TMI Tax Updates - e-Newsletter
May 20, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. All you need to know about Filing Form ADT-1

   By: Ishita Ramani

2. GUIDELINES FOR SCRUTINY OF GST RETURNS

   By: Dr. Sanjiv Agarwal

3. THE FINDINGS OF INCOME TAX APPELLATE TRIBUNAL ON ‘ARM’S LENGTH PRICE’ IS SUBJECT TO JUDICIAL REVIEW

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Notification - ₹2000 Denomination Banknotes – Withdrawal from Circulation; Will continue as Legal Tender

2. ₹2000 Denomination Banknotes – Withdrawal from Circulation; Will continue as Legal Tender

3. FAQ - ₹2000 Denomination Banknotes – Withdrawal from Circulation; Will continue as Legal Tender

4. 2nd Trade and Investment Working Group Meeting in Bengaluru from 23rd - 25th May, 2023

5. CCI approves proposed merger of Credit Suisse Group AG with UBS Group AG

6. Commemoration of GeM Incorporation Day

Notifications

Customs

1. 37/2023 - dated 18-5-2023 - Cus (NT)

Notification in relation to the rail link route connecting Bathnaha-Indian Customs Yard, Jogbani in Inda, and Nepal Customs Yard, Biratnagar in Nepal by amendment of Principal Notification No. 63/1994-Customs (N.T.) dated 21st November, 1994

2. 36/2023 - dated 18-5-2023 - Cus (NT)

Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession of the Notification No. 33/2023-Customs(N.T.), dated 4th May, 2023

GST - States

3. S. R. O. No. 557/2023 - dated 6-5-2023 - Kerala SGST

Extension of time limit specified u/s 73(10) for issuance of order u/s 73(9) of the KGST Act for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilised - 3 notifications modified

4. S. R. O. No. 556/2023 - dated 6-5-2023 - Kerala SGST

Waives the amount of late fee referred to in section 47 of the KGST Act

5. S. R. O. No. 554/2023 - dated 6-5-2023 - Kerala SGST

State Government recommendations of the Council, notifies the registered persons who failed to furnish a valid return within a period of thirty days from the service of the assessment order issued on or before the 28th day of February, 2023

6. G.S.R. 57/P.A.5/2017/S.164/Amd.(64)/202 - dated 9-5-2023 - Punjab SGST

Punjab Goods and Services Tax (Fifth Amendment) Rules, 2023

7. G.S.R. 55/P.A. 5/ 2017/S.164/Amd.(62)/2023 - dated 9-5-2023 - Punjab SGST

Punjab Goods and Services Tax (Third Amendment) Rules, 2023

Law of Competition

8. S.O. 2228 (E). - dated 18-5-2023 - Competition Law

Central Government appoints the 18th day of May, 2023 as the date on which the provisions various sections of the Competition (Amendment) Act, 2023 shall come into force

Highlights / Catch Notes

GST

• Court Grants 6% Interest on Delayed CGST and IGST Refunds for Period from November 2021 to April 2023.

  Case-Laws - HC : Interest on delayed refund of CGST and IGST not processed despite sanctioned - rate of interest - interest allowed at the rate of 6% per annum from 01.11.2021 till 27.04.2023 - HC
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Income Tax

• Supreme Court Clarifies Section 69A Income Tax Act: Definitions of "Owner" and "Valuable Article" for Unexplained Assets.

  Notes : Addition u/s 69A - ambit of the word "owner" and "valuable article" for the purpose of additions as Unexplained money, etc - Apex court explained the scope in a detailed and elaborated judgment
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• Exemption Denied: Section 10(23C)(vi) Disallowed Due to Profit Motive; Entity Must Prove Sole Educational Purpose Annually.

  Case-Laws - AT : Denial of exemption u/s 10(23C)(vi) - CIT(E) observed the huge surplus which indicates that the activities are conducted with the motive of profit. - even if for any year the taxpayer is found to be existing solely for educational purposes and not for purposes of profit, the assessee still has to continuously satisfy this pivotal condition each and every year. - Since the assessee has been found to be not ‘existing’ solely for the purposes of education, denial of exemption u/s 10(23C)(vi) of the Act is upheld. - AT
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• Section 263 Revision: AO Failed to Examine Cash Deposits and Interest Disallowance Due to Lack of Taxpayer Details.

  Case-Laws - AT : Revision u/s 263 - Issue of cash deposits as well as issue of interest disallowance has nowhere been examined by Ld. AO. Though a query was raised regarding cash deposit, prima facie, the requisite details were not furnished by the assessee. This being so, no view could be said to be have taken by Ld. AO on these two issues. - AT
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• Assessing Officer's Error u/s 154: Income Accepted Incorrectly, Impacting Taxation Across Different Assessment Years.

  Case-Laws - AT : Rectification of mistake u/s 154 - AO accepting the returned income instead of substituting the same with the assessed income - Merely, because the AO has retained the addition in AY 2018-19 as per the income retuned by the assessee, it cannot be said that the income cannot be brought to tax in AY 2016-17 especially when the appeal is still pending before the ld.CIT(A). - AT
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• Trust's 12AA Registration Denied: Fails to Qualify as Public Religious Trust, Serves Only Specific Sub-Sect.

  Case-Laws - AT : Exemption u/s 11 - grant of registration u/s 12AA rejected - private religious trust or public trust - If the assessee wanted grant of registration under section 12AA of the Act, the assessee has to satisfy certain conditions stipulated under the Income Tax Act. In this case, the assessee has failed to satisfy the conditions as required u/s 12AA for grant registration as a public religious trust for the reason that the assessee trust existed only for the benefit of a particular sub sect and not general public at large. - AT
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• Court Examines Section 40A(3) Compliance on Non-Account Payee Payments; Assessee Used RTGS/NEFT Despite Available Banking Facilities.

  Case-Laws - AT : Addition u/s 40A(3) - Payments made otherwise than by an account payee cheque - It is admitted case of assessee that to one of the parties even payments were made by RTGS/NEFT. So there is no question of lack of banking facilities available with the assessee or that when the payments were made such facility was not accessible. - When the provision of Section 40A(3) is made in the Act with specific intention to discourage colourable payments then the Ld. Tax Authorities below cannot be expected to accept such casual explanations. - AT
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Customs

• Customs broker's license revocation invalid; broker followed authority letter acknowledged by Joint Commissioner. Charges under Regulation 10 dismissed.

  Case-Laws - AT : Revocation of Customs Broker License - If the Customs broker had been acting as per the authority letter which was mentioned in the statement of Customs broker as has been accepted by the Joint Commissioner while adjudicating the above case, the charge for contravention of Regulation 10(d), (e) & (m) cannot be sustained. - AT
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Indian Laws

• India Withdraws Rs. 2000 Banknotes from Circulation; Remain Legal Tender for Transactions and Currency System Streamlining.

  News : FAQ - ₹2000 Denomination Banknotes – Withdrawal from Circulation; Will continue as Legal Tender
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IBC

• Adjudicating Authority Wrongly Rejects Corporate Debtor's Revival Application Despite Settlement Clause 10 Commitment.

  Case-Laws - AT : CIRP - Seeking revival of company - Company Petition was disposed of taking settlement on record and when Clause 10 of the Settlement specifically contains an undertaking by the Corporate Debtor for revival, corporate debtor can not be allowed to go back from its commitment as was made in the settlement. - the Adjudicating Authority committed error in rejecting the revival application - AT
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Service Tax

• Appellant Challenges Service Tax on NIXI, Claims Peering Transaction Can't Be Split for Tax Assessment.

  Case-Laws - AT : Levy of service tax - Appellant claimed that NIXI is not the ISP (internet service provider) - a single transaction of providing peering cannot be split into two transactions, nor is it permissible to artificially vivisect a composite indivisible commercial transaction and examine one part for taxability purposes. - AT
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• Non-payment of service tax under RCM for using natural resources; Point of Taxation Rules deemed inapplicable.

  Case-Laws - AT : Non-payment of service tax - reverse charge mechanism (RCM) - amount paid to the Government or a local authority - right to use of natural resource or quarry sand from the allotted mines - The Point of Taxation Rules deal with the date on which payment of service tax has to be made and do not determine whether the service is taxable or not. These Rules, therefore, would not be applicable in the present case. - AT
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• Power Plant Site Prep Classified as "Works Contract" Service, Not "Site Formation" Under Supreme Court's Larsen & Toubro Decision.

  Case-Laws - AT : Classification of services - activity of preparation of site for the power plant - It has been found as a fact that the work order in the present case, involves both supply of services as also goods. It is, therefore, a composite contract. In view of the decisions of the Supreme Court in Larsen & Toubro it has to be held that the services performed by the appellant under the work order would fall in the category of “works contract‘ service and not “site formation‘ service. - AT
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• Refund Claim Filed for Service Tax Pre-GST; Section 174(2) Protects Pre-Repeal Rights Despite Notification 41/2012-ST Repeal.

  Case-Laws - AT : Refund claim - service tax paid on technical inspection and certification services, much before 01.07.2017 - Post GST era - The observation made by the Commissioner (Appeals) in respect of the provisions of Section 173 of The Central Goods and Service Tax Act, 2017, are in respect of the repeal of notification 41/2012-ST without even referring to the Section 1 74 (2) ibid, cannot impact the rights accrued to the appellant prior to such repeal. - AT
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Central Excise

• CENVAT Credit Denied Due to Misinterpretation of 'Input' vs 'Input Service' in CENVAT Credit Rules, 2004.

  Case-Laws - AT : Denial of CENVAT credit of tax - From a plain reading of the germane definitions in CENVAT Credit Rules, 2004, we also find that the distinction drawn between ‘input’ and ‘input service’ for deploying the expression ‘whether directly or indirectly’ also appears to have been overlooked by central excise authorities - The lack of finding in the impugned order on the applicability of the main leg of the definition and its nexus with the final output hinders the exercise of appellate determination. - AT
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Case Laws:

• GST

• 2023 (5) TMI 796
  Interest on delayed refund of CGST and IGST not processed despite sanctioned - rate of interest - HELD THAT:- In so far as the interest for the period commencing from 04.10.2021 is concerned, this Court had expressed its prima facie view in the order dated 01.05.2023, that the same would be payable as there has been an inordinate delay in disbursing the refund. Interest is essentially a compensation to a person who has been deprived of use of the amounts due to him. It is relevant to refer to the observations made by the Supreme Court in UNION OF INDIA THROUGH DIRECTOR OF INCOME TAX VERSUS M/S TATA CHEMICALS LTD. [ 2014 (3) TMI 610 - SUPREME COURT] where it was held that The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course. Undisputedly, if a person is denied of the payment due to him, he is required to be compensated. In SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] the Supreme Court has endorsed the principle that interest would be payable even in cases where there was no statutory provision for payment of interest. Thus, the petitioner is entitled to interest on the sum of Rs.68,37,488/- from 01.11.2021 (considering an allowance of twenty-six days for the respondents to comply with the refund sanction order dated 04.10.2021) till the date of payment, that is, 27.04.2023 - the present petition is disposed of by directing the respondents to pay the interest on the amount of Rs.68,37,488/- from 01.11.2021 till 27.04.2023 at the rate of 6% per annum as expeditiously as possible and, in any event, before 31.05.2023. Petition disposed off.

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• 2023 (5) TMI 751
  Interest on delayed disbursement of Interest - rate of interest on delayed refund - HELD THAT:- Insofar as the interest for the period prior to 04.10.2021 is concerned, the same was not sanctioned and the petitioner s appeal in respect of the same is pending before the Appellate Authority. Insofar as the interest for the period commencing from 04.10.2021 is concerned, this Court is, prima facie, of the view that the petitioner is entitled to the same as there has been an inordinate delay in disbursing the refund. The petitioner also challenges the provision of Section 56 of the Central Goods and Services Tax Act, 2017 read with the Notification No.13/17-Central Tax dated 28.06.2017 insofar as it limits the rate of interest on delayed refund at 6% per annum. However, the learned counsel for the petitioner does not press for the said relief, and no orders are required to be issued in this regard. Issue notice.

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• Income Tax

• 2023 (5) TMI 795
  Validity of reopening assessment - notice issued in the name of a dead person - HELD THAT:- As petitioner has informed the Authority about the death of his father Shri Daxeshkumar Ranjitrai Mehta by writing a letter and by submitting death certificate. Despite this, the Revenue proceeded with the notice and passed order dated 27.07.2022. The impugned notice was issued in the name of a dead person which is unenforceable and invalid. It is well-settled principle that any proceedings against a dead person is a nullity. Decided in favour of assessee.

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• 2023 (5) TMI 794
  Deduction u/s. 80P(2)(a)(i) - AO concluded that interest received from cooperative bank and commercial banks do not qualify for deduction u/s. 80P(2)(d) - HELD THAT:- Hon ble jurisdictional High Court in the case of PCIT v. Totagars Co-operative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] has decided in the issue in favour of the revenue wherein it is held that the person or body corporate from which such interest income is received will not change its character, viz. interest income not arising from its business operations, which made it ineligible for deduction under Section 80P - The case in hand is also similar and the character of income will not change. Accordingly interest received on investments with cooperative bank as well as other banks shall be treated as income from other sources and it is not the business income of the assessee, therefore does not quality for deduction u/s. 80P(2)(d) of the Act. Since the entire interest received has been taxed as income from other source, fundamental principle under Income-tax Act being that only net income has to be taxed and not the gross income, especially in the light of the judgment of Totagars Sale Cooperative Society [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] Accordingly, the case is restored to the file of the A.O. with a direction to examine whether assessee has incurred any expenditure for earning interest income, which is assessed under the head `income from other sources . If so, the same shall be allowed as deduction u/s 57 - AO is directed to decide the issue as per law. The assessee is directed to co-operate with the department and furnish the necessary evidence for expeditious disposal of the matter. It is ordered accordingly. This ground is partly allowed for statistical purpose. Deduction u/s. 80P(2)(a)(i) on other receipts under different heads in the Profit Loss account - AO has not considered the nature of receipts and whether it is part and parcel of the business income of the assessee or not. CIT(Appeals) has also not discussed this issue. Therefore, this issue should go back to the AO for examining the nature of receipts and whether it is connected to the regular business activity carried on by the assessee. This issue is accordingly remitted to the AO for fresh consideration. Assessee is directed to substantiate its case before the AO. If the AO finds the receipts are part and parcel of the business income of the assessee, the AO is directed to allow deduction u/s. 80P(2)(a)(i) to that extent. Accordingly this issue is allowed for statistical purposes.

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• 2023 (5) TMI 793
  Registration u/s. 80G - according to the CIT(Exemption) that whatever educational activities are carried out, building constructed, funds invested in construction of building by the assessee are not protected and denied the registration u/s. 80G(5)(vi) - AR submitted that admittedly, the said land belongs to the four trustees and the assessee s trust entered into lease agreement with the said trustees for 30 years - revenue contended that overall activity of construction of building as per the terms of the lease agreement direct benefit of the persons covered u/s. 13(3) of the Act which clearly violates the conditions mentioned u/s. 80G(5)(vi) HELD THAT:- We find force in the arguments of the ld. DR that the assessee will have no right whatsoever over the construction of building and its development, utilizing from the assessee s trust fund. The assessee is also bound to vacate the said premises after the lease period. As brought to our notice that the CIT(Exemption) rejected the assessee s application on two earlier occasions and this is the third application wherein the assessee has not made any efforts in modifying the lease deed as the case may be. As rightly pointed by the ld. DR if the registration u/s. 80G(5)(vi) of the Act is granted, the assessee is entitled to receive certain donations which are tax free being utilized for construction, development and the achievement of its objects etc. which goes to the hands of the lessors after the expiry of lease period of 30 years. We find there is no guarantee or protection given to the said tax free asset in the lease deed and will benefit the persons i.e. trustees covered u/s. 13(3) of the Act. Thus, we find no infirmity in the order of CIT(Exemption) and it is justified. Thus, the grounds raised by the assessee are dismissed.

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• 2023 (5) TMI 792
  Denial of exemption u/s 10(23C)(vi) - CIT(E) observed the huge surplus which indicates that the activities are conducted with the motive of profit. - Appellant does not exist solely for educational purpose and is involved in commercial activities within the meaning of section 10(23C) (vi) - HELD THAT:- If the objects of the assessee, as claimed, have remained the same since the preceding years, the assessee has modified the way of its functioning and thus cannot be said to be existing solely for the purpose of education. It is pertinent to note that in section 10(23C)(vi) of the Act, before the term solely for educational purposes and not for purposes of profit , the word existing is used. Therefore, even if for any year the taxpayer is found to be existing solely for educational purposes and not for purposes of profit, the assessee still has to continuously satisfy this pivotal condition each and every year. Section 10(23C)(vi) of the Act is not worded in the same manner as other provisions pertaining to deduction such as sections 10A, 10B, 80IB, etc., which provides for the satisfaction of formation conditions as well as continuing conditions, and the fulfilment of formation conditions are to be tested only in the initial year. We find that other decisions relied upon by the learned AR rendered in assessee s own case pertains to either exemption u/s 11 or registration u/s 12A, wherein the provisions are not as stringent as section 10(23C)(vi) of the Act. Since the assessee has been found to be not existing solely for the purposes of education, denial of exemption under section 10(23C)(vi) of the Act is upheld. As a result, the appeal filed by the assessee is dismissed.

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• 2023 (5) TMI 791
  Reopening of assessment u/s 147 - period of limitation - return was already scrutinized u/s 143(3) and the reopening exercise has been undertaken beyond 4 years - LTCG undisclosed - HELD THAT:- As one of the essential requirements is that there should be failure on the part of the assessee to disclose fully and truly all material facts necessary for her assessment for impugned assessment year. During the course of original assessment proceedings, AO, vide notice required the assessee to file purchase and sale deed of Kanathur property. The same was duly furnished by the assessee along with computation of Long-Term Capital Gains. The other details as called for by Ld. AO were also furnished by the assessee - Considering the same, the assessment was framed on the assessee making certain additions. Thus, it was a case wherein there was no failure on the part of the assessee to disclose material facts necessary for her assessment. Therefore, applying the case of Foramer France [ 2003 (1) TMI 101 - SC ORDER] it was to be held that notice issued u/s 148 was barred by limitation and consequential assessment framed by Ld. AO would be nullity. The decision of Pr. CIT vs. S. Chand Co. Ltd.[ 2018 (11) TMI 1067 - SC ORDER] also supports the proposition that reassessment proceedings merely at the behest of audit objection as based on mere appraisal of the same record without any tangible material or information, would be bad in law. In the present case, we find that there is no independent application of mind by Ld. AO while recording the reasons for reopening. There is no new tangible material to reopen the case. Therefore, the assessment was to be held as bad-in- law. Decided in favour of assessee.

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• 2023 (5) TMI 790
  Revision u/s 263 - as per CIT AO not properly examined issues viz., (i) salary to Manager Asst.Manager; (ii) disallowance of interest to others (iii) Cash deposit during demonetization period (iv) Audit fees and (v) bonus to staff and customers - as argued only CASS reason being cash deposit during demonetization period, Pr.CIT failed to note that AO cannot travel beyond the mandate of verifying such cash deposit only and in the absence of any approval by Pr.CIT to look into other- issues also, he erred in holding that the impugned order is erroneous and prejudicial to the interest of revenue. HELD THAT:- We find that this issue has been addressed by Hon ble Supreme Court in the case of CIT vs Ralson Industries Ltd [ 2007 (1) TMI 89 - SUPREME COURT] The facts in that case are quite similar to facts before us. When an order is passed by a higher authority, the lower authority is bound thereby keeping in view the principles of judicial discipline. An order of assessment is subject to exercise of an order of a revisional jurisdiction under section 263 of the Act. Doctrine of Merger in such a case will have no application. Each case is required to be considered on its own facts. It would not be correct to contend that only because a proceeding for rectification was initiated subsequently, the revisional jurisdiction could not have been invoked under any circumstances whatsoever. If such a proceeding was initiated, in our opinion, the contesting parties could bring the same to the notice of the Commissioner so as to enable him to take into consideration the subsequent events also. It goes without saying that if and when the Commissioner of Income-tax takes up for consideration a subsequent event, the assessee would be entitled to make its submission also in regard thereto. This decision would have precedence over all the other decisions as cited by Ld. AR. Therefore, we reject this plea raised by Ld. AR. We find that during the course of original assessment proceeding, a notice u/s 142(1) was issued to the assessee calling for requisite details from the assessee. The same include Copies of Audit Report and financial statements of previous 3 years. The assessee was also directed to explain the reasons for large cash deposit during demonetization period. Vide another notice the assessee was directed to file statistical report on cash deposit, This include cash deposit during financial years 2015-16, 2016-17 and details of cash sales as well as analysis of cash sales and cash deposits in those years. The assessee responded to these notices and uploaded certain details on 22-11-2019. The same include audit fees and expenses ledgers, ledger of bonus paid to customer, details of salary paid during the year. The issue of payment of Audit fees, staff salaries and bonus paid to customers was duly examined by AO and the assessee had furnished all the details as required by Ld. AO. Issue of cash deposits as well as issue of interest disallowance has nowhere been examined by Ld. AO. Though a query was raised regarding cash deposit, prima facie, the requisite details were not furnished by the assessee. This being so, no view could be said to be have taken by Ld. AO on these two issues. We modify the revisionary order and direct AO to remain confined himself to the extent of examining the issues of large cash deposit during demonetization period and the issue of interest disallowance u/s 36(1)(iii). The impugned order stand modified to that extent. Appeal partly allowed.

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• 2023 (5) TMI 789
  Estimation of profit on bogus sales - AO has applied GP rate of 6.7% to entire sales turnover of the assessee - CIT-A deleted addition - HELD THAT:- AO estimation is unacceptable, as, except two parties, the Assessing Officer has not found anything adverse in respect of sales made to others. Therefore, he should not have applied the GP rate of 6.75% to entire sales turnover. To that extent, Commissioner (Appeals) was justified in reversing the decision of the AO. Insofar as the applicability of the GP rate of 6.75% to sales effected to M/s. Dee Kay Trade Centre and M/s. J.S. Enterprises are concerned, there is no difference in the products sold by the assessee to all the parties. Therefore, if the GP shown by the assessee in respect of sales effected to other parties is acceptable, there is no reason why the same GP rate will not apply to the sales effected to M/s. Dee Kay Trade Centre and M/s. J.S. Enterprises. This is so because, when there is similarity in the products sold, there cannot be much difference in the GP rate. We hold that the additions sustained by Commissioner (Appeals) in different assessment years under dispute deserves to be deleted. Appeal of assessee allowed.

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• 2023 (5) TMI 788
  Rectification of mistake u/s 154 - AO accepting the returned income instead of substituting the same with the assessed income - In order passed u/s. 143(3) r.w.s. 153A, AO had accepted the returned income without rectifying the figure of the assessed income, there was an apparent mistake in the order HELD THAT:- . We do not find any infirmity in the order of the CIT(A) on this issue. We find the ld.CIT(A) while upholding the action of the AO held that there is no change of opinion but a substitution of the last assessed income as per record and the demand not being a subject matter of 154 proceedings as it is identical to the demand raised in 153A proceedings. So far as the submission of assessee that the AO has made the addition in AY 2018-19 and therefore, the same could not have been rectified in the 154 proceedings is concerned, the same in our opinion is without any merit. In the original order, the AO had made the addition on the ground that assessee has deposited the money in the long-term capital gain account scheme beyond the due date and has also withdrawn the amount before the period of three years. Although, the assessee has offered the income to tax in the AY 2018-19, however the AO has brought to tax the same in AY 2016-17 and the matter is still pending before the ld.CIT(A). When there was an apparent mistake in the order of the AO in accepting the returned income instead of substituting the same with the assessed income there was an apparent error and the AO was fully justified in rectifying the same. The proposition of assessee that there cannot be addition of the same amount in two different assessment years is correct. Merely, because the AO has retained the addition in AY 2018-19 as per the income retuned by the assessee, it cannot be said that the income cannot be brought to tax in AY 2016-17 especially when the appeal is still pending before the ld.CIT(A).Thus we do not find any infirmity in his order - Decided against assessee.

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• 2023 (5) TMI 787
  Rectification u/s 154 - disallowance claim of the amount of the exempted allowance - rectification request of the assessee is rejected as there was no mistake apparent from the record in the order passed u/s 143(1)(a) as no claim of the amount of the exempted allowance was made in the return of income and therefore, there being difference in the amount of salary appearing in the Form No. 26AS - HELD THAT:- It can be said that assessee did not make any claim for exempted allowance in the return of income, thus omission was on the part of the assessee and therefore, there is no mistake in the order passed u/s 143(1) by the CPC. Accordingly, we uphold the finding of the CIT(A) of rejecting the claim of rectification of order u/s 143(1)(a) of the Act. Whether CIT(A) has rejected the claim of allowing relevant exemption on merit? - We find that the assessee made a fresh claim before the CIT(A) which was rejected by CIT(A) on the ground that no relevant documents in support of exemption was filed during the first appellate proceedings before him and said claim of exemption was sought merely on the basis of the Form No. 16. But we are of the opinion that if the assessee is otherwise eligible for exemption under the provisions of the Act, she should not be deprived merely for the reason that she failed to report the claim properly in the form prescribed for filing return of income. Assessee submitted that the assessee is willing to produce all the documents in support of exemption claimed, if matter is restored back to the AO. We feel it appropriate to restore this issue back to the file of the AO with the direction to the assessee to produce all necessary evidence in support of its claim of exemption of the allowances. AO is directed to examine the said claim and allow in accordance with law after due verification and enquiry if so required

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• 2023 (5) TMI 786
  TDS u/s 194A - deposits received from its members - Revenue s approach of treating the Non-Availing Compensation ( NAC ) paid by the assessee to its members as interest, which was disallowed u/s 40(a)(ia) - HELD THAT:- In the present case, the assessee is engaged in the business of selling holiday membership plans to its customers/members. The amount received from the members was apportioned over the tenure of the membership, which differs from scheme to scheme offered by the assessee. Out of the apportioned receipts, the amount pertaining to the year was considered as sales and the balance amount was considered as advances sales over the tenure of the membership. Once the membership is accepted and confirmed, a member is entitled to avail of facilities as per terms and conditions related to the entitlement certificate. Approach of the Revenue, on one hand treating the NAC paid by the assessee to its members as interest and on the other hand treating the amount received from the members as the income of the assessee is self-contradictory since only when the deposits are considered as a loan, which was one of the allegations in the reasons recorded while reopening the assessment, the interest can be charged on it. Thus, when the assessee s business was considered to be in the nature of CIS, all the consequences in relation thereto must follow. Entries in the books of account are not decisive or determinative of the true nature of the entries. Therefore, the amount received by the assessee from its members, to the extent the same is treated as income in its books of account, is directed to be reduced while calculating the total income of the assessee, since the same is in the nature of capital receipt. NAC paid to the members also includes the repayment of membership amount collected from the members and the same has been claimed as a deduction by the assessee. Since the said repayment has already been claimed as a deduction, therefore the said amount need not be again reduced while calculating the total income of the assessee for the year under consideration. Accordingly, ground No. 4 raised in assessee s appeal is allowed. Disallowance u/s 14A r/w Rule 8D - AR submitted that the disallowance under section 14A of the Act cannot exceed the quantum of exempt income - HELD THAT:- We find that Hon ble jurisdictional High Court in Nirved Traders (P.) Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT] , has held that disallowance under section 14A of the Act cannot be more than exempt income. Thus, we direct the AO to restrict the disallowance made under section 14A of the Act to the extent of exempt income earned by the assessee, during the year under consideration. As a result, grounds raised in assessee s appeal are partly allowed. MAT - disallowance u/s 14A for the purpose of computing the book profit under section 115 JB - HELD THAT:- We find that Special Bench of Tribunal in ACIT vs Vireet Investment (P) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income-tax Rules, 1962. Thus, we direct the AO to compute the book profit under section 115 JB of the Act, without resorting to computation under section 14A read with Rule 8D. Considering 30% of NAC for the purpose of disallowance under section 40(a)(ia) of the Act instead of the entire amount - HELD THAT:- CBDT, while explaining the provisions of the Finance (No.2) Act, 2014, vide Circular No.1 of 2015 dated 21/01/2015 clarified that the amendment by the Finance (No.2) Act, 2014 to the provisions of section 40(a)(ia) of the Act takes effect from 1st April 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years. We further find that the Hon ble Supreme Court in Shree Choudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT] held that the amendment by the Finance (No.2) Act, 2014 is with effect from 01/04/2015 and shall be applicable from the assessment year 2015-16. Since it is settled that the amendment to section 40(a)(ia) of the Act by the Finance (No.2) Act, 2014 is with effect from the assessment year 2015-16, the AO is directed to apply the said amended provision while computing disallowance under section 40(a)(ia).

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• 2023 (5) TMI 785
  Exemption u/s 11 - grant of registration u/s 12AA rejected - private religious trust or public trust - Assessee trust exists solely for a particular sect of the Hindu religion - CIT(E) held for provisions of section 11 the beneficiaries of the trust must be public at large and accordingly, private religious trusts are not entitled for exemption of income, thus denied grant of registration u/s12AA - HELD THAT:- In this case, the assessee trust namely, Arulmigu Aathi Karumapuram Sellandiamman Kudipaattukarakal Seva Trust existed for the purpose of Poruleentha Kula Vellala Gounder, which is a sub sect of Vellala Gounder community, established exclusively for them. Therefore, once the assessee trust is established for the purpose of particular subcaste, it is only for the benefit of that sub-caste and thus, it is a private religious trust and registration u/s 12AA of the Act cannot be granted. Six temples are under the control of the Hindu Religious Charitable Endowments Department, Tamil Nadu and it is fully maintained by the Government of Tamil Nadu. Therefore, the argument of the ld. Counsel for the assessee that the assessee trust was doing services to other six temples and is open to public at large cannot be accepted. Therefore, registration u/s 12AA of the Act cannot be granted to the assessee trust. The assessee trust does not come under the purview of charitable trust or under the purview of public religious trust. It is only a private religious trust. Therefore, registration under section 12AA of the Act cannot be granted to the assessee trust. Activities of the Trust are to receive contribution from the members and not from any outsider and the expenditure is only to manage and protect their temple - If the assessee is running on the basis of mutuality, it can carry its activities and nobody will object. However, no 12AA registration can be granted to the assessee trust, being a private religious trust. Receipts of the trust do not come within the definition of income under section 2(24) - The income has to be determined depending upon the receipt, what are the expenditure incurred, what is the source of income and it has to be decided after considering entire details. It cannot be predetermined by the assessee that the receipts derived by the assessee cannot be an income within the meaning of section 2(24) of the Act. Violation of Article 14 and Article 19(c) of the Constitution of India - We find that Article 14 as well as Article 19(c) has no application to the facts of the present case. In this case, whether the assessee is entitled for grant of registration u/s12AA of the Income Tax Act or not has to be determined as per the conditions stipulated under the Income Tax Act. The above mentioned two Articles nowhere correlated to grant of registration u/s 12AA. Neither the State Government nor the Central prohibit forming a trust or association and it is not the policy of either of the Government - If the assessee wanted grant of registration under section 12AA of the Act, the assessee has to satisfy certain conditions stipulated under the Income Tax Act. In this case, the assessee has failed to satisfy the conditions as required u/s 12AA for grant registration as a public religious trust for the reason that the assessee trust existed only for the benefit of a particular sub sect and not general public at large. Decided against assessee.

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• 2023 (5) TMI 784
  Validity of order of the National Faceless Appeal[CIT] Centre passed u/s 250 - Correct tax liability of the assessee - assessee has been doubly taxed - assessee was a unit of Kabir welfare trust which was registered under Societies Registration Act as registered u/s 12AA - assessee polytechnic being part/unit of the Kabir welfare trust, hence, its income and financial transactions have been duly included and taken care of in the return of income filed by the Kabir welfare trust, which has already been assessed u/s 143(3) - HELD THAT:- It has been held time and again that the Income Tax authorities should charge only legitimate taxes from the assessee. At both the stages, either by the Appellate Assistant Commissioner or before the Appellate Tribunal, the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. The Hon ble full bench of the Bombay High Court in Ahmedabad Electricity Company Ltd.and Godavari Sugar Mills Ltd. [ 1992 (4) TMI 29 - BOMBAY HIGH COURT] that there was nothing in section 254 or section 251 which would indicate that the appellate authorities are confined to considering only the objections raised before them or allowed to be raised before them either by the assessee or by the department, as the case may be. They can consider the entire proceedings to determine the tax liability of the assessee. The issue is required to be examined at the end of the Assessing Officer. We, therefore, restore the matter to the file of the Assessing Officer with a direction that the Assessing Officer will examine the contentions of the assessee that the income declared by the assessee and taxes paid thereon have already been included and part of the income declared by the Kabir welfare trust . If the contention of the assessee that in the light of the above narrated facts and circumstances, there is a double taxation of the same amount, is found correct, the Assessing Officer will process the refund of the taxes paid by the assessee - the assessee will not be entitled to any interest on the refund amount upto 3 months from the date of receipt copy of this order. However, the assessee will be entitled to the interest on the refund as provided in the relevant provisions of the Income Tax Act after 3 months from the date of receipt copy of this order.

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• 2023 (5) TMI 783
  Delayed payment of employee s contribution to ESI and PF - Payment beyond the due date by invoking the provisions of section 36(1)(va) but within the due date for filing return of income u/s.139(1) of the Act.n the case of CHECKMATE SERVICES PVT LTD VS CIT-1 [ 2022 (10) TMI 617 - SUPREME COURT] held that allowability/treatment of delayed Employee PF Contribution payment to be taxable in hands of assessee under provisions of Income Tax Act. Hon ble Supreme Court held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee s contribution is linked to payment before the due dates specified in the respective Acts and employer s contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of the Act. It was held that result of any failure to pay within the prescribed dates also leads to different results. In the case of employee s contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer s claim for deduction permanently forever u/s.36(1)(va) of the Act. On the other hand, delay in payment of employer s contribution is visited with deferment of deduction on payment basis u/s.43B of the Act and is therefore not lost totally. Therefore, as per the above decision, the disallowance made by the Revenue authorities, were fully justified. Grounds raised by the assessee stands dismissed.

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• 2023 (5) TMI 782
  Addition u/s 40A - Payments made otherwise than by an account payee cheque - as submitted bearer cheques were issued to the supplier parties on demand as assessee was new in the business so the assessee had to accept the demand of the suppliers - HELD THAT:- CIT(A) has rightly observed that a bearer cheque can bounce as well, for insufficient balances therefore giving bearer cheque to parties as the surety of being encashed is not sustainable explanation of business expediency. The bench finds no error in the findings of the Ld. CIT(A) because if the intention was to secure the payments to the parties by bearer cheques to be as good as cash then there are other banking instruments like Banker s cheque or RTGS/NEFT facilities which would have ensured prompt and secured payments. It is admitted case of assessee that to one of the parties even payments were made by RTGS/NEFT. So there is no question of lack of banking facilities available with the assessee or that when the payments were made such facility was not accessible. When the provision of Section 40A(3) is made in the Act with specific intention to discourage colourable payments then the Ld. Tax Authorities below cannot be expected to accept such casual explanations. There should be a justification in the refusal of a party to not accept payment by way of a crossed cheque/draft to defeat a provision made under Act to discourage cash payments. There is nothing on record to show that the nature of purchases was such that the parties were having decisive role to lay the terms and conditions of mode of payment to be with cash or bearer cheques only and that the assessee s business interest would have suffered due to non-availability of goods otherwise than from this particular party. The law relied, including the Boards s circular, is thus not applicable on facts and evidence. Decided against assessee.

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• 2023 (5) TMI 781
  Penalty u/s 271(1)(c) - defect in the penalty notice u/s 274 - omnibus notice - as argued charge in the penalty notice is not specified as to whether penalty is levied on account of concealment of particulars of income or for furnishing of inaccurate particulars of income - HELD THAT:- We note that non-specification of charge in penalty notice is fatal. In the present case, it is the claim of assessee that specific limb was not specified. This averment has not been disputed by the Revenue. In such circumstances, when penalty notice is an omnibus notice and the charge is not specified, penalty under section 271(1)(c) of the Act will not survive. See case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] and Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] - Thus, since the penalty notice is omnibus and the charge has not been specified, the penalty is not sustainable. Decided against revenue.

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• 2023 (5) TMI 780
  Rectification application - Hon ble Bench applied the profit rate of 38.23 % to gross purchase while the profit rate on gross purchase calculated by the CIT(A) was 27.66 % - loss to the revenue as the income determined after giving appeal effect to the order of the ITAT, is lower than the income declared in return by the assessee - HELD THAT:- In argument the revenue let to inform that the rectification was required to relate this order of the ITAT, Amritsar Bench. But the ITAT Amritsar Bench has passed the speaking order in this issue. The recalling the observation of a speaking order of ITAT is beyond the jurisdiction of Bench. So, the MA application of the revenue is dismissed.

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• 2023 (5) TMI 779
  Estimation of profit - Bogus purchases - HELD THAT:- We agree with the view of the lower authorities that there should be an estimation of profit element from these purchases and should be estimated reasonably as the assessee could not conclusively prove that the purchases made are from the parties as claimed, especially in the absence of any confirmations from them. Keeping in view the nature of business of the assessee i.e. trader in Iron and Steel Metals, it would be justified if the profit element embedded in those purchases are estimated at 5%. We direct the Assessing Officer to estimate the profit element from the non-genuine purchases at 5% for both the Assessment Years i.e., A.Y. 2009-10 and A.Y. 2011-12 and restrict the disallowance of purchases to 5% and compute the income accordingly. Appeals filed by the assessee are partly allowed.

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• 2023 (5) TMI 778
  Withdrawal of the appeal - opting to settle the dispute relating to the tax arrears for the assessment year under consideration under the Vivad Se Vishwas Scheme, 2020 - assessee has obtained Form No.4 also from the Department - HELD THAT:- In absence of any objection from the side of the ld. DR, the request of the assessee for withdrawal of the appeal is allowed. Aforesaid is subject to a caveat that in case the dispute relating to tax arrears for the captioned assessment year is not ultimately resolved in terms of the aforesaid Scheme, the assessee shall be at liberty to approach the Tribunal for reinstitution of the appeal and the Tribunal shall consider such application appropriately as per law. The Revenue has no objection with regard to the aforesaid caveat. Appeal is treated as dismissed for statistical purposes only.

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• Customs

• 2023 (5) TMI 777
  Opportunity of hearing granted or not - violation of principles of natural justice - HELD THAT:- The respondent/ Commissioner have failed to provide adequate opportunity of hearing to the appellant. No reason have been recorded in the impugned order as to why not a date and time could be fixed after the lunch hours or after 3 p.m. for hearing the Counsel of the appellant, who is usually pre-occupied due to his commitments before the Hon ble Supreme Court/High Courts. Accordingly, in the interest of justice this appeal is allowed by way of remand to the respondent/ Commissioner (original Adjudicating Authority), to hear the appellant denovo and shall fix the hearing at a mutually suitable time preferably at or after 3 p.m.

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• 2023 (5) TMI 776
  Maintainability of appeal - time barred or not - appellant claimed to have received copy of Order-in-Original beyond the time limitation - HELD THAT:- Commissioner (Appeals) has held that the appellant had received copy of Order-in-Original on 05.08.2019 and therefore the appeal was time barred. It is found that on 05.08.2019 copy of the Order-in-Original was given to Shri Sumit Tawari and not the appellant and therefore the date of service of Order-in-Original on the appellant is 27.09.2019. Therefore, appeal filed before Commissioner (Appeals) is within the limitation provided by law. The impugned Order-in- Appeal is set aside and matter remanded to Commissioner (Appeals) for decision on merit - appeal allowed by way of remand.

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• 2023 (5) TMI 775
  Condonation of delay in filing appeal - power of Commissioner (Appeals) to condone the delay - drawback sanction has been demanded for the reason that the proof export obligation as prescribed was not filed by the appellant by the original authority - HELD THAT:- In the case of Avanti Overseas Pvt. Ltd. [ 2018 (4) TMI 920 - CESTAT NEW DELHI ] relied upon by the learned AR, by the majority, following has been held that to decide the issue of eligibility of drawback, it is necessary to first decide the issue of the status of the appellant whether they are a 100% EOU or not. The two issues are not totally independent issues. The issue of status of the appellant has to be resolved in order to decide the fundamental issue of entitlement of drawback to the appellant. The pith and substance of the dispute in the appeal is about payment of drawback. In view of the above majority order, this appeal is not maintainable before the Tribunal - appeal dismissed.

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• 2023 (5) TMI 774
  Maintainability of appeal - non-prosecution of the case - Rule 20 of the CESTAT (Procedure) Rules, 1982 - HELD THAT:- Hon ble Apex Court has in case of ISHWARLAL MALI RATHOD VERSUS GOPAL AND ORS. [ 2021 (9) TMI 1301 - SUPREME COURT ] held that considering the fact that in the present case ten times adjournments were given between 2015 to 2019 and twice the orders were passed granting time for cross examination as a last chance and that too at one point of time even a cost was also imposed and even thereafter also when lastly the High Court passed an order with extending the time it was specifically mentioned that no further time shall be extended and/or granted still the petitioner defendant never availed of the liberty and the grace shown. In fact it can be said that the petitioner defendant misused the liberty and the grace shown by the court. It is reported that as such now even the main suit has been disposed of. The appeal is dismissed for default and non-prosecution in terms of Rule 20 of CESTAT (Procedure) Rules, 1982.

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• 2023 (5) TMI 773
  Revocation of Customs Broker License - forfeiture of security deposit - penalty - evasion of Customs Duty - misdeclaring description, quantity and value with the intention to circumvent the applicability of mandatory registration required for the import of these goods from the Central Insecticides Board, under Section 9 of the Insecticides Act, 1968 - actual goods concealed from prohibited goods under the Schedule of Insecticides Act - HELD THAT:- If the Customs broker had been acting as per the authority letter which was mentioned in the statement of Customs broker as has been accepted by the Joint Commissioner while adjudicating the above case, the charge for contravention of Regulation 10(d), (e) (m) cannot be sustained. Undisputedly the Joint Commissioner has exonerated the Customs broker of the proceedings initiated under Custom Act on the basis of the said authority letter. These findings have not been challenged by the Revenue before any appellate authority. The findings recorded in the impugned order that Customs broker was actively involved in importation of the goods in contravention of the provisions of Customs Act, 1962, read with Section 9 and 17 of the Insecticides Act, 1968 cannot be held to be proper. The decision in the case of DHAKHANE CO VERSUS COMMISSIONER OF CUSTOMS (GENERAL) , NCH, MUMBAI [ 2014 (12) TMI 771 - CESTAT MUMBAI] relied upon by the Revenue is not applicable to the facts of the present case as in the said decision the authority letter issued by exporter in favour of CHA was fabricated. In the case of PRIME FORWARDERS VERSUS COMMR. OF CUSTOMS, KANDLA [ 2007 (11) TMI 37 - CESTAT, AHMEDABAD] , Tribunal has observed that As regards, penalty on M/s. Prime Forwarders, customs house agent, no evidence of their involvement or their knowledge about mis-declaration has been brought on record. The Commissioner has observed that being a responsible CHA, he should have informed the correct description of the goods. However, we find that the said CHA has acted on the basis of the documents given to them and there is nothing to show that he was aware of the containers being stuffed with Ferro Titanium instead of brass scrap. As such we find no justification for imposition of penalty upon the said appellant. Nothing has been brought on record to show that contravention of Regulation 10(d), (e) (m) of the CBLR, 2018 can be established against the appellant. The proceedings initiated against the appellant are also not in line with the Advisory issued by the Principal Chief Commissioner of Customs, Mumbai. The impugned order cannot be sustained and the same is set aside - Appeal allowed.

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• 2023 (5) TMI 772
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - import consignment of toys with misdeclaration and concealment of cosmetics inside was attempted to be cleared for home consumption with intent to evade customs duty - violation of Regulations 10(a), 10(d), 10(e), 10(m) and 10(n) of CBLR - Proper considerations of submissions not done - violation of principles of natural justice - HELD THAT:- There are no consideration of the submissions made by the appellant in their representation dated 29.10.2021. The order has been passed without consideration of the submissions made and is against the principles of natural justice. Appeal filed by the appellant is allowed by way of remand to the original authority for passing a speaking order after providing the appellant all the documents that are relied against them and after consideration of all the submissions made by the appellant before him. As the issue is in respect of revocation of the CHA licence impacting the right to livelihood of the concerned persons, the case is remanded and the matter in remand proceedings should be decided within two months from the receipt of this order. Appeal is allowed by way of remand.

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• Securities / SEBI

• 2023 (5) TMI 771
  Public issue of shares - payout to the shareholders - Persons acquiring shares to make public announcement in certain cases - accused offered the public to acquire 20% of the capital of M/s. Damania Airways Limited in terms of Clause 40 B of the listing agreement of the Stock Exchange, Mumbai - non-despatch of consideration amounts to a violation of Regulation 20 - acquirers replied to the show cause notice stating inter alia that the liquidity crunch in the market caused the delay and that they had already despatched more than 70% of the consideration. HELD THAT:- All procedures to the offer, including payment of consideration to the shareholders who have accepted the offer, would be completed within four weeks from the date of closure of the offer. The offer closed on 29 February 1996; Khemkas should have made the payments to the shareholders on or before 28 March 1996. the complainant has produced on record letters from the Manager of the Offer and Khemka Brothers dated 9 April 1996, 25 April 1996, 10 July 1996 and 17 August 1996 wherein it is unambiguously admitting that the acquirers, i.e. Khemka Brothers have not been able to pay the shareholders who have accepted the offer and cited liquidity crunch in the market as the reason for their failure. As has been explained above, the Regulation requires that the payout to the shareholders who have accepted the offer is to be made within four weeks from the closure of the offer. Prima facie failure on the part of the acquirer to meet the obligation amounts to a breach of Regulations 20 and 22. Section 24(1) of the SEBI Act makes it clear that any SEBI Act, Rules and Regulations breach would invite prosecution. As there was sufficient material available with the complainant, which prima facie indicates a violation of Regulations 20 and 22. Regulation 33 confers discretion on the Board having regard to the facts and circumstances of the case to investigate into the books of account or other records. Based on the report of such investigation under Regulation 36, the Board has the power to issue directions as contemplated under Regulation 39. Regulation 39 expressly saves the power of the Board to initiate criminal prosecution under Section 24 of the Act. Conjoint reading of Regulation 33, along with Regulation 39, confers discretion on the Board to initiate an investigation if such investigation appears to be necessary to the Board. In the facts of the case, there was sufficient material to demonstrate that there was sufficient material based on correspondence between the Managers of the accused and the complainant wherein the accused admitted that they have not been able to pay the shareholders who had accepted the offer. Furthermore, the accused cited the liquidity crunch in the market as the reason for their failure. Therefore, in the facts of the case, it is not necessary for the Board to lodge an investigation as per Chapter V into the violation of Regulations 20 and 22. In the absence of incontrovertible documents such as Form 32 under the Companies Act, 1932 or other material to show the applicant s resignation, the SEBI Special Judge has rightly held that the applicant has failed to make out a case for discharge. Hence, there is no merit in the criminal applications. No case is made out for quashing the complaint or charges.Both criminal applications are dismissed.

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• Insolvency & Bankruptcy

• 2023 (5) TMI 770
  CIRP - Seeking revival of company - withdrawal of Company Petition under Section 12-A of the Code - default in making payment of any of the tranches of Financial Creditors - settlement of dispute between the parties - HELD THAT:- In the present case, consent terms were brought on record since they were part of the Application under Section 12A of the Code which was noticed in the Order of the Adjudicating Authority itself. When consent term itself contains clause for revival, non-giving liberty specifically for revival by the Adjudicating Authority is inconsequential. The Adjudicating Authority has also referred to the Judgment of this Tribunal in Himadri Foods Ltd. v. Credit Suisse Funds AG, [ 2021 (1) TMI 1303 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], which was distinguished by the Adjudicating Authority. The Adjudicating Authority held that the liberty was granted by the Adjudicating Authority hence the case is distinguishable - It was found that there are no distinguishing feature of the Judgment in Himadri Foods Ltd. In the said case also, consent terms contemplated event of default and gave liberty to report the matter. In the present case also, Company Petition was disposed of taking settlement on record and when Clause 10 of the Settlement specifically contains an undertaking by the Corporate Debtor for revival, corporate debtor can not be allowed to go back from its commitment as was made in the settlement. Another judgment which has been relied on by Learned Counsel for the Respondent is C.A. (AT) Ins. No. 294 of 2021-SRLK Enterprises LLP v. JALAN Transolutions (India) Ltd. [ 2021 (4) TMI 1358 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] - the adjudicating Authority while rejecting the revival application observed that the settlement was arrived in between the parties outside the Tribunal. In the present case, the Settlement was arrived and submitted before the Adjudicating Authority which was noticed in the Order dated 09.02.2022 hence the Judgement of SRLK Enterprises LLP is clearly distinguishable from the facts of the present case. Thus in the facts of the present case, the Adjudicating Authority committed error in rejecting the revival application 3196 of 2022 when the consent term itself contemplates a clause for revival in event of default and default having been committed by the Corporate Debtor, rejection of revival is to deny the Financial Creditor rightful remedy. Non-mention of specific liberty in the Order is inconsequential in view of the clear terms in the settlement which was the basis of withdrawal of Company Petition. Application allowed.

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• Service Tax

• 2023 (5) TMI 769
  Valuation - income from sale of publication of books has to be added in the consideration for coaching services provided by the Appellant or not - HELD THAT:- The issue is no longer res integra as the Tribunal in various decisions held that the value of books cannot be included in the consideration for coaching services. Tribunal in the case of M/S CEREBRAL LEARNING SOLUTIONS PVT. LTD. VERSUS CCE, INDORE [ 2013 (4) TMI 527 - CESTAT NEW DELHI ] wherein it was held that that part of the clarification of the CBEC which engrafts a condition that the exemption notification is applicable only where the value of the course material (sold by a commercial or training institute) answers the description of standard text books which are priced, is illegal, un-authorised and of no effect. No notice or cognition can be taken by any authority or such un-authorised exertions by the CBEC. If this illegal and un-authorised condition, imposed on the generality of exemption granted by the Central Government vide Notification No. 12/2003-S.T., dated 20-6- 2003 is ignored, as it must, the assessee/appellant is clearly entitles to the benefit of the exemption. Since the value of sale of books is separately identifiable from the audited financial statements of the Appellant and there are documents to show that such sale was also made not to the students but to third parties also, the question of levy of service tax on such value from sale of books/publication cannot be sustained. The appeal filed by the Appellant is allowed.

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• 2023 (5) TMI 768
  Levy of service tax - invoice raised on NIXI - existence of relationship of service provider and service recipient between the appellant and NIXI or not - Appellant claimed that NIXI is not the ISP (internet service provider) and hence neither the service provider nor the service receiver, hence not liable to pay service tax - it is alleged that all services provided by the appellant to the other internet service providers (outgoing traffic) through NIXI is the output service provided by the appellant on which service tax is payable - extended period of limitation - period prior to the negative list regime i.e. prior to 01.07.2012 - difference of opinion between technical members and judicial members - HELD THAT:- It is seen that for domestic peering NIXI charges port charges and member fees. The appellant was paid by NIXI when the difference between the in-traffic and out-traffic was in the negative, otherwise the appellant had to pay to NIXI. It is not in dispute that the settlement amount is received by the appellant, as an internet service provider, only if the quantum of traffic used by the other internet service providers through the appellant port (outgoing traffic) is less than 5 times the traffic used by the appellant on other internet service providers networks (incoming traffic). The Commissioner bifurcated an inserverable activity of peering into two parts namely, out-traffic and in-traffic as independent transactions leviable to be taxed separately. Admittedly, peering is a multilateral agreement and is generally settlement free. It is a business relationship where internet service providers provide access on a reciprocal basis to the customers. In fact, without giving access to each other s network and the data contained therein, internet cannot function. It is, therefore, because of a technical requirement that internet service providers provide access to each other s network. An activity has to be seen from a commercial stand point and cannot be artificially split. The dominant intent test/substance of the transaction has to be seen and in this connection reference can be made to the decision of the Supreme Court in THE STATE OF PUNJAB VERSUS ASSOCIATED HOTELS OF INDIA LTD. [ 1972 (1) TMI 80 - SUPREME COURT ] holding that The transaction in question is essentially one and indivisible, namely, one of receiving a customer in the hotel to stay. Even if the transaction is to be disintegrated, there is no question of the supply of meals during such stay constituting a separate contract of sale, since no intention of the part of the parties to sell and purchase food-stuff supplied during meal times can be realistically spelt out. The Commissioner merely assumed that the appellant would have received payment for the out-traffic. NIXI provides for computation of the amount only on the difference in data traffic and there is no provision for payment for out traffic data and payment of in traffic data. No book adjustment is made and what was payable or receivable is computed on a formula provided by NIXI - a single transaction of providing peering cannot be split into two transactions, nor is it permissible to artificially vivisect a composite indivisible commercial transaction and examine one part for taxability purposes. Thus, the appellant is not a service provider nor NIXI is a service receiver. An amount of Rs. 3.71 lakhs received by the appellant, therefore, could not have been subjected to levy of service tax. What also needs to be noted is that as per the Agreement, invoices had to be raised by NIXI and not by the appellant. The application filed by the appellant also contains as Annexure A an invoice dated 01.04.2010 issued by NIXI to the appellant. The two issues that have been referred are, accordingly, answered in the following manner: (i) There is no relationship of service provider and service recipient between the appellant and NIXI and, therefore, the appellant is not liable to pay service tax; and (ii) Mere raising of an invoice by the appellant on NIXI during the course of investigation would be of no consequence as the appellant had not provided any service to NIXI and would, therefore, not be required to pay service tax. The matter may now be placed before the regular division bench for hearing of the appeal.

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• 2023 (5) TMI 767
  Recovery of Service tax - code share charges and inter airline service charges - resolution plan approved by NCLT in the insolvency proceedings - HELD THAT:- The matter is no more res integra, as the Hon ble Supreme Court in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT ], had decided the settled position of law, holding that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior the date on which the Adjudicating Authority grants its approval under Section 31 could be continued. CBIC has vide Instruction No.1083/04/2022-CX9 dated 23.05.2022 has laid down the guidelines in the form of Standard Operating Procedure (SOP) for handling the NCLT cases by the department, and reiterated the legal position that as operational creditors, GST and Customs authorities are required to submit their claims against the corporate debtors when the corporate insolvency and resolution process has been initiated. Once the Resolution plan is approved by NCLT, no demands can be raised on the Resolution Applicant. However from the date of approval of the resolution plan by the NCLT, the appeal filed by the applicant has abated and CESTAT has become functus officio in the matters relating to this appeal. In view of the order passed by the Co-ordinate Bench of this Tribunal in the judgement of the Hon ble Supreme Court in Ghanashyam Mishra and upon taking note of the fact that the NCLT has approved the resolution plan in the insolvency proceedings in regard to the corporate debtor of the appellant-assessee company, we are of the view that the appeals before this Tribunal are abated. Appeals filed by the appellant-assessee and the Revenue are disposed off.

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• 2023 (5) TMI 766
  Non-payment of service tax - amount paid to the Government or a local authority towards periodical charges for assignment of right to use of natural resource or quarry sand from the allotted mines - point of taxation rules - reverse charge mechanism - period from April 2016 to January 2017 - HELD THAT:- This precise issue came up before a Bench of the Tribunal in M/S. THE MADHYA PRADESH STATE MINING, CORPORATION LIMITED VERSUS PR. COMMISSIONER, CGST CENTRAL EXCISE, BHOPAL (M.P.) [ 2023 (4) TMI 1075 - CESTAT NEW DELHI] . In regard to short payment of service tax on dead rent paid by the appellant to the State Government, which was taxable on a reverse charge basis against the receipt of services concerning grant of mining rights, the Bench held that for the purposes of levying service tax, the taxable event is construed at the time the service is provided or agreed to be provided - in order to determine whether levy of services tax is applicable on a particular activity, it is necessary to determine the point of time when such activity is provided or agreed to be provided and since the agreements between the appellant and the State Government regarding grant of mining right were executed prior to April 01, 2016, on which date the transaction in mining of right to use natural resources became taxable, the appellant would not be liable to pay the service tax. The Point of Taxation Rules deal with the date on which payment of service tax has to be made and do not determine whether the service is taxable or not. These Rules, therefore, would not be applicable in the present case. In any view of the matter, the issue is covered by the decision of the Division Bench of the Tribunal in Madhya Pradesh State Mining Corporation. Appeal dismissed.

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• 2023 (5) TMI 765
  Proper discharge of service tax liability through book adjustment for the period April 2015 to June 2017 or not - HELD THAT:- The learned Commissioner (Appeals) vide Order-in-Appeal dated 16/1/2018, in appellants own case have been pleased to allow the appeal under similar facts and circumstances observing that appellants have credited the Govt. Account on account of service tax by way of book adjustment, irrespective of the fact that the same has been deposited by them by not following the procedures, verbatim as provided under the provisions of the Finance Act, 1994. The appellants being a Govt. department cannot be attributed with any malafide intention to evade payment of Service tax. In view of the facts and circumstances and the issue already having been decided in favour of the appellant, which order have attained finality, tthis appeal is allowed - impugned order set aside.

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• 2023 (5) TMI 764
  Classification of services - activity of preparation of site for the power plant - site formation and clearance, excavation and earthmoving and demolition services or not - payment of service tax through credit also rejected on the ground that the invoices against which credit was availed were not issued to the Bhilai premises of the appellant - CENVAT Credit. HELD THAT:- What transpires from a perusal of Annexure A (containing description of the work to be carried and amount to be paid) is that the work order is a composite contract comprising services as well as goods. This would be clear from serial no. 6 of annexure which mentions Earth work in excavation for levelling and grading using borrowed good earth . It specifies that borrowed good earth has to be arranged by the contractor at its own cost. There can be no manner of doubt that the work order comprises both the service element as well as the goods element. The Supreme Court in Larsen Toubro [ 2015 (8) TMI 749 - SUPREME COURT] drew a distinction between the service contracts simpliciter and a composite works contracts which would involve both services and goods and held that it is only w.e.f. June 01, 2007 that composite contracts can be subjected to levy of service tax and not before this date. It has been found as a fact that the work order in the present case, involves both supply of services as also goods. It is, therefore, a composite contract. In view of the decisions of the Supreme Court in Larsen Toubro it has to be held that the services performed by the appellant under the work order would fall in the category of works contract service and not site formation service. The finding of the Commissioner on this issue, therefore, cannot be sustained and is set aside. Whether the appellant would be justified in availing CENVAT credit? - HELD THAT:- The Commissioner had examined documents to ascertain whether the appellant was justified in availing CENVAT credit, but in view of the finding recorded in this order that the appellant would not be liable to pay service tax, the appellant cannot avail the benefit of rule 3(l) of 2004 Rules. Penalty - HELD THAT:- Learned counsel for the appellant, however, pointed out that the appellant had reversed the CENVAT credit availed by it and, therefore, this issue is only academic in nature. Learned counsel for the appellant also submitted that in any view of the matter the penalty imposed on the appellant for wrong availment of CENVAT credit needs to be set aside - This submission of learned counsel for the appellant deserves to be accepted. The issue of tax liability of a sub-contractor in cases where the main contractor had paid service tax was subject matter to litigation and, therefore, no mala fides can be attributed to the appellant. The penalty imposed on the appellant, therefore, deserves to be set aside. Interest - HELD THAT:- Interest cannot be imposed on the appellant as demand of service tax is not sustainable and credit was reversed by the appellant. The confirmation of demand of service tax deserves to be set aside and is set aside. The imposition of penalty and interest also deserves to be set aside and is set aside - Appeal allowed.

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• 2023 (5) TMI 763
  Parallel proceedings - Cash refund of accumulated CENVAT credit - consequently, admissibility of CENVAT credit on the input services availed by the appellant also questioned by way of issuance of show-cause notice for the said period - HELD THAT:- After filing cash refund claims of the accumulated CENVAT credit by the appellant during the relevant period, proceedings were also initiated simultaneously proposing denial of CENVAT credit and its recovery by way of issuance of show-cause notice more or less on the same grounds on which refund claims were proposed to be denied. This Tribunal in TEXAS INSTRUMENTS (INDIA) PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX [ 2014 (9) TMI 1135 - CESTAT, BANGALORE ] examined the very same grounds of objections of the revenue on the admissibility of cash refund claims of accumulated CENVAT credit on export of service and remanded the matter after recording the principles to be followed in deciding the refund claims - It is also not in dispute that pursuant to the said Order of the tribunal refund claims were adjudicated and allowed to the appellant vide de novo order dated 01.5.2017 which covers one month of the present demand notice i.e., June 2008. The learned advocate submits that for the subsequent period, this Tribunal following the earlier order in TEXAS INSTRUMENTS (INDIA) PVT LTD remanded the issue for de novo consideration. However, the same is pending adjudication. In these circumstances, the submissions for remanding the matter to consider the demand notice along with refund claims pending de novo adjudication before the Commissioner seems to be relevant and appropriate - Appeal allowed by way of remand.

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• 2023 (5) TMI 762
  Refund claim - service tax paid on technical inspection and certification services, much before 01.07.2017 - Post GST era - applicability of N/N. 41/2012-ST - HELD THAT:- The notification does not provide for any limitation on the period in which the goods have to be exported from the date of receipt of the input service on the payment of service tax. Impugned order does not analyze the notification in dispute but has misdirected itself by going into the transitional provisions as per the Central Goods and Service Tax Act, 2017. From the plain wording of the notification it is evident that the right to claim the rebate has accrued to the appellant (exporter) on the date of payment of the service tax on input services received by him for use in the export of goods. Assistant Commissioner has in para 5 (iii) recorded a specific finding in this regard which was not disputed by the revenue in their appeal before the Commissioner (Appeal) nor Commissioner (Appeal) has recorded any finding to this effect. In the case of Eicher Motors Ltd. [ 1999 (1) TMI 34 - SUPREME COURT ], Hon ble Apex Court held that it becomes clear that a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the Rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. The observation made by the Commissioner (Appeals) in respect of the provisions of Section 173 of The Central Goods and Service Tax Act, 2017, are in respect of the repeal of notification 41/2012-ST without even referring to the Section 174(2) ibid, cannot impact the rights accrued to the appellant prior to such repeal. As is evident from the wording of the notification and the decision of the Hon ble Supreme Court the right to rebate has accrued to the appellant at the time of the receipt of the specified input services for use in the export of goods by the exporter, and such right could not have been extinguished by the subsequent event of repeal of Chapter V of the Finance Act, 1994. Impugned order set aside - appeal allowed.

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• 2023 (5) TMI 761
  CENVAT Credit - input services or not - Mediclaim and group Insurance Policies taken for its employees - period October, 2006, to September, 2011 (appellant is confining the arguments only for the claim upto 30/03/2011 i.e. pre amended period) - HELD THAT:- So far as pre amended period is concerned the issue involved herein is not more res integra in view of various decisions of this Tribunal in which it has been specifically held that credit of service tax paid on group insurance premium / group mediclaim of the employee is available to the assesee / employer. The Hon ble High Court of Karnataka in the matter of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-III, COMMISSIONERATE VERSUS STANZEN TOYOTETSU INDIA (P.) LTD. [ 2011 (4) TMI 201 - KARNATAKA HIGH COURT] has held that cenvat credit cannot be rejected on the group insurance health policy taken by the employer. Not only the employees only but there are decisions of the Tribunal, for the period prior to amendment, in which it has been held that even the cenvat credit of service tax paid on insurance premium in respect of dependent / family members of the employee is available to the employer. Therefore it can be said that for the period prior to amendment, service tax paid on all those services which the assessee has utilized directly or indirectly in or in relation to the final product eligible as credit and merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not constitute input service. The appellant has rightly availed the cenvat credit for the period prior to 01/04/2011 and the instant appeal is allowed to that extent only.

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• 2023 (5) TMI 760
  Reversal of CENVAT Credit - input services and capital goods used for providing both taxable and exempted services - Rule 6(3A) of Cenvat Credit Rules, 2004 - HELD THAT:- The appellant has reversed the amount computed under Rule 6(3A) after taking into account Cenvat credit, the fact now disputed by the appellant. This fact is being noted in both the orders. As the appellant has already reversed the amount in excess of what was required to be reversed after treating ocean freight services as not exempted services, there are no reason why to remand this matter for recomputation to the original authority. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2023 (5) TMI 759
  CENVAT Credit - fake invoices - sourcing only the Cenvatable Credit invoices without actual receipt of the goods - availment of Cenvat Credit not due on the strength of the eight invoices issued by the registered dealer - HELD THAT:- It has been an admitted position both by the supplier of goods, as well as the recipient thereof, that they have been negotiating the sales through the said two unregistered dealers. In fact the registered dealer has submitted, to negotiate supplies of manufactured goods through traders, for sale of his goods. The appellant relies heavily on Board s of Circular no. 1003/10/2015- CX dated 05.05.2015. It is noticed that the said circular of the Board caters to a situation as herein and was based upon representations received from the trade. Vide para 3 of the circular, the Board has spelled out the purpose behind amending Central Excise Rules 2002 and inserting two provisos (third fourth) in Rule 11(2) thereof. Para 3 of the circular states that the intendment for amendment was to allow an additional facility for direct transport of goods from the manufacturer to the consignee who avails Cenvat Credit based on the cenvatable invoices issued by the registered dealer. It further mentions that this change was so brought about to obviate the need for goods to be brought to the premises of registered dealers for subsequent transport of the goods to the consignee. For earlier period, the appellant has adverted to Circular No. 218/52/96-CX dated 04.06.1996 concerning transit sale movement of goods under Rule 52-A invoice. Moreover, even the circular referred supra clearly states that the impugned changes need to be read harmoniously keeping the governments intention in mind and that these were by way of additional facility to registered dealer for direct dispatch of goods from the manufacturer to consignee when they were issuing cenvatable invoice. When non receipt of goods by the appellant, is not substantiated, it would not be appropriate to deny them the facility of Cenvat Credit availment on the strength of the invoice of the registered dealer, duly accounted for in their RG-23A-Pt.I II. The department s contention of mere receipt of documents and no goods were supplied is without even a toehold of substance. It is at best only presumed or assumed that the appellants had not received the said goods as per the said cenvatable invoices issued. There is no sound basis to allege so and harbor such a belief by the department - the situation for supply of goods herein is specially provided for in Rule 11(2) proviso and it provides for availment of Cenvat Credit on the strength of the said invoices issued by the registered dealer. Further, the provisions have been made applicable mutatis mutandis in case of a first stage dealer or a second stage dealer (refer Rule 11(7) of the Central Excise Rules 2002. There is nothing to disentitle the availment of Cenvat Credit when such facility is clearly envisaged in law and the intention of the government so to do also spelled out by way of circular to promote/facilitate ease of doing business, and the elaborate circumstantial evidence indicating the receipt of the goods. Thus as the impugned goods have been found to be duly accounted for in statutory records, payments made, transportation details indicated in the invoices and as there is not an iota of evidence to suggest non-receipt of goods by the appellants, Cenvat Credit therefore cannot be denied - Also since it is not the case that no goods were produced by the appellants and also under the circumstances no alternative receipt/supply of goods for such manufacture has been brought out by the department, the charge levelled gets demolished under its own weight. The Tribunal has also so held and allowed credit in the case of M/S. DASHMESH CASTINGS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, CHANDIGARH [ 2015 (4) TMI 522 - CESTAT NEW DELHI ]. In the case of APOLLO METALEX PVT. LTD. VERSUS COMMISSIONER OF C. EX. S.T., NOIDA [ 2015 (10) TMI 960 - CESTAT NEW DELHI ], the Tribunal held that it was not correct to disallow credit on the strength of invoices issued by unregistered dealer (intermediate supplier), when actual receipt of goods was not disputed. The order of the Learned Commissioner passed in appeal is therefore set aside - appeal filed by the party is allowed.

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• 2023 (5) TMI 758
  CENVAT Credit - input services - denial on the ground that the services were not covered by the scope of definition of Input Service as defined under Rule 2(l) of the Cenvat Credit Rules, 2004 - period January to March 2011 - HELD THAT:- The impugned services involved in the present case have been held to be input services by various decisions of the Tribunal - reliance can be placed in the case of COMMISSIONER OF C. EX. CUS., VAPI VERSUS APAR INDUSTRIES LTD. [ 2010 (8) TMI 407 - CESTAT, AHMEDABAD] , GARWARE POLYSTER LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, AURANGABAD [ 2011 (10) TMI 73 - CESTAT, MUMBAI] , M/S. FIAMM MINDA AUTOMOTIVE LTD. VERSUS CCE, DELHI-III [ 2011 (1) TMI 246 - CESTAT, NEW DELHI] and M/S. COCA COLA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III [ 2009 (8) TMI 50 - BOMBAY HIGH COURT] . The impugned order is not sustainable in law and the same is liable to be set aside - Appeal allowed.

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• 2023 (5) TMI 757
  SSI Exemption - use of brand name of others - selling through distributors at the selling price which is less than MRP - exemption under Notification No. 8/2003- CE dated 01.03.2003 as amended - HELD THAT:- Commissioner (Appeals) in his order held that it was for the Department to disprove the claim and to establish that the deed of assignment, though dated 3-4-1993 was in fact executed after the date of seizure. Without establishing this, the assignment deed cannot be brushed aside. In the above set of facts, the impugned order cannot sustain and has to be set aside. We therefore hold that appellants claim to be owners of the brand name Golden Oriole on the date of visit of the officers to the appellant s factory on 10-8-1994 is established on the basis of the assignment deed and accordingly, they were entitled to the benefit of Notification No. 1/93. It has been submitted that the above order of the Commissioner (Appeals) has been accepted by the Revenue and no further appeals have been filed. Appeal allowed.

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• 2023 (5) TMI 756
  Recovery of Central Excise Duty - ascertainment of the correct assessable value of automotive tyres cleared for the replacement segment market - case of Revenue is that appellant had contractually undertaken to discharge duty liability on automotive tubes and failure to do so upon alteration of assessable value had been brought out in the impugned order - HELD THAT:- This matter is before us consequent to fresh adjudication directed by the Tribunal; in the remand order, the manner in which ascertainment of claim of the appellant was to be dealt with had been spelt out. That order had not been complied with by the adjudicating authority. A change of guard in the office of the adjudicating Commissioner did not discharge the onus devolving on that authority to carry out the adjudication in conformity with the remand order. That the law must prevail could not have been unknown to departmental officers, that the statute does not contemplate collection of duty beyond the authority of law does not have to be stated and that convenience of presumption of non-payment of taxes is, surely, anathema to responsible tax administration is an article of faith not alienable by the State. There are no option other than to set aside the impugned orders. Learned Senior Counsel submitted that it would be possible to establish the veracity of their claim of actual assessable value, in the manner undertaken earlier, within six months. Accordingly, the adjudicating authority is directed to issue appropriate directions to the jurisdictional field formations to report on the reconciliation within that time frame and, thereafter, adjudicate the show cause notice. Appeal allowed by way of remand.

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• 2023 (5) TMI 755
  Maintainability of appeal - time limitation - letter for personal hearing and original order sent in different addresses - HELD THAT:- From the perusal of the letter dated 27.06.2019 fixing the date of personal hearing, it is observed that the letter fixing the personal hearing has been issued to the appellant at their new address whereas the order-in-original has been issued at the old address of the appellant - Revenue has not been able to show that the order in the present case was received by the appellant prior to the date stated by them, i.e. 20.03.2020. Hon ble Supreme Court vide order dated 10.01.2022 in Suo Motu Writ Petition (C) No.3/2020 [ 2022 (1) TMI 385 - SC ORDER ] has observed that In cases where the limitation would have expired during the period between 15-3-2020 till 28-2-2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 1-3-2022. In the event the actual balance period of limitation remaining, with effect from 1-3-2022 is greater than 90 days, that longer period shall apply. In view of the above order of the Hon ble Supreme Court, it is found that the entire period of delay is covered by this order and effectively there is no delay in filing the appeal before the Commissioner (Appeals). Accordingly the order of the Commissioner (Appeals) cannot be sustained - Commissioner (Appeals) has not considered the issue on merits and has disposed of the appeal filed on the ground of limitation only. As the said order disposing of the appeal of the appellant on the ground of limitation cannot be upheld, the matter needs to be remanded back to the Commissioner (Appeals) for considering the issue on merits. Appeal allowed by way of remand.

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• 2023 (5) TMI 754
  Denial of CENVAT credit of tax - input services - construction service - security service - maintenance and repair service - works contract service - manpower recruitment and supply service - denial on the ground of lack of nexus - HELD THAT:- It would be appropriate to hold that perception of nexus , with its unbounded connotations, is not an appropriate nomenclature for the touchstone intended by rule 3 of CENVAT Credit Rules, 2004; conformity must need be tested against the entirety of the definition of input service in rule 2(l) of CENVAT Credit Rules, 2004 including the principal and inclusive leg on every finding of denial. Our perusal of the order of the original authority supra reveals that the principal leg has been accorded but a cursory disposal. From a plain reading of the germane definitions in CENVAT Credit Rules, 2004, we also find that the distinction drawn between input and input service for deploying the expression whether directly or indirectly also appears to have been overlooked by central excise authorities. The relevance of the expression in the latter, by reason of intangibility and solely for manufacturing entities, is crucial enough to be the essence of the test for conformity to the definition - the principle of nexus of service should not, therefore, restrict itself to direct use but should encompass indirect deployment and, hence, should be examined also in relation to the main leg of the definition. The lack of finding in the impugned order on the applicability of the main leg of the definition and its nexus with the final output hinders the exercise of appellate determination. It would be appropriate to have that undertaken to enable which we set aside the impugned order and restore the proceedings before the original authority to take note of the submissions of the appellant herein on the direct/indirect use of the impugned services procured by the appellant and determine nexus or lack thereof. Accordingly, the appeals are allowed by way of remand.

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• CST, VAT & Sales Tax

• 2023 (5) TMI 753
  Levy of additional tax - valuation - works contract - deduction of depreciation on machinery and tools - claiming of excess deductions on account of expenses and profit elements or not - HELD THAT:- It is crystal clear that notwithstanding the fact that there was no specific provision in the Act, 2003 qua deduction of depreciation in plant and machinery while computing taxable turnover on works contract at the relevant time still, keeping in view the principles as laid down in Gannon Dunkerley Co. s case [ 1992 (11) TMI 254 - SUPREME COURT] which had been interpreted by different High Courts in the above cited authorities, the said provision is to be interpreted to mean that the deduction for a claim in the nature of depreciation on account of use of plant and machinery was in contemplation of the discussion before Apex Court in Gannon Dunkerley Co. s case. We also consider it relevant to mention here that the principles of law as laid down in Gannon Dunkerley Co. s case were not discussed in Thampi Company s case [ 2009 (6) TMI 960 - KERALA HIGH COURT] . Therefore, the Tribunal while allowing the appeal filed by the respondent-assessee and allowing deduction on account of depreciation of plant and machineries made by the respondent-assessee by observing that the said deduction would cover charges for obtaining on hire or otherwise machineries of the assessee cannot be held to be at any fault and therefore the order passed by the Tribunal deserves to be upheld. Since this question of law had been raised in all the five instant appeals, therefore, the same stands answered in favour of the respondents-assesses of these appeals and against the appellant. Appeal dismissed.

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• Indian Laws

• 2023 (5) TMI 752
  Repudiation of Insurance claim - mob of about 200-250 persons entered the resort and damaged/destroyed the insured property resulting in loss to the complainant. - malicious act on the part of the management of Vedic village, which fell within the exclusions provided under Clause V(d) of the Insurance Policy - it is also submitted that the Survey Report of the Surveyor opining that the loss had occurred due to the insured peril and the claim was admissible was highly erroneous and could not be treated as final - HELD THAT:- From the reading of Clause V of the subject policies, it is discernible that the loss of or visible physical damage or destruction by external violent means directly caused to the property insured was covered, but the loss, damage or destruction to the property caused by burglary, housebreaking, theft, larceny or any such attempt or any omission of any kind of any person in any malicious act was not covered - In the instant case, the appellant-Insurance company had repudiated the claim of the respondent taking recourse to the said Clause V(d) of the subject policy on the ground that the loss caused to the respondent was an outcome of the malicious act/acts on the part of the respondent Vedic Village management and it fell within the exclusions provided under Clause V(d) of the Insurance Policy. For the purpose of coming to the said conclusion, the appellant- Insurance Company in its letter dated 02/05/2011 while repudiating the claim of the respondent, had relied upon the incident which had taken place at the football match ground, where the accused Gaffar Molla and his associates had fired and caused death of one person and injured others, and thereafter they had taken shelter at the Vedic Village of the respondent. It is trite to say that wherever such an exclusionary clause is contained in a policy, it would be for the insurer to show that the case falls within the purview of such clause. In case of ambiguity, the contract of insurance has to be construed in favour of the insured. In the instant case, the appellant-Insurance Company had failed to discharge its burden of bringing the case within the exclusionary clause V(d) of the policies in question. The surveyor in the Final Survey Report dated 16.06.2011 had also opined that the loss had occurred due to the insured peril and the claim was admissible. Though it is true that the Surveyor s Report is not the last and final one nor is so sacrosanct as to the incapable of being departed from, however, there has to be some cogent and satisfactory reasons or grounds made out by the insurer for not accepting the Report. In the instant case, the appellant-Insurance Company has failed to make out any such cogent reason for not accepting the surveyor s Report. Appeal dismissed.

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