TMI Tax Updates - e-Newsletter
April 8, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Blocked input tax credit - issuance of credit notes by the supplier - denial of Input Tax Credit with regard to certain inputs - Both parties presented their arguments, with the petitioner emphasizing the provision of evidence supporting their claims. The Court found discrepancies in the assessing officer's conclusions and noted the lack of explicit reasons for denying Input Tax Credit. Consequently, the impugned order was set aside on all three issues and remanded for re-consideration, with directions for providing the petitioner with a reasonable opportunity to present their case.
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GST:
Confiscation of goods - levy of penalty - presence of additional stock - The High Court scrutinized statutory provisions, emphasizing that confiscation cannot be solely based on eye estimation and must adhere to prescribed valuation methods. It criticized the delay in legal proceedings and the lack of physical verification before imposing penalties. Ultimately, the Court ruled in favor of the petitioners, quashing the impugned orders and directing the return of any deposited amounts.
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GST:
Condonation of delay in filing an Appeal - Violation of principles of natural justice - The High Court observed that the appellate authority failed to appropriately apply Supreme Court precedents for condoning the delay. Moreover, deciding the matter on merits without due consideration of relevant judgments was deemed unjustified.
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GST:
Reverse charge of Goods and Services Tax (GST) on recovery agent services - Constitutional validity of Collection of Tax / GST under RCM - The Delhi High Court's judgment underscores the legislative discretion in tax matters, reaffirming the validity of the reverse charge mechanism within the GST framework. It illustrates the balance between legislative intent and constitutional mandates, ensuring that tax laws are applied equitably without disrupting the underlying objectives of the GST regime. By dismissing the petition, the Court reaffirmed that the mechanism of tax collection and the conditional provision of input tax credit do not, in themselves, constitute discrimination or arbitrariness under the Constitution.
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GST:
Violation of principles of natural justice - order in original has been passed ex-parte to the petitioner - The High Court found merit in the petitioner's arguments, recognizing the breach of natural justice and the failure to serve the notice at the correct address. It emphasized the fundamental importance of natural justice and disagreed with the respondent's argument regarding the availability of an alternative remedy, citing precedent that the High Court retains jurisdiction under Article 226 in cases involving such breaches.
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GST:
Appeal rejected on the ground of delay - Refund of unutilised input tax credit - The Court examined the interpretation of Rule 108(3) of the CGST Rules, which mandated the submission of certified copies within seven days of filing the appeal. Despite the literal interpretation of the rule, the Court considered recent amendments and the recommendations of the GST Council, which highlighted the availability of orders online. Consequently, the Court quashed the impugned order and remanded the matter back to the appellate authority for fresh consideration on merits, emphasizing that the merits of the case should be decided after giving the petitioner an opportunity to be heard.
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GST:
Refund of accumulated input tax credit - relevant date for the purpose of considering the limitation u/s 54 - The High Court addressed this issue by directing the respondent authority to consider the date of filing of the refund application, whether filed manually or online, as the date of filing the manual refund application. This decision aimed to ensure that the petitioner's refund claims would not be rejected based on the limitation period. Additionally, the petitioner was instructed to file fresh refund applications online within four weeks, with the date of such applications deemed to be the date of manual filing.
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GST:
Validity of assessment order - absence of three-month gap - The petitioner's counsel argued for a three-month gap between the show cause notice and assessment order, emphasizing the need for a reasonable opportunity. However, the Government Advocate highlighted the petitioner's multiple opportunities to contest the tax demand. The High Court clarified that while Section 73(2) of the TNGST Act mandates a three-month notice, it does not require a three-month gap between the notice and assessment order. Despite the petitioner's non-participation in proceedings, the Court deemed it necessary to grant them an opportunity to be heard. Consequently, the assessment order was quashed, contingent upon the petitioner remitting 10% of the disputed tax demand within two weeks and submitting a reply to the show cause notice.
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GST:
Principles of natural justice - The High Court found merit in the petitioner's argument regarding the violation of procedural fairness, as the impugned order failed to provide adequate opportunity for personal hearing, thereby infringing upon principles of natural justice. Consequently, the impugned order was set aside by the High Court. Regarding the objection related to the pendency of a previous writ petition, the Court clarified that no interim order was in effect and left it open for the petitioner to raise objections on merits before the respondent-authority.
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GST:
Refusal to rectify the assessment order passed under Rule 142 (5) of the C.G.S.T. Rules, 2017 - denial of the Input Tax Credit (ITC) - The High Court found merit in the petitioner's arguments, noting that the assessing authority had failed to consider relevant legal precedents and a binding Circular issued by the CBIC. Consequently, the Court set aside the order dated 30.01.2024 and directed the assessing authority to reconsider the matter and issue a fresh reasoned order by a specified deadline. Pending the fresh order, the High Court ordered the disputed demand of tax and penalty to remain in abeyance.
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GST:
Violation of principles of natural justice - cryptic order - excess claim Input Tax Credit - Despite the petitioner submitting a detailed reply, the court found that the impugned order failed to adequately consider their response. The court noted deficiencies in the order's assessment of the petitioner's submissions and its failure to seek clarifications if deemed necessary. Consequently, the High Court set aside the order and remitted the matter for re-adjudication, directing the Proper Officer to provide specific details or documents required from the petitioner. The court reserved its consideration on the merits of the case and left open the challenge to a specific notification.
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GST:
Violation of principles of natural justice - SCN not received as the show cause notice was not uploaded on the GST portal under the heading ‘Notices’ but appears to have been uploaded under the heading of Additional Notices - The case involves a challenge to an order creating a demand against the petitioner under Section 73 of the CGST Act. The petitioner claims they never received the show cause notice and were thus unaware of the proceedings against them. The High Court, after considering the submissions of the parties, sets aside the impugned order and grants the petitioner an opportunity to file a reply to the notice within 30 days. It directs the Proper Officer to re-adjudicate the matter after providing the petitioner with a personal hearing.
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Income Tax:
Assessment u/s 153C/153A - Computation of the Relevant Assessment Years Block - Jurisdiction for Reopening Assessments - The Delhi High Court meticulously analyzed the legal and procedural framework governing the reassessment process following search operations. It provided clarity on the computation of the relevant block of years for assessment, the jurisdictional reach of the Income Tax authorities in light of the 2017 amendments, and the procedural safeguards intended to ensure fairness in the reassessment process. The judgments underscore the necessity for a precise satisfaction note and uphold the legislative amendments aimed at capturing undisclosed income extending beyond the standard six-year limitation period, subject to meeting specific criteria outlined in the statute.
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Income Tax:
TDS liability u/s 194C - 'Contract for Sale' and not a 'Works Contract' - Scope of the term "Work" - Seeking issue a Certificate u/s 197 r.w.s. 206(C)(9) for NIL Tax Deduction at Source (TDS) on all sales effected by the Petitioner/ Company - The burden of proof regarding the nature of transactions between the assessee and Hindustan Lever Limited (HUL) falls on the assessee. The court emphasizes the importance of providing sufficient documentation to support the claim that the transactions do not fall under Section 194C but rather under a different category, such as a contract for sale. - Ultimately, the court disposes of the writ petitions, indicating that the petitioner's claims are not legally tenable given their past treatment of payments from HUL and the lack of documents disputing the tax deductions made by HUL.
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Income Tax:
TP Adjustment - Comparable selection - determination of the arm’s length price (ALP) of international transactions - The appellant contested the inclusion of two companies, Roto Pumps Ltd. and Simmonds Marshall Ltd., as comparables due to product dissimilarity. The Appellate Tribunal upheld the exclusion of these comparables, emphasizing their dissimilar businesses compared to the appellant. Additionally, the Tribunal dismissed the appellant's objections regarding capacity utilization adjustment, PLI calculation, and treatment of foreign exchange gain/loss, as they became inconsequential post the exclusion of the disputed comparables.
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Income Tax:
Additions against Over-invoicing of Purchases - The Tribunal found that the AO's selective reliance on pieces of evidence without considering the entirety of the material was unjustified. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the additions related to over-invoicing. - Regarding the undervaluation of stock, the Tribunal observed that the documents presumed to demonstrate unexplained investment were prepared for strategic purposes, showcasing notional values for presentation to potential investors. It was determined that these notional figures could not form the basis for additions under section 69B.
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Income Tax:
Denial of exemption u/s 10(38) - . The ITAT found that the assessee, an individual with income from salary and other sources, had legitimately purchased equity shares of CCL International Ltd, which were later sold through a registered stockbroker. The transactions were subjected to Securities Transaction Tax (STT), and the gains were classified as long-term capital gains. Despite the AO's suspicion regarding the sharp rise in the share price, the ITAT found no evidence to doubt the genuineness of the transactions. The Tribunal highlighted the company's ongoing business operations and its recognition by government bodies, thereby ruling the capital gains as genuine and entitled to exemption under section 10(38).
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Income Tax:
Assessment u/s 153C - Additions made by revenue based on search findings in group cases of M/s SRS mining and its partners - The Tribunal noted that the AO of the assessee received the satisfaction note from the AO of the searched person. Based on the precedent set by the Supreme Court, it was determined that the assessment for AY 2015-16 was without jurisdiction as it fell outside the allowable period for assessment under section 153C. Consequently, the assessment for AY 2015-16 was quashed. - The Tribunal found that the additions were based solely on the incriminating material and the statement of an individual, which was later retracted. It was held that the material in question did not directly implicate the assessee, nor was there any corroborative evidence to support the addition. Therefore, the additions made for AYs 2016-17 and 2017-18 were deemed unsustainable, leading to their deletion.
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Income Tax:
Bogus LTCG - exemption u/s 10(38) denied - The AO contended that the LTCG was undisclosed income arising from alleged manipulation in penny stocks. However, the assessee provided substantial evidence, including contract notes and transaction statements, to support the genuine nature of the investment. Relying on established precedents and the evidence presented, the Tribunal upheld the assessee's claim, thus deleting the LTCG addition. Consequently, as the commission disallowance was contingent upon the LTCG addition, it was also revoked by the Tribunal.
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Income Tax:
Addition of cash deposits u/s 68 - abnormal sales reported by the assessee during demonetized period - The Tribunal found no merit in the Revenue's argument that the sales were abnormal, highlighting that no concrete evidence was presented to substantiate the claim of unaccounted money being introduced as sales. Furthermore, the Tribunal noted the impossibility of producing CCTV footage as demanded by the Revenue, years after the transactions took place. Based on the thorough documentation provided by the assessee, the Tribunal ruled that the cash deposits were sourced from legitimate sales proceeds.
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Income Tax:
Reopening of assessment u/s 147 or assessment u/s 153C - reassessment was made based on the materials found in the course of search conducted on third party - The tribunal allowed the appeal, quashing the reassessment order dated March 28, 2016, on the grounds that the reassessment was conducted under an incorrect section of the law. It held that if the reassessment was based on incriminating materials found in the course of a third party's search, it should have been conducted under Section 153C rather than Section 147.
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Income Tax:
Adjustment of part income-tax refund received by the assessee against the total outstanding refund, comprising of principal/ tax and interest - quantum of interest to which the assessee would be entitled u/s 244A - The Tribunal concluded that the part refund should first be adjusted against the interest component of the outstanding refund before adjusting against the principal. This decision aligns with previous rulings from various ITAT benches and the principles of fairness, equity, and good conscience. - The Tribunal discredited the Revenue's argument that this adjustment method would result in granting interest on interest, which is not permissible. It underscored that the adjustment strategy proposed by the assessee does not infringe upon the principles laid down by the Supreme Court.
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Income Tax:
Addition in view of the Provisions of section 50C on the Gift of Plots - Transfer of property by a Company as a gift - AO concluded how the gift by one company to other company can be genuine, considering the fact that the company is an Artificial Judicial Person and the element of “natural love and affection” cannot be exist - The department made an addition under Section 50C regarding the gift of plots. The appellant argued that the transfer of property act allows for such gifts, and cited relevant legal provisions and case law. The appellate tribunal upheld the appellant's contention, deleting the addition made by the Assessing Officer.
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Income Tax:
Revision u/s 263 - as argued no draft assessment order u/s 144C prior to passing the final assessment order passed - The Tribunal analyzed the circulars cited by the PCIT and concluded that they were explanatory in nature and did not invoke the powers of Section 119 of the Act. As such, non-compliance with these circulars did not render the assessment order erroneous. Moreover, the Tribunal cited precedents to establish that a non-est and void order cannot be subject to revisionary proceedings under Section 263. Therefore, the exercise of jurisdiction by invoking clause (c) of Explanation 2 of Section 263(1) of the Act was deemed inappropriate.
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Income Tax:
Taxability of Income in India - international taxation, permanent establishment (PE), and treaty benefits under the India-UK Double Taxation Avoidance Agreement (DTAA). - The ITAT upheld this contention of the assessee, emphasizing that possession of a valid Tax Residency Certificate indeed qualifies the entity as a resident of the UK for tax purposes, thereby entitling it to treaty benefits under the India-UK DTAA. - Further, the ITAT concluded that the Indian company acted independently, without the authority to conclude contracts on behalf of the appellant. Hence, it was determined that there was no Fixed Place PE or Dependent Agent PE in India for the appellant. - The ITAT disagreed with the lower authorities' attribution of profits to a presumed PE in India. It clarified that the appellant's business activities, particularly related to offshore supplies, did not constitute a business connection in India.
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Income Tax:
Accrual of income - Taxability of notional interest income credited by the assessee in his profit and loss account as per the requirement of Indian Accounting Standards - The assessee, a public limited company, had credited interest-free loans to its subsidiary and accounted for "notional interest" in its books. The Revenue challenged this, arguing for its inclusion in taxable income. However, the Appellate Tribunal, after considering submissions from both sides and referring to relevant precedent, ruled in favor of the assessee. It held that since there was no contractual obligation for the debtor to pay interest, the notional interest income did not accrue and should not be taxed.
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Income Tax:
TP Adjustment - selection of most appropriate method (MAM) - Resale Price Method or Transactional Net Margin Method - Introduction of Fresh Comparables - Removal of 3% Filter - The Tribunal upholds the adoption of Transactional Net Margin Method (TNMM) over Resale Price Method (RPM), citing subsequent TNMM usage and functional comparability. It supports the introduction of new comparables and the rejection of the 3% filter due to marketing intensity. The Tribunal confirms the deletion of additions based on selected comparables' margin comparison with the appellant.
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Customs:
Eligibility of petitioner in seeking clearance of the goods - High Seas Sale agreement stands cancelled - The petitioner contested the jurisdiction of the authorities, sought to quash an impugned letter, and requested the release of containers and amendment of the Bill of Entry. Additionally, the petitioner challenged the validity of a CBIC notification and requested detention and demurrage waivers. The High court acknowledged the petitioner's entitlement to seek clearance due to the cancellation of a High Seas Sale agreement and permitted the submission of an application to the designated Customs Officer. Respondent No. 6 raised no objections, and the court directed a timely decision on the application, while keeping all contentions open.
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Customs:
Maintainability of petition - alternative remedy of appeal - Validity Of show-cause notice - The petitioner contended that the impugned show-cause notice and order were without jurisdiction because the Additional Commissioner of Customs, who issued them, was not authorized under the SEZ Act notifications of August 5, 2016. - The High Court observed a discrepancy between the petitioner's claim of not receiving notices and the impugned order's assertion that notices were served. This discrepancy led to disputed questions of fact. - As the issue of notice service involved factual disputes, the High Court declined to entertain the petition on this ground, leaving it for the appellate authority to examine during appeal proceedings.
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Customs:
Import of Baggage - opportunity to declare the contents of their baggage to the proper officer - The petitioners argue that they were not given an opportunity to declare the contents of their baggage, as required by the Customs Act, 1962. However, the senior standing counsel contends that the interception was based on intelligence about syndicate activities. The High Court finds that the dispute revolves around questions of fact and directs the petitioners to file statutory appeals. It grants them leave to do so within ten days and orders that the appellate authority should consider the appeals on merits without considering the question of limitation.
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Customs:
Valuation of export goods on which duty has to be paid - iron ores - The Tribunal determines that the transaction value specified in the contract between the appellant and the buyer should be considered for valuation purposes, rather than relying solely on the Customs Laboratory report. The Tribunal decides that certain deductions made to the transaction value, such as for moisture content and lump value, should not be allowed. It directs that the transaction value be determined without such deductions.
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Customs:
Valuation of goods transacted between related persons - Royalty addition - The Appellate Tribunal scrutinized the jurisdictional implications and competence of the reviewing authority in making such a directive. - They found that the directive lacked a legal basis due to procedural irregularities and jurisdictional limitations. The Tribunal criticized the absence of proper notice and justification under relevant customs laws. They also questioned the competence of the reviewing authority to challenge the decision of the Deputy Commissioner, SVB, without sufficient cause for grievance. - In conclusion, the Tribunal set aside the impugned order and remanded the appeal to the first appellate authority for proper consideration in accordance with the scheme of Customs Act, 1962.
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Customs:
Revocation of CHA License - appellant failed to verify the address at which the two clients operated and that requirement of ‘know your customer (KYC)’ was entirely different - The appellant was accused of breaching obligations related to verifying client identity and operations at the declared address. Despite the appellant's argument of compliance with KYC norms and reliance on precedent, the tribunal found that they failed to exercise due diligence in verifying client antecedents, especially in the diamond trade. While setting aside certain penalties, the tribunal upheld the forfeiture of the security deposit, emphasizing the importance of regulatory compliance and diligence in customs brokerage.
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Customs:
Levy of penalty on CHA - The appellate tribunal examined the case where penalties were imposed on appellants for allegedly failing to verify the antecedents of an importer before clearing a consignment as a Customs House Agent (CHA). Despite allegations, it was found that there was no evidence implicating the appellants in any wrongdoing related to the misdeclaration of goods. Moreover, as similar proceedings had been initiated under the Customs Brokers Licensing Regulations and subsequently revoked by the High Court, the tribunal concluded that any issues regarding antecedent verification should have been addressed through these regulations rather than penalties under the Customs Act. Consequently, the penalties imposed on the appellants were dropped, and the impugned order was set aside.
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Customs:
Valuation - Inclusion of expenditure incurred towards advertising, marketing and promotion of the goods - The Tribunal emphasized that for costs to be added to the transaction value under rule 10(1)(e) of the 2007 Valuation Rules, they must be incurred as a condition of sale of the imported goods, either to the seller or a third party to satisfy an obligation of the seller. - The Tribunal found that the appellant was required to undertake advertising and promotion activities on its own account, even as per agreements with the foreign suppliers. These activities, aimed at promoting sales within India, were determined to be post-import activities not directly linked to the conditions of sale or an obligation towards the foreign suppliers. Thus, the Tribunal concluded that these expenses do not qualify for inclusion in the transaction value of imported goods for customs valuation purposes.
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FEMA:
Adjudicating Authority under FEMA - The High Court clarified that the Adjudicating Authority is not a persona designata, but a designation empowered by the Act. The court emphasized that the authority designated by the Central Government can continue proceedings even if the original appointee ceases to hold office. Therefore, the argument that only the issuing authority can adjudicate the case was rejected. - The court held that the term "the Adjudicating Authority" does not refer to a specific individual but to the authority designated within the pecuniary limits set by the notification. Thus, the contention that only the issuing authority can adjudicate was dismissed.
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Corporate Law:
Prospective or Retrospective application of amendment to the provisions of the Act and Rules - The High Court touched upon the principle that delegated legislation, unless explicitly retrospective, does not impair vested rights. However, it clarified that legislation clarifying or explaining existing laws can have retrospective effect, particularly if it fills legislative gaps or clarifies ambiguities. In this context, Rule 37 was seen as clarifying rather than altering the law's essence, thus applicable to pending applications like that of the appellant.
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Corporate Law:
Conversion from an unlimited liability company to a limited liability company - Section 18 of the Companies Act, 2013 - Applicability of the amendments to Section 18 and Rule 37 - To be applied retrospectively for the application filed before the amendment or not - The High Court rejected the appellant's contention that it had a vested right to conversion under the unamended Act, stating that approval must align with the law as it exists at the time of granting such approval. The Court further reasoned that the amendment was curative in nature, designed to protect creditors' interests by introducing additional criteria for conversion, including the necessity for NOCs.
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Indian Laws:
Dishonor of Cheque - Ascertaining nature of transaction - whether a criminal proceeding can be initiated and an accused held guilty when there is already a civil court decree concerning the same transaction - The Supreme Court acknowledges the conflicting nature of civil and criminal proceedings concerning the same issue and transaction. However, it emphasizes that the standard of proof and burden of evidence in civil and criminal cases are different. - the Supreme Court clarifies that while civil court decisions may have persuasive value, they are not binding on criminal courts, except for limited purposes such as sentence or damages. - the Supreme Court concludes that the criminal proceedings, including the conviction and damages imposed by lower courts, are unsustainable. It asserts that the criminal court must abide by the civil court's declaration regarding the nature of the cheque involved.
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IBC:
Constitutional Validity of Circular - The court examined whether the Circular introduced new legal standards beyond the scope of the IBBI's authority and whether it applied retrospectively, affecting the petitioner's past actions. - The High Court invalidated parts of the Circular that introduced new requirements for the computation of liquidators' fees, marking them as substantive amendments that could not be enacted without following the prescribed legislative process. Conversely, the Court recognized the IBBI's role in clarifying ambiguous aspects of the regulations, thereby facilitating better compliance by insolvency professionals.
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IBC:
Rejection of Application of Claim, raised by the Appellant - limitation in preferring an appeal - The NCLAT found that the appeal was filed beyond the 30-day limitation period prescribed by Section 61(2) of the IBC. - Despite the Appellant's reasons for the delay, including seeking legal advice and geographical constraints, the Tribunal finds them insufficient to justify condonation of the delay.
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IBC:
CIRP - Admission of Section 7 application - The NCLAT addressed the validity and impact of the ex parte arbitral award. It concluded that, irrespective of the award's validity—which was contested by the appellant and pending adjudication—the evidence of debt and default was incontrovertible based on the loan agreement, the debtor’s admissions, and the financial records presented. The Appellate Tribunal unequivocally upheld the Adjudicating Authority’s order, affirming that the debt and default were clearly established through the documentation provided by the financial creditor, rendering the application for initiating CIRP as justified.
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IBC:
CIRP - denial of rights to be heard to protect the Financial Interest of Hundreds of Home Buyers / Allottees - Applicability of Threshold - joint filing by either 100 allottees or 10% of the total number of allottees of the same real estate project, whichever is less - The Tribunal noted that the appellant and co-petitioners, representing various projects within the township, did not meet the specified threshold for initiating CIRP, as they did not collectively belong to the same real estate project or phase. - The NCLAT concluded that the appeal lacks merit based on the presented arguments and evidence. It was determined that the application for initiating CIRP was not maintainable in law, affirming the decision of the Adjudicating Authority.
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Service Tax:
SVLDRS - Rejection of application under Sabka Vishwas Scheme - Payment was delayed by one day - The petitioner attempted to make the payment within the stipulated period but faced a technical glitch with online banking. - The High Court examined the petitioner's attempt to make payment within the stipulated time and the technical glitch encountered. Referring to similar cases, the court noted that if an assessee is prevented by bona fide reasons, such as technical issues, from making timely payment, they cannot be deprived of the benefits of the Sabka Vishwas Scheme.
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Central Excise:
100% EOU - Valuation of goods - Calculation of central excise duty on goods cleared from a 100% Export Oriented Unit (EOU) into the domestic tariff area. - The Appellate Tribunal rules in favor of the appellant. It confirms that duty calculation should align with the provisions of the Customs Act, 1962, and rejects the Revenue's methodology based on MRP minus abatement. The Tribunal sets aside the impugned order and allows the appeal.
Articles
Notifications
Case Laws:
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GST
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2024 (4) TMI 296
Blocked input tax credit - issuance of credit notes by the supplier - denial of Input Tax Credit with regard to certain inputs - HELD THAT:- Except for holding that the tax payer had availed Input Tax Credit which is blocked credit under Section 17(5), no reasons are specified as to why such Input Tax Credit was denied. The impugned order is set aside in relation to these three issues and remanded for re-consideration. The first respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of a copy of this order. Petition disposed off.
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2024 (4) TMI 295
Violation of principles of natural justice - ex-parte demand - retrospective cancellation of GST registration of petitioner - under declaration of output tax - excess claim of Input Tax Credit - ITC claimed from cancelled dealers - return defaulters and tax non payers - HELD THAT:- It is an admitted case of the Department that in case registration is cancelled retrospectively, the taxpayer cannot access the portal. Accordingly, there is merit in the contention of the petitioner that he was not served with the impugned Show Cause Notice and the impugned order which was issued after the registration was cancelled. The impugned order which had been passed solely on account that petitioner had not filed a reply cannot be sustained. The matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 04.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.
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2024 (4) TMI 294
Seeking grant of Regular bail - claiming of ineligible tax credit - applicability of Section 132 (1)(c) of the Gujarat Central Goods and Service Tax Act, 2017 - HELD THAT:- The role attributed to the present applicant is to the effect that present applicant has availed ineligible input tax credit of Rs. 07.45 Crores on the basis of purchases made from six registered entities, which according to the revenue are found to be non-existing. This Court has also considered punishment prescribed for the offence in question and also considered the fact that the applicant is in custody since 02.02.2024. In the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the FIR, without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail. The applicant is ordered to be released on regular bail on executing a personal bond of Rs. 10,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions imposed - the present application is allowed.
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2024 (4) TMI 293
Retrospective cancellation of GST registration of the Petitioner - notice does not specify any cogent reason - violation of principles of natural justice - HELD THAT:- Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. On the one hand, the order states that no reply filed and on the other hand refers to a reply dated 07.01.2022, which shows complete non-application of mind, particularly when the Proprietor had passed away and no reply was filed. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. Petitioner does not seek to carry on business or continue with the registration, the impugned order dated 03.02.2023 is modified to the limited extent that registration shall now be treated as cancelled with effect from 29.04.2021 i.e., the date when Sh. Manoj Kumar Munjal passed away. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. Petition disposed off.
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2024 (4) TMI 292
Retrospective cancellation of GST registration of the Petitioner - notice does not specify any cogent reason - violation of principles of natural justice - HELD THAT:- Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. On the one hand, the order states that no reply filed and on the other hand refers to a reply dated 07.11.2022, which shows complete non-application of mind, particularly when the Proprietor had passed away and no reply was filed. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the above facts that Petitioner does not seek to carry on business or continue with the registration, the impugned order dated 14.02.2023 is modified to the limited extent that registration shall now be treated as cancelled with effect from 18.11.2021 i.e., the date when Sh. Dershan Kapoor passed away. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. Petition disposed off.
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2024 (4) TMI 291
Confiscation of goods - levy of penalty - burden of proof on Department - mere presence of additional stock - HELD THAT:- One is unable to understand that after the Appellate Authority had come to the above finding that the stock was not weighed or counted, specifically when the same could have very well been done in the premises of the petitioner, why did the Appellate Authority subsequently reduce the penalty by making a fresh assessment. The calculation of the stock by the Appellate Authority on the basis of an estimate is without any basis in law. When the Appellate Authority had come to the finding that the officers in the survey did not carry out the quantification of the stock in the correct manner, there was no reason for the Appellate Authority to uphold the confiscation and penalty. There are no reason with regard to the delay in the confiscation and levy of penalty. In fact, the notice for confiscation was issued in August 2019, almost 10 months after the date of survey. This inordinate delay in issuing show cause notice goes to the root of the matter and is a factor to be considered - the delay leads to an inference that the authorities have acted in a callous manner. It is trite law that the burden of proof for imposition of penalty and confiscation of goods is on the Department and the same cannot be done on estimates when it is clear that the Department could have carried out a physical verification based on counting and weighing of the goods. In light of the same, the entire finding with regard to excess stock, that is based on estimate, is liable to be rejected outrightly. The impugned orders with regard to penalty and confiscation are quashed and set aside - As the said finding of excess stock is clearly without any basis in law and illegal, the initiation of proceedings under Section 74 of the Act cannot stand on any footing - impugned orders are set aside - petition allowed.
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2024 (4) TMI 290
Doctrine of comity - Condonation of delay in filing an Appeal - Violation of principles of natural justice - failure to appreciate the judgements of the Supreme Court, properly, for condoning the delay - HELD THAT:- Upon a perusal of the impugned order, it appears that the appellate authority has not properly appreciated the judgements of the Supreme Court for condoning the delay. Furthermore, having held that the matter was time barred, the appellate authority has proceeded to decide the matter on merits, which also unfortunately is without any basis in law as the appellate authority has not taken into consideration the judgement of the Bombay High Court in Vodafone Idea Limited v. Commissioner of CGST and Central Excise, Mumbai [ 2022 (7) TMI 645 - BOMBAY HIGH COURT] and the judgment of Delhi High Court in Vodafone Idea Limited v. Union of India and Others [ 2023 (10) TMI 934 - DELHI HIGH COURT] . It is to be noted that the judgement of the Bombay High Court was not taken up in appeal before the Supreme Court and the Central Board of Indirect Taxes and Customs decided not to file SLP against the order passed by the Bombay High Court - the decision of the Bombay High Court holds the field and since the issue is that under the Central Legislation, following the doctrine of comity, the judgement of the Bombay High Court would apply in the State of Uttar Pradesh too. The impugned orders is quashed and set aside with a direction upon the appellate authority to decide the issue afresh in light of the observations made hereinabove - Petition disposed off.
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2024 (4) TMI 289
Reverse charge of Goods and Services Tax (GST) on recovery agent services - Constitutional validity of Collection of Tax / GST under RCM - Challenge to N/N. 30/2012-ST dated 20.06.2012, N/N. 10/2014-ST dated 11.07.2014 and N/N. 10/2017-Integrated Tax (Rate) dated 28.06.2017 issued by the Central Government - challenge to Section 17(3) of the Central Goods and Services Tax Act, 2017 deeming supply of recovery agent services as exempted supplies - HELD THAT:- There is no vested or inherent right of an assessee to claim credit for an input tax paid on the services availed. The matter relating to whether any such credit is available and to which extent it is available, is a matter of statutory prescription. The right to avail input tax credit is a statutory right and is available only if the statute provides for the same and that too to the extent that the statute permits. The petitioner s challenge in this petition is founded, principally, on Article 14 of the Constitution of India. According to the petitioner, denial of input tax credit on account of service tax/GST being payable on a reverse charge method in respect of the services in question results in hostile discrimination. Before proceeding to address this issue, it would be relevant to recount certain relevant legal principles, which are necessary to be borne in mind for addressing such a challenge. The Central Government has in its wisdom selected certain services on which service tax/GST is payable on a reverse charge basis. The contention that the same amounts to hostile discrimination is plainly unmerited. All persons rendering services of a particular nature have been treated uniformly. It is not the petitioner s case that persons rendering services of a recovery agent to banking company, nonbanking financial corporation or financial institution have been treated differently. The power to tax is a sovereign power, subject to the legislative competence under the Constitution. The legislature or the Parliament has wide discretion in choosing the persons to be taxed or the objects for taxation - It is not open for the petitioner to claim that the kind of services it renders services as a recovery agent to a NBFC must necessarily be taxed in a similar manner as any other taxable service. There are no merit in the petitioner s contention that the legislative scheme for denying input tax credit in respect of services on which service tax / GST is payable on a reverse charge basis, is arbitrary and falls foul of Article 14 of the Constitution of India. First of all, the right to utilise input tax credit is a statutory right, such credit is available only if the statute permits it and to the extent that it does. A service provider providing services, which are subject to payment of tax on a reverse charge basis, is not liable for payment of service tax/GST in respect of the services that it renders. Thus, a service provider is not assessed to tax on the output services - An assessee, which is not liable to pay tax on output has no liability against which it can set off the input tax credit. Thus, the denial of input tax credit in respect of services where GST is payable on reverse charge basis, cannot by any stretch be held to be irrational and arbitrary. Clearly, the service providers rendering services on which tax is payable on a reverse charge basis would constitute a class of their own and a challenge to the same founded on Article 14 of the Constitution of India, would necessarily fail - It is well settled that Article 14 of the Constitution of India does not prohibit reasonable classification, which has the rational nexus to its object. Denying input tax credit to service tax providers, who are not liable to pay tax on output services is founded on a rational basis, which has a clear nexus with the classification. There are no merit in the challenge laid by the petitioner to the impugned Notifications or the provisions of Section 17(3) of the CGST Act - petition dismissed.
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2024 (4) TMI 288
Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - under declaration of output tax - the tax on outward supplies under declared on reconciliation of data in GSTR-09 - reconciliation of GSTR-01 with GSRT-09 - excess claim Input Tax Credit - scrutiny of ITC reversals - under declaration of ineligible ITC - HELD THAT:- The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 06.12.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is incomplete and not supported by relevant documents which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 28.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.
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2024 (4) TMI 287
Violation of principles of natural justice - cryptic order - excess claim Input Tax Credit - under declaration of ineligible ITC - ITC claimed from cancelled dealers - return defaulters and tax nonpayers - HELD THAT:- The observation in the impugned order dated 26.12.2023 is not sustainable for the reasons that the reply dated 19.10.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory nor any substantial documents were submitted by the taxpayer which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the Petitioner. The impugned order records the reply furnished by the Petitioner as incomplete, not supported by adequate documents, unclear and unsatisfactory. Proper Officer is directed to intimate to the petitioner if any details/documents, as may be required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act. Petition disposed off.
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2024 (4) TMI 286
Violation of principles of natural justice - impugned order does not take consideration the reply submitted by the Petitioner in full consideration and has passed a cryptic order - under declaration of output tax - excess claim Input Tax Credit - ITC claimed from cancelled dealers - return defaulters - tax non-payers - HELD THAT:- The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is insufficient and unsatisfactory. The impugned order does not specifically deal with the reply dated 23.10.2023 given by the petitioner, however, refers to certain judgment to hold that the burden to prove admissibility of any input tax credit cannot be shifted to the Tax Authorities. The Proper Officer has not even considered the reply of the petitioner along with the enclosed documents and merely held that the burden cannot be shifted on the Tax Authorities. The Proper Officer had to examine the documents submitted by the petitioner and then hold whether the input tax credit is admissible or not. The Proper Officer has not stated as to why such transactions are not acceptable. The matter is remitted to the Proper Officer to re-adjudicate the issues - impugned order set aside - petition allowed by way of remand.
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2024 (4) TMI 285
Maintainability of petition - availability of statutory remedy of appeal - Seeking restoration of GST registration number of the petitioner - petitioner did not file GST returns - reply to SCN could not be submitted within the stipulated time - HELD THAT:-It is not clear, as to how, on the one hand it has been submitted by the petitioner that he has not filed any reply to the show cause notice because it was not in the prescribed format, then in the Cancellation of Registration Order dated 03.01.2023 objection/reply filed by the petitioner dated 03.08.2022 has been noted. It is found from the pleadings on record that the petitioner has admitted that he has not filed GST returns because of illness of the Accountant and that the notice was served upon him, but he ignored the same and did not choose to submit any reply because it was not in the prescribed format. Therefore, the petitioner cannot be given the benefit of the arguments raised by him on the basis of violation of principles of natural justice. The petitioner has statutory remedy of filing his application for revocation under Section 30 of the said Act before the appropriate authority. The writ petition is dismissed.
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2024 (4) TMI 284
Violation of principles of natural justice - order in original has been passed ex-parte to the petitioner - HELD THAT:- It would be in the interest of justice that the proceedings are remanded to the Adjudication Officer as there is clearly a breach of principles of natural justice as the petitioner was not granted an opportunity of being heard or even to file a reply to the show-cause-notice before the order-in-original was passed by the Adjudicating Officer which was admittedly an ex-parte order. Certainly, the law would mandate that a show-cause-notice is issued to the parties before any order is passed on the same. In the present case, the petitioner had made appropriate amendments on the GST portal, in view of change of its address which was on 23 October 2019 and 5 December 2019 as also admitted by the respondents in the reply affidavit. It clearly appears that the show-cause-notice was forwarded to the petitioner at an address which was in fact prior address before change of its address effected on 23 October 2019. The show cause-notice was not served on the petitioner, consequently the same was not replied and / or the petitioner could not put up a valid defence - this is a case which has resulted in breach of principles of natural justice in passing of the impugned order. The impugned order-in-original dated 30 August 2022 (Exhibit-B) is quashed and set aside - Proceedings stand remanded to the Adjudicating Officer, namely, the Commissioner, CGST Central Excise, Belapur Commissionerate - petition disposed off by way of remand.
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2024 (4) TMI 283
Seeking one more opportunity to produce all proofs of payments made through bank channel - Demand alongwith penalty - excess claim Input Tax Credit - ITC claimed from cancelled dealers, return defaulters and tax nonpayers - HELD THAT:- Perusal of the letter dated 03.12.2023 shows that petitioner was given an opportunity to personally appear and there was no requirement stipulated therein to produce any bank payment proofs. As per the petitioner, if given an opportunity, petitioner shall be able to produce all proofs of payments made through bank channel. The impugned order dated 29.12.2023 is set aside. The matter is remitted to Proper Officer for re-adjudication. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Petitioner shall produce all the relevant documents as inter-alia the clarification with regard to the HSN Code and also the proof of payment made through the banking channel before the proper officer within a period of one week from today thereafter, proper officer shall decide the show cause notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act. Petition disposed off.
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2024 (4) TMI 282
Appeal rejected on the ground of delay - Refund of unutilised input tax credit - difference between the value of exports as mentioned in the invoice and the shipping bill - HELD THAT:- On perusal of Rule 108 of Central Goods Service Tax Rules, 2017, it is clear that the petitioner is required to submit decision or order appealed against within seven days of filing of appeal under sub-rule (1) and final acknowledgment indicating appeal number is to be issued in Form GST APL-02 by the appellate authority. Therefore, literally applying Rule 108(3) by the appellate authority was justified in rejecting the appeals on the ground of delay. As the GST Council has agreed to recommendations of the Law Committee which provides that when an order which is appealed against is issued or uploaded on the common portal and the same can be viewed by the appellate authority, requirement of submission by the appellant of a certified copy of such an uploaded order to vouch for its authenticity would be insignificant in view of availability of the order online. Therefore, considering such recommendation, amendment which is clarificatory in nature, has come into effect from 26th December, 2022 on the statute - In view of the above amendment which would have a retrospective effect as the same is a clarificatory in nature and therefore, the impugned order passed by the appellate authority rejecting the appeal on the ground of delay would not survive. The impugned order is, accordingly, quashed and set aside and the matter is remanded back to the appellate authority to pass a fresh de novo order on merits after giving opportunity of hearing to the petitioner. Petition disposed off by way of remand.
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2024 (4) TMI 281
Refund of accumulated input tax credit in terms of Section 54(3)(ii) of the Central Goods Service Tax Act, 2017 (CGST Act) read with Rule 89(5) of the Central Goods Service Tax Rules, 2017 - relevant date for the purpose of considering the limitation u/s 54 - HELD THAT:- The respondent authority is directed to consider the date of filing of the refund application to be preferred by the petitioner be considered as the date of filing manual refund application as relevant date for the purpose of considering the limitation under Section 54 so as to process the refund application preferred by the petitioner online and grant the refund to which the petitioner is eligible and not disputed by the respondent authorities, in accordance with law. The petitioner shall file fresh refund application online within a period of four weeks from today. However, the date of such application shall be deemed to have been to be considered as of date of manual filing of refund applications by the petitioner - Petition disposed off.
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2024 (4) TMI 280
Violation of principles of natural justice - reasonable opportunity to contest the tax demand not provided - validity of assessment order - HELD THAT:- It is noticeable that the petitioner replied to the show cause notices on the very next day and requested for 30 days' time to reply. Without responding to the petitioner's reply, the impugned orders were issued within about 15 or 16 days from the date of receipt of the reply. The impugned orders do not refer to the petitioner's reply or set out any reasons for rejecting the reply. Since the petitioner was deprived of a reasonable opportunity to contest the tax demand, these impugned orders are unsustainable. The impugned orders dated 16.10.2023 are quashed and these matters are remanded for reconsideration. The petitioner is permitted to submit a reply to the respective show cause notice within a period of 15 days from the date of receipt of a copy of this order. Petition disposed off by way of remand.
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2024 (4) TMI 279
Retrospective cancellation of GST registration of petitioner - neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation - violation of principles of natural justice - HELD THAT:- The Show Cause Notice and the impugned order are bereft of any details accordingly the same cannot be sustained and neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation - Further, the said Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, the petitioner had no opportunity to even object to the retrospective cancellation of the registration. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention is required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The impugned order dated 14.02.2023 does not qualify as an order of cancellation of registration. On one hand, it states that the registration is liable to be cancelled and on the other, in the column at the bottom there are no dues stated to be due against the petitioner and the table shows nil demand - petition disposed off.
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2024 (4) TMI 278
Validity of assessment order - absence of three-month gap between the SCN and order - Attachment of bank accounts of petitioner - reasonable opportunity of hearing was provided or not - HELD THAT:- The impugned order reveals that the petitioner was provided opportunities by issuing notice in Form ASMT 10 and show cause notice in Form GST DRC-01. However, it is also clear that the petitioner did not participate in proceedings. In these circumstances, albeit by putting the petitioner on terms, the petitioner should be provided an opportunity of being heard. Solely for such reason, the impugned assessment order calls for interference. The impugned assessment order dated 18.10.2023 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. Within the aforesaid period, the petitioner is also permitted to submit a reply to the show cause notice. Upon receipt thereof and upon being satisfied that 10% of the disputed tax demand was received, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months from the date of receipt of the petitioner's reply. Petition disposed off.
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2024 (4) TMI 277
Validity of assessment order - two separate proceedings were initiated in respect of the same assessment period and pertaining to the same issue - HELD THAT:- Undoubtedly, considerable confusion has been created by initiating two separate proceedings in respect of the same assessment period and in respect of the same issue. The rectification order is also unclear with regard to the reasons for rectification. Such order indicates that there is no tax liability. In these circumstances, the petitioner is entitled to another opportunity to explain the disparity between the GSTR 3B and GSTR 2A returns. However, the petitioner should be put on terms. The impugned order is quashed subject to the condition that the petitioner remits a sum of Rs. 2 lakhs towards the disputed tax demand made therein. Such remittance shall be made within a period of two weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (4) TMI 276
Validity of assessment order - no personal hearing was provided after the petitioner replied to such show cause notice and prior to the issuance of the assessment order - violation of principles of natural justice - HELD THAT:- On examining the show cause notice and the reply thereto, it is evident that the petitioner did not raise the issue relating to exemption of goods dealt with by the petitioner before the assessing officer. The assessing officer also did not take note of either Notification No.1 or Notification No.2. The impugned assessment order was issued in those facts and circumstances. While the petitioner was offered a personal hearing under show cause notice dated 14.10.2023, no personal hearing was provided after the petitioner replied to such show cause notice and prior to the issuance of the assessment order. Upon taking into account the above facts and circumstances, especially the fact that the relevant Notifications were not taken into consideration while issuing the impugned assessment order, impugned assessment order calls for interference. The impugned assessment order dated 12.12.2023 is quashed and the matter is remanded for reconsideration. The assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months from the date of receipt of a copy of this order. The writ petition is disposed off.
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2024 (4) TMI 275
Principles of natural justice - Gross violation of Section 75(4) of the Central Act - no order may have been passed during pendency of earlier writ petition filed by the petitioner pertaining to rectification of GSTR-I - Section 11 of the Goods and Services Tax (Compensation to States) Act, 2017 read with the provision of Central Goods and Services Tax Act, 2017 - HELD THAT:- In MAHAVEER TRADING COMPANY VERSUS DEPUTY COMMISSIONER STATE TAX AND ANOTHER [ 2024 (3) TMI 334 - ALLAHABAD HIGH COURT] the fact of violation of Section 75(4) of the State Act is considered. Therein, it was held that In view of the facts noted above, before any adverse order passed in an adjudication proceeding, personal hearing must be offered to the noticee. If the noticee chooses to waive that right, occasion may arise with the adjudicating authority, (in those facts), to proceed to deal with the case on merits, ex-parte. Also, another situation may exist where even after grant of such opportunity of personal hearing, the noticee fails to avail the same. Leaving such situations apart, we cannot allow a practice to arise or exist where opportunity of personal hearing may be denied to a person facing adjudication proceedings. For the same reason, the impugned order cannot be sustained. It is set set aside. The writ petition is allowed.
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2024 (4) TMI 274
Refusal to rectify the assessment order passed under Rule 142 (5) of the C.G.S.T. Rules, 2017 - denial of the Input Tax Credit (ITC) - HELD THAT:- The law declared by the Court being retrospective and it being applicable to the assessment period in question, the issue ought to have been examined with seriousness. Similarly, merely because the assessing authority may not have been aware of the Circular of the CBIC when it passed the assessment order, it may not have refused to apply its mind to that Circular upon correction application being filed. Primarily, the decision of the Court being law declared and the Circular being the binding direction to apply the law, an order passed contrary to such law or direction to apply the law would remain an order that may have experienced an error apparent on the face of record - the approach of the assessing authority is found to be erroneous. The matter is remitted to the assessing authority to pass a fresh reasoned order dealing with the rectification application filed by the petitioner and keeping in mind the observations made above. Since in the earlier decision of the Court, time has been granted to the revenue and the GSTN to make compliance by 31.03.2024, let a fresh order be passed in terms of this order by 15.04.2024. Petition disposed off by way of remand.
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2024 (4) TMI 273
Violation of principles of natural justice - challenge to assessment orders - Attachment of Bank Accounts of petitioner - HELD THAT:- The assessment orders were issued on 31.07.2023, but the petitioner has approached this Court in late February 2024 after the bank accounts of the petitioner were attached. The documents on record clearly indicate that the petitioner was negligent in not contesting the assessment proceedings until orders of attachment were issued. However, it is equally clear that the orders impugned herein were issued without hearing the petitioner. In these circumstances, solely with the view to provide an opportunity to the petitioner to contest the tax demands, interference with the impugned orders is warranted subject to putting the petitioner on terms. Hence, the impugned assessment orders are quashed and the matters are remanded for re-consideration subject to the condition that the petitioner remits 12.5% of the disputed tax demand in each assessment order within a period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within a period of three weeks from the date of receipt of a copy of this order. Petition disposed off by way of remand.
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2024 (4) TMI 272
Violation of principles of natural justice - cryptic order - excess claim Input Tax Credit - under declaration of ineligible ITC - ITC claimed from cancelled dealers - return defaulters and tax nonpayers - HELD THAT:- The observation in the impugned order dated 31.12.2023 is not sustainable for the reasons that the reply filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory nor any substantial documents were submitted by the taxpayer which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the Petitioner. The impugned order records the reply furnished by the Petitioner as incomplete, not supported by adequate documents, unclear and unsatisfactory. Proper Officer is directed to intimate to the petitioner if any details/documents, as may be required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act. Petition disposed off.
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2024 (4) TMI 271
Violation of principles of natural justice - SCN does not take into consideration the reply submitted by the Petitioner and is a cryptic order - under declaration of output tax - excess claim of ITC - ITC to be reversed on non-business transactions and exempt supplies - under declaration of ineligible ITC - ITC claimed from cancelled dealers, return defaulters and tax nonpayers - HELD THAT:- The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 20.10.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the Petitioner. The impugned order records the reply furnished by the Petitioner is not satisfactory. Proper Officer is directed to intimate to the Petitioner details/documents, as may be required to be furnished by the Petitioner. Pursuant to the intimation being given, Petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act. The challenge to Notification No. 9 of 2023 with regard to the initial extension of time is left open - Petition disposed off.
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2024 (4) TMI 270
Violation of principles of natural justice - cryptic order - excess claim Input Tax Credit - under declaration of ineligible ITC - ITC claimed from cancelled dealers - return defaulters and tax nonpayers - HELD THAT:- The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 23.10.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory nor any substantial documents were submitted by the taxpayer which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the Petitioner. The impugned order records the reply furnished by the Petitioner as not satisfactory nor duly supported by adequate documents. Proper Officer is directed to intimate to the Petitioner details/documents, as maybe required to be furnished by the Petitioner. Pursuant to the intimation being given, Petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act. Petition disposed off.
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2024 (4) TMI 269
Violation of principles of natural justice - SCN not received as the show cause notice was not uploaded on the GST portal under the heading Notices but appears to have been uploaded under the heading of Additional Notices - HELD THAT:- Perusal of the impugned order shows that the order does not specifically deal with any of the averments in the notice and appears to be an order passed in default on account of the petitioner neither filing a reply nor appearing for personal hearing. In view of the above and in view of the request of the petitioner that an opportunity be given to the petitioner to file a response to the show cause notice, the impugned order dated 15.12.2023 is set aside - Petitioner is given an opportunity of filing a reply to the show cause notice within a period of 30 days from today. Thereafter the Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing to the petitioner and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75 (3) of the Act. Petition disposed off.
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Income Tax
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2024 (4) TMI 268
Assessment u/s 153C/153A - certain pre-conditions which must be satisfied before assessment or reassessment action can be commenced in respect of the relevant assessment year - computation of the six AYs and then ten year block - Satisfaction note for initiating proceedings u/s 153C by AO of other than the searched person - whether notices for AYs 2010-11, 2011-12, 2012-13 and 2013-14 fall beyond the ambit of relevant assessment year as defined by Explanation 1 to Section 153A when computed from the date of handover of the requisite material to the AO of the other person , with the said phrase being an allusion to the non-searched entity - Interim order was passed to the effect that while the AO would have liberty to continue the reassessment proceedings, any adverse orders if passed against the petitioner, would not be given effect to until further orders of the Court. Whether the limit of INR 50 lakhs which is spoken of must be satisfied in each of the relevant assessment year or could the prescriptions of clause (a) be said to be satisfied if that monetary precondition is met on a cumulative calculation of the total asset value pertaining to the years opened up for assessment or reassessment as the case may be? - HELD THAT:- Prior to the insertion of Sections 153A, 153B, and 153C in the Chapter pertaining to procedure for assessment, an assessment in respect of search cases was governed and regulated by Chapter XIVB of the Act. The said Chapter comprising of Sections 158B to 158BH set out the procedure for assessment or reassessment proceedings being undertaken as a fallout of a search which may have been conducted. Chapter XIVB spoke of assessments being undertaken for a block period comprising of six AYs preceding the previous year in which the search may have been conducted or a requisition made. In terms of Section 158BA, the total undisclosed income relating to the block period as determined was to be taxed at rates specified in Section 113 as income of the block period irrespective of the previous year or years to which such income related. As would be manifest from a reading of the various provisions that stood placed in that Chapter, they essentially contemplated and envisaged two separate assessments being undertaken, namely, one pertaining to the block period and which would get triggered pursuant to a search or a requisition made and the second consisting of a regular assessment proceeding parallelly and unconcerned with the computation of the undisclosed income identified for the said block period. Sections 153A, 153B and 153C were introduced by virtue of Finance Act, 2003. The trinity provisions constituted a paradigm change in the manner in which search assessments were liable to be conducted. They set up a procedure clearly distinct from that which was envisaged under Chapter XIVB and were ordained to apply in respect of all searches or requisitions made after 31 May 2003. The fact that these provisions were envisaged to now govern and regulate all search assessments came to be reinforced by virtue of the introduction of Section 158BI and thus bringing the curtains down on the block period assessment procedure set out in Chapter XIVB and which had held the field till then. While Section 153A pertained to assessment in case of the person searched, it undoubtedly laid in place the assessment machinery for the non-searched person and in respect of whom the search may have led to the identification of money, bullion, jewellery or other valuable article or thing, books of account, documents belonging to that other person . Section 153C did not lay in place a separate procedure for assessment and merely postulated that assessment or reassessment, as the case may be, would have to be undertaken in accordance with the provisions of Section 153A. The next and crucial amendments which came to be made in Sections 153A, 153B and 153C were introduced by virtue of the Finance Bill, 2017 and which for the first time adopted the concept of the relevant assessment year and provided an explanation for the said term. The definition of the expression relevant assessment year also came to be introduced by virtue of this Bill. Reverting then to the principal provisions made in Section 153A and as the provision stands presently, we find that it essentially enables the AO to issue notice to the searched person requiring it to submit a return of income in respect of each AY falling within the six AYs as well as for the relevant assessment year . As noticed hereinabove, all pending assessments or reassessments pertaining to the period of six AYs or the relevant assessment year would abate in light of the Second Proviso to Section 153A(1). Identifying the point of origin for the purposes of computation of the six AYs and then ten year block and the relevant assessment year as defined by Section 153A - As is manifest from a plain reading of Section 153C, the six AYs are ordained to be those which immediately precede the AY relevant to the previous year in which the search may have been conducted or requisition made. The block of six AYs would thus have to be identified bearing in mind the AY pertaining to the FY in which the search had been conducted or requisition made. The aforesaid AY would thus constitute the anchor point for the purposes of identification of the six AYs . The statute envisages a similar process to be adopted for the purposes of computation of the relevant assessment year and where applicable constructs a block of ten AYs . The significant difference between the two however is that while the six AYs hinge upon the phrase immediately preceding the AY pertaining to the search year, the ten AYs are liable to be computed or reckoned from the end of the AY relevant to the year of search. In our considered opinion, the petitioners have correctly identified the aforesaid distinction as being crucial and determinative for the purposes of reckoning the six and the ten AY block period. Computation of the Six and Ten year Block in present batch of WPs - Viewed in that light, and while keeping the period of 01 April 2021 to 31 March 2022 as the constant, the relevant AY would be AY 2022-23. The ten AYs would have to be computed from 31 March 2023 with the said date indubitably constituting the end of the AY relevant to the previous year of search. Viewed in light of the above, it would be manifest that AY 2022-23 would form the first year of the block of ten AYs and with the maximum period of ten AYs terminating in AY 2013-14. The petitions forming part of List I pertain to AYs 2010-11, 2011-12 and 2012-13. So far as the aforenoted writ petitions are concerned, undisputedly AY 2010-11, 2011-12 and 2012-13 fall beyond the maximum period of ten AYs . Since the ten AYs , when computed from the end of AY 2022-23 would terminate upon AY 2013-14, AYs 2010-11, 2011-12 and 2012-13 would clearly fall outside the block period of ten AYs and cannot legally or justifiably be reopened under Section 153C read with Section 153A of the Act. Proceeding then to List II, we find that the petitions placed in that list pertain to cases where the hand over occurred in FYs 2022-23 and 2023-24. Consequently, the relevant AYs would be AY 2023-24 and AY 2024-25 respectively. In light of the principles enunciated by us and which explain how the period of six and ten AYs is liable to be computed, the reopening of assessments pertaining to AYs 2010-11, 2011-12, 2012-13 and 2013-14 would clearly fall beyond the ambit of ten AYs as provided under Section 153C read with Section 153A. We note in this behalf that all of the writ petitions forming part of List II pertain to the aforenoted AYs 2010-11, 2011-12, 2012-13 and 2013-14. We are therefore of the opinion that the Section 153C notices issued against the writ petitioners placed in List I and insofar as they pertain to AYs 2010-11, 2011-12 and 2012-13 would not sustain being beyond the relevant assessment year which could have possibly formed the basis for initiation of action under that provision. Similarly, the Section 153C notices impugned by the writ petitioners placed in List II and insofar as they pertain to AYs 2010-11, 2011-12, 2012-13 and 2013-14 and which have been found to fall outside the net of relevant assessment year , being the ten year block, would be liable to be set aside on this score alone. Thresholds as per the fourth proviso of section 153A - The notice u/s 153C would have to clearly reflect due application of mind by the AO in this respect and be prima facie sustainable. The formation of opinion in this respect would have to be based not on mere ipse dixit but reflective of being based on a fair assessment of the quantum of income likely to have escaped assessment as opposed to being speculative and conjectural. In case the AO intends to reopen assessment for the ten year block period, it would have to be shown that the formation of opinion in that respect is referenced to the material obtained in the search and in its possession and the same having the prospect or likelihood of escaped income being pegged at INR 50 lakhs or more. The Fourth Proviso, when interpreted along the lines suggested by us, and which commends acceptance, would strike a just and appropriate balance between the right of the respondents to initiate proceedings on the basis of material gathered in the course of the search and that of the assessee who could assail the reopening of ten assessment years if the prerequisites are not shown to have been met. We are also of the firm opinion that the figure of INR 50 lakhs is not meant to be the qualifying criteria for each of the relevant assessment year independently. Clause (a) in unambiguous terms uses the expression in aggregate in the relevant assessment years . Consequently, even if the income likely to have escaped assessment on a cumulative computation be in excess of INR 50 lakhs, the same would qualify the statutory requirements as placed by the Fourth Proviso. Issue of Finality/ Closure for AYs' 2010-11 and 2011-12 and applicability of 2017 Amending Act - Sections 153A and 153C are provisions which are triggered by material that may be fortuitously recovered in the course of a search. Both those provisions override and are ordained to operate above and beyond the normal assessment or reassessment provisions. At the time when they were originally introduced in the statute in 2003, they enabled the AO to carry out an assessment exercise stretching over six AYs . In 2017, the provisions came to be amended and the AO consequently came to conferred further power to reopen ten AYs . The power to initiate an assessment under Sections 153A and 153C is separate and distinct from the ordinary reassessment provisions comprised in Section 148. Both sets of provisions are intended to operate in separate silos. The power to assess over a larger period of ten years when introduced in the concerned provisions was made subject only to the preconditions comprised in the Fourth Proviso to Section 153A. All that the Legislature deemed appropriate to provide was to restrict the application of that power to searches conducted on or after 01 April 2017 subject of course to the fulfilment of the other stipulations placed in the provisions and the existence of the jurisdictional prerequisites. The very fact that the statute in unequivocal terms provisioned for it to be applicable to all searches conducted or requisitions made post that date is evidence of the manifest legislative intent for it applying to the relevant assessment year computed in accordance with Explanation 1 placed in Section 153A. We also bear in mind the pertinent observations of the Supreme Court in S.C. Prashar, Income Tax Officer [ 1962 (12) TMI 53 - SUPREME COURT ] when it had observed that finality which may ordinarily come to imbue an order of assessment does not result in the creation of a corresponding vested right in the assessee. In any case and for reasons aforenoted, we are of the firm opinion that the judgements rendered in the context of Sections 145-151 would not constitute a prudent basis to interpret Sections 153A and 153C insofar as the argument of closure as canvassed by the writ petitioners is concerned. We consequently find ourselves unable to hold in favour of the writ petitioners insofar as this aspect is concerned. Order:- A. Prior to the insertion of Sections 153A, 153B and 153C, an assessment in respect of search cases was regulated by Chapter XIVB of the Act, comprising of Sections 158B to 158BI and which embodied the concept of a block assessment. On a search being undertaken in terms of Section 153A, the jurisdictional AO is enabled to initiate an assessment or reassessment, as the case may be, in respect of the six AYs immediately preceding the AY relevant to the year of search as also in respect of the relevant assessment year , an expression which stands defined by Explanation 1 to Section 153A. B. Both Sections 153A and 153C embody non-obstante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 of the Act. By virtue of the 2017 Amending Act, significant amendments came to be introduced in Section 153A. The 2017 Amending Act also put in place certain prerequisite conditions which would have to inevitably be shown to be satisfied before the search assessment could stretch to the relevant assessment year . The preconditions include the prescription of income having escaped assessment and represented in the form of an asset amounting to or likely to amount to INR 50 lakhs or more in the relevant assessment year or in aggregate in the relevant assessment years . C. Section 153C, pertains to the non-searched entity and in respect of whom any material, books of accounts or documents may have been seized and were found to belong to or pertain to a person other than the searched person. As in the case of Section 153A, Section 153C was also to apply to all searches that may have been undertaken between the period 01 June 2003 to 31 March 2021. In terms of that provision, the AO stands similarly empowered to undertake and initiate an assessment in respect of a non-searched entity for the six AYs as well as for the relevant assessment year . The AYs , which would consequently be thrown open for assessment or reassessment under Section 153C follows lines pari materia with Section 153A. D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the relevant assessment year is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non- searched person. E. The reckoning of the six AYs would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs hinges upon the phrase immediately preceding the assessment year relevant to the previous year of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it from the end of the assessment year . This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology immediately preceding when it be in relation to the six year period and employing the expression from the end of the assessment year while speaking of the ten year block. G. Thresholds put in place by virtue of the Fourth Proviso to Section 153A are concerned and the argument of the writ petitioners of the condition of INR 50 lakhs being an unwavering precondition, we find ourselves unable to sustain that submission bearing in mind the indubitable fact that proceedings for search assessment commence upon the issuance of a notice and the AO at that stage having really not had the occasion to undertake a detailed or in depth examination of the evidence collected or come to a definitive opinion with respect to the total income which may have escaped assessment. The usage of the phrase likely to is indicative of the Legislature being conscious of the provisional character of the opinion that the AO may have formed at that stage. H. Even if the identified asset at that stage be quantified as less than INR 50 lakhs, the AO must for reasons to be duly recorded, be of the opinion that the ultimate computation of escaped income is likely to exceed INR 50 lakhs. The aforesaid satisfaction would have to be based on an assessment of the material gathered and the potentiality of the same being indicative of the escaped assessment exceeding INR 50 lakhs. T I. Since the precondition of INR 50 lakhs or more constitutes a sine qua non for initiating action for the extended ten year block, the aforesaid satisfaction and the reasons in support thereof would have to borne out from the Satisfaction Note itself. Precondition of INR 50 lakhs is not liable to be viewed as being the qualifying criteria for each relevant assessment year that may be thrown open and that the said condition would stand satisfied if the escaped income cumulatively or in the aggregate meets the minimum benchmark of INR 50 lakhs. J. The contention of finality and closure addressed with respect to AYs 2010-11 and 2011-12 on the basis of the statutory timeframes prescribed for assessment or reassessment and as those provisions stood prior to 01 April 2017 is misconceived, since it proceeds on the assumption that once the period of assessment or reassessment were to come to an end, it would inevitably lead to the creation of a vested right in favour of the assessee. The aforesaid argument proceeds on the incorrect premise of the reassessment provisions controlling or cabining the power conferred by Sections 153A and 153C. Acceptance of the aforesaid contention would amount to ignoring the plain and evident intent of the Legislature for Sections 153A and 153C operating above and beyond the reassessment powers. K. The submission of closure and finality also fails to bear in consideration the indubitable fact that a search is an eventuality which is inherently unpredictable, a circumstance which would defy prophecy and it consequently being wholly irrational to read the time frames pertaining to reassessment as regulating or controlling the period within which an assessment predicated on that event may be initiated. It would be wholly illogical to conceive of a connection between the statutory time frames which are otherwise embodied in the Act and search assessments. In fact the acceptance of this submission would amount to virtually erasing the non obstante clause contained in Sections 153A and 153C. L. The legislative intent of those provisions having retroactive application is clearly evidenced from the statue declaring that they would apply to all searches conducted between 31 May 2003 to 31 March 2021, and the Fourth Proviso in unambiguous terms extending the applicability of those provisions to all searches conducted post 01 April 2017 and Sections 153A and 153C superseding the provisions for reassessment, otherwise appearing in the Act. M. The argument of closure also fails to take note of the accepted distinction between the liability to tax under the Act and the right to assess and enforce a liability created pursuant thereto. As was pertinently observed, the liability to the State exists and operates de hors a consideration of time and in the absence of the statute itself imposing a time limit. The only limitations which are introduced while enacting Sections 153A and 153C was of the period within which the search had been conducted.
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2024 (4) TMI 267
TDS liability u/s 194C - 'Contract for Sale' and not a 'Works Contract' - Scope of the term Work - Seeking issue a Certificate u/s 197 r.w.s. 206(C)(9) for NIL Tax Deduction at Source (TDS) on all sales effected by the Petitioner/ Company - dealings between the buyer and seller were continuing smoothly until the Buyer started deducting TDS (Tax Deducted at Source) @ 2% under section 194 (C) on all Sale Invoices of the Petitioner Company with effect from May, 2019 - HELD THAT:- The onus of proving the transactions between the assessee and the HUL that it does not fall under section 194C completely lies with the assessee. He is required to provide sufficient documents in support of the transaction that it is not a contract under the meaning of section 194C of the Act, rather it is a contract for sale and falls under circular no.05/2010 issued by the CBDT. As per the purchase agreement entered into between the assessee and HUL, whether the materials used in manufacturing the products sold to HUL cannot be assessed and/or judged from the reading/ analysis of the agreement. The views in respect to purchase of materials can be only assessed from the verification of purchase invoices and books of accounts and confirmation from the HUL. Based on the Departmental analysis the rate of deduction has been derived and accordingly approval has been given by the competent authority. Based on the Estimated Net Profit of the assessee for the F.Y. 2020-21, the rate of deduction has been derived and accordingly approval has been given. The contention of the petitioner is not pertinent in this instant case, since the Petitioner itself submitted application in F.No.13 claiming receivable for the Hindustan I.ever as contractual receipts . Further it had not made M/s. Hindustan lever Limited as a party to this case which indicates that it primarily had no objection with M/s. Hindustan Lever Limited treating it's payment to the applicant as contractual payment . Petitioner's claim that the Hindustan lever had been wrongly deducting tax at source under section 194C, treating the contractual agreement for manufacturing of Hindustan Lever Limited products as works contract is not legally tenable since for all purposes the functioning of the applicant in respect of its transaction with Hindustan lever/ comes under the domain of works contract . Further, it is also noted that the applicant had regularly claimed amount receivable from Hindustan Lever as 'contractual amount in F.No.13 filed in earlier Financial Years including Financial Year 2019-20 and even in F. No. 13 filed for the Financial Year 2020-21. Petitioner did not adduce any documents/correspondences disputing the deduction of tax at source under section 194C of the I.T. Act by the Hindustan Lever Ltd. Evidently, the Petitioner did not consider such action by Hindustan Lever Limited as dispute suitable for agitation with Hindustan Lever Limited, unless rate of IDS for the Financial Year 2020-21 has been fixed at 1.25%.
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2024 (4) TMI 266
Validity of Reopening of assessment u/s 147 - Cash deposited in bank account - assessee has not furnished the Income Tax Return for assessment year 2010- 11 - whether the deposits made in the bank account were reflecting in the return of income or not? - HELD THAT:- Facts on record clearly reveal that the assessee, indeed, has furnished his return of income under section 139(1) of the Act for the assessment year under dispute. Thus, it is established on record that while recording the reasons for reopening of assessment, the AO has not thoroughly examined the materials available in his own record. Also further observed that the return of income for the impugned assessment year was filed by the assessee before the very same AO. Had he examined the assessment record properly certainly, he could have verified the return of income filed by the assessee and ascertained whether the deposits made in the bank account were reflecting in the return of income or not. Thus, it is evident, the Assessing Officer has reopened the assessment on wrongful assumption of facts. This, in our view, vitiates the initiation of proceedings under section 147 of the Act, which ultimately culminated in passing of the assessment order under section 147/144 of the Act. Thus proceedings initiated for reopening of assessment under section 147 of the Act are invalid. Decided in favour of assessee.
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2024 (4) TMI 265
TP Adjustment - Comparable selection - HELD THAT:- Comparable companies in dispute namely, Roto Pumps and Simmonds Marshal Ltd. are engaged in totally dissimilar business and financials of such comparable companies selected by the TPO would give wholly incongruent results owing to overwhelming product dissimilarity. AO/TPO to our mind wrongly modified transfer pricing analysis of the assessee by wrongfully including these two companies with inherent dissimilarity. The CIT(A) has set right the glaring error committed by the AO/TPO. We thus see no reason to interfere with the finding of facts arrived at by the CIT(A). The grievances raised by the Revenue as per its grounds no.1 and 2 are thus devoid of any merit. Hence, we decline to interfere. Interest earned on fixed deposits as part of operating profit while calculating Profit Level Indicator (PLI) for the purposes of comparability analysis - HELD THAT:- As assessee submits that once the comparables namely, Roto Pumps and Simmonds Marshall Ltd. are excluded for the purposes of comparability analysis and determination of ALP, nothing turns on grievances of the Revenue in present appeal emanating from alternative ground raised before the CIT(A). Revenue has not rebutted such observations on behalf of the assessee. Foreign exchange gain / loss as non-operating in nature while calculating the margins of the assessee-company as well as comparable companies for the purposes of determination of ALP - HELD THAT:- As assessee pointed out on the similar footings that once the comparative analysis with reference to Roto Pumps and Simmonds Marshall Ltd. is set right are excluded, the adjudication of such grievance raised on behalf of the Revenue becomes inconsequential due to absence of any adverse impact on the interest of the Revenue.Revenue has again not rebutted such observation. Revenue appeal dismissed.
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2024 (4) TMI 264
Addition u/s 69A - price difference existed in certain items as supplied by specified vendors/suppliers at Chakan Plant only - HELD THAT:- As per the terms of Loyalty Incentive agreement which were found and seized during the course of search, the assessee Company has already recognized income on account of loyalty incentive in its books of account for F.Y 2017-18 based on the written agreement entered into with the suppliers and after expiry of seven years from the date of agreement as has been provided of the Agreements initial period in terms of Agreements. Assessee company recognizes its revenue and expenses as per the applicable accounting Standards (IndAS) and generally accepted accounting principles and has been constantly following the same over the years. The loyalty incentive accrued to the assessee Company in AY 2018-19 has been duly recorded in the books of accounts of the assessee company. It is seen from the regular Books of Account that the loyalty incentive income was recorded on 31/03/2018. After receipt of credit notes and necessary documents from the vendors the loyalty incentive were debited to the respective vendors ledgers. Copies of credit note, ledger accounts in the books of vender and ledger account in the books of the Assessee. Thus, it is apparent and clearly evident from the perusal of above extracts of the regular books of account that the income in respect of loyalty incentive been already recognized by the assessee company in its regular books of account. Considering the above facts and circumstances, we find no reason to interfere with the findings and conclusion of the CIT(A), accordingly the Ground No. 1 2 of the Revenue is dismissed. Unexplained investment in stock/suppression u/s 69B - difference between the amount as per books and amount as per the valuation was at a uniform and absolute percentage of 44.82%, which was applied on the basis of GP of the last available unaudited published result of the Company for the half year ending on 30.09.2017 - A.O. based on the loose sheet and also based on the statement of Sh. Deepak Jain, M.D, the above addition has been made. In the Appeal filed by the Assessee - CIT(A) deleted the said addition - HELD THAT:- The statement of Sh. Deepak Jain states that, the said sheet may have been prepared for the purposes of some strategic purposes and it was only out of pressure and to buy peace of mind that he agreed to offer the differential amount to tax. The said fact has been clarified vide his letter dated 27/12/2017 filed before ADIT (Inv) Unit II, Faridabad produced. It was stated that the statement recorded during the search was an under stressed statement and the said sheet was prepared for strategic purpose for presenting before prospective investors and the copy of the said letter - CIT(A) was rightly observed that that the act of the AO in placing heavy reliance on the statement of Mr. Deepak Jain recorded during the course of search to make additions is also untenable. In fact, the statement given by Mr. Deepak Jain should have been considered by the AO in line with the seized documents and in the right perspective. We find no error or infirmity in the order of the CIT(A) in deleting the said addition - Finding no merit in Ground, we dismiss the Ground No. 3 4 of the Revenue. Under valuation of stocks by relying on the seized material and the statement of employees - HELD THAT:- Perusal of the impugned seized sheet, the difference was merely on account of valuation to an extent of absolute percentage of 44.82%, which was applied on the basis of GP of the last available unaudited published result of the Company for the half year ending on 30.09.2017. The evidence that the impugned valuation was wholly and exclusively notional in nature which was prepared for strategic purposes of presentation to prospective investors existed in the seized material itself, which were incorrectly brushed aside by the AO. It is to be noted that the said seized document contained the similar details of three Companies i.e. M/s Lumax Industries Ltd., M/s Lumax Auto Technologies Ltd. and M/s Lumax D K Auto Industries. As already discussed elaborately of the similar Companies involved to the similar Companies in the case of Lumax Industries Ltd.[supra] and held that the CIT(A) has justified in deleting the addition. Finding the parity, in the instant Appeals for the reasons mentioned thereon, we find no reason to entertain the findings and the conclusion of the CIT(A) in deleting the addition in the appeals in hand.
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2024 (4) TMI 263
Denial of exemption u/s 10(38) - AO had doubted the veracity of receipt of money in the form of sale consideration of shares of CCL International Ltd by making an addition u/s 69 - HELD THAT:- The provisions of section 69 of the Act per se could not be made applicable to the facts of the instant case as it talks about Unexplained Investments made by an assessee. The entire allegations leveled by the revenue qua this company falls flat. We find that the ld. AO had not found any material against this company CCL International Ltd. There is no allegation / statement of any party regarding the said company giving any adverse remarks on the ground that the said company s share prices were artificially manipulated in the stock market. No action has been taken by Securities Exchange Board of India (SEBI). Instead the ld. AO had merely adopted the cut paste modus operandi of some other scrips and had made vague allegations of some investigation by department and SEBI which are totally unconnected to the assessee and the scrip dealt by the assessee herein. In our considered opinion, the entire issue has been looked into by the ld. AO from the angle of suspicion by ignoring the aforesaid factual details placed on record proving the credentials of CCL International Ltd. It is trite law that suspicion howsoever strong cannot partake the character of a legal evidence. This is a classic case of the revenue ignoring their own officers scrutiny assessment orders framed on the said company CCL International Ltd duly accepting the fact that the said company is engaged in various businesses and had reported huge incomes year after year. Hence it cannot be classified as a penny stock company at all. Once it is held that this company is not a penny stock, none of the allegations leveled by the ld. AO and upheld by the ld. CIT(A) in their orders would be applicable to the said company. The ld. AR also stated that the said company is still listed in the stock exchange and is priced at Rs 30 approximately per share. We find that the coordinate bench of Delhi Tribunal in the case of Reeshu Goel [ 2019 (10) TMI 1387 - ITAT DELHI ] had categorically given a finding that the said company CCL International Ltd cannot be held to be a paper entity . We hold that the capital gains earned by the assessee on sale of shares of CCL International Ltd is genuine and accordingly the assessee would be entitled for exemption u/s 10(38) of the Act thereon. Hence the addition made u/s 69 of the Act by the ld. AO is hereby deleted. The Ground raised by the assessee are allowed. Addition u/s 68 - unsecured loans received by the assessee - HELD THAT:- With regard to loan received by the assessee from Rakesh Gupta (HUF) assessee had duly explained even the source of source of the lender to be out of sale proceeds of shares received from Trustline Securities Ltd. Hence the creditworthiness of the lender is also proved beyond reasonable doubt. Since all the three necessary ingredients of section 68 of the Act are proved by the assessee herein, no addition could be made u/s 68 of the Act in respect of loan received from Rakesh Gupta (HUF). Loan received from Ankita Garg, there is no reason for the ld. CIT(A) to merely reject this crucial document of bank statement as additional evidence which only supports the documents already placed on record by the assessee before the ld. AO viz. the ledger account of Agro Auto Grind Engineers Pvt Ltd. Hence we have no hesitation to hold that the assessee had duly proved the identity of the lender, creditworthiness of the lender and genuineness of the transactions in respect of loan received from Ankita Garg in the sum of Rs 12,20,000/- and hence the addition made u/s 68 of the Act thereon is hereby directed to be deleted. Loan received from Kapil Gupta, considering the smallness of the amount of Rs 16,000/-, we hold that the lender has got sufficient sources to advance loan of Rs 16,000/- to the assessee on 13.8.2014 through regular banking channel. Hence we have no hesitation to hold that the assessee had duly proved the identity of the lender, creditworthiness of the lender and genuineness of the transactions in respect of loan received from Kapil Gupta in the sum of Rs 16,000/- and hence the addition made u/s 68 of the Act thereon is hereby directed to be deleted. Appeal of assesee allowed.
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2024 (4) TMI 262
Assessment u/s 153C - Additions made by revenue based on search findings in group cases of M/s SRS mining and its partners - as argued satisfaction of jurisdictional AO was based on reasons to suspect rather than on reasons to believe and the satisfaction was not based on independent application of mind but was on account of borrowed satisfaction - HELD THAT:- We concur with the adjudication of Ld. CIT(A) that the additions were made merely on the basis of dumb document which would not possess any stand-alone evidentiary value since it did not contain the complete particulars of the relevant transactions and the persons involved in the said transactions. The seized material did not contain complete information to facilitate drawing of such an inference as done by Ld. AO. There was no mention as to the nature of said transaction of cash payment, the purpose of such payment and precise identity of the assessee. There was no mention in the seized material as to whether the payment was made to a particular person in his own right or it was paid to him on behalf of another person. In the absence of such essential and critical information, it could not be inferred with a reasonable degree of certainty that the payments were made to a person whose abbreviated names appeared therein and the said amount represents the income of the said persons including the assessee. An entry made in the diary or notebook by a third-person with scant details could not be used to fasten the tax liability on the persons whose abbreviated name appears therein, in the absence of any corroborative evidence. Such seized material was liable to be treated as dumb document which would not have any evidentiary value in respect of entries found therein in the absence of corroborative evidence which can provide necessary reliable basis for deciphering the nature and character of the said entries. The addition made on the basis of such a dumb document could not be sustained. We concur with these observations of Ld. CIT(A). Even if the statement of Shri K. Srinivasulu[from whose possession the said material was found and seized] was to be considered, we find that the statement of Shri K. Srinivasulu do not directly implicate the assessee. He has only maintained the diary on the instructions of partners of M/s SRS Mining and his role is nothing more. The assessee has nowhere been named in the seized material. Therefore, the impugned additions would have no legs to stand. It is trite law that no addition could be made merely on the basis of presumption, conjectures or surmises. The ratio of decision of Hon ble Supreme Court in the case of Common Cause vs. UOI [ 2017 (1) TMI 1164 - SUPREME COURT] would squarely apply to the facts of the case. The ratio of decision of Hon ble Delhi High Court in the case of CIT vs. Sant Lal [ 2020 (3) TMI 692 - DELHI HIGH COURT] would also apply wherein, in similar circumstances, it was held that the entries found form the premises of a third-party could not form the basis of addition when the revenue failed to produce any other cogent material to link the assessee to the entries. We find that similar is the situation in the present case. Therefore, the conclusions drawn by Ld. CIT(A), in this regard, could not be faulted with. Appeal of the revenue, for all the three years, stands dismissed.
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2024 (4) TMI 261
Bogus LTCG - exemption u/s 10(38) denied - addition of income from undisclosed sources u/s. 68 - Treating long term capital gain as accommodation entries and bogus entries - HELD THAT:- The assessee submitted contract note before the assessing officer, bank statement and STT was paid on the transaction. None of the evidences submitted by the assessee have been proved bogus or concocted. The Ld. assessing officer must have to specify and demonstrate with cogent evidence that transactions of purchase and sale of shares made by the assessee are bogus. In the assessee`s case nothing was brought by the assessing officer to prove that any of these evidences, as narrated above, filed by the assessee is false or untrue. We note that Hon`ble Jurisdictional High Court of Gujarat in the case of Jagat Pravinbhai Sarabhai [ 2023 (1) TMI 44 - GUJARAT HIGH COURT ] held that where AO noted that assessee had indulged in scrip of shell company and had claimed long term capital gain on sale of shares and made addition u/s 68 holding that entire transaction was bogus and in the nature of penny stock, however, since genuineness of investment in shares by assessee was substantiated by him by producing copy of transaction statement for period from 01.06.2001 to 01.10.2010 and shares were retained for more than ten years and were sold after such long time, hence investment was not bogus therefore it cannot be treated that investment was made in penny stock. The genuineness of investment in the shares by the assessee was substantiated by him by producing contract note, transaction was through recognised broker, transaction was done through banking channel on which STT was paid. The shares were held by assessee, as an Investor. Thus we delete addition made. Addition on account of commission paid @ 5% - In the assessee's case AsO added 5% - Since, we have deleted the alleged addition hence addition made by Assessing Officer does not have leg to stand, therefore it is hereby deleted. Assessee appeal allowed,.
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2024 (4) TMI 260
Addition of cash deposits u/s 68 - abnormal sales reported by the assessee during demonetized period - assessee is a partnership firm and stated to be engaged in jewellery business - On abnormal sales assessee submitted that after announcement of demonetization, there was panic amongst the public and they were finding the easiest and safe way of parking the funds and at that point of time, the only option was to purchase the jewellery. The huge rush in the jewellery shops was reported widely in the media and there was increase in volume of sales - CIT(A) deleted addition - HELD THAT:- In the present case, the assessee has duly discharged the burden of establishing the source of cash deposit and the onus was on Ld. AO to disprove the same. However, except for mere allegation and few statistics, there is nothing on record to support the conclusions drawn by AO that the assessee s own unaccounted money was introduced and accommodated under bogus customers name during the demonetization period. The demand of Ld. AO to produce CCTV recording after lapse of considerable period of time could not be said to be reasonable particularly when all the other evidences supports the case of the assessee. There is no finding by Ld. AO that any particular sales affected by the assessee exceeded threshold limit which would require collection of tax at source (TCS). Since cash generated out of sales has been credited in the books of accounts, the provisions of Sec.69A could not be invoked in the present case. The case laws as cited by Ld. CIT(A) duly supports the case of the assessee. Under these circumstances, the impugned additions have rightly been deleted by Ld. CIT(A) - Decided against revenue. Excessive interest paid on unsecured loan creditors - AO observed that the assessee paid interest of 21% to loan creditors - AO, invoking the provisions of Se.40A(2)(b) r.w.s. 37 restricted the same to 12% and disallowed a sum accordingly - CIT(A) deleted addition - HELD THAT:- Due regard has to be given to fair market value of the facilities or the legitimate needs of the business. Simply because bank loan rate is lower, the same would not entitle Ld. AO to invoke these provisions unless it was shown that the same was excessive having regards to the fair market value. As rightly held by CIT(A), taking loans from financial institutions would involve lot of procedures and documents including pledging of properties. The loans from family members would be easy to take and no collateral security would be required. Naturally, such loans are subjected to higher risk and therefore, carry higher rate of interest. The Ld. AR has also demonstrated that these loans have been offered the same rate of interest since long time and no such disallowance has been made in earlier years. AR has placed on record first appellate order of the assessee for AY 1987-88 wherein the assessee had paid interest @22% and similar disallowance was made by Ld. AO. However, CIT(A) deleted the same considering the fact that the loans were available to the assessee for larger period of time. Therefore, considering all these facts, we would concur with the adjudication of Ld. CIT(A).- Decided against revenue.
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2024 (4) TMI 259
Reopening of assessment u/s 147 or assessment u/s 153C - reassessment was made based on the materials found in the course of search conducted on third party - addition u/s 68 in respect of share capital received by the assessee from various parties/companies - HELD THAT:- We observe that identical issue came up for consideration before the coordinate bench of the Tribunal in the case of M/s MAH Impex Pvt. Ltd. [ 2024 (1) TMI 411 - ITAT DELHI] wherein the coordinate bench considered identical issue where an assessment was made u/s 143(3) r.w.s. 147 of the Act based on incriminating material found in a search conducted on S.K. Jain Group and the Tribunal sustained the order of the CIT(Appeals) in quashing the reassessment order passed u/s 143(3) r.w.s. 147 of the Act and upholding the view of the CIT(A) that once reassessment proceedings are initiated on the basis of incriminating material found in the search of third party then the provisions of section 153C of the Act are applicable which exclude the application of provisions of section 147 and 148 of the Act. Also decided in MR. NILESH BHARANI VERSUS DCIT CC - 4 (1) MUMBAI [ 2023 (3) TMI 200 - ITAT MUMBAI] assessment order passed u/s 147 of the Act on 30/12/2018 is illegal and void ab initio and same is hereby quashed, having been passed on incorrect provision, ignoring the mandatory non-obstante sections 153A / 153C of the Act, as here in this case, jurisdiction to assess and pass the assessment order was under sections 153A / 153C. Thus as in the present case the assessment was framed u/s 143(3) r.w.s. 147 of the Act based on the incriminating material found in the course of search in a third party. We hold that the assessment made u/s 143(3) r.w.s. 147 of the Act is void ab initio - Assessee appeal allowed.
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2024 (4) TMI 258
Adjustment of part income-tax refund received by the assessee against the total outstanding refund, comprising of principal/ tax and interest - quantum of interest to which the assessee would be entitled u/s 244A - with the assessee contending that the refund be adjusted first against the interest component outstanding and then against the principal/tax, while the Department s contention was to the contrary - Interest to be allowed on all outstanding after adjustment of part refund - HELD THAT:- As decided in UNION BANK OF INDIA [ 2016 (8) TMI 688 - ITAT MUMBAI] as relying on INDIA TRADE PROMOTION ORGANISATION [ 2013 (9) TMI 451 - DELHI HIGH COURT] there is no provision in law for manner of adjustment of part refund granted. And taking into account the provisions of section 140A of the Act requiring self-assessment tax paid short by the assessee to be first adjusted against interest outstanding and then against tax, and also the provisions of section 220 of the Act charging interest on the portion of outstanding demand of tax including interest, the hon ble court held that the same principle would follow if Revenue defaults in full payment of refund. Since section 244A of the Act debars payment of interest on interest refund, it held that part refund needs to be adjusted against interest first otherwise the assessing Officer/ Revenue would refund the principal amount and not pay the interest component u/s 244A for an unlimited period with impunity and without any sanction which would tantamount to allowing a premium on non-compliance with the law. Since the issue has been so decided in favour of the assessee by the Hon ble Delhi High Court and no other contrary decision of either the jurisdictional High Court or the Hon ble apex court has been brought to our notice, we have no hesitation in allowing the assesses appeal directing interest to be allowed on all outstanding after adjustment of part refund. First contention of the DR is that interest being in the nature of compensation for amount outstanding and not paid, whatever is once paid , there is no question of any interest being payable thereon - DR, we find, has simplified the issue to an extent which is not acceptable. It is not so black and white as stated by the ld. DR from what we understand of her submissions. According to ld. DR, whatever is refunded is towards the principal, and there is no question, therefore, of paying any interest on the amount refunded; but that exactly is the controversy before us, i.e. whether the amount refunded should go to be adjusted first the principal and then the interest or vice-a-versa. Therefore, this contention of the ld. DR, we find, is of no consequence and is dismissed. DR secondly contented that the provisions of Indian Contract Act be applied, according to which, as per her submissions, where neither the debtor who has the first right, nor the creditor who has the second right of intimation of usage of the refund, exercise this right, then the amount refunded is to be appropriated proportionately between the principal and interest - This contention also merits no consideration since as observed by the Hon ble Delhi High court in the case of India Trade Promotion (supra) it would result in the Revenue enjoying a premium for its non-compliance since it is not required to pay interest on interest and apportioning any amount of part refund to tax refund outstanding will be to the unjust benefit of the Revenue. Therefore, in all fairness, equity and good conscience, as held by the ITAT Mumabi Bench in the case of Union Bank of India Vs. ACIT (supra), the part refund should first go to be adjusted against the interest component and then against the principal component. The provisions of Indian Contract Act, as pointed out by the ld. DR, cannot be applied in the present situation considering the situation existing in the present case that the assessee is not entitled to interest on interest. No hesitation in acceding to the plea of the assessee that the refund granted to it be first adjusted against the interest component of the refund outstanding and thereafter against the principal component - Decided in favour of assessee.
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2024 (4) TMI 257
Late payment of employees contribution to PF u/s 43B - HELD THAT:- This issue is covered in favour of Department by the Judgment of the Hon ble Supreme Court in the case of M/s. Checkmate Services (P) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] following the same, this ground is dismissed. Disallowance on account of prior period expenses - HELD THAT:- Since the amounts involved in all these issues are very small, the same are dismissed without going into the merits of the case, for which the Ld. Counsel for the assessee has no objection. Thus, ground dismissed. Disallowance of interest as capital expenditure - AO capitalised the interest at the rate of 12% on closing balance of CWIP in the absence of exact computation provided by the assessee and this disallowance is confirmed by the Ld. CIT(A) - HELD THAT:- The Reserves and Surplus as on 31st March, 2013 are Rs. 37.04 Cr as against that of Rs. 39.68 Cr in addition to the share of Rs. 3.22 Cr. It is also observed that the addition to the capital work-in-progress is only Rs. 3.33 Cr, which is much lower than the available free funds in the form of Reserves and Surplus. The AO has worked out the disallowance based on the closing balance of CWIP at the rate of 12%. While doing so, AO has ignored the availability of own funds and wrongly assumed that the addition to CWIP was entirely out of borrowed funds. Therefore, in view of the wrong application of facts by the Ld.AO and judicial precedents on the above subject, we find no merit in the order of Ld.CIT(A) in confirming the addition under section 36(1)(iii) of the Act and we hereby delete the same. In the result, Ground of the appeal is allowed. Addition in view of the Provisions of section 50C on the Gift of Plots - Transfer of property by a Company as a gift - AO concluded how the gift by one company to other company can be genuine, considering the fact that the company is an Artificial Judicial Person and the element of natural love and affection cannot be exist and why not to invoke the provisions of section 50C of the Act for the above Gift transaction - HELD THAT:- Section 5 of the Transfer of Property (TP) Act, 1882, defines the term 'transfer of property', as an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons.TP Act, considers a company not only as a Person but literally speaking as a 'living person', a person with life. The same expression 'person' is provided in section 5 is transplanted in section 122 of the TP Act, which defines a 'gift' . There is no restriction in law against a company making Gift of its property, to another company. A transfer without consideration when claimed as a gift is always a gift. Further Section 47(iii) of the I.T. Act, specifically provides that any transfer of a capital asset under a Gift is not regarded as a transfer. Therefore the Plots transferred by the assessee company by way of executing Gift Deed in favour of M/s. Ratnakar Estate Developers Pvt. Ltd. is a valid Gift and not liable for capital gain. Consequently invoking the provisions of Section 50C of the I.T. Act, does not arise in the above transaction. Decided against revenue. Depreciation on Computer software - AO disallowed the claim stating that the assessee has only purchased license to use the software and therefore not entitled to claim depreciation at 60% - HELD THAT:- Depreciation on computer software is no more res integra as this issue is settled by the Special Bench of the Tribunal in the case of DCIT vs. Datacraft India Limited, (2010) 133 TTJ 0377 (Mum) (SB) wherein it was held that as per the meaning of expression 'computer' could not be restricted only to CPU of computer by pulling out import and output devices from ambit of 'computer'-All input and output devices, which in fact support in receipt of input and outflow of output were also part of 'computer'- When particular hardware or software was used along with computer and when their functions were integrated with computer, such hardware or software would be termed as 'computer'-Items on which Assessee claimed depreciation at rate of 60% by treating them as 'computer' were being used as input or output device of computers-Any device used along with computer and when their functions were integrated with computer came within ambit of the expression 'computer'- Assessee was entitled to avail depreciation at rate of 60% as was applicable to a 'computer'. Decided in favour of assesee.
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2024 (4) TMI 256
Revision u/s 263 - assessment order passed u/s 254/143(3) r.w.s. 92CA(3) was found to be erroneous and prejudicial to the interests of the Revenue - as argued no draft assessment order u/s 144C prior to passing the final assessment order passed - HELD THAT:- When the ld. PCIT himself has formed an opinion that the final assessment order has been passed without taking into account the Board Circular No.05/2010 dated 03.06.2010 and Circular No.09/2013 dated 19.11.2013, which has made it mandatory for the AO to pass a draft assessment order u/s 144C of the Act prior to passing the final assessment order, then, certainly, it cannot be accepted from DR that he would still press that there was no requirement of passing a draft assessment order. Thus the order passes was not in accordance with law. We are of the considered view that every circular or communication of the Board cannot be considered to be issued by the Board u/s 119 of the Act, which are meant for issuing orders, instructions and directions and same when issued u/s 119 of the Act specifically mention the fact that Board has invoked the powers of Section 119 of the Act. The explanatory notes to the provisions of Finance Act only explain the substance of the provisions of the concerned Finance Act relating to Direct taxes and may serve as external aid to interpretation of the Finance Act but cannot be considered to be issued u/s 119 of the Act, so as to say that if anything contained therein in the explanatory notes has not been followed by the assessing officer, it will lead to defiance of orders, instructions and directions issued by the Board u/s 119 of the Act. Thus the exercise of jurisdiction by invoking clause (c) of Explanation 2 of Section 263(1) of the Act, itself was bad. Then reference to any order u/s 263 of the Act is to an assessment order, which otherwise is passed in due course of law and is otherwise a valid and enforceable order and not an order which is void ab initio, being not passed in accordance with due course of law. Decided in favour of assessee.
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2024 (4) TMI 255
Taxability of Income in India - receipts from offshore supply under PGCIL Contract - benefit under the India-UK DTAA - PE in India or not? - AO formed an opinion that the Indian Associate was actively involved in soliciting business for the assessee while also taking on the Indian leg of the composite contracts, thus, concluded that there was a Dependent Agent Permanent Establishment (PE) in India - HELD THAT:- We find that the assessee had enclosed a certificate issued by HM Revenue and Customs, UK certifying that assessee is a tax resident in UK for the year 2015 - The said certificate specifically mentioned that the assessee company is a resident of UK in accordance with Article 4 of the treaty between India-UK DTAA -We find that the assessee is liable for tax for worldwide income. The assessee is a fiscal transparent entity entitled for treaty benefits as it holds valid tax residency certificate from UK Tax Authorities. Article 3(g) of India UK DTAA defines the term company to mean any body corporate or any entity which is treated as a company or body corporate for tax purposes. Admittedly, the assessee is a company. Admittedly, UK tax authorities had issued tax residency certificate for assessee clearly stating that it is a tax resident of UK even as per Article 4 of India-UK DTAA. In our considered opinion, once the assessee is a tax resident of UK as per Article 3(g) read with Article 4 of India-UK DTAA, the mechanism of tax assessment and recovery of tax will follow thereafter. The expression liable to tax mentioned in Article 4 of India UK DTAA is to be understood in the manner that whether a particular person is obligated to pay tax in that respective country or not. If it is obligated to get taxed in that country, then depending upon its income, recovery of tax would happen on its own and tax mechanism for framing tax assessment would get triggered. Hence, we hold that the assessee herein is a tax resident of UK which fact is also confirmed by the Tax Residency Certificate issued by the UK Tax authorities specifically confirming that the assessee is a tax resident even as per Article 4 of the India-UK DTAA. Having held that the assessee is a tax resident of UK, it would be automatically entitled for treaty benefits. Action of the AO in holding that GETDIL constitutes fixed place permanent establishment in India - Indian company is independently acting on its own, having its own work force, having independent receipts and had suffered taxes in India. Hence, it cannot be construed as Dependent Agent Permanent Establishment (DAPE). The Indian entity does not have any authority to conclude contract. The contract is awarded based on global bids. Hence, we hold that the entire observations made by the ld AO in this regard are totally without any basis. Our view is further fortified by the decision of National Petroleum Construction Company [ 2016 (2) TMI 47 - DELHI HIGH COURT ] wherein, it was held that given where assessee, a UAE based company, in course of carrying out contract with ONGC for installation of petroleum platforms, availed services of ASL for providing marketing information and other facilities in India, since 'ASL' was not authorized to conclude contract on assessee's behalf, paragraph 5 of article 5 of India-UAE DTAA applied to its case and, thus, it could not be regarded as Dependent Agent Permanent Establishment (DAPE) of assessee in India. Accordingly, ground No. 6 raised by the assessee is allowed. Action of AO in placing reliance on the Base Erosion and Profit Shifting (BEPS) Action Plan 7 read with Article 13 of Multilateral Instrument - We find that the application of BEPS Action Plan 7 read with Article 13 Multilateral Instrument is an issue which is still in the air and is in nascent stage as the OECD members had not come into consensus for the same. Accordingly, the same cannot be applied for the AY under consideration. Hence the Ground No. 11 raised by the assessee is allowed. Levy of interest u/s 234B and 234D - default on the part of the assessee in payment of advance tax - Assessee challenged levy of interest on the ground that the buyer has deducted tax at source and remitted to the account of the Central Govt in accordance with the proviso to section 209(1)(d) of the Act and hence there would be no liability for the assessee to pay advance tax - HELD THAT:- This issue is no longer res integra to hold that interest u/s 234B of the Act is not chargeable in the instant case. The chargeability of interest u/s 234D of the Act is consequential in nature. Chargeability of interest u/s 234A - HELD THAT:- AO is directed to verify whether the return of income was filed before the due date specified u/s 139(1) of the Act or the extended due date from time to time by the CBDT and decide the chargeability of interest u/s 234A of the Act accordingly. With regard to chargeability of interest u/s 234B of the Act, the decision rendered by us hereinabove for AY 2016-17 shall apply mutatis mutandis for this year also. Accordingly, ground raised by the assessee is allowed for statistical purposes.
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2024 (4) TMI 254
Accrual of income - Taxability of notional interest income credited by the assessee in his profit and loss account as per the requirement of Indian Accounting Standards - taxation under Real Income principle - contention of the assessee is that the income tax can be levied only on the real income and not on notional income - as submitted that the notional interest credited to the Profit and Loss account as per the requirement of Indian Accounting Standards cannot be considered as real income as there is no contractual obligation for the debtor to pay interest - CIT(A) deleted addition HELD THAT:- As decided in M/S. SHRIRAM PROPERTIES LIMITED [ 2023 (4) TMI 375 - ITAT CHENNAI] Tribunal accepted the contentions of the assessee that the above said income did not accrue to it. Thus the notional income credited to the profit and loss account cannot be said to have accrued to the assessee, when there is no contractual obligation to pay the same. In the instant case, it was not shown to us by the revenue that there existed a contractual obligation to collect interest from the debtors. Thus we hold that the notional interest income credited by the assessee to the profit and loss account as per the requirement of Indian Accounting Standard has not actually accrued to the assessee and hence the same is not liable for taxation under Real Income principle. Accordingly, we are of the view that the CIT(A) was justified in directing the Assessing Officer to exclude the same. Appeal filed by the Revenue is dismissed.
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2024 (4) TMI 253
TP Adjustment - selection of most appropriate method (MAM) - Resale Price Method or Transactional Net Margin Method - Introduction of Fresh Comparables - Removal of 3% Filter - it is also the claim that if the Transactional Net Margin Method is applied PLI of the assessee is 6.12% and PLI of the comparable is 5.41% and even otherwise no adjustment can be made. HELD THAT:- In subsequent years the assessee itself has adopted the transactional net margin method as the most appropriate method. CIT A held that resale price method is the most appropriate method but looking at the subsequent adoption of most appropriate method of transactional net margin method by the assessee itself, he computed the arm's-length price of the international transaction adopting the transactional net margin method. Therefore now the grievance of the learned assessing officer that the learned CIT A has held that the resale price method is the most appropriate method does not hold any water. Further we also do not decide ground number A of the appeal of the AO whether in such case what should be the most appropriate method as the method adopted by the learned transfer pricing officer of transactional net margin method has been upheld for deleting the addition by the learned CIT A. While computing the arm's-length price adopting the transactional net margin method, nine comparables were selected whose average PLI of operating profit/sales was 5.41% and the assessee's margin was 6.12%, the addition was deleted. DR objection is that the comparable is introduced by the assessee before theCIT A where in some of the cases very low margin of 1% and 2% is shown and therefore such low margin entities could not have been selected. However, he could not show that those entities are functionally not comparable with the assessee. May be in the comparability analysis some of the companies may have a lower margin but those have to be included in the comparability analysis if they are functionally comparable with the functions of the assessee. No infirmity in the order of the CIT A in deleting the addition of adjustment in arm's-length price of international transaction - Decided in favour of assessee.
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Customs
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2024 (4) TMI 252
Classification of imported goods - goods declared as Nylon knitted fabric Or Net fabrics - Tribunal found that the goods have been found to be not Knitted fabric but is Net fabric - imposition of redemption fine for this consignment u/s 125 of the CA, 1962 is upheld - mis-declaration was not willful with intention to evade customs duty - Penalty imposed on the appellant was also reduced - HELD THAT:- On perusal of the Office Report, it is noted that nobody has entered appearance on behalf of the appellant, despite service of notice on the appellant on discharge of the appellant s counsel. Thus, the appeal is dismissed for non-prosecution.
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2024 (4) TMI 251
Seeking clearance of the goods - High Seas Sale agreement stands cancelled - default on the part of respondent No. 6 in making payments - It is contended that the petitioner has now stepped into the shoes of respondent No. 6 and has become entitled to seek amendment of the bill of entry and/ or to file a fresh bill of entry to clear the goods - HELD THAT:- On a query made by us, Mr. Nankani has submitted that there are no transactions of the petitioner with respondent No. 6, except the present High Seas Sale which too stands cancelled. It is submitted that except for this contract, the petitioner has never dealt with respondent No. 6. Respondent No. 6 who is represented by Mr. Gohil, learned counsel states that respondent No. 6 has no objection whatsoever for the goods being cleared by the petitioner. Thus, in our opinion, considering the request which is made by the petitioner by its letter dated 15 December, 2023 addressed to the Deputy Commissioner of Customs (Imports), JNCH, Nhava Sheva (supra), it is appropriate that the application of the petitioner for clearance of the goods either by permitting amendment of bill of entry or by filing of a fresh bill of entry as the law may permit, needs to be decided by the concerned designated officer. We accordingly permit the petitioner to place on record of the designated Customs Officer, a proper application raising all contentions as may be permissible in law which the petitioner state would be filed within two days from today. The petition stands disposed of in the aforesaid terms.
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2024 (4) TMI 250
Maintainability of petition - alternative remedy of appeal - Validity Of show-cause notice - No opportunity of personal hearing - violation of principles of natural justice - diverting cut and polished diamonds - without following the procedure prescribed under the Special Economic Zone Act, 2005 ( the SEZ Act ) - HELD THAT:- We are of the opinion that though the petition is maintainable under Article 226 of the Constitution of India, the petitioner is unable to point out as to whether the notices were served upon him by the respondent-Assessing Officer. In the impugned order, it is categorically mentioned that though the notices were served upon the petitioner, the petitioner neither attended the hearing nor submitted any request letter for adjournments on four occasions whereas, in the memo of the petition, it is stated that no such notices were served upon the petitioner. Thus, it involves disputed questions of facts as to whether the notices were served upon the petitioner or not by the respondent-authority which can be considered by the appellate authority while examining the record. We would therefore not like to entertain this petition on ground of not providing opportunity of hearing to the petitioner. We therefore do not entertain this petition as there is alternative efficacious remedy available under the provisions of the Customs Act to be availed by the petitioner and accordingly, without entering into the merits of the matter, the petitioner is relegated to avail such alternative efficacious remedy with a liberty to raise all the contentions which are raised in this petition before the appellate authority. We make is clear that the time spent by the petitioner before this Court in pursuing this petition may be considered as bona fide by the appellate authority in case of any delay which may be considered by the appellate authority to condone the delay, if any, in preferring the appeal by the petitioner within a reasonable time from today. The petition is accordingly dismissed.
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2024 (4) TMI 249
Import of Baggage - opportunity to declare the contents of their baggage to the proper officer - Challenged the Order passed for Confiscation and detention - Period of limitation for presenting statutory appeals - HELD THAT: - On examining the orders impugned herein, I find that the dispute turns on questions of fact. Moreover, it appears that the detentions and confiscation challenged herein relate to action taken against a group of about 148 persons. Therefore, it is appropriate that the respective petitioner files a statutory appeal. Since these writ petitions were filed within the period of limitation, the time taken in prosecuting these petitions is liable to be excluded for purposes of computing the period of limitation for presenting statutory appeals. Consequently, these writ petitions are disposed of by granting leave to the respective petitioner to present statutory appeals. If such appeals are presented within a maximum period of ten days from the date of receipt of a copy of this order, the appellate authority is directed to receive and dispose of such appeals on merits without going into the question of limitation. This order will not stand in the way of the respondents proceeding with adjudication pursuant to the detention orders.
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2024 (4) TMI 248
Valuation of export goods on which duty has to be paid - iron ores - modification of transaction value between the buyer and seller based on the test report of the chemical examiner of CRCL when the price should be finalised as per the test report of CIQ as per the agreement between the buyer and seller - inclusion of additional consideration for sale. HELD THAT:- The value for the purpose of determining the duty is the transaction value subject to four conditions (a) that the sale is for delivery at the time and place of exportation; (b) buyer and seller are not related; (c) price is the sole consideration for sale; and (d) subject to other conditions which may be specified by the Rules. The proviso to this section indicates that in case of imported goods, the value of commissions and few other charges have to be included. However, it does not provide for inclusion of commissions in case of exports. The Customs Export Valuation Rules do not provide for addition of any amount to the negotiated price (Transaction Value) or any reduction from it where the parties are not related and the price is at arm s length. If the transaction value has to be determined as per the contract based on the test report of CIQ, it has to be determined so. The test report by CRCL is not relevant to determining the transaction value. It is not for the department to substitute the requirement of test report of CIQ in the contract between the importer and its overseas supplier with the test report of CRCL. The export price is the transaction value subject to adjustment as per the clause in the contract between the parties. It is also found that it is not the case of Revenue that the appellant received anything over and above the transaction value or the amount mentioned in the final invoice on the basis of test report i.e. certification of quantity and quality at the discharge port, on the basis of report of the mutually agreed laboratory. Reduction of US$16 per MT from the invoice - HELD THAT:- Any compensation paid for any purpose under some other contracts, needless to say, cannot modify the transaction value in this contract. Therefore, the transaction value must be determined without deducting this amount of US$ 16 per MT. Since this compensation has been deducted from the invoice value, it must be added to determine the correct FOB value of the goods. The impugned order is accordingly modified to the extent that the FOB value shall be the transaction value as finalised between the appellant and its overseas buyer but without deducting the amount of US$ 16 per MT which was the compensation paid by the appellant with respect to some past transactions. Since the invoices have deducted this amount, the same needs to be added so that the correct FOB value is determined - There is no case to impose any penalty on the appellant and accordingly all penalties are set aside. The matter is remanded to the Adjudicating Authority for the limited purpose of arithmetical calculation of the duty - appeal allowed.
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2024 (4) TMI 247
Refund claim - Special Additional Duty paid at the time of import of goods under Notification No.102/2007 - Original authorities rejected the refund claim observing that the description of the goods in the bill of entry does not match with the description of goods in the sales invoices - HELD THAT:- The appellant has described the goods as MS Plates and HR Sheets for the reason that they are known as such in the market on the basis of variation in thickness. I am convinced with the explanation put forward for the variation in the description and is satisfactory. Further, the appellant had produced Chartered Accountant certificate as well as the correlation statements along with the refund claim. In such circumstances the original authority ought not to have denied the refund claim. The Tribunal in the case of Ganesha Impex Vs. Commissioner of Customs (Sea-Import),[ 2019 (3) TMI 1949 - CESTAT CHENNAI] had occasion to consider a similar issue. The Tribunal held that when the documents established that of the goods imported co-related with the invoices, the refund should not be denied on some minor variation in describing the goods. The Hon ble jurisdiction of High Court in the case of P.P. Products Ltd., Vs. Commissioner of Customs, [ 2019 (5) TMI 830 - MADRAS HIGH COURT] held that when the CA certificate is produced the same cannot be brushed aside without proper reason. In the present case the adjudicating authority has not put forward any finding as to disregard the CA certificate. In such circumstances the refund claim ought to be allowed. I hold that the appellant is eligible for refund. The impugned order is set aside. The appeal is allowed with consequential relief if any.
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2024 (4) TMI 246
Valuation of goods transacted between related persons - Royalty addition - Addition to assessable value to the extent of 5% of net sale price of precipitated calcium carbonate - remand jurisdiction of appellate authority to issue directions to proper officer - No notice issued u/s 28 of Customs Act, 1962 - cross-border trade transaction - HELD THAT:- From the absence of show cause notice, as well as submission on behalf of appellant, it is again clear that such imports that are subject to Special Valuation Branch (SVB) oversight are, invariably, kept provisional for finalization to be undertaken upon completion of ascertainment by Special Valuation Branch (SVB). Therefore, at this stage, the quantification ordered by the first appellate authority pertains to finalization under section 18 of Customs Act, 1962 devolving on proper officer that Deputy Commissioner, Special Valuation Branch (SVB) is not. As appeal has not been directed before first appellate authority against order of such proper officer , it transgresses the remand jurisdiction of such appellate authority to issue directions to proper officer who has yet to complete the process of finalization. Direction to the ostensible original authority is an exercise in futility and direction to the proper officer , and the statutorily empowered potential original authority , is beyond appellate jurisdiction of Commissioner of Customs (Appeals) before whom the order impugned did not challenge a yet to occur assessment. In these circumstances, it behoves us to focus on the competence of the reviewing authority to have gone before the first appellate authority against the opinion of the Deputy Commissioner, Special Valuation Branch (SVB) that there was no need to add the royalty to assessable value. Section 128 of Customs Act, 1962 stands on two limbs decision being that of officer below the rank of Commissioner of Customs and from the decision causing a grievance. The author of the order impugned before the first appellate authority is certainly subordinate to Commissioner of Customs. However, as pointed out above, that opinion was not even persuasively binding on the proper officer who, as assessing authority and obliged to issue speaking order, is required to arrive at assessment uninfluenced, even if not uninformed, by external sources. Therefore, there was no cause for grievance to initiate appellate remedies. Such opportunity would have presented itself after finalization. Implicit in acknowledgement of appellate remedy against advisory of Special Valuation Branch (SVB) is another round of appeal through the first appellate authority on the same goods and facts which does not sit well with the principle of comety of courts. The appeal before the first appellate authority was, thus, premature. This aspect of disposal of the appeal within the scheme of Customs Act, 1962 and the role of Deputy Commissioner, Special Valuation Branch (SVB) within it was not evaluated by the Commissioner of Customs (Appeals). Thus, we set aside the impugned order and restore the appeal to first appellate authority to dispose off the pleas of the appellant- Deputy Commissioner in accordance with the scheme of Customs Act, 1962. Appeal is, thus, allowed by way of remand.
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2024 (4) TMI 245
Revocation of CHA License - forfeiture of security deposit - Penalty - violation of Regulations 11(a), 11(b), 11(d), 11(n) 11(j) of the Custom Broker Licensing Regulations, 2013 - appellant failed to verify the address at which the two clients operated and that requirement of know your customer (KYC) was entirely different - HELD THAT:- The appellant had, admittedly, filed bills of entry for twenty consignments of diamonds , valued at ₹ 66.15 crores and ₹ 31.5 crores, imported by the two holders of import export code (IEC) that, after clearance, were handed over and, doubtlessly, against authorization of the importers to a service provider. Investigation revealed that these were actually transacted by other persons and it is on record that the appellant had no connection with them. In the course of investigation, it was ascertained that multiple remittances were made overseas against the same goods indicating collusion among the several entities and persons. It is not the case of the respondent-Commissioner that the appellant had anything to do with the transactions beyond that of filing of bills of entry and coordinating clearance thereafter. Nonetheless, in the belief that obligations under the Customs Broker Licencing Regulations, 2013 had been breached, impugned proceedings got underway. The facts, as elicited during the inquiry, persuaded dropping of the charges pertaining to handling of imports without authorization from client and of failure to advise client to comply with statutory prescriptions. The appellant had, no doubt, undertaken know your customer (KYC) exercise which did not reveal anything untoward. However, the client claimed to be in the diamond trade which has its own peculiarities of confidentiality, of capital adequacy and of operating proximity and equations among its practitioners; all of these warranted a closer look at the antecedents of the client. It is not the defence of the appellant that the client was in the diamond trade and it is on lending of name , with its consequences, that the impugned transactions came in for adverse notice. It is that lack of diligence which was of significance to the finding in the inquiry report. The appellant has been found to have failed to verify antecedents and identity of client as well as that operations are carried out at the declared address. This is, probably, the one obligation that specifies action in the context of easily comprehended stipulation and against which failure to undertake those can be ascertained. It is on record that the appellant had not carried out any ascertainment of the premises of the client either directly or through another. That is the most fundamental of obligations and breach thereof jeopardizes the reliability of the broker. Thus, the charge sustains against the appellant. However, the consequence, insofar as offence under customs law is concerned, is far from clear in the record of proceedings as to immediately conclude that all three detriments in Customs Broker Licencing Regulations, 2013 must necessarily follow. The only breach that survives does not merit such harsh retribution. We, therefore, set aside the revocation of licence under regulation 18 of Customs Broker Licencing Regulations, 2013 and the penalty imposed under regulation 22 of Customs Broker Licencing Regulations, 2013. The forfeiture of deposit is upheld and, should the appellant, choose to operate the licence, the same shall be subject to fresh deposit being made towards security as prescribed in Customs Broker Licencing Regulations, 2018. Accordingly, the appeal is disposed off on these terms.
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2024 (4) TMI 244
Levy of penalty u/s 112(a) of the Customs Act - alleging that the appellants have not checked the antecedents before undertaking the responsibility of a CHA for the consignments - Misdeclaration of goods - HELD THAT:- On examination of the goods, it was found that the goods had been mis-declared. However, no allegation against the appellants has been made during the course of investigation to the effect that the appellants were having the details of the goods imported by the importer or having any connivance with the importer for mis-declaration of goods in question. Moreover, for the allegation with regard to checking of the antecedents of the importer or its representative, proceedings are warranted under the Customs Brokers Licensing Regulations, which proceedings against the appellant have already been dropped. Thus, no penalty is imposable on the appellants as held by this Tribunal in the case of Chandan Chatterjee v. Commissioner of Customs (Port),[ 2024 (1) TMI 682 - CESTAT KOLKATA] . In view of this, we drop the penalty imposed on the appellants - In the result, the impugned order is set aside and the appeals are allowed with consequential relief, if any.
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2024 (4) TMI 243
Valuation of imported goods - demand of differential customs duty due to reassessment of the value of goods - recovery of interest - Penalty - Whether the expenditure incurred by the appellant towards advertising, marketing and promotion of the goods imported by the appellant under the Agreements with the foreign suppliers is liable to be added to the transaction value of the imported goods - HELD THAT:- In the present case, it clearly transpires from the Agreements entered into between the appellant and the foreign suppliers that the foreign suppliers had granted to the appellant the right to import the products for distribution and sale in India but the appellant had to incur, on its own account, the expenditure towards advertising, marketing and promotion of the products. In some of the Agreements the appellant was required to use its best efforts to promote and develop the distribution and sale of the products and the Agreement could be terminated at the discretion of the foreign supplier if the appellant did not spend the amount indicated in the Agreement. Note to rule 3(2)(b) of the Interpretation Notes also needs to be remembered. Though it provides that if the sale or price is subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued, the transaction value shall not be acceptable for customs purposes but it also provides that if the buyer undertakes on his own account, even though by agreement with the seller, activities relating to the marketing of the imported goods, the value of these activities is not part of the value of imported goods nor shall such activities result in rejection of the transaction value. It cannot, therefore, be urged that the appellant incurred expenditure to satisfy obligation of foreign sellers. Thus, the first requirement of rule 10(1)(e) of the 2007 Valuation Rules is not satisfied. The second requirement of rule 10(1)(e) is that payment should be made by the buyer to a third party to satisfy an obligation of the seller towards the third party. A Division Bench of the Tribunal in Adidas India [ 2020 (3) TMI 324 - CESTAT NEW DELHI] examined almost similar terms of the Agreements and held that the requirements of rule 10(1)(e) of the 2007 Valuation Rules are not satisfied. Thus, the second criterion is also not satisfied. In this view of the matter, the reasoning of the Principal Commissioner in the impugned order that since the appellant was required and obliged to undertake marketing/ advertising in terms of the Agreements with the foreign suppliers, the price of the imported goods cannot be said to be the sole consideration within the meaning of section 14 of the Customs Act and, therefore, the transaction value is liable to be rejected under rule 12 of the 2007 Valuation Rules is clearly contrary to the categorical stipulation in the Interpretative Notes to rule 3 that activities relating to marketing of the imported goods undertaken by the buyer, even though under agreement with the seller, cannot be considered to be additional consideration and cannot form part of the value of the imported goods, nor shall such activities result in rejection of the transaction value. The impugned order dated 29.05.2020 passed by the Principal Commissioner, therefore, cannot be sustained and is set aside. The appeal is, accordingly, allowed with consequential relief(s).
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Corporate Laws
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2024 (4) TMI 242
Seeking conversion from an unlimited liability company to a limited liability company - Section 18 of the Companies Act, 2013 - whether the Appellant s application filed on 21st October, 2014 before the ROC will be governed by the conditions in the statutory provision of Section 18 of the Act as it existed on the said date or the additional criteria provided in Rule 37, which was inserted subsequently by the Legislature w.e.f. 27th July, 2016, would also be applicable to the said application? - HELD THAT:- The submissions of the Appellant cannot be accepted and it is opined that the Appellant did not acquire any vested right of conversion upon filing the application under Section 18 of the Act on 21st October, 2014 with the ROC. It is well settled by Supreme Court that the relevant law for grant of approval of an application would be the date on which the approval is granted. Reference made to the judgment of Supreme Court in USMAN GANI J. KHATRI OF BOMBAY AND ORS VERSUS CANTONMENT BOARD AND ORS [ 1992 (5) TMI 205 - SUPREME COURT] where it has been held that At present the statutory bye-laws published on April 30, 1988 are in force and the fresh building plans to be submitted by the petitioners, if any, shall now be governed by these bye-laws and not by any other bye-laws or schemes which are no longer in force now. Further the Supreme Court in RAMESH PRASAD VERMA VERSUS THE STATE OF BIHAR AND ORS [ 2009 (8) TMI 1291 - PATNA HIGH COURT] has held that a legislation, if clarificatory, declaratory or explanatory in nature and purport will have retrospective operation especially in the absence of any indication to the contrary. The contention of the Appellant that the ROC by insisting on NOCs from the creditors, lenders and stakeholders has sought to render Section 18(3) otiose is without any merit. The requirement of NOC has been statutorily incorporated in Rule 37 and the said Rule also contemplates issuance of notice by the applicant-company to each of its creditors inviting objections, if any, to the proposed conversion. The Appellant has not challenged the vires of the Rule 37 and, in fact, consciously abandoned the challenge initially made to the said Rule. Thus, with the said Rule existing on the statute book, the objection of the ROC with respect to the non-circulation of this application of conversion to the creditors, lenders and stakeholders of the applicant-company is not arbitrary and is in conformity with Rule 37. The contention of the Appellant that ROC in the impugned decision erred in referring to Section 366 of the Act read with Rules 3 and 4 of the Companies (Authorised to Register) Rules, 2014 as it is not attracted to an application filed under Section 18 of the Act, does not persuade to set aside the impugned decision. The ROC has recorded in the impugned order that it adverted to the principles laid down in Section 366 and the Rules, 2014 as the applicant herein was objecting to the newly inserted Rule 37 and as per ROC, the Rules of 2014 also embodied the same spirit of the statute. There are no merit in the present appeal and the same is dismissed.
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Insolvency & Bankruptcy
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2024 (4) TMI 241
Constitutional Validity of Circular issued by issued by the Insolvency and Bankruptcy Board of India (IBBI). - clarification of usage of certain terms contained in Regulation 4(2)(b) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - illegal amendment in the LP Regulations by the circular - computation of the liquidator s fee before and after the 2019 Amendments. The challenge is primarily on the ground that in the garb of clarifying certain terms contained in Regulation 4(2)(b), the IBBI has effectively, by a back-door method, amended the LP Regulations by stipulating new substantial requirements, and that too, with retrospective effect. Whether the Impugned Circular simply clarifies Regulation 4(2)(b), or whether it effects substantive amendments to the term in the garb of clarification? HELD THAT:- The Impugned Circular positively introduces a new position that an act of court would indeed prejudice the liquidator, unless he gets the court to confirm his fee computation, on a case to case basis. The liquidator may even have to approach different courts since according to Paragraph 2.5, only the forum that stayed a disposal of an asset can confirm if the suspension of the time can be availed of, and that too only for such asset as that court protected from being liquidated. Such a detailed and complicated matrix of regulatory requirements cannot constitute a guideline that merely clarifies the existing regulatory framework. The only way to make regulations towards this end would be to do so under Section 240 and comply with the Law-Making Regulations. That not having been done, Paragraph 2.5 of the Impugned Circular is indeed a substantive amendment masquerading as a clarification. There are no hesitation in striking it down as being ultra vires the LP Regulations and the IBC. A close review of the material on record also reveals that the IBBI has indeed issued a Discussion Paper on 20th October, 2023 on Strengthening the Liquidation Process and has proposed amendments to the LP Regulations in this regard. In the proposed amendment, it appears that the IBBI s desire is to empower the Stakeholders Committee to approve an adjustment to the liquidator s fees, on account of court-inflicted delays. Even while the standard sought to be introduced in the garb of clarification is different from the standard under active consideration for an amendment to the LP Regulations, what is clear is that Paragraph 2.5 can simply not be upheld as a clarification. Paragraph 2.1 and Paragraph 2.5 of the Impugned Circular are hereby struck down as being ultra vires the LP Regulations and the IBC. They introduce substantive amendments to statutory legislation even while purporting to be mere clarifications. The changes they seek to bring in are not even covered by the IBC and the LP Regulations. Due process by way of compliance with the statutory requirements of the Law-Making Regulations is missing. Therefore, in the course of conducting the quasi-judicial proceedings, the IBBI is prohibited from placing any reliance on Paragraph 2.1 and Paragraph 2.5 of the Impugned Circular in determining if any fee charged by the Petitioner in the liquidation assignments in question, was in excess of permissible thresholds. The IBBI must discharge the First Show Cause Notice since it evidently has been subsumed by the Second Show Cause Notice, in substance and content. Multiplicity of proceedings on the same cause of action before the same regulator against the same noticee on the same facts is inappropriate. The IBBI must issue a written communication reconciling the coverage of the two show cause notices and in any case dispose of the proceedings as expeditiously as possible and in accordance with law. Petition disposed off.
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2024 (4) TMI 240
Condonation of delay in filing an appeal - limitation in preferring an appeal - Rejection of Application of Claim, raised by the Appellant - HELD THAT:- The Learned Counsel for the Appellant in sub para II of Para 3 of the Delay Condonation Application has given unjustifiable reason which were not even prevalent at the time when the period of limitation for preferring an appeal was actually subsisting. That the counsel for the Appellant has endeavoured to argue certain grounds in support of the delay condonation application which are not even pleaded in the principal delay condonation application and if this be the situation his plea which is not taken and pleaded in defence for seeking condonation of delay cannot be considered by this Tribunal, since being beyond the pleadings. It would be too hypothetical to accept the arguments extended by the Learned Counsel for the Appellant that he had to seek legal advice and that his placement in Bengaluru had created an embargo in filing an Appeal in time. In fact, due to technological development, these two reasons seems to be without any plausible justification, which could be acceptable by this Tribunal to condone the delay of 28 days which has chanced in filing an appeal, hence as such the period is not extendable under the 2nd proviso of Section 61. Appeal dismissed.
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2024 (4) TMI 239
Admission of Section 7 application - time limitation - arbitral award dated 04.02.2020 needs to be ignored in proceedings under Section 7 or not, objection of the Corporate Debtor being pending before the Delhi High Court in the proceeding for execution of the arbitral award - existence of debt and default or not. Whether the application under Section 7 filed by the Appellant on 31.01.2022 was barred by time? - HELD THAT:- Section 3 of the Limitation Act casts an obligation on a Court to consider as to whether application filed is within limitation as prescribed by the Limitation Act, 1963. It is also well settled that even if no defence is raised by the Defendant regarding plea of limitation, the question of limitation has to be looked into and decided by the Court - thus the time being even if 04.02.2020 is not taken as date of default, proceed to examine as to whether application is filed within the limitation. As noted above, the amount was to be paid in 58 instalments. 1st instalment is to be paid in 15.08.2017 and last on 15.05.2022. It is pleaded by the Corporate Debtor itself that it has paid only Rs.40 Lakhs which at best will cover first three instalments. Thus, even if it is taken that the default committed on 15.11.2017, the application filed on 31.01.2022 is well within time - When the entire loan was recalled, the cause of action arose to initiate proceeding and application filed on 31.01.2022 from loan recall notice is also well within time. Thus, from any view of the matter, the application filed by the Financial Creditor on 31.01.2022 was well within time and the Adjudicating Authority did not commit any error in rejecting the submission of the Appellant that the Application is barred by time. Whether the arbitral award dated 04.02.2020 needs to be ignored in proceedings under Section 7, the objection of the Corporate Debtor being pending before the Delhi High Court in the proceeding for execution of the arbitral award? - HELD THAT:- The challenge to the arbitral award dated is 04.02.2020 pending before the Delhi High Court with regard to which objections have already been filed by the Corporate Debtor - it is not necessary to express any opinion with regard to rival contentions of the parties in relation to award dated 04.02.2020. Whether debt and default was proved in the proceedings under Section 7? - Whether the Adjudicating Authority committed error in admitting Section 7 application? - HELD THAT:- The debt and default is fully established and even if the arbitral award dated 04.02.2020 is not taken into consideration the debt and default is proved on the part of the Corporate Debtor. We may refer to the judgment of the Hon ble Supreme Court in M. Suresh Kumar Reddy vs. Canara Bank and Ors. [ 2023 (5) TMI 570 - SUPREME COURT] where the Hon ble Supreme Court after noticing the earlier judgments had held that when debt and default is proved, the Adjudicating Authority has to admit the application unless it is incomplete - it is found that there was sufficient materials brought by the financial creditor on the record to prove the debt and default, even if the arbitral award is disregarded. The Adjudicating Authority did not commit any error in admitting Section 7 application. Debt and default having been proved on the part of the Corporate Debtor, there are no error in the order passed by the Adjudicating Authority admitting Section 7 application. There is no merit in the appeal - appeal dismissed.
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2024 (4) TMI 238
CIRP - denial of rights to be heard to protect the Financial Interest of Hundreds of Home Buyers / Allottees - Applicability of Threshold - Requirement of joint filing by either 100 allottees or 10% of the total number of allottees of the same real estate project, whichever is less for application u/s 7 - Violation of principles of natural justice - denial of rights to be heard to protect the Financial Interest of Hundreds of Home Buyers / Allottees - appellant submits that the impugned order holding that the Section 7 Petition, filed under I B Code, 2016, is not maintainable, since the Allottees, belong to different Projects, and the Impugned Order, was passed without, considering the facts, placed on record - wrongful interpretation of explanation (ii) of Section 5 (8) of the I B Code, 2016. HELD THAT:- In the instant case, the Appellant / Petitioner, takes a stand that in the Order dated 09.05.2022 of the National Consumer Disputes Redressal Commission (vide Consumer Complaint No. 1951 of 2016), the plea of the Respondent / Corporate Debtor ascribing reasons, in regard to the delay, relating to the time, when the Respondent / Corporate Debtor, accepted the bookings from the Allottees, and regularly raised demands and accepted amounts, from the Allottees, were rejected, a clear adverse circumstance, against the Respondent / Corporate Debtor, all the more, when the outbreak of Pandemic Covid-19, came after a decade. The emphatic stand of the Respondent / Corporate Debtor is that Sushant Megapolis Township, comprise of Multiple Commercial Real Estate Projects, all the sub-projects are independent of each other, and were being developed and sold as separate Projects, within the Township. Moreover, they were Registered, under RERA Act, 2016, with different RERA Registration Numbers. As a matter of fact, each Project, is further divided into Multiple phases, with different complete Schedules - Indeed, as per definition Section 5(8)(f) explanation (ii) of the I B Code, 2016, the expressions 'allottee' and 'real estate project' shall have the meanings respectively assigned to them in clauses (d) and (zn) of Section 2 of the Real Estate (Regulation and Development) Act, 2016, (16 of 2016). Section 7 of the I B Code, 2016, provides for an initiation of Corporate Insolvency Resolution Process, by Financial Creditor. The two essential features of an Admission of an Application, under Section 7 of the Code are (a) Existence of Debt and (b) Default - In fact, an Adjudicating Authority / Tribunal s jurisdiction is restricted to determine, whether the Application is complete and whether, there is any Debt and Default, as per decision in Dr. H.N. Nagaraj vs. Edelweiss Asset Reconstruction Company Ltd. [ 2018 (7) TMI 968 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] . The proceedings, under the I B Code, 2016, are not a Litigation, to be decided by a Court of Law. It is not the Property, which is at the base of the Code. It is the Liquidity, which is the foundation for triggering the Corporate Insolvency Resolution Process. In the instant case, the Respondent / Corporate Debtor, had executed, at least Three kinds of Agreements, with the Petitioners (before the Adjudicating Authority / Tribunal) (a) Plot Allottee Agreement (b) Builtup Unit Allottee Agreement and (c) Apartment Allottee Agreement - One cannot ignore an important fact, that the second proviso to Section 7(1) of the I B Code, 2016, mentions that for financial creditors , who are allottees , under a real estate project , an application, for initiating Corporate Insolvency Resolution Process, against the Corporate Debtor, shall be filed jointly by not less than one hundred of such allottees, under the same real estate project or not less than ten percent of the total number of such allottees under the same real estate project, whichever is less. In the present case, the Appellant / Petitioner and other Petitioners, who filed CP (IB) No. 596 (PB) / 2021, under Section 7 of the I B Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, before the Adjudicating Authority / Tribunal, for initiating Corporate Insolvency Resolution Process, against the Respondent / Corporate Debtor, are from different numerous projects, and they have not established their case, as Creditors of a class, concerning any particular project, registered with The Real Estate (Regulation Development) Act, 2016 (16 of 2016), with a view to fulfil the requirement of 10% or 100 Allottees , as envisaged, as per Section 7 (1) of the I B Code, 2016. This Tribunal, on a careful consideration of divergent contentions, advanced on either side, considering the facts and circumstances of the instant case, comes to an irresistible and consequent conclusion that the CP (IB) No. 596 (PB) / 2021, filed by the Appellant / Petitioner and other Petitioners, before the Adjudicating Authority / NCLT, Principal Bench, New Delhi, is prima facie not maintainable in the eye of Law. Further, this Tribunal, on going through the Impugned Order, dated 06.01.2023 in CP (IB) No. 596 (PB) / 2021, passed by the Adjudicating Authority / Tribunal, the views expressed in dismissing the CP (IB) No. 596 (PB) / 2021, is free from any legal flaws. Appeal dismissed.
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FEMA
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2024 (4) TMI 237
Adjudicating Authority under FEMA - Case of the appellants that the show cause notice having been issued by the Special Director, Directorate of Enforcement, he is the Adjudicating Authority and the further proceedings are required to be conducted by him alone and not by the Additional Director - Single Judge dismissed the writ petitions holding that the case was transferred from the Special Director to the Additional Director in view of the enhancement of pecuniary jurisdiction and the same is well within the provisions of the Act of 1999. HELD THAT:- The persona designata is a person who is described as an individual, as opposed to a person ascertained as a member of a class. At the first instance, the show cause notice was issued by the Adjudicating Authority. Adjudicating Authority referred to in Rule 4 of the Rules of 2000 does not refer to a designation of an authority or a person. Rules of 2000 do not suggest that the Adjudicating Authority shall only be the Special Director or the Principal Special Director or the Additional Director. It only says the Adjudicating Authority and, as such, by no stretch of imagination it can be inferred that the Adjudicating Authority is a persona designata . Adjudicating Authorities exercise their jurisdictions and power according to the pecuniary limits as enumerated in the notification appointing them as Adjudicating Authorities. The notification issued by the Central Government empowers the Adjudicating Authority to decide the case within his/her pecuniary limits. Albeit the notice is issued by the Special Director, who at the relevant and material time was the Adjudicating Authority, subsequently, because of the fresh notification issued on 27.9.2018, the Adjudicating Authority notified by the Central Government is the Additional Director and the Additional Director is empowered to conduct the adjudication proceedings. The inquiry and the adjudication proceedings has to proceed on the basis of the evidence produced. The evidence produced by the person would be considered by the Adjudicating Authority for forming an opinion to proceed further with the show cause notice. The contention of the appellants that the person who issues the show cause notice under Rule 4(1) of the Rules of 2000 would alone be the Adjudicating Authority till the culmination of the proceedings cannot be comprehended and needs to be rejected. According to learned Senior Counsel, the same is a saving clause. Referring to the said phraseology, it is submitted that the show cause notice having already been issued to the appellants, the appellants are covered under the said saving clause and, as such, the appellants' case cannot be transferred from the second respondent to the third respondent. In our opinion, the said arguments does not hold water. The phrase except as respects things done or omitted to be done before such supersession... would mean that whatever acts are done till the date of issuance of the notification superseding the earlier notification are saved. The show cause notice issued under Rule 4(1) of the Rules of 2000 before issuance of the said notification dated 27.9.2018 is saved. The further proceedings cannot proceed before the person who was an Adjudicating Authority under the notification already superseded. The inquiry will have to be continued by the Adjudicating Authority as per the notification in vogue and not the Adjudicating Authority under the superseded notification. We are of the firm view that the learned Single Judge has not committed any error while dismissing the writ petitions.
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Service Tax
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2024 (4) TMI 236
SVLDRS - Payment was delayed by one day - The petitioner attempted to make the payment within the stipulated period but faced a technical glitch with online banking. - application of the Petitioner rejected without giving any opportunity of hearing to the Petitioner with the reason amount not quantified - violation of principles of natural justice - HELD THAT:- In the case before the Gujarat High Court in M/S LG CHAUDHARY VERSUS UNION OF INDIA [ 2022 (10) TMI 631 - GUJARAT HIGH COURT] , the Petitioner therein tried to make the payment of the amount determined in Form SVLDRS-3, through NEFT, on 30th June 2020, which was the last date for making payment but due to some technical glitch from the end of the receiving bank, the payment was returned to the Petitioner therein. Hence, in that case, the facts were very similar to the facts in the present case. In this factual scenario, the Gujarat High Court held in the given facts and circumstances, the petitioner made bona fide attempt to make the payment as determined under the Scheme and is also prepared to pay the amount in question in accordance with the Scheme along with interest for the period for which the petitioner was not permitted to make payment by respondent authorities considering extreme Pandemic condition of Covid-19, we are of the opinion that this is a fit case for invocation of the powers under Article 226 of the Constitution of India. Hence, in the case of L.G. Chaudhary, the Gujarat High Court held that the bona fide attempt made by the Petitioner therein to make the payment could not be doubted and substantive benefit of the Sabka Vishwas Scheme could not be denied to the Petitioner therein on the ground of procedural technicalities, more particularly in time of COVID-19 Pandamic. In the present case, the Petitioner tried to make payment within the stipulated period of 30 days from the issuance of Form SVLDRS-3, as provided under the Sabka Vishwas Scheme, but due to a technical internet banking error, the Petitioner was not able to make payment on 18th November 2022, which was the last date of making payment. It is not in dispute that the Petitioner was prevented due to technical reasons from making the said payment on 18th November 2022 - the ratio of the aforesaid decisions of the Gujarat High Court and of this Court clearly apply to the facts of the present case and the Petitioner s payment under the Sabka Vishwas Scheme ought to be accepted by the Respondents. On a perusal of the said Order, it is very clear that and as held by the Gujarat High Court, the same would not be applicable to the facts of the present case where the Petitioner has made a bona fide attempt to make the payment within the stipulated time, however, due to technical issues, the same was not credited to the account of the Respondents. In fact the said Order of the Supreme Court does not at all deal with such a situation, and, therefore, is clearly not applicable to the facts of the present case. Order dated 16th December 2022, rejecting the Petitioner s SVLDRS-1 application is hereby quashed and set aside - Petition disposed off.
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2024 (4) TMI 235
Classification of service - business support services or not - Guarantee Commission received for furnishing Corporate Guarantee - invocation of Extended period of Limitation - revenue neutrality - HELD THAT:- Sequentially in order to ascertain its eligibility for levy of tax it is important to understand the meaning of Corporate Guarantee as well. Corporate guarantee is the act of undertaking the responsibility of the debtor s obligation, in this case, a company. The execution of Corporate Guarantee by the Appellant is merely an act of providing an instrument for securing loans and not even fundamentally connected to the services as described under Business Support services which includes those services to the tune of transaction processing, routine administration or accountancy, customer relationship management and tele-marketing which in its nature of extension includes those that are out sourced only to be interpreted within its scope for the purpose of levy of tax. Therefore, no merit can be found that the commission so received on such corporate guarantee by the Appellant will become eligible for taxation under the scope of Section 65 (104c) of the Finance Act, 1994. Extended period of limitation - Revenue Neutrality - HELD THAT:- The show cause notice dated 09.10.2012 has been issued for the period 08.02.2008 to 30.06.2012. The Appellant states that post audit of January 2009 they were not subjected to any adverse treatment by the Department as regards levy of tax on Corporate Guarantee based on the responses submitted to the Department for the queries raised in the said audit. All this goes on to show that the Appellant has not suppressed any facts with intention to evade tax payment. Therefore, the show cause notice issued invoking extended period cannot sustain. Appellant succeeds on limitation as well. The impugned order set aside - appeal allowed.
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2024 (4) TMI 234
Non-payment of service tax - Service Tax Registration not taken - services were provided to the Government Department viz. Electricity Department of Daman (UT) - extended period of limitation - HELD THAT:- It is found from the scrutiny of various invoices on record before us and which are of the impugned period, the same were issued by the appellants to Assistant Engineer of Electricity Department , Division-V, Nani, Daman. In relation to demand of Rs. 3,18,976/- having invoked through extended period and which was contested before us on the ground that Commissioner (Appeals) incorrectly held that work were not proved to be done in Residential or Commercial Localities as per Serial No. 5 of the Board Circular before or after point of distribution. Exemption was granted as per circular only up to material used like Electric cables and services provided up to distribution point. Learned Commissioner found that invoices produced by them were lacking in this regard - Learned Commissioner did not indicate that the material was used or services provided up to the distribution point and not beyond distribution point. It is found that this evidence of having done erection testing and laying of various material for Assistant Engineer, Electricity Department does indicate that the material was used up to distribution point so as to become eligible for service being treated as non taxable. It is found from scrutiny of the document as above that very fact that invoices were issued in the name of Assistant Engineer Electricity Department indicates the same were for the purposes works done for Assistant Engineer of the electricity department. An evidence to this effect which is documentary in nature and which clearly indicates that this service was provided and invoice issued to the Government Department is sufficient to hold that services were in relation to work done up to distribution point. Therefore for invoices which indicate that they were issued to the electricity department, no question of taxability of service will arise as per the above said board clarification. Only if there are any invoices in the name of private party can it be held that services were provided beyond distribution point. In view of the foregoing, the demand if any made against the appellant shall be confined to the normal period of limitation. in above terms, the department is directed to rework demand - Accordingly, appeal is allowed by way of remand.
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2024 (4) TMI 233
Classification of services - Manpower Recruitment or Supply Agency Service or not - providing temporary manpower to carrying out a specific task i.e. inspection, loading and dispatch, production and sorting of materials etc. in the factory premises of M/s. Senor Metals Pvt. Limited - HELD THAT:- The matter is no longer res-integra as this Tribunal in a similar case has held that the agreement is for execution of a particular work and not for providing any manpower. As per work contract the payment is paid for the work performed on the basis of per Kg of goods manufactured and therefore such an activity cannot be classifiable under the service category of Manpower Recruitment or Supply Agency Service. Tribunal in the case of ROOPSINH JODHSINH CHAUHAN AND NAVALSINH JADEJA VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT [ 2023 (11) TMI 102 - CESTAT AHMEDABAD] has held that The work undertaken by the appellant do not fall under the service category of Manpower Recruitment or Supply Agency Service and therefore, the impugned orders are without any merit and are set aside. Thus, the service provided by the appellant does not fall under the category of Manpower Recruitment or Supply Agency Service and therefore, the impugned order-in-appeal is bad in law and the same is set-aside - appeal allowed.
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2024 (4) TMI 232
Levy of service tax or exemption from tax - Erection, Commissioning or Installation service - Extended period of limitation. Extended period of limitation - demand raised only on the basis of audit objections without any further investigation by the department and without satisfying the requirement for invoking the extended period of limitation under Sub-section 4 of Section 11A of the Central Excise Act, 1944 - HELD THAT:- An identical issue of invoking the extended period of limitation based on audit objections was considered by the co-ordinate Bench in the case of M/S. DELTA POWER SOLUTIONS INDIA PVT. LTD. VERSUS COMMISSIONER, CUSTOMS, CENTRAL EXCISE SERVICE TAX, COMMISSIONERATE, HAPUR [ 2021 (11) TMI 174 - CESTAT NEW DELHI] and the Division Bench of the Tribunal after considering the various decisions of the Hon ble Apex Court in EASLAND COMBINES VERSUS COLLECTOR OF C. EX., COIMBATORE [ 2003 (1) TMI 107 - SUPREME COURT] has held In the present case, what is seen is that the audit was conducted between June 17, 2011 to June 22, 2011 and the show cause notice refers to this audit only. The notice, therefore, should have been issued within one year from the relevant date and there is no good reason as to why the Central Excise Officer should have waited till March 19, 2015 to issue the show cause notice. The extended period of limitation, for this reason alone, could not have been invoked. Levy of service tax or exemption from tax - Erection, Commissioning or Installation service - claim of the appellant is that the services provided by them to CPWD and Airport authority are in the nature of works contract as per their agreement and are exempted from payment of service tax - HELD THAT:- The stand of the department that appellant is liable to pay service tax under the category of Erection, Commissioning or installation service is also not tenable in view of the decisions of the Tribunal in the case of GOA FRIENDS ENGINEERING ELECTRICALS PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE, PANAJI [ 2021 (9) TMI 510 - CESTAT MUMBAI] wherein the Tribunal has held In the facts and circumstances narrated supra, the retrospective effect of the exemption is applicable to the electrical works executed, and the maintenance undertaken, by the appellant for Goa State Industrial Development Corporation (GSIDC) and Goa Medical College (GMC). Further it is also found that the services rendered by the appellant to CPWD, Airport falling under the category of works contract as per their agreement and it cannot be taxed in any other category as held by the Tribunal in the case of M/S SHREE MOHANGARH CONSTRUCTION CO. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, JAIPUR [ 2021 (3) TMI 519 - CESTAT NEW DELHI] wherein, it has been held that works contract service could not be equated either with a contract for sale of goods or a contract for supply of services simplicitor and service tax can only be demanded works contract service after introduction of a charge on works contract service and not under any other head either before introduction of service or thereafter. Thus, in the instant case even if assessee had not fulfilled conditions required under Works Contract Composition Scheme, there was no case for department to charge service tax on service provided by assessee under any other head. The impugned order is not sustainable on merit as well as limitation - appeal allowed.
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2024 (4) TMI 231
Extended period of limitation - suppression of facts - Cleaning Housekeeping services - Cooking services - Fleet Management services - period of dispute is 2011-12 2012-13 - HELD THAT:- The appellant has regularly filed the returns. Further, it is found that there is no allegation of any misstatement or suppression in the returns. It is also not the allegation that the appellant has not disclosed their full turnover in the returns. The only allegation of Revenue in the SCN is that they came to know the fact of non-payment of service tax on the services under dispute only during the course of detailed investigation undertaken, and further have stated that under the self-assessment procedure it is imperative that the assessee should have scrupulously discharged the service tax liability. Thus, it is evident that the SCN has been issued by way of change of opinion and no case of suppression, misstatement, fraud or any contemptuous conduct is made out. Therefore, the Department has not made out any case for invoking extended period and thus, the appellants succeed on the issue of limitation. It is noticed that for the similar services earlier provided by M/s Junior Varsity and M/s K12 Educational Management (same group companies), the department had bundled the services on the ground that these services are provided to same recipients and the classification under three different heads is erroneous as services are provided to single entity or service recipient. Thus, it appears, prima facie, that there is no consistency in classification of services by the Revenue. However, having found that the appellants have a strong case on limitation, there is no need to consider submissions on merits. The extended period of limitation is not invokable - the impugned order is set aside - appeal allowed.
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2024 (4) TMI 230
Direction to recalculate the refund amount of interest granted in excess - relevant date for calculation of interest - Supply of tangible goods for use services - reverse charge mechanism - Whether the appellant is entitled for interest from the date of deposit of the amounts paid under protest on 14.10.2009 4.11.2009 or from 3 months of filing the claim? - HELD THAT:- The Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, HYDERABAD VERSUS ITC. LTD. [ 2004 (12) TMI 90 - SUPREME COURT] has held that in the event of refund of any pre-deposit when a question arises of giving interest on the delayed refund of pre-deposit, as provided under the Circular by CBEC the payment of interest on such delayed refunds beyond three months would require the payment of interest and the same is to be 12% per annum. This period of three months commences from the date of final disposal of the dispute between the parties. The Circular:802/35/2004 dated 08.12.2009 if is closely examined, relates to return of deposit made as per the direction of the Tribunal wherein it is specified that the deposit needs to be returned within three months of the disposal of the appeal - While further interpreting Section 11BB, the Apex Court held further that interest under the said Section 11B of the Act becomes payable on the expiry of a period of three months from the date of receipt of application under sub-section (1) of Section 11B of the Act and that the said explanation would not have any bearing or connection with the date from which the interest under Section 11BB becomes payable. Thus, a collective reading of these decisions, and close examination of the same, the question here is not of interest on refund of the duty amount but of the predeposit. There is no express provision of payment of interest under Section 35FF of Central Excise Act, 1944 on the refund of pre-deposit. However, drawing analogy from Section 11B of the Central Excise Act, which provides for the refund of the duty, Section 11BB as held by the Apex Court, herein above, speaks of the interest on the refund of the duty as there would arise a requirement of payment of interest if the duty is not refunded within a period of three months from the date of receipt of application to be submitted under subsection (1) of Section 11B of the Act. Such interest needs to be paid as such rate fixed by the Central Government on expiry of period of three months from the date of receipt of application. In the instant case, the amount claimed as refund being the duty paid and continued to lie as pre-deposit, with the department. Hence, once the Tribunal decided in favour of the present appellant on 24.10.2013, the payment of interest would start running from the same date. The Tribunal while so ordering to set aside the order of the Commissioner, ordered to refund the said amount along with interest. The refund of amount considered as pre-deposit would be at par with the refund of duty and the interest would be payable on such pre-deposit. Whether the appellant is entitled to interest during the period of 123 days when the Tribunal s order in PETRONET LNG LTD VERSUS COMMISSIONER OF SERVICE TAX [ 2013 (11) TMI 1011 - CESTAT NEW DELHI ] was stayed by the Supreme Court? - HELD THAT:- The Apex Court in the case of M/S. STYLE (DRESS LAND) VERSUS UNION TERRITORY CHANDIGARH ANR. [ 1999 (8) TMI 969 - SUPREME COURT ] has held It is a settled principle of law that as and when a party applies and obtains a stay from the court of law, it is always at the risk and responsibility of the party applying. Mere passing of an order of stay cannot be presumed to be the conferment of any additional right upon the litigating party - In view of the settled position of law, the interest is payable for the 123 days as well. The impugned order is set aside - appeal allowed.
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2024 (4) TMI 229
Classification of services - supply of tangible goods service or not - supply of tangible goods without transferring the right of effective control - providing a taxable service to their clients i.e., prior to 01.07.2012 - HELD THAT:- An identical issue has already been examined in the case of the Haryana unit of the appellant by the Tribunal in M/S LINDSTROM SERVICE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX [ 2019 (8) TMI 427 - CESTAT CHANDIGARH] it was observed in the instant case, in terms of agreement work-wear rented out always remains within the exclusive possession of their clients and nobody else can use the those work-wear at the same time and hence effective control to lie with the user/ clients. The appellant, therefore, does not have control over the use of the work-wear. Thus the activity is not in the nature of service under the Finance Act in both during the period prior to negative list regime and thereafter as held in the impugned order. As the issue has been settled in favour of the appellant, therefore, the appellant is not liable to pay Service Tax - the impugned order is set aside - appeal allowed.
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2024 (4) TMI 228
Extended period of Limitation - suppression of facts or not - Recovery of service tax alongwith interest and penalty - whether the services provided by the appellant shall be classified under the category of internet telecommunication services as per Section 65 (57a) of the Finance Act, 1994 for the purpose of levy of service tax? - HELD THAT:- The period of demand is from April 2008 to June 2012, as after the change in regime of levy service tax to negative list of services, appellant started paying the service tax on the said services received by them. All the facts including the documents, balance-sheet and other records pertaining to the disputed services were in knowledge of the Revenue and also audited during the course of audit for the period February 2010. There is correspondence also available at Page 89 90 of the paper-book whereby information in respect of audit objection was called from the appellant vide letter dated 16.03.2011 which was responded by the letter dated 19.05.2011 when the entire issue was in correspondence as a sequel of audit conducted Revenue could not have proceeded to issue a notice by invoking extended period of limitation alleging suppression. There are no reason for which an extended period of limitation could have been invoked in the present case the entire demand should fail on this ground itself. Without going into the merits of the case for which learned counsel submits there are certain decisions in their favour, it is held that demand is barred completely by limitation. Since the demand is barred by limitation the penalties imposed on the appellant too are set aside. Appeal allowed.
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2024 (4) TMI 227
Reversal of CENVAT Credit in terms of Rule 3 (5) of the Cenvat Credit Rules, 2004 - no physical removal of capital goods - HELD THAT:- The said issue has been examined by this Tribunal in the case of M/S. VODAFONE MOBILE SERVICES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD [ 2017 (12) TMI 29 - CESTAT AHMEDABAD] , wherein this Tribunal has held that appellant has correctly availed Cenvat credit and is not required to reverse Cenvat credit in terms of Rule 3(5) of Cenvat Credit Rules, 2004. As the issue has already been settled by this Tribunal wherein it has been held that the appellant has correctly availed Cenvat credit and is not required to reverse Cenvat credit in terms of Rule 3(5) of Cenvat Credit Rules, 2004, therefore, there are no merit in the impugned order. Appeal allowed.
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2024 (4) TMI 226
Refund claim - services consumed by the SEZ unit, may be incorporated or not in the list of the services for authorized services, for use by a SEZ unit or a developer - denial of refund claim on the ground that the services are not mentioned in the list of specified services approved by the SEZ authorities - HELD THAT:- The refund is admissible in view of the decision in the case of TEGA INDUSTRIES LIMITED VERSUS C.C.E. S.T. -VADODARA-II [ 2022 (6) TMI 821 - CESTAT AHMEDABAD] where it was held that keeping in view of the intention of the Government in enacting the SEZ Act and giving special fiscal concessions SEZs, I am of the considered opinion that this is only a procedural and is not a mandatory condition as held by the Commissioner (Appeals). Further the decisions relied upon by the appellant clearly held that the SEZ Act has an overriding effect over other laws. Therefore this ground on the basis of which refund claims have been rejected is not tenable in law. Denial of claim for refund against invoices which contains has been addressed to Appellant s Unit outside the SEZ but has been consumed within the SEZ - HELD THAT:- The matter was remanded for consideration whether these services for which invoices are addressed to the premises of the appellant which fall outside the SEZ unit would be admissible as refund amount. After taking note to the various decisions and law it has been held that such refund shall be admissible subject to the appellant, satisfying the Original Adjudicating Authority with regards to receipt as consumption of services within SEZ unit. Appeals allowed by way of remand.
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2024 (4) TMI 225
Classification of services - manpower supply services - reverse charge mechanism - N/N. 30/2012-ST dated 26.06.2012 - It is a case of the appellant that they had been paying the service tax in respect of all the services received to the provider of service tax, who has inter-deposited the service tax - HELD THAT:- It is evident that the fact of payment of service tax under forward charge by the service provider is not in dispute. On perusal of the invoices it is evident that the service provider is a registered service provider, registered with the department and has issued the invoices to the appellant indicating the amount of service tax, educations cess and higher education-cess. Appellant, while making the payment have made the entire tax amount indicated in the invoices undisputedly. Further on the invoices the services provided are indicated as cleaning services, Assembling services etc. These services are not the services specified in the notification No 30/2012-ST and thus are not the services on which the appellant was required to discharge the tax liability under partial reverse charge mechanism. The service provider who is also registered with the Department was required to discharge the service tax liability under these category. Invoice show the complete transactions, service tax liability has been correctly discharged in the manner as prescribed under law. It is settled law that classification of service from one category to another category could not have been altered at the end of recipient of service to demand service tax under some other category of taxable service. There are no merits in the demand made by the impugned order and the same is set aside - As the demand has been set aside so is the penalty imposed - appeal allowed.
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Central Excise
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2024 (4) TMI 224
100% EOU - Valuation of goods - clearance under domestic tariff area, i.e. within the territory of India - manufacture of P P medicaments falling under Chapter 30 of First Schedule to Central Excise Tariff Act, 1985 - to be covered under notification issued under Section 4A of Central Excise Act, 1944 or not - HELD THAT:- For arriving at total central excise duty payable on the goods manufactured by 100% EOU and allowed to be cleared in domestic tariff area, the customs duty leviable under Customs Act, 1962 if the same is charged at ad valorem rate, then the value of the goods has necessarily to be arrived at in accordance with the provisions of Section 14 of Customs Act, 1962. The said provision of the Act has been made very clear by Hon ble Supreme Court in the case of COMMNR. OF CENTRAL EXCISE VERSUS MORARJEE BREMBANA LTD. [ 2015 (4) TMI 354 - SUPREME COURT] where it was held that As is clear from the bare reading of the aforesaid proviso, in those cases where excisable goods are produced or manufactured by hundred per cent export oriented undertaking are allowed to be sold in India, the duty of excise has to be the amount equal to the aggregate of the duties of customs which would be leviable under Section 12 of the Customs Act, on like goods produced or manufactured outside India if imported into India and where the said duties of custom are chargeable by reference to their value, the value of such excisable goods shall be determined, in accordance with the provisions of the Customs Act and Customs Tariff Act, 1975. It is, therefore, very clear that basic customs duty is to be ascertained taking the value into consideration where the value is determined in accordance with the provisions of Section 14 of Customs Act, 1962. On perusal of the show cause notice, it is noted that for the purpose of demanding differential duty, basic customs duty was calculated by Revenue on the basis of MRP value minus abatement - under Section 14 of Customs Act, 1962, there is no provision for arriving at value on the basis of the provisions of Section 4A of Central Excise Act, 1944 such as MRP minus abatement as adopted by Revenue. The impugned order set aside - appeal allowed.
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2024 (4) TMI 223
Maintainability of appeal - appeal dismissed for non-prosecution as per Rule 20 of CESTAT (Procedure) Rules, 1982 - time limitation - HELD THAT:- Having filed an appeal the Appellant should have intimated the Registry of the change in address if any, for delivery of notice / judgment etc. Moreover, the daily Cause List showing the cases being listed for hearing is available in the public domain on the Tribunals website. After filing an appeal due diligence mandates that the Appellant follow up on the matter and make himself available on the date of hearing either in person or by his Authorized representative. Persons with good causes of action should pursue the remedy with reasonable diligence at every available opportunity. Hence there is reasonable ground to think that the non-appearance was occasioned by the Appellant as he is not serious about the appeal and is deliberately trying to gain time. It is a well-accepted position that the accrued right of the opposite party cannot be lightly dealt with. Tribunal in the case of Pankaj Vs. CCE [ 2023 (12) TMI 910 - CESTAT ALLAHABAD] which has heavily relied on the judgment of the Hon'ble Supreme Court in the case of Ishwarlal Mali Rathod vs Gopal [ 2021 (9) TMI 1301 - SUPREME COURT] , Babu Singh Vs. State of UP [ 1978 (1) TMI 171 - SUPREME COURT] , Shiv Cotex Vs. Tirgun Auto Plast (P) Ltd. [ 2011 (8) TMI 977 - SUPREME COURT] , Noor Mohammed Vs. Jethanand Anr. [ 2013 (2) TMI 27 - SUPREME COURT] and has concluded that there is no justification for adjourning the matter beyond three times which is the maximum number statutorily provided. Thus, no purpose would be achieved in continuing with this appeal - appeal dismissed for default as per Rule 20 of CESTAT ( Procedure ) Rules , 1982.
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2024 (4) TMI 222
Utilization of credit of Education Cess (EC) and Secondary Higher Education Cess (SHEC) towards the liability of excise duty denied - invocation of extended period of limitation - mis-leading declaration - suppression of facts or not - HELD THAT:- The appellant consciously took the benefit of the notification no.12/2015 for the purpose of utilizing the EC and SHEC towards payment of excise duty, which otherwise was not permissible. But deliberately did not comply with the conditions specified for such utilization, which required that the credit of EC and SHEC paid on inputs or capital goods received in the factory of manufacture of final products on or after the 1st day of March, 2015 could be utilized for the payment of duty of excise. The appellant cannot bifurcate the benefit, which was granted under the notification and avail the same but ignore the conditions specified for such utilization and hence, the invocation of the extended period of limitation was justified - It is settled law that a party cannot approbate and reprobate at the same time. Reference made to decision of the Apex Court in the case of SHYAM TELELINK LTD. NOW SISTEMA SHYAM TELESERVICES LTD. VERSUS UNION OF INDIA [ 2010 (10) TMI 1017 - SUPREME COURT ], laying down that the person taking advantage under an instrument, which both grants a benefit and imposes a burden, cannot take the benefit without discharging the burden. It was, therefore, not permissible for the appellant to avail the benefit of utilization under the notification without discharging the burden of declaring with reference to the cutoff period prescribed therein. Reliance placed by the appellant on the decision of the Metco Roof Pvt. Ltd. [ 2021 (7) TMI 766 - CESTAT CHENNAI] , where the learned Single Member, although upheld the demand raised as legal and proper, however, rejected the levy of penalty as unwarranted, since the issue is of interpretational nature. With due respect, it is begged to differ from the view taken by the learned Single Member in Metco Roof Pvt. Ltd. as the consistent view of the department and the Tribunal and as upheld by the Delhi High Court in Cellular Operators Association of India [ 2018 (2) TMI 1264 - DELHI HIGH COURT] that two cesses i.e. EC and SHEC and the excise duty and the service tax had been treated as different and separate and cross utilization was never permitted. Though the decision of the Delhi High Court is under challenge before the Apex Court in CELLUALAR OPERATORS ASSOCIATION OF INDIA SOCIETY VERSUS UNION OF INDIA ORS. [ 2018 (8) TMI 2150 - SC ORDER] , however, no stay of the impugned order has been granted. Even prior to the decision in Cellular Operators Association of India [ 2018 (2) TMI 1264 - DELHI HIGH COURT ] Ahmedabad Bench of the Tribunal in M/S FIELDMAN ENGINEERS PVT. LTD. VERSUS C.C.E. AND S.T. -RAJKOT [ 2018 (5) TMI 183 - CESTAT AHMEDABAD ] has specifically held that cenvat credit lying in balance in the account of Higher Secondary Education Cess and accumulated before 1.3.2015 can be used only for discharge of Cess as provided under the rules and cannot be used for discharging the liability of excise duty. The appellant though made a declaration that EC and SHEC is being used in payment of excise duty as per the notification no.12/2015 but that was an incomplete declaration with intent to mis-lead the Department. Once the appellant was utilizing the EC and SHEC towards payment of excise duty by virtue of the liberty granted under the notification, it is the bounden duty to disclose as to whether the credit of the two cesses paid on inputs or capital goods was received on or after 1.3.2015. However, the appellant did not disclose whether the amount was received prior to the cut-off date or after 1.3.2015, knowing that the amount received prior to the said date could not have been adjusted towards the liability of excise duty and deliberately made bald reference to the notification. The reliance placed by the learned Authorised Representative on the decision of the Apex Court in M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I [ 2007 (8) TMI 11 - SUPREME COURT ] holding that suppression means failure to disclose full information with intent to evade payment of duty, squarely covers the present case. In that view, the extended period of limitation has been rightly invoked. There are no error in the impugned order and the same is hereby affirmed - appeal dismissed.
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2024 (4) TMI 221
Short payment of Central Excise duty - clearance of refrigerator with Washing Machine and Refrigerator with VCD as combination pack on combination MRP rather than combined MRP of the individual items - HELD THAT:- The issue is no longer res-integra. In the appellants own case Delhi Bench of this Tribunal in VIDEOCON INTERNATIONAL LTD. VERSUS COMMISSIONER OF C. EX., NOIDA [ 2012 (12) TMI 920 - CESTAT NEW DELHI] has held In this case, admittedly the combination packs of Referigerator with water purifiers, Refrigerators with washing machines or CTVs with VCD players are not actually packed in a bigger package. The combination packs in this case have to be treated as combination sales as a marketing strategy under which on purchase of two items refrigerator with washing machines, refrigerator with water purifier or CTVs with VCD players, the price charged is less than their individual MRP. Such combination sales, in our view, cannot be treated as combination pack or packaged commodity as understood in SWM Rules and have to be treated as sale of individually packed items at a combined price. There are no merits in the impugned order - appeal allowed.
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CST, VAT & Sales Tax
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2024 (4) TMI 220
Maintainability of appeal - requirement to pay the mandatory pre-deposit under the GVAT Act and CST Act. It is the case of the petitioner that the Commissioner Appeals as well as the Tribunal while passing an order of pre-deposit has not considered the prima facie case in favour of the appellant. HELD THAT:- It appears that the Tribunal has imposed the condition of pre-deposit consisting of the entire demand under the Central Sales Tax. The Tribunal has passed an order requiring the appellant to deposit Rs. 36,00,000/- out of the total remaining demand of Rs. 36,19,825/-. Therefore we are of the opinion that the Tribunal has exceeded its jurisdiction in passing the order of pre-deposit without considering the fact that if the appellant is required to pay almost entire amount of the outstanding dues then the very purpose of pre-deposit would be frustrated. Therefore, as the appellant is ready and willing to deposit Rs. 5,00,000/- to show the bona fides and to enable the appellant to furnish the statutory forms in the remaining period of pre-deposit, the interest of justice would be served if the amount of pre-deposit is reduced to Rs. 5,23,000/-. The appellant is therefore to deposit Rs. 5,23,000/- on or before 15.07.2024 towards the mandatory pre-deposit in the appellate proceedings and the present appeal filed by the appellant is accordingly allowed to the aforesaid extent and the matter is remanded back to the First Appellate Authority who will hear the appeals filed by the appellant on deposit of Rs. 5,23,000/- on or before 15.07.2024 - Matter on remand.
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2024 (4) TMI 219
Requirement to fulfil condition to deposit 15% of the disputed tax demand, to participate in the assessment proceedings - alleged mismatch of purchases between the returns filed by the appellant and the other dealers - HELD THAT:- The learned Judge, after having considered the submission made by the learned counsel for the appellant / assessee, has granted one opportunity to the assessee, however subject to a condition that the assessee has to deposit 15% of the tax demanded, by the order impugned herein. According to the learned counsel for the appellant, when the learned Judge is inclined to remand the matter to the respondent for re-consideration, he ought not to have imposed such condition on the appellant, which is illegal and contrary to law. The issue involved herein had already been considered by a Division Bench in Havea Handles Components Pvt. Ltd v. Assistant Commissioner (CT) (FAC), Royapettah II Assessment Circle, Chennai [ 2014 (7) TMI 1367 - MADRAS HIGH COURT ] and it was held that It has to be pointed out, at this stage, that once it has been found that the orders impugned in the writ petitions are unsustainable on account of violation of principles of natural justice, it is wholly unnecessary to impose any condition while remitting the matter for fresh adjudication and in the considered opinion of this court, the direction given to the appellant / writ petitioner to deposit 10% of the tax amount as claimed in the demand notice, as a condition precedent to enquire into the matter, is unsustainable and the said portion of the order is liable to be set aside. Following the above said judgment, in an identical case in M/S. R.P.S. CO VERSUS THE ASSISTANT COMMISSIONER (ST) (FAC) BROUGH ROAD CIRCLE, ERODE [ 2022 (2) TMI 1430 - MADRAS HIGH COURT] , this court, in which, one of us (RMDJ) was a member, has set aside the pre-condition imposed on the appellant therein to deposit 30% of the tax amount for consideration of the matter afresh by the assessing authority, observing that the same was certainly unwarranted. This Court is inclined to set aside the order of the learned Judge insofar as directing the appellant / assessee to deposit 15% of the demanded tax as a condition precedent for re-doing the assessment by the authority and the same is accordingly, set aside. Consequently, the appellant / assessee is directed to file objections to the order passed by the respondent treating the same as show cause notice as directed by the learned Judge, within a period of two weeks from the date of receipt of a copy of this judgment - Appeal allowed.
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Indian Laws
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2024 (4) TMI 218
Dishonor of Cheque - Ascertaining nature of transaction - whether a criminal proceeding can be initiated and an accused held guilty when there is already a civil court decree concerning the same transaction - criminal jurisdiction would be bound by the civil Court or not - HELD THAT:- This Court in Satish Chander Ahuja vs. Sneha Ahuja [ 2020 (10) TMI 1379 - SUPREME COURT] considered a numerous precedents, including Premshanker [ 2002 (9) TMI 849 - SUPREME COURT ] and Vishnu Dutt Sharma [ 2009 (5) TMI 862 - SUPREME COURT] , to opine that there is no embargo for a civil court to consider the evidence led in the criminal proceedings. The position as per Premshanker is that sentence and damages would be excluded from the conflict of decisions in civil and criminal jurisdictions of the Courts. Therefore, in the present case, considering that the Court in criminal jurisdiction has imposed both sentence and damages, the ratio of the above-referred decision dictates that the Court in criminal jurisdiction would be bound by the civil Court having declared the cheque, the subject matter of dispute, to be only for the purposes of security. The criminal proceedings resulting from the cheque being returned unrealised due to the closure of the account would be unsustainable in law and, therefore, are to be quashed and set aside. Resultantly, the damages as imposed by the Courts below must be returned to the appellant herein forthwith - Appeal allowed.
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2024 (4) TMI 217
Criminal Conspiracy - Challenge to impugned order primarily on grounds that the prosecution case is based on speculations and the trial court has failed to appreciate the prosecution story in right perspective - Existence of conspiracy between the appellants Arun Kumar Gurjar and Baljeet Singh as alleged by the prosecution or not - HELD THAT:- In the present case the complainant PW 1 brought one typed complaint in office of CBI which was stated to be not properly addressed. Thereafter another complaint Ex. PW 1/A was retyped in office of CBI and said complaint is basis of registration of present FIR. There is nothing on record which can suggest that the contents of previous complaint which was already typed in office of the complainant PW 1 were materially different from the complaint Ex. PW 1/A which was retyped in office of CBI - The trial court rightly held that there was nothing to prove that there was any material change in the retyped complaint except the proper address as clarified by the complainant PW 1 during his testimony and no importance can be given on aspect of change of complaint in the facts and circumstances. The trial court rightly observed that case law cited on behalf of the appellants as referred herein above can be distinguished under facts and circumstances of present case. It is accepted legal proposition that delay in lodging FIR must be properly explained to rule out chance of manipulation and embellishments. In present case the appellants Arun Kumar Gurjar and Baljeet Singh were handling income tax assessment of firm of the complainant i.e. MPVC. The appellants Arun Kumar Gurjar and Baljeet Singh as per the complainant initially demanded bribe of Rs. 1.5 lacs in month of October, 2010 which was raised to Rs. 5 lacs in month of December, 2010 which the complainant was not able to pay and thereafter the complainant on 28.12.2010 lodged the complaint Ex. PW 1/A which was basis of registration of FIR. The prosecution under given facts and circumstances of case has properly explained delay in registration of FIR. There is no legal force in arguments advanced on behalf of appellants Arun Kumar Gurjar and Baljeet Singh that there was unexplained delay in registration of FIR. The appellant Baljeet Singh was assisting the appellant Arun Kumar Gurjar in the income tax assessment case of MPVC and was writing the order sheets. The trial court further observed that the appellant as per testimony of the complainant PW 1, the appellant Baljeet Singh was continuously in the touch in respect of demand of bribe. The trial court held that in ordinary course of events, it is hard to believe that the complainant PW 1 will go to the extent of lodging false case against the appellant Baljeet Singh on account of minor argument much prior to present case - in consideration of the trial court plea of false implication of the appellants Arun Kumar Gurjar and Baljeet Singh by the complainant PW 1 did not inspire any confidence and there is no convincing material on record to accept the plea of false implication. The trial court as such considered plea of false implication of the appellants Arun Kumar Gurjar and Baljeet Singh by the complainant PW 1 due to reasons as mentioned hereinabove in detail and in right perspective. The plea of false implication is without any justification and there is no force in arguments advanced by the learned Senior Counsels for the appellant Arun Kumar Gurjar and the Baljeet Singh that they were falsely implicated at instance of the complainant. Existence of conspiracy between the appellants Arun Kumar Gurjar and Baljeet Singh as alleged by the prosecution - HELD THAT:- The inference of conspiracy between the appellants Arun Kumar Gurjar and the Baljeet Singh cannot be based on the shaky ground that the appellant Baljeet Singh met the complainant PW 1 in the room no. 207 which belonged to the appellant Arun Kumar Gurjar. The charge of conspiracy between the appellants Arun Kumar Gurjar and Baljeet Singh cannot be deemed to have been established on mere suspicion and surmises or inferences which are not supported by cogent and acceptable evidence and has to be proved beyond reasonable doubt which it has not been. It is accepted legal proposition that proof of demand and acceptance of the gratification is a sine qua non to constitute offence punishable under section 7 of the PC Act and presumption under section 20 of the PC Act can be invoked only on proof of demand of gratification by the accused and the acceptance thereof. The offence under Section 7 cannot be established unless demand and acceptance are established. It is also accepted legal proposition that mere acceptance of any illegal gratification or recovery thereof in the absence of proof of demand would not be sufficient to bring home the charge under Sections 7 of the PC Act. The prosecution has failed to prove the acceptance of the tainted money by the appellant/Arun Kumar Gurjar and substantial doubts are appearing from the evidence led by the prosecution as to the guilt of the appellant Baljeet Singh - The impugned judgment and impugned order passed by the trial court are set aside and appellants are acquitted for the offence for which they were charged. If the appellants Arun Kumar Gurjar and Baljeet Singh have deposited any fine in terms of impugned order, they are entitled for refund of fine. Accordingly, the appeals are allowed.
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