TMI Tax Updates - e-Newsletter
May 18, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Jurisdiction - power of Joint Commissioner (Investigation) Enforcement to exercise powers and functions of adjudicating authority - The State argues notifications should be read together, designating the Joint Commissioner as a proper officer for statewide jurisdiction. Respondent No. 1 argues the notification grants blanket powers statewide. The court finds the proper officer for adjudication must be designated, emphasizing jurisdictional limits in the notification. None of the notifications extend jurisdiction beyond the designated area. The court agrees with the petitioner's contention, restraining coercive actions and granting time for responses. - The matter is scheduled for further proceedings.
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Levy of GST on Extra Neutral Alcohol (ENA) supplied by the petitioner - The High Court, after considering the arguments and precedent cases, dismissed the writ petition, highlighting the petitioner's failure to provide a written explanation as required by law before challenging the SCN, as per the recent Supreme Court ruling. The court reiterated the importance of adhering to procedural requirements before seeking judicial intervention, thereby affirming the dismissal of the petition.
Income Tax
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Foreign Tax Credit (FTC) u/s 90 r.w. Article 25 India US Treaty (DTAA) - Claim denied as Assessee could not file Form 67 online along with return - The Tribunal accepted the appellant's plea of a reasonable cause for the delay, as evidenced by medical documentation, and condoned the delay, allowing the appeal to proceed. - The Tribunal agreed with the appellant's contention, emphasizing that procedural law should not be construed as mandatory when it obstructs justice. It noted that the DTAA provisions override those of the Income Tax Act if they are more beneficial to the taxpayer.
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Addition u/s 50C r.w.s. 56(2)(vii) (b) - the buyer of the property - The Tribunal (ITAT) ruled that since the assesses were buyers, Section 50C did not apply, and Section 56(2)(vii)(b) did not apply as the property was not acquired without consideration. The retrospective application of Section 56(2)(vii)(b) was also rejected. Additionally, the Tribunal found no grounds for addition under Section 69C, as no show cause notice was issued and the initial addition was not sustained. Consequently, the appeals by both assesses were allowed. Additionally, the Tribunal found no grounds for addition under Section 69C, as no show cause notice was issued and the initial addition was not sustained.
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Assessment against non existent company - name of company struck off by ROC - Assessment based on Seized Materials - The Tribunal noted that the Assessing Officer was aware of the company's non-existence but proceeded with the assessment. It ruled that the assessment orders passed in the name of a non-existing company were void ab initio, as they lacked jurisdictional validity. Consequently, the Tribunal quashed the entire assessment proceedings and allowed the cross objections filed by the assessee, dismissing the appeals filed by the Revenue.
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Computation of capital Gain - Disallowance being expenses towards the additional work undertaken by the assessee in respect of the flat purchased by her for a consideration - The Tribunal accepted the assessee's evidence, including bank statements and agreements with contractors, as sufficient proof of the additional construction work. Recognized that the housing loan was jointly taken by the assessee and her husband for purchasing and improving the flat. Confirmed that the entire transaction, including the additional work and loan repayment, was reflected in the assessee's accounts. Disallowed the AO's findings due to lack of contrary evidence and deleted the addition.
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Penalty u/s 271 (1) (c) - Income disclosed only after the search and seizure operation - The High Court emphasized that Explanation 5A of Section 271(1)(c) deems concealed income even if disclosed post-search, and upheld the assessing officer’s initiation of penalty proceedings based on detailed findings of concealed income in the assessment orders. The Court referenced key Supreme Court judgments, asserting that the satisfaction for penalty can be inferred from the assessment order and need not be explicitly stated in the notice if the order details the concealment. It also rejected the respondent’s defense of voluntary disclosure, noting it was made only after irrefutable evidence of concealment emerged during the search. It set aside the ITAT’s order, reinstated the penalties, and remanded the matter to the ITAT for adjudication on merits.
Customs
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Valuation of export goods - Iron Ore Fines - transaction value - FOB price - Export duty - The appellant contested this, arguing that unless the Revenue disputes the transaction value with corroborative evidence, it should be considered valid, citing relevant case laws. The Tribunal concurred, emphasizing that the Revenue had not doubted the transaction value and had not followed sequential valuation rules before adopting contemporaneous values. As the Revenue did not contest the Adjudicating Authority's findings, the transaction value's correctness was upheld, and the appeal was allowed.
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Implementation of the Resolution Plan and change in management and control - Demand of customs duty - The appellant did not file any claim during the insolvency process, and as per provisions of the IBC, once a resolution plan is approved, all claims not part of the plan stand extinguished. The Court referred to relevant sections of the IBC and a Supreme Court ruling, affirming that once a resolution plan is approved, claims not included cease to exist. Consequently, the appeal was deemed abated, and the questions proposed were not answered.
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Cancellation of warehouse licenses - Penalty u/s 117 - The Tribunal found that the Department had not adhered to the proper procedure for canceling the licenses and that the appellant had submitted genuine insurance policies for some licenses, which were erroneously cancelled. It also noted that the requirement for submitting NOCs from the port was not mandated by the relevant regulations. - Furthermore, the Tribunal held that the penalty imposed on the Director of the appellant company was not sustainable as the specific contraventions under the Customs Act were not established in the Show-Cause Notice.
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Levy of safeguard duty - Determination of effective date and time of implementation of Notification - The appellant argued that the notification was only effective from its publication date in the Official Gazette, which was 24.02.2013. The Tribunal considered various judicial precedents and concluded that a notification becomes effective only upon its publication in the Official Gazette. Since the appellant’s goods were imported before the publication date, the safeguard duty could not be imposed.
Indian Laws
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Dishonour of Cheque - vicarious liability - Whether service of notice to the trust through its trustees suffices for the purpose of the NI Act. - The Delhi High Court dismissed petitions challenging the trial court’s order summoning the petitioners in complaint cases filed u/s 138 NI Act. The Court held that serving notice to the trust through its trustees meets the legal requirement, making individual notices to trustees unnecessary. It further established that trustees can be held vicariously liable u/s 141 NI Act, and the amended complaints sufficiently detailed the petitioners’ involvement in the alleged transactions.
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Defreezing of bank accounts - Implication of Non-Reporting of Seizure Forthwith to the Magistrate - The Supreme Court judgment addresses the critical question of whether delayed reporting of seizures to the Magistrate under Section 102(3) Cr.P.C. nullifies the seizure order. The Court traced the legislative history and examined conflicting precedents, concluding that delayed reporting is a procedural irregularity rather than a substantive illegality. The Court defined the term "forthwith" and clarified that non-compliance with the reporting requirement does not invalidate the seizure. The validity of the seizure depends on the jurisdictional and substantive grounds, not procedural compliance. - In the present case, the Supreme Court overturned the High Court’s decision to de-freeze the bank accounts of the respondents, directing them to execute a bond to deposit the seized amount if found guilty.
IBC
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Scope of CIRP costs - Section 5(13) and Regulation 31 - waterfall mechanism - contract was completed during the CIRP period - The Tribunal emphasized that for a claim to be classified as CIRP cost, it must be directly related to maintaining the Corporate Debtor as a going concern and approved by the CoC. The primacy of CoC in such determinations. - Regarding Role of Contractual Terms: The Tribunal noted that payments to RBM Enterprises were contingent on NTPC payments to SHEL, which did not materialize. Therefore, the claim did not qualify as a CIRP cost. - Ultimately, the Tribunal overturned the Adjudicating Authority's order, declaring that the claim by RBM Enterprises does not meet the criteria for CIRP costs and should be classified under Section 53 of the Code for liquidation distribution.
PMLA
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Money Laundering - Grant of bail - The petitioner, seeking bail after 14 months of detention, faced allegations of involvement in a complex money laundering scheme, using dummy firms and fraudulent accounts to launder substantial sums of money. The petitioner’s role extended beyond professional duties, involving active participation in the financial crimes. The court recognized the petitioner’s right to a fair trial under Article 21 but emphasized the gravity of the offenses and the ongoing investigation. The court applied the twin conditions under Section 45 of the PMLA, noting the failure of the petitioner to prove prima facie innocence. The court justified the continued detention, considering the seriousness of the economic offenses and the need for further investigation. Thus, the court rejected the bail application.
SEBI
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Freezing the Demat Accounts of the petitioners - The Calcutta High Court adjudicated on the legality of freezing Demat Accounts of petitioners, directors of a listed company, by the Calcutta Stock Exchange (CSE). The petitioners argued that the freezing of their accounts violated SEBI Regulations due to lack of individual notices. The CSE justified its actions citing persistent non-compliance by the company. The court found procedural lapses by the CSE in issuing individual notices, as required under SEBI Circular dated January 22, 2020, but recognized the company's non-compliance. The court set aside the freezing notice, directing the CSE to issue fresh compliance notices to the petitioners, and allowed for future freezing actions if non-compliance persists.
Service Tax
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Liability to pay Service Tax when the main contractor has already paid - The Tribunal cited a circular stating sub-contractors are liable to pay Service Tax separately. However, they ruled the extended limitation period couldn't be invoked due to ambiguity during the relevant period. Regarding the normal limitation period, they upheld the demand for October 2010 to March 2011. They rejected the appellant's argument based on a Supreme Court case and noted that the demand for this period wasn't dead. Ultimately, they confirmed the demand for the normal period but set aside the extended period demand.
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CENVAT Credit - exempt service or not - amount of interest received by the appellant on the delayed payment of the amount of consideration received from the sale of flats/villas/shops - The Tribunal observed that the interest received is akin to liquidated damages or compensation and does not constitute an exempted service. Therefore, the appellant is not liable for reversal of Cenvat credit based on this interest. The appellant did not perform any service to receive the interest; it was merely a deterrent for delayed payments, thus not requiring reversal of Cenvat credit.
Articles
Notifications
News
Case Laws:
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GST
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2024 (5) TMI 827
Violation of principles of natural justice - the impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - demand including penalty - HELD THAT:- The observation in the impugned order dated 29.12.2023 is not sustainable for the reasons that the reply dated 25.10.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is incomplete, not duly supported by adequate documents, unable to clarify the issue which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order dated 29.12.2023 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - Petition disposed off.
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2024 (5) TMI 826
Violation of principles of natural justice - impugned order notes that as neither any reply was received from the noticee nor any one attended the hearing - HELD THAT:- As conceded by the respondent that a reply was filed but the same was not taken into account by the Adjudicating Authority while passing the impugned order. The impugned order is accordingly set aside. The show cause notice is restored on the record of the Adjudicating Authority. The Adjudicating Authority shall decide the show cause notice in accordance with law after giving one opportunity of personal hearing to the petitioner. It is clarified that in case petitioner once again fails to appear pursuant to the hearing being granted, the Adjudicating Authority would be at liberty to proceed further with the adjudication of the show cause notice ex-parte. However, after taking into consideration the reply filed by the petitioner. The petition is disposed off.
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2024 (5) TMI 825
Jurisdiction - power of Joint Commissioner (Investigation) Enforcement Wing, Rajasthan I, Jaipur to exercise powers and functions of adjudicating authority under Section 73 of the Act of 2017 - whether notification dated 25.02.2020 confers blanket powers on the Joint Commissioner, Deputy Commissioner and Assistant Commissioner in the matter of exercise of powers under Section 73 of the Act of 2017? - HELD THAT:- It is found that for the purposes of exercising powers of adjudicating authority under Section 73 of the Act of 2017, proper officer would be one who has been assigned that function as adjudicating authority. While notification dated 25.02.2020 provides that for the purposes of exercising powers under Section 73 of the Act of 2017, the officers of the rank of Joint Commissioner/Deputy Commissioner/Assistant Commissioner would be competent, the notification also clearly says that such power would be exercisable by them within their jurisdiction. All other notifications which have been filed by the respondents do not show that in relation to exercise of powers of adjudicating authority under Section 73 of the Act of 2017, the jurisdiction of Joint Commissioner Enforcement Wing, Rajasthan I, Jaipur has been extended beyond his jurisdiction including Udaipur jurisdiction. List the matter on 12.07.2024.
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2024 (5) TMI 822
Maintainability of petition - availability of statutory alternative remedy of appeal - Levy of penalty u/s 129(1)(a) of the U.P. GST Act, 2017 - HELD THAT:- In face of statutory alternative remedy of appeal available and it being equally open to the petitioner to raise all grounds pressed in the present petition before the appeal authority, we are not inclined to offer any interference in exercise of our extraordinary jurisdiction under Article 226 of the Constitution of India. Since the petition has remained pending before this Court for sometime, it is disposed of with a direction subject to the petitioner availing statutory alternative remedy of appeal against the impugned order within a period of three days and filing stay application, the same may be dealt with and decided, as expeditiously as possible, preferably within a period of ten days therefrom.
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2024 (5) TMI 820
Cancellation of registration of the petitioner under the WBGST Act, 2017 - failure on the part of the petitioner to file its returns for six months - HELD THAT:- From the proceedings initiated by the respondents it would transpire that the show cause notice was issued on the petitioner for cancellation of the petitioner s registration on account of failure on the part of the petitioner to file its returns. Incidentally, the said show cause notice was issued at a point of time when the country was under lock down. Although, the cancellation order of the petitioner s registration dated 17th March 2021 records that the petitioner had submitted a response on 15th May 2020, it is found from the pleadings filed by the petitioner that the petitioner was denied such opportunity to file its response. Be that as it may, taking into consideration the fact that suspension/revocation of license would be counter productive and works against the interest of the revenue since, the petitioner in such a case would not able to carry on its business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax, the respondents should take a pragmatic view in the matter and permit the petitioner to carry on its business. Application disposed off.
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2024 (5) TMI 813
Levy of GST on Extra Neutral Alcohol (ENA) supplied by the petitioner - Validity of show cause notice - HELD THAT:- The respondents placed reliance on the recent decision of the Hon ble Apex Court Union of India in UNION OF INDIA OTHERS VERSUS COASTAL CONTAINER TRANSPORTERS ASSOCIATION OTHERS [ 2019 (2) TMI 1497 - SUPREME COURT] where the Apex Court held ' We find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices. Though there is no bar as such for entertaining the writ petitions at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage. Neither it is a case of lack of jurisdiction nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice.' Therefore, it is clear that the Apex Court frowned upon the practice of approaching this court on issuance of show-cause notice, without giving written explanation to enable the authority to consider his defence and to pass appropriate orders. Therefore, the petitioner has rushed to this court to challenge the show-cause notice without availing the opportunity given to him to submit his written explanation. Therefore, the writ petition is not maintainable. The writ petition is dismissed.
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Income Tax
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2024 (5) TMI 829
Reassessment u/s 148/148A - escaped income is less than Rs. 50 lakhs or more? - petitioner submits that the respondents only took into consideration the credits in the bank account and did not take into account the debits therefrom and if such debits had been taken into account, she submits that the escaped amount would be much less than Rs. 50 lakhs - HELD THAT:- On perusal of the impugned orders, it is evident that the respondents proceeded ex-parte because the petitioner did not reply or otherwise participate in proceedings. It is also evident that the aggregate deposits were taken into consideration. The petitioner contends that the debits from the bank account were not taken into consideration and that if such debits were considered, the alleged escaped income would be less than the prescribed minimum threshold of Rs. 50,00,000/-. Since the petitioner could not contest the matter on merits earlier, the interest of justice warrants that an opportunity be provided to the petitioner. Since we propose to remand the matter, we do not intend to record any findings with regard to the legal arguments raised with regard to the scope of Section 149(1)(b) of the I-T Act. The impugned orders are set aside and the matter is remanded for reconsideration. The petitioner is permitted to submit a reply to the show cause notice dated 27.02.2023 within 15 days from the date of receipt of a copy of this order.
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2024 (5) TMI 828
Validity of computation sheet and the consequential notice of demand - petitioner pointed out that no addition was proposed in relation to the return of income filed by the petitioner - HELD THAT:- By referring to the computation sheet and the notice of demand, he points out that patent errors were committed while demanding a sum of Rs. 5,04,29,383/-. Accepts notice for the respondents. She submits that there appears to be a discrepancy when the assessment order and the impugned communications are compared. On perusal of the assessment order, it is clear that it was concluded therein that no addition is being made in relation to the issues mentioned in paragraph 1 thereof. In those circumstances, the demand made in the computation sheet and the demand notice cannot be sustained. Therefore, this writ petition is allowed by quashing the impugned computation sheet and the consequential notice of demand.
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2024 (5) TMI 823
Estimation of Net profit - assessee failed to prove the source of cash deposits and that such deposits are only from the business, confirmed the addition - HELD THAT:- The figures establish that at no point of time, the net profit from the line of business of the assessee is as high as 10%. The accepted figures show that it is from 0.5% to 8%. In these circumstances, estimate of net profit at 10% is too high and on the face of the figures disclosed by the assessee, net profit at 0.5% is too low. Taking a pragmatic view, we consider the net profit at 5% is reasonable and will meet the ends of justice and, therefore, accept the contention raised by AR. AO is accordingly directed to estimate the net profit at 5% of the total sales. Appeal of the assessee is allowed in part.
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2024 (5) TMI 821
Addition of unexplained income - cash deposits during the demonetization period - as per assessee sources for the deposits to be of' agricultural income' - HELD THAT:- As the assessee is an agriculturist having source of income from agricultural produce and he has furnished the document showing the agriculture holding of 20 acres of land belongs to his wife and children. The assessee deposited the amount during the demonetization period, which included proceeds from the sale of agricultural produce from his agricultural land and also from the agricultural land belongs to the family and also some deposits from past savings in the bank account. However, AO has failed to take into consideration the above facts. Revenue has not been disputed about owning agriculture land by the assessee. It is quite fair to assume that the agricultural land must have yielded some produce and during the month of November, the assessee likely received some amount from the sale of agriculture produce. In view of the above facts and considering the other factors that allow any individual to deposit for a sum of Rs. 2 lakhs in cash during the period of demonetization, we deem it appropriate to restrict the addition to a sum of Rs. 2,00,000/-. Thus, the appeal of the assessee is partly allowed.
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2024 (5) TMI 815
Foreign Tax Credit (FTC) u/s 90 r.w. Article 25 India US Treaty (DTAA) - Claim denied as Assessee could not file Form 67 online along with return - HELD THAT:- Section 90 of the Act provides that Govt. of India can enter into Agreement with other countries for granting relief in respect of Income on which taxes are paid in country outside India and such income is also taxable in India. Neither Section 90 nor DTAA provides that FTC shall be disallowed for non-compliance with any procedural requirements. FTC is Assessee s vested right as per Article 25 of the DTAA read with Section 90 and same cannot be disallowed for non-compliance of procedural requirement that is prescribed in the Income Tax Rules. Since the Form 67 has been filed, the same could be verified by the AO and to give relief accordingly. As decided in case of Sambhaji and others vs. Gangabai and others [ 2008 (11) TMI 393 - SUPREME COURT] that procedural law should not ordinarily be construed as mandatory; the procedural is always subservient to and is in aid to justice. Therefore, filing of Form 67 as per provision of Section 90 r.w. Rule 128(9) of the Act is a procedural law and should not control the claim of FTC. Section 90(2) of Income Tax Act, where the Central Govt. of India entered into a DTAA, the provisions of the Act would apply to the extent they are more beneficial to a taxpayer. Therefore, the provisions of DTAA override the provisions of the Act, to the extent they are beneficial to the assessee. Such contentions of the assessee, however, could not be controverted seriously by the Learned DR. We dispose of this appeal by setting aside the issue to the file of the Learned AO with a direction upon him to verify the details of Form 67 as claimed to have been filed by the assessee in regard to claim of FTC, for A.Y. 2018-19 and to give relief to the assessee in accordance with law. Assessee s appeal is, therefore, allowed for statistical purposes.
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2024 (5) TMI 814
Addition u/s 68/69A r.w.s. 115BBE - HELD THAT:- CIT(A) has given a finding that the assessee did not file any documentary evidence regarding cash deposits which is a subject matter of the impugned addition. However, it is the contention of the assessee that the assessee had provided documentary evidence to the Assessing Authority. This fact is required to be verified at the end of AO if the claim of the assessee is found to be correct, the AO would delete the impugned addition. Hence, this issue is restored to the file of AO for decision afresh. Ground No.3 raised by the assessee is accordingly, allowed for statistical purposes. Disallowance of deduction claimed under Chapter VI-A - deduction u/s 80C - AO rejected the claim on the basis that the assessee failed to furnish any supporting evidences - as contended by the assessee that the amount was deposited in PPF Account and hence, he was entitled for deduction u/s 80C - HELD THAT:- Having considering the submissions of the assessee, this contention needs verification at the end of AO and the AO would verify the correctness of the claim of the assessee that the amount was deposited in PPF Account if it was found that amount was deposited in the PPF Account of the assessee during the Financial year, the AO would delete the addition. Adhoc disallowance of business expenditure - HELD THAT:- There is no dispute that the impugned addition is based on adhoc disallowance of the expenditure. It is seen from the assessment order that the AO had made adhoc disallowance @ 25% on the basis that no explanation was offered by the assessee. As find that there is no basis of adopting 25% expenditure being not related to the business of the assessee. Since, the impugned addition is based upon merely, surmises and without giving clear finding, the impugned addition is hereby deleted. Ground No.5 raised by the assessee is accordingly, allowed.
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2024 (5) TMI 811
Estimation of profit - Validity of order of CIT(A) in reducing the gross profit @ 7.89% as against the 100% addition made by the AO - Bogus purchases - non genuine parties to cover-up the purchases from grey market - addition u/s 69C - CIT(A), has erred in reducing gross profit @ 7.89% as against the 100% addition made by the AO - HELD THAT:- As in assessee's own case for assessment year 2007 08. [ 2019 (6) TMI 1722 - ITAT MUMBAI] and thereafter, determined that only the balance profit which was disclosed by the assessee in genuine trade and non genuine trade could be added to the total income of the assessee. The coordinate Bench in the appellate order found that gross profit of non genuine purchases 7.64% whereas the gross profit of the assessee from other purchases is 7.89%, and therefore, the difference of 0.25% was added to the total income of the assessee. Therefore, the issue has been decided on the merits of the case in the appeal of the assessee arising out of the same appellate order. Appeal filed by the AO is dismissed.
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2024 (5) TMI 802
Addition u/s 50C r.w.s. 56(2)(vii) (b) - Additions in the hands of the buyer of the property - difference between the purchase price as per sale deed and the jantri value of the property on which the stamp duty was paid - Assessee is co-owners of the same property - As submitted the assessee was a buyer of the property, no capital gain could have arisen in her hand, therefore, the provision of Section 50C of the Act was not applicable at all in this case - HELD THAT:- An addition could have been made under this Section only if any immovable property, with stamp duty value exceeding Rs. 50,000/-, was acquired without consideration. In this case, the property was not acquired without consideration. Therefore, the provision of Section 56(2)(vii)(b) of the Act is not found applicable in this case. This provision was amended by the Finance Act, 2013 w.e.f. 01.04.2014 whereby the difference between the stamp duty value and the actual sale consideration was made liable for addition as income from other sources . As explicitly mentioned in the Memorandum that the existing provision was applicable to immovable property received without consideration only and that it did not cover cases of inadequate consideration. In order to include the cases of inadequate consideration, the provision of Section 56(2)(vii)(b) of the Act was amended with effect from 01.04.2014. It is categorically mentioned that this amendment was effective from 01.04.2014 onwards and applicable to A.Y. 2014-15 and subsequent years. Therefore, this amendment cannot be extended to past years. Accordingly, no addition u/s. 56(2)(vii)(b) of the Act could have been made in A.Y. 2012-13 u/s. 56(2)(vii)(b) of the Act in the case of inadequate consideration. Therefore, the addition as made by the AO cannot be sustained. Addition u/s. 69C - CIT(A) was also wrong in confirming the addition u/s. 50C r.w.s. 69 of the Act. As already discussed earlier, the provision of Section 50C of the Act is not applicable in the case of buyer and the department never had any case of making any addition u/s. 69C - addition u/s. 69C could have been made only in respect of actual investment as made by the assessee in the property and not in respect of jantri value. The addition u/s 69 also can t be sustained for the reason that case was reopened to consider the difference between jantri value and actual purchase value. When the addition on the issue on which the case was reopened is not sustained, no other addition is permissible. The CIT(A) had also not issued any show cause notice to the assessee for making the addition u/s. 69C of the Act. Therefore, the order of the CIT(A) is cancelled. Appeal preferred by the assessee is allowed.
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2024 (5) TMI 797
Assessment against non existent company - name of company struck off by ROC - HELD THAT:- It is crystal clear that the knowledge of the sticking of the name of the assessee from ROC was with AO as on 19.12.2018 being the date of assessment order in respect of the other assessee which under any circumstances cannot be denied by the Revenue authorities, in spite of that, the AO in the instant case as proceeded with the assessment proceedings and finalized the same u/s 153C r.w.s 144 of the Act dated 26.12.2018. Therefore, order in the case of KCJ Buildtech Pvt. Ltd. is not sustainable in the eyes of law since the said company was not in existence at that material point of time at all. The assessment proceeding, is, thus found to be not maintainable as the assessment order suffers from jurisdictional error. The order is, therefore, admittedly being issued in the name of a non-existing company which has no value in the eyes of law; in fact such irregularities vitiated the entire proceedings and therefore, the same is liable to be quashed.
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2024 (5) TMI 796
Scope of enquiry in cases under limited scrutiny - Assessment order was selected for limited scrutiny under CASS on two issues, i.e., (i) sale consideration of the property in ITR is less than sale consideration of property reported in AIR and (ii) large investment in property as compared to total income - HELD THAT:- AO has made inquiry in respect of sale of property, which was purchased by the assessee in AY 2013-14. The property was sold on 26.08.2014 for a consideration of Rs. 95,00,000/-. It is the claim of the assessee that the purchase value was Rs. 60,87,883/- and she incurred further expenditure of Rs. 47,38,280/- towards additional work. After collecting the evidence and explanation of the assessee, the AO has recomputed STCG on sale of the property at Rs. 34,12,162/- in lieu of short term capital loss of Rs. 13,26,113/- claimed by the assessee. Therefore, this issue is within the scope and ambit of the first issue of the limited scrutiny . Large investment in property as compared to total income - If the value adopted by the Stamp Valuation Authority is considered, it would be Rs. 43,80,219/-. Therefore, the total investment in property as compared to the total income declared by the assessee in her ITR is much higher. It is clear that the AO has not expanded the scope of inquiry under limited scrutiny by CASS. We also find that the enquiry made by the AO are directly on the issue for which the case was selected for limited scrutiny . Therefore, the contention of the Ld.AR that the AO exceeded his jurisdiction in passing the impugned assessment order is not correct, both in law and on facts. The same is therefore dismissed. Computation of capital Gain - Disallowance being expenses towards the additional work undertaken by the assessee in respect of the flat purchased by her for a consideration - Payment of margin money to contractors for additional work are submitted. It is further submitted that the husband of the appellant has neither incurred any cost nor repaid any part of housing loan nor credited the sale consideration in his books of account. He has also not reflected any apart of the capital gains in his ITR. Both the purchase as well as sale and the consequent STCG have been reflected in the ITR of the appellant only. The income from house property in respect of the whole flat is also reflected in the hands of the appellant and not in the hands of her husband - It is clear that the appellant has provided sufficient evidence to show that the expenditure was incurred by her for the additional work. She has given the bank statement to prove the source of expenditure and there is no evidence on record that the payment made to the contractors where received back in cash by the appellant. Hence, the claim of the appellant for incurring of expenditure towards the additional work is accepted and the disallowance made by the AO and confirmed by the CIT(A) is hereby deleted. This ground of assessee s appeal is allowed. Addition u/s 56(2) - There is no street light, no drainage, no road and no water supply in the area. The plot is also at lower level than normal level. Due to low level of the land, lot of garbage and rain water gets stored in the area. Due to above reasons, the fair market value of plot is much less than the jantri value. Therefore, assessee requested to refer the matter to DVO for ascertain the fair market value as per the proviso below u/s 56(2)(vii) - AO accepted to the request of the assessee and sent for valuation before DVO. However, no report from the DVO has been received. AR has stated that due to location of flat in an under-developed area and for the reasons stated during the assessment year, it is likely to fetch less price as compared to the properties in the area. However, he has not been able to furnish any evidence to support his claim. The burden of proof lies on the assessee which has not been discharged with cogent evidence and details. At this stage, it may be stated that the Ld.AR argued that no such addition has been made in case of other co-owners of assessee. However, he has not able to give the assessment order of other co-owners to establish that the impugned issue was duly examined by the AO of the other co-owners. It is common knowledge that only a few cases are picked up for scrutiny and if the case of some other persons have not been picked up for scrutiny and accepted under u/s 143(1) of the Act, the same cannot be a ground for not making the addition, which is otherwise sustainable on facts and clear operation of law at the relevant point of time. The report of DVO has also not been given to us to reconsider the amount of addition made by the AO. Therefore, we sustain the addition made by the AO. Accordingly, this ground of assessee is dismissed.
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2024 (5) TMI 792
TP Adjustment - comparable selection - HELD THAT:- Eclerx Services Ltd to be excluded to be functionally different. Genesys International Corporation Ltd. - In assessee s own case for assessment year 2008-09 [ 2019 (1) TMI 1901 - ITAT MUMBAI ] directed to exclude Genesys from the list of comparables on account of functional disparity. Similar view was taken by the Tribunal in assessee s appeal for assessment year 2009-10 for excluding Genesys from the list of comparable. No material to controvert the findings of co-ordinate Bench in the preceding assessment years is brought on record by the Revenue. Thus, we direct the AO to exclude Genesys from the list of comparables in the impugned assessment year. Infosys BPO Ltd. - To substantiate the argument of extra ordinary event, the assessee placed on record Annual Report of Infosys for Financial Year 2009-10. A perusal of same reveals that Infosys has acquired McCamish Systems LLC, USA for a total consideration of Rs. 173 crores and further contingent consideration of Rs. 67 crores. Thus, from the above it is evident that there was financial impact on the funds of the company in Financial Year 2009-10 on account of acquisition of another entity. As decided in JP Morgan India (P) Ltd. [ 2019 (1) TMI 1274 - BOMBAY HIGH COURT ] has held that events like merger, amalgamation etc., in life span of a company is not a normal event, hence, such company cannot be considered as comparable. Thus, on account of extra-ordinary event of amalgamation during the relevant year, Infosys BPO Ltd. is directed to be excluded from the list of comparables. Wipro Ltd.- Wirpro had paid Rs. 2385 million relating to previous acquisition. Further, from perusal of annual report it emerges that Hon'ble Karnata High Court had approved amalgamation of Wipro Networks Pte. Ltd. Singapore and WMNETSERV Limited, Cyprus with Wipro w.e.f. 1.4.2009. Thus, there were extra ordinary event of amalgamation and merger during the relevant period. As held earlier, wherever there are such extra ordinary event in the life cycle of a company in particular/relevant financial year, the said company cannot be considered as good comparable. Thus, in the aforesaid reasons, we hold that Wipro is not a good comparable in the impugned assessment year. Informed Technologies India Ltd - The activities carried by DBOI Global Services (P) Ltd. are in the nature of providing data process and back office support services to its AEs. Thus the said company is also captive service provider. In the light of similar facts, we follow the decision of the Coordinate bench and direct the Assessing Officer to exclude Informed Technologies India Ltd. from the list of comparables. Reduce service tax refund from operating expenses - HELD THAT:- The assessee has placed reliance on the decisions of Tribunal in the case of AMD India P. Ltd [ 2019 (12) TMI 400 - ITAT HYDERABAD ] and Capstone Securities Analysis P. Ltd. [ 2019 (4) TMI 2156 - ITAT PUNE] to contend that service tax refund is operating revenue. The assessee has also furnished a table indicating that even if service tax refund is ignored the variation between the ALP and value of international transaction is less than 5%, hence, the international transaction would be within tolerance limit. We find that the Tribunal in the cases afore-mentioned has held service tax refund/service tax written back as operating revenue while computing profit level indicator. Considering above decisions of the Tribunal, we see no merit in ground no.2 of appeal, hence dismissed. Benefit of deduction u/s 10A in respect of interest earned on various fixed deposits - HELD THAT:- We find that this issue is recurring. In assessment year 2009-10 2011-12, the assessee had claimed deduction u/s 10A on interest income. AO disallowed the same. The matter travelled to the Tribunal. The co-ordinate bench allowed benefit of deduction under section 10A of the Act in respect of interest income. The facts being identical in the impugned assessment year, we uphold the direction of DRP in treating interest income as income from business eligible for deduction under section 10A of the Act. Deduction u/s 10A in respect of foreign exchange gain on EEFC account - HELD THAT:- The Coordinate Bench in assessee s appeal [ 2021 (7) TMI 53 - ITAT MUMBAI ] allowed the benefit of deduction u/s 10A.
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2024 (5) TMI 791
TP Adjustment - Upward adjustment towards charging of notional interest for 19 days excess credit period for realisation of export sale proceeds of finished pharmaceutical products from AEs (199 days average credit period to AEs as compared to average credit period of 180 days in case of receivables from non- AEs) - HELD THAT:- The working capital adjustment given by the assessee company while fixing the sale price and which has an impact of outstanding trade receivable on profitability while having sale proceeds realisation which is incidental to transaction of sale of finished goods as per the submission of the Ld. AR appears to be not verified by the AO/TPO and in fact the international transaction of export of finished goods which was benchmarked using Transaction Net Margin Method with profit indicator of operating profit by operating cost, wherein assessee company s margin was 48.31% as compared to comparable entities having margin of 17.71% has to be looked into the export profit margin and this aspect needs to be verified. Therefore, we are remanding back this matter to the file of the TPO for proper adjudication and verification of the issue in consonance with the charging of notional interest for 19 days excess credit period for realisation of export sales proceeds of finished pharmaceutical products from AEs whether has an impact on the profitability of the assessee company and whether the other comparable capitalising the same which was not indicated by the TPO in its order. Ground of assessee s appeal partly allowed for statistical purpose. Disallowing the claim of deduction u/s 35(2AB) - weighted portion relating to expenditure on exhibit batches and certain other expenses - HELD THAT:- From the perusal of A.Y. 2009-10 order passed by the Tribunal, it can be seen that the aspect of expenditure in nature of Exhibit Batches was not allowed and, therefore, this aspect is settled and hence the same is dismissed. As regards to the aspect of expenses incurred at R D Center, from the perusal of the Paper Book at page no.81 the approval was granted upto 31.03.2012 and, therefore, the assessee has demonstrated before us that the expenses incurred at R D Center which was recognised and approved should have been considered by the CIT(A). Hence, as regards expenses amounting to Rs. 501.62 lakhs incurred at R D Centre recognised in A.Y. 2012-13 are deleted. Ground no.2 of the assessee s appeal is thus partly allowed. Rejection of books of account - assessee company failed to fully controvert the justification for lower Gross Profit rate (GP rate) and Net Profit rate (NP rate) as compared to GP rate and NP rate of its partnership firm - HELD THAT:- It is pertinent to note that for the three consecutive Assessment Years the assessee has shown that the assessee has not incurred any expenditure due to the policy making and the business models in certain categories and in fact the assessee company calculated the NP rate on the basis of return on capital employee return of asset employee or NP as percentage of sales is equal to or higher than the NP rate of comparable entity of having similar profile. In fact, the CIT(A) has observed that the assessee company made a GP of 48% on the products purchased for trading from partnership as compared to GP of 46% on trading of products purchased from third party. Thus, the observation of the AO that some expenses were shifted from the hands of the firm to the hands of the assessee company are not justifiable from the perusal of the records. Decided in favour of assessee. Addition u/s 35(1)(iv) - expenditure incurred during the year on intangibles and accounted under capital work in progress on which no depreciation has been claimed later on - HELD THAT:- From the perusal of the records, it can be seen that the CIT(A) has followed AY 2011-12 [ 2024 (2) TMI 223 - ITAT AHMEDABAD] the Tribunal has set aside this issue to the file of the AO - The facts are identical in the present A.Y. and, therefore, the matter is remanded back to the file of the AO for proper verification and adjudication of the issues in respect of expenditure incurred during the year on intangibles and accounted under capital work in progress on which no depreciation has been claimed later on in the context of Income Tax Statute. Assessee be given opportunity of hearing by following the principles of natural justice. Thus, ground of the assessee s appeal are partly allowed for statistical purpose. Disallowance of commission expenses to non-resident agents u/s 40(a)(i) - HELD THAT:- It is pertinent to note that this issue related to the commission expenses to non-resident agents u/s 40(a)(i) of the Act has not been categorically verified in the context of non-resident agents and the resident agents and needs further verification. Therefore, we are remanding back this issue to the file of the AO for proper verification and adjudication of the said issue. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. Upward adjustment in respect of interest on loans and advances - HELD THAT:- It is pertinent to note that this issue is decided against the assessee but the interest quantification/calculation has to be done, therefore, for the limited purpose the issue is remanded back to the file of the AO. Addition u/s 14A - exempt income earned or not? - HELD THAT:- From the perusal of records, no exempt income earned during the year. The Ld. DR also has not pointed out that any exempt income was earned. In fact, the assessee has made suo moto disallowance and the CIT(A) has given a categorical finding to that extent. This issue was also decided in favour of the assessee for the A.Y. 2011-12 [ 2024 (2) TMI 223 - ITAT AHMEDABAD] .
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2024 (5) TMI 787
Penalty u/s 271 (1) (c) - concealed income detected by the Income Tax Department - income disclosed only after the search and seizure operation - allegation of Defective notice u/s 274 as show-cause notice does not specifically spell out the grounds for imposition of the proposed penalty - as per DR as after the search and seizure operations and pursuant to the notice u/s 153A assessee filed return of income declaring total income, thus Explanation-5A creating a deeming clause of concealment of particulars of income is fully attracted - HELD THAT:- Assessee has concealed particulars of true income in his returns and it is only after the search and seizure operation was conducted and voluminous documentary evidences came in the hands of the Income Tax Department evidencing concealment of income by the assessee only then he surrendered certain amounts as undisclosed income in the return u/s 153A filed much subsequent to the search and seizure. Therefore, disclosure of income was not voluntary but it was on account of concealed income detected by the Income Tax Department. In the present set of facts, the assessing officer has recorded his satisfaction in the assessment order and initiated penalty proceedings u/s 271 (1) (c) for concealment of particulars of income by the respondent assessee. He also directed for issuance of notice. The issuance of notice u/s 274 of the Act, 1961 was merely a consequence of the penalty proceeding initiated by the AO during the course of assessment proceedings. The assessee was well aware of the fact of concealment of particulars of income by him, which was well discussed in both the assessment orders by the assessing officer. There is no ambiguity in section 271 (1) (c) or section 271 (1B) or in Explanation 5A to sub-section 1 of section 271(c). Therefore, this Court cannot assume something which is not expressed or which shall stand in conflict with the aforesaid provisions. A plain reading of the aforesaid unambiguous provisions lead to an irresistible conclusion that if an assessee falls within the four corners of the legal fiction created by section 271 (1B) and the Explanation 5A and the AO has recorded his satisfaction of concealment of particulars of income during the course of assessment proceedings then the penalty proceedings cannot be said to be bad. In the present set of facts the AO has noted in the assessment order the concealment of particulars of income by the respondent/assessee. Notices were also directed to be issued as has been observed in the assessment orders. Once, in the assessment order the assessing officer has mentioned concealment of particulars of income by the assessee, the notice u/s 274 is merely consequential. It is admitted fact of the case that the respondent/assessee was heard by the assessing officer who passed the penalty order. The submissions made by the respondent/assessee before the assessing officer in penalty proceedings, have been noted by the assessing officer which have also been reproduced by us above. Thus, it is undisputed that the respondent/assessee has been heard. Under the circumstances, when a satisfaction has been recorded by the assessing officer during the assessment proceedings, consequential notice u/s 274 was issued to the respondent/assessee and the respondent/assessee has been afforded an opportunity of being heard then the Tribunal has committed a manifest error of law and facts and has completely misdirected itself to set aside the penalty orders on the ground that the grounds for imposition of penalty were not mentioned in the show cause notice under section 274 of the Act and thus, the show cause notice was defective . The conclusion of the Tribunal is also in conflict with the law laid down by Hon ble Supreme Court in D. M. Manasrei [ 1972 (9) TMI 5 - SUPREME COURT] and Mak Data Pvt. Ltd. [ 2013 (11) TMI 14 - SUPREME COURT] The substantial question of law is answered in favour of the revenue and against the assessee and it is held that when the Assessing Officer has recorded in the Assessment order the particulars of concealed income/undisclosed income of the assessee and on that basis initiated penalty proceeding u/s 271 (1) (c) of the Act, 1961, then consequential notice u/s 274 issued by assessing officer to the assessee to afford him opportunity of hearing, is specifically a notice for penalty for concealment of particulars of income/undisclosed income. Such a notice complies with the principles of natural justice and is a valid notice u/s 274 of the Act, 1961.
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Customs
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2024 (5) TMI 818
Valuation of export goods - Iron Ore Fines - transaction value - FOB price - Export duty - contemporaneous exports - corroborative evidence - HELD THAT:- Only when the Revenue doubts the transaction value and then follows the Valuation Rules sequentially before adopting the contemporaneous value, we can take the view that Department has the correct approach. In this case, such a situation has not arisen. The Learned AR relies on the case law Obulapuram Mining Company Pvt Ltd., Vs CCCE ST, Guntur 2018 (10) TMI 223 - CESTAT HYDERABAD also goes into these aspects. In that case, the Tribunal has held that after rejecting the value under Rule 8 the Adjudicating Authority is required to go through the Rules 4 to 6 in a sequential manner which was not done and hence the matter was remanded. On the other hand, in this present case, the Adjudicating Authority has not rejected the transaction value and infact has taken the view that it has correctly reflected as per the documentary evidence placed. The Department was not agitated by the findings of the Adjudicating Authority and no further Appeal was filed by the Revenue. Hence the issue of transaction value being correct has reached finality. Thus, we allow the appeal with consequential reliefs, if any, as per law.
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2024 (5) TMI 817
Application For grant of Bail - offence punishable under Sections 135 - smuggling - cigarettes of foreign origin - HELD THAT:- Considering the nature of allegations and accusation against the applicant, the severity of the punishment if convicted and the period of incarceration as well as the fact that no apprehension has been expressed by the learned counsel for the Customs that the applicant is at the risk of fleeing justice or that he would tamper with evidence or influence any witness, hence, at this stage, without expressing any opinion on the merits of the case, this Court is of the view that the applicant is entitled to be released on bail. In case of breach of any of the conditions, it shall be a ground for cancellation of bail.
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2024 (5) TMI 812
Detention of imported item - restricted goods - import of Multi- Function Devices (Digital Photocopiers and Printers) - violation of the Foreign Trade Policy, 2015 -2020 framed under Sections 3 and 5 of the Foreign Trade Act and the Wastes Management Rules - Absolute Confiscation - Penalty - HELD THAT:- We find that the issue is no more res-integra. The issue regarding confiscation of used Digital Multifunctional machine was considered by various authorities including the Hon ble Supreme Court in the matter of Commissioner of Customs Vs. M/s Atul Automation Pvt. Ltd. 2019 (1) TMI 1324 - SUPREME COURT and Digital Express 2020 (10) TMI 184 - KARNATAKA HIGH COURT . In the absence of any evidence regarding margin of profit, it is settled that, such goods can be allowed to be redeemed on payment of redemption fine of 10% of enhanced value and penalty of 15% of the enhanced value. Thus, there is no infirmity in the order of allowing release of goods subject to payment of fine and penalty as held by Appellate authority. It was not the case of Commissioner (appeals) that goods in the case were not liable for confiscation, since they are imported in violations of various non-tariff provisions of Customs Act and other Statutory provisions. Thus, appeals are partially allowed and upheld the order of confiscation. However adjudicating authority is directed to release the goods imported under Bill of Entry No. 3626892 dated 16.10.2017 to respondent on payment of appropriate Customs duty on enhanced value and on payment of redemption fine of Rs. 3,70,000/- and penalty of Rs. 1,85,000/-. Similarly, adjudicating authority is directed to release the goods imported under Bill of Entry No. 3504084 dated 05.10.2017 to respondent on payment of appropriate Customs duty on enhanced value and on payment of redemption fine of Rs. 3,00,000/- and penalty of Rs. 1,50,000/-. In the result the appeals are allowed partially subject to the above conditions.
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2024 (5) TMI 806
Implementation of the Resolution Plan and change in management and control - demand for period prior to the approval of the Resolution Plan by the NCLT - HELD THAT:- It was submitted that similar facts were recorded by this Court vide order dated 25th August 2022 passed in R/Tax Appeal No.32 of 2019, holding that the said R/Tax Appeal No.32 of 2019 is required to be disposed of as having become infructuous and abated with regard to any liability of any nature whatsoever having extinguished in view of the implementation of the Resolution Plan and change in management and control of the assessee in view of the provisions of Sections 31 and 32A of the IBC as per the decision of the Hon ble Apex Court referred to therein. Applying the ratio laid down in the case of Ghanashyam Mishra and Sons v. Edelweiss Asset Reconstruction 2021 (4) TMI 613 - SUPREME COURT , as the facts are identical, these Tax Appeals are disposed of as abated and the proposed questions are, accordingly, not answered. In view of disposal of the Tax Appeals, Civil Applications would not survive and are, accordingly, disposed of.
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2024 (5) TMI 801
Cancellation of warehouse licenses - Penalty u/s 117 - fake insurance policies and port allotment letters - violations of Rules made - appellant submits that there is no provision for submission of NOC from the Port; there was a mistake on the part of the employee of the appellant in submitting not genuine/ fake insurance policies; genuine insurance policies were available for license - HELD THAT:- The appellants are alleged to have submitted fake insurance policies in respect of some licenses; though, the appellants argue that the submissions of licenses within the renewal period was not required and at best can be termed as superfluous and the same would not have any bearing on the licenses; it is evident that the management of the appellant were not aware of the fact of submission of such fake licenses which was done by an employee. I find that this will not absolve the appellant of the commission of the offence, if any. There is no mention of any criminal complaint was registered against the employees of the appellant and if so, what was the outcome of the same. Though, the same is not relevant to see the veracity of the licenses, it could throw light on the mala fides of the appellant, if any. Revocation of licenses - Revenue is free to take action against the licenses which are obtained by fraud or mis-representation, such an action cannot be excessive and needs to be commensurate to the commission of offence, more so, looking into the fact that the Adjudicating Authority has allowed continuation of warehousing operations for a period of three months to enable the clearance of cargo. It is also seen that the Adjudicating Authority categorically holds that the appellants have paid the applicable dues to the Vishakhapatnam Port Authorities in respect of all the warehouses which was not disproved in the investigation. This gives an indication that the Adjudicating Authority had an idea at the back of his mind that the license can be continued notwithstanding the submission of fake/ nongenuine insurance policies in respect of some licenses. Thus, it would have been in the fitness of things if the two licenses Nos.16/2020, 24/2018, for which genuine insurance policy was available, were not cancelled. Similarly, I find that the appellant s argument that mere possession of fake NOCs has no bearing on the case as the NOCs were not even required to be submitted. Penalty on the Director - Revenue has not brought out any violation committed by Shri Venugopal for being liable for penalty under Section 117 of the Customs Act, 1962. I am of the opinion that unless there is a specific provision in the Rules/ Regulations to impose penalty under such Rules/ Regulations, recourse cannot be taken to the general provisions unless provided for. Further, learned Adjudicating Authority merely avers that mens rea is not required for imposition of penalty ibid. The issue of mens rea comes when any of the violations have been highlighted. In the absence of the same, the imposition of penalty on Shri Venugopal under this Section is not legally sustainable. Thus, Appeal is partly allowed by setting aside the cancellation of license and imposition of penalty on Shri M. Venugopal, Director of the appellant. Accordingly, Appeal stands allowed.
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2024 (5) TMI 794
Determination of effective date and time of implementation of Notification No. 5/2012-Cus - Whether the appeal is liable to pay safeguard duty on electrical insulators of glass which is imposed by Notification No. 5/2012-Cus (Safeguard), or otherwise - HELD THAT:- It can be seen that various courts and Tribunal has taken a consistent view that the date of effect of Notification shall be from the date of publication of the Notification in the Official Gazette and not merely from the date of Notification. In the present case, it is admitted fact that the publication of the Notification was made on 24.02.2013 whereas the entry inward of the import goods was allowed on 24.12.2012, therefore on that date the Notification had not come into force, accordingly on the import in the present case, the safeguard duty under Notification No. 5/2012-Cus dated 20.12.2012 cannot be demanded. Accordingly, the impugned order is set aside and appeal is allowed. Since the entire duty demand is not sustainable as discussed above, penalty on the co-appellant M/s Velji P Sons which is consequential to the demand of duty will also not sustain. Accordingly, the impugned order is set aside. Appeal is allowed with consequential relief, if any, as per law.
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Securities / SEBI
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2024 (5) TMI 798
Validity of freezing the Demat Accounts of the petitioners by the Calcutta Stock Exchange (CSE) - petitioner no. 1 forms a part of the promoter group as defined under regulation 2 (1) (w) of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 ( 2015 Regulations ) and the family of the petitioners control the management and affairs of the proforma respondent no. 5-Company. HELD THAT:- In the present case, petitioner no. 1 has subsequently issued e-mails to the respondent no. 1, showing his willingness to deposit the fines. Although no such intention appears from the conduct of the petitioners to comply with the other formalities, which were amply clarified to the petitioners by the several e-mails, notice and publication made by the CSE, the fact remains that no separate notice was given to the petitioner no. 1/promoter before freezing the Demat Accounts where the petitioner no. 1 is a joint holder. Clause 5 of Annexure-I specifically distinguishes between the first notice, which is to be given to the listed entity itself, and the second notice which is to be given not to the listed entity but the promoter of the non-compliant entity. The said requirement having not been satisfied by the CSE/respondent no. 1, the impugned act of freezing the Demat Accounts of the petitioners was unlawful and not sustainable in the eye of law. It cannot be denied that the stages prior to the same have been duly complied with by respondent no. 1. Hence, the laches on the part of respondent no. 1 can be rectified if a notice as contemplated in Clause 5 of Annexure I is issued prior to freezing the Demat Accounts of the petitioner. Accordingly is allowed on contest, thereby setting aside the Notice dated January 1, 2024, insofar as the petitioners are concerned and the e-mails dated January 3, 2024 and January 5, 2024 issued by the respondent no. 1 and quashing the freezing of the Demat Accounts of the petitioners. Nothing in this order, however, shall preclude respondent no. 1 from proceeding afresh with issuance of a notice to the petitioner no. 1 and the other promoters/promoter group of the proforma respondent no. 5-Company individually under the second limb of Clause 5 of Annexure-I of the SEBI Circular dated January 22, 2020 to ensure compliance with the requirements and pay fines within ten days from the date of such notice. In the event the defaults are not made good by compliance with the requirements and payment of fine, the respondent no. 1 shall be at liberty to proceed as per the procedure laid down in Clause 6 of Annexure-I of the said Circular by intimating the depositories to freeze the entire shareholding of the promoters as well as other securities held in the Demat Accounts in case of failure of the non-compliant listed entity/proforma respondent no. 5-Company to comply with the requirements and pay the fine levied under the said Circular. In the said notices, the respondent no. 1 shall specify the exact amount of fine payable by the petitioners.
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Insolvency & Bankruptcy
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2024 (5) TMI 808
Violation of principles of natural justice - non-speaking order - impugned order has not dealt with the various prayers made by the Appellant in the application and has confined its order with the claim which has been admitted by the RP - HELD THAT:- This matter requires a relook by the Adjudicating Authority for the purpose of recording a finding on each prayers sought in the application after taking into consideration the pleadings as well as the evidence brought on record. As according to us, the impugned order is totally nonspeaking. Application is hereby restored and the matter is remanded back to the Adjudicating Authority to decide the application again by recording reasons while dealing with the prayers made in the application - appeal allowed by way of remand.
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2024 (5) TMI 789
Scope of CIRP costs - Allowability of the claims during the CIRP to be treated as CIRP costs - waterfall mechanism - contract was completed during the CIRP period - cost attributable to the Respondent can be considered as CIRP cost or not - whether the costs incurred for the work done during the CIRP by Respondent No 1/subcontractor, can be considered as CIRP Cost or not by the Liquidator? - HELD THAT:- From the extracts of the minutes of the CoC, it is clear that a conscious decision was taken that payments to vendors engaged in specific projects would be sourced from the cash flow generated by those projects' customers. The Darlipali Plant of the Corporate Debtor ceased operations during the CIRP Period. Consequently, the activities undertaken by Respondent No. 1, acting as a subcontractor, did not contribute to the Corporate Debtor's viability as a going concern. This pivotal factor led Respondent No. 2, in its capacity as the Resolution Professional, to exclude the costs incurred by Respondent No. 1 from the ambit of CIRP Costs. It is agreed that mere fact that the dues have arisen during the CIRP period would not be determinative of it to be classified as CIRP cost. Interpreting Section 5(13)(c) of the Code in this manner would render the words in running the business of the corporate debtor as a going concern otiose. Further, it is clear from Regulation 31 and the guidance provided by IBBI vide the above-mentioned circular that unless the CoC has approved the dues and they directly relate to the CIRP, the dues cannot be classified as CIRP cost. And the CoC decided to exclude the cost incurred from the terminated projects, which is not maintaining the Corporate Debtor as a going concern . In conclusion, the following criteria determine whether a cost incurred by the Resolution Professional during CIRP qualifies as CIRP cost: (a) maintaining the Corporate Debtor as a going concern, (b) payment to suppliers of essential goods and services, and (c) direct relation to CIRP with approval from the Committee of Creditors (CoC). Applying these criteria to this case, the claim fails to meet the definition of CIRP cost. This has also been held so in various decisions of this Tribunal also. In Bharat Hotels Ltd. v Tapan Chakraborty [ 2022 (9) TMI 224 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] it was held that These issued may be decided in the meeting of the CoC and are not to be examined by the Adjudicating Authority even before the CoC takes a decision. It shall be always open for the appellant to raise issue regarding the cost in the meeting of the Committee of Creditors. With reference to the grievance of the Appellant with regard to obtaining valuation report, it is always open to the Appellant to request the Liquidator to obtain a valuation report, if not already obtained. The Respondent's claim should be classified as non-CIRP cost, falling under Section 53 of the Code for distribution during liquidation - The Respondent's claim doesn't meet the CIRP cost definition. It lacks CoC approval, doesn't support the going concern objective, and is subject to unrealized payments from NTPC. The AA's decision contradicts CoC's authority, previous rulings, and commercial realities and is therefore set aside. Accordingly, the Respondent's claim should not be treated as CIRP cost. Appeal allowed.
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PMLA
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2024 (5) TMI 788
Money Laundering - Grant of bail - presumption of innocence and its appreciation in respect of the offences under the Prevention of Money Laundering Act - provisions of Article 21 of the Constitution of India and its overriding effect over Section 45 of PMLA - HELD THAT:- In this Case amount transpired in course of investigation initially is recovering of the seized cash amount and the same was at the behest of a complaint lodged by a nationalised bank in respect of transactions/debit credit taking place in some of the accounts and the same being routed through another nationalised bank. The holder of the main five companies were found to have a single address which was rented for two months and so far as shell-companies are concerned which were from Jamshedpur, Jharkhand mainly in those case on scrutiny of the records which were furnished for opening the accounts the same were found to be fake or non-existent. Going by the allegations against the present petitioner in the complaint the petitioner was applying his mind, knowledge and conscience for routing out the money which was illegally acquired by Tushar Patil, Prasenjit Das, Viraj Suhas Patil. The role of the petitioner was for concealment and projecting proceeds of crime as untainted money. Delay and long detention in custody have never been accepted by the constitutional courts and wherever there has been unreasonable delay the Courts have favoured the constitutional mandate of liberty. However, there are cases where the statute is built in such a manner that the complicity simpliciter is not a criteria but the detention is on the basis of guilt and the present case is one of such nature. It is a fact that the petitioner is in custody for more than 14 months but the nature of the offence complained of requires time for investigation as the procedure adopted in concealment and its unearthing both are time consuming. It has been submitted by the Enforcement Directorate that not only investigation is continuing but immovable assets which have been the outcome of such proceeds of crime are being traced to countries or abroad and for which time is being consumed. Having regard to the fact that although complaint has been filed in this case but yet further investigation is at a crucial stage, the petitioner cannot be released on bail only on the ground of delay having regard to the fact that he has not been able to overcome the twin conditions under Section 45 of the PMLA, 2002. The prayer for bail of the petitioner is rejected.
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Service Tax
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2024 (5) TMI 824
Exemption from service tax - services of laying, terrazzo flooring, Polishing and PVC Joint Strips to TATA Consultancy Ltd SEZ Park Pune - exemption was denied only for the reason that the Authorization (Form A2 ) bears the wrong address of Bangalore of the appellant - wrong address mentioned and afterwards was rectified - HELD THAT:- The undisputed fact is that the said Form A2 has been rectified and accordingly, the correct address of the appellant was mentioned in the Form A2. Therefore, after rectification it is as if the correct address has always been there in A2 Form, moreover, if at all there is lapse, it is an inadvertent mistake in the form which was duly rectified. For this small lapse substantial benefit of Notification No. 12/2013 cannot be denied. This Tribunal time and again held that the services received in SEZ is otherwise exempted as per Section 26 (1e) of SEZ Act, 2005 itself and in terms of Section 51 thereof has overriding effect over any other law for time being in force, therefore, in view of the SEZ Act itself no service tax is leviable on the services received in SEZ - The present case is on much better footing that by rectifying the mistake in A2 Form, the condition of the Notification No 12/2013 has been correctly complied with. The appellant are indeed entitled for the exemption Notification No. 12/2013-ST. The impugned order is not sustainable, hence, the same is set aside - Appeal is allowed.
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2024 (5) TMI 816
Valuation of service - calculation of service tax - value of free housing/ accommodation facility provided by the appellant to the CISF personnel should be treated as additional consideration flowing to CISF and the value of such facilities need to be included in the service value or not - HELD THAT:- The matter is no longer res Integra as this Tribunal in case of M/s. CISF V/s. Commissioner of Central Excise and Service Tax, Rajkot [ 2024 (4) TMI 391 - CESTAT AHMEDABAD] has already decided the issue at hand in favour of the appellant. The impugned Order-In-Appeal is without any merit and the same aside - appeal allowed.
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2024 (5) TMI 809
Non-payment of Service Tax on various services provided - providing manpower supply and recruitment agency service to various parties - no proper findings given by Adjudicating Authority - violation of principles of natural justice - HELD THAT:- It is found that while confirming the service tax demand the Adjudicating Authority has not indicated any work order to prove that the activity undertaken by the appellant is in fact that of supply of manpower and recruitment agency service while the appellant is claiming that they were engaged by various parties for completion of the various job works and construction of road etc. - The Adjudicating Authority has not given his finding whether the appellant has been providing the services in the SEZ area or not or whether they are entitled for the exemption from payment of Service Tax for the services provided by them to SEZ developer or SEZ unit. The Adjudicating Authority should give a fresh opportunity of hearing including the opportunity of presenting all the relevant papers/documents/evidences to the appellant and re-decide the matter afresh. The appeal is allowed by way of remand.
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2024 (5) TMI 807
Liability of appellant, as a sub-contractor, to pay Service Tax when the main contractor has paid Service Tax on the services rendered - Consulting Engineer Service - services of supervision, coordination and monitoring in respect of engineering and technical works under the Yamuna Action Plan Project - extended period of limitation - penalty - HELD THAT:- The appellant has rendered the services to M/s. Tokyo Engineer Consultants Co. Ltd. as a sub-contractor. It is on record that the main contractor has paid Service Tax on the entire bill amount. However, it is observed that the Board has issued the Circular dated 23.08.2007 wherein it has been clarified that a sub-contractor is liable to pay Service Tax separately even if the main contractor discharges Service Tax on the entire amount. Accordingly, the appellant is liable to pay Service Tax on the services rendered by them as a sub-contractor. Invocation of the extended period of limitation - HELD THAT:- The appellant cannot be faulted for not paying Service Tax for the period prior to the issue of the clarification by the Board. Further, the entire issue was within the knowledge of the Department and there is no evidence brought on record to establish suppression of facts with intention to evade payment of tax on the part of the appellant. Accordingly, the extended period of limitation cannot be invoked to demand duty in this case. In the case of M/S SHREE RANIE GUMS CHEMICALS PVT. LTD., M/S JAINSONS (INDIA) INDUSTRIES, M/S BASANT, M/S SATYAM ENTERPRISES (UNIT I) AND M/S SHREE RAM GUM CHEMICALS LTD. VERSUS CCE, JAIPUR-II [ 2017 (5) TMI 1303 - CESTAT NEW DELHI] , this Tribunal has held that the demand raised by invoking the extended period includes normal period of limitation within it. Thus, when it is held that the extended period of limitation is not invokable, the demand for the normal period of limitation survives. Penalty - HELD THAT:- It is observed that no suppression of facts with intention to evade payment of Service Tax exists in this case. Hence, in the facts and circumstances of the present case, no penalty is imposable on the appellant. The demand of service tax for the extended period of limitation is set aside. The demand, if any, for the normal period of limitation, is confirmed along with interest - No penalty is imposable on the appellant - appeal disposed off.
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2024 (5) TMI 803
Reversal of CENVAT Credit - units sold after the Completion Certificate (CC) - exempt services or not - scope of SCN - HELD THAT:- The Grounds taken by the Revenue before the Commissioner (Appeals) is not known since neither side has filed the copy of the Revenue s Review Order Order and Grounds taken by the Revenue. The Commissioner (Appeals) has passed the Order to the effect that the Appellant is not eligible to take full Cenvat Credit since they were also providing exempted service in the form of sale of units after the issuance of Completion Certificate. He has also dealt with the issue as to whether the Appellant can take the benefit of Cenvat Credit as well as abatement when they are following the procedure given under Notification No. 1/2006-St as amended from time to time. As to whether the Commissioner (Appeals) has traversed beyond the scope of SCN can be seen only after going through the Department s Grounds before him are considered, which presently is not available to the Bench. Since the Show Cause Notice addressed several issues about the credit taken, return shown in the ST-3 etc., it would be important to get these facts verified. In the absence of all the documents being placed before the Bench, it would not be fair to come to conclusion at this juncture. Accordingly, in the interest of justice, the matter is remanded to the Adjudicating Authority to get all the documentary evidence including the Audit Report, Grounds taken by Revenue before the Commissioner (Appeals), properly verified and pass a considered decision. Matter on remand.
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2024 (5) TMI 795
CENVAT Credit - exempt service or not - amount of interest received by the appellant on the delayed payment of the amount of consideration received from the sale of flats/villas/shops - HELD THAT:- The penal interest clauses in the agreement are in the nature of providing a safeguard to the commercial interest of the contracting parties. Accordingly, in the present case, the interest amount received by the appellant is in form of compensation towards the loss suffered by the appellant due to such delayed payments on the part of the customers. Therefore, the subject amount of interest received by the appellant are merely flow of money to deter such acts and cannot be regarded as a consideration for any activity undertaken by it. Thus it is clear that appellant is rendering only one taxable service i.e. of Construction. No question arises for invoking Rule 6(1)(3) of Cenvat Credit Rules, 2004. Consequently, the appellant is not liable to make reversal of Cenvat Credit in respect of receipt of interest as per new Explanation 3 to Rule 6(1) of Cenvat Credit Rules. The impugned show cause notice has been issued based on a frivolous ground. Hence the same is held void. The findings arising out of such show cause notice are not sustainable. The order under challenge is therefore set aside - Appeal allowed.
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Central Excise
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2024 (5) TMI 830
Condonation of delay of 445 days in filing this civil appeal - sufficient cause for delay or not - HELD THAT:- The reasons assigned are not satisfactory so as to make out a case for sufficient cause for condonation of the delay. Hence, the application seeking condonation of delay is dismissed. The appeal is dismissed on the ground of delay.
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2024 (5) TMI 819
Recovery of central excise duty - proviso to section 11A of the Central Excise Act, 1944 with interest and penalty - HELD THAT:- The date 10.05.2022 has been wrongly mentioned instead of 25.07.2022. The rest of the averments in the said paragraph are the averments that are contained in the order dated 25.07.2022 - It is, therefore, more than apparent that the matter was heard by the Additional Commissioner on 25.07.2022 and not by Principal Commissioner, but the order has been passed by the Principal Commissioner. This clearly defies all principles of natural justice. The officer who was required to adjudicate the show cause notice should have heard the matter, but it clearly transpires from the records provided to the appellant by the department itself under the Right to Information Act that the matter was actually heard by the Additional Commissioner. This statement made by the Deputy Commissioner is clearly contradictory to the information supplied by the department itself to the appellant under the Right to Information Act. The Deputy Commissioner should have at least looked at the Ordersheet to find out who had actually heard the matter instead of just stating that the appellant has made an incorrect and baseless statement. The matter is remitted to the Adjudicating Authority to pass a fresh order - Appeal allowed by way of remand.
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2024 (5) TMI 810
Valuation - Inclusion of equalized handling charges from their customers on excisable goods in the assessable value - HELD THAT:- This very issue in the appellant s sister concern i.e. MESSRS MIRA INDUSTRIES VERSUS C.C.E. -AHMEDABAD-II [ 2023 (4) TMI 655 - CESTAT AHMEDABAD] this Tribunal has taken a view that the handling charges recovered from the customers is not includible in the assessable value. The facts of the above case and the case in hand are absolutely identical. Therefore, following the judgment of Mira Industries, in the present cases the handling charges is not includible in the assessable value of the excisable goods. Accordingly, the demand in this respect is not sustainable. Appeal allowed.
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2024 (5) TMI 805
Abatement of appeal - Resolution Plan approved by NCLT - recovery of CENVAT Credit with interest and penalties - HELD THAT:- The identical matter has been considered by two coordinate benches of the Tribunal in the case of M/s Jet Airways (India) Limited vs. Commissioner of Service Tax-IV [ 2023 (5) TMI 767 - CESTAT MUMBAI] and Hyderabad Bench in the case of Icomm Tele Ltd. vs. Commissioner of Central Tax, Puducherry [ 2023 (10) TMI 1344 - CESTAT HYDERABAD] . It is pertinent to refer the findings of Mumbai Bench of the Tribunal in the case of M/s Jet Airways (India) Limited [ 2023 (5) TMI 767 - CESTAT MUMBAI] which was disposed of and it was ordered that the appeals stand abated once the Resolution Plan has been approved by NCLT and the CESTAT has become functus officio in the matters relating to this appeal. Once the Resolution Plan has been approved by the NCLT, thereafter, the present appeal stands abated as the CESTAT has become functus officio in the matter relating to the present appeal - the appeal filed by the appellant is disposed of as abated.
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2024 (5) TMI 804
Abatement claim - entire manufacturing process in the factory has remained closed for the period from 17.10.2014 to 31.10.2014 - Rule 10 of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules - HELD THAT:- Firstly there is no denying of the fact that the manufactured goods which were in the stock were duty paid goods and the Rule 10 only provides a facility that if the assessee has any order pending for dispatch of the goods in that case they are free to clear the goods within the first two days, it has not been stipulated that all the goods which are manufactured and pending in the stock are to be cleared within a period of two days. It is important to take note that Rule 10 only mentions the word May that itself signifies that the manufacture is free to avail facility of clearing the goods for two days at the commencing of the closer period. This provision basically meet the requirement of dispatches of the goods or sale of the goods to match the requirement of pending dispatch orders. It is settled Principal of the law that the word as provided in the statute or notification has to be read as it is rather than basically interpreting them in different way Hon ble Supreme Court in case of BANSAL WIRE INDUSTRIES LTD. VERSUS STATE OF UP. [ 2011 (4) TMI 77 - SUPREME COURT] has held that ' It is a settled principle of law that the words used in the section, rule or notification should not be rendered redundant and should be given effect to. It is also one of the cardinal principles of interpretation of any statue that some meaning must be given to the words used in the section. Expression Wire rods and wires which is mentioned in item no. (xv) would not and cannot cover the expression tools, alloy and special steels of entry no. (ix) nor it would refer to the expression Iron and Steel as each item used in entry nos. (ix) and (xv) are independent items not depending on each other at all.' Rule 10 provides that assessee May clear the goods for first two days of the commencement of the closer period, it does not mean that all the manufactured/ stocked goods need to be cleared within two days. The appellant have fulfilled all the conditions of Rule 10 of the Tobacco Manufactured Rules, 2010 - Therefore, they are entitled for the abetment of the duty for the closer period of the manufacturing machines. The impugned order in appeal is without any merit and the same is set aside - Accordingly the appeal is allowed.
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2024 (5) TMI 800
Area based exemption - subsequent demand of duty after disallowing the benefit of area based exemption under Notification No. 49-50/2003-CE - demand alongwith interst and penalty - HELD THAT:- The identical issue has been considered by the Tribunal in the appellant s own case M/S AGV FENESTRATION PVT LTD VERSUS CCE-CHANDIGARH-I [ 2023 (12) TMI 563 - CESTAT CHANDIGARH ] and this Tribunal after considering all the submissions of both the parties has held that the appellant are entitled to the benefit of Notification No. 50/2003-CE dated 10.06.2003 for the period 20.06.2009 to 21.03.2010 - It was held in the case that the denial of benefit of notification 50/2003-CE dated 10.06.2003 for the period from 20.06.2009 to 21.03.2010 is not sustainable in law. As the Tribunal in the appellant s own case has held that the appellant was entitled to benefit of area based exemption under Notification No. 50/2003-CE, therefore subsequent demand for the period from 18.06.2009 to 21.03.2010 does not survive. Consequently, the impugned order is set aside by allowing the appeal of the appellant with consequential relief, if any, as per law. Appeal allowed.
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2024 (5) TMI 799
Levy of Central Excise Duty - product of the appellant namely Sulphur 90% WG with the brand name of CosavetFertis is a manufactured goods or not - HELD THAT:- Reliance placed in the case of C.C. E-BHARUCH VERSUS SULPHUR MILLS LTD [ 2022 (10) TMI 732 - CESTAT AHMEDABAD] where it was held that The nature and composition of the materials (including Sulphur 99%) procured and used by the Respondent are the same, the process undertaken and the chemicals added to Sulphur 99% are the same; the nature as well as composition and use of the products obtained by the Respondent i.e Casvet Fertis- WG are the same, the structures of Chapter 25,38 and 31 of tariff are also the same, and most importantly there is no change in definition of manufacture and excisable goods under the Central Excise Act, nor it is there any new pronouncement of a Judicial or quasi-judicial forum affecting the concepts of manufacture or that of excisable goods or classification. The impugned order is upheld - Revenue s appeal is dismissed.
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Indian Laws
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2024 (5) TMI 793
Dishonour of Cheque - vicarious liability - demand notice not addressed to the petitioners in their individual capacity - Proviso (b) to Section 138 of the NI Act - proceedings can be initiated against all the Trustees of a Trust or not - Section 141 of the NI Act - HELD THAT:- Proviso (b) to Section 138 of the NI Act read with Section 142 of the NI Act shows that for the maintainability of a complaint for an offence under Section 138 of the NI Act, the payee or the holder in due course of the cheque, as the case may be, should make a demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The notice, therefore, is to be given to the drawer of the cheque - In the present cases, the cheques are drawn by the accused no. 2 Trust. It is, therefore, the drawer of the cheques . The notice has, admittedly, been issued to the drawer , that is, the accused no. 2- Trust. The same has been addressed to be served on the drawer/Trust through its Trustees. Presently, it is not disputed by the petitioners that they are the Trustees of the accused No. 2-Trust. Section 141 of the NI Act states that where the offence under Section 138 of the NI Act is committed by a company, every person who, at the time the offence was committed, was in-charge and was responsible to the company for the conduct of the business of the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly - the only plea of the petitioners is the lack of notice under Proviso (b) to Section 138 of the NI Act and the purported lack of pleadings in the Complaint Cases against the petitioners herein in their individual capacity. In Kirshna Texport and Capital Markets Ltd. [ 2015 (6) TMI 344 - SUPREME COURT ] the Supreme Court, considering the provision of Proviso (b), Section 141 and Section 7 of the NI Act has held ' Section 138 of the Act does not admit of any necessity or scope for reading into it the requirement that the Directors of the Company in question must also be issued individual notices under Section 138 of the Act. Such Directors who are in charge of affairs of the Company and responsible for the affairs of the Company would be aware of the receipt of notice by the Company under Section 138. Therefore, neither on literal construction nor on the touchstone of purposive construction such requirement could or ought to be read into Section 138 of the Act.' The above judgment would squarely apply to the facts of the present cases. There is no requirement for separate notice(s) to be issued to each of the Trustees of the accused no. 2-Trust to make them vicariously liable and to be proceeded against in terms of Section 138 of the NI Act read with Section 141 of the NI Act. The notice having been served on the Trust through its Trustees, all the Trustees are deemed to have been duly served with the legal/demand notice(s), thereby meeting the requirement of Proviso (b) to Section 138 of the NI Act. The averments are sufficient for the purpose of attracting Section 141 of the NI Act against the petitioners. Even otherwise, in their capacity as Trustees of the accused no. 2, the petitioners are officers in charge of the Trust. The petitioners shall have to lead their defence under Section 141 of the NI Act, in case they are to escape their liability as the Trustees of the accused no. 2- Trust, who is the drawer of the cheque(s) in question. Such defence is not to be considered by this Court or the learned Trial Court at this stage. There are no merits in the present petitions. The same are, accordingly, dismissed.
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2024 (5) TMI 790
Defreezing of bank accounts - Scope of the Expression Forthwith - delay on part of the police in reporting the seizure to the jurisdictional Magistrate - HELD THAT:- In deciding whether the police officer has properly discharged his obligation under Section 102(3) Cr.P.C., the Magistrate would have to, firstly, examine whether the seizure was reported forthwith. In doing so, it ought to have regard to the interpretation of the expression, forthwith . If it finds that the report was not sent forthwith, then it must examine whether there is any explanation offered in support of the delay. If the Magistrate finds that the delay has been properly explained, it would leave the matter at that. However, if it finds that there is no reasonable explanation for the delay or that the official has acted with deliberate disregard/ wanton negligence, then it may direct for appropriate departmental action to be initiated against such erring official. It is again reiterated that the act of seizure would not get vitiated by virtue of such delay. The reasoning adopted by the High Court cannot be sustained - This takes to the consequential question, namely, whether at this distance of time, it is to be directed that freezing of the bank accounts afresh? The answer has to be in the negative, since undisputedly by virtue of the impugned order, the bank accounts of the respondents has been defreezed and resultantly, the Respondents would have operated the accounts and amount of Rs.19,83,036/- which had been frozen would have been withdrawn. The ends of justice would be met and the interest of prosecution would be served if the Respondents are called upon, forthwith, to execute a bond undertaking to deposit the amount (which has been thus far withdrawn from the seized bank accounts) before the jurisdictional Court in the event the Court were to return a finding of guilt against the accused persons. The appeals are allowed in part.
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