TMI Tax Updates - e-Newsletter
May 18, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Law of Competition PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Amnesty Scheme for one time settlement of default in export obligation by Advance and EPCG authorization holders.

   By: Vinay Goyal

2. Special Fake Registration Drive- Key Action Points

   By: NikhilMohan Jhanwar

3. Cross-border wire transfers shall be accompanied by accurate, complete, and meaningful originator and beneficiary information.

   By: Vivek Jalan

4. FEES AND ADDITIONAL FEES PAYABLE WHILE FILING COMPANY LAW FORMS

   By: DR.MARIAPPAN GOVINDARAJAN

5. MANAGING STUCK TAX REVENUE & IBC CODE

   By: Dr. Sanjiv Agarwal

News

1. Cabinet approves Memorandum of Understanding between Institute of Chartered Accountants of India and The Chartered Accountants of the Maldives

2. Cabinet approves signing of Memorandum of Understanding between Competition Commission of India and Egyptian Competition Authority

3. Stakeholders Event for Working Groups 1 & 2 at the first Ministerial meeting of India-EU Trade and Technology Council

4. India-EU FTA negotiation is progressing well: Sh. Goyal

5. Sh. Goyal meets Mr. Breton on the sidelines of the 1st Ministerial meeting of India EU Trade and Technology Council

Notifications

Customs

1. G.S.R. 368 (E) - dated 16-5-2023 - Cus

Effective rates of customs duty and IGST for goods imported into India - Corrigendum – Notification No. 35/2023, dated 29-04-2023.

FEMA

2. G.S.R. 369 (E) - dated 16-5-2023 - FEMA

Amendment to the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023. - Rule 7 related to Use of International Credit Card while outside India

GST - States

3. 599-F.T. - dated 12-4-2023 - West Bengal SGST

Seeks to extend, u/s 168A, the time limit specified under sub-section (10) of section 73 for issuance of order under sub-section (9) of section 73 of the said Act.

4. 598-F.T. - dated 12-4-2023 - West Bengal SGST

Seeks to waive late fee for the non-filers of GSTR-10.

Income Tax

5. 27/2023 - dated 16-5-2023 - IT

Scheme namely the Mahila Samman Savings Certificate, 2023 notified u/s 194A(1)(C) of IT Act

Indian Laws

6. G.S.R. 237 (E) - dated 31-3-2023 - Indian Law

Mahila Samman Savings Certificate, 2023.

Law of Competition

7. F. No. R-40007/6/Reg-Meeting/Noti./2023-CCI - dated 16-5-2023 - Competition Law

Competition Commission of India hereby establishes following regional offices.

Circulars / Instructions / Orders

Customs

1. 11/2023 - dated 17-5-2023

Amnesty Scheme for one time settlement of default in export obligation by Advance and EPCG authorization holders - Notification No. 32/2023-Customs dated 26.04.2023

Highlights / Catch Notes

GST

• Section 74 GST Proceedings Valid Without Show Cause Notice; Independent of Section 61 Requirements.

  Case-Laws - HC : Validity of proceedings u/s 74 without issuing SCN for Scrutiny of GST returns - Merely because no notices were issued under Section 61 of the Act would mean that issues of classification or short payment of tax cannot be dealt with under Section 74 as exercise of such power is not dependent upon issuance of notice under Section 61. - HC
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• High Court Dismisses Petition for Release of Goods; Transporter Not Responsible for Tax Payment, No Supporting Affidavit Provided.

  Case-Laws - HC : Seeking release of detained goods - The submission made now seeking release of conveyance, is on the ground that tax has been paid in full. It is not for the transporter to make this submission as such payment, if at all would have been borne by the assessee concerned, and not the transporter. To be noted that the assessee is not on affidavit before this Court attesting to the aforesaid position. - There are no merit in this Writ Petition and the same is dismissed. - HC
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• GST Not Charged on Plot Sale if Booking or Agreement Made Before Release Certificate Issued; Sale Deed Post-Certificate.

  Case-Laws - AAR : Levy of GST - construction of immovable property - the applicant is not liable to charge GST on sale of plot, if the booking of plot and / or receipt of consideration and/or agreement for sale is entered prior to the release certificate and sale deed is executed after receipt of release certificate - AAR
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Income Tax

• High Court Rules New Tax Benefit for JDAs Applies Prospectively, Not Retrospectively, Under Subsection 5A of Section 45.

  Case-Laws - HC : Taxability of Capital gains - Year of taxability - Joint Development Agreement (JDA) - Effect of new subsection 5A u/s 45 added - retrospectivity OR prospectivity - We find no discrimination having been visited on individuals or Hindu undivided families, for whom there was a change made in the manner, or the previous year in which the computation of total income is made, which was effective only insofar as the agreements entered into after 01.04.2018. - WP claiming the benefit with retrospective effect dismissed - HC
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• High Court Dismisses Writ Petition on Section 148A Reassessment; Observations Won't Prejudice Future Income Assessment Claims.

  Case-Laws - HC : Reopening of assessment - notice to petitioner u/s 148A(b) - any observations of the assessing authority while passing order u/s 148A(d) with regard to merits of assessment of income would remain subject to the order to be ultimately passed in reassessment proceedings u/s 148 and would not be to the prejudice of rights and contentions of the assessee u/s 148 as well as departmental remedies in respect thereof. - WP dismissed. - HC
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• Penalty u/s 271(1)(c) for revenue recognition under AS-9 deemed unsustainable; AS-7 method not mandatory that year.

  Case-Laws - AT : Penalty u/s 271(l)(c) - recognization of revenue as per AS-9 - Section 43CB has been inserted w.e.f. 1/4/2017. Hence Section 43CB is not applicable to the year under consideration. Revenue has raised a ground that Assessee had violated law by not following AS-7 method of Accounting, however, it was never, a compulsory method for the year under consideration. Hence, there is no violation qua AS-7. We agree with the Ld. CIT(A) that Penalty u/s 271(1)(c) is not sustainable - AT
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• Penalty Confirmed for Non-Compliance with Audit Requirement u/s 271B of Income Tax Act.

  Case-Laws - AT : Penalty u/s 271B - Tax audit - failure to get books of accounts audited u/s 44AB - assessee did not maintain books of account u/s 44AA - Neither section 44AA and 44AB are in substitution of each other and nor the penalty levied u/s 271A and 271AB are in alternate or in substitution to each other. The separate and distinct provisions of section 44AA and 44AB of the Act not only apply on different class of persons but also on the different threshold of income/sales turnover. - Levy of penalty confirmed - AT
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• Income Tax Act Section 41(1) Upheld: Sundry Creditors Addition Confirmed Due to Unverified Parties and No Repayment Efforts.

  Case-Laws - AT : Addition of Sundry Creditors u/s 41(1) - Appellant could not get the confirmation of the parties - expenses which have not been paid for the last six years - expenses wherein not even a single creditor had demanded the money back nor the assessee made any attempt to repay the same - Addition confirmed - AT
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• Assessee Challenges Disallowance of Bad Debts; Argues Provision Adjustment Equals Actual Write-Off Under Tax Law.

  Case-Laws - AT : Disallowance of bad debts written off - Admittedly, the provision was created by the assessee in the earlier year out of the profit and loss account. Thus, any adjustment against such provision for bad and doubtful debts amounts to actual writing off the bad debts. - the assessee cannot be denied the benefit for the bad debts merely on the reasoning that such bad debts were not claimed in the profit and loss account but adjusted against the provision of bad debts. - AT
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• Overseas Cricket Association's Termination Compensation Not Taxable in India Under Article 5(5) of India-South Africa DTAA.

  Case-Laws - AT : Income taxable In India - Taxability of compensation paid to the overseas Cricket Association for the termination of the agreement - Dependent Agent Permanent Establishment (DAPE) - As the assessee cannot be said to be DAPE of CSA in India under Article 5(5) of the India-South Africa DTAA. Thus, the payment of compensation to CSA under the Termination Agreement is also not taxable under the provisions of the India-South Africa DTAA. - AT
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• Penalty Order Timing u/s 275(1)(c): Must Be Issued Within Six Months of Penalty Action Initiation.

  Case-Laws - AT : Levy of penalty u/s 271C - Period of limitation - In the present case, since penalty u/s 271C has not been initiated during the course of any proceedings, first part of sec. 275(1)(c) would have no application and it is only the second part which would apply. Thus the penalty order ought to have been passed within a period of six months beginning from the end of the month in which the action for imposition of penalty was initiated. - AT
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• Penalty Imposed for Concealing Capital Gains on Goodwill u/s 271(1)(c); Assessee Provided Inaccurate Income Details.

  Case-Laws - AT : Levy of penalty u/s 271(1)(c) - Non disclosing capital gains on sale of goodwill - The transferee company, in its published accounts, recognized goodwill and it cannot be said that the assessee was not aware of the goodwill. Thus, we are of the opinion that it is a clear case of concealment of income by filing inaccurate particulars. - As assessee has deliberately made an attempt not to disclose true facts, levy of penalty confirmed - AT
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• Income Tax Order u/ss 201(1) and 201(1A) Barred by Limitation Due to Pre-2010 Amendment Timeline.

  Case-Laws - AT : Order passed u/s 201(1)/201(1A) - Failure to deduct TDS in certain cases - whether assessment barred by limitation? - reasonable period of four years - Period prior to the amendment in section 201(3) by the Finance Act, 2012 w.r.e.f. 01.04.2010 - the order passed by the ld. TDS officer u/s 201 / 201 (1A) of the Act is barred by limitation - AT
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• Exemption under Income Tax Act Section 10(10AA) capped at Rs. 3 lakhs; no revision unless notified by CBDT or court.

  Case-Laws - AT : Exemption u/s 10(10AA) - Eligible amount of exemption - if the limit fixed in 2002 revised, consequent to the directions or the proceedings before the Hon’ble Delhi High Court or the CBDT revise the limit then in that situation the assessee may approach the jurisdictional AO for taking the benefit of increase in limit but presently considering the fact that in the absence of the relevant notification benefit cannot be granted to the assessee more than Rs. 3 lacs. - AT
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• Section 263 Revision: Assessee's Accounting Policy Deemed Sales Reversal, Not Unexplained Expenditure; No Prejudice to Revenue.

  Case-Laws - AT : Revision u/s 263 - unexplained expenditure - Though the policy adopted by the assessee is not at par with the settled accounting policies since the cash is entered in the books without actually receiving the cash, however, going through the flow of the transactions we find that this is in the nature of sales reversal - it is merely a sales reversal entry and not a case of unexplained expenditure - no prejudice is caused to the Revenue due to this accounting system consistently followed by the assessee - AT
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• Trust's Fee Receipts Assessment Needs More Evidence Beyond Section 133A Accountant's Statement.

  Case-Laws - AT : Assessment of trust - Unaccounted fee receipts - reliance on statement recorded u/s 133A of Accountant of the Society - It is a settled law that statement recorded during the survey operation u/s 133A of the Act may be a relevant material but in the absence of further materials to substantiate it, the statement recorded u/s 133A of the Act could not be the basis for making addition. - AT
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• Assessee Must Justify Cash Deposits During Demonetisation to Avoid Unaccounted Classification; Burden of Proof Lies with Them.

  Case-Laws - AT : Unexplained cash deposits - Assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. Burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. - AT
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• Income Tax Penalty u/s 271(1)(c) Overturned Due to Defective Notice u/s 274.

  Case-Laws - AT : Penalty u/s 271(1)(c) - Defective notice u/s 274 - The notice u/s. 274 r.w.s. 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued, thus the penalty order passed u/s 271(1)(c) of the Act by the Assessing Officer and the order of the CIT(A) in confirming the penalty order are erroneous - AT
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Customs

• High Court Orders Release of Watermelon Seeds Imported Before Sept 30, 2022, Following No-Objection Certificate by Customs.

  Case-Laws - HC : Seeking release of detained goods - ascertaining date of import for the purpose of export of watermelon seeds made on or before 30.9.2022 - when the custom authorities have issued no-objection certificate, prima facie case is made out for release of the goods. In that view, the competent custom authority is directed to release and facilitate the clearance of the goods of the petitioner - HC
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• Court Questions Co-Accused's Statement in Smuggling Case; Section 9D Cites Lack of Examination u/s 138B Procedure.

  Case-Laws - AT : Smuggling - Reliability of uncorroborated statement of co-accused - Section 9D is pari materia to Section 138B of Customs Act 1962 and hence the ratio of the above said decision squarely applicable to this case as well . In this case, the adjudicating Authority has not examined the person who has given the statement which has been relied upon to implicate the Appellant. - When the procedure set out in Section 138 B is not followed, the statement of the co accused has no evidentiary value. - AT
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• Customs Rule 7: Invalid PVC Sheeting Valuation Due to Lack of Evidence on Imported Goods Market Survey.

  Case-Laws - AT : Valuation of imported goods - PVC sheeting - rejection of declared value - rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 requires adoption of the value of identical or similar imported goods sold in India as the base for computation of unit price. There is nothing on record to evidence that the market survey was confined, unarguably, to imported goods without which the re-determination thereof fails the test of law. - AT
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• Court Rejects Freight Cost Increase for Duty Recovery; Confirms Rule 3 Violation in Customs Valuation Case.

  Case-Laws - AT : Valuation - enhancement of freight component for recovery of additional duty - It is clear from the records that the adjudicating authority had arrived at a mathematical computation that had nothing to do with any payment made to the carrier. This is not the intent of adjustment necessitated by rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. For this reason, the enhancement, for the purposes of determining differential duty, in the impugned orders must be set aside. - AT
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• Court Rules on Provisional Release of Seized Goods; Jurisdiction Limits Under Customs Act, 1962, Section 110A Highlighted.

  Case-Laws - AT : Seeking provisional release of seized goods - The conclusion that the impugned goods are unfit for human consumption is beyond the scope of jurisdiction conferred by Customs Act, 1962 - The law does not intend that State is enriched by fines arising from breach of the law or by substituting for the importer to trade in goods, whether seized or even confiscated. Section 110A is couched in such plain language as to give no room for controversy in interpretation or speculation of legislative intent; indeed, it does not even offer scope for discriminatory treatment among imported goods. - AT
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• Appellant Can Amend Bill of Entry for Duty-Free Clearance of Undeclared Diamonds u/s 149 of Customs Act 1962.

  Case-Laws - AT : Entitlement to duty free clearance - Return (import) of export goods (unsold) - undeclared quantity of cut and polished diamonds - As the goods are yet to be cleared for home consumption, there cannot be any prejudice caused to Revenue by exercise of authority under section 149 of Customs Act, 1962 to make appropriate alterations in the bill of entry for which the appellant may make formal application insofar as the ascertainment of claim for eligibility to exemption from duty is extendable to them is concerned. - AT
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FEMA

• RBI Withdraws Permission for Using International Credit Cards Without Prior Approval for Expense Payments.

  Notifications : Permission for use of International Credit Card for making payment by a person towards meeting expenses, without the approval of RBI, withdrawn - Notification
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Indian Laws

• Court Erred in Denying Petitioner's Cross-Examination Right u/s 145(2) in Cheque Dishonor Case.

  Case-Laws - HC : Dishonour of Cheque - right of the accused to cross examine the complainant - The trial Court, committed error in observing that the petitioner is silent on the specific ground of defence or point on which he wishes to cross examine the complainant. It may be that the petitioner has an opportunity to lead defence evidence and rebut the presumption if any, however, that does not mean that the valuable right of the petitioner to cross examine the complainant which he is entitled to under section 145(2) of the NI Act can be lightly brushed aside. - HC
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IBC

• Creditors' Committee Opts for Liquidation of Corporate Debtor After No Resolution Plan Submitted by Extended Deadline.

  Case-Laws - AT : Seeking Liquidation of Corporate Debtor - no resolution plan received till date (by RP) - no error can be said to have been committed by the Committee of Creditors in taking decision of liquidation when no resolution plan was received by the Resolution Professional inspite of extending the date. - AT
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• Settlement Halts CIRP: Tribunal Closes Proceedings Using Rule 11 of NCLAT Rules, 2016 After Parties Reach Agreement.

  Case-Laws - AT : Seeking closure (withdrawal) of CIRP proceedings - Settlement of dispute between the parties - The present is a case where Committee of Creditors has not yet been constituted and the Appellant after filing settlement agreement by the Financial Creditor dated 08th May, 2023, prays for withdrawal of the CIRP in exercise of inherent power of this Tribunal under Rule 11 of NCLAT Rules, 2016. - CIRP closed - AT
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Service Tax

• Court Rules Willful Intent Necessary for Extended Limitation in Service Tax Non-Payment Cases: Misclassification Insufficient.

  Case-Laws - AT : Non-payment of service tax - extended period of limitation - suppression of facts - d mis-classified the services - mere suppression of fact is not enough as it has also to be conclusively established that suppression was wilful with an intent to evade payment of service tax. - AT
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Central Excise

• Court Finds No Evidence of Cenvat Credit Fraud; Capital Goods Were Received and Used in Manufacturing Process.

  Case-Laws - AT : Wrong and irregular Cenvat credit - allegation that transaction were on paper only - non receipt of capital goods physically - the present case is on a higher pedestal as the capital goods received from M/s. AESPL were duly installed in the factory of the Appellant and were being used in the manufacture of finished goods. The department has not brought any evidence on record that the Appellant did not receive various capital goods from M/s. AESPL and was not using the same in the manufacture of finished goods - there is no material on record to show that M/s. AESPL did not supply capital goods to the Appellant as alleged in the show cause notice and held in the impugned order. - AT
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VAT

• Assessing Concealed Turnover Under JVAT Act Section 35(7) Requires Clear Evidence and Officer's Recorded Satisfaction.

  Case-Laws - HC : Concealment of turnover - validity of assessment and Levy of penalty - recording of satisfaction is sine qua non before proceeding to impose tax and penalty upon the assessee under Section 35(7) of the JVAT Act. Any such satisfaction is to be based on tangible materials as are found by the AO as the provisions are penal in nature where an assessee is found to be indulging in tax evasion by suppression or concealment of actual sales or turnover by selling goods at a higher price than shown by him. - HC
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Case Laws:

• GST

• 2023 (5) TMI 712
  Validity of proceedings u/s 74 without issuing SCN for Scrutiny of GST returns - no deficiency in returns pointed out - condition precedent for initiation of action under Section 74 of CGST Act - Requirement to issue a notice under subsection 3 of Section 61 of Central Goods and Service Tax Act, 2017 once returns have been submitted by the assessee before initiating action under Section 74 of the Act or not - HELD THAT:- In the present case it does not appear that any discrepancy was noticed by the department in the returns of the petitioner nor any such deficiency was pointed out to the assessee for it to be rectified by it. The returns, therefore, remain intact. It is later at the stage of consideration of the return that the department has found that proper tax has not been deposited and consequently proceedings under Section 74 has been initiated and concluded against the petitioner. In the statutory scheme the course followed by the department would clearly be permissible in law. The argument that unless deficiency in return is pointed out to the assesee, and an opportunity is given to rectify such deficiency, that the department can proceed under Section 74 is not borne out from the statutory scheme and the argument in that regard therefore, must fail. The scrutiny proceedings of return as well as proceeding under Section 74 are two separate and distinct exigencies and issuance of notice under Section 61(3), therefore, cannot be construed as a condition precedent for initiation of action under Section 74 of the Act. Merely because no notices were issued under Section 61 of the Act would mean that issues of classification or short payment of tax cannot be dealt with under Section 74 as exercise of such power is not dependent upon issuance of notice under Section 61. The argument is misconceived is thus, repelled - Petition dismissed.

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• 2023 (5) TMI 711
  Refund of the amount of IGST on the ocean freight charged, already paid by the petitioner - Constitutional validity of N/N. 8 of 2017 and 10 of 2017 both dated 28.6.2017 read with corrigendum dated 30.6.2017 as held to be ultra vires in the case of Mohit Minerals Pvt. Ltd. vs. Union of India [ 2020 (1) TMI 974 - GUJARAT HIGH COURT ]. HELD THAT:- The above position and law emanating from the decision of this court in Mohit Minerals Pvt. Ltd. could not be disputed by learned advocates for the parties - It may also be mentioned that similar issue came up for consideration before the co-ordinate Bench in ADI Enterprises vs. Union of India [ 2022 (6) TMI 849 - GUJARAT HIGH COURT] , wherein the question was about refund of the IGST paid pursuant to the aforementioned Notifications. The court directed respondents to refund the amount of IGST already paid by the applicants pursuant to Entry No.10 of Notification No. 10 of 2017. Thus, the notifications impugned in this petition have already been declared ultra vires. Therefore, the said prayer in this petition did not require any further consideration. Refund of the amount of Rs.1,69,03,829/- paid by the petitioner as IGST on ocean freight of goods imported during January, 2018 till June, 2020 - HELD THAT:- The competent authority of the respondents is directed that if such amount of IGST has been collected by the authorities, the same shall be refunded to the petitioner within six weeks from the date of receipt of this order alongwith the statutory rate of interest. Petition allowed.

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• 2023 (5) TMI 710
  Seeking release of detained goods - Permission sought by the transporter not the owner of the goods - Section 129(1) of the Tamil Nadu Goods and Services Tax Act, 2017 read with the Central Goods and Services Tax Act, 2017 and Integrated Goods and Services Tax Act, 2017 - HELD THAT:- Though Section 129 provides for various situations where release of conveyance and goods may be sought, Section 129(6) is specific to a transporter and enables a transporter to seek release of the conveyance in the circumstances mentioned therein, being, upon payment of penalty under sub-section (3) or a sum of Rs.1.00 lakh, whichever is less. The benefit as above, is always available to the petitioner before me. The submission made now seeking release of conveyance, is on the ground that tax has been paid in full. It is not for the transporter to make this submission as such payment, if at all would have been borne by the assessee concerned, and not the transporter. To be noted that the assessee is not on affidavit before this Court attesting to the aforesaid position. Reliance is placed upon the decision of this Court in TVL. THIRUVANNAMALAIYAR TRANSPORT REP. BY ITS PROPRIETOR SR. V. KESAVAN VERSUS THE DEPUTY STATE TAX OFFICER, STATE TAX OFFICE I (INT), VELLORE [ 2022 (12) TMI 710 - MADRAS HIGH COURT ] . In that case, the distinction between the manner in which Section 129 would operate qua a consignor/consignee on the one hand, and transporter on the other, has not been specifically argued and thus not taken note of or addressed. There are no merit in this Writ Petition and the same is dismissed.

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• 2023 (5) TMI 709
  Levy of GST - construction of immovable property - booking of plot, receipt of consideration and agreement for sale is entered as well as sale deed is executed after as well as prior to the release certificate - Sale of Plot - Basic Infrastructure Development charges - Other common amenities and facilities charges - applicability of GST if the sale price is a consolidated price in the agreement for sale towards land cost, basic infrastructure development charges and other common amenities and facilities charges. HELD THAT:- It is seen that the applicant has separately collected the consideration towards the (a) Plot area, (b) basic infrastructure development charges, and (c) other common amenities and facilities. Consideration towards the plot area - HELD THAT:- It is clear that the same is covered under entry 5 of Schedule III, and hence the transaction shall be treated neither as a supply of goods nor a supply of services. Consideration separately shown to have been collected towards basic infrastructure charges - HELD THAT:- It is seen that the same are done to provide the basic infrastructure facilities like electricity access up to the plot, water and sewerage access up to the plot and roads, etc. These are mandatory requirement for release of plots and the plots become the saleable plots only after the provision of these basic infrastructure and facilities. Hence they are a part and parcel of the consideration for the plot though collected and shown separately. These facilities created are to be handed over to the local authorities and no longer remain the part of the applicant s property. Hence the consideration collected towards basic infrastructure development is part of the consideration towards the plot and is not a consideration for a separate supply - These constructions are done on the land not transferred to the plot owners but remains in the ownership of the applicant till it is relinquished to the local authorities. Hence the amount collected on account of this only increases the value of the land (plot) and hence do not form a separate supply. Consideration separately shown to have been collected towards common amenities and facilities - HELD THAT:- It can be seen that the Club House and other common amenities are provided as a service with no transfer of title to land or buildings and hence would not be covered under entry 5 of Schedule III of the CGST Act. What is provided is only a service of access to the service facilities and hence is liable to tax and does not form part of the consideration for the land or building. These are also not mandatory facilities to be provided as per any law. The ownership rights on the above facilities are found to be still remaining with the Promoter and the Promoter can assign these facilities to anyone of his choice and the Purchaser is only provided with access rights. Hence this provision of access rights for a separate consideration would definitely form a separate supply under the provisions of Section 7(1) of the CGST Act, 2017. Corpus fund - HELD THAT:- The same is found to be in the nature of deposit for future expenses and if the future expenses are known when the amount is collected, the same attains the nature of advance and hence becomes taxable at the time of its collection itself. If the nature of expenses are not known at the time of collection and it is for unforeseen expenses, it would be in the nature of a deposit and is not a part of consideration for a supply at the point of collection but when the same is applied to an expense, the supply would be constituted and would be taxable. Applicability of GST if the sale price is a consolidated price which includes land cost, basic infrastructure development charges and other common amenities and facilities charges - HELD THAT:- There is only service of access to club house and common amenities and the same is considered as a supply and hence the value proportionate to club house and common amenities are applicable to GST.

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• Income Tax

• 2023 (5) TMI 708
  Taxability of Capital gains - Year of taxability - Joint Development Agreement (JDA) - Effect of new subsection 5A u/s 45 added - retrospectivity OR prospectivity - whether sub-section (5A) of Section 45 of the Act; inserted by the Finance Act, 2017, with effect from 01.04.2018, apply retrospectively? - Provision inserted to eliminate an unintended consequence, visiting the assessee with a hardship, which was sought to be removed HELD THAT:- Since the amendment to Section 45 by insertion of a sub-section was expressly stated to be, with effect from the 1st day of April, 2018. There is no question of any discrimination between persons who entered into a JDA before and after the amendment, insofar as the JDA entered into by an individual or a Hindu undivided family, prior to 01.04.2018 being governed by the law on the subject as it existed at that point of time, i.e. on a conjoint reading of Section 2(47)(v) read with Sections 45 48. There is no discrimination among equals since the differentiation is made on the basis of date on which the JDA has been entered into, which is a natural consequence of an amendment brought into the Act by way of an insertion expressly stated to be prospective from a specific date i.e., 01.04.2018. Further, though there are different class of assessee under the Income Tax Act, they cannot be considered to be equal, merely for reason of their being assessed under that Act. In the present case, the amendment made effective from 01.04.2018 is expressly stated to be prospective from that date and there can be no intendment ferreted out since the above noted deficiencies are totally absent. We find no discrimination having been visited on individuals or Hindu undivided families, for whom there was a change made in the manner, or the previous year in which the computation of total income is made, which was effective only insofar as the agreements entered into after 01.04.2018. We find no reason to accept the contention raised of it s retrospectivity and reject the argument of discrimination and the amendment having intended mitigation of hardship and removal of unintended consequences. The consequence that flow from the provisions in the absence of sub-section (5A) of Section 45 prior to 01.04.2018 cannot be obliterated by the subsequent amendment, which was expressly stated to be prospective. We reject the writ petitions making it clear that we have answered only the question of retrospectivity urged before us. We have not gone into the facts and the various contentions of the petitioners, regarding the JDA having not materialized, no consideration having been passed, the JDA itself having become unworkable and even some of the petitioners, companies and like legal entities having become defunct.

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• 2023 (5) TMI 707
  Reopening of assessment - notice to petitioner u/s 148A(b) accompanying the information with the assessing officer to suggest that income chargeable to tax has escaped assessment - HELD THAT:- Assessing authority has received information from DDIT (investigation), Unit III, Nagpur from DGGI and GST authorities as well as from CBDT that the sellers of the assessee were availing fraudulent ITC on the basis of investigation made by the concerned agencies. Such information would be information referable to clause (i) of Explanation 1 to second proviso to section 148 - We have already observed that there is no challenge to the notice by the assessee on the ground that information disclosed vide notice u/s 148A(b) is not covered by the information specified in Explanation 1 to the second proviso to section 148. Maintainability of the writ petition against the order passed under section 148A(d) is distinct from the scope of adjudication available qua the order passed under section 148A(d) - The limited scope available under Article 226 of the Constitution of India to adjudicate an order passed under section 148A(d) of the Act, 1961 would be confined to existence of the information only, in view of the scheme of the Act of 1961. A contrary construction cannot be culled out from the judgment of the Supreme Court of India in Red Chilli International Sales [ 2023 (1) TMI 674 - SC ORDER] In Anshul Jain [ 2022 (10) TMI 3 - SC ORDER] the Supreme Court did examine the scope of proceedings under section 148A vis-a-vis reassessment proceedings u/s 148 of the Act to observe that by the very nature of proceedings the examination would remain more exhaustive at the stage of reassessment proceedings with elaborate remedies available under the statute to the assessee. The order passed by the AO u/s 148A(d) regarding existence of information suggesting that income chargeable to tax has escaped assessment would otherwise remain subject to reassessment order passed under section 148 - Thus, any observations of the assessing authority while passing order u/s 148A(d) with regard to merits of assessment of income would remain subject to the order to be ultimately passed in reassessment proceedings u/s 148 and would not be to the prejudice of rights and contentions of the assessee u/s 148 as well as departmental remedies in respect thereof. We do not find any merit in the challenge laid to the order of assessing authority u/s 148A(d), as well as the notice issued u/s 148 - WP dismissed.

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• 2023 (5) TMI 706
  Penalty u/s 271(l)(c) - assessee offered additional income only because of search - inaccurate particulars of income for not following recognization of revenue as per AS-9, as the assessee had violated the law by not following percentage of completion method (POCM) as prescribed by ICAI in AS-7 - HELD THAT:- Though the assessee had explained that assessee was following Project Completion Method. We are aware that explanation 5A to Section 271(1) has introduced the deeming fiction. In this case the difference in the return of Income is only because of Method of Accounting. It is not disputed that assessee was following Project Completion Method which was allowed for AY 2016-17. Therefore, the explanation submitted by the assessee for the difference in the original return of income and return filed after the search is a valid reason. See TRIDENT ESTATE PRIVATE LTD. [ 2021 (5) TMI 384 - ITAT MUMBAI] as held that the project is incomplete and in substance if assessee wishes to offer for taxation its gain on completion of project i.e. apply completed contract method the same cannot be rejected. A legal claim or change of opinion cannot partake character of concealment. Section 43CB has been inserted w.e.f. 1/4/2017. Hence Section 43CB is not applicable to the year under consideration. Revenue has raised a ground that Assessee had violated law by not following AS-7 method of Accounting, however, it was never, a compulsory method for the year under consideration. Hence, there is no violation qua AS-7. We agree with the Ld. CIT(A) that Penalty u/s 271(1)(c) is not sustainable - Decided against revenue.

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• 2023 (5) TMI 705
  Disallowance of claim of Foreign Tax Credit (FTC) - assessee filed rectification u/s 154 as passed not granting the claim of the assessee - CIT(A) confirmed the order of rectification and held that the assessee has not filed Form No.67 before the prescribed time limit [after the due date of filing of the return u/s 139(1)] - HELD THAT:- The assessee had filed Form No.67 along with documentary evidence and acknowledgement for the same dated 30.03.2021 is on record (Exhibit B4 before the CIT(A). From the income tax return filed along with the computation of income, it is evident that the foreign salary has been included in the total income and tax on the said income has been paid. The assessee has claimed FTC for the taxes paid abroad . The Bangalore Bench of the Tribunal on identical facts in the case of Ms.Brinda Ramakrishna v. ITO [ 2022 (2) TMI 752 - ITAT BANGALORE] had held that filing of Form 67 is a procedural / directory requirement and not a mandatory requirement. It was held that violation of the procedural norm does not extinguish the substantive right of claiming the credit of FTC. Thus we hold that the assessee is entitled to the benefit of FTC. Decided in favour of assessee.

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• 2023 (5) TMI 704
  Penalty u/s 271B - Tax audit - failure to get books of accounts audited u/s 44AB - assessee did not maintain books of account u/s 44AA - HELD THAT:- An person covered u/s 44AB is of course also covered u/s 44AA of the Act but not the vice-versa may not be true. The penalty u/s 271A is levied for non-compliance of the provisions of section 44AA of the Act, whereas, the penalty u/s 271B is levied for non-compliance of the provisions of section 44AB of the Act. Neither section 44AA and 44AB are in substitution of each other and nor the penalty levied u/s 271A and 271AB are in alternate or in substitution to each other. The separate and distinct provisions of section 44AA and 44AB of the Act not only apply on different class of persons but also on the different threshold of income/sales turnover. The object of requiring the assessee to get his books of accounts audited u/s 44AB is to get a clear picture of the assessee s accounts so as to enable the Income Tax Authorities to assess true and correct income of the assessee. The penalty u/s 271B is attracted for failure of the assessee to get the books of account audited. - Decision in the case of BHARAT CONSTRUCTION COMPANY VERSUS INCOME TAX OFFICER [ 1998 (12) TMI 614 - MADHYA PRADESH HIGH COURT] followed. Since, the case in hand, the assessee did not get his books of account audited, therefore, as per the provisions of section 44AB read with section 271B AO rightly levied the penalty u/s 271B of the Act. We, therefore, do not find any merit in the appeal of the assessee and the same is accordingly dismissed.

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• 2023 (5) TMI 703
  Addition of Sundry Creditors - Appellant could not get the confirmation of the parties - Appellant has submitted that he could not obtain the confirmation as they are very old creditors - CIT (A) held it is apparent that liabilities on account of creditors appearing in the books of Appellant have ceased to exist as the parties are not acknowledging their dues from the Appellant and, therefore, in view of Explanation 1 to Section 41(1), there is cessation of liability by the concerned parties - Whether revenue can bring the expenditure incurred in the earlier years to be taxed in the subsequent years? - Whether the revenue unilaterally deem the liabilities ceased as time went by? HELD THAT:- The revenue can bring the expenditure incurred in the earlier years to be taxed in the subsequent years if it is proved that the expenditure incurred was bogus and the revenue can deem the liabilities ceased as time went by taking into consideration, the period of non-payment of dues and the intention to pay the dues. Having examined the expenses payable and the detailed order of the ld. CIT(A) how the expenses are not found to be genuine, we hold that the expenses which have not been paid for the last six years and the expenses which have been incurred for Amit Saree and Rangoli Collection pertaining to F.Y. 2007-08 and all other expenses wherein not even a single creditor had demanded the money back nor the assessee made any attempt to repay the same. CIT(A) has correctly examined the invoices, period and purpose. Hence, we decline to interfere with the order of the ld. CIT(A) - Decided against assessee.

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• 2023 (5) TMI 702
  Disallowance of bad debts written off - appellant had not written off the same in its books of accounts - assessee has not put any effort into the recovery of such bad debts - CIT(A) concluded that the assessee has not written off bad debts to the tune of Rs. 69,33,446.00 in the books of accounts and therefore, he disallowed the same - HELD THAT:- We are not in agreement with the finding of the CIT(A) on the reasoning that the assessee has not written of the bad debts amounting to Rs. Rs. 69,33,446.00 against the provision for the bad debts which has already suffered the tax. Any adjustment made by the assessee on account of the bad debts against the provisions created in the earlier year amounts to actual writing off the bad Debts in the books of accounts. Thus, the assessee cannot be denied the benefit for the bad debts merely on the reasoning that such bad debts were not claimed in the profit and loss account but adjusted against the provision of bad debts. Appeal of the assessee is allowed. Admittedly, the provision was created by the assessee in the earlier year out of the profit and loss account. Thus, any adjustment against such provision for bad and doubtful debts amounts to actual writing off the bad debts. Thus, we set aside the finding of the CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.

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• 2023 (5) TMI 701
  TP Adjustment - Comparables selection - TPO has rejected the R Systems International Limited from the list of comparables on the basis that it has a different year end as compared to assessee - HELD THAT:- We notice that the coordinate bench in assessee s own case AY 2010-11 [ 2022 (8) TMI 1379 - ITAT MUMBAI] . Tribunal recorded that inasmuch as this company has not been rejected on the ground of functionality, if the quarterly results are available in the public domain wherein the figures for the relevant quarter are also available, there cannot be any difficulty to work out the proportionate margin. While placing reliance on the decision of this Tribunal in the case of Cadence Design Systems India Ltd., the Tribunal directed the TPO to consider the quarterly results and work out the proportionate margin results. As gone through the order and also the facts involved in this matter. The rejection of this comparable is not on the ground of functional dissimilarity, but only because of a different accounting period. Facts being similar, we are of the considered opinion that it is a fit case to direct the ld. AO to consider the quarterly results and work out the proportionate profit margin for this purpose, we remand the matter to the file of the TPO/AO for compliance of our direction. Thus as the issue is covered by the above decision of the coordinate bench in assessee s own case we remit the issue back to the TPO with a direction to consider the quarterly results and work out the proportionate profit margin of the comparable after giving a reasonable opportunity of being heard to the assessee. Denial of deduction u/s.10AA for interest income - HELD THAT:- In assessee s case, we notice that the assessee has placed the surplus funds in FDs and has earned interest from the same. The facts of assessee s case being identical to the case of Hewlett Packard Global Soft Ltd [ 2017 (11) TMI 205 - KARNATAKA HIGH COURT] respectfully following the above we hold that the interest income earned by the assessee is eligible for deduction under section 10AA. Accordingly, we delete the disallowance made by the Assessing Officer in this regard.

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• 2023 (5) TMI 700
  Income taxable In India - Taxability of compensation paid to the overseas Cricket Association for the termination of the agreement - Dependent Agent Permanent Establishment (DAPE) - assessee conducted an annual Cricket tournament called CLT20 during the months of September/October every year, till the year 2014 and entered into an arrangement with CSA and CA to ensure the participation of their winners and/or runner-up teams of the domestic Twenty20 Cricket competition in the CLT20 Tournament apart from other ICC member countries - main income from the CLT20 Tournament arose from the sale of media rights - whether the CSA had a DAPE in India under the provisions of the India-South Africa DTAA? HELD THAT:- We find that the payment made to CSA by the assessee under the Termination Agreement dated 25/06/2015 was not only for the premature termination of the arrangement amongst them, whereby CSA was required to ensure the participation of teams from South Africa in the CLT20 Tournament each year, but the compensation was also for the non-compete clause as provided in clause 6 of the agreement. However, there is no clause in the agreement that supports the submission of the assessee that the compensation was for the purpose of avoiding any litigation and settling the disputes, therefore we find no merits in the said submission. In the present case, we are of the considered view that the payment to CSA is not arising from any operations carried out in India in the year under consideration and thus the same is not taxable under section 9(1) of the Act. Further, the fact that the agreements were executed in India is of some relevance, but only for the purpose of determining the jurisdiction of the courts and the same will not determine the taxability of receipt in India, unless there are some operations carried out in India and the payment is "reasonably attributable" to same, which condition, as noted above, is absent in the present case. In any case, the payment of compensation to CSA is for the termination of the arrangement, which was a profit-making apparatus, and thus is in the nature of capital receipt and hence not taxable. It is pertinent to note that the entire CLT20 Tournament was conducted by the assessee, and all the agreements, including the media/broadcasting Rights Agreement, in this regard were entered into by the assessee. As noted in the Termination Agreement, in order to maximise the commercial success of the CLT20 Tournament and to ensure the participation of teams from South Africa and Australia in addition to the other teams of ICC member countries, the assessee, inter-alia, entered into an arrangement with CSA to ensure that its winning/runner-up teams involved in domestic Twenty20 Cricket competition administered by CSA participate in the CLT20 Tournament organised by the assessee each year As the assessee cannot be said to be DAPE of CSA in India under Article 5(5) of the India-South Africa DTAA. Thus, the payment of compensation to CSA under the Termination Agreement is also not taxable under the provisions of the India-South Africa DTAA. Since the payment is not chargeable to tax in India in the hands of CSA, therefore, there is no obligation on the assessee to deduct tax at source under section 195 of the Act. Accordingly, the impugned order passed by the learned CIT(A), on both counts, is set aside. Section 115BBA(1)(b) of the Act has no application to the year under consideration, as the same only covers amount guaranteed to be paid or payable to a non-resident sports association or institution in relation to any game or sport played in India. However, in the present case, it is undisputed that CLT20 Tournament was discontinued from the year 2015, therefore, no game or sport was played in India in the year under consideration. Further, the payment to CSA is compensation for the termination of the CLT20 Tournament, which cannot by any interpretation be said to be "in relation to any game or sport played in India". As a result, the grounds raised by the assessee are allowed.

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• 2023 (5) TMI 699
  Additions towards sundry creditors - there is an increase in sundry creditors when compared to previous financial year even though there is no significant business activities in the impugned financial year - HELD THAT:- As assessee has explained trade payables appearing in their books of accounts with necessary evidences and the ld. CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer towards trade payables u/s. 68 of the Act. Thus, we are inclined to uphold the findings of the ld. CIT(A) and dismiss appeal filed by the revenue. Validity of assessment order passed u/s. 143(3) - directions of the Joint Commissioner of Income-tax u/s. 144A without giving an opportunity to the assessee to furnish its reply to the proposed directions of the JCIT, as per provisions of section 144A - HELD THAT:- Directions issued by the JCIT is on the lines on which the investigation connected to the assessment should be made and also the Assessing Officer has made additions as per the directions of the JCIT issued u/s. 144A - assessment order framed by the Assessing Officer is on the basis of directions issued by the JCIT u/s. 144A of the Act and further, said directions is prejudicial to the assessee, the JCIT ought to have given an opportunity to the assessee to be heard before issuing such directions. Since, the JCIT had issued directions u/s. 144A of the Act, without providing an opportunity to the assessee to be heard as provided under proviso to section 144A of the Act, in our considered view the whole proceedings including assessment proceedings is vitiated and consequent assessment order passed by the Assessing Officer is liable to be quashed. Argument of the ld. DR since the Assessing Officer did not refer to the directions issued by the JCIT u/s. 144A of the Act, it cannot be presumed that the assessment framed is in pursuant to directions u/s. 144A of the Act - We find that although, the Assessing Officer did not specifically referred to the directions of the JCIT issued u/s. 144A in the assessment order, but if you go through the directions and the assessment order, the directions issued by the JCIT is in lines on which the investigation connected with the assessment should be made. Therefore, we are of the considered view that, the assessment made in pursuant to directions of the JCIT issued u/s. 144A of the Act, without providing opportunity to the assessee to be heard as per provisions of section 144A of the Act is illegal, void and liable to be quashed. Thus, we quash the assessment order passed by the Assessing Officer u/s. 143(3) dated 29.03.2016.

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• 2023 (5) TMI 698
  Deduction u/s 80P(2)(d) - disallowance of interest received on FDRs with the Ahmedabad District Cooperative Bank claimed as Exempt u/s.80(P)(2)(d) - HELD THAT:- Ahmedabad District Co-operative Bank is registered under Societies Registration Act of Gujarat. In case of Surat Vankar Sahkari Sangh Limited [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] categorically mentioned provision of Section 80P(2)(d) of the Act does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a Co-operative Society. The Ahmedabad District Co-operative Bank is also a registered Co-operative Society and, therefore, the assessee is eligible for claiming deduction under Section 80P(2)(d) of the Act. DR has not pointed out any distinguishing facts from the decision of Hon ble Gujarat High Court and that of assessee s case. Therefore, the appeal of the assessee is allowed.

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• 2023 (5) TMI 697
  Levy of penalty u/s 271C - Period of limitation - Penalty for failure to deduct TDS - HELD THAT:- Penalty in question u/s 271C is independent of assessment proceedings and thus the limitation for levy of penalty u/s 271C would be governed by clause (c) of section 275(1). This clause provides that no order imposing the penalty shall be passed after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. In the present case, since penalty u/s 271C has not been initiated during the course of any proceedings, first part of sec. 275(1)(c) would have no application and it is only the second part which would apply. Thus the penalty order ought to have been passed within a period of six months beginning from the end of the month in which the action for imposition of penalty was initiated. Since the show cause notice u/s 271C was issued on 21.01.2020, the period of six months would have to be reckoned from 01.02.2020 that would end to 31.07.2020. Therefore, penalty order passed on 16.12.2020 is barred by limitation and therefore, the same is quashed. Appeal of the assessee is allowed.

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• 2023 (5) TMI 696
  Revision u/s 263 by CIT - TPA of loan given to AE - PCIT directing AO to refer the international transaction of loan given to the Associated Enterprises, Mauritius which came into existence on conversion of assessee s investment in redeemable preference share and to incorporate the Arm s Length Price determined by the learned Transfer Pricing Officer to be incorporated in the assessment order - HELD THAT:- It is an undisputed fact that conversion of redeemable preference shares into unsecured loan is an international transaction entered into by the assessee with its associated enterprises in Mauritius. Therefore, any adjustment arising on account of the arm s-length price of this international transaction is falling into the domain of the learned transfer-pricing officer only. Sole responsibility lying on the AO is to make reference of this international transaction to the learned transfer-pricing officer which has been made by the learned assessing officer after obtaining the prior approval of the PCIT It is also not the case of PCIT while passing order under section 263 of the income tax act that the provisions of explanation 2 are applicable as the order of the assessment has not been made in accordance with any orders/directions or instruction issued by the board u/s 119 of the act. There is no allegation/assertion in the order under section 263 of the income tax act that the learned assessing officer has not followed the mandatory instructions issued by the central board of direct taxes of referring to the learned transfer-pricing officer. It is also clear that prior to The Finance Act 2022 amended with effect from 1/4/2022, the order of the learned transfer pricing officer were not subject to revision under section 263 of the income tax act by the principal Commissioner of income tax. By The Finance Act 2022, with effect from 1/4/2022 clause (iii) to explanation 1 inserts order under section 92CA by the transfer-pricing officer. Thus, it is clear that the order passed under section 92CA by the learned TPO was not subject to revision under section 263 of the income tax act by the principal Commissioner of income tax. The order of the learned principal Commissioner of income tax is indirectly revising the order of the learned transfer-pricing officer. In the assessment order passed under section 143 (3) of the act there is no error on the part of the learned assessing officer either in making reference to the learned transfer pricing officer or in not incorporating any modification made by the learned transfer pricing officer. Therefore, No error in the order of the learned assessing officer but it is an attempt by the learned principal Commissioner of income tax to revise the order of the learned transfer-pricing officer, which is not permitted prior to 1/4/2022. Appeal of the assessee is allowed.

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• 2023 (5) TMI 695
  Levy of penalty u/s 271(1)(c) - Non disclosing capital gains on sale of goodwill - HELD THAT:- We find that the assessee has not shown any capital gains on sale of goodwill inspite of the fact that the transferee company had already recorded goodwill in their books. The peculiar facts in this case are that the Chairman is common for both the assessee company as well as transferee company M/s. Pentafour Technologies Ltd. The transferee company, in its published accounts, recognized goodwill and it cannot be said that the assessee was not aware of the goodwill. Thus, we are of the opinion that it is a clear case of concealment of income by filing inaccurate particulars. As assessee has deliberately made an attempt not to disclose true facts before the Assessing Officer, thereby, concealed the income by filing inaccurate particulars. Thus, the provisions of section 271(1)(c) of the Act clearly applies to the present case. As argued penalty proceedings was initiated as per assessment order u/s 143(3) whereas, no penalty was initiated in view of the order u/s 143(3) r.w.s. 263 and therefore, penalty cannot be levied under section 271(1)(c) - AO has initiated penalty proceedings for concealment of goodwill. Subsequently, in his revision order u/s 263 CIT enhanced the quantum, which is continuation of the proceedings. The concealment of income and furnishing of inaccurate particulars has been considered by the AO by passing assessment order under section 143(3) of the Act dated 31.03.2003. It is not the case that the concealment started after passing order under section 143(3) r.w.s. 263 - Therefore, the argument of the ld. Counsel no penalty was initiated in view of the order u/s 143(3) r.w.s. 263 is rejected. Issue of limitation to pass penalty order u/s 271(1)(c) - In the present case, the assessee has not filed any additional ground and no reason was given and the ld. Counsel has raised this issue for the first time while arguing the case. In our opinion, only based on the argument, legal issue cannot be decided unless there is a ground raised in the appeal. Since no such ground was raised in the appeal, the argument of the ld. Counsel is rejected. Addition on the ground that there was deliberate attempt on the part of the assessee company not to disclose the sale of goodwill and non-disclosure of goodwill tantamount to concealment of income and furnishing of inaccurate particulars of income by adopting colourable device stating that the payments were made towards non-compete fee, IPR on brand value, IPR on brand, etc - Decided against assessee.

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• 2023 (5) TMI 694
  Order passed u/s 201(1)/201(1A) - Failure to deduct TDS in certain cases - whether assessment barred by limitation? - reasonable period of four years - Period prior to the amendment in section 201(3) by the Finance Act, 2012 w.r.e.f. 01.04.2010 - HELD THAT:- Prior to the amendment in section 201(3) by the Finance Act, 2012 w.r.e.f. 01.04.2010, there was no stipulation provided in the Act for passing an order u/s 201(1)/201(1A) holding a person to be an assessee in default. In fact, this fact is also explained by the CBDT Circular No.05/2010 dated 03.06.2010 which explains the amended provisions w.r.e.f. 01.04.2010 prescribing time limit for framing an order u/s 201 of the Act. In fact, the said Circular says that this amendment would be effective from 01st April, 2010 only and would apply to such orders passed on or after 1st April, 2010. We find that the ld. DR took shelter based on this CBDT Circular before us stating that since the order in the instant case was passed on 29.03.2011 which is after 01.04.2010, the said order is passed within the time limit prescribed in section 201(3) of the Act r.w. proviso thereto. We find that the very same issue was subject matter of consideration before the Hon ble jurisdictional High Court in the case of Vodafone Essar Mobile Services Ltd. vs. Union of India, reported in [ 2016 (8) TMI 509 - DELHI HIGH COURT] referred to supra. The Circular has to be interpreted in such a manner that the time limit stipulated in section 201(3) of the Act would apply only for those orders passed on or after 1.4.2007 and not earlier. we hold that the order passed by the ld. TDS officer u/s 201 / 201 (1A) of the Act is barred by limitation. Hence the demand raised thereon is directed to be quashed. Decided in favour of assessee.

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• 2023 (5) TMI 693
  Penalty u/s 271C - assessee has not submitted the PAN number - AO contended that the TDS is required to be deducted @ 20 % on all such payments as per provision of section of 194C - HELD THAT:- In this case the bench noted that all the EDCs since the assessee has not given the details of PAN number the ld. AO has raised the demand @ 20 % and if the ld. AO consider the PAN number of these case the assessee will get the substantial relief on the levy of TDS defaults as well as on the levy of penalty on the TDS defaults. The bench also noted that the assessee is part of the state government and the defaults if any is on account of the peculiar circumstances of the case and on the facts these EDCs are working under the direct supervision of the assessee on no profit no loss basis. In light of these facts we deem it fit in the interest of justice to admit the details of the payee with the PAN numbers. As this details were not before the lower authority we admit it in the interest of equity and justice and restore the matter to the file of the AO to examine the case afresh but by providing adequate opportunity of being heard to the assessee. The assessee is also directed to produce the documentary evidences concerning the issue in question and will cooperate the AO. Thus, the appeal of the assessee is allowed for statistical purposes.

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• 2023 (5) TMI 692
  Computation of capital gain on sale of land - Nature of land sold - capital asset or agricultural land - appellant fails to convincingly pass the test of proving that the impugned land is indeed agricultural land - HELD THAT:- All evidences filed by the assessee including copies of purchase and sale deeds of land, revenue records maintained by the State Government, certificate issued by the Additional Tahsildar and Village Officer, clearly shows that the impugned land is an agricultural land and used for agricultural operations. The assessee had also filed other evidences to prove that the land has been used for agricultural operations till it was sold. Therefore, we are of the considered view that land sold by the assessee is an agricultural land and which is outside the scope of definition of capital asset as defined u/s. 2(14) of the Act. Thus, we are of the opinion that the Assessing Officer and the ld. CIT(A) are completely erred in denying exemption from tax towards consideration received for sale of agricultural land. Hence, we direct the AO to delete additions made towards computation of capital gains on sale of land. Appeal filed by the assessee is allowed.

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• 2023 (5) TMI 691
  Exemption u/s 10(10AA) - Eligible amount of exemption - eligibility of leave encashment exemption to the highest paid employee in the central government - assessee contended that leave encashment amount received at the time of retirement is exempt from tax to the extent of eligibility of leave encashment exemption to the highest paid employee in the central government - HELD THAT:- As not disputed that the CBDT has not issued the notification for increase in the limit and even in the case stated herein in KAMAL KUMAR KALIA ORS. [ 2019 (11) TMI 1143 - DELHI HIGH COURT] has issued a notice in the matter to the Union of India. In the light of these facts and prayer of the assessee that even the Hon ble Finance Minister while giving the speech in the budget indicated in the increase in the limit but the relevant notification/clarification yet not received the bench feels that if the CBDT issue the notification and revise the limit in that case the assessee may seek the relief based on that future events but presently considering the fact that the relevant limit is fixed at Rs. 3,00,000/- for which there is already relief granted to the assessee considering the present provision read with the notification. Based on these observations we are of the view that if the limit fixed in 2002 revised, consequent to the directions or the proceedings before the Hon ble Delhi High Court or the CBDT revise the limit then in that situation the assessee may approach the jurisdictional AO for taking the benefit of increase in limit but presently considering the fact that in the absence of the relevant notification benefit cannot be granted to the assessee more than Rs. 3 lacs. Based on these observations the appeal of the assessee is disposed off.

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• 2023 (5) TMI 690
  Nature of receipt - subsidy received from Government of India - revenue or capital receipt - Assessee stated that subsidy received by the assessee is neither directly used for acquisition of any asset and thus, the same has not been reduced from the cost of asset as required under provisions of section 43 - HELD THAT:- As per the scheme, subsidy can be utilized either for setting up of new biomass cogeneration system or to promote the existing system and its benefits. In the present case, the assessee has set up 4.2 megavolts captive power plant with a cost of project of Rs. 18.90 crores. The assessee has claimed subsidy of Rs. 84 lakhs @ 20 lakhs per megavolt on total amount invested for setting up 4.2 megavolt power plant. From the above, it is very clear that subsidy received from Government of India is directly linked to investment made in setting up of new power plant. Therefore, we are of the considered view that the assessee needs to reduce the amount of subsidy received from Government of India from actual cost of asset installed in power plant, because said subsidy is directly linked to setting up of new power plant, as per the scheme promoted by the Government. Therefore, we are of the considered view that the Assessing Officer is completely erred in treating subsidy received from Government of India as revenue receipts taxable u/s. 2(24)(xviii) of the Act. Subsidy received by the assessee from Government of India through Tamilnadu Energy Development Agency, is capital subsidy given by the Government to enable the assessee to set up new power plant in line with program on biomass co-generation system in industry and thus, the assessee ought to have reduced amount of subsidy received from actual cost of plant and machinery installed in the plant for claiming depreciation. Therefore, we direct the AO to treat subsidy received from Government of India as capital receipts and also reduce from cost of asset acquired out of said subsidy and allow depreciation as per law. Disallowance u/s. 14A r.w.r. 8D to book profit computed u/s. 115JB - HELD THAT:- This issue is covered in favour of the assessee by the decision of ACIT vs Vireet Investments Pvt Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] where it has been clearly held that the computation of clause (f) to Explanation (1) of section 115JB(2) of the Act, is to be made without resorting to the computation as contemplated u/s. 14A r.w.r. 8D of the I.T. Rules, 1962. Thus, by following the decision of ITAT Special Bench, we direct the Assessing Officer to delete additions made towards disallowance u/s. 14A r.w.r. 8D of the I.T. Rules, 1962 to book profit computed u/s. 115JB(2) of the Act.

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• 2023 (5) TMI 689
  Validity of assessment Order passed in the name of amalgamating company - exercises of jurisdiction by the Ld. AO against non-existing company - HELD THAT:- AO fallen in error in not taking cognizance of the fact of merger of the assessee company and that it had lost legal existence for the purpose of the Act, still the assessment order was passed against non-existing entity. Such order is void ab initio. Additional grounds are allowed.

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• 2023 (5) TMI 688
  Penalty imposed u/s 271(1)(c) - mandation of recoding of satisfaction before initiating penalty proceedings - assessee is a Govt. of Arunachal Pradesh enterprise engaged in the business of construction of houses for the police department and other government corporations which claimed exemption u/s 10(26B) - HELD THAT:- D/R who fairly accepted that there is no recording of any satisfaction for initiation of penalty proceedings under section 271(1)(c), in the body of the assessment order. AO noted in the assessment order, his satisfaction that there was either concealment of income by the assessee or that the assessee had furnished inaccurate particulars in his return of income and that there is a case made out for initiating proceedings u/s 271(1)(c) - Initiation of proceedings u/s 271(1)(c) against the assessee is not valid in law and the penalty imposed thereafter is not sustainable and liable to be quashed. Accordingly, under the facts and circumstances of the case and considering the judicial precedent referred above and submissions made by Sr. D/R, we find it proper to delete the penalty imposed by ld. AO u/s 271(1)(c) - Accordingly, additional ground taken by the assessee is allowed.

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• 2023 (5) TMI 687
  Revision u/s 263 - unexplained expenditure - HELD THAT:- Assessee makes some credit sales to the regular customers, though the amount is not received but the same is entered in the cash sales register and the amount is shown outstanding in the name of truck owners with truck numbers. Subsequently, when the amount is received the same is credited to the daily cash sales customer accounts. Though the policy adopted by the assessee is not at par with the settled accounting policies since the cash is entered in the books without actually receiving the cash, however, going through the flow of the transactions we find that this is in the nature of sales reversal - the sales which is booked at the time of giving goods to the regular customers and though the amount is not received but still the cash sales are increased by that amount but subsequently, when the actual amount is received then again the regular sales is credited with that amount and the amount shown in the past as cash sales from such customers (not actually giving cash), the same is reversed. Therefore, it is merely a sales reversal entry and not a case of unexplained expenditure . Complete documentary evidences in support of these transactions have been filed and we are satisfied that it is not a case of unexplained expenditure. Even otherwise all these details of cash sales including the cash book have examined by ld. AO in detail while carrying out the assessment proceedings for the reason for which the case selected for scrutiny i.e. cash deposit during demonetization period, therefore CIT erred in referring to other issue which was not required to be dealt by ld. AO and thus, wrongly invoked jurisdiction u/s 263 of the Act. Since no prejudice is caused to the Revenue due to this accounting system consistently followed by the assessee and since the order of ld. AO is not erroneous as complete examination of details has been carried out through issuance of notice u/s 142(1) to which proper compliance has been made by the assessee filing requisite details and thus, the assessment proceedings u/s 143(3) of the Act has been carried out after making proper enquiry, proper application of mind and taking a plausible view in accordance with law. No justification in the jurisdiction assumed by CIT u/s 263 for carrying out the revisionary proceedings and even on merits, the impugned proceedings are not valid - Appeal of assessee allowed.

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• 2023 (5) TMI 686
  Disallowance of Commission expenses - business expediency - HELD THAT:- As assessee has given the details of return of income of those four parties, confirmation of payments as well as the TDS details. The summons issued u/s 131 of the Act was also responded thorough letters and, therefore, AO cannot say that the commission expenses are not actually incurred by the assessee. AO has totally ignored the business expediency for which the commission has been paid to these parties and for which the assessee has given all the details. AO as well as the CIT(A) was not right in disallowing the commission expenses. Disallowance of Interest expenses - assessee firm paid interest at the rate of 18% - The assessee has demonstrated before the AO as well as before the CIT(A) that the advances taken from the parties were for the business purposes and it was unsecured loans and, therefore, the assessee firm paid interest at the rate of 18% due to exigencies of the business. AR pointed out that charging 12% interest to the other parties will not influence the payment of interest while the assessee obtained loans as in need/urgency these parties have given loan to the assessee and, therefore, the assessee was obligated to pay the particular rate of interest. These aspects were totally ignored by the AO and hence the appeal of the assessee is allowed.

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• 2023 (5) TMI 685
  Addition of business expenses and depreciation claim u/s 32 - AO observed that business was not set up and commenced - principles of consistency - HELD THAT:- We note that the assessee was allowed similar expense and depreciation in the earlier years which has resulted loss from the business as evident from the Income Tax Return. The relevant details of the business loss claimed by the assessee. Accordingly, the principles of consistency need to be adopted as there is no change in the facts before us as well as law with respect to the issue raised by the assessee. DR at the time of hearing has also not brought anything on record contrary to the arguments advanced by the assessee. Accordingly, keeping the principles of consistency, set aside the findings of the Ld. CIT(A) and allow the grounds of appeals raised by the assessee. Hence, the ground of appeal of the assessee are allowed. Addition on account of violation of the provisions of section 43B - assessee has claimed the expenses incurred on conversion of agriculture land into non-agriculture land which were not paid before the due date of filing the return of income - As the expense was not by the assessee before the due date of filing the return of income, the disallowed the same and added to the total income of the assessee - HELD THAT:- Admittedly, the genuineness of the expense has not been doubted by the authorities below. The expense claimed by the assessee was disallowed mainly on the reasoning that the conditions specified u/s 43B of the Act were not satisfied. Admittedly, the expense in the present case is to be allowed on payment basis under the provisions of the section 43B of the Act. Accordingly, set aside the order of the CIT(A) with the direction to the AO to allow the impugned expense on payment basis as per the provision of section 43B - Hence, the ground of appeal of the assessee is allowed for statistical purposes.

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• 2023 (5) TMI 684
  Assessment of trust - Unaccounted fee receipts - reliance on statement recorded u/s 133A of Accountant of the Society - difference on account of annual charges mentioned in the statement and chart [Dakhila Fees Vivran Chart] - HELD THAT:- Assessee had placed various details before the authorities but we find there is no finding of the authorities on the evidences furnished by the assessee to demonstrate the contention of the assessee being wrong. We find that the addition has been made on the basis of the statement of the accounted recorded u/s 133A of the Act. It is a settled law that statement recorded during the survey operation u/s 133A of the Act may be a relevant material but in the absence of further materials to substantiate it, the statement recorded u/s 133A of the Act could not be the basis for making addition. Considering the totality of the aforesaid facts, we are of the view that the AO was not justified in making the addition. We therefore direct its deletion. Thus the ground of assessee is allowed.

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• 2023 (5) TMI 683
  Enhancement of income by CIT-A - claim made in the revised return rejected - amount claimed as deduction having been paid as brokerage denied on the ground that the revised return is nonest and invalid - addition made by the Ld. CIT(A) challenged on the ground that this addition being not part of the assessment order has been made without issuing any notice of enhancement to the assessee and that the assessee has paid the amount to M/s. Alliance Intermediaries Network Pvt. Ltd. on account of commission through banking channel and that one of the directors of that company has admitted the receipt of said commission amount which is liable to be allowed as deductable expenses - whether the claim of the assessee made in the revised return has rightly been considered by the Ld. CIT(A) without having any findings on it returned by the AO? - second round of litigation - HELD THAT:- We are of the considered view that when factual aspect qua claim made by the assessee has not been examined by the AO the Ld. CIT(A) without issuing notice to the assessee or without calling any remand report from the AO could not have decided the same. A.Rs for the parties to the appeal have unanimously contended that in such circumstances to decide the issue once for all the issue should be remitted back to the AO to decide the claim of the assessee afresh after providing opportunity of being heard by considering the revised return as a valid one. However, rest of the addition made by the AO and confirmed by the Ld. CIT(A) are not to be disturbed. In view of what has been discussed above, impugned order passed by the Ld. CIT(A) is hereby set aside to the extent of addition claimed as deduction by the assessee and case is remitted back to the AO to decide afresh to that extent in view of the findings returned hereinabove - Appeal filed by the assessee is allowed for statistical purposes.

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• 2023 (5) TMI 682
  Unexplained cash deposits - genuineness of the cash deposited not proved for the reason that it is not supported by any PAN details - assessee had huge cash deposits during demonetisation period - whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money? - HELD THAT:- The instruction dated 21/02/2017 says that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. Instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non-availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not. Assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. Burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. AO shall verify all the details / evidences filed by the assessee based on the above direction and to consider the claim in accordance with law. We direct the AO to verify the cash deposited in the light of the above circular by granting proper opportunity of being heard to the assessee. Appeal filed by the assessee stands allowed for statistical purposes.

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• 2023 (5) TMI 681
  Penalty u/s 271(1)(c) - Defective notice u/s 274 - non mentioning of specific charge in the notice issued u/s 274 - non striking off irrelevant limb and without specifying the charge for which notice was issued - HELD THAT:- As in case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT ] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s. 271(l)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. The notice u/s. 274 r.w.s. 271(l)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued, thus the penalty order passed u/s 271(1)(c) of the Act by the Assessing Officer and the order of the CIT(A) in confirming the penalty order are erroneous - Appeal filed by the assessee is Allowed.

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• 2023 (5) TMI 680
  Unexplained Money u/s 69A - Cash Deposits in the Bank Account of the Firm - Addition based upon AIR Information received - HELD THAT:- Assessee had stated that the firm had deposited a sum of Rs.6,60,000/- in the bank account of the assessee however, the AO took it as Rs.6,10,000/-. Secondly, the AO did not take note of cash withdrawals of Rs.19,55,000/- by the assessee during the Assessment Year. This submission of the assessee is not adverted by CIT(A). Assessee had given a plausible explanation to the lower authority. We find merit into the contention of the assessee that if the gross receipts are taken at Rs.17,82,469/- but not at Rs.24,96,217/- after giving effect to the reversal entry of Rs.7,13,748/- as reflected in the Form 26AS. The income of the assessee firm would be at Rs.1,42,598/- if computed @ 8% of the contractual receipts on the presumptive basis. Hence, impugned addition as made by the AO and sustained by the Ld.CIT(A) is unjustified and deserves to be deleted. Appeal of the assessee is allowed.

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• Customs

• 2023 (5) TMI 679
  Merchandise Exports from India Scheme - benefit denied on the ground that the petitioner had checked the box N (for No) instead of Y (for Yes) in the reward column pertaining to MEIS - inadvertent error or not - HELD THAT:- The controversy involved in the present petition is covered by the decision of a coordinate Bench of this Court in JUBILANT BIOSYS LIMITED VERSUS DIRECTORATE GENERAL OF FOREIGN TRADE ORS [ 2022 (12) TMI 1254 - DELHI HIGH COURT ], where a committee of officers was constituted to consider whether the benefit of MEIS could be extended to the petitioner in that case. The said committee took a lenient view and the petitioner which was earlier denied the benefit of MEIS on similar grounds as in the present petition, was granted the benefit of MEIS. The respondents shall follow the methodology as set out in the advisory dated 11.04.2023 as quoted above, and process the petitioner s request for benefits under the MEIS - petition allowed.

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• 2023 (5) TMI 678
  Place of origin of goods - it is claimed that the goods are originated from Mizoram, inside the country - petitioner claimed to be the first purchaser of the goods inside the country - HELD THAT:- This being a dispute arising under fiscal statute involving questions of fact as to whether goods had been imported from outside the country or had originated within the country and whether they had been correctly described in the invoice document or not, those issues would require fact enquiries to be made and evidence to be appreciated before any firm conclusion may be reached. Further, in face of the petitioner having availed two statutory remedies, there are no justification for the petitioners now to avoid filing of second appeal before the Tribunal and seek adjudication in the writ proceedings, instead. At the same time, the writ petition was filed in the month of March, 2023 and the same is pending before this Court. It is considered appropriate to dispose of the writ petition with liberty to the petitioners to file statutory appeal before the Tribunal. If such appeal is filed within two weeks from today in accordance with law, the Tribunal may treat the same to have been filed within time and proceed on merits and decide the same in accordance with law - petition disposed off.

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• 2023 (5) TMI 677
  Refund of Terminal Excise Duty (TED) - whether the DTA Units who had paid Excise Duty at the time of supply of goods to the EOU s, utilizing their CENVAT Credit, can claim refund of the same in light of the provisions of the FTP (2209-2014)? HELD THAT:- It has been stated before this Court that the said issue stands covered by the judgment delivered by the Hon ble Supreme Court in Sandoz Private Limited Vs. Union of India Others, [ 2022 (1) TMI 225 - SUPREME COURT ], wherein the Hon ble Supreme Court while allowing the claim for refund of TED has held that in the case of DTA supplier of goods to EOU, if TED has been paid by utilizing CENVAT credit, the refund would be in the form of reversal of commensurate amount of CENVAT credit amount. This Court has carefully gone through the judgment delivered by the Hon ble Supreme Court in Sandoz Private Limited and the issue involved in the present case stands concluded on account of the said judgment. The Respondent herein/ Petitioner shall be entitled for refund in accordance with law - Application disposed off.

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• 2023 (5) TMI 676
  Seeking release of detained goods - prayer for waiver of container demurrage charges from the date of import till the date of actual physical release of the goods in terms of the detention memo - also seeking waiver of ground rent charges to permit the clearance of the goods - Import Policy of Watermelon Seeds - HELD THAT:- In the facts and circumstances of the case, Rule, returnable on 17.8.2023. In the facts of the case when the custom authorities have issued no-objection certificate, prima facie case is made out for release of the goods. In that view, the competent custom authority is directed to release and facilitate the clearance of the goods of the petitioner - In the meantime, the respondent Nos.3 and 4, who are the private entities and claiming their charges against the petitioner, are not precluded from initiating civil action against the petitioner, if advised, to be dealt with in accordance with law and on its own merits.

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• 2023 (5) TMI 675
  Seeking release of detained goods - waiver of detention charges in view of Section 10(1)(l) of the Sea Cargo Manifest and Trans Shipment Regulations, 2018 and Regulation 6(1)(i) of the Handling of Cargo in Customs Area Regulation, 2009 - petitioner submitted that despite the stand of the Custom authorities in favour of the petitioners, the goods are not released because of the insistence of the respondents no.3 and 4-private parties, for payment of detention and demurage charges - HELD THAT:- The stand of respondents no.3 and 4 could not be impediment in releasing the goods. The claim of detention and demurrage charges by the said private parties could be enforced by them by taking recourse to civil remedies in accordance with law, as may be permissible. However, the Court shall not express any opinion in that regard. Hence, without going into further factual details and merits of the case, the respondents are hereby directed to release the goods which are under their custody within two weeks from the date of receipt of this order - Even as the prayers other than release of goods are not pressed by the learned advocate for the petitioner, they could not have been granted by the Court. The goods shall however be released. Petition disposed off.

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• 2023 (5) TMI 674
  Smuggling - gold biscuits with foreign markings - relevant date for valuation of goods - absolute confiscation - Personal penalty imposed on the petitioner as well as two others under Section 112 of Customs Act - HELD THAT:- The narration relating to the litigation is really of no consequence in the matter as the valuation of the asset in question for determination of duty, emanates from order dated 24/31.07.2015 which has attained finality as on date. The narration in regard to the litigation is for purposes of completion and seeing as the petitioner has emphasised only upon those orders that are of no consequence really, in deciding the issue relating to valuation of the goods for determination of customs duty. The enactment contemplates two separate and distinct schemes for valuation in the context of imposition of duty on the one hand, and fixing redemption fine, on the other. As far as duty is concerned, the applicable provisions are Sections 14 and 15. Section 14 talks of valuation of the goods which is the manner by which such valuation should be effected and Section 15 crystallizes the date as on which such valuation must take place. Coming to redemption fine, Section 25 is a code by itself and states that the valuation for purposes of fixing redemption fine, shall not exceed the market price as on the date of confiscation of the goods. Thus, the Act contemplates two separate and different scenarios, one while imposing customs duty and the other, in the levy of redemption fine. The argument of the petitioner to the effect that the date of valuation must be taken to be the date of confiscation of the goods for the purposes of levy of customs duty thus has no merit. Impugned order dated 09.11.2020 calls upon the petitioner to pay duty as per Section 15(1)(c) of the Customs Act, 1962 and there is no legal infirmity made out in this regard - Petition dismissed.

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• 2023 (5) TMI 673
  Seeking exit from EOU scheme - rejection on the ground that petitioner had not submitted periodic performance report during the validity of letter of permission and as agreed in legal undertaking which amounted to non-compliance of the conditions - mere a procedural lapse or otherwise - Chapter VI of Foreign Trade Policy - HELD THAT:- As could be seen from the provisions of the scheme, the objective of the clause is to ensure that an entity which has taken some benefit in the form of importing capital goods without payment of duty, the same would not be entitled to exit from the scheme without making good the duties that it had availed off. The objective of the scheme is essentially to ensure that an entity does not take the benefit of the scheme and thereafter withdraw from the scheme and make a profit out of the entire venture. The petitioner admittedly made an application seeking for exit from the scheme and it was its specific case that it had not imported any capital goods or procured any capital goods in respect of project. As could be seen from the finding recorded by the authority, the petitioner had not imported any capital goods or procured any capital goods for setting up the software technology park. It is, therefore, clear that it was not obliged to reimburse any amounts for exiting from the scheme - clause relating to exit from the scheme does not entitle the authority to reject the application on the ground that the periodical performance report had not been furnished. In this case, the authority has in fact stated that the petitioner did furnish the IT park progress report as per its email dated 10.06.2009. The mere noncompliance of a procedural requirement cannot prevent the petitioner from exiting from the scheme. The furnishing of periodic status report did not result in any monetary benefit to the petitioner and it was only procedural requirement which it had to comply. If the petitioner had not taken any monetary benefit by virtue of the licence granted to it, its exit cannot be denied - As far as the argument that an appellate remedy is available, it is to be stated here that the matter is pending before this Court since eight years and after a period of eight years, relegating the petitioner to avail the appellate remedy would neither be just, nor proper. In the light of the fact that the petitioner has not availed any benefit under the scheme, the impugned order cannot be sustained - Petition allowed.

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• 2023 (5) TMI 672
  Smuggling - Gold Biscuit - Indian Currency (sale price of smuggled gold) - appellant stated that demand is based on assumption and presumption and on the basis of uncorroborated statement of co-accused - reliability of statements - admissible evidence or not. HELD THAT:- The entire case of the Revenue has been built on the basis of the statement of the co-accused. Bishnupada Dey, the co-accused in this case only implicated the Appellant. There is no evidence available on record to establish that the Appellant has asked Bishnupada Dey to carry the gold. The connection between the Appellant and Bishnupada Dey was a phone number. Mr. Dey was told to call the Appellant in the phone number 8276875110. On verification, the phone number was found to be registered in the name of Soumyadeep Talapatra. So, on the basis of these evidences alone it cannot be concluded that Mr. Dey was carrying the gold for the Appellant. Revenue has mainly relied upon the statement of Mr Dey to implicate the Appellant in this case. They have relied upon some decisions in the Order-in-Original to support their claim that the statement of the co-accused is an admissible evidence. The First decision relied upon by the Revenue is PRAVEEN DUMAR SARAOGI VERSUS UNION OF INDIA [ 2014 (2) TMI 643 - ALLAHABAD HIGH COURT] . The said decision was relating to granting of bail in a case of a complaint under Section 135 of the Customs Act, 1962 and subsequent application for quashing of bail under Section 482 of the Criminal Procedure Code. This is not a case similar to the present case on hand and hence, the said decision has no application in the Appellant s case. The second decision relied upon by the Revenue is NARESH J. SUKHAWANI VERSUS UNION OF INDIA [ 1995 (11) TMI 106 - SUPREME COURT] . In this case, the statement of co-accused was supported by other evidences like photographs and other intrinsic material as mentioned in paragraph 3 of the said decision and hence, the said decision is distinguishable on the facts of the case since in the case of the Appellant, there is no other evidence available to implicate the Appellant in the seizure of the gold. The third decision relied upon by the Revenue is MR. KP. ABDUL MAJEED, S/O. HUSSANKOYA HAJI VERSUS COMMISSIONER OF CUSTOMS, COCHIN [ 2014 (7) TMI 730 - KERALA HIGH COURT] . The facts of the case in the said decision, is also different since there were other evidences of 17 persons as mentioned in Paragraphs 2, 9 14 of the said order. Several persons have spoken about the involvement of the petitioner in the smuggling activity. The said judgment also mentioned that confessional statement of co-accused can be treated as evidence provided sufficient materials are available to corroborate the same. In the case of the appellant there is only one statement and no other corroborative evidence. The said judgment has no relevance in the facts and circumstances of the Appellant s case. The fourth decision relied upon by the Revenue is KI. PAVUNNY VERSUS ASSTT. COLLR. (HQ.) , C. EX. COLLECTORATE, COCHIN [ 1997 (2) TMI 97 - SUPREME COURT] . This decision is in respect of the confession of the accused himself and not by co-accused. The said decision also repeatedly speaks about the requirement of corroborative evidence by holding that the Rule of Practice Prudence requires that confession should be corroborated by independent evidence. In the case of Appellant, there is no confession by the Appellant. Hence, the said judgment of K.I. Pavunny has no application in the facts and circumstances of the Appellant s case. The Appellant relied on various decisions of High Courts and Tribunals. From the decisions cited, it is found that the statement of a co-accused is a weak evidence. Without any corroborative evidence, the statement of the co-accused alone is not sufficient to implicate the Appellant, as has been done in this case. The Appellant raised the issue of relevancy of statements relied upon by the Adjudicating Authority. They have referred sections 138 B of Customs Act 1962 and section 9D of Central Excise Act,1944, which are pari materia to each other. The contention of the Appellant is that the Adjudicating Authority has not followed the procedure prescribed in the said sections before relying on the said statement of the co-accused in this case and hence any conclusion arrived at on the basis of that statement is legally not tenable. Section 9D is pari materia to Section 138 B of Customs Act 1962 and hence the ratio of the above said decision squarely applicable to this case as well . In this case, the adjudicating Authority has not examined the person who has given the statement which has been relied upon to implicate the Appellant. Also, no opportunity of cross examination given to the Appellant to question the basis on which the co accused has implicated the Appellant in this case. When the procedure set out in Section 138 B is not followed, the statement of the co accused has no evidentiary value. The findings in the impugned order against the Appellant are not supported by any corroborative evidence and hence not sustainable - the penalty imposed against the Appellant is not sustainable and set aside the same - appeal allowed

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• 2023 (5) TMI 671
  Valuation of imported goods - PVC sheeting - rejection of declared value - enhancement of value - rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Confiscation - redemption fine - penalty - HELD THAT:- The lower authorities proceeded on the assumption that the impugned goods are of prime quality but, nonetheless, relied upon alternatives in valuation that are not consistent with the finding for it is inconceivable that similar goods, of prime quality, were not being imported and the sweeping declaration of non-availability is not borne by any record of search for such. It would not be out of place to suggest that the lower authorities appear unsure of the their own conclusions inasmuch as determination, and approval thereof, in accordance with the residual rule 9 was not allowed to stand on its own but placed alongside rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - As rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is to be invoked only upon inability of ascertained under any of the preceding rules, the concatenation of the two itself is not permissible in law. It is clear from the manner in which the re-determined value has been computed, and from specific assertion of the market survey being confined to imported goods, that it is based on prices obtaining for domestically produced articles. The valuation under rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 fails on this ground. Likewise, rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 requires adoption of the value of identical or similar imported goods sold in India as the base for computation of unit price. There is nothing on record to evidence that the market survey was confined, unarguably, to imported goods without which the re-determination thereof fails the test of law. Appeal allowed.

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• 2023 (5) TMI 670
  Valuation - enhancement of freight component for recovery of additional duty - non-inclusion of actual freight from Iran to Mumbai as prescribed in rule 10(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Place of origin - core of the allegation is that all four shipments were effected from Iran even as the bills of lading for methanol were issued from Oman backed by invoice from UAE while bills of lading and invoice were issued from UAE for toluene and mixed xylene with Taiwan as place of origin. Place of origin - HELD THAT:- The sole evidence of goods not being of Taiwanese/Omani origin, as contained in the bills of lading, are the records of passage by MT Braveworth from Fujairah to Sohar en route to India having been interrupted by allegedly calling at Dayyer in Iran and of MT Chem Trader having called at Bander Imam Khamenei in Iran before arrival at Jebel Ali for the next voyage to Mumbai. There is no evidence on record, elicited through official channels, of the facts relating to the movement of the vessels. The impugned orders have placed emphasis on the statements recorded from the master of the respective vessels but, in the absence of official confirmation from authorities at Oman/UAE about the port clearance submitted for entry at Sohar/Jebel Ali where, acknowledgedly, the two vessels departed for arrival in Kandla/Mumbai, it cannot be concluded that such evidence can be relied upon to visit detriment upon importers who had no commercial engagement with the vessels or her masters. The assessments had been taken up on the value corresponding to that in the invoice with addition of purported freight from Iran to Mumbai. The invoices had been issued by M/s Trade Unity FZE on cost insurance freight (CIF) terms and by M/s Kriscon DMCC, Dubai on cost and freight (CFR) terms and having freight cost separately therein do not, of themselves, warrant invoking of rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 except on finding that the freight was payable by the importer to the carrier or that the freight had been absorbed by the seller - The freight that has been ascertained does not even pretend to be representative of the actual payment made, either by exporter or by importer, to the carrier. It is clear from the records that the adjudicating authority had arrived at a mathematical computation that had nothing to do with any payment made to the carrier. This is not the intent of adjustment necessitated by rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. For this reason, the enhancement, for the purposes of determining differential duty, in the impugned orders must be set aside. The examinations in the present case are done with deliberate intent, for demonstrating that it is obligatory on the part of adjudicating authority to evaluate the proposals put forth in the show cause notice on the basis of available facts and law and that any detriment, of duty or fine/penalties, visited upon an importer without examination of the role of the noticee on the circumstances leading to the conclusion of having breached Customs Act, 1962 is not only inappropriate but tantamount to executive overreach that rule of law abhors - Appeal allowed.

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• 2023 (5) TMI 669
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - violation of regulation 10(b), 10(d) 10(n) of Customs Broker Licensing, Regulation 2018 - non-production of any evidence to show that Girish Kumar is her authorized employee - Dinesh Bhardwaj, G-Card Holder, being paid by Girish Kumar Prop. of Global Art Logistics and the appellant subleased its license to Girish Kumar since 2017 - HELD THAT:- The submissions made by the Ld. Counsel for the appellant do not have force and are devoid of merit. There are serious allegations made in the show cause notice dated 19.07.2022 against the appellant for contravention of regulation 10(b), 10(d) and 10(n) of licensing regulation, 2018. It is also found that on the alleged allegations an inquiry officer was appointed who after affording adequate opportunity to the appellant submitted the inquiry report on the basis of which show cause notice was issued and the allegations of violation were proved against the appellant. Ld. Commissioner in the impugned order has considered each and every submission made by the appellant and has given reasoned finding. Division Bench decision of the principal Bench in the case of Swastik Cargo Ageny Vs. commissioner of Customs [ 2023 (2) TMI 677 - CESTAT NEW DELH ] relied upon by the DR wherein identical allegations were there against the customs broker and the Division Bench after considering the various decisions of the hon ble Supreme Court and the High Court has upheld the revocation of Customs broker license of the customs broker. The appellant is found to be guilty of violation of regulation 10(b), 10(d) and 10(n) CBLR, 2018 - there are no infirmity in the impugned order passed by the Commissioner Ludhiana - appeal dismissed.

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• 2023 (5) TMI 668
  Seeking provisional release of seized goods under section 110A of Customs Act, 1962 - imports of arecanuts - to be classified under heading 8002 of First Schedule to Customs Tariff Act, 1975 or under tariff item 2106 90 30 of the First Schedule to Customs Tariff Act, 1975? - HELD THAT:- An officer created by statute is, necessarily, limited by the ambit of the statute and customs officers created by section 3 of Customs Act, 1962 are, necessarily, confined to the purpose for which such legislation was enacted, viz., import and export of goods. Consequently, the responsibility for, or authority to enforce, any other law for the time being in force would be contingent upon such law placing some prohibition on imports or exports; even such laws do not concede jurisdictional authority to customs officers except by, and only upon, specific conferment within such statutes. In the absence of such empowerment, not only would chaos result but ever present is potential for overreach should those lacking sufficient expertise in administering such special laws misappropriate authority to enforce. The distinction between enforcing the law and enforcing compliance with the law is not so subtle as not to appeal to reasonableness. The entire regime for filtration of articles of food, including testing by FSSAI-credited laboratories and reference to FSSAI before clearance thereof, on import is founded upon this distinction in authority to invoke the framework of such legislation and, more especially, involving specialized knowledge. Customs authorities are bound by the sanction and approval accorded, under the aegis of Food Safety and Standards Act, 2006, by the designated authority therein as the sole determinant for invoking section 111 of Customs Act, 1962 insofar as articles of food are concerned. An independent ascertainment of fitness for human consumption, without reference to the statutory authority envisaged for the enforcement of Food Safety and Standards Act, 2006, is not in public interest and invocation of public health, no matter how convenient it may be for retention of goods, is no substitute for legal jurisdiction. The prohibition in the notification cited in the impugned order cannot be made applicable to the impugned goods except by invoking provisions of Customs Act, 1962 attracting consequence of misclassification; there is no whiff of such intent. The conclusion that the impugned goods are unfit for human consumption is beyond the scope of jurisdiction conferred by Customs Act, 1962 on the respondent- Commissioner in the absence of determination by the designated authority under the Food Safety and Standards Act, 2006 whose actions are validated by the circumscribing responsibility devolving on such authority - a validation that no customs authority can lay claim to. The grounds evinced for discarding the request for provisional release under section 110A of Customs Act, 1962 are not legally tenable. It may also be inferred that provisional release is a facilitative measure. Though power to seize has inhered, and as it should, in Customs Act, 1962 from the very beginning, and, indeed, as legacy carried over from section 178 of Sea Customs Act, 1878, for close to a century and half, it was only by section 26 of Taxation Laws (Amendment) Act, 2006, incorporating section 110A in Customs Act, 1962, that provisional release of seized goods by Commissioner of Customs pending order of the adjudicating officer found acknowledgment in law - The law does not intend that State is enriched by fines arising from breach of the law or by substituting for the importer to trade in goods, whether seized or even confiscated. Section 110A is couched in such plain language as to give no room for controversy in interpretation or speculation of legislative intent; indeed, it does not even offer scope for discriminatory treatment among imported goods. The impugned goods are directed to be provisionally released on furnishing of bond to the extent of value of the goods and subject to the procedural safeguards implicit in section 47 of Customs Act, 1962 within ten days of receipt of this order. Appeal disposed off.

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• 2023 (5) TMI 667
  Deletion of penalty u/s 114A of Customs Act - confiscation ordered observing that the goods were mis-declared as to quantity - HELD THAT:- There is error in findings recorded in Commissioner (Appeals) as to penalty. There is no mention of Section 28 anywhere in the adjudication order. As such, the adjudication order is definitely under Section 17 of the Act. Further, the appellant have admitted the mis-declaration and have prayed for decision on merits, as the imported goods were ready market due to Covid Panedmic disturbances, which was at its peak during the relevant time. However, it is found that there is some arbitrariness in the valuation done by the registered valuer, which is on higher side by 25%. The penalty under Section 114A of the Act is confirmed - the quantum of penalty reduced to Rs. 5 lakhs - appeal allowed in part.

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• 2023 (5) TMI 666
  Entitlement to duty free clearance - Return (import) of export goods (unsold) - undeclared quantity of cut and polished diamonds - N/N. 45/2017- Cus dated 30th June 2017 - failure to declare the second box in the impugned consignment was found sufficient for depriving the goods of the benefit of the exemption notification to confirm recovery of duty liability - HELD THAT:- The order impugned here is the outcome of an appeal, filed by an importer whose grievance, and thereby the framework of the appeal itself, was limited to the points raised in appeal and section 118 of Customs Act, 1962 was not one among them for the same had been considered and dropped in the order appealed against. The provision, so deliberately dropped, could not have been revived in appeal within the boundaries noticed by the Hon ble Supreme Court in the judgements by an appeal of Revenue or, in specific exercise of power so granted by the statute, by reframing of the issues in appeal but only after placing the appellant before it on notice of intent to do so. By the failure of the confiscation upheld in the impugned order, the consequent penalty under section 112 of Customs Act, 1962 cannot be sustained. Moreover, the findings of the original authority are replete with observations about the mistake that occurred as well as the role of the consol intermediary for not reflecting the contents of the consignment despite having issued house airway bill (HAWB) in acknowledgement of having assumed custodianship of the package and its contents. The fastening of wrongdoing on the appellant, therefore, does not sustain. It has ever been the claim of the appellant that the consignment in its entirety are unsold returns from the two export shipments affected by them in accordance with notification no. 45/2017-Cus dated 30th June 2017. No attempt was made to establish the veracity of the claim even in relation to the contents declared in the bill of entry before effecting seizure of the consignment of its entire on 24th February 2020. However, the lower authorities have acknowledged the eligibility, subject to ascertain, of the declared goods to such exemption; the principle so espoused cannot be withheld from the entirety of the consignment in view of mandated first check appraisal of contents. The eligibility of the undeclared cut and polished diamonds would adequately evidence the lack of motive in concealment, let alone deliberate attempt to evade duty. As the goods are yet to be cleared for home consumption, there cannot be any prejudice caused to Revenue by exercise of authority under section 149 of Customs Act, 1962 to make appropriate alterations in the bill of entry for which the appellant may make formal application insofar as the ascertainment of claim for eligibility to exemption from duty is extendable to them is concerned. The impugned order set aside except the extent of ascertainment of eligibility to notification no. 45/2017-Cus dated 30th June 2017 while modifying even that to cover the entire 410.17 carats - appeal disposed off.

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• Law of Competition

• 2023 (5) TMI 665
  Levy of penalty - grievance is that the Commission has not imposed suitable penalty upon the Respondents in terms of the provisions of the Act - Section 27 in the Competition Act, 2002 - HELD THAT:- Section 27 of the Act provides that if the Commission after inquiry finds that any agreement referred to in section 3 or action of an enterprise in a dominant position, is in contravention of section 3 or section 4, as the case may be, it may pass all or any of the orders mentioned in the said provision - The Commission found that it would be just and expedient to invoke only the provisions of Section 27(a) of the Act which further provides for a direction to any enterprise or association of enterprises or person or association of persons, as the case may be, involved in such agreement, or abuse of dominant position, to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position, as the case may be. Thus, from a careful reading of Section 27, it appears that the Commission has the jurisdiction either to pass all or any of the order which are so mentioned in the said Section. In the present case, the Commission has invoked Section 27(a) of the Act. There is no reason to interfere in the well-considered order passed by the Commission - Appeal dismissed.

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• Insolvency & Bankruptcy

• 2023 (5) TMI 664
  Seeking Liquidation of Corporate Debtor - no resolution plan received till date (by RP) - HELD THAT:- The Committee of Creditors in its meeting held on 10.03.2020 took a decision with 100% vote to liquidate the Corporate Debtor. In the CoC meeting it was noted that last date for submitting the resolution plan was 26.02.2022, which date was extended till 09.03.2022, however, the Resolution Professional did not receive any plan till the time of the meeting - The Committee of Creditors noted that the Corporate Debtor is not a going concern and no plan having been received resolution was passed to liquidate. The Adjudicating Authority has allowed the application filed by the Resolution Professional for accepting the liquidation resolution - no error can be said to have been committed by the Committee of Creditors in taking decision of liquidation when no resolution plan was received by the Resolution Professional inspite of extending the date. Valuation of the Corporate Debtor - HELD THAT:- The present is a case where the valuation has been conducted under the CIRP Regulation, 2016. Liquidator is obliged to consider the average of the value arrived as per Regulation 35 of the CIRP Regulation, 2016. Present is not a case where Liquidator has directed fresh valuation under Regulation 35 Sub-regulation (2) - Furthermore, in the present case, two valuation reports are already on the record, as brought on the record by the Appellant, as noted above. When the case is covered by Regulation 35(1), the Liquidator has to take the average of the estimate of the value arrived by the two Valuers. The Liquidator while proceeding to sell the assets in accordance with Liquidation Process Regulation, 2016 has to take the reserve value as per Schedule-I of the Liquidation Regulation. The reserve price has to be value of assets arrived at as per Regulation 35 (1). Liquidation order upheld - appeal disposed off.

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• 2023 (5) TMI 663
  Appointment of Administrator of DHFL to perform all functions of the Resolution Professional (RP) under the Code and to conduct the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor Dewan Housing Finance Corporation Limited - Supersession of Board of Directors of Dewan Housing Finance Corporation Limited (DHFL) - avoidance of different transactions undertaken by the Corporate Debtor in the CIRP of the Corporate Debtor - section 25(2)(j), 43, 44 and 66 of IBC. The first submission raised by the learned Counsel for the Appellant is that after completion of the CIRP, avoidance applications, which are not decided by that time, becomes infructuous and cannot be proceeded any further - HELD THAT:- The above submission of the learned Counsel for the Appellant is not acceptable on account of the statutory scheme delineated by the Code and the Regulations. Section 26 itself gives clear legislative intent that avoidance applications are different stream than the stream of insolvency resolution process - Admittedly, the liquidation process begins when no Resolution Plan is approved in CIRP. Continuance of the avoidance application is implicit by provision of Section 36, sub-section (3), sub-clause (f). What is contemplated in Section 36(3)(f) is also clear from CIRP process, which is reflected by Regulation 38(2)(d) of CIRP Regulations. Regulation 38 provides for Mandatory contents of the resolution plan. Regulation 38(2)(d) has been inserted by Notification dated 14.06.2022. The insertion of Regulation 38(2)(d) by the above amendment clearly makes the legislative intent clear that Resolution Plan shall provide manner in which proceedings in respect of avoidance transactions will be pursued after approval of Resolution Plan - The Division Bench in Venus Recruiter Pvt. Ltd. vs. Union of India [ 2020 (11) TMI 850 - DELHI HIGH COURT ] has clearly held that avoidance application is independent of the resolution of the Corporate Debtor and can survive the CIRP. We, thus, are of the view that argument of the Appellant that after conclusion of the CIRP by approval of the Resolution Plan, avoidance application becomes infructuous, cannot be accepted. Another submission which has been pressed by the learned Counsel for the Appellant is that Successful Resolution Applicant cannot pursue the avoidance applications and if at all, the avoidance applications can be pursued, it could have been only by the RP and that in the present case the Administrator - HELD THAT:- The present is not a case where Successful Resolution Applicant is exercising any delegated powers of RP/ Administrator. In the present case, Resolution Plan envisages and specifically provides for pursuing of the applications by the Successful Resolution Applicant. The Successful Resolution Applicant is not exercising any delegated powers of RP, hence, the argument that RP being persona designate, has no relevance in the present case - Although, the proviso to Regulation 38(2)(d) provides that this clause shall not be applicable to Resolution Plan, which was submitted before the commencement of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022, that is prior to 14.06.2022, however, in the present case, the Resolution Plan, which was submitted prior to the date, contained specific provision for continuance of avoidance applications by Successful Resolution Applicant, which provision in the Resolution Plan cannot be said to be contrary to any provisions of the Code or the Regulations. When Resolution Plan specifically empowers the Successful Resolution Applicant to pursue the avoidance applications, the said provisions of the Plan shall bind everyone including the erstwhile Administrator. The submission of the learned Counsel for the Appellant cannot be accepted that it is the erstwhile Administrator/ RP, who could alone, if at all, pursue the avoidance application. This argument has to be rejected in view of the specific clause, permitting the Successful Resolution Applicant to pursue the application. Another argument advanced by the learned Counsel for the Appellant is that two applications filed by the Administrator were after Resolution Plan was voted on 15.01.2021 - submission of the Appellant is that any avoidance application, which has been filed subsequent to approval of the Plan cannot be pursued and the order of the Adjudicating Authority substituting the Piramal in those application deserves to be set aside - HELD THAT:- The timeline for filing avoidance application under Regulation 35A have been held to be not mandatory, however, the applications have to be filed in a reasonable time and any avoidance application, which is filed with inordinate delay can be refused to be entertained by the Adjudicating Authority. The submission which has been pressed by the learned Counsel for the Appellant is that avoidance applications, which were filed after approval of the Resolution Plan by the CoC, could not have been entertained. In the Code and the Regulations, there are no such provisions, which indicate that avoidance application filed after approval of the Plan by the CoC is to be rejected or not. It depends on the facts of each case and circumstances as to whether any application filed after approval of the Resolution Plan by the CoC can be considered or not. In the present case, the Resolution Plan has noted the pending avoidance applications. The present Appeals have been filed by the Ex-Promoter of the Dewan Housing Finance Corporation Finance Limited and allegation regarding fraudulent transactions were against the Ex-Promoters including the Appellant. The object of continuing the avoidance applications, even after the CIRP is the discovery of dubious transactions and permitting such preferential undervalued and fraudulent transactions to continue, will be depriving the benefit of such transactions to the creditors, which is not the intent of the statutory scheme. The impugned order has rightly permitted the Piramal Successful Resolution Applicant to pursue the avoidance applications, which were filed by the erstwhile Administrator and were pending before the Adjudicating Authority - there are no error in the impugned orders passed by the Adjudicating Authority permitting the Piramal to pursue the applications and rejecting the applications filed by the Appellant and other Applicants to reject such applications - appeal dismissed.

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• 2023 (5) TMI 662
  Seeking closure (withdrawal) of CIRP proceedings - Section 7 Application admitted - Financial Creditor has already settled the dispute with the Appellant and Terms and Conditions of the Settlement have been brought on record vide Settlement Letter dated 08th May, 2023 - It is submitted that claim of the intervener having been already filed, CIRP process against the Corporate Debtor be allowed to continue rejecting prayer of the Appellant to close the CIRP. HELD THAT:- From the facts of the present case, it is clear that CIRP was initiated against the Corporate Debtor vide Order dated 23rd December, 2022 admitting Section 7 Application filed by the IDFC First Bank Limited Respondent No. 1 herein. On 04th January, 2023, Interim Order was passed in this Appeal directing that Committee of Creditors (CoC in short) may not be constituted. Interim Order passed in this Appeal still continues as on date. In the I B Code as enacted in 2016, there was no statutory provision permitting withdrawal of an Application under Section 7 and 9 of the Code. Hon ble Supreme Court Swiss Ribbons Pvt. Ltd. Anr. v. Union of India Ors. [ 2019 (1) TMI 1508 - SUPREME COURT ] held that before a Committee of Creditors is constituted, a party can approach the NCLT directly under inherent powers of Rule 11 for withdrawal of Section 7 or 9 Application. The present is a case where Committee of Creditors has not yet been constituted and the Appellant after filing settlement agreement by the Financial Creditor dated 08th May, 2023, prays for withdrawal of the CIRP in exercise of inherent power of this Tribunal under Rule 11 of NCLAT Rules, 2016. A categorical observation made by the Hon ble Supreme Court in Ashok G. Rajani v. Beacon Trusteeship Ltd. Ors. [ 2022 (9) TMI 1011 - SUPREME COURT] is that Settlement cannot be stifled before the Constitution of Creditors in anticipation of the claims against the Corporate Debtor from 3rd Persons. In another recent Judgment of the Hon ble Supreme Court Abhishek Singh v. Huhtamaki PPL Ltd. Anr. [ 2023 (3) TMI 1285 - SUPREME COURT] , Hon ble Supreme Court again referring to the Judgment of Ashok G. Rajani again reiterated the same preposition. In the above case, Appeal was filed against the Order of NCLT by which an Application under Section 12A filed for withdrawal of the CIRP was rejected by the NCLT. The Application filed under Section 12A was opposed by intervener who claimed to have raised their claim before the IRP. The above judgement of the Hon ble Supreme Court in Ashok G Rajani and Abhishek Singh where the cases were Application for withdrawal was filed before the Committee of Creditors was constituted - Present is also a case where Settlement has been entered between the parties and prayer is being made to withdraw the CIRP in exercise of jurisdiction under Rule 11 of NCLAT Rule, 2016. The Financial Creditor having settled the matter with the Corporate Debtor and Settlement letter dated 08th May, 2023 having been brought on record, it is deemed to be a fit case to exercise jurisdiction under Rule 11 of NCLAT Rules, 2016 to close the CIRP. On account of objection raised by the intervener of his filing claim before the IRP, the CIRP can not be allowed to proceed since the debt for which CIRP has been initiated, has been settled with the Financial Creditor. The Intervener is free to take such legal proceedings as may be advised to protect his interest. Taking the settlement letter dated 08th May, 2023 on record, the CIRP against the Corporate Debtor is closed, setting aside the Order dated 23.12.2022 - appeal disposed off.

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• 2023 (5) TMI 661
  Maintainability of application filed u/s 9 of IBC - NCLT admitted the application - Non service of demand notice - it is alleged that before filing the Section 9 Application Section 8 notice was not issued - HELD THAT:- The letter dated 07.08.2013 clearly contains acknowledgement of the debt by the Corporate Debtor. The submission which has been pressed by the Appellant is that the payment was to be made when the work starts. The said statement at best stated the time from when payment shall start, which was accepted by the Operational Creditor. The fact that payment was to take place from the date work start does not in any manner absolve the liability of the Appellant since acknowledgment was very much there. From the order of the Adjudicating Authority, it is clear that the debt was never disputed. Insofar as the question of Section 8 notice not being issued, on basis of which Appellant contends that there was no default, sufficient to notice that notice was issued to the Corporate Debtor in the winding up petition, subsequently which was transferred. The submission of learned counsel for the Appellant that no default was committed cannot be accepted. Thus, present is a case where debt was proved and default was committed by the Appellant - there are no error in the order the Adjudicating Authority admitting Section 9 application - There is no merit in the Appeal, Appeal is dismissed.

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• PMLA

• 2023 (5) TMI 660
  Principles of natural justice - Non-service of proper SCN - Provisional Attachment Order - Money laundering - proceeds of crime - investing part of proceeds of crime to purchase properties - HELD THAT:- This Court notes with some concern that the impugned email/communication has been written to the promoters of the TDI in respect of the properties which are not even subject matter of any investigation, and that too by Assistant Director, Mr. Hemant, who is not authorised under the PMLA to pass such communications. Though the email is now sought to be withdrawn, it is clear that such an email ought not to have been written in the first place - The higher authorities including the Director, Enforcement Directorate shall be informed of this impugned email which was written in the present case, so that appropriate instructions and directions could be given to the concerned officials of the Enforcement Directorate. The communication dated 26th July, 2019 having been withdrawn, no further orders are called for in this writ petition - Petition disposed off.

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• 2023 (5) TMI 659
  Violation of principles of natural justice - opportunity to summon the Assistant Director and Deputy Director of the respondent authority for their examination/cross-examination, rejected - rejection holding that no meaningful purpose would be served by cross-examining the said officers - HELD THAT:- The appeal is disposed of with the following directions: (i) It would be open to the appellant to raise all issues, factual as well as legal before the Adjudicating Authority at the time of final hearing. (ii) The Adjudicating Authority would be at liberty to take an independent view of the entire factual matrix as well as legal issues without being influenced by any observation contained in the impugned order of the Tribunal dated 08.05.2023 on the merits of the factual matrix as well as legal issues. (iii) The Adjudicating Authority shall permit the appellant to address arguments and rely upon the material that has already been placed before it by the appellant before forming an opinion with regard to passing of the final order in terms of Section 8 of the Act. The appeal is accordingly dismissed as withdrawn.

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• 2023 (5) TMI 658
  Violation of principles of natural justice - Petitioner s application for right to cross examine witnesses has been rejected - Appealable order or not - Provisional Attachment Order - HELD THAT:- It is now the settled position that the order under challenge being an order passed by the Adjudicating Authority, PMLA is appealable under Section 26 of the PLMA - This provision has been considered by this Court in DR. U.S. AWASTHI VERSUS ADJUDICATING AUTHORITY PMLA ANR. [ 2023 (1) TMI 595 - DELHI HIGH COURT] wherein the Court under similar circumstances interpreted the order rejecting application for cross examination passed by the Adjudicating Authority, PMLA as appealable under Section 26 of the PMLA. The Appellate Tribunal, PMLA is currently constituted and is functioning. The impugned order would be appealable to the Appellate Tribunal. Thus, this Court is not inclined to entertain the present writ petition. The Petitioner is relegated to avail of its Appellate remedy in accordance with law. However, this Court would like to specifically note that it appears that the Respondent No. 1 has failed to take into consideration the observations of this Court in the U.S. Awasthi case where the use of such disconcerting language as contained in paragraph 8 of the impugned order, has been frowned upon by this Court. Repeated use of templated paragraphs, as though the principles of Natural Justice are mere rhetoric, is not permissible. The present order shall be treated as a warning to the concerned authority to not use such language, failing which the Court would be constrained to direct action to be taken. The Appellate Tribunal, PMLA shall ensure that the Respondent No. 1. shall abide by the principles of natural justice as also the observations of this Court given in Dr. U.S. Awasthi - The Petitioner is permitted to approach the Appellate Tribunal, PMLA within a period of one month. The period during which the present writ petition was pending shall be deductible from the period of limitation for filing of the appeal - the observations of this Court qua the language of the impugned order used would not have a bearing on the merits of the case. Petition disposed off.

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• Service Tax

• 2023 (5) TMI 657
  Non-payment of service tax - architect services - management or business consultant - it is alleged that the appellant had mis-classified the services as construction services and, accordingly, taken benefit of the exemption provided under a Circular dated 17.09.2004 - intent to evade tax or not - suppression of facts - extended period of limitation - HELD THAT:- The appellant is a registered assessee and had been filing returns under section 73(6)(i) of the Finance Act. The relevant date for calculation of the limitation period is from the date on which the periodical return is to be filed. As per rule 7 of Service Tax Rules, 1994 [the Service Tax Rules], every assessee has to file a half yearly return by the 25th of the month following the particular half-year. It would be seen that in regard to the services performed by an architect, the period from 01.04.2005 to 30.06.2009 is not within the normal period but the period from 01.07.2009 to 30.03.2010 is within the normal period. In regard to the services said to have been performed by a management or business consultant, the entire period is covered by the extended period of limitation under the proviso to section 73(1) of the Finance Act. The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word one year , the word five years has been substituted - There is substance in the contention advanced on behalf of the appellant that mere suppression of fact is not enough as it has also to be conclusively established that suppression was wilful with an intent to evade payment of service tax. In Pushpam Pharmaceuticals Company [ 1995 (3) TMI 100 - SUPREME COURT ] , the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. It would also be useful to refer to a decision of the Tribunal in M/S. SHIV-VANI OIL GAS EXPLORATION SERVICES LTD. VERSUS CST, NEW DELHI [ 2016 (10) TMI 878 - CESTAT NEW DELHI ] , wherein the Tribunal after making reference to the decision of the Supreme Court in COSMIC DYE CHEMICAL VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1994 (9) TMI 86 - SUPREME COURT ], observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. It is, therefore, clear from the aforesaid discussion that the extended period of limitation could have been invoked only if there was suppression of facts with intent to evade payment of service tax - Such being the position, the demand made for the extended period in so far as architect services and management or business consultant services are concerned deserves to be set aside and is set aside. There is no demand for the normal period so far as management or business consultant services are concerned. However, the period from 01.07.2009 to 30.03.2010 would fall within the normal period so far as architect services is concerned and, therefore, it would have to be examined whether the demand could have been confirmed under this head. It is not possible to accept the contention of the learned counsel for the appellant that the work required to be performed by the appellant would fall under construction services as there is nothing in the agreement nor anything could be pointed out by the learned counsel appearing for the appellant that the nature of work required to be performed by the appellant would fall under construction services . It was imperative for the appellant to have led evidence to substantiate that any construction work was required to be performed by the appellant under the agreement - There is, therefore, no error in the finding recorded by the Commissioner that the appellant did not perform construction services and the work performed by the appellant would appropriately fall under the architect services. The order passed by the Commissioner confirming the demand of service tax for the extended period of limitation in so far as the architect services and management or business consultant services are concerned is set aside - the demand confirmed for the normal period for architect services as also the demand for CENVAT credit is upheld - Appeal allowed in part.

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• 2023 (5) TMI 656
  Levy of service tax - business auxiliary service - invocation of extended period of limitation contemplated under section 73(1) of the Finance Act, 1994 - penalty - HELD THAT:- The issue decided in the case of M/S TEAM HR SERVICES LTD. VERSUS CST, DELHI [ 2018 (2) TMI 1680 - CESTAT NEW DELHI] where it was held that we have no doubt that the appellant did market the services provided by the client bank. It will not be correct to state that the appellant only provided operational assistance in such marketing. No such words were used in the terms of the agreement and in fact the agreement directly refers to the appellant as a service provider to mark its products (ICICI Bank) and the appellants are in fact engaged in promotion and marketing activity of the financial products of the client bank. The aforesaid decision of the Tribunal was confirmed by the Delhi High Court in the appeal filed by the Department in COMMISSIONER OF CENTRAL TAX GST DELHI EAST VERSUS TEAM HR SERVICES LTD. [ 2018 (10) TMI 406 - DELHI HIGH COURT] . The observations made by the Delhi High Court dismissing the appeal filed by the Department against that part of the order of the Tribunal holding that the extended period of limitation could not have been invoked. In view of the aforesaid decision of the Tribunal and the Delhi High Court, it has to be held that extended period of limitation could not have been invoked. As the entire demand is for the extended period of limitation, the order passed by the Commissioner holding that the extended period of limitation was correctly invoked deserves to be set aside and is set aside. The imposition of penalty also deserves to be set aside and is set aside. Appeal allowed.

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• 2023 (5) TMI 655
  Refund of CENVAT Credit - input services used in legal consultancy services provided by the appellant to clients situated outside India (export of services) - denial of refund on the ground that the services so rendered by them are not taxable at their end irrespective of the fact whether the same are provided domestically or are exported - HELD THAT:- The issue involved in this appeal is covered by a judgment of the Delhi High Court in the appellant s own case COMMISSIONER OF CGST DELHI EAST VERSUS ANAND AND ANAND [ 2022 (8) TMI 761 - DELHI HIGH COURT ] where it was held that It is because the expression output service finds a mention in Sub-rule(1) of Rule S, that the revenue chose to refer to Rule 2(p) of the 2004 Rules and, in our view, consequently, mixed up the domestic service provided by the service provider i.e., the assessee, with the export service. In view of the aforesaid decision of the Delhi High Court, it has to be held that the appellant was entitled for refund of the claims made under rule 5 of the 2004 Rules. The order dated December 22, 2017 passed by the Commissioner (Appeals-I) is, therefore, set aside and the appeal is allowed.

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• 2023 (5) TMI 654
  Levy of service tax - consideration towards bare-boat charter of offshore drilling unit to M/s Transocean Drilling Services (India) Pvt Ltd - deemed sales/high seas sale - Revenue submitted that the liability to tax arises from rendering of declared service and the sole factor in immunising themselves from the tax is evidence of right to use having been transferred to the charterer - HELD THAT:- Ever since the broadening of the tax net under Finance Act, 1994, controversy over composite transactions involving sale/deemed sale, which are liable to tax only under the laws of the states comprising the Union, as well as service, taxable only under Finance Act, 1994, have been the subject of judicial determination. The plea of exclusion from sales tax imposed by states or of exclusion from service tax stemming from the consideration of the transaction being already subject to the other tax was elaborated at length in the decision of the Hon ble Supreme Court in re Bharat Sanchar Nigam Ltd, in TATA CONSULTANCY SERVICES VERSUS STATE OF ANDHRA PRADESH [ 2004 (11) TMI 11 - SUPREME COURT] where the five attributes stand settled as the determinants of exclusion from tax under Finance Act, 1994. It would appear from a scrutiny of the charter agreements that there is no reason to conclude otherwise. It was, therefore, the responsibility of the service tax authorities to base their claim to tax these transactions by demonstrating non-compliance insofar as the impugned agreements are concerned. A perusal of the show cause notices, as well as the impugned orders confirming the demand thereon, shows those to be based entirely on the presence of permanent establishment in India, nonpayment of tax on sale and the contractual right to resume control for failure to comply with terms of agreement and chargeability to tax of supply of tangible goods prior to 1 July 2012 - The test of right to use , as laid down by the Hon ble Supreme Court, has not been applied to the transaction by the adjudicating authority while deciding on upholding the demand in the show cause notices. Insofar as the orders impugned in appeal of Revenue are concerned, there is no ground for interference. The impugned order confirming the demand is not consistent with law and merits setting aside - Appeal of assessee allowed.

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• 2023 (5) TMI 653
  Demand of service tax dropped - respondent availed exemption from payment of service tax for services provided to Special Economic Zones [SEZ] but did not provide documentary certificates to support its claim of exemption - notifications dated 03.03.2009 and 01.03.2011 - HELD THAT:- The applicability of the notifications issued under section 93(1) of the Finance Act, 1994, which exempt taxable services provided in relation to the authorized operations in SEZ, has been considered by the Tribunal in M/S. SRF LIMITED VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, LTU NEW DELHI AND COMMISSIONER OF CGST, AND CENTRAL EXCISE, INDORE [ 2022 (4) TMI 989 - CESTAT NEW DELHI] wherein after analyzing the provisions of the Special Economic Zones Act, 2005, the provisions of notifications issued under the provisions of section 93(1) of the Finance Act and the decision of the Telangana High Court in GMR AEROSPACE ENGINEERING LIMITED AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT] , the Tribunal observed that as the charge of service tax under the Finance Act, 1994 on the services provided for authorised operations of the appellant are overridden by section 51 of the SEZ Act, 2005, any exemption notifications for such services as well as the conditions laid down in them are redundant. Service tax, if any, paid on such input services for authorised operations need to be refunded to the appellant. We also find no force in the other grounds raised for denying the refund of service tax paid. Revenue however, submitted that in view of the provisions of section 26(2) of the SEZ Act, the exemption could have been claimed by the appellant only in accordance with the provisions of section 93(1) of the Finance Act - this submission has been dealt with by the Tribunal in SRF Ltd. and it has held that the exemption notification should have been issued under section 26(2) of the SEZ Act and the notifications issued under the Finance Act, in view of the provisions of SEZ Act, would have no application. The appeal filed by the department deserves to be dismissed and is dismissed.

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• Central Excise

• 2023 (5) TMI 652
  Wrong and irregular Cenvat credit - It is alleged that the entire transaction was conducted with M/s. AESPL was on paper only with an ulterior motive of availing wrong and irregular Cenvat credit without accompaniment of any physical material said to be manufactured by the said M/s. AESPL - wilful and deliberate suppression of material fact - time limitation - interest and penalty - HELD THAT:- Majority of the evidences which have been relied upon against the Appellant relates to the activities of M/s. AESPL - answer of Revenue was that large machineries needed to be fabricated in the factory premises with plates, angles, channels etc. but there stood no evidence that such plates, angles, brought to the factory premises for fabrication. There was also no such evidence that those machineries were brought in piecemeal manner and assembled at factory premises. It is found that the sole allegation in the show cause notice was that the capital goods received on which the Appellant had availed cenvat credit were never manufactured by M/s. AESPL and that the entire transactions by the Appellant with M/s. AESPL were on paper only. It is a well settled law that the adjudicating authority cannot go beyond the scope of the show cause notice as has been laid down by the Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS, MUMBAI VERSUS TOYO ENGINEERING INDIA LIMITED [ 2006 (8) TMI 184 - SUPREME COURT ] and in the case of THE COMMISSIONER OF CENTRAL EXCISE, BHUBANESWAR-I VERSUS M/S. CHAMPDANY INDUSTRIES LIMITED [ 2009 (9) TMI 7 - SUPREME COURT ]. In these judgments it has been laid down that the department cannot travel beyond the scope of show cause notice and that the Revenue cannot argue the case which has not been made out in the show cause notice. The whole case of the department that the transactions with M/s. AESPL were fake transactions and the Appellant took credit without receipt of the capital goods or non-receipt of the goods clearly falls down. In the show cause notice it was alleged that the Appellant had utterly failed to verify the antecedents of the supplier manufacturer for the purpose of availing of Cenvat credit. This would mean that the goods were actually received by the Appellant without verifying the antecedents of the supplier-manufacturer. It is well settled law that onus of proof that the Appellant received the capital goods from some other source was squarely on the department which it failed to prove - the present case is on a higher pedestal as the capital goods received from M/s. AESPL were duly installed in the factory of the Appellant and were being used in the manufacture of finished goods. The department has not brought any evidence on record that the Appellant did not receive various capital goods from M/s. AESPL and was not using the same in the manufacture of finished goods - there is no material on record to show that M/s. AESPL did not supply capital goods to the Appellant as alleged in the show cause notice and held in the impugned order. Time Limitation - HELD THAT:- In the present case the period involved is from 20-052003 to 30-06-2008 and the show cause notice was issued on 04-122008. The majority of the duty demand is under the extended period of limitation - in the present case even if the goods were not actually manufactured by M/s. AESPL the fact remained that the same were duly received by the Appellant and M/s. AESPL have duly discharged the central excise duty on the same. In such a case extended period of limitation could not be invoked against the Appellant. Interest and penalty - HELD THAT:- Once the duty demand is not sustainable either on merits or on the issue of limitation, the question of sustaining penalty upon the Appellant or demand of interest from them does not survive. The impugned order cannot be sustained both on merits and on the point of limitation - Appeal allowed.

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• 2023 (5) TMI 651
  100% EOU - non-fulfilment of export obligation - manufacture and export of footwear - Dutiability of capital goods and raw materials imported by availing the benefit of notification no. 53/97- Cus dated 3rd June 1997 and notification no. 1/95-CE dated 4th January 1995 and notification no. 22/2003-CE dated 31st March 2003 - HELD THAT:- Admittedly, the appellant was unable to fulfil the prescribed export obligation for the first five years of operation and, therefore, in accordance with the policy prescriptions and corresponding exemption notifications issued under Central Excise Act, 1944 and Customs Act, 1962, became liable to duties in accordance with the scheme. Furthermore, the appellant also was liable to be proceeded under the Foreign Trade (Development Regulation) Act, 1992 by the designated authority competent to impose penalties for such failure. Between 2002-03, when the appellant ceased to export and the effective closure of the factory in 2006 as well as the proceedings initiated under Customs Act, 1962/Central Excise Act, 1944 in 2011, several changes had been made to the scheme. Concurrently, the perception on liabilities arising from non-fulfilment of export obligation had also undergone transformation in terms of judicial determination. In SHRIRAM GRAPE GROWERS CO-OPERATIVE SOCIETY LTD VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS [ 2018 (3) TMI 205 - CESTAT MUMBAI] , it was held that It is, therefore, adequately certain that the duty liability on imported, or indigenously procured, capital goods is erased by sheer efflux of time. The appellant has been functioning exportoriented unit since 1992 and capital goods procured in that year should be eligible for depreciation over the period that the unit has been in existence. As on the date of the impugned order, the appellant has been in existence for over a decade and, by application of the straight-line depreciation approved by the Central Board of Excise Customs, the value of capital goods would be nil. Consequently, no duty liability would arise. In BAGLAN TALUKA GRAPE GROWERS CO-OPERATIVE SOCIETY LTD VERSUS COMMISSIONER OF CENTRAL EXCISE NASHIK [ 2019 (1) TMI 1188 - CESTAT MUMBAI] it was held that With a lapse of time since the commencement of commercial production , the value of the missionary appreciates to nil and demand of duty is thus erased. At the same time, the proceedings for recovery of duty, under the applicable notification granting exemption from duty, for annual deficiency is independent, and exclusive, of the proceedings for debonding. In the present dispute, the proceedings appear to have originated with completion of the period of warehousing which should be applicable only if the warehouse goods whenever put to use and, on completion of the warehousing., The duty liability would be computed on value as assessed originally without benefit of depreciation. In the present circumstances, owing to utilization, depreciation is not reliable. The depreciation over the entire tenor result in nil value for the purpose of assessment. It would appear that these decisions of the Tribunal, and several others thereafter establishing the consistent view of judicial determination on duty liability of such units unable to continue exportation, was not available to the original authority which precluded a judicious disposal of the issue as proposed in the show cause notice - As the substantial part of the amount in dispute pertains to capital goods and the adjudicating authority would need to reappraise the demand in accordance thereof requiring the matter to be remanded, it would also be in consonance thereof for the dispute relating to raw materials also to be reconsidered at the same time. Matter remanded back to the original authority for a fresh decision in accordance with the law as enacted and as judicially determined - appeal allowed by way of remand.

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• 2023 (5) TMI 650
  MODVAT Credit - parts /components of DG set - manufacturer of these DG sets which was commissioned / directed by another person - HELD THAT:- On going through the latest decision of the Apex Court in COMMISSIONER OF CENTRAL EXCISE I CHANDIGARH VERSUS M/S AMBUJA CEMENT LTD. [ 2022 (9) TMI 1456 - SUPREME COURT] , inter-alia, observing that DGPP sets on which modvat credit is allowed is part and parcel of the factory of the assessee which is ultimately used in the manufacture of the end product- cement. Therefore, Sl. No. 5 of the Table appended to rule 57 Q shall be attracted and the assessee shall be entitle to the modvat credit on such DGPP sets being part / components of the cement plant/final manufacture product. The above analysis is clearly applicable to the facts herein as the parts of DG sets were imported and were received by the assessee in their factory even where the purchases are made by WIL. Further, the assessee acquired the components of the generating set, not for use in the manufacture of generating set as a final product but to generate electricity which was required for the manufacture of yarn etc. which was their final product. Needless to mention that the parts, spares and accessories are covered under the definition of capital goods under Rule 57-Q. The present appeal by the revenue is dismissed.

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• CST, VAT & Sales Tax

• 2023 (5) TMI 649
  Valuation - determination of sale price of Iron Ore sold by the petitioner - average rate of neighbouring mines in exercise of the powers under Section 35(7) read with Section 30(4) of the JVAT Act - HELD THAT:- After going through the impugned order and other relevant documents placed, it appears that revised assessment proceeding of the petitioner was completed and an order has been passed whereby, in exercise of power u/s 35(7) r/w section 30(4) of the JVAT Act, tax and interest has been imposed upon the petitioner on the ground that petitioner has concealed its GTO. After going through the proviso to Section 35 (7) of the Act it appears that the statute specifically postulates that prescribed authority shall record its reason before initiating the proceedings and no order shall be passed under this sub section without giving the dealer an opportunity to be heard. Section 35(7) contemplates of such a proceeding against an assessee regarding whom the Assessing Officer is satisfied that he has resorted to selling of goods at a higher price than shown in his invoices. Therefore, the proviso to Section 35 (7) of the JVAT Act firstly stipulates that the reasons must be recorded by the prescribed authority for initiating the proceeding and secondly, the principles of natural justice should be followed. Though in the instant case the second ingredient of the proviso has been fulfilled; however, there is no document to suggest that the assessing officer has recorded his reason before initiating the proceeding. In the absence of any tangible materials to support such a finding, it is difficult to assume that a purchaser of petitioner would purchase minerals at a lesser price under an invoice in order to evade payment of tax especially when the said purchaser is entitled to avail ITC under the JVAT Act, 2005. It is only after recording of reasons for initiation of proceedings under Section 35(7) the exercise for determination of value of goods at the time of sale and assessment of tax on such price is to be done by giving the dealer an opportunity of being heard. It is reiterated that recording of satisfaction is sine qua non before proceeding to impose tax and penalty upon the assessee under Section 35(7) of the JVAT Act. Any such satisfaction is to be based on tangible materials as are found by the AO as the provisions are penal in nature where an assessee is found to be indulging in tax evasion by suppression or concealment of actual sales or turnover by selling goods at a higher price than shown by him. Learned Tribunal has completely failed to consider that the requirement of law for initiating a proceeding under Section 35(7) by recording reasons has not been fulfilled by the Assessing Officer - the matter is therefore required to be remanded to the AO to comply the provisions of Section 35(7) of the Act for initiating the proceeding, if he finds any evidence that the goods have been sold at higher price than shown by the dealers. Petition allowed by way of remand.

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• 2023 (5) TMI 648
  Rebate on Input Tax paid on diesel - activity of crushing the boulders into gitti amounts to manufacturing (or not) and for this process, diesel is used as raw material - interpretation of Section 14(1AC) of MP VAT Act - HELD THAT:- The learned Appellate Tribunal has considered the first contention of the appellant about the activities of stone crushing is amount to manufacture or not. According to the Tribunal, the appellant is only changing the size of stones from boulder to gitti , hence, there is no change in its character by reducing the size. The manufacturing includes any activities that bring out a change in final product. The Apex court in the case of COMMISSIONER OF SALES TAX, UP. VERSUS LAL KUNWA STONE CRUSHER (P) LTD. [ 2000 (3) TMI 58 - SUPREME COURT ] held that Even if gitti, kankar, stone ballast, etc. may all be looked upon as separate in commercial character from stone boulders offered for sale in the market, yet it cannot be presumed that Entry 40 of the notification is intended to describe the same as not stone at all. In fact the term stone is wide enough to include the various forms such as gitti, kankar, stone ballast. The above view has been affirmed in the case of STATE OF MAHARASHTRA VERSUS MAHALAXMI STORES [ 2002 (11) TMI 112 - SUPREME COURT ] where it was held that From a perusal of the definition, extracted above, it is clear that the processes of producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or adapting of any goods fall within the meaning of the term manufacture . But it may be pointed out that every type of variation of the goods or finishing of goods would not amount to manufacture unless it results in emergence of a new commercial commodity. In the instant case, the very nature of the activity does not result in manufacture because no new commercial commodity comes into existence. Claim of ITR for the purchase of diesel - HELD THAT:- The appellant used to purchase diesel to run the crusher machine and not as a raw material to manufacture the gitti . ITR can be allowed only to the registered dealers on the purchase of goods specified in Schedule II within the State. The appellant is not a dealer engaged in the sale or purchase of diesel, therefore, the Tribunal has not committed any error in interpreting Sections 14 and 14(1AC) of the Act of 2002. Diesel is covered in Part III A of Schedule II and Part II of Schedule II does not cover petrol and diesel. As such, there are no errors in the finding recorded by the Assessing Authority, First Appellate Authority as well as Tribunal. Appeal dismissed.

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• 2023 (5) TMI 647
  Reversal of ITC - incentives / discounts received by the appellant from its vendors - attachment of bank accounts - HELD THAT:- Out of the total disputed tax of Rs.1,02,05,505/- for the assessment years in question, a sum of Rs.46,81,461/- relates to the reversal of ITC on incentives, which is covered by the judgment of the Apex Court in M/s.Jayaram Co. case [ 2016 (9) TMI 408 - SUPREME COURT ] wherein, the assessment orders dated 29.10.2010, with respect to reversal of input tax on incentives / discounts received by the appellant from its vendors, were set aside - After deducting the said sum of Rs.46,81,461/-, the balance sum of Rs.55,24,044/- pertaining to other issues, to which, the appellant has also filed application under Section 84 of the TNVAT Act, 2006. Considering the total quantum covered under Section 19(20) of the Tamil Nadu Value Added Tax Act, 2006, amounts to Rs.46,81,461/-, which was set aside in the earlier round of litigation, but, the same was not taken into consideration by the learned Judge and that, if the amount so deleted, is deducted from the total disputed tax of Rs.1,02,05,505/- by way of subsequent assessment proceedings, the total outstanding amount would be around Rs.55,00,000/-, this court, to meet the ends of justice, is inclined to modify the order of the learned Judge, in the following terms: i. The appellant shall pay a sum of Rs.25,00,000/- within a period of eight weeks from the date of receipt of a copy of the judgment; ii. On such payment, bank attachment, if any, shall be lifted forthwith; iii. On the failure of the appellant to comply with the direction (i) above, the interim order granted by the learned Judge shall stand vacated automatically without any reference to this court. Appeal disposed off.

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• 2023 (5) TMI 646
  Framing of Assessment under Section 29(2)(c) of the PVAT Act, 2005 - period 2006-2007 to 2009-2010 - it is alleged that Assessing Authority, while framing assessment under Section 29(2) had not followed the procedure laid down under Section 29(5) of the Act, 2005 - HELD THAT:- In the present case, the tax has already been deposited by the appellant as observed by the Tribunal in order dated 31.05.2018 (Annexure A-8). Moreover, on merits, after examining the order dated 01.08.2012 passed by the Deputy Excise Taxation Commissioner, (Appeals), U.T., Chandigarh, it is found that the assessment has been made after examining documents which were recovered during the inspection from the business premises of the appellant and not as a best Judgment Assessment. Even though the ETO, who had passed the impugned order, had been allotted ward No. 1 as per notifications (Annexures A-5 and A-5/A). However, it is not the case of the appellant that ETO was not competent to pass the assessment order with regard to residents of any ward. The Deputy Excise Taxation Commissioner (Appeals) as well as the Tribunal had proceeded to examine the case on merits in detail and the order with respect to liability of the assessee to make payment of tax pursuant to the search conducted does not require any interference on facts as well as no substantial question of law arises to interfere with the finding of facts given by the Assessing Officer, Deputy Excise Taxation Commissioner (Appeals) and the Tribunal. At this stage, no case is made out to remand the matter back to the concerned ETO of the ward to pass a fresh order on merits which has already been examined in detail by all the three authorities below. Hence, no substantial question of law arises to interfere in the case on the question of jurisdiction only as this Court is of the view that the matter will not be remanded back to the concerned Assessing Officer as the documents and evidence will remain same and no second opinion could have been formed with respect to the assessment made for the assessment years 2006-07 to 2009-10. Appeal dismissed.

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• Indian Laws

• 2023 (5) TMI 645
  Dishonour of Cheque - right of the accused to cross examine the complainant - section 145(2) of the NI Act - applications under section 145(2) of the NI Act were opposed by the respondent no. 1 on the ground that the petitioner has not set out any specific point of defence and the application is mere denial of the complaint - HELD THAT:- The question of considering the special provisions laid down by section 145 of the NI Act for a dishonoured cheque trial and to consider how far certain assertions made by the accused are in accordance with the provisions contained in the two sub-sections of that section came came up for consideration before the Supreme Court in MANDVI CO-OP. BANK LTD. VERSUS NIMESH B. THAKORE [ 2010 (1) TMI 570 - SUPREME COURT ] - The Supreme Court held that the evidence on affidavit given by the complainant or his witness under section 145(1) is in the nature of his examination-in-chief and on being summoned by the Court on application made by the accused under section 145(2), is not required to depose again in examination-in-chief before being cross examined as to the facts stated in the affidavit. In M/S. METERS AND INSTRUMENTS PRIVATE LIMITED ANR. VERSUS KANCHAN MEHTA [ 2017 (10) TMI 218 - SUPREME COURT ] , the Supreme Court was considering the issue as regards the rejection of the prayer by the High Court for compounding offence under section 138 of NI Act on payment of cheque amount and in the alternative for exemption from personal appearance. When the matter came up for hearing before the Supreme Court, notice was issued to consider the question as to how the proceedings for an offence under section 138 of the Act can be regulated, where the accused is willing to deposit the cheque amount. The question for consideration was Whether in such a case, the proceedings can be closed or exemption granted from personal appearance or any other order can be passed . The accused has right to a fair trial. Once it is recognised that the accused has absolute and unqualified right to have the complainant and any or all of his witnesses summoned for cross-examination, the applicant cannot be deprived of such a right unless there are some extraordinary reasons for doing so. In fact, the object of section 145(2) is explained by the Supreme Court in Meters and Instruments Private Limited and anr. The Hon ble Supreme Court in paragraph 9 observed that the object of section 145(2) was simpler and swifter trial procedure. Only requirement is that the evidence must be admissible and relevant. The affidavit of the complainant can be read as evidence . The Supreme Court held that the accused has to disclose specific defence to contest the case. The trial Court, committed error in observing that the petitioner is silent on the specific ground of defence or point on which he wishes to cross examine the complainant. It may be that the petitioner has an opportunity to lead defence evidence and rebut the presumption if any, however, that does not mean that the valuable right of the petitioner to cross examine the complainant which he is entitled to under section 145(2) of the NI Act can be lightly brushed aside. The decision relied upon by learned counsel for the respondent in RUKMAKAR @ BHARAT TULSHIDAS NAIK VERSUS SANTOSH SHABA GAONKAR ANR [ 2019 (4) TMI 2105 - BOMBAY HIGH COURT] is distinguishable on facts as this Court was of the opinion that the application was filed in a casual manner. The petitioner therein had not set out the grounds in the application or during the course of hearing of the application to cross-examine the complainant. It is in those circumstances that the order passed by the trial Court was not interfered with. Petition allowed.

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