TMI Tax Updates - e-Newsletter
May 13, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Violation of principles of natural justice - duplication of ITC - The petitioner contended that their detailed reply addressing each allegation with supporting documents was not adequately considered by the tax authority. The Court found the tax authority's rejection of the petitioner's reply solely on grounds of incompleteness unsustainable, emphasizing the necessity for proper consideration of the documents and explanations provided. It directed the remittance of the matter for re-adjudication, granting the petitioner an opportunity to file a further reply and directing the Proper Officer to examine the contention regarding the reversal of erroneously availed ITC.
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Violation of principles of natural justice - While the petitioner raised concerns regarding the violation of Section 65 of the GST Acts and lack of proper notice, the Court found that the petitioner had actively participated in the proceedings by responding to various notices. However, it noted that the respondent did not adequately consider the petitioner's replies before passing the impugned order. Consequently, the Court quashed the impugned order and directed the petitioner to deposit 10% of the disputed tax amount.
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Grant of Regular Bail - fraudulent passing of Input Tax Credit without actual supply of goods - While acknowledging the seriousness of the charges, the court noted the absence of concrete evidence supporting the prosecution's claim that the petitioner might tamper with witnesses. It cautioned against denying bail solely based on the severity of the accusations. The court stressed the discretionary nature of bail jurisdiction, urging careful consideration of individual rights and societal interests. The court imposed specific conditions on the petitioner's bail.
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Levy of GST - export of services or not - place of supply - Intermediary services or independent service - The AAR clarified that the applicant's services to foreign universities/colleges are neither those of an intermediary nor subject to GST. These services qualify as 'export of services', benefiting from GST exemption, provided the payments are received in convertible foreign exchange.
Income Tax
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Computation of Long-Term Capital Gain derived from transfer of property - Indexed cost of improvement - The Tribunal observed that the bank's loan appraisal included the consideration for further construction, indicating the genuineness of the work order and agreement. However, the Tribunal emphasized the need for the assessee to provide additional evidence, such as relevant bank statements, to substantiate the payment made for further construction. The Tribunal set aside the AO's order and directed a reexamination of the claim of indexed cost of improvement based on the work order and agreement.
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Income recognition - Interest on NPA - Citing a judgment of the Delhi High Court, affirmed by the Supreme Court, the High Court concluded that if interest on NPAs is not received due to circumstances beyond the control of the assessee, it cannot be deemed to have accrued. The Court highlighted that under the RBI Act and Prudential Norms, interest income cannot be considered as accrued when NPAs are involved. Therefore, the Court ruled in favor of the appellant.
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Default in not depositing the TDS amount, as deducted, with the government - The High court underscored the mandatory nature of issuing TDS certificates or ensuring the deposit of deducted amounts with the government treasury promptly. - The High Court determined that JBVNL's retention of the tax deducted, under the guise of awaiting the appeal's outcome, was unauthorized and constituted an illegal withholding of funds. As such, the court directed JBVNL to release the withheld amount along with interest and imposed costs for what was deemed a frivolous defense.
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Limitation for passing a assessment order - Consequential order passed by the assessing authority beyond the time limit specified u/s 153 (2A) - The High Court examined the statutory provisions and concluded that the time limit applies to consequential orders following a remand by an appellate or revisional authority. The purpose of this provision is to ensure expeditious assessments and timely receipt of government dues. In the case at hand, despite specific directions from the Tribunal, the Assessing Authority failed to pass the consequential order within the prescribed time limit, leading to prejudice for the assessee.
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Disallowance of loss on sale of Government Securities - permissible business loss or not? - The Tribunal disagreed with the AO's presumption that the securities were not stock-in-trade but investments, noting that buying and selling securities, including Government securities, were part of the business activity of the assessee company. The Tribunal found that the loss on sale of Government securities claimed by the assessee was allowable as a business loss.
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Validity of order passed u/s. 147 against deceased assessee - Citing Section 159(2) of the Act and judicial precedents, the Tribunal emphasized that no order can be passed against a dead person, and proceedings should continue against the legal representative. - The Appellate Tribunal (ITAT) noted that despite notification of the death of the assessee to the AO and the submission of relevant documents, the assessment was framed without impleading the legal heir. - Consequently, the ITAT declared the assessment order null and remanded the matter to the AO for proper assessment after notifying the legal representative of the deceased assessee.
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Addition u/s 69A on the basis of whatsapp messages - The ITAT noted that the mere presence of WhatsApp messages on a mobile phone does not conclusively prove that the transactions mentioned therein were undertaken by the phone's owner. It was emphasized that such messages could be exchanged in various contexts not necessarily related to undisclosed income. - The tribunal agreed with the appellant that there was an erroneous double addition for a single transaction amount calculated in both dollars and rupees, which amounted to a computational error by the AO.
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Addition made u/s. 69A - unexplained cash deposits - The Tribunal found merit in the assessee's argument that the cash on hand at the beginning of the financial year could reasonably explain the subsequent deposits during demonetization. - The Tribunal highlighted that previous judicial decisions have supported the notion that mere time gaps between cash withdrawals and deposits are not sufficient grounds for additions under Sec. 69A if the assessee provides a coherent trail of the cash flow.
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Disallowance of deduction claimed u/s 80P - interest and dividends received from investments made with DCCB - The appellate tribunal, in its detailed analysis, upheld the assessee's contention and allowed the appeal. It ruled that the income earned by the cooperative society from its investments in District Cooperative Central Bank qualified for deduction under section 80P(2)(a)(i) of the Income Tax Act.
Customs
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Interest for delay in sanction of refund - The appellant contested the duty assessment, arguing that the amounts paid were arbitrarily enhanced and later set aside by the Commissioner (Appeals). The Tribunal found in favor of the appellant, holding that they were entitled to interest on the refunded amounts from the date of deposit until disbursement.
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Smuggling - illegal importation of the seized gold - Confiscation of the gold and Indian currency - The Tribunal found no evidence linking the seized Indian currency to smuggling activities, thus ruling its confiscation unsustainable. Similarly, penalties imposed on appellant nos. 1 and 2 were deemed unjustified due to lack of evidence implicating them in smuggling. Penalties imposed on appellant nos. 3 and 4 were reduced, considering their involvement in the smuggling but deeming the original penalties excessive. Consequently, the tribunal ordered the release of the confiscated currency and set aside penalties for appellant nos. 1 and 2, while reducing penalties for appellant nos. 3 and 4.
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Seeking re-export of goods - Absolute confiscation of goods - breach of ‘intellectual property rights’ - The tribunal found that while the goods were correctly confiscated under sections 111(d), 111(f), 111(l), and 111(m) of the Customs Act, 1962, the option for re-export should have been given for goods that were importable under specific conditions. - It was determined that while the goods were rightly confiscated due to violations of import regulations, the method of handling the aftermath, including the destruction of goods and some of the penalty assessments, was inappropriate and exceeded legal authority.
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Conversion (Amendment) of shipping bills - substitution of ‘scheme code 19’ by ‘scheme code 03’ in the shipping bills and related invoices - benefits of a scheme - drawback - The CESTAt observed that the circular's restrictions exceeded statutory empowerment and lacked authority as it imposed rigid conditions not contemplated in the law. Emphasizing the distinction between 'documents' and 'bills of entry/shipping bills,' the Tribunal ruled that amendments could be denied only if they did not reflect facts at the time of clearance/export. - Considering the appellant's claim of eligibility for conversion under the Foreign Trade Policy, the Tribunal concluded that the rejection lacked comprehensive appreciation of amendment procedures and disregarded the spirit of guidance offered in the circular.
Indian Laws
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Dishonour of Cheque - liability created in favour of the Complainant by the Accused or not - MoU between the manufacturer and the retailer - The retailer issued multiple cheques to the distributor, which were subsequently dishonoured - The High Court concluded that the trial court had erred in its judgement, primarily by misinterpreting the evidence and the legal standards applicable under the NI Act. The appeals by the distributor were allowed, and the retailer was directed to pay double the amount of the dishonoured cheques as a fine, underlining the enforcement of commercial responsibilities and the legal implications of issuing cheques without sufficient funds.
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Constitutional validity of para 83 of the EPF Scheme and para 43A of the Pension Scheme - international workers - Discrimination - Grievance of the petitioners is that, under para 83 of the EPF Scheme, “international workers” are covered under the Act and Scheme, irrespective of their salary drawn by them. - The High Court observed that provisions treated international workers differently from domestic workers without a sufficient justification, thus violating the equality clause of the Constitution. - The classification of workers under these paras did not have a rational relation to the objectives of the EPF & MP Act, which aims to provide social security to workers in lower income brackets, not to impose burdens on high-earning international workers. - Consequently, the High Court held the provisions as unconstitutional. They were struck down as they were found to be discriminatory, arbitrary, and ultra vires (beyond the powers of the Act)
IBC
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Initiation of CIRP - operational debt claimed by RCL was due and payable or not - While the initial operational debt was cleared, issues related to GST payments and credits were highlighted as unresolved. However, these were not part of the original claim under the CIRP application, hence could not be considered as grounds for insolvency under the IBC framework. - The Tribunal allowed the appeal, setting aside the order admitting the corporate debtor into CIRP. It acknowledged the full payment of the operational debt but noted the corporate debtor's responsibility concerning the GST issues, suggesting that the creditor might pursue other legal remedies for this part of the debt.
PMLA
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Grant of bail - Money Laundering - illegal mining - The High Court found sufficient grounds under PMLA for the charges, as the proceeds of the crime were derived directly from the illegal mining, which is a scheduled offense under PMLA. The activities met the criteria of involvement in possession, acquisition, and use of proceeds of crime, substantiating the applicability of PMLA. - Given the severity of the offenses and the potential for the accused to influence witnesses or tamper with evidence, the Court was inclined to prioritize the larger public interest and the integrity of the investigation over the individual liberties of the accused. The bail application was denied, with the Court stating that the petitioner failed to demonstrate any exceptional circumstances that would justify the grant of bail under the stringent provisions of PMLA.
Service Tax
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Refund of service tax paid on Reverse Charge Mechanism - It is the case of the Department that payment of service tax on RCM, availment of CENVAT credit of the same and refund of unutilized credit under Rule 5 are different and are governed by different provisions of law - The Tribunal reiterated that payment of tax and availing credit are distinct matters, with no automatic entitlement to refund unless specifically provided by law. - Additionally, they clarified that the refund claim couldn't be considered under Rule 5 of the CENVAT Credit Rules.
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Short payment of tax pursuant to VCES declaration - Regarding the service tax demand, the Tribunal found that the appellant had complied with the conditions of the VCES and settled the tax dues under the SVLDR Scheme, thus nullifying the demand raised under VCES. Concerning the Revenue's appeal, the Tribunal concluded that the demand was duplicative, vague, and hit by limitation, ultimately ruling in favor of the appellant.
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In the case of "Club or Association Service," the Tribunal ruled in favor of the appellant, citing the principle of mutuality and previous decisions supporting their stance. Similarly, for "Convention Service" and "Business Exhibition Service," the Tribunal found no merit in the demands, emphasizing that the activities did not meet the criteria for taxation under those categories. Additionally, the Tribunal held that the demand was barred by limitation, as there was no evidence of suppression to evade tax.
Central Excise
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100% EOU - non-fulfillment of export obligation - jurisdiction of respondent to question fulfilment of NFE - The Tribunal noted that the appellant had indeed achieved positive NFE within the stipulated block period and had received debonding certification from the Development Commissioner. Citing precedents and circulars, the Tribunal emphasized that once the Development Commissioner issues an exit order, revenue authorities lack jurisdiction to re-open the matter. Therefore, the proceedings against the appellant were deemed unsustainable and were set aside.
Articles
Notifications
Case Laws:
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GST
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2024 (5) TMI 552
Retrospective cancellation of GST registration of the petitioner - there is no clarity in the SCN as to where and before whom the petitioner had to appear in response to the SCN - Violation of principles of natural justice - HELD THAT:- The order of cancellation also does not give any details and is a completely unreasoned order. The order merely refers to the Show Cause Notice and states that the effective date of cancellation is 09.10.2019 i.e. a retrospective date. There is no clarity as to on what ground the registration of the petitioner has been cancelled. There is clearly non-application of mind on the part of the jurisdictional Commissioner and he seems to have acted simply on the recommendation of the Deputy Commissioner (Anti Evasion). The documents which have been produced in Court by learned counsel for the respondent have admittedly not been furnished to the petitioner along with the Show Cause Notice. 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 taxpayer during such period. Since the impugned Show Cause Notice is itself defective and the impugned order is cryptic without any reason, the same cannot be sustained. Petition disposed off.
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2024 (5) TMI 551
Violation of principles of natural justice - the impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - duplication of ITC - HELD THAT:- It is noticed that in the reply dated 10.10.2023 petitioner had taken a plea on the duplication of Input Tax Credit (ITC) amounting to Rs. 91,96,278.00/-. However, there is no consideration of the reply filed by the petitioner in the first instance and in the consequent rectification order dated 30.03.2024, a mere adjustment has been granted to the demand earlier raised. Therefore, the observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 10.10.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is incomplete, not duly supported by adequate documents and unable to clarify the issue which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner - Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order dated 30.12.2023 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.
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2024 (5) TMI 550
Violation of principles of natural justice - no opportunity of personal hearing was granted to the petitioner - challenge to order passed u/s 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- The impugned orders are liable to be quashed and set aside. Accordingly, this Court issues a writ of certiorari quashing the orders dated November 26, 2022 and February 19, 2024 with a direction upon the officer concerned to provide a copy of the SIB report to the petitioner within three weeks from date and subsequent to providing the SIB report, opportunity of hearing must be afforded to the petitioner before passing final order under Section 74 of the Act. Petition allowed.
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2024 (5) TMI 549
Cancellation of registration without any application of mind - violation of principles of natural justice - HELD THAT:- In the present case, the facts are similar to one in Surendra Bahadur Singh's case [ 2023 (8) TMI 1262 - ALLAHABAD HIGH COURT] , wherein the appeal was barred by time under Section 107 of the Act. However, the Division Bench in Surendra Bahadur Singh's case took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice. The orders impugned herein are liable to be set aside. Accordingly, the order in original dated November 10, 2022 and the appellate order dated April 6, 2024 are quashed and set aside - Petition allowed.
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2024 (5) TMI 548
Violation of principles of natural justice - violation of conditions in Section 65 of the respective GST Acts and that summary of the Show Cause Notice was issued to the petitioner - no prior intimation as is contemplated under Section 65(3) of the Act - HELD THAT:- The allegation that the respondent has violated Section 65 of the respective GST Enactment cannot be countenanced as the petitioner has not only participated in the proceedings before issuance of the Notice in Form GST DRC-01A dated 11.03.2022 but also filed a detailed reply to the Show Cause Notice in Form DRC-01 dated 09.03.2023. What has been enclosed today along with Writ Petition is only the summary of the Show Cause Notice in Form DRC-01 dated 09.03.2023. The summary of the Show Cause Notice, to which, the petitioner has filed reply and additional reply, is itself a detailed Show Cause Notice running to 146 pages. Therefore, the submission of the learned counsel for the petitioner that the respondent has violated the rights of the petitioner cannot be countenanced. Considering the fact that the reply of the petitioner has not been considered by the respondent in detail in the impugned order, the impugned order is quashed and the case is remitted back to the respondent to pass a fresh order - petitioner is willing to deposit 10% of the disputed tax amount of Rs. 11,59,31,746/-. The submission stands recorded. Therefore, the petitioner is directed to deposit 10% of the disputed tax amount of Rs. 11,59,31,746/- before the respondent on or before 30.05.2024. Petition disposed off.
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2024 (5) TMI 547
Non-payment of GST - misinterpretation of the orders passed by the respondents - HELD THAT:- The TRAN-1 verification issued is before the DGGI. The very objection raised by the petitioner that parallel proceedings cannot be undertaken, has been accepted by the respondents, and therefore, they have dropped the proceedings, so far as Commercial Tax Officer, Ward 8, Chandigarh is conerned. However, it does not mean that the petitioner can get away from the examination and verification to be done by DGGI, in pursuance of their show cause notice dated 29.09.2023. The petition is dismissed.
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2024 (5) TMI 546
Violation of principles of natural justice - reasonable opportunity was not provided to contest the tax demand on merits - petitioner was unable to respond to the show cause notice or participate in proceedings culminating in the order impugned herein - petitioner is willing to remit 10% of the disputed tax demand as a condition for remand - HELD THAT:- On perusal of the impugned order, it is evident that an audit was conducted and that an audit report dated 15.09.2023 was issued. It is also clear that an intimation and show cause notice preceded the impugned order. In these circumstances, the petitioner cannot be absolved of responsibility as a registered person to monitor the GST portal. At the same time, it is noticeable that the tax proposal was confirmed because the petitioner did not submit a reply along with supporting documents. Therefore, albeit by putting the petitioner on terms, the interest of justice demands that the petitioner be provided an opportunity. The impugned order dated 29.12.2023 is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of three 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 - Petition disposed off.
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2024 (5) TMI 545
Grant of Regular Bail - fraudulent passing of Input Tax Credit without actual supply of goods - violation of provisions of Section 132(1) (b) and 132(1)(c) of the CGST Act - HELD THAT:- This Court has arrived at the conclusion that the petitioner deserves to be released on bail in the present case. No doubt, the respondents have levelled specific allegations against the present petitioner, yet, the criminal liability of the petitioner is yet to be decided by the trial Court during the course of trial. Still further, the petitioner was arrested in the present case on 07.01.2023 and the maximum sentence provided under the statute is five years. Still further, the case of the prosecution is based on the testimonies of official witnesses and the petitioner may not be in a position to influence the witnesses, who are to be produced by the prosecution before the trial Court. Even otherwise, the petitioner cannot be confined in jail as an under-trial for an indefinite period. The present petition is allowed and the petitioner is ordered to be released on bail on his furnishing bail bonds/surety bonds to the satisfaction of the learned trial Court/Duty Magistrate/CJM concerned subject to the conditions imposed.
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2024 (5) TMI 544
Levy of GST - export of services or not - place of supply - Intermediary services or independent service - Marketing/ Recruitment/ Referral Consultant by the Applicant to foreign universities/ colleges on principal to principal basis - HELD THAT:- A perusal of the terms of the underlying agreements between the Applicant and foreign colleges and university amply clarifies that the Applicant is not an agent of foreign colleges and university, as it cannot and does not represent itself as an agent or broker or a similar person to enter into a contract, supply or transaction with third party i.e. the prospective students, on behalf of foreign colleges and university. In fact, neither the Applicant has any role or responsibility for services provided by foreign colleges and universities to the prospective students nor it can influence or interfere in the selection process of prospective students thus rendering itself an alien to the arrangement between the foreign colleges and university, and prospective students. The relationship between the Applicant and foreign colleges and university has been defined, impliedly or explicitly, as of principal to principal. It is also clear that the necessary conditions for qualifying as intermediary i.e. presence of three parties and provision of main service with ancillary service by the facilitator acting as an agent or broker, as per Section 2 (13), are not fulfilled by the applicant. The services of marketing/ recruitment/ referral consultant are provided by the Applicant to foreign colleges and university on principal to principal basis, with no contractual relationship with prospective students. The Applicant is providing its main service of marketing/recruitment and referral consultant to the foreign colleges/universities, which is independent of the transactions between the foreign colleges/university, and their prospective students. The Applicant cannot be construed to have been facilitating services of the foreign colleges and university to the prospective students as students cannot be construed as service recipients particularly in the absence of consideration flowing from them to the Applicant. Thus, the Applicant cannot be considered as intermediary for the purpose of Section 2 (13) of IGST Act. In the instant case, the Applicant (Supplier) is located in India while the recipient of services i.e. foreign colleges and university are located outside India. Since, the activity of the Applicant is an independent service of marketing/ recruitment/ referral consultant , the same will fall under Section 13 (2) of the IGST Act to determine its place of supply. Accordingly, the place of supply of the services of the Applicant shall be location of recipient of it services i.e. location of foreign colleges and university which is outside India. The activity of the Applicant for foreign college and university should qualify as export of service in terms of Section 2(6) of IGST Act provided the payments are received in convertible foreign exchange.
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Income Tax
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2024 (5) TMI 543
Computation of Long-Term Capital Gain derived from transfer of property - Indexed cost of improvement - AO not considering the cost of construction as per work order to complete the Semi-Finished Residential Flat - AO rejected the claim of the assessee only on the ground that the assessee could not justify the payment of consideration to the vendor with necessary bank statement - HELD THAT:- We are of the considered opinion that the argument of AO that the work order and agreement entered into by the assessee with the vendor is not genuine is totally incorrect and baseless. At the same time, the assessee is also unable to file further evidences to substantiate his case that he has paid a sum to the vendor for additional construction work in the property. Except the work order, the assessee could not furnish relevant bank statement to prove payment to the builder. Unless the assessee file necessary evidences to substantiate its claim, it is difficult for the AO to accept the claim of the assessee only on the basis of the work order. Therefore, we are of the considered opinion that the matter needs to go back to the file of the AO for further verification. Thus, we set aside the order of the AO and restore the issue back to the file of the AO with a direction to reexamine the claim of indexed cost of improvement on the basis of work order and agreement entered into with the vendor for putting up further construction in the property. AO is directed to call for necessary record from the Bank, if so necessary to ascertain the true nature of the work order entered into by the assessee with the vendor. In case the AO finds that the assessee has paid additional amount for further construction, then the AO is directed to allow deduction towards indexed cost of improvement while computing the Long-Term Capital Gain derived from transfer of property. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (5) TMI 542
N on-issuance of notice u/s 143(2) - DR tried to persuade us that there was no requirement of notice u/s 143(2) of the Act - HELD THAT:- Notice u/s 143(2) is required to be served on the assessee before making the addition in the hands of the assessee. Since the needful was not done by the AO before making addition in the hands of the assessee as contemplated u/s 143(2) of the Act, thus, there was jurisdictional error committed by Revenue before making addition in the hands of the assessee which goes to the root of the matter. Hence, any addition based on such fatal error, is not sustainable, in the eye of law. See Hotel Blue Moon [ 2010 (2) TMI 1 - SUPREME COURT] decided the issue in favour of the assessee.
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2024 (5) TMI 541
Income recognition - Interest on NPA - non-recognition of income is not permissible under the Income-tax Act, 1961 and the same should be added to the total income of the assessee for the year - ITAT deleted addition - HELD THAT:- As decided in Income Tax Appellate Tribunal [ 2015 (11) TMI 926 - ITAT KOLKATA ] irrespective of the method of accounting following by the assessee, interest, expenses of the nature referred to section 43B (d) of the Act can be allowed as a deduction only in the year in which such interest are actually paid. The debit to the profit and loss account of an amount which is claimed as deduction u/s 43B of the Act is not a requirement and the decision of Associated Pigments Ltd. [ 1998 (9) TMI 78 - CALCUTTA HIGH COURT ]supports the plea of the assessee in this regard - Decided in favour of the assessee and against the revenue. Interest on non-performing asses - HELD THAT:- As decided in Vasisth Chay Vyapar Ltd. [ 2010 (11) TMI 88 - DELHI HIGH COURT ] held that the assessee-company being NBFC is governed by the provisions of the RBI Act. In such a case, interest income cannot be said to have accrued to the assessee having regard to the provisions of section 45Q of the RBI Act and Prudential Norms issued by the RBI in exercise of its statutory powers. As per these norms, the ICD had become NPA and on such NPA where the interest was not received and possibility of recovery was almost nil, it could not be treated to have been accrued in favour of the assessee. Decided in favour of the assessee. Accrual of interest on recurring deposit - Year of assessment - HELD THAT:- Accrual of interest on recurring deposit / sinking fund was only upon maturity, it is also an admitted fact of the case that the entire accrued interest was accounted for by the assessee and was offered to tax in the assessment year 2005-06. Thus, the interest on such deposit/fund which was subjected to tax by the assessing officer in assessment year 2001-02 and assessment year 2002-03 was offered for taxation by the assessee in the assessment year 2005-06 and was accordingly taxed.Under the circumstances, the impugned order of the ITAT cannot be said to suffer from any manifest error of law. Decided in favour of assessee.
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2024 (5) TMI 540
Default in not depositing the TDS amount, as deducted, with the government - Default in not making TDS deductions with consequent denial of TDS credit - deductions from the running account bills raised against the supply of materials by respondents and and retained on the pretext of Income Tax Contingency - as pleaded that the kept back amount shall be released or the TDS certificate will be issued depending on the outcome of the appeal preferred by the JBVNL against the demand notice - writ of mandamus directing the Respondent JBVNL to forthwith issue TDS Certificate for the amount deducted as Income Tax @ 2% from the bills raised by the Petitioner towards supply of materials to the Respondent JBVNL so as to enable the Petitioner to get the tax credit of the said amount under Income Tax laws - HELD THAT:- The demand notice issued to the Respondent/JBVNL that it committed default in not making TDS deductions cannot cloak it with any authority or even an excuse to withhold a certain amount from the running bills of the Contractor. This is quite curious that the respondent/JBVNL seeks to take a stand before the CIT (Appeal) that it was not under an obligation to deduct 2% TDS from the running bills of the Contractor raised towards the supply of materials and, on the other hand, it has retained Rs. 2,90,32,000/- towards payment of 2% TDS deductions on that count. This is also relevant that the deductions by the JBVNL starting from the financial year 2016-17 have accumulated to Rs. 2,90,32,000/- but it did not deposit the said amount with the Income Tax Department. The amount so withheld from the running bills of the petitioner-Firm is speculative and kind of a wagering step by the JBVNL. The JBVNL has no authority in law to withhold Rs. 2,90,32,000/- as kept back amount for the purpose of litigation with the Income Tax Department. The action of the JBVNL in withholding Rs. 2,90,32,000/- is therefore held illegal and deprecated; cost must be imposed upon it. Any unjust retention of money or property of another shall be against the fundamental principles of justice, equity and good conscience. The unauthorized deductions from the running bills of the petitioner-Firm are patently illegal. Such deductions caused loses to the petitioner-Firm which filed its Income Tax returns but was deprived of Rs. 2,90,32,000/- and thereby suffered business or alteast interest losses. On the other hand, the JBVNL was unjustly enriched and need to restitute the petitioner-Firm. The refund of Rs. 2,90,32,000/- must therefore carry interest as a matter of course. In Indian Council for Enviro-Legal Action v. Union of India [ 2011 (7) TMI 1109 - SUPREME COURT] held that this is the bounden duty of the Court to neutralize unjust enrichment by imposing compound interest and punitive costs. In response thereof, a supplementary counter-affidavit has been filed stating that in terms of Clauses 10.1 and 10.7 of the General Conditions of Contract whereunder the Contractor is solely and entirely responsible for any taxes including income tax, the JBVNL is empowered to adjust such amount from the price/bills released to the Contractor. The JBVNL has further stated that in case the appeal filed by it fails it shall be required to deposit the entire amount with interest and penalties and then the TDS return shall be filed and certificate i.e. Form-16A for the same shall be generated and issued to the Contractor. In the circumstances of the case, we hold that the stand taken by the JBVNL lacks bona fide; short to saying actuated with oblique motive. The imposition of cost on the party which started litigation without any just cause or took false and frivolous defences is necessary to discourage the dishonest litigant. To this end, the Court is required to impose such cost that would make the litigant think twice before putting up any speculative claim or defence. The petitioner-Firm was unnecessarily dragged to the Court and, that too, knowingly and for no fault on its part. We are of the definite opinion that the JBVNL must be saddled with cost of Rs. 5 Lacs which shall be recovered from the Managing Director.
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2024 (5) TMI 539
Limitation for passing a assessment order - Consequential order passed by the assessing authority beyond the time limit specified u/s 153 (2A) - HELD THAT:- We find that the order of the Tribunal dated 24.05.2016 specifically directed the Assessing Authority to re-adjudicate the issue with regard to the claims made by the petitioner assessee u/s 54F. In accordance with the provisions of Section 153 (2A) of the IT Act, the Assessing Authority ought to have passed the consequential order by 31.03.2018 i.e., before the expiry of one year from 31.03.2017. However, Ext. P8 consequential order of the Assessing Authority is dated 17.02.2023 and proceeds on the assumption that there was more than one issue that was remanded to him for de novo adjudication. While it is the submission of the learned Standing counsel for the Income Tax Department that only the issue under Section 54F was remanded for de novo adjudication, we do not find it to be of much relevance to the issue that we are called upon to decide, namely, whether on a limited remand for de novo adjudication of one of many issues that arise for consideration in an assessment, the consequential order passed by the Assessing Authority can be seen as one that would attract the provisions of Section 153 (2A) of the IT Act. Taking note of the Scheme of the statutory provisions as referred to above, as also the inherent object behind those provisions, which is to ensure an expeditious finality to assessments, we are of the view that the consequential orders passed by the Assessing Authority pursuant to the remand had necessarily to be passed within the time prescribed u/s 153 (2A) - As significant in this context that the definition of assessment under the IT Act includes a re-assessment and in the case of the petitioner assessee the remand by the Tribunal warranted a reassessment of the issue in relation to the deductions claimed u/s 54F of the IT Act and the substitution of the revised finding, in place of the original finding on the said issue, in the assessment order that was originally passed. See DR. R.P. PATEL VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTTAYAM [ 2015 (3) TMI 1291 - KERALA HIGH COURT] The time limit specified in Section 153 (2A) of the IT Act is also intended to ensure that amounts due to the Government, if any, are received at the earliest point in time after the remand. If an assessee defaults in payment of the tax dues after the passing of the consequential order giving effect to the terms of the remand, he becomes liable to pay statutory interest from the date on which he ought to have paid the tax in the first instance i.e., along with his return. Thus, an Assessing Authority, who is called upon to adjudicate an issue afresh pursuant to a remand from an Appellate Authority, cannot ignore the time limit specified in the statute for passing the consequential order because any delay would operate to the prejudice of the assessee who would be called upon to pay interest for a longer time period corresponding to the delay - Decided in favour of assessee.
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2024 (5) TMI 538
Foreign Tax Credit u/s. 90/91 - statutory requirement prescribed under Rule 128(9) of I T Rules, 1962 for filing of Form 67 before due date of filing of return for claiming FTC - directory of mandatory obligations - Claim denied as assessee belatedly filed the corresponding Form- 67 under Rule 128 of I.T. Rules, 1963 - HELD THAT:- As in similar factual backdrop that case law in light of Duraiswamy Kumaraswamy [ 2023 (11) TMI 1000 - MADRAS HIGH COURT ] has already held the foregoing Rule 128 of I.T. Rules is directory only than mandatory in nature. This is indeed coupled with the fact that assessee had duly filed her Form-67 on 28.12.2021 well before sec. 154 order in question dated 10.03.2022. Faced with this situation, we hardly see any merit in the Revenue s instant sole substantive grievance.
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2024 (5) TMI 537
Disallowance of loss on sale of Government Securities - permissible business loss or not? - AO has disallowed the loss on the presumption that Central and State Government securities, the year for maturity of which was specified as 2028 and 2034, were not business stock-in-trade but were in the nature of investments - HELD THAT:- As per Section 6 of the Banking Regulation Act, in addition to the business of banking, a banking company may also engage in buying and selling of securities and such buying and selling is considered as part of its business activities. Therefore, the investment in Central and State Government Securities as appearing in the balance sheet of the company were its business assets and in the nature of stock-in-trade. Merely because they were shown as investment in the balance sheet they don t become capital asset, as buying and selling of the securities including Government securities is part of business activity of the assessee company. Further, the CBDT had issued a Circular No.599 dated 24.04.1991 giving clarification regarding treatment of securities as stock-in-trade or investment by the Banks. CBDT has categorically clarified that the securities held by Banks must be regarded as stock-in-trade of the Banks. Therefore, the loss on Government securities of Rs. 38,55,000/- as debited in the books of accounts of the assessee has to be treated as loss in stock-in-trade and not a capital loss in investments. As this loss was in the nature of business loss, the AO was not correct in disallowing the same. In view of these facts, the CIT(A) was not correct in confirming the order of the AO disallowing the loss. Accordingly, the AO is directed to allow the loss in Government securities claimed by the assesse as business loss. Depreciation on Government securities claimed by the assessee bank - HELD THAT:- Depreciation on Government Securities was deterioration in the value of security. In essence, this was a loss claimed on valuation of the security. As clarified by the CBDT vide Circular No. 599, reproduced earlier, the loss claimed by the banks on valuation of their securities was a business loss and an allowable deduction. We accordingly hold that the depreciation on Government securities claimed by the assessee bank is allowable, as deduction. Appeal preferred by the assessee is allowed.
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2024 (5) TMI 536
Denial of exemption u/s 11 - form No. 10B and 10BB has not been filed in time - claim of the assessee was that assessee filed form no.10B of the Act, prior to the filing of the return and the acknowledgement copy of the form no. 10B of the Act filed, was also shown - HELD THAT:- The extended time limit available to the assessee for the due date of filing of the return of income was 28 February 2022. Admittedly assessee filed return of income on 14/3/2022 and also furnished form number 10B along with that. Therefore, the due date for filing of form number 10B was one month prior to the due date of filing of the return of income i.e. 31 January 2022. As, the due date of filing of the return have been extended by the CBDT, the delay caused in filing form number 10B is minimal and also due to the uncertainty of the due date of filing of the return which is duly extended by CBDT. Identical issue arose before the coordinate bench in case of Kedar Nath Saraf Charity Trust [ 2024 (5) TMI 454 - ITAT KOLKATA] Income-tax Department was aware about the technical glitches and the problems faced by the tax-payers in furnishing various types of Forms including Form No. 10B is with regard to the furnishing of audit report in case of Trusts and Societies - return was filed within time limit prescribed u/s 139(1) of the Act but there was a delay in furnishing of the audit report on Form 10B and this Tribunal after considering the facts of the case as well as judicial precedents allowed the benefit of Section 11 12 of the Act. Coordinate bench held that up to March 2022, the country was passing through pandemic. The due dates for filing of the return of income as well as compliance made by the assessee also falls during that period. In view of this, we find that the delay caused in filing of number 10B deserves to be condoned. Accordingly, as indicated above, CIT- A was correct in allowing the appeal of the assessee.
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2024 (5) TMI 535
TP adjustment - rejection of assessee's contention by the DRP/AO to grant business volume discount adjustment and geographical difference adjustment while determining the Arms Length Price(ALP) - HELD THAT:- As pointed out by the assessee and as conceded by the DR also, the assessee has been allowed business volume discount adjustment in Asst.Year 2006-07 by the ITAT. Similarly, it was pointed out to us that the ITAT in the case of the assessee in its order reported in [ 2012 (11) TMI 111 - ITAT AHMEDABAD ] had noted that the TPO himself had allowed adjustment of transaction of sales with AE on account of geography. Therefore, it is clear that the assessee has been allowed adjustment to the sale price to its AEs on account of volume discount and on account of geography of sale. Having said so, we consider it fit to restore this issue back to the TPO to re-adjudicate the issue after considering the facts placed before us by the assessee on the issue of quantity discount and geographical adjustment. Disallowance on account of prior period expenses - assessee was unable to establish that the expenses was crystalised in the impugned AY - as argued DRP ought to have allowed prior period expenses crystallized during the year claimed after netting off with prior period income - HELD THAT:- ITAT [ 2022 (7) TMI 1497 - ITAT AHMEDABAD ], in its order allowed the claim of prior period expenses following the decision of Adani Enterprise Ltd. [ 2016 (7) TMI 1250 - GUJARAT HIGH COURT ] holding that where the disallowance of prior period expenses is a tax neutral exercise, since the assessee has incurred year to year with the tax rate also being the same in the years, there is no reason to make any such disallowance of prior period expenses. The Tribunal had noted the fact that the assessee had been consistently debiting prior period expenses in the past also, and considering this fact, we hold that the disallowance of prior period expenses is not tenable and is directed to be deleted. Disallowance of expenses invoking provision of section 14A r/w rule 8D - nexus between borrowed funds and investments - HELD THAT:- We hold that the following the decision of the Special Bench in the case of Vireet Investments P.Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] the AO is directed to re-compute the disallowances of administrative expenses, considering only those investments, which have earned exempt income. Disallowance of bad debts claimed - claim of the irrecoverable amounts written off in the books - HELD THAT:- We find merit in the contention of assessee, and do not consider it fit to restore the issue back to the AO for verification of the facts, whether the impugned amounts represent the business advances. The nomenclature /description of te amounts as deposit and the fact that they relate to several parties involving small amounts , therefore considering the materiality of the amount involved, it is not considered fit to seek verification of the fact by the AO noting that it is a very old appeal pertaining to A.Y 10- 11. Accepting, therefore, the fact that these advances were in the nature of business advance, and considering the decision of jurisdictional High Court in the case of Abdul Rasak Co. [ 1981 (2) TMI 27 - GUJARAT HIGH COURT ] we hold that the assessee be allowed claim as business loss in terms of section 28 of the Act. Assessee has not contested its original claim of these amounts written off being in nature of bad debts written off in terms of section 37(1) of the Act. Therefore, it is only the alternate claim of the assessee of the allowance of its amount in all to Rs. 6.51 lakhs out of the total claim of Rs. 17.15 lakhs, as business loss under section 28 of the Act, that is being allowed to the assessee. Disallowance on account of excess claim of depreciation - HELD THAT:- As in order of the ITAT in the case of the assessee pertaining to Asst.Year 2009-10 [ 2022 (7) TMI 1497 - ITAT AHMEDABAD ] and we find that identical issue was dealt wherein the Tribunal noted that the assessee has been disallowed excess claim of depreciation on account of depreciation thrust upon it in Asst.Year 2001-02 on asset, on which it had not claimed depreciation in the said year by the ITAT in Asst.Year 2006-07, 2008-09 and 2009-10 and even Asst.Year 2005-06. Further taking note of the admission of assessee that identical claim of excess depreciation has been disallowed in the preceding years by the ITAT, we have no hesitation in confirming the impugned disallowance of excess depreciation. Adjustment made to the book profits for disallowance on expenses made u/s 14A - HELD THAT:- As decided in Vireet Investment P.Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI ] as held that no adjustment to the book profits is permissible on account of disallowance of expenses made under section 14A of the Act in terms of provisions of section 115JB of the Act, we have no hesitation in deleting the disallowance made in the present case on identical facts. The AO is directed to delete the adjustment so made to the books profits on account of disallowance of expenses under section 14A.
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2024 (5) TMI 534
Validity of order passed u/s. 147 against deceased assessee - responsibility of legal representative u/s 159 - Addition u/s 68 - bogus LTCG - HELD THAT:- As per the settled principle of law, no order can be passed against a dead person, and thus, any proceedings taken against the deceased assessee shall be continued against the legal representative from the stage at which it stood on the date of the death of the deceased. A.O despite having been intimated about the fact that the assessee had expired failed to implead his legal heir and framed the assessment in the name of the deceased assessee. In a case where an assessee dies pending any assessment proceedings, the provisions of Section 159 of the Act get attracted. Accordingly, it is incumbent on the A.O to ensure compliance with sub-section (2) of Section 159 before any order is passed. As decided in DALUMAL SHYAMUMAL [ 2004 (11) TMI 57 - MADHYA PRADESH HIGH COURT] as the A.O had framed the assessment in the name of the assessee (since deceased), therefore, assessment so framed was a nullity. However, once the assessment order was held to be nullity, then the Tribunal should have given a consequential direction as contemplated u/s. 159 of the Act to the A.O so that proper assessment order could be passed. Thus, we hold the order passed by the A.O u/s. 147 r.w.s. 144B as nullity, and remand the matter to the file of the A.O for ensuring compliance with Section 159(2) for passing appropriate orders of assessment after validly putting to notice the legal representative/representatives of the deceased assessee.
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2024 (5) TMI 533
Addition u/s 69A on the basis of whatsapp messages - whatsapp messages contained in the mobile phone found from the appellant during the course of search relates to alleged transactions undertaken and that those transactions relates to and or carried by him - AO contended that in the chat message the recipient confirmed to have that transaction saying ok dear based on that ld. AO considered as unexplained money. HELD THAT:- The provision of section 69A of the Act empowers the ld. AO make addition of any money, bullion, jewellery or other valuable articles and such money, bullion, jewellery or valuable article is not recorded in the books of accounts maintained. Here the issue is that the money so recorded in the Whatsapp not found at the time of search in the possession of the assessee. Not only that the contention of the assessee that there is a double addition for one transaction i.e. one for Indian Rupee and another on account dollar and thus the addition of the double the amount. We found force in the argument advanced that there is no investment or expenditure on the part of the assessee found have been recorded in the search proceeding. It is also found that cash in Indian rupee or dollar have been found physically at the time of search. Based on these non-disputed facts before us we are of the considered view that there is no merits in the reasoning advanced by the revenue and therefore, we vacate the addition - Decided in favour of assessee.
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2024 (5) TMI 532
Unexplained income of the assessee - Unexplained deposits - contention of the ld. A.R. is that the assessee has withdrawn money from M/s. Kotak Mahindra Bank, Koramangala branch and the same has been deposited into same bank - only argument of the ld. D.R. is that assessee has not explained the reason for withdrawals of cash from the said account to hold that source of cash was not explained by the assessee - HELD THAT:- In our opinion, that cannot be reason for addition on this unexplained income of assessee. Once the assessee has explained the source of deposit as having given from the withdrawal made in the bank account, it was not open to the revenue to examine as to what assessee did with that money and cannot chose to disbelieve the plea of the assessee merely on the surmises that it would not be probable for the assessee to keep the money idle. Being so, the addition cannot be made on this count. This view of me is supported by the order of the Tribunal in the case of Shri Narayana Shibaroor Shibaraya [ 2022 (11) TMI 1112 - ITAT BANGALORE] as held that the cash deposits in the bank account are preceded by withdrawal from the very same bank account and If the revenue wants to disbelieve the plea of the Assessee then it must show that the previous withdrawal of cash would not have been available with the Assessee on the date of deposit of cash in the bank account. The AO and CIT(A) have proceeded purely on assumption and surmises that cash withdrawn was not available to the Assessee on completely extraneous factors. Addition on deposits made in bank account - assessee has pleaded that assessee has given an amount to one Mr. Sri Maruti Reddy towards purchase advance of immovable property. Later, there was a defect in title and amount has been returned and it was used for redepositing the same to the assessee s bank account - HELD THAT:- As incumbent upon the authorities to carry out necessary enquiry when assessee has made a statement that assessee has received the said amount from other party namely Shri Maruthi Reddy by way of refund of purchase advance given to him. In the present case, the lower authorities without carrying out any enquiry, made additions which is inappropriate. As held in the case of S.R. Venkata Ratnam [ 1980 (8) TMI 73 - KARNATAKA HIGH COURT] AO has not made any exercise to disbelieve the version of the assessee about the redepositing of amount out of the earlier withdrawal and also the ld. AO was required to disprove that the amount withdrawn earlier was not the amount redeposited. In the present case, when the assessee has taken a plea that it was the amount received from Mr. Maruthi Reddy, which was earlier advanced to him to purchase a property and that has not been verified by ld. AO and the addition has been made, which is not possible to do so without verifying the same. Thus force in the argument of the ld. A.R. and the addition was made on this count is deleted. Deposits during demonetization - HELD THAT:- As explained that the said amount has been deposited out of earlier savings. This is a nominal amount saved by assessee used to redeposit to bank account on demonetization. Considering the smallness of amount, no reason to sustain the addition. The addition is deleted. Deposits from receipts from parents - as per assessee the said amount was received from past savings given by assessee s parents and that said amount has been kept by assessee s parent and on demonetization the same amount has been given to the assessee and deposited to assessee s bank account - HELD THAT:- As discussed earlier, without bringing any material against the assessee, addition cannot be made. Accordingly, the addition is deleted. Appeal of the assessee is allowed.
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2024 (5) TMI 531
Addition made u/s. 69A - unexplained cash deposits - Rejection of books of accounts - Time Gap between withdrawal and deposits in the banks account - whether assessee has duly discharged the onus cast upon him? - Main contention of ld. A.R. is that the assessee is having opening balance as on 31.3.2016 at Rs.19,71,244/- as disclosed to the department in ITR-4 filed for the assessment year 2016-17, thus this amount is available to the assessee to deposit it into these two bank accounts - HELD THAT:- The department has no contra evidence to deny the availability of said opening balance to deposit into assessee s bank accounts. Similar issue came for consideration before this Tribunal in the case of Shri Narayana Shibaroor Shibaraya [ 2022 (11) TMI 1112 - ITAT BANGALORE] wherein as held that if the revenue wants to disbelieve the plea of the Assessee then it must show that the previous withdrawal of cash would not have been available with the Assessee on the date of deposit of cash in the bank account. The AO and CIT(A) have proceeded purely on assumption and surmises that cash withdrawn was not available to the Assessee on completely extraneous factors - Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. Decided in favour of assessee.
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2024 (5) TMI 516
Disallowance of deduction claimed u/s 80P - interest and dividends received from investments made with DCCB - whether the assessee is eligible for deduction u/s 80P with respect to the interest income earned on deposits parked with District Cooperative Central Bank, or not? - HELD THAT:- It is an admitted fact that the assessee has claimed deduction u/s 80P of the Act. The contention of the AO and the DR is that any income by way of interest or dividends derived the Co-operative Society from its investments with any other cooperative society is eligible for deduction. Revenue Authorities have also placed relied on the decision of Hon ble Supreme Court of India in the case of M/s Totgars Cooperative Sale Society Ltd [ 2010 (2) TMI 3 - SUPREME COURT] wherein it was held that investment of surplus on hand not immediately required in Short Term deposits and securities by a co-operative society providing credit facilities to members or marketing agriculture produce to member . However, in the instant case, the facts are distinguishable and hence, in my view, the ratio laid down in the case of M/s Totgars Cooperative Sale Society Ltd.(supra) shall not be applied to the instant case. On similar set of facts, in the case of Kakateeya Mutually Aided Thrift and Credit Co-op Society [ 2023 (9) TMI 211 - ITAT VISAKHAPATNAM] held in favour of the assessee the assessee has invested surplus funds out of the activities carried out as per the provisions of section 80P(2)(a) of the Act. We therefore by respectfully following the jurisdictional High Court are of the view that interest income should be allowed as deduction U/s. 80P(2)(a)(i) of the Act and thereby the Ld. CIT(A)-NFAC has rightly held by deleting the addition made by the Ld. AO and hence we find no infirmity in the order of the Ld. CIT(A)-NFAC. - Decided in favour of assessee.
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Customs
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2024 (5) TMI 530
Interest for delay in sanction of refund - transaction value of imports - Imports of Polyester Spun Yarn - HELD THAT:- As observed, the amount in question in the present case is no more remains to be an amount of customs duty nor it is an amount of pre-deposit, the amount is merely a deposit with Revenue which Revenue has no authority to retain. The appellant being the owner of the said amount. As per Article 300A of the Constitution of India also, no person shall be deprived of his property, save by authority of law. Once the self assessed value of the appellant has been accepted, the differential duty which was already recovered from the appellant cannot be called as the amount of duty or the amount collected under the authority of law. It definitely is the property of the appellant which remained with the department since the day of the deposit. Hon ble Apex Court in the case of Sandvik Asia Ltd. Vs. Commissioner of Income Tax-I 2006 (1) TMI 55 - SUPREME COURT , has held the assessee to be entitled to claim interest from the date of payment of initial amount till the date of its refund. Relying upon these decisions, as discussed above, I hold that the appellant herein is entitled to claim the interest on three of the amounts as have already been refunded to him. The interest shall accrue from the date of the payment of the said amount with the department. Keeping in view of this tribunal in the case of M/s S. S. Dyes Chemicals 2015 (11) TMI 1393 - CESTAT MUMBAI and the fact that the amount is lying deposited with the department since the Year 2013, I deem it to be a fit case for the interest to be awarded to the appellant on three of the amounts, already refunded , at the rate of 12% per annum to be calculated from the date of payment of the said amount till the disbursement thereof. Thus, the order is hereby is modified to the extent as mentioned. The appeals stands accordingly disposed off.
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2024 (5) TMI 529
Smuggling - illegal importation of the seized gold - Confiscation of the gold and Indian currency - Penalty - 'Prohibited goods' Or 'restricted items' - HELD THAT:- We find that the investigation has failed to bring in any evidence to counter this claim made by the appellant no. 1. Thus, we observe that there is no evidence available on the record to show that the Indian currency seized was the sale proceeds of the gold smuggled by appellant no. 1. Accordingly, we hold that the seizure of the Indian currency amounting to Rs.46,00,000/- is not sustainable. Thus, we hold that the confiscation of Indian currency of Rs.46,00,000/- u/s 121 of Customs Act, 1962 is not sustainable. Accordingly, we set aside the confiscation of the Indian currency in the impugned order. Imposition of penalty on appellant no.1 - W e observe that there is no evidence on record to show that appellant no.1 was involved in the smuggling of the gold into the country without payment of Customs duty. Appellant no.1 has been implicated by the two persons apprehended by the DRI, Kolkata. However, the search of the premises of the appellant no. 1 has not yielded any evidence in connection with the seizure of the said gold. Thus, we hold that the penalty imposed on the appellant no. 1 u/s 112 of the Customs Act, 1962 is not sustainable and accordingly, the same is set aside. Imposition of penalty on Shri Krishna Pramanik (appellant no. 2) - We observe that the apprehended persons have named one Krishna Sarkar as the person who handed over the gold to them. However, We do not find any evidence available on record to show that the said Krishna Sarkar and Krishna Pramanik are one and the same. The appellant no. 2 has been implicated in aiding transportation of the smuggled gold, but there is no evidence to substantiate this allegation. Thus, we hold that the penalty imposed on the appellant no. 2 is not sustainable. Imposition of penalty on the appellant nos. 3 and 4 - It is observed that they were apprehended by the officers of DRI, Kolkata when the gold weighing 2.625 Kgs was in their possession. They were not having any document to establish the licit import of the gold. Thus, there is 'reason to believe' that the gold was smuggled in nature and the involvement of the appellants no. 3 and 4 in the transportation of the smuggled gold without any valid document is established. We observe that the goods in question are not 'prohibited goods' warranting severe penalty. The goods are 'restricted items' for which a lesser penalty would meet the ends of justice. We find that the appellants have heavily relied on the decision of the Hon ble High Court in the case of Gopal Saha [ 2016 (5) TMI 83 - CALCUTTA HIGH COURT] . Thus, we find that the penalties are imposable on the appellant nos. 3 and 4, but the same are on the higher side. Therefore, we reduce the penalties imposed on these appellants to Rs.5,00,000/- (Rupees Five Lakhs only) each - In the result, the appeals filed by all the four appellants are disposed of.
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2024 (5) TMI 528
Seeking re-export of goods - Absolute confiscation of goods subject to prohibition on import - breach of intellectual property rights - Penalty u/s 112, 114AA Or 117 of Customs Act - furnished false declarations - enhancement of valuation - Cosmetic goods - Declaration of two lots of miscellaneous articles and one each of computer parts and accessories - Validity of notice - value of identical and similar goods - HELD THAT:- There is no finding that the value of the declared goods in the consignments of M/s Ghare Impex had been subjected to the requirements of rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 or that rule 3(4) therein was operable. It is clear that the declared value of the declared goods in the consignment of M/s Creative Sales and M/s Unique Impex could not have been less than any conceivably actual value and, more particularly, as these were found to be second hand upon examination. The value of declared goods have not been demonstrated as meriting re-valuation. We are also unable to fathom the discrimination in determination of the duty liability of M/s Ghare Impex, whose goods were almost entirely confiscated and ordered for destruction, while not effecting the same exercise for the other two importers similarly situated. The value of undeclared goods are not relevant to the proceedings except for imposition of penalty owing to absolute confiscation as well as to the only plea of appellants that goods may be allowed to be re-exported. There is no requirement for duty to be levied in either contingency. Nonetheless, the rigour of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is not to be discarded merely because there is no intent to levy duty as the definition of value in section 2 does not offer scope for such dilution. Furthermore, the notice, as well as the impugned order, is bereft of any discussion, in relation to the declared and undeclared goods, on the availability of identical or similar goods that was purportedly used as reference by the approved valuer when the adjudicating authority had already recorded the inevitability of by-passing rule 4 and rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. It is inconceivable that such prohibited goods are available in the market for an acceptable evaluation of price that the approved valuer appears to have resorted to. It would appear that the reliance placed on the report of valuer to the exclusion of the responsibility devolving on the proper officer opting for deductive value has rendered the valuation exercise to be untenable in its entirety and, in the absence of any factual narration in the notice, not amenable to fresh determination. Hence, the confiscation u/s 111(m) of Customs Act, 1962 for variation from declared value must be held to lack sanction of law as also the value arrived at by the adjudicating authority. Thus, the impugned order is modified to the extent that the goods absolutely confiscated therein are held to be liable for confiscation and, in acceptance of request for such by the importers, are permitted to be re-exported without being entailed by any other detriment u/s 125 of Customs Act, 1962. The goods permitted for re-export are, except for those in alleged breach of intellectual property rights , held as liable to confiscation supra but, in the absence of any evidence of any role played by any of the appellants in their import, recourse to section 112 of Customs Act, 1962 is not validated by law. The undeclared goods intended to be cleared for home consumption are, to the extent not absolutely confiscated, held as liable to confiscation u/s 111(l) of Customs Act, 1962 but permitted to be redeemed on payment of fine that erases the margin of profit and subject to penalty on the importer to the extent provided for in section 112 of Customs Act, 1962; this will entail determination of value for assessment u/s 14 of Customs Act, 1962 which the proper officer u/s 17 of Customs Act, 1962 shall discharge. Likewise, the declared goods in imports of M/s Creative Sales and M/s Unique Impex shall be subject to valuation for clearance and consequent fine and penalties for having been imported without appropriate licence. Consequently, the appeal is allowed to the extent as set out above.
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2024 (5) TMI 527
Export of ciprofloxacin tablets - Conversion (Amendment) of shipping bills - substitution of scheme code 19 by scheme code 03 in the shipping bills and related invoices - benefits of a scheme - drawback - advance authorisation for procurement of ciprofloxacin API as inputs against invalidation letters - HELD THAT:- The scope of section 149 of Customs Act, 1962 is statutorily circumscribed by the framework of the provision. It is intended for rectification of documents issued by parties to a commercial engagement which is, thereby, transposed into the statutorily prescribed entry envisaged by section 46 and section 50 of Customs Act, 1962. The empowerment stands on its own, and subject only to verifiability of facts as available on date of import or export, as the case may be. No other intrusion may be permitted to influence the disposal of request for amendment. The impugned circular suffers from the pre-disposition to perceive all, and any, request for amendment in terms of the consequences whereas the consequences to assessment of any benefit stems from another statutory provision which the designated authority is required to dispose off in accordance with the facts and the statutory framework of that empowerment. The convergence of the two in the impugned circular has had the effect of excoriating a jurisdiction contrary to legislated empowerment. We are led to conclude that the impugned order is in error. A contrary view would have the effect of allowing the jurisdiction in section 149 of Customs Act, 1962 to overwhelm the jurisdiction to decide as empowered by Customs Act, 1962 or any other law. Thus, we set aside the impugned order and direct the competent authority to dispose off the request of the applicant without considering the benefits that may flow thereby and strictly restricting itself to the judicial determination set out in the several decisions supra.
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Insolvency & Bankruptcy
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2024 (5) TMI 526
Admissibility of section 9 application - initiation of CIRP - operational debt claimed by RCL was due and payable or not - if any default thereto was committed by the Respondent No.1/BJCL - As claimed debt were paid before the admission of CIRP application - Respondent claimed the dues of GST are still pending - HELD THAT:- In the case of Section 9 application, it is necessary for the Operational Creditor to indicate the particulars of the crystallised debt qua the Corporate Debtor. From the given particulars in the Section 8 demand notice, it is clear that the total amount of operational debt claimed by RCL is Rs.1,96,96,325/- of which the principal amount for non-supply of cement clinker against advance was Rs.1,83,81,894/-. In addition, interest was claimed at the rate of 18% per annum from 11.04.2022 for 145 days amounting Rs.13,14,431/- only. In the Section 9 application, in Part IV also, the total amount of debt has been similarly shown as Rs.1,96,96,325/- only and interest has been calculated with effect from 11.04.2020 to 02.09.2022. It is therefore an undisputed fact that the crystallised amount of operational debt is Rs 1.96 cr only including interest and we do not find any other sum included in Form 3 or Form 5 submitted by the RCL. It is an undisputed fact that RCL had never sought any GST amount in the Section 8 demand notice or Section 9 application or at any time when the matter was pending adjudication before the Adjudicating Authority. The scheme of the IBC is to ensure that when a default takes place, in the sense that the debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt, once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. On looking into the facts of the present case, there are no hesitation to opine that BGCL had already made payment of the entire operational debt as claimed by RCL in Section 8 Demand Notice and debt as reflected in Form 5 of Section 9 application. In the factual matrix of the case at hand, when the dues in terms of Form 3 and Form 5 have been cleared by BJCL, endeavours on the part of RCL to seek initiation of CIRP by raising claims which do not find place in Form 3 and Form 5 filed by them, clearly manifests the intention of the RCL to invoke the provision of IBC to enforce recovery of debts against the Corporate Debtor. Allowing such claims which never formed part of the claim of operational debt before the Adjudicating Authority to be considered at the appeal stage is not tenable. This cannot be commended as it militates against the spirit and essence of IBC. The Impugned Order of the Adjudicating Authority is set aside - Appeal allowed.
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PMLA
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2024 (5) TMI 525
Grant of bail - Money Laundering - proceeds of crime - scheduled offences - illegal mining - principles of parity - Section 45 of PML Act - HELD THAT:- It is evident that the reason for giving explanation under Section 2(1)(u) is by way of clarification to the effect that whether as per the substantive provision of Section 2(1)(u), the property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country but by way of explanation the proceeds of crime has been given broader implication by including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence - It is evident that the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. The present petitioner directly looks transportation of over the illegal stone chips through inland vessels. These inland vessels are indirectly operated by Pankaj Mishra through his accomplices Rajesh Yadav, Rahul Yadav, Bachhu Yadav and present petitioner. Several trucks laden with stone chips/aggregates are crossed through these inland vessels without mining challans - Thus, the investigation has revealed that there is connivance of the petitioner with Pankaj Mishra and Rajesh Yadav Dahu Yadav in the illegal activities connected with the proceeds of crime derived out of illegal mining activities and the said petitioner is facilitating the accused person Pankaj Mishra to run the business of extortion illegal mining and transportation activities in Sahebganj. Besides this, heavy levy is extorted forcefully from transport vehicles operating in these mining areas, for allowing them to transport the mined stones and other items. The offence of money laundering as contemplated in Section 3 of the PMLA has been elaborately dealt with by the three Judge Bench in Vijay Madanlal Choudhary (supra), in which it has been observed that Section 3 has a wider reach. The offence as defined captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and is not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money laundering - The property must qualify the definition of Proceeds of Crime under Section 2(1)(u) of the Act. As observed, in all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of Proceeds of Crime under Section 2(1)(u) will necessarily be the crime properties. It is pertinent to mention here that the process envisaged under Section 50 of PMLA is in the nature of an inquiry against the proceeds of crime and it is not an investigation and the authorities who are recording the statements are not police officers and therefore, these statements can be relied upon as admissible piece of evidence before the Court. The summons proceedings and recording of statements under PMLA are given the status of judicial proceedings under Section 50(4) of PMLA. When such is the sweep of Section 50 of PMLA, the statements that have been recorded and which has been relied upon in the complaint must be taken to be an important material implicating the petitioner. The statements that were recorded during the investigation has been dealt with in prosecution complaint and many of the statements clearly implicate the petitioner. This Court while considering the prayer for regular bail has taken into consideration that though the Court is not sitting in appeal on the order passed by learned court since this Court is exercising the power of Section 439 Cr.P.C but only for the purpose of considering the view which has been taken by learned court while rejecting the prayer for bail, this Court is also in agreement with the said view based upon the material surfaced in course of investigation. Principles of parity - HELD THAT:- The law is well settled that the principle of parity is to be applied if the case of the fact is exactly to be similar then only the principle of parity in the matter of passing order is to be passed but if there is difference in between the facts then the principle of parity is not to be applied - It is further settled connotation of law that Court cannot exercise its powers in a capricious manner and has to consider the totality of circumstances before granting bail and by only simple saying that another accused has been granted bail is not sufficient to determine whether a case for the grant of bail on the basis of parity has been established. The Hon ble Apex Court in TARUN KUMAR VERSUS ASSISTANT DIRECTOR DIRECTORATE OF ENFORCEMENT [ 2023 (11) TMI 904 - SUPREME COURT] wherein at paragraph-18, it has been held that parity is not the law and while applying the principle of parity, the Court is required to focus upon the role attached to the accused whose application is under consideration. T he main allegation against the Pashupati Yadav @ Pashupat Yadav with whom parity is claimed, was hand in glove and working as a close associate with the other co-accused persons who were running and trading of mining of stone chips illegally without paying any royalty amount. The crime proceeds to tune of Rs.1.23 Crores was deposited in the account of the said Singhvahani Transport Pvt. Ltd. from 22.04.2021 to 16.03.2022 on different dates - Applying the principle of parity, this Court is of the view as per the judgment rendered by the Hon'ble Apex Court rendered in Tarun Kumar that the benefit of parity is to be given if the facts/involvement of the petitioner, is identical to the persons with whom parity is being claimed. Having regard to the entirety of the facts and circumstances of the case, this Court is of the opinion that the petitioner has miserably failed to satisfy this Court that there are reasonable grounds for believing that he is not guilty of the alleged offences. On the contrary, there is sufficient material collected by the respondent-ED to show that he is prima facie guilty of the alleged offences - since the petitioner has failed to make out a special case to exercise the power to grant bail and considering the facts and parameters, necessary to be considered for adjudication of bail, this Court does not find any exceptional ground to exercise its discretionary jurisdiction to grant bail. This Court is of the view that it is not a case where the prayer for bail is to be granted, as such, the instant application stands dismissed.
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Service Tax
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2024 (5) TMI 524
Levy of service tax - Business Auxiliary Service - commission received from M/s Spice Telecommunications Ltd. - HELD THAT:- The Commission received by the appellant are for sale of SIM Cards and other products of M/s Spice Communication Ltd. The service tax has already been paid by M/s Spice Communication Ltd. on the product sold by the appellant. This issue is no more rest integra and has been settled by the various decisions of the Tribunal - reliance placed in the case of COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS M/S RAMA SALES AND SERVICES [ 2018 (3) TMI 556 - ALLAHABAD HIGH COURT] the Hon ble Allahabad High Court held that purchase and sale of SIM Cards by franshisee/distributors appointed by telecom companies not leviable to Service Tax under category of Business Auxiliary Service especially when such companies already discharged service tax on gross amount of Such SIM cards and charging any further service tax on same amount would lead to double taxation. Similarly, in the case of Dyal Medicos [ 2014 (11) TMI 1136 - CESTAT NEW DELHI] it was held by the Tribunal that commission on SIM Cards of BSNL where service tax has already been discharged by BSNL on full value of SIM cards, separate commission is not payable. The impugned order is not sustainable in law and the same is set aside - Appeal allowed.
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2024 (5) TMI 523
Refund of service tax paid on Reverse Charge Mechanism - It is the case of the Department that payment of service tax on RCM, availment of CENVAT credit of the same and refund of unutilized credit under Rule 5 are different and are governed by different provisions of law - HELD THAT:- On going through the records of the case, it appears that having paid the applicable service tax on being pointed out by the audit, the appellants have filed the refund claim. If the appellants are seeking refund of service tax under Section 11B of Central Excise Act, 1944, they have to satisfy the conditions of Section 11B which provides for refund of any duty. It is not clear as to why the appellants have claimed refund of duty; it is not duty which is paid in excess or under mistaken notion of law. Any claim of refund should have some basis for claiming of the same. The claim of the appellants appears to be that they have paid service tax on Reverse Charge Mechanism; they are eligible to avail CENVAT credit of the same and as they are not in a position to avail and utilize the credit, they are seeking refund under Section 142(3)of CGST Act, 2017. From the records of the case, it is seen that the case does not fall under the category of refund under Rule 5, as a refund claim for the relevant quarter has already been filed and availed by the appellant, the fact of which is not denied by them. It is found that the appellant is attempting to compress various provisions relating to refund under Central Excise Act, 1944; CENVAT Credit Rules 2004 and CGST Act 2017. The provisions of law do not permit the same. It was for the appellant to pay the applicable service tax in time; to avail CENVAT credit of the same and claim refund under the provisions of Rule 5 as the appellants are engaged in export. The appellants have paid duty on being pointed out after the implementation of GST. Thus, their claim of refund of unutilized credit has no merit. As the service tax cannot be held to have been paid without sanction of law, the appellants are also not eligible for refund of service tax as such. The appeal is rejected.
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2024 (5) TMI 522
Short payment of tax pursuant to VCES declaration, under Sec 110 read with Sec 111 of the Finance Act, 2013 for the period up to 31.12.2012 - short payment of tax under the head Cargo Handling service and Mining service for the period 10.04.2008 to 11.08.2010 - imposition of personal penalty - detailed examination not carried out - extended period of limitation - HELD THAT:- There is no detailed examination of the services rendered by the appellant for the period under dispute. In the absence of proper averments in the SCN with respect to nature of service and its classification, the demand raised as lumpsum with reference to Annexure-III to the SCN is vague. Accordingly, the learned Commissioner has rightly held the demand to be bad both on account of duplication and vagueness as well as hit by limitation. It is found that learned Commissioner has rightly observed that the appellant has not been put to proper notice seeking correct classification of services. Further, evidently, SCN dt.08.10.2014 covered the period up to 2010-11 under various heads, including mining service , GTA service , etc., which was issued less than 3 months prior to the present SCN dt.30.12.2014. Thus, Revenue was fully aware of the affairs of the appellant while issuing the previous SCN dt.08.10.2014 and hence, the department cannot take the plea in the subsequent SCN that the demand is with respect to some missed out services or category of service - the learned Commisisoner has rightly dropped the demand of Rs.9,68,42,681/-. Appeal allowed.
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2024 (5) TMI 521
Levy of service tax - doctrine of mutuality - Club or Association Service - Convention Service - Business Exhibition Service - extended period of limitation - penalty - appellant is an association engaged in promoting industry, trade and commerce. Club or Association Service - appellant submits that they are a mutual organization and hence, no Service Tax is payable by them - HELD THAT:- The service in this case has been rendered by the appellant to their members. There is no service provider and service receiver exists in this case. When the service provider and service receiver are the same person, it is a 'self- service' and there is no tax on self-service. The contention of the appellant is agreed upon that the principle of mutuality applicable in this case and therefore, there is no liability to pay Service Tax in this case - there is no merit in the demand confirmed in the impugned order - demand set aside. Convention Service - Appellant submits that sometimes some seminars/workshops are not open to the general public and is only for members - HELD THAT:- When the appellant organizes meetings for their own members, it is not open to general public. However, the appellant is not providing any service in relation to organizing of conventions. In this case, the principle of mutuality as approved by the Hon ble Apex Court in the case of State of West Bengal v. Calcutta Club Ltd. [ 2019 (10) TMI 160 - SUPREME COURT] applies. Accordingly, no Service Tax is liable to be paid on the services rendered to their own members - the demand confirmed in the impugned order under Convention Service is not sustainable. Business Exhibition Service - Demand raised solely based on the gross figures available in the balance-sheet without giving any reason for the nature of the services rendered - HELD THAT:- The appellant contended that it is a settled position of law that onus of proving taxability is on the Revenue; tax has been demanded under Business Exhibition Service on the ground that it is not sponsorship service ; the Department needs to prove that the amount has been received from some business exhibitor in relation to business exhibition service, which has not been done. The submissions made by the appellant are agreed upon - appellant has not rendered 'Business Exhibition Service' and the demand confirmed in the impugned order on this count is not sustainable. Extended period of Limitation - HELD THAT:- The Department was aware of the working of the appellant and there is no scope for suppression in the facts and circumstances of the case - he issue involved is of interpretation of legal provisions and hence, the extended period cannot be invoked to demand Service Tax. Accordingly, the demand is liable to be set aside on the ground of limitation also. Penalty - HELD THAT:- As there is no suppression with intention to evade the tax established in this case, no penalty imposable on the appellant. Accordingly, the penalty imposed on the appellant in the impugned order is set aside. The impugned order is set aside - appeal allowed.
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Central Excise
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2024 (5) TMI 520
100% EOU - non-fulfillment of export obligation - jurisdiction of respondent to question fulfilment of NFE - appellants have already achieved positive NFE in the block period - HELD THAT:- The appellant has achieved positive NFE within block period and also obtained de-bonding from the Development Commissioner - As the de-bonding certificate has also been issued by the Development Commissioner, the Revenue has no power to initiate proceedings against the order of the Development Commissioner as held by this Tribunal in the case of COMMR. OF CUSTOMS (PORT) , KOLKATA VERSUS M/S TRANSWORLD BUSINESS CORPORATION [ 2018 (7) TMI 1297 - CESTAT KOLKATA] . Similar view has been taken by this Tribunal in the case of UNIVERSAL BIOFUELS PVT. LTD. VERSUS CC, VIJAYAWADA [ 2019 (4) TMI 490 - CESTAT HYDERABAD] , wherein this Tribunal has held ' We also find strong force in the argument of Ld. Counsel for the appellant that the final decision regarding any licence issued by the DGFT or Development Commissioner rests with such authority. Once the final exit has been given by the Development Commissioner, Customs has no authority to re-open the matter.' In view of the above cited judicial pronouncement and the issuance of order of order of De-bonding by the Development Commissioner, the respondents have no jurisdiction to initiate proceedings against the appellant as the appellants have already achieved positive NFE in the block period. Therefore, the proceedings against the appellants are not sustainable. Accordingly, the same are set aside - Appeal allowed.
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2024 (5) TMI 519
Valuation adopted by the Respondent when the goods were cleared from their depots - Adoption of lower assessable value while clearing the goods from their depots and realising higher value of the sales taken up by them from their depot - Contradictory findings - period 2006 to 2011 on 27.12.2011 - extended period of limitation - HELD THAT:- Since the findings of the Adjudicating Authority in the OIO and the findings of the Commissioner (Appeals) are contradictory in many places, in the interest of justice, the matter has to be remanded to the Adjudicating Authority to verify all these facts properly. The Respondent should be given copies of all the relied upon documents irrespective of whether the extract has been taken from Respondent s own record or they have been taken from some other source. After this, principles of natural justice should be followed and the Adjudicating Authority should pass a detailed and considered Order, both on merits as well as on account of limitation. Appeal allowed by way of remand.
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Indian Laws
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2024 (5) TMI 518
Dishonour of Cheque - liability created in favour of the Complainant by the Accused or not - MoU between the manufacturer and the retailer - The retailer issued multiple cheques to the distributor, which were subsequently dishonoured - presumption under Section 139 of NI Act was rebutted by the Accused - differences in the evidences - presumption of innocence in criminal trial - evidentiary value of evidence - proof of foundational facts for drawing of presumption under Section 139 of NI Act on the basis of available documents - HELD THAT:- The view of the trial Court is hyper technical view. The trial Court has overlooked the basic facts about the roles played by CW No. 1 and CW No. 2. The trial Court scrutinized their evidence by presuming that they are the witness to prove a particular fact only but in fact, they are the witness in respect of the facts forming transaction right from placing of the orders till filing of complaint. The trial Court overlooked the fact that the Complainant is not a natural person but an artificial entity working through natural persons and that too, in the office situated at different places. The trial Court decided the complaint as if the trial of bodily offences is being conducted. The complaint under Section 138 of NI Act is based on the documents and proved by giving oral evidence. On some occasion, these complaints involve business transactions. It involves the correspondence in between the parties made in usual course. Such correspondence throws light on the intention of the parties. The trial Court overlooked the difference in relationship in between the H.P., and Kores, Kores and Ambitious and Ambitious and H.P., and Ambitious. No doubt, Kores on behalf of H.P., was selling the products to the Sub-distributors. It is true that the MoU in between H.P., and Kores was not produced. There must be some financial terms. However, it is already observed the relationship in between Kores and Ambitious, stand on different footing. It is purely sale and purchase of products. Ambitious was getting some incentives from H.P. Ambitious was not satisfied - The MoU is restricted only to incentives by way of sale promotion and it has nothing to do with basic transaction of sale and purchase of products. This defence was taken by the Ambitious just to avoid a lawful payment to Kores. This finding is given on the basis of available documents and on the basis of documents not produced by the Ambitious including the Court litigation. The cheques are the cheques within the purview of instruments. The instructions given for not depositing these cheques by Ambitious could not be substantiated by bona fide dispute with Kores. In fact, it was a dispute with the H.P. Coupled with this fact, no evidence was adduced to prove the sufficiency of amount in the account by Ambitious. The Kores have complied with the provisions of Section 138 of the NI Act relating to issuance of notice in time, receipt of notice and filing of complaint in time - the judgment of acquittal needs to be reversed - the Accused has committed offence punishable under Section 138 of the NI Act. The order of conviction upheld - appeal allowed.
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2024 (5) TMI 517
Constitutional validity of para 83 of the EPF Scheme and para 43A of the Pension Scheme - international workers - grievance of the petitioners is that, under para 83 of the EPF Scheme, international workers are covered under the Act and Scheme, irrespective of their salary drawn by them. The employees other than the international workers, who draw exceeding Rs. 15,000/- per month is outside the purview of the Scheme. HELD THAT:- Section 5 of the EPF MP Act states that the Central Government may, by notification in the Official Gazette, frame a Scheme to be called the Employees Provident Fund Scheme for the establishment of provident funds under this Act for the employees or for any class of employees and specify establishments or class of establishments to which the said Scheme shall apply and they shall be established, as soon as, may be after the framing of the scheme, a Fund in accordance with the provisions of this Act and the Scheme. On reading of Section 7 of the said Act, it is thus clear that the modification of the Scheme is a statutory power which the Central Government initially exercises and then the notification is placed before each of the houses of the parliament for its ratification - In the instant case, the Government of India has the power under Section 7(1) of the EPF MP Act to modify the Scheme from time to time and the competence of the Central Government to introduce or modify the Scheme is apparent from Section 7 of the EPF MP Act. The aims and objects of introducing para 83 of the EPF Scheme as could be seen is, to protect the Indian employees going abroad to work from being subjected to the social security and the retirement clause of their post-country which are prejudicial to their interest and to motivate these countries for entering into such agreements with India and to make it happen is to provide for reciprocal treatment to the nationals of these countries while they work in India - Keeping in view the aims and objects of the main EPF MP Act, when a ceiling amount of Rs. 15,000/- per month has been placed as a threshold for an employee to be a member to the scheme, para 83 of the EPF Scheme ought not to have an unlimited threshold for international workers while denying the same benefit to Indian workers. There being no commonality of interest of the aims and objectives of EPF MP Act, 1952 and para 83 of EPF Scheme, para 43A of EP Scheme to be struck down as incompatible, arbitrary, unconstitutional and ultra vires. Thus, there is discrimination between the Indian employees working in a non-SSA country (who are not international workers as per definition) and foreign employees from a non-SSA working in India who are classified as international workers. There is no rational basis for this classification nor there is reciprocity that compels to classify foreign employees from non-SSA countries as international workers - The introduction of para 80 and 81 under the Scheme in respect of working journalists and the cine employees cannot be equated with bringing international workers under the EPF Scheme. In the case of working journalists, considering the fact that they undergo a lot of risk on duty, the said amendment was made. The introduction of para 83 of Employees Provident Fund Scheme and para 43A of Employees Pension Scheme are hereby struck down as unconstitutional and arbitrary and consequently, all the orders passed thereof are unenforceable. Writ Petitions are allowed.
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