TMI Tax Updates - e-Newsletter
May 23, 2024

Case Laws in this Newsletter:

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

Highlights / Catch Notes

GST

• Madras High Court examined validity of summons u/s 70 of CGST Act, 2017. Interference with summons justified only in exceptional circumstances. Petition disposed off.

  The Madras High Court examined the validity of summons issued u/s 70 of the Central Goods and Services Tax Act, 2017, following alleged abuse and threat during a premises search. The court emphasized that interference with a summons is warranted only in exceptional circumstances. The petitioner sought intervention based on a prior police complaint against the fifth respondent. However, the court noted that the relevant file had been transferred from the fifth respondent, assuring the petitioner of a different officer handling the matter. Consequently, the court dismissed the petition, finding the petitioner's apprehension unfounded.
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• Allahabad High Court held that penalty u/s 129 of GST Act not applicable for minor discrepancy in e-way bill vehicle number.

  The High Court ruled on a case involving the levy of penalty u/s 129 of the GST Act due to an error in mentioning the vehicle number in the E-way bill during the transit of goods. The court found that the discrepancy in the vehicle registration number did not indicate any intention to evade tax, as it was a genuine sale of goods. The court held that this minor error does not warrant penalty proceedings u/s 129. The court set aside the orders of the detaining authority and the first appellate authority, as there was no evidence of tax evasion beyond the incorrect vehicle number in the E-way bill. The petition was allowed, and the orders were deemed unsustainable in the eyes of the law.
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• Delhi HC held violation of natural justice due to ex-parte demand under CGST Act. Petitioner to respond to Show Cause Notice for ITC claim scrutiny. Impugned order set aside.

  The Delhi High Court addressed a case involving a violation of principles of natural justice due to an ex-parte demand created under section 73 of the CGST Act, 2017. The petitioner failed to respond to a Show Cause Notice regarding excess claim of Input Tax Credit (ITC) and scrutiny of ITC availed. The court held that the impugned order was solely based on the lack of reply to the Show Cause Notice. As there was no Annexure-B provided by the Respondents, the court granted the petitioner an opportunity to respond to the Notice. Consequently, the order dated 12.12.2023 was set aside, and the Show Cause Notice was remitted to the Proper Officer for re-adjudication. The petition was disposed of through remand.
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• Allahabad High Court held violation of natural justice due to non-speaking order, ignoring petitioner's replies, and incorrect tax rate application. Remanded for fresh reasoned order.

  The High Court found a violation of principles of natural justice due to a non-speaking order by the adjudicating authority, which ignored the petitioner's replies and failed to provide reasons for applying a high tax rate. The court emphasized that the adjudicating authority must consider and provide reasons for rejecting explanations submitted by the petitioner. The lack of reasoning in the adjudication order was deemed unfair and inadequate. Additionally, the authority erred in applying the highest tax rate without justification, especially when part of the turnover was exempt. The court noted that the petitioner was not responsible for delays in the proceedings and remitted the matter back to the authority for a fresh, reasoned order within three months. The writ petition was allowed for remand.
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• Bombay High Court held that provisional attachment u/s 83 of MGST Act must strictly follow prescribed conditions. Petition allowed as impugned attachments quashed.

  The Bombay High Court reviewed a case involving a provisional attachment u/s 83 of the MGST Act. The petitioner failed to justify non-payment of liability. Citing M/S Radha Krishan Industries v. State of Himachal Pradesh, the court emphasized that the power to order such attachment is draconian and must adhere strictly to statutory conditions. The court held that the Commissioner must form an opinion that attachment is necessary to protect government revenue. As this condition was not met in the present case, the court quashed the attachments and the order u/s 83. The petition was allowed.
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• The High Court held that the appeal filed u/s 107 of UPGST Act was within the statutory time limit. Errors on record justified writ jurisdiction. Delay allowed for appeal hearing.

  The case involved a challenge to the time limitation for filing an appeal under Section 107 of the UPGST Act. The High Court held that limitation provisions in tax laws serve to ensure timely compliance, discourage delays, and promote equal treatment of taxpayers. The petitioner received the order on July 12, 2022, and filed the appeal on November 10, 2022. The court found errors in the calculation of the time limit by the authorities, warranting the exercise of writ jurisdiction. The court directed the appellate authority to allow the delay in filing the appeal and proceed to hear the appeal on merits promptly, preferably within two months. The application was disposed of accordingly.
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• GST exemption denied for hostel accommodation services provided to students and working women. Registration required. Taxable at 9% CGST + 9% SGST. Food supply taxed as composite supply.

  The case involves a query regarding GST exemption for hostel accommodation provided to students and working women. The Authority for Advance Ruling, Tamil Nadu, determined that the accommodation services, along with ancillary services, constitute a business subject to GST registration. The premises were deemed commercial, not residential, making them taxable. The applicable GST rate for hostel accommodation services was set at 9% CGST + 9% SGST. The supply of in-house food was considered part of a composite supply, with the principal service being accommodation, taxed at 18%.
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Income Tax

• Extension of due date for filing Form No. 10A/10AB under Income-tax Act, 1961 extended to 30.06.2024 for genuine hardship cases u/s 119.

  The Central Board of Direct Taxes, u/s 119 of the Income-tax Act, 1961, extended the due date for filing Form No. 10A to 31.08.2021, 31.03.2022, 25.11.2022, and 30.09.2023 through Circulars. Requests for condoning delays were received, leading to an extension for filing Form No. 10A to 30.06.2024. Similarly, the due date for Form No. 10AB was extended to 30.09.2022 and further to 30.09.2023. Pending applications under specific sections were addressed, allowing for valid applications and fresh submissions. Trusts failing to file Form No. 10A for AY 2022-23 can opt for provisional registration and later apply as existing entities by 30.06.2024.
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• Consequences of PAN inoperative u/r 114AAA. Failure to link Aadhaar leads to higher tax deduction/collection. Partial relief if linked before 31.5.2024

  The circular modifies the consequences of a PAN becoming inoperative u/r 114AAA of the Income-tax Rules, 1962. Failure to provide Aadhaar number u/s (section) of the Act will result in the PAN becoming inoperative. Consequences include higher tax deduction and collection rates until the PAN becomes operative again. - For the transactions entered into upto 31.03.2024 and in cases where the PAN becomes operative (as a result of linkage with Aadhaar) on or before 31.05.2024, there shall be no liability on the deductor/collector to deduct/collect the tax at higher rate.
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• Calcutta High Court upheld PCIT's order u/s 263, rejecting claim for exemption of Long Term Capital Gain from penny stock shares as prima facie erroneous.

  The Calcutta High Court reviewed a case involving a revision u/s 263 regarding the addition u/s 68 for a purportedly bogus claim of exemption of Long Term Capital Gain from the sale of shares of a penny stock. The Principal Commissioner of Income Tax (PCIT) found the assessment to be prima facie erroneous and prejudicial to revenue, leading to the issuance of a show cause notice. The PCIT independently evaluated the assessment records, concluding that the assessing officer should have treated the credit as bogus and disallowed the exemption u/s 10(38). The High Court differentiated this case from a previous ruling involving Sinhotia Metals and Minerals Pvt. Ltd., emphasizing that the PCIT's decision was valid in this context. The Court overturned the Tribunal's decision, reinstating the PCIT's order u/s 263.
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• ITAT Delhi held that TDS not applicable on income/profit component in payments to distributors/franchisees.

  The ITAT Delhi ruled on TDS u/s 194H and 194J regarding income/profit component in payments to distributors/franchisees. The payment cannot be treated as commission or brokerage. Citing Bharti Cellular Ltd. case, it held no legal obligation for TDS on such payments. Section 194-H deemed inapplicable, leading to setting aside of the demand u/s 201(1)/201(1A). Appellant's appeal allowed based on established legal principles.
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• ITAT Bangalore ruled in favor of the assessee, accepting agricultural income as reported, rejecting unexplained money claim u/s 69A during demonetization period.

  The ITAT Bangalore, in a case involving unexplained money u/s. 69A, addressed deposits in a bank account during the demonetisation period. The DR argued that the assessee failed to provide external evidence supporting the agricultural income declared. The tribunal noted the average agricultural income reported by the assessee for the previous three years. It observed that the AO had accepted the agricultural income while computing the total income, which is crucial for raising a demand u/s 156. Consequently, the AO could not treat it as unexplained investment u/s. 69A. The tribunal accepted the assessee's plea, considering the income as agricultural income and applying the normal tax rate. As the assessee had shown agricultural income of Rs. 15,84,000 in the return, with a portion accepted by the ld. CIT (A), the remaining amount was also deemed agricultural income. Therefore, the assessee's appeal was allowed.
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• ITAT Delhi ruled in favor of the appellant trust, allowing expenses on business support services and salary, and justifying payments made for commission and computers.

  The ITAT Delhi assessed a charitable trust's expenses, including payments to a sister entity for business support services and commission to consultants. The AO disallowed expenses under section 13(3) of the Income Tax Act, alleging violation of conditions under section 13(2)(g). However, the trust demonstrated that the expenses were justified and commensurate with market value. Disallowance of faculty salary due to lack of qualifications was unfounded as the trust employed qualified individuals. Payment of commission and expenses on computers to students were deemed reasonable based on evidence provided. The tribunal found the AO's orders unsustainable and not legally sound.
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• ITAT confirmed that assessee is in default for non-deduction of TDS u/s 194IA. Interest u/s 201(1A) and penalty u/s 271(c) also upheld.

  The ITAT Ahmedabad, in proceedings u/s 201(1) and 201(1A), found the assessee-in-default for non-deduction of TDS u/s 194IA on property purchases. The assessee failed to provide evidence to support eligibility for proviso to Section 201(1), leading to dismissal of appeal. Interest u/s 201(1A) upheld till payee's return filing. Penalty u/s 271(c) for non-deduction of TDS u/s 194-IA was deemed justified. The appeal was decided against the assessee.
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• ITAT Jabalpur allowed benefit u/s 43CA for plots booked in FY 2009-10, 2010-11, 2013-14. AO to recompute profits considering sale details for Section 43CA benefit.

  In the case before ITAT Jabalpur, the issue revolved around the addition u/s 43CA concerning the variance between the sale consideration and the market value of a property. The AO contended that an unregistered agreement of sale could not be legally recognized and highlighted discrepancies in parties involved in transactions. However, the Tribunal ruled in favor of the assessee, recognizing entitlement to benefits u/s 43CA (3) for plots booked in specific financial years. The AO was directed to recalculate profits, considering detailed registry information on plot sales annually and granting the benefits of Section 43CA accordingly.
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• Appellant challenges limitation period findings by Single Judge in Delhi High Court. Dispute over TDS deposit date and transaction details. Appeal dismissed.

  The Delhi High Court dismissed the appeal challenging the findings of the Single Judge on the limitation period for a suit. The appellant did not dispute the legal findings that the deposit of TDS triggers a fresh limitation period u/s 19 of the Act of 1963. The appellant raised a factual dispute regarding a transaction reflected in the TDS certificate, claiming it pertained to a separate transaction. The court rejected this claim as it was not raised before the Single Judge. The court held that the Single Judge's conclusion based on the TDS certificate was in line with the evidence and law. The court dismissed the appeal and pending applications, affirming the Single Judge's decision on the limitation issue.
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• ITAT Ahmedabad allowed the exemption u/s 11, stating activities like fee collection for statutory purposes are not commercial in nature.

  The ITAT Ahmedabad considered the eligibility of exemption u/s 11 for an assessee engaged in activities like development planning, town planning schemes, and fee collection. The AO argued the assessee's profit motive disqualifies it from claiming benefits u/s 11 & 12. However, the tribunal referenced the Supreme Court's decision in AUDA case, emphasizing that fees collected for statutory activities are not considered trade or business. Activities like housing development by statutory bodies are not commercial in nature. The nature of the service provided is crucial; essential public services like water or sewage cess are not deemed commercial. Non-statutory bodies engaging in trade promotion or business facilitation may not qualify for charitable status. The tribunal allowed the assessee's appeal based on these principles.
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• Rajasthan High Court held that limitation for passing order u/s 263 starts from original assessment date, not reassessment date. Revision proceedings set aside.

  The Rajasthan High Court examined the validity of revision proceedings u/s 263 concerning the period of limitation. The issue was whether the period of limitation for passing the order u/s 263 should be reckoned from the date of the original assessment order or the date of the reassessment order. The Court referred to the Supreme Court's judgment in the case of Industrial Development Bank of India Ltd. and followed the decision in the case of Chambal Fertilisers and Chemicals Limited. It was held that once the reassessment of the escaped assessment occurred, the revision would have the same limited ambit for the purpose of limitation prescribed in Section 263(2) of the Income Tax Act of 1961, which is two years. The Court noted that the petitioner could have challenged the original assessment order but lost due to the law of limitation. Citing the Supreme Court's ruling, the Court found the revision proceedings to be illegal on the face of it due to limitation issues, set them aside.
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• Allahabad High Court upheld validity of reassessment based on 'reason to believe' from information received, allowing assessment proceedings to continue as per law.

  The case before the Allahabad High Court involved the validity of reassessment proceedings initiated by the assessing authority based on information that the purchaser did not exist. The court held that the decision to initiate reassessment was based on relevant information and the suggestion of income escapement. The non-existence of the purchaser was supported by the purchaser's lack of response to notices and statements from a third party. The court noted that the existence of the purchaser company on the MCA portal was not a mandatory condition for reassessment. The court emphasized that the assessing officer's decision to initiate reassessment was based on the information received and the suggestion of income escapement, rather than a strict "reason to believe" requirement. The court dismissed the writ petition, allowing the assessment proceedings to continue in accordance with the law.
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• ITAT Rajkot held that Notification No. SRO 1800 is superseded by Section 80P of the Act for cooperative societies' tax deductions. Assessee's claim dismissed.

  The case involves a dispute regarding the deduction claim u/s 80P of the Income Tax Act by a cooperative society based on Notification No. SRO 1800 issued under the repealed Act. The Appellate Tribunal held that the introduction of Section 80P specifically for cooperative societies supersedes the previous notification. The Tribunal emphasized that deduction/exemption provisions are similar and that the notification stands withdrawn as per Section 297 of the Act. The Tribunal referred to relevant case law and concluded that the cooperative society is not eligible for the claimed benefit under Section 80P as it does not meet the necessary criteria. The appeal by the assessee was dismissed based on these findings.
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• ITAT Indore held that the reassessment based on invalid reasons is not valid. AO cannot assess independent incomes not part of original reasons u/s 147. Assessee succeeds in appeal.

  The ITAT Indore ruled on the validity of reopening assessment u/s 147 based on information from DDIT (Inv.)-Unit 2(2), Kolkata alleging sham transactions with a shell company. Assessee consistently denied such transactions. Tribunal found no evidence of transactions with the alleged shell company, rendering the reassessment invalid. The AO cannot make new additions unrelated to original reasons u/s 147. The 3rd Proviso restricts AO to reassess only matters not subject to appeal, reference, or revision. Relying on Jet Airways case, the reassessment order was quashed, and the assessee succeeded in the appeal.
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• ITAT Chennai ruled on deduction u/s 80IA for power supply to industrial units. Market value determined by State Electricity Board rate. Assessee's claim upheld.

  The ITAT Chennai ruled on deduction u/s 80IA, focusing on determining the market value of power supplied by the assessee to its industrial units. The AO argued for using rates fixed by Tariff Regulatory Commission, while the assessee supported using the average price of power purchased. The Supreme Court clarified that "market value" refers to the price in a free trade environment. It held that the market value should be based on the rate at which the State Electricity Board supplied power to consumers, not the rate sold to a supplier. The ITAT noted that the AO allowed the deduction for the initial year and subsequent years. The assessee used a price of ₹5.60 per unit based on charges paid to Tamilnadu Electricity Board. Ultimately, the ITAT held that the State Electricity Board's rate should be considered the market value for claiming deduction u/s 80IA, dismissing the Revenue's grounds.
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• Delhi High Court directs reconsideration of stay of demand order, highlighting AO's failure to assess prima facie merits and undue hardship.

  The Delhi High Court addressed a case involving a stay of demand where the petitioner was required to deposit 20% of the outstanding demand as a pre-condition for protection. The court found that the assessing officer (AO) did not consider the prima facie merits of the challenge raised by the petitioner or address the issue of undue hardship. Referring to a previous case, the court emphasized the importance of examining the AO's power under Section 220(6) of the Act and criticized the AO's stance that the application for stay could not be entertained without the pre-deposit. The court concluded that the petition should be remitted to the AO for a fresh consideration of the stay application.
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• Review petition filed seeking reconsideration of order dismissing appeal. Court held no grounds for review as no error apparent on record.

  The case involves a review petition filed in the Madhya Pradesh High Court seeking to recall an order that dismissed an appeal due to the absence of substantial questions of law. The court held that a review application is maintainable for reasons such as the discovery of new evidence, a mistake or error apparent on the face of the record, or any other sufficient reason. The review power is distinct from appellate power and cannot be used to rehash old arguments. The court cited legal precedents to emphasize that a decision can only be reviewed if it contains an error evident on the face of the record, not merely because it is erroneous. Ultimately, the court found no error apparent on the face of the record to justify interfering with the impugned order.
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• ITAT Bangalore examined if microfinancing by assessee qualifies as charitable activity u/s 11. Charging high interest deemed commercial, not charitable. Decision favors revenue.

  The ITAT Bangalore considered whether an organization engaged in microfinancing activities qualified for exemption u/s 11 as a charitable entity or if its activities were commercial in nature. The tribunal emphasized that if an organization's primary activity is trade or business, it must not have a dominant profit motive and should not use charity as a cover for commercial activities. The tribunal noted that charging exorbitant interest rates akin to commercial banks indicated a profit-driven motive, making it ineligible for exemption. The organization's activities did not align with benefiting low-income groups as required for charitable status. The tribunal ruled in favor of the revenue authority, denying the organization's claim for exemption u/s 11.
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Customs

• Queries on drawback applicability addressed by Chennai Customs, emphasizing reduced physical interface. Exporters to upload self-declaration for clarity.

  The public notice issued by the Commissioner of Customs, Chennai addresses queries on drawback applicability and aims to reduce physical interface. It highlights that drawback rates do not apply to exports from Export Oriented Units or units in Free Trade Zones/SEZs. To streamline the process, exporters must upload a self-declaration certifying goods were not from these units. This eliminates the need for manual queries and physical visits. The notice responds to concerns raised by the Chennai Custom Brokers' Association and emphasizes the importance of compliance with trade policies.
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• Extension granted for 3 months to Ortho-phosphoric Acid from BIS standard IS 798:2020. Amendment exempts acid used in fertilizer production.

  The Ministry of Chemicals and Fertilizers issued an amendment to the Ortho Phosphoric Acid (Quality Control) Order, 2021, granting a 3-month extension from the applicability of BIS standard IS 798:2020 for Ortho-phosphoric Acid used in fertilizer manufacturing. This extension was implemented through a notification dated 13.04.2024. The amendment exempts Ortho Phosphoric Acid when used in fertilizer production from the BIS standard for 90 days. The Order, effective upon publication, aims to ensure public interest and quality control compliance. Authorities are instructed to sensitize officers and address any arising difficulties. The amendment was made u/s 16 of the Bureau of Indian Standards Act, 2016.
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• CESTAT Bangalore held no mis-declaration in import value. Confiscation and penalty under section 112(a)(ii) set aside for 100% EOU engaged in software services.

  In the case before CESTAT Bangalore, the issue revolved around mis-declaration of import value, duty demand, confiscation of goods, and penalty imposition. The appellant, a 100% EOU providing software development services, imported a semi-conductor fabrication system. The appellant declared the value based on the supplier's proforma invoice, which was later found to be undervalued due to the goods being used. The Chartered Engineer enhanced the value, impacting the export obligation. The tribunal held that there was no intentional mis-declaration or suppression by the appellant, as the declared value was based on the proforma invoice. Consequently, the confiscation order and penalty imposed under section 112(a)(ii) were set aside.
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• CESTAT Kolkata held that no evidence showed Customs Broker's involvement in fraudulent activities. Penalty and forfeiture set aside as no case was made against the broker.

  The CESTAT Kolkata, an Appellate Tribunal, considered a case involving a Customs Broker accused of illegal activities leading to the forfeiture of their security deposit and imposition of a penalty for violating Regulation 19(8) of CHLR, 2004. The Tribunal found that the main noticee was a different entity, not the present Appellant. The allegations of fraudulent activities were not substantiated against the Customs Broker, and no evidence showed their involvement in the specific case. The Tribunal noted that mere possession of an H-Card by another individual associated with the Broker did not implicate the Broker in any wrongdoing. The Enquiry Officer's report also cleared the Customs Broker of any misconduct. Consequently, the Tribunal set aside the penalty and forfeiture, ruling in favor of the Customs Broker and disposing of the appeal.
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• CESTAT Allahabad upheld refund of SAD on goods sold with VAT. Compliance with Notification No.102/2007 and circular No.16/2008-Cus. No unjust enrichment found.

  CESTAT ALLAHABAD held that refund of Special Additional Duty (SAD) on goods sold with VAT charged is permissible u/s Notification No.102 of 2007 Cus. The tribunal found that refund claims met notification and circular requirements, including certification by a chartered accountant to avoid unjust enrichment. Adjudicating authority followed board guidelines in sanctioning refunds. Previous tribunal decisions favored respondents, dismissing revenue appeals. Distinction made from a Supreme Court case not applicable to SAD refund cases.
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• HC quashes proceedings u/s 36(1) Legal Metrology Act, 2009 due to lack of authority. Duty-free shops at an international airport, deemed outside India's territory.

  The Calcutta High Court considered a Revision Application regarding the seizure of goods from duty-free shops at an international airport, deemed outside India's territory. Citing the Supreme Court's precedent, the court quashed the proceedings as the complainant lacked authority to initiate them for offenses outside India's customs frontiers. The court allowed the revision, quashing the proceedings under u/s 36(1) of the Legal Metrology Act, 2009 u/r 32(3) of the Legal Metrology (Packaged Commodities) Rules, 2011.
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DGFT

• Discontinuation of Safeguard measures on Isopropyl alcohol import under Chapter 29 of ITC (HS) 2022, effective from 01.04.2024. - DGFT

  The Government of India, Ministry of Commerce & Industry, Department of Commerce, Directorate General of Foreign Trade, has discontinued safeguard measures on the import of Isopropyl alcohol (IPA) under Chapter 29 of ITC (HS) 2022, Schedule-I (Import Policy). This decision was made through DGFT Notification No. 64/2015-20 dated 31.03.2023 and Public Notice No. 04/2015-20 dated 11.04.2023, imposing country-wise Quantitative Restrictions (QR) on IPA imports for the period 2023-24. The restrictions automatically ceased on 31.03.2024 as per the notification. Import of IPA under HS code 29051220 is now "Free" without any Policy Condition effective from 01.04.2024.
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• Clarification on fulfilling export obligation of Advance Authorisation under Customs Notifications, allowing options for physical exports or domestic supplies.

  The Policy Circular No. 01/2024 issued by the Directorate General of Foreign Trade provides clarification on the discharge of export obligations of Advance Authorisation (AA) under specific Customs Notifications. Advance Authorisation holders have the option to fulfill export obligations through physical exports or domestic supplies as per FTP 2015-2020 guidelines. The circular harmonizes Para 4.14 of FTP 2015-2020 with Customs Notification No. 01/2019-Customs, allowing AA holders issued after 10.01.2019 to choose various options for fulfilling export obligations, including supplies to specific entities and capital goods supply against EPCG authorization. Holders of Advance Authorisation for deemed exports under Customs Notification No. 21/2015-Customs can also fulfill obligations through specified supplies or physical exports. The circular is approved by the DGFT and provides clarity on compliance options for AA holders.
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• Amendments made to Appendix-2Y of FTP, 2023, adding Ministry of Mines to the list of exempted QCOs for import of inputs by Advance Authorisation holders, EOU, and SEZ.

  The Directorate General of Foreign Trade, u/s 1.03 and 2.04 of the Foreign Trade Policy (FTP), 2023, has amended Appendix-2Y to exempt certain Ministries/Departments' notifications on mandatory Quality Control Orders (QCOs) for import of inputs by Advance Authorisation holders, EOU, and SEZ. The updated list includes Ministry of Steel, DPIIT, Ministry of Textiles, and now Ministry of Mines. This amendment, effective immediately u/r Notification No. 71/2023, facilitates import of goods for manufacturing export products. Signed by the Director General of Foreign Trade.
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• SION - Correction made to import quantity of Filter Aid in Public Notice No. 01/2024 dated 9th April, 2024 from 3600 Kg to 3.600 Kg by DGFT u/s 1.03 of FTP, 2023.

  The corrigendum issued by the Directorate General of Foreign Trade corrects the import quantity of Filter Aid in relation to SION E-124 for the export item Refined Sunflower Oil (Edible Grade). The correction was made u/s 1.03 of the Foreign Trade Policy, 2023. The import quantity of Filter Aid at S. No. 6 in Public Notice No. 01/2024 dated 9th April, 2024 was amended from 3600 Kg to 3.600 Kg. This correction is in accordance with the powers conferred u/s 1.03 of the Foreign Trade Policy, 2023.
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FEMA

• RBI sets investment limits for FPIs in debt and Credit Default Swaps for 2024-25. Revised limits for different categories specified. - FEMA

  The Reserve Bank of India has issued a circular (RBI/2024-25/27) regarding investment limits for Foreign Portfolio Investors (FPIs) in debt instruments and Credit Default Swaps. The circular references various previous directives and sets the investment limits for the financial year 2024-25. The limits for FPI investment in government securities, state government securities, and corporate bonds remain unchanged. The circular also specifies the allocation of incremental changes in limits and sets out revised investment limits for different categories for the year 2024-25. Additionally, the circular sets an aggregate limit for the notional amount of Credit Default Swaps sold by FPIs. Authorized Dealer Category-I banks are instructed to inform their constituents about the circular. The circular is issued u/s 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.
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• Case involves unauthorized foreign exchange transactions u/s 3 of FEMA. Authorities took action against the same.

  The case involves unauthorised foreign exchange transactions conducted in violation of regulations. The individual engaged in these transactions without proper authorization, contravening u/s of the relevant law. The regulatory authorities initiated proceedings u/s to address the unauthorized activities. The individual's actions were found to be in breach of u/r, leading to potential legal consequences. The case underscores the importance of compliance with foreign exchange regulations to avoid legal repercussions.
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• RBI allows resident entities to hedge gold price risk using OTC derivatives in IFSC, in addition to exchanges, as per updated guidelines.

  The Reserve Bank of India (RBI) issued Circular No. 01/2024-25 allowing resident entities to hedge gold price risk in overseas markets using OTC derivatives in addition to exchanges in the International Financial Services Centre (IFSC). This decision aligns with the Master Direction on Foreign Exchange Management. The circular, effective immediately, was issued u/s 10(4) and 11(1) of the Foreign Exchange Management Act, 1999, and does not affect compliance with other laws.
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Corporate Law

• The High court uphold the decision that the Regional Director (NR) of ROC acted within the bounds of a quasi-judicial function and that the disciplinary proceedings were unjustified

  The Delhi High Court upheld the order quashing of the disciplinary proceedings against the Regional Director (NR) of ROC, emphasizing the distinction between executive and quasi-judicial functions under the Act. The court held that an authority's act can be quasi-judicial even without two competing parties, considering factors like nature of rights affected. Referring to relevant case law, the court highlighted the need for objective criteria and consideration of objections for a function to be quasi-judicial. The court noted the elaborate procedure under Rule 30 for shifting applications, requiring examination of objections and reports from RoCs. Despite allegations of misconduct, the court found no fault in the respondent's approval of shifting applications, given reliance on information provided and lack of alerts about pending inspections. The court dismissed the petition, emphasizing the respondent's heavy workload and lack of evidence against other officers involved.
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State GST

• Circular clarifies treatment of statutory dues under GST law for taxpayers under IBC. Reduction in dues to be intimated for recovery proceedings.

  The circular issued by the Government of Tamil Nadu, Commercial Taxes Department, addresses the treatment of statutory dues under GST law for taxpayers whose proceedings have concluded under the Insolvency and Bankruptcy Code, 2016 (IBC). It clarifies that no coercive action can be taken against corporate debtors for dues prior to the commencement of the Corporate Insolvency Resolution Process (CIRP). The circular emphasizes the treatment of such dues as 'operational debt' and outlines the process for filing claims before the National Company Law Tribunal (NCLT) in accordance with the IBC. The Commissioner, u/s 168 of the Tamil Nadu Goods and Services Tax Act, provides clarity on the continuation and validation of recovery proceedings u/s 84 of the Act. It explains that if government dues are reduced through appeals or other proceedings, the Commissioner must inform the taxpayer and appropriate authority, allowing recovery proceedings to continue for the reduced amount.
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Indian Laws

• High Court held that allegations in FIR disclose cognizable offence of misappropriation of money collected for GST and TDS. Petition to quash FIR dismissed.

  The Karnataka High Court examined a case involving misappropriation of money collected from punters for GST and TDS payments. The court held that the allegations in the FIR disclosed a cognizable offense, rejecting the petitioners' argument that the police procedure was contrary to legal principles. The court emphasized that Section 482 of the Criminal Procedure Code should not be used to thwart a legitimate prosecution. The court found that the allegations and evidence collected during the investigation established a prima facie case of a cognizable offense, including serious allegations of misappropriation of funds. Consequently, the petition to quash the FIR was dismissed, allowing the investigation to proceed.
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IBC

• Partial modification to IBBI circular on liquidators' fee under IBBI (Liquidation Process) Regulations, 2016. Certain paragraphs withdrawn, compliance deadline extended.

  The circular no. IBBI/LIQ/61/2023 dated 28th September 2023 regarding liquidators' fee under Regulation 4 of IBBI (Liquidation Process) Regulations, 2016 has been partially modified. The Hon'ble Bombay High Court, in a case involving the Insolvency and Bankruptcy Board of India, invalidated Paragraphs 2.1 and 2.5 of the circular. Consequently, these paragraphs are withdrawn. Insolvency Professionals who have not complied with the circular are required to do so by 31st May 2024. This modification is made u/s 196 of the Insolvency and Bankruptcy Code, 2016.
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• Admissibility of second petition u/s 7 of Insolvency and Bankruptcy Code - default on loan instalments - CD's deceptive actions - Appeal dismissed.

  The National Company Law Appellate Tribunal, Principal Bench, New Delhi, addressed the admissibility of a second petition u/s 7 of the Insolvency and Bankruptcy Code, 2016, concerning unpaid instalments and the existence of debt and default. The Corporate Debtor availed a loan from the Financial Creditor but failed to make payments, leading to the first petition being admitted. A settlement was reached, but the Corporate Debtor failed to honor it, resulting in the Financial Creditor filing a second petition for the remaining debt. The Adjudicating Authority rightly admitted the second petition, emphasizing that allowing such tactics by the Corporate Debtor would be detrimental. The Tribunal held that the amount paid during the appeal should be adjusted only if supported by a written agreement; otherwise, the Financial Creditor could adjust it towards interest. The appeal was dismissed, and the deposited amount was ordered to be returned to the Appellant.
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• NCLAT upholds NCLT order u/s 66 of IBC, 2016 for fraudulent transactions reducing liability towards Corporate Debtor. Appeal dismissed.

  The National Company Law Appellate Tribunal in New Delhi addressed the maintainability of proceedings u/s 66 of the Insolvency and Bankruptcy Code, 2016. The Resolution Professional failed to provide a clear opinion as required by Regulation 35A, leading to the filing of the application u/s 66. The Tribunal held that action can be taken against any person involved in fraudulent transactions to recover amounts for the Corporate Debtor. In this case, the appellant was closely linked to the Corporate Debtor, reducing the outstanding amount and causing losses to creditors. Previous cases support the Tribunal's decision to uphold orders u/s 66. The Tribunal found no reason to interfere with the Adjudicating Authority's order, and the appeal was dismissed. The authority to recover from fraudulent transactions was affirmed by the Supreme Court in Phoenix Arc (P) Ltd. vs. Spade Financial Services Ltd.
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• Bombay High Court emphasizes timely compliance with NCLT Rules for CIRP applications u/s 94 and 95 of IBC. Extreme delays in processing and non-compliance addressed.

  The Bombay High Court addressed non-compliance with Rule 28 of the NCLT Rules, 2016 regarding timely registration and disposal of applications u/s 94 and 95 of the Insolvency and Bankruptcy Code, 2016. It noted extreme delays in compliance with objections and in declining matters for non-compliance, leading to unreasonable continuance of interim moratorium against personal guarantors. Applications were declined after significant delays, indicating prolonged moratorium periods. The court emphasized the importance of timely compliance with rules and dismissed the petition, highlighting the need to follow due process for refiled applications.
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• CIRP Application dismissed as Corporate Debtor's name struck off by RoC. Code aims at revival, not debt recovery. CIRP for CD's protection and revival, not adversarial. No error found, appeal dismissed.

  The NCLAT upheld the order of NCLAT dismissing an application for resolution as the Corporate Debtor's name was struck off by the RoC. The application under Section 9 was questioned whether it was for winding up or CIRP initiation. The Tribunal clarified that winding up involves company dissolution and asset liquidation for creditor payment, while CIRP aims at company revival. The Code is not a debt recovery mechanism but a revival tool. CIRP safeguards the Corporate Debtor's interests and aims at maximizing asset value. Section 252(3) provides appeal rights for challenging RoC orders. The Appellate Tribunal found no errors in the Adjudicating Authority's order and dismissed the appeal.
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SEBI

• Flexibility granted to Alternative Investment Funds (AIFs) and investors for handling unliquidated investments, detailed under specific categories.

  The circular issued by SEBI, provides flexibility to Alternative Investment Funds (AIFs) and their investors in dealing with unliquidated investments. It outlines the format for reporting such investments u/s specified rules. This information falls under the categories of "Legal framework - Circulars" and "Info for - Alternative Investment Funds."
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• SEBI amends contract note requirements for 'fit and proper' status, easing business procedures. Stock Exchanges to update rules accordingly.

  The circular issued by SEBI on April 24, 2024, addresses the ease of doing business by amending the requirement of publishing 'fit and proper' status on contract notes. The relaxation, u/s 11(1) of the SEBI Act, eliminates the need to include the text of Regulation 19 of the SCR(SECC) Regulations, 2018 on contract notes. Instead, a reference to the applicable regulation must be made by mentioning the URL/weblink. Stock Exchanges must amend bye-laws, rules, and regulations accordingly and inform members about the changes. This action aims to streamline processes and protect investors' interests in the securities market.
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• SEBI allows cross margin benefits for offsetting positions with different expiry dates, subject to specified conditions for stock exchanges and clearing corporations.

  The SEBI circular dated April 23, 2024, extends cross margin benefits for offsetting positions with different expiry dates. Spread margins of 40% for correlated indices and 35% for index and constituents are introduced. The benefit is revoked on the expiry day of the first position to expire. Exchanges must monitor cross margin activities. Effective in three months, the circular is issued u/s 11(1) of the SEBI Act to safeguard investor interests and regulate the securities market.
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• SEBI issues circular mandating AIFs to submit standardized PPM audit reports online for annual compliance, with optional sections. Review and revisions planned.

  The circular mandates Alternative Investment Funds (AIFs) to conduct an annual audit of compliance with the Private Placement Memorandum (PPM) as per SEBI (AIF) Regulations, 2012. A standardized reporting format for PPM Audit Report has been introduced for various AIF categories in consultation with the Standard Setting Forum for AIFs (SFA). AIFs must submit the PPM audit reports to SEBI online through the SEBI Intermediary Portal (SI Portal) within 6 months from the end of the Financial Year. Optional audit sections include 'Risk Factors', 'Legal, Regulatory and Tax Considerations', 'Track Record of First Time Managers', 'Illustration of Fees and Expenses', and 'Glossary and Terms'. The reporting requirements are effective for the Financial Year ending March 31, 2024 onwards. The circular is issued u/s 11(1) of the Securities and Exchange Board of India Act, 1992 to safeguard investor interests and regulate the securities market. The reporting format will be periodically reviewed and
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Service Tax

• CESTAT Mumbai held appellant liable for service tax on retained amount from unclaimed goods sale proceeds. Upheld Commissioner's order following precedent.

  The case involves a dispute over service tax liability on the amount retained by the appellant from the sale proceeds of unclaimed imported goods. The appellant, an operator of a container freight station and custodian of goods, paid service tax under protest for the period February 2004 to 17.07.2008. The appellant argued that no service was provided for the auction surplus of abandoned cargo. The tribunal considered the precedent decision in the appellant's own case, which favored the appellant on the same issue for an earlier period. However, changes in the law post-2011 and the distinction between charges for storage and warehousing services and auction proceeds of abandoned goods were noted. The appellant's reliance on a previous tribunal decision regarding CENVAT credit on services used for auction of abandoned goods was also discussed. The tribunal found that the appellant was liable to pay service tax on storage and warehousing services for the disputed period.
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Central Excise

• CESTAT allows refund claim on duty paid for outward freight charges in FOR basis sales. Decision based on legal precedents. Majority Decision.

  The CESTAT Chandigarh, in a majority decision, in an appellate tribunal decision, allowed the appeal regarding the rejection of a refund claim for duty paid on outward freight charges. The appellant, clearing goods from their factory gate and selling on a FOR basis, was found entitled to claim a refund of central excise duty paid on freight. The tribunal, following precedents including a Larger Bench ruling and a High Court decision, held that denial of the refund was not legally sustainable. The impugned orders were set aside, allowing all appeals with consequential relief as per law.
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VAT

• Andhra Pradesh High Court allowed appeal without depositing 12.5% u/s 31 of AP VAT Act, following precedent to consider appeal without payment.

  The case involves the Admission of appeal for compliance with the deposit requirement of 12.5% u/s 31 of the AP VAT Act. The rejection of endorsement was based on Form-H filing timing post CST assessment. The court held that u/s 31(1) IIIrd proviso, appeal admission requires proof of payment of due amounts and 12.5% difference. As no tax, penalty, or interest was due, the 12.5% deposit was not necessary. Citing M/s. Sri Hari Maharalayam Company case, the court directed appeal consideration without the 12.5% payment. The impugned order was set aside, directing the respondent to admit the appeal without III proviso compliance. The writ petition was allowed.
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Articles

• Harnessing Artificial Intelligence for Analytics in Small and Medium-Sized Firms
• No denial of ITC merely because the supplier failed to file returns and pay taxes
• Benefits of Udyam Registration Online

Notifications

• Customs

• 37/2024 - dated 21-5-2024 - Cus (NT)
  Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

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• GST - States

• 08/GST-2 - dated 21-5-2024 - Haryana SGST
  Amendment of Notification No. 03/GST-2, dated 24.01.2024 (To extend the timeline for implementation of the notification from 01.04.2024 to 15.05.2024) under the HGST Act, 2017

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News

• IICA and MCA hold inter-ministerial workshop on ‘Responsible Business Conduct in India’ in partnership with the United Nations Development Programme (UNDP) in New Delhi

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Case Laws:

• GST

• 2024 (5) TMI 1043
  Search and seizure - Gold Flake Super Star cigarettes - illicit trade/supply - jurisdiction of CGST Delhi North Commissionerate - reasonsto believe - Whether or not, requisite statutory ingredients were present to enable the concerned respondents to exercise the power vested upon them under Section 67(2) of the CGST Act? - it was held by High Court that 'the search and seizure conducted by CGST Delhi North Commissionerate are declared unlawful' - HELD THAT:- It is not required to interfere with the impugned judgment and order passed by the High Court. However, question of law is kept open. The observations made in the writ petition will not have a bearing on the adjudication proceedings. The Special Leave Petition is dismissed.

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• 2024 (5) TMI 1042
  Suspension of GST registration of the petitioner - it is submitted that new address had already been uploaded on the GST portal, which was not noticed by the Anti Evasion Cell - HELD THAT:-The petitioner is directed to appear before the Anti Evasion Cell on 28.05.2024 at 12 Noon and shall also appear before the Proper Officer on 29.05.2024 at 12 Noon. Thereafter, the said authorities shall pass appropriate orders on the request of the petitioner for recalling the suspension within a maximum period of two weeks.

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• 2024 (5) TMI 1041
  Time limitation of appeal - Whether the appeal filed by the Petitioner under Section 107 of the UPGST Act was within the statutory time limit? - HELD THAT:- Limitation provisions in the UPGST Act set clear timelines for various actions, such as filing returns, making payments, or initiating appeal. By imposing time limits on actions, limitation provisions discourage delay and procrastination. Taxpayers are incentivized to fulfil their obligations promptly, which contributes to the smooth functioning of the tax administration system. Limitation provisions ensure equal treatment of taxpayers by establishing uniform deadlines for compliance. This prevents unfair advantages for non-compliant taxpayers and promotes a level playing field in the taxation process. It is evident that that the petitioner received the order in original on July 12, 2022 and filed the appeal on November 10, 2022. In light of the same, three months period would have begun on July 13, 2022 and expired on October 12, 2022 and the extended period would have expired on November 12, 2022. In light of the same, it appears that the calculation done by the authorities below is incorrect which warrants the exercise of writ jurisdiction. The presence of errors apparent on record provides a valid ground for the exercise of writ jurisdiction by the courts. When administrative authorities commit mistakes that are evident from the records of the case, aggrieved parties have the right to seek judicial intervention to rectify such errors and ensure justice. This Court directs the first appellate authority to allow the delay in filing the appeal and thereafter hear the appeal on merits and decide the same expeditiously, preferably within a period of two months from the date of production of a certified copy of this order before it. Application disposed off.

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• 2024 (5) TMI 1040
  Appeal dismissed solely on the ground that the same is barred by limitation - Cancellation of GST registration of the Petitioner with retrospective effect - no reasons for cancellation given - violation of principles of natural justice - HELD THAT:- The impugned order dated 27.06.2019 passed on the Show Cause Notice dated 02.03.2019 does not give any reasons for cancellation. It merely states that the registration is liable to be cancelled for the following reason Whereas no reply to notice to show cause has been submitted . However, the said order in itself is contradictory - There is no material on record to show as to why the registration is sought to be cancelled retrospectively. The Show Cause Notice and the impugned order are bereft of any details. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. Accordingly, the same cannot be sustained. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so - Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. In view of the fact that the Petitioner does not wish to carry on business or continue with the registration, impugned order dated 27.06.2019 is modified to the limited extent that registration shall now be treated as cancelled with effect from 27.06.2019 i.e., the date when the order cancelling the GST registration of the Petitioner was issued. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. Petition disposed off.

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• 2024 (5) TMI 1039
  Violation of principles of natural justice - non-application of mind - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - order u/s 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The impugned order after recording the narration records that the reply uploaded by the taxpayer is devoid of merits without any justification or proper reconciliation. The reply filed by the petitioner gave full particulars with regard to the tax paid on outward supplies under declared on reconciliation of data in GSTR-09 through DRC-03 as pointed out by the department by the impugned order. The demand towards the taxes on the output supplies which were alleged to be under declared have been dropped. With regard to the other issues, the observation in the impugned order dated 24.04.2024 is not sustainable for the reasons that the reply dated 20.02.2024 filed by the Petitioner is a detailed reply with supporting documents. The impugned order dated 24.04.2024 cannot be sustained and is set aside in respect of the issues that have been held against the Petitioner - Petition disposed off.

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• 2024 (5) TMI 1038
  Violation of principles of natural justice - Non-speaking order by the adjudicating authority - replies have been ignored - application of rate of tax on the commodities dealt with by the petitioner - HELD THAT:- The impugned order is wholly non-speaking both with respect to rejection of the explanation furnished by the petitioner and also with respect to application of rate of tax on the commodities dealt with by the petitioner. No discussion exists in the impugned order to consider any of the materials relied upon by the petitioner. Such approach adopted by the adjudicating authority is unacceptable. Once explanation was furnished to the show cause notice, irrespective of its worthiness in the eyes of the adjudicating authority, it remained obligated in law to deal with the same by affording adequate reasons. Merely describing a claim as unacceptable or false or rejected would not fulfill the requirements of a proper adjudication proceeding. The reason to reach such conclusion is the essence of fairness of an adjudication proceeding. Unless such reasons are given in black and white, the adjudication order may remain laconic. Second, assuming for the sake of submission that the adjudicating authority had chosen to reject the explanation submitted by the petitioner and such rejection may have been valid, another fatal error has been committed in the adjudication proceedings, insofar as no reason had been assigned by the adjudicating authority in taxing the turn over on best judgement basis - the adjudicating authority has not assigned any reason to submit such turnover at the highest rate of tax i.e. @ 28%. In doing that he has acted unmindful of the fact that it was the further claim of the petitioner arising from the same books of accounts and that part of turnover was exempt. In the present case, the petitioner was not at fault for the delay in the proceedings. The notice was issued late. The petitioner responded in writing and submitted his application. That has been rejected without assigning any reasons. The adjudication order is clearly laconic - even if the petitioner was relegated to the forum of the appeal, irrespective of the fate in that appeal, the petitioner may never have any opportunity before the adjudicating authority. Therefore, that layer of the proceeding would remain practically ex parte against the petitioner to the extent his replies would remain from being considered by the adjudicating authority. The matter is remitted to the adjudicating authority to pass a fresh reasoned order as expeditiously as possible preferably within a period of three months after hearing the petitioner - The writ petition is allowed by way of remand.

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• 2024 (5) TMI 1037
  Violation of principles of natural justice - ex-parte demand created u/s 73 of CGST Act, 2017 - Lack of response to Show Cause Notice - excess claim of ITC and scrutiny of ITC availed - HELD THAT:- The only reason for passing the impugned order is that petitioner had not filed any reply to the Show Cause Notice. In view of the stand of the Respondents that there is no Annexure-B, we are of the view that one opportunity needs to be granted to the Petitioner to respond to the Show Cause Notice. The impugned order dated 12.12.2023 is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.

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• 2024 (5) TMI 1036
  Levy of penalty u/s 129 of GST Act - wrong mention of number of Vehicle, through which the goods were in transit, in the E-ay bill - HELD THAT:- It is not in dispute that goods were being transported by the dealer through stock transfer from its unit at Agra to M/s Rawat sales in Mathura. From perusal of the e-way bill which has been brought on record, it is clear that the vehicle number has been mentioned as UP 80 CT 7024. As there is no dispute to the fact that it is a case of sale of goods and there is no intention on the part of dealer to evade any tax, the minor discrepancy as to the registration of vehicle in State in the e-way bill would not attract proceedings for penalty under Section 129 and the order passed by the detaining authority as well as first appellate authority cannot be sustained. Moreover, the Department has not placed before the Court any other material so as to bring on record that there was any intention on the part of the dealer to evade tax except the wrong mention of part of registration number of the vehicle in the e-way bill. The orders are unsustainable in the eyes of law and both the orders are hereby set aside - Petition allowed.

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• 2024 (5) TMI 1035
  Provisional attachment under Section 83 of the MGST Act - Mandate of forming an opinion before passing the order of attachment - Petitioner has failed to discharge the liability without any justification - HELD THAT:- The Hon ble Supreme Court in M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. [ 2021 (4) TMI 837 - SUPREME COURT] has opined that the power to order a provisional attachment [under Section 83] of the property of the taxable person, including a bank account, is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly followed. The Hon ble Supreme Court has further opined that the exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that it is necessary so to do for the purpose of protecting the interest of the Government revenue. The expression necessary so to do for protecting the government revenue implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment. Once this is the law laid down by the Hon ble Supreme Court, and which we find applies with full force to the facts of the present case, we have no hesitation in quashing the impugned attachments and the order passed under Section 83. The petition is allowed.

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• 2024 (5) TMI 1034
  Challenge to tax demand - lack of reasonable opportunity for contesting the order - Violation of principles of natural justice - HELD THAT:- The petitioner has placed on record the bank statement. Such statement discloses that a sum of Rs. 3,09,574/- was appropriated from the petitioner's bank account. This amount appears to correspond to the entire demand towards tax, interest and penalty. Consequently, at this juncture, revenue interest is fully secured. Since the petitioner asserts that he is in a position to explain the discrepancy between his GSTR 3B returns and the auto populated GSTR 2B, it is just and appropriate that an opportunity be provided to the petitioner. The impugned order dated 01.09.2023 is set aside and the matter is remanded for reconsideration - petition disposed off by way of remand.

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• 2024 (5) TMI 1033
  Validity of demand notice and assessment order - failure to file appeal within statutory period - availability of alternative remedy - HELD THAT:- The petitioner had a statutory remedy by way of an appeal under Section 107 (4) of the Bihar Goods and Services Tax Act. The aforesaid provision requires an appeal to be filed within a period of three months and upon delay, to be filed within a further period of one month; which could also be considered if there is satisfactory explanation for the delay occasioned. The petitioner has not availed the remedy and at this point of time, cannot seek to avail the appellate remedy for reason of the limitation period having expired long prior. The Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER] , due to the pandemic situation, limitation was saved between 15.03.2020 till 28.02.2022. It was also directed that an appeal could be filed within ninety days from 01.03.2022. Hence, an appeal could have been filed on or before 30.05.2022, which provision was not availed by the petitioner herein. The Hon ble Supreme Court also declared that if a longer period than 90 days is provided in a Statute, then that longer period will apply. Hence, a delayed appeal could also have been filed on or before 30.06.2022. The present writ petition is filed on the demand notice being issued, which is not permissible when there was an alternate efficacious remedy, which was not availed by the petitioner for reason of his own default. There are specific contours for invocation of the extra ordinary remedy under Article 226 of the Constitution of India, as has been delineated in the STATE OF HP. AND OTHERS VERSUS GUJARAT AMBUJA CEMENT LTD. AND ANOTHER (AND OTHER APPEALS) [ 2005 (7) TMI 353 - SUPREME COURT] . No ground exists and in any event the attempt of the petitioner to bypass the appellate remedy, which he chose to not avail of, cannot be countenance - petition dismissed.

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• 2024 (5) TMI 1032
  Validity of summons issued u/s 70 of the Central Goods and Services Tax Act, 2017 - abuse and threat in course of a search of the premises - HELD THAT:- It is only in exceptional circumstances that interference with a summons would be justified an exercise of discretionary jurisdiction. In the case at hand, the petitioner urges such interference largely on the ground that a police complaint was lodged earlier against the fifth respondent. On instructions, learned standing counsel for respondents 1 to 4 submits that the relevant file was transferred from the fifth respondent and, therefore, the petitioner would be submitting a reply to and appearing before a different officer. In these circumstances, the apprehension of the petitioner is misplaced. Petition disposed off.

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• 2024 (5) TMI 1031
  Challenge to SCN/assessment orders issued by the respondent - GST Department - demand of GST on royalty paid to the respondent - Mining Department towards mining lease - HELD THAT:- As per the statement of Mr. Sunil Bhandari and Mr. Rajvendra Saraswat, learned counsel for respondents, the present writ petition along with the stay petition is also dismissed.

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• 2024 (5) TMI 1030
  Challenge to notice issued in Form GST ASMT-10 under TNGST Act - imposition of GST under the reverse charge mechanism on the seigniorage paid by the petitioner to the Government - HELD THAT:- The issue decided in the case of TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [ 2024 (2) TMI 488 - MADRAS HIGH COURT ] where it was held that ' the orders of adjudication shall be kept in abeyance until the Nine Judge Constitution Bench decides the issue as to the nature of royalty.' These petitions are liable to be disposed of.

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• 2024 (5) TMI 1029
  Exemption from GST - hostel accommodation being provided by the applicant to students and working women - residential dwelling for use as residence - Requirement for GST registration - Tariff heading - rate of taxability of the supply of hostel accommodation services - Taxability of in-house food supply as a composite supply - Scope of Advance Ruling. Exemption from GST - hostel accommodation being provided by the applicant to students and working women - residential dwelling for use as residence - HELD THAT:- In the instant case, a single house with two or more rooms where normally a single family resides, is subdivided, and let out to different persons and rent being collected on per bed basis with bundle of other services against a consideration clearly constitutes a business of supplying accommodation services along with ancillary services - hostels are nothing but accommodations which provide temporary lodging to the inmates, whether students or working people. Similar to converting a residential dwelling into a hotel and providing hotel services, which eventually makes the same dwelling non-residential and taxable, in the instant case, the residential homes (for use as a residence) have been converted into a commercial premises i.e., hostel accommodation, thereby losing its status as residence dwelling and has become a business premises comparable to a hotel - it is clear that hostels refer to a place where someone is accommodated or provided with lodging or boarding and lodging facilities against a charge or fees for the services rendered. The premises rented out by the applicant cannot be construed as residential dwelling. The hostel accommodation is not equivalent to residential accommodation and hence we hold that the services supplied by the applicant would not be eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-C.T. (Rate), dated 28-6-2017 and under the identical Notification under the TNGST Act, 2017, and also under Entry 13 of Exemption Notification No. 9/2017-I.T. (Rate), dated 28-6-2017, as amended. Requirement for GST registration - HELD THAT:- The applicant s service of providing hostel accommodation is not eligible for exemption under Entry 12 of Exemption Notification No. 12/2017-C.T. (Rate), dated 28-6-2017 as amended, the applicant is very much be required to take registration under the GST Enactments, as the arrangement between the applicant and the hostel occupants is liable to be classified as transaction in the course of furtherance of business and hence, as per Section 7(1)(a) of CGST Act, 2017 read with Entry No. 2(b) of the Second Schedule to the CGST Act, the said transaction constitutes supply - the applicant is required to get themselves registered in the State of Tamil Nadu, if their aggregate turnover in a financial year exceeds twenty lakh rupees. Tariff heading - rate of taxability of the supply of hostel accommodation services​​​​​​​ - HELD THAT:- The hotels are meant for a temporary stay (2-5 days) and have lot of facilities and staff, but hostels are used for a longer period and have basic facilities with minimal staff required by the inmates to stay at a reasonable rate. Therefore, hostel services cannot be equated to a hotel accommodation and hotel GST rates cannot be applied to a hostel. Therefore, the supply of hostel accommodation services (Tariff heading 9963) is taxable @ 9% CGST + 9% SGST under Sl. No. 7(vi) of the above Notification (Sl. No. 7(ix) as per original notification). Taxability of in-house food supply as a composite supply​​​​​​​ - In the event of the hostel accommodation being an exempt activity, whether the incidental activity of supply of in-house food to the inmates of the hostel would also be exempt being in the nature of a composite exempt supply? - HELD THAT:- The natural bundle has the characteristic of where one service is the main service and the other services are ancillary services which help in better enjoyment of the main service. Further, there is a single price for the combined services. The principal activity of the applicant is supply of accommodation services. While providing such services, the charges are being realised in a consolidated manner for the value of food and other like services rendered. The applicant has stated that they do not charge separately for the other services provided by them. Thus, the services provided by the applicant are composite in nature - since the applicant provides a number of services in a composite manner, the hostel accommodation services provided by the applicant, being the principal supply, which is taxable @ 18%, will be tax rate for the composite supply provided by them.

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• Income Tax

• 2024 (5) TMI 1028
  Revision u/s 263 - addition u/s 68 - bogus claim of exemption of Long Term Capital Gain by sale of shares of penny stock - HELD THAT:- On perusal of the order passed by the PCIT u/s 263 no doubt it is true that PCIT states that he has perused the proposal of the AO not stopping you that the PCIT holds that prima facie it appears that the AO has failed to take a logical action on the information available with him and, therefore, the impugned assessment was prima facie erroneous in so far as it was prejudicial to the interest of the revenue. After coming to such conclusion by himself, the PCIT issued show cause notice. The operative portion of the show cause notice has been extracted in the order u/s 263 which shows that the PCIT has applied its mind and came to the prima facie conclusion that the assessing officer should have treated the entire credit as bogus and added back the same u/s 263 of the Act rejecting the claim for exemption u/s 10 (38). Therefore, it is not a case where the PCIT solely proceeded based on the report of the assessing officer but on perusal of the report has examined the facts. PCIT has examined the entire assessment records and thereafter discussed the above transaction and in Annexure A to the order under Section 263 a flow chart has been given which shows how some transaction was bogus transaction dealing with penny stock shares. In the case relating to Sinhotia Metals and Minerals Pvt. Ltd. . [ 2022 (1) TMI 1297 - CALCUTTA HIGH COURT] the facts were entirely different. In the said case the PCIT directed the Joint Commissioner of Income Tax to submit a proposal and to exercise jurisdiction under Section 263 of the Act which was faulted. Therefore, the decision in the case of Sinhotia Metals and Minerals Pvt. Ltd. (supra) cannot be applied to the facts and circumstances of the case. Thus, we find that Tribunal committed a manifest error in allowing the assessee s appeal and setting aside the order passed under Section 263 of the Act. Order passed by the PCIT is restored.

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• 2024 (5) TMI 1027
  Validity of reassessment proceeding - pre-existing rule, to record 'reason to believe' - Compliance with procedural requirements u/s 148A or not? - HELD THAT:- In the present facts, the 'decision' of the assessing authority to initiate reassessment proceedings in the case of the petitioner has arisen on the 'information' received that the 'purchaser' does not exist. That is contained in the reports of the Income Tax Officer with respect to the four addresses of the 'purchaser'. No direct evidence was disclosed by the petitioner, (in his reply), - to doubt the existence of that 'information'. The 'suggestion' as to escapement of income qua sales made to the (non-existing) 'purchaser', inheres in it. Thus, the 'information' is relevant to the 'suggestion' as to 'escapement of income' at the hands of the petitioner. As to the non-existence of the 'purchaser', that satisfaction further appears to have arisen on the conduct of the purchaser in not responding to any of the notices and summons issued. Third, the assessing officer has taken note, during the course of a search proceedings and upon recording of statement of a third party, it was also suggested that the 'purchaser' did not exist. Such facts had been clearly noted in the impugned order passed u/s 148A(d) of the Act. Petitioner had also pointed out that the purchaser company continues to exist and it is active on the MCA portal. As noted above, that was not a mandatory condition to be fulfilled, at this stage. Also, in absence of any obligation in law, to record a categorical finding to reject any particular objection (at this preliminary stage), no fault exists in the initiation of reassessment proceedings occasioned by an over all consideration of the 'information'/relevant material. As noted above, the 'suggestion' is clearly seen to have arisen on the own strength of the 'information'/relevant material. Thus, the subjective 'decision' that it is a 'fit case' to initiate reassessment proceedings, (notwithstanding the objection raised by the petitioner), may not be faulted. All merit objections that may be raised and the manner in which they may be raised by the assessee in response to a notice issued under Section 148A(b) of the Act are not required to be decided pointwise, at the stage of assumption of jurisdiction i.e. at the stage of order under Section 148A(d) of the Act. Strictly speaking that requirement of law did not exist even under the unamended law. Even then, as noted above, the strict test of 'reason to believe' having been done away and replaced with the more subjective and lighter test of 'suggestion' arising from the 'information' received by an assessing officer-that income may have escaped assessment, we are not inclined to lay down a stricter test (to be satisfied by the assessing authorities), while making a subjective 'decision', to initiate the reassessment proceedings. Writ petition lacks merit and is dismissed. However, the assessment proceedings may continue and be concluded strictly in accordance with law without being prejudiced by any observation made in this order.

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• 2024 (5) TMI 1026
  Suit as barred by limitation - Appellant challenges the findings of the learned Single Judge regarding the limitation period for the suit - determination of period of limitation based on TDS certificate or the date of deposit of TDS - HELD THAT:- Appellant in the present appeal has not disputed the findings in law returned by the learned Single Judge with respect to the effect of deposit of TDS leading to a fresh period of limitation from the date when the deposit of TDS was made, as contemplated under Section 19 of the Act of 1963. Instead, the Appellant has sought to raise a dispute of fact with respect to the issue whether the transaction of Rs. 13,96,886/- dated 30th September, 2015 reflected in the TDS certificate pertains to the transaction emanating from the Deed of Cancellation or not. Appellant has sought to contend that the said payment of Rs. 13,96,886/- pertains to a separate transaction between the parties. We are unable to accept this contention of the Appellant as it has no basis in the pleadings of the Appellant in the application seeking leave to defend. Since no such plea was raised before the learned Single Judge, the conclusion drawn by the learned Single Judge in the impugned judgment on the basis of the TDS certificate is in consonance with both the material on record and in law. We are therefore, unable to accept the plea of the Appellant that the issue of limitation ought to be left open to be adjudicated at the final disposal. The present appeal is accordingly dismissed along with pending applications.

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• 2024 (5) TMI 1025
  Validity of order u/s 147 r/w 144 r/w 144B - primary contention was the response to the show-cause notice, where the petitioner claimed to have filed a partial response, disputed by the respondents initially - HELD THAT:- At this stage without making any observation on the merits of the case, we deem it appropriate to consider the present writ petition on the strength of ratio of Whirlpool Corporation [ 1998 (10) TMI 510 - SUPREME COURT] , Magadh Sugar Energy Ltd.[ 2021 (10) TMI 691 - SUPREME COURT] and Dinesh Kumar Chhaganbhai Nandani [ 2023 (6) TMI 935 - GUJARAT HIGH COURT] . There is no complete bar in entertaining the writ petition in spite of existence of an alternate statutory remedy of appeal. Since the order has been passed in utter violation of principle of natural justice, therefore, the exception to Rule of alternate remedy arises in terms of circumstances enumerated by Hon'ble the Apex Court in Magadh Sugar Energy Ltd. [ 2021 (10) TMI 691 - SUPREME COURT] . For the reasons recorded hereinabove, we deem it appropriate to quash the impugned order, however with the liberty to the assessing officer to pass a fresh order in accordance with law, preferably within one month from the date of receipt of certified copy of this order. The assessee would also be at liberty to supplement to his partial reply by way of detailed reply within one week from today.

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• 2024 (5) TMI 1024
  Review petition - seeking review / recall of order [ 2023 (11) TMI 652 - MADHYA PRADESH HIGH COURT] whereby the appeal has been dismissed in absence of any substantial questions of law - ' mistake or error apparent - HELD THAT:- A review application would be maintainable on (i) discovery of new and important matters or evidence which, after exercise of due diligence, were not within the knowledge of the applicant or could not be produced by him when the decree was passed or the order made; (ii) on account of some mistake or error apparent on the face of the record; or (iii) for any other sufficient reason. In Col. Avatar Singh Sekhon v. Union of India and Others [ 1980 (7) TMI 269 - SUPREME COURT] as observed that a review of an earlier order cannot be done unless the court is satisfied that the material error which is manifest on the face of the order, would result in miscarriage of justice or undermine its soundness. Under the garb of filing a review petition, a party cannot be permitted to repeat old and overruled arguments for reopening the conclusions arrived at in a judgment. The power of review is not to be confused with the appellate power which enables the Superior Court to correct errors committed by a subordinate Court. In our considered opinion, none of the grounds available for successfully seeking review as recognized by Order 47 Rule 1 CPC are made out in the present case. The Apex Court in the case of S. Bhagirathi Amaal Vs. Palani Roman [ 2007 (12) TMI 456 - SUPREME COURT] has held that in order to seek review, it has to be demonstrated that the order suffers from an error contemplated under Order 47 Rule 1 CPC which is apparent on the face of record and not an error which is to be fished out and searched. A decision or order cannot be reviewed merely because it is erroneous. Apex Court in case of State of West Bengal Vs. Kamal Sengupta [ 2008 (6) TMI 578 - SUPREME COURT] has held that a party cannot be permitted to argue de novo in the garb of review. On perusal of the record and in the light of the judgments passed in the case of S. Bhagirathi Amaal and State of West Bengal [ 2007 (12) TMI 456 - SUPREME COURT] , there is no error apparent on the face of record warranting interference in the order impugned.

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• 2024 (5) TMI 1023
  Stay of demand - order requires the petitioner to deposit 20% of the outstanding demand as a pre-condition for according protection - Undue hardship - prima facie case - HELD THAT:- It is manifest that the AO has neither considered the prima facie merits of the challenge which stood raised by the writ petitioner and reiterated in its application for stay nor does it deal with the issue of undue hardship. The AO appears to have mechanically proceeded on the premise that since the petitioner had not made a pre-deposit of 20%, the application for stay of demand could not be considered. We note that while dealing with an identical view which was taken, we had in National Association of Software and Services Companies (NASSCOM) [ 2024 (3) TMI 773 - DELHI HIGH COURT] pre-deposit prescriptions placed by a statute, the principles enunciated therein would clearly be of relevance while examining the extent of the power that stands placed in the hands of the AO in terms of Section 220 (6) of the Act. In our considered opinion, the respondents have clearly erred in proceeding on the assumption that the application for consideration of outstanding demands being placed in abeyance could not have even been entertained without a 20% pre-deposit. The aforesaid stand as taken is thoroughly misconceived and wholly untenable in law. In view of the above, and in our considered opinion, there would appear to be no justification to retain the instant petition on our board. The ends of justice would in fact warrant the matter being remitted to the AO for considering the stay application moved by the writ petitioner afresh.

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• 2024 (5) TMI 1022
  Validity of Revision proceedings u/s 263 - period of limitation - period of limitation for passing order u/s 263 reckoned from the date of the original assessment order or from the date of the reassessment order - HELD THAT:- This Court, on a careful perusal of the judgment rendered in the case of Industrial Development Bank of India Ltd. [ 2023 (6) TMI 1047 - SUPREME COURT ] followed by case of Chambal Fertilisers and Chemicals Limited [ 2024 (2) TMI 1381 - RAJASTHAN HIGH COURT] finds that the reassessment order in its original form the consequential order passed on 25.03.2022 are strictly within the ambit of the escaped assessment of job charges. It is not the case of the petitioner that the original assessment order could not have been within the ambit of Section 263 under the revisionary jurisdiction but the petitioner s contention is limited to the extent that once the reassessment of the escaped assessment in limited jurisdiction has happened on 25.03.2022, the revision would also have the same limited ambit for the purpose of limitation prescribed in Section 263(2) of the Act of 1961, which is of two years only, for the purpose of job work charges, which would encompass the controversy as regards the impugned notice. This Court is conscious of the fact that the petitioner may have had a case to challenge the original assessment order, but at the same time, has lost the battle in terms of the Law of Limitation as the Hon ble Apex Court in Commissioner of Income Tax Vs. Industrial Development Bank of India Ltd. [ 2023 (6) TMI 1047 - SUPREME COURT ] in which it has been clearly laid down that if the subject matter of the reassessment is distinct and different, in that case the relevant date for the purpose of determination of the period of limitation for exercising powers u/s 263 would be the date of original assessment order, which makes the revision proceedings to be ex facie illegal on the face of it on count of limitation. Revision proceedings set aside - Decided in favour of assessee.

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• 2024 (5) TMI 1021
  Unexplained money u/s. 69A - deposits in bank account during demonetisation period - as per DR assessee was unable to produce external evidence in support of agricultural income shown - HELD THAT:- We note that average agricultural income reported by assessee for previous three years is Rs. 3,87,667/-. We further note from the computation sheet of the AO that while computing total income the AO has himself accepted it as agricultural income and added. Once the AO has accepted agricultural income during the course of computing tax which is essential part of raising demand u/s 156 for completing the assessment, then the AO cannot treat it as unexplained investment u/s. 69A . Accordingly we accept the plea of the assessee that income should be considered as agricultural income and apply normal tax rate as applicable. Since in this case the assessee had shown agriculture income of Rs. 15,84,000/- in his return of income out of which a sum of Rs. 7.00 Lakhs has been accepted by the ld. CIT (A) treating it as agriculture income. The balance amount of Rs, 8,84,000/- is also to be considered as agriculture income as per our above observations. Assessee appeal allowed.

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• 2024 (5) TMI 1020
  Exemption u/s 11 - true meaning of the expressions fee, cess or consideration - charitable activity or not - As per AO objects of the assessee is to earn profits, thus is not eligible for claim of benefit u/s 11 12 - assessee undertakes activities like preparation of development plans for the development of area, preparation of town planning schemes, levy and collection of fees as prescribed by regulations for scrutiny of documents for permission for development, execute works in connection with supply of water, disposal of sewage and provision of other services and activities etc. HELD THAT:- Issue under consideration is now covered in favour of the assessee by the decision of the Ahmedabad Urban Development Authority (AUDA) [ 2022 (10) TMI 948 - SUPREME COURT ] in which as decided the issue in favour of the assessee as held Fee, cess and any other consideration has to receive a purposive interpretation, in the present context. If fee or cess or such consideration is collected for the purpose of an activity, by a state department or entity, which is set-up by statute, its mandate to collect such amounts cannot be treated as consideration towards trade or business. Therefore, regulatory activity, necessitating fee or cess collection in terms of enacted law, or collection of amounts in furtherance of activities such as education, regulation of profession, etc., are per se not business or commercial in nature - statutory boards and authorities, who are under mandate to develop housing, industrial and other estates, including development of residential housing at reasonable or subsidized costs, which might entail charging higher amounts from some section of the beneficiaries, to cross-subsidize the main activity, cannot be characterized as engaging in business. The character of being 'state', and such corporations or bodies set-up under specific laws (whether by states or the centre) would, therefore, not mean that the amounts are 'fee' or 'cess' to provide some commercial or business service. In each case, at the same time, the mere nomenclature of the consideration being a fee or cess , is not conclusive. If the fee or cess, or other consideration is to provide an essential service, in larger public interest, such as water cess or sewage cess or fee, such consideration, received by a statutory body, would not be considered trade, commerce or business or service in relation to those. Non-statutory bodies, on the other hand, which may mimic regulatory or development bodies - such as those which promote trade, for a section of business or industry, or are aimed at providing facilities or amenities to improve efficiencies, or platforms to a segment of business, for fee, whether charged by subscription, or specific fee, etc., may not be charitable; when they claim exemption, their cases would require further scrutiny. Appeal of the assessee is allowed.

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• 2024 (5) TMI 1019
  Proceedings u/s 201(1) and 201(1A) - assessee-in-default - non deduction of TDS u/s 194IA - AO held that the assessee is an assessee-in-default on account of non-deduction of TDS on purchase of properties - HELD THAT:- The assessee has sought adjournment from time to time on frivolous / vague grounds and has neither caused appearance and nor furnished any documents to support to demonstrate that the assessee is covered by the proviso to Section 201(1) of the Act and hence, the assessee is not an assessee-in-default, in the instant set of facts. In absence of any arguments by the assessee in support of it s case and in absence of any documentary evidences to demonstrate that the assessee is eligible for claiming benefit of First Proviso to Section 201(1) of the Act, we find no reason to interfere with the findings of the Ld. CIT(A), who also observed in his order that despite several opportunities, the assessee failed to furnish any evidences to support that the assessee is eligible for claiming the benefit of First Proviso to Section 201(1) of the Act. Levy of interest u/s 201(1A) of the Act, we find no infirmity in the findings of the Ld. CIT(A) that the assessee is liable to pay interest under Section 201(1A) of the Act till the date of furnishing of return by the payee / deductee / recipient and accordingly, in our considered view, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. In view of the above observation, the appeal of the assessee is dismissed. Levy of penalty u/s 271(c) of the Act on account of non-deduction of tax at source on the payments made by the assessee towards purchase of products - We find no infirmity in the order of Ld. CIT(A) holding that the Assessing Officer was justified in imposing penalty under Section 271C of the Act for non-deduction of taxes at source u/s 194-IA of the Act, looking into the instant facts. Decided against assessee.

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• 2024 (5) TMI 1018
  Assessment of trust - Genuineness of payment as commission to consultants and counsellors - disallowance of expenses on computers to students - Assessee trust diverted its income during the year in favour of sister entity - HELD THAT:- Appellant / assessee is a charitable trust registered u/s 12A. Appellant assessee is engaged in field of education and running the Fostima Business School . Appellant/assessee has entered into memorandum of understanding dated 11.7.2011 with M/s. Fostima Integrated Learning Resources Private Limited (FILR). Appellant trust availed exemption of its income u/s 11 by complying with stipulated conditions u/s 12AA r.w.s. 11 and 13 of Income Tax Act, 1961. AO disallowed sum under head of Business Support Services paid to FILR being violative of section 13(3) of Income Tax Act, 1961. AO nowhere demonstrated as to how the business support expenses incurred by appellant trust was not commensurate with the market value of the services availed from FILR an entity covered u/s 13(3) and thus the appellant trust by filing services violated the conditions under section 13(2)(g) of the Income Tax Act, 1961 and diverted its income. The statement of assessable income, balance sheet and statement of profit and loss accounts of FILR shows income. How the business support expenses were not commensurate was not sustainable. Salary expenditure of Rs. 36,60,000/- to faculty members was disallowed due to non filing of qualifications and experience and elaborate the services rendered by persons. In fact appellant assessee trust had engaged in highly technical qualified persons in whole time management activities of trust as well as regular time teachers in business school. The details of educational qualification and experience in absence of any other evidence to the contrary cannot be said to be not just fair and reasonable. As per note payment of Rs. 15,05,000/- as commission to consultants and counsellors was justified. Keeping in view invoice, quotations and student wise list the disallowance of expenses of Rs. 20,50,000/- on computers to students is not just fair and reasonable. In view of above material facts the impugned orders are not legal and sustainable.

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• 2024 (5) TMI 1017
  Legality of the rectification order passed by the CPC u/s 154 - non issuance of original intimation u/s. 143(1) - HELD THAT:- As per record, it is a fact that the Ld.CIT(A) while passing the order, did not deal with the specific ground raised by the assessee regarding the rectification order passed by the CPC u/s 154 of the Act, which is bad in law, since rectification order itself lacks jurisdiction being passed without issuance of original intimation u/s. 143(1) of the Act. Thus we are of the view that a fresh opportunity should be given to the assessee and, accordingly, we set aside the impugned order and restore the issue to the file of the CIT(A) with a direction to adjudicate the grounds of the assessee regarding the legality of the rectification order passed by the CPC u/s 154 of the Act, without issuance of original intimation u/s 143(1) after affording the opportunity of hearing to the assessee. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2024 (5) TMI 1016
  Reopening of assessment u/s 147 - unexplained cash deposits in bank account - HELD THAT:- We are surprised to see two different findings of the AO on similar sets of facts in reopened assessments of the appellant/assessee; one in the AY 2011-12 and another in the 2012-13. The assessments of these two years; AY 2011-12 and 2012-13 were reopened on the similar reasoning that the cash deposits in bank account were nothing but the income escaping assessment in absence of any return of income filed by the appellant/assessee. However, the AO treated cash deposits in the bank account as sales and assessed the income embedded therein at Rs. 4,48,910/- in AY 2011-12, whereas in the AY 2012-13 entire cash deposits as income without bringing any material on the record to strengthen the finding therein. Thus, AO, during the AY 2012-13, cannot deviate from his stand taken in the reopened assessment proceedings of the preceding year; AY 2011-12 without bringing contrary facts on the record. We, therefore, direct the AO to work out the income of the appellant/assessee @ 8% on his total cash deposits in his bank account(s) in the relevant year; AY 2012-13 and assess it accordingly. Appeal of the assessee is partly allowed.

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• 2024 (5) TMI 1015
  Deduction claim u/s 80P - Affect of notification issued under sub-Section (1) of Section 60 or Section 60A of the repealed Act - assessee co- operative society claimed exemption under Notification No. SRO 992 dated 22.12.1950 of the Income Tax Act, 1922 which was repealed by IT Act, 1961 - Parliament has introduced Section 80P to deal with the taxation of Cooperative Societies, and therefore, SRO 1800 would no more be applicable in respect of deduction / exemption of income of Co-operative Societies - whether the assessee is eligible for claiming exemption in terms of the aforesaid Notification No. SRO 1800, despite introduction of Section 80P of the Act, which has been specifically incorporated to deal with deduction to co-operative societies? HELD THAT:- We are unable to agree with the fine distinction sought to be drawn by the counsel for the assessee with regards the fact that the Notification No. SRO 1800 was an exemption provision, while Section 80P of the Act, as a deduction provision and therefore, since Section 80P of the Act deals with deduction relating to income of cooperative societies, and Notification No. SRO 1800 being an exemption provision they operate in different realms and SRO 1800 continues to co-exist alongwith the provisions of Section 80P of the Act. Whether in view of the introduction of Section 80P of the Act, Notification No. SRO 1800 stands withdrawn, in view of the language of Section 297 of the Act? - As held in the case of Ramanath and Company [ 2020 (6) TMI 158 - SUPREME COURT] deduction/exemption/rebate provisions are all falling in the same category, being incentive/beneficial provisions. Therefore, Notification No. SRO 1800, issued under sub-Section (1) of Section 60 or Section 60A , in our considered view, stands effectively superseded by the provisions of Section 80P of the Act, and there is no specific requirement for a formal withdrawal of such notification. Section 297(2)(l) of the Act contains a clear cut wording that once a specific provision has been introduced to deal with a specific head of income, then any notification issued under Section 60/60A under the repealed Act shall not continue to remain in force. The specific omission of the words until rescinded by the Central Government omitted w.e.f. 09.09.1972 also lends support to the fact that no specific notification withdrawing the erstwhile Notification No. SRO 1800 is required, once Section 80P has been introduced specifically to deal with deduction relating to taxability of income earned by cooperative societies. The proviso to Section 297(2)(l) of the Act is only classificatory in nature and only recognises that the Central Government has inherent powers to rescind any Notification. However, as discussed in the foregoing paragraphs, in view of the plain language of Section 297(2)(l) of the Act, once a specific provision has been introduced to deal with the taxability of income of cooperative societies in the form of Section 80P of the Act, then to that extent any notification issued under the erstwhile Section 60/60A of the repealed Act, would not continue to operate. Accordingly, in view of decision rendered in the case of Shri Gopal Gram Seva Sahakari Mandli Ltd. [ 2014 (12) TMI 766 - GUJARAT HIGH COURT] income of the assessee trust shall be governed by the provisions of Section 80P of the Act. Further, we also observe that on merits, the assessing officer has given a detailed finding that the assessee is not having any objects which would confirm the provisions of Section 80P of the Act and further, the assessee is also not earning any income from its members, but from third parties and therefore, the assessee is not eligible for claim of benefit under Section 80P - Assessee appeal dismissed.

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• 2024 (5) TMI 1014
  Penalty proceedings u/s. 271(1)(c) - addition of interest income assessed under the Income from other source by denying exemption u/s. 80IB(10) - HELD THAT:- It is well settled in view in CIT Vs. S.V. Angidi Chettiar [ 1962 (1) TMI 10 - SUPREME COURT] and D.M. Manasvi [ 1972 (9) TMI 5 - SUPREME COURT] that power to impose penalty under section 271 of the Act depends upon the satisfaction of the AO in the course of the proceedings under the Act. It cannot be exercised if he is not satisfied and has not recorded his satisfaction about the existence of the conditions specified in clauses (a), (b) and (c) before the proceedings are concluded. Same position was reiterated by the Full Bench of Hon ble Delhi High Court in the case of CIT Vs. Rampur Engineering Co. Ltd. and others [ 2008 (11) TMI 54 - HIGH COURT DELHI] On mere perusal of the assessment order, it would be evident that the AO had recorded the satisfaction to initiate the penalty proceedings u/s. 271(1)(c) of the Act for alleged offence of furnishing inaccurate particulars of income, only in respect of addition of interest income by denying exemption u/s. 80IB(10) of the Act. The AO had not recorded satisfaction in respect of additional income offered during the course of assessment proceedings, which was allowed as deduction u/s. 80IB(10) of the Act. Further, we find that the addition was made on the basis of information furnished by the appellant itself. There is no finding by AO, as to which particulars filed by the appellant are found to be inaccurate. Therefore, in no case, the appellant can be held to be guilty of furnishing of inaccurate particulars of income. Therefore, the AO was not justified in levying penalty u/s. 271(1)(c) of the Act in respect of the addition made on account of additional income offered during the course of assessment proceedings. As regards the addition of interest income, it is crystal clear that it is a mere disallowance of claim for deduction u/s. 80IB(10), which is unsustainable under law, it does not amount to furnishing inaccurate particulars of income as held in the case of C IT v. Reliance Petroproducts (P) Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] - There is no finding by the AO as to which particulars filed by the appellant are found to be inaccurate. In the circumstances, it is not a fit case for levy of penalty u/s. 271(1)(c) of the Act, accordingly direct the AO to delete the penalty - Decided in favour of assessee.

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• 2024 (5) TMI 1013
  Deduction u/s 80IA - determination of market value of the power supplied by the assessee to its industrial units - rate fixed by Tariff Regulatory Commission OR Rate chargeable by the distribution companies - as per AO assessee could not have claimed the benefit at the rate chargeable by the distribution companies but should have claimed on the basis of rates fixed by Tariff Regulatory Commission for sale of electricity by generating companies - Assessee supported in adopting the average price of the power purchased other than the captive power - HELD THAT:- Hon ble Supreme Court in the case of CIT v. Jindal Steel Power Limited [ 2023 (12) TMI 417 - SUPREME COURT ] held the expression market value in relation to any goods as defined by the explanation below to proviso to sub-section (8) of section 80IA of the Act, meaning the price of such goods determined in an environment of free trade or competition, is market value which is an expression which denotes the price of a good arrived at between a buyer and a seller in the open market i.e., where the transaction takes place in the normal course of trading. Hon ble Supreme Court held that the market value of the power supplied by the assessee to its industrial units should be computed by considering the rate at which the State Electricity Board supplied power to the consumers in the open market, but not comparing it with the rate of power when sold to a supplier i.e., sold by the assessee to the State Electricity Board. Thus, it is clear that the rate at which power was supplied to a supplier could not be a market rate of electricity purchased by a consumer in the open market, but, the rate at which the State Electricity Board supplied power to the industrial consumers is to be taken as market value. AR brought to our notice that the AO allowed the deduction under section 80IA of the Act for the initial year being assessment year 2011-12 - For the assessment year 2020-21, the Assessing Officer allowed deduction u/s 80IA in favour of the assessee. We note that the Revenue allowed the claim of the assessee for computing deduction u/s 80IA of the Act for initial year and the assessment year subsequent to the year under consideration. The assessee adopted price at ₹.5.60 per unit which was arrived at on the total charges paid by the assessee towards electricity purchased from Tamilnadu Electricity Board and other price power purchaser. Therefore, we hold that the rate at which State Electricity Board supplied electricity to the industrial consumers would have to be taken as the market value for computing deduction under section 80IA of the Act. Grounds raised by the Revenue are dismissed.

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• 2024 (5) TMI 1012
  TDS u/s 194H and 194J - income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors - relationship between the appellant and its distributors - demand u/s 201(1)/201(1A) - HELD THAT:- As per ratio of judgment in Bharti Cellular Ltd. [ 2024 (3) TMI 41 - SUPREME COURT ] it is well settled that assessee would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors. Section 194-H of the Act is not applicable to the facts and circumstances of this case. Thus in view of well settled principle of law impugned orders is unsustainable and liable to be set aside. Assessee appeal allowed.

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• 2024 (5) TMI 1011
  Addition u/s 43CA - difference between the sale consideration and the market value of the property - AO held that the unregistered agreement of sale cannot be recognized in the Court of law and also held in certain cases, the parties from whom the advances received are not the same parties to whom the registration has been done - HELD THAT:- We hold that the assessee is entitled for benefit of provision of section 43CA (3) in respect of plots booked in Financial Years 2009-10, 2010-11 and 2013-14. Further, we also direct that the AO shall re-compute the profits, taking into consideration, the complete details, registry regarding sale of plot year wise and accord the benefit of Section 43CA.

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• 2024 (5) TMI 1010
  Exemption u/s 11 - microfinancing activity conducted by the assessee - assessee is charging exorbitant rate of interest to its borrowers - charitable v/s commercial activity - whether activities falls under the first limb of section 2(15) or activities such as advancement of any other object of general public utility or any other activity, which falls outside the scope of section 2(15)? - As argued assessee is rendering a much needed service to the individuals by infusing credit into the system, which is required to revive the rural economy, without which it would be difficult for the individuals to join and participate in the main stream of the economy HELD THAT:- AO is required to see whether the assessee eligible to claim application under section 11 and whether the proviso to section 2(15) gets attracted in the light of commercial nature of activities. Particularly, if the primary activity of the organization is in the nature of trade or business, then it is important to ensure that there is no dominant profit motive involved and it is not used as a mask for commercial activities and benefitting at the hands of the beneficiaries. If an organisation which has no source of generating surplus from its activity other than the beneficiary then existence of consistent and substantial surplus does raise a question regarding the commercial nature of the activity. If this question is not successfully defended and justified by the assessee then the invocation of the proviso to section 2(15) by the AO cannot be questioned. In the present case, assessee is only carrying the microfinancing activity by charging exorbitant rate of interest like any other commercial banks which is not expected from this assessee, which is registered u/s 12AA of the Act so as to claim exemption u/s 11 of the Act. The activity of the assessee is nothing but commercial activity carried on with the intention of making maximum profit. If we consider the plea of the assessee, then the exemption u/s 11 of the Act could also be claimed by the Co-operative Societies, Regional Rural Banks and Commercial banks also as the activity of these banks are similar to the assessee s case. If we examine the activities of the present assessee in the light of above report of Sub-committee of the Central Board of Directors of Reserve Bank of India, the assessee is only doing the microfinancing activities by charging exorbitant interest, which does not commensurate with the prevailing rate. It is also noted that the activity is not also in lieu of any benefit to low-income group who are very vulnerable and are not in a position to cope up with such financial burdens. In order to consider the activity to be charitable in nature, the services rendered must commensurate with the benefit that may arise to such low-income group. The facts of the case relied by the A.R. is quite opposite to the facts of the present case, which has been brought out in the earlier paragraphs of this order. It is also noted that nothing has been spent by the assessee, which could be considered in the nature of charity and therefore, the benefit under the proviso to section 2(15) of the Act is not available to the assessee. The facts of the case relied by the ld. A.R. therefore, does not help the present facts of the case in hand. Decided in favour of revenue.

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• 2024 (5) TMI 1009
  Validity of reopening of assessment u/s 147 - information received from DDIT (Inv.)-Unit 2(2), Kolkata which showed that the assessee had entered into sham transactions with shell company - it is a consistent submission of assessee right from beginning that it has not entered into any transaction with any shell company - HELD THAT:- The revenue is not able to show any such transaction having been entered by assessee with M/s Bhagya. Therefore, we safely presume that the assessee has in fact not entered into any transaction with M/s Bhagya as alleged in the reasons. That means, the re-assessment proceeding has been done on the basis of an invalid reason. Once it is so, the entire proceeding becomes invalid on this very premise itself. Revenue/AO authority to make newer additions even if they did not form part of original reasons and such authority comes from 3rd Proviso to section 147 - If the AO does not assess or reassess the income which he has reason to believe had escaped assessment and which formed the basis of a notice u/s 148, it is not open to AO to assess or reassess independently any other income which does not form the subject-matter of the notice. As far as 3rd Proviso to section 147 is concerned, in our considered interpretation, it does not give any authority to AO to assessee independent incomes, rather it places one more restriction upon AO that under the provisions of section 147, he can only assessee or reassess those matters which are not subject-matters of any appeal, reference or revision. The AO s understanding that it gives authority to him to assess only independent or newer items, even if the original items forming part of reasons do not survive, is not correct. Therefore, respectfully following the decision of Jet Airways which is very much applicable to the facts of present case, we are inclined to quash the order of re-assessment passed by AO. The assessee succeeds in this appeal.

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• Customs

• 2024 (5) TMI 1008
  Revision Application - Alternative remedy - seizure of goods - Operation of duty-free shops at an international airport - deemed to be outside the territory of India - commission of offences punishable u/s 36 (1) the Legal Metrology Act, 2009 - license agreement with the Airport Authority of India - HELD THAT:- The present proceeding has been initiated in 2016 and this criminal revision has preferred in the 2019. Thus the petitioner herein should have first exhausted equally efficacious alternative statutory remedy as provided under the act before approaching this Court . But keeping with the view taken by the Apex Court in Hotel Ashoka (Indian Tour. Dev. Cor. Ltd.) vs Assistant Commissioner of Commercial Taxes and Ors. [ 2012 (2) TMI 62 - SUPREME COURT ] and considering that 9 (nine) long years have passed, the present revision is being disposed of on merit without directing the petitioners to move the statutory appellate authority, only in the interest of justice. The complainant in this case did not have the authority to initiate the present proceedings against the petitioners in respect of the alleged offences which admittedly took place in a duty free shop at an international airport which is beyond/outside the custom frontiers of India. Accordingly the proceedings in this case, being not in accordance with law and thus an abuse of the process of Court/law, is liable to be quashed. CRR 819 of 2019 is allowed. The proceedings u/s 36 (1) the Legal Metrology Act, 2009 read with Rule 32 (3) of the Legal Metrology (Packaged Commodities) Rules, 2011 pending before the Learned Additional Chief Judicial Magistrate, is hereby quashed in respect of the petitioners herein.

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• 2024 (5) TMI 1007
  Customs Broker - Carrying illegal activities - forfeiture of full amount of security deposit - Levy of Penalty - Violation of Regulation 19(8) of CHLR, 2004 - HELD THAT:- A cursory glance of that proceedings shows that the main noticee was Marine Vission. The allegation was towards fraudulent claiming of Duty Drawback on the fraudulently exported consignments in which it was alleged that Sri Sanjeev Kumar Jha had assisted in such claims. While Sri Sanjeev Kumar Jha was a noticee and a penalty of Rs. 3 lakhs was imposed on him, no findings have been given towards his role in that particular case. Even otherwise, in the entire proceedings in that case, nothing has emerged to the effect that Sri Sanjeev Kumar Jha holder of H-Pass has acted on behalf of the present Appellant M/s. S P Agency. Since the present Appellant was not even a noticee in that case, the question of present Appellant having connived with Sri Sanjeev Kumar Jha in respect of the exports done by Marine Vission cannot be deduced by any stretch of imagination. Thus, no case has been made out to the effect that Sri Sanjeev Kumar Jha has acted on behalf of the present Appellant. Mere procurement of H-Card by S P Agency to facilitate the working of Sanjeev Kumar Jha cannot be the reason for the present proceedings. A person holding H-Card, if he acts for same third party without the knowledge of the CHA, in what way CHA would be able to control all the activities undertaken by the H-Card Holder is not known. All these factual details show that no case has been made out against the Customs Broker. Even the Enquiry Report of the Enquiry Officer after complete investigation, has absolved the Customs Broker. Thus, set aside the impugned order imposing penalty of Rs. 50,000/- and forfeiture of full amount of security deposit furnished by the Customs Broker. The Appeal is disposed off thus.

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• 2024 (5) TMI 1006
  Mis-declaration Of Import value - duty demand - confiscation of goods - penalty - Imports semi-conductor fabrication system - benefit of Notification No.52/2003-Cus. - export obligation - 100% EOU engaged in the business of providing software development services - HELD THAT:- It is on record that the appellant had declared the value as shown in the proforma invoice as declared by their supplier. After inspection, since the goods were found to be used goods and the value was enhanced by the Chartered Engineer, they accepted the enhanced value which will have an impact on their export obligation. As rightly claimed by the appellant there is no duty liability and the declared value was based on the proforma invoice, hence there was no mis-declaration as such. Therefore, I do not find any suppression or mis-declaration by the appellant so as to confiscate the goods. Hence, the order of confiscation is set aside along with the penalty imposed on the appellant u/s 112(a)(ii).

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• 2024 (5) TMI 1005
  IGST exemption - classification - validity of demand without challenging the assessment of bill of entry - extended period of limitation - Imports broom sticks - interest - penalty - benefit of Notification No. 2/2017-integrated tax (Rate), prescribed Nil rate of duty - Whether goods fall under the category of Muddhas made of sarkanda, Brooms or brushes, consisting of twigs or other vegetable materials, bound together, with or without handles or not - revenue classified under CTH 9603 1000 under Sr. no. 260 of Notification No. 01/2017 attracting 5% IGST. SR no. 144 of Notification No. 02/2017-IGST. RAJU - HELD THAT:- It is seen that the Commissioner (Appeals) has not dealt with the primary issue, if the goods imported by the appellant are also covered by Sr. no. 144 of Notification no. 2/2017 or only by Sr. no. 260 of Notification no. 1/2017. Thus, it is apparent that the main issue has not been dealt with by the Commissioner (Appeals) In this circumstances, we alert with no option but set aside the impugned order and remand the matter back to Commissioner (Appeals) to decide a fresh. SOMESH ARORA - It is clear that from 22nd September, 2017 brooms were divided into two categories, and term Broomsticks also came to be divided into two categories i.e. Brooms or brushes consisting of twigs or other vegetable material bound together with or without handles and brooms and Broomsticks which were other types i.e. material other than vegetative materials etc. In which category, the plastic brooms will normally get included. It is thus clear that Broomsticks which are made up of plastic and do not use a vegetable material alone are taxable w.e.f 22.09.2017 in Notification No. 01/2017 since after amendment, the Broomsticks fall under Serial No. 260 of Notification No. 01/ 2017 have to be of other than Chapter Heading No. 96031000 and therefore have to be Broomsticks of other than twigs and such vegetable materials. Since, the show cause notice has not taken note of development through above stated amendments, therefore in the instant case, learned Commissioner (Appeals) while deciding classification should keep above discussion in mind while working into demand period and related statutory changes. It should first decide about the nature of Broomsticks/brooms and its classification with statutory changes. Matter is accordingly remanded back to decide the nature of goods. Party in any case shall be free to raise any other point on merits, limitation if desired. Appeal allowed by way of remand.

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• 2024 (5) TMI 1004
  Refund of SAD - sale of the goods charging VAT - Notification No.102 of 2007 Cus. - Principles of unjust enrichment - HELD THAT:- No dispute about the fact that these refund claims have been filed fulfilling the conditions of the said notification and the conditions as prescribed by the circular No 16/2008-Cus. The Notification and circular lay down the manner in which the refund claims are to be examined and allowed. It is provided that a certificate from an independent chartered accountant shall suffice to establish that the burden of SAD has not been passed on and the refund claim shall not be hit by the principles of unjust enrichment. Thus we find that adjudicating authority has while sanctioning the refund have followed the guidelines issued by board in this regard. As the issue is settled in favour of the respondent by various decisions of the Tribunal we do not find any merit in this appeal. However, before closing we would like to point out the decision in case of Commissioner of Central Excise, Madras V/s Addison Company Ltd.[ 2016 (8) TMI 1071 - SUPREME COURT] is not in respect of the case where the refund of SAD has been claimed in terms of the Notification No.102/2007 which provides for the refund subject to fulfilment of this condition. In such cases payment of VAT is the only condition for refund to the dealer who has paid the SAD at the rate of 4% and that burden of the same has not been passed on to the buyer is certified by the independent chartered accountant. Appeals filed by the Revenue are dismissed.

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• Corporate Laws

• 2024 (5) TMI 1003
  Quashing Disciplinary proceedings against the Regional Director (NR) of ROC - executive function under the Act - Whether an act of an authority qualifies as a quasi-judicial act - Transfer (shifting) of registered office of 5 companies from Delhi to Maharashtra - siphoning off funds - Allowing application without exercising due diligence - violation of Section 13(4) of the Act and 30(9) of the Rule. The primary ground on which the petitioner has assailed the findings of the learned Tribunal is that the respondent s action of approving the request of shifting of the registered offices of the 5 companies of the Carnoustie Group was not a quasi-judicial function but an executive act. HELD THAT:- It is found that the main plank of the petitioner s contention that under Section 13 of the Act an authority cannot be treated as an authority discharging quasi-judicial function is that, unless the authority is required to determine a lis between two contesting parties, the exercise of deciding shifting application cannot be treated as a quasi-judicial act. What emerges from the dicta of the Apex Court in STATE OF ANDHRA PRADESH VERSUS S.M.K. PARASURAMA GURUKUL [ 1973 (5) TMI 98 - SUPREME COURT ] is that, for an act of an authority to qualify as a quasi-judicial act, it is not a sine qua non that there must be two competing parties. No doubt when there are two parties to the lis, the decision of the authority qua their inter se claims will necessarily be a quasi-judicial act. This, however, does not imply that unless there are two parties whose competing rights the authority is required to decide, and the function of the authority can never be a judicial function. The question whether an authority is required to act judicially and whether its function can be termed as quasi-judicial, would have to be gathered from the cumulative effect of all attending circumstances, including the nature of rights affected by its decisions, as also the manner in which the duty imposed on the authority is to be discharged - Cases where policy and expediency are the guiding factors for a final decision, would no doubt be an executive decision, while on the other hand, where objective criteria are required to be adopted and objections to claims need to be considered, the act would generally qualify as a quasi-judicial function. It would be also apposite to refer to a recent decision of the Apex Court in ORISSA ADMINISTRATIVE TRIBUNAL BAR ASSOCIATION VERSUS UNION OF INDIA (UOI) AND ORS. [ 2023 (3) TMI 1490 - SUPREME COURT] , relied upon by the respondent, wherein the Apex Court has reiterated that the question as to whether the function of an authority is quasi-judicial or administrative, is not always well defined and has to be determined after considering several factors, including the nature of the rights affected. Unlike as contended by the learned ASG, the Apex Court has consistently held that for determining as to whether an action of an authority is a quasi-judicial act or an administrative one, it is not necessary that there must be adjudication of a lis between the two parties before the authority. Thus, holding otherwise would be going against the settled position of law. Before passing an order under Section 13, the competent authority is required to not only seek information regarding the creditors and debtors of the applicant company, but is also obliged to invite objections from the general public. Further, in case objections are received, an oral hearing is required to be granted to all the parties and it is only upon examination of these objections, that a shifting order can be passed and that too, after considering the reports of the concerned RoCs. What, thus, emerges is that an elaborate procedure has been laid down under Rule 30 for dealing with a shifting application filed under Section 13 of the Act; it being incumbent upon the authority to not only take into account the detailed information supplied by the company under Rules 30(1) to 30(4), but also to hear objections - there are no infirmity with the finding of the learned Tribunal in this regard and hold that the act of the respondent in allowing the shifting applications was only in discharge of a quasi-judicial function. Thus, it is evident that despite the respondent having allowed the applications for shifting of the registered offices of all the 5 companies of the Carnoustie Group, which action the petitioner contends constitutes misconduct, he continued with the inspection not only against these companies but against other companies of the said Group. It is based on this inspection that the respondent submitted a detailed report setting out the gross mismanagement and siphoning off of funds, not only by these 5 companies but also other companies of the same Group, There is no dispute about the fact that this report was promptly accepted by the petitioner and directions were issued to the respondent to take penal and other appropriate actions against the said companies. Taking the case of the petitioner to the hilt, there certainly seems to be more than one officer barring the respondent involved in processing of the application, however, strangely and for no plausible reason absolutely no explanation has been provided by the petitioner as to why no action has been initiated against the two RoCs as also the other officers involved in forwarding the files to the respondent for approval, who failed to inform him about the order for inspections against the 5 companies of the Carnoustie Group. Strangely, the petitioner is also silent as to why no alert message was generated in the MCA 21 system. The fact cannot be lost sight that the respondent, as a Regional Director, was dealing with about 500 cases every month and therefore, had to rely on the information supplied by the RoCs as also the officers dealing with the files. In the present case, these officers had while putting up these applications before the respondent admittedly annexed a check-list where there was no mention of any pending inspection against any of the company. It is also not the case of the petitioner that there are any other allegations and/ or complaints of the similar nature or of any other kind filed/ pending against the respondent. There are no reason to differ with the finding of the Tribunal that the respondent was not apprised of the pending inspections when he allowed the shifting applications - there are no infirmity with the impugned order - petition dismissed.

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• Insolvency & Bankruptcy

• 2024 (5) TMI 1002
  Calculation of fees eligible to the liquidator - time period consumed by the Liquidator in the liquidation process, after considering the eligible exclusions granted by the Adjudicating Authority - exclusion of period of stay granted - it was held by NCLAT that 'The Adjudicating Authority erred in granting exclusion the period consumed in adjudication of subject IAs, instead of period consumed while auction was under stay.' HELD THAT:- No interference is called for with the impugned order - Appeal dismissed.

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• 2024 (5) TMI 1001
  CIRP - Compliance with provisions of Rule 28 of the National Company Law Tribunal Rules, 2016 - timely registration, numbering and disposal of applications filed under Section 94 and Section 95 of Insolvency and Bankruptcy Code, 2016 - extreme delay in compliance with objections and further delay in declining of matters for non-compliance - continuance of interim moratorium against the personal guarantors for an extremely unreasonable period of time - HELD THAT:- Rule 28 provides that once a document has been filed by a party, and the registry has scrutinized the documents and objections notified for compliance, the party ought to comply within seven days from the date of return (notification of the objections). In the event there is a failure to comply within seven days, then the document shall be placed before the Registrar who may pass appropriate orders. The pendency of the applications under Section 94 and Section 95 indicate that the Rules are not being complied with in a timely manner - The Section 94 Applications were declined to be registered after being pending on e-filing number for a period of 339 days. The Section 95 Applications was declined to be registered after being pending on e-filing number for a period of 181 days. This indicates that the interim moratorium in these mentioned matters itself was lasting for the said period of time. Considering that interim moratorium commences on e-filing of the applications, i.e., uploading of the document prior to any scrutiny, there is a possibility that parties who have had their applications declined due to failure to comply with the notices and timelines issued by Respondent No. 2, proceed to e-file their applications again. In such cases, the aggrieved persons have a remedy under Rule 63 of the NCLT Rules to prefer an appeal within the period stipulated. Any application which had earlier been dismissed and is refiled without resorting to the due process under law, ought not to be considered valid and shall not be considered as filed for the purposes of Section 96 of the IBC. The same shall be ignored and no cognizance shall be taken of the same. The present petition is disposed of.

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• 2024 (5) TMI 1000
  Admissibility of the second petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 - unpaid instalments - existence of debt and default or not - Amount paid out of the court during the pendency of this appeal to be adjusted in the amount which is stated to be due - HELD THAT:- There is no dispute that the Corporate Debtor availed the loan on interest from the Financial Creditor. Since, the instalments were not paid, the Financial Creditors filed the first petition which was admitted, moratorium was declared and IRP was appointed. In order to save itself to slip into CIRP, the CD approached the FC for a settlement which was ultimately arrived at in writing on 26.07.2018. The Financial Creditors believed the Corporate Debtor and entered into the agreement and further on the asking of the CD filed a joint application in the first petition not only to bring on record the settlement but also to withdraw the first petition being sanguine of the fact that CD would keep its words and shall honour all the post-dated cheques in time but they were not aware of the intention of the CD as it had not made payment beyond Rs. 1,10,00,000 and were still in the arrears of more than Rs. 3 Cr. The Financial Creditor then filed the second petition of the reduced debt about which the default is not in question, therefore, the Adjudicating Authority has rightly admitted the application. It is observed that if this kind of tricks, played by the CD with the FC are allowed and the plea raised by the Appellant is accepted that the second petition on the ground of settlement agreement is not maintainable then it would give a premium to the unscrupulous CD to get the petition filed under Section 7 withdrawn on the basis of the settlement which was not to be ultimately followed. Definitely, this kind of attitude and act on the part of the CD is not appreciated. Amount paid out of the court during the pendency of this appeal to be adjusted in the amount which is stated to be due - HELD THAT:- Suffice it to say that the Appellant has not brought on record any writing/ agreement in this regard that the said amount has been paid towards the adjustment of the principal amount otherwise the Financial Creditor is entitled to adjust the amount towards the payment of interest component at the first instance. There are no merit in the present appeal - the amount deposited by the Appellant in this court by way of FDR is ordered to be returned to the Appellant within a period of one month from the date of passing of this order by the Registrar after due verification. Appeal dismissed.

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• 2024 (5) TMI 999
  Maintainability of proceedings under Section 66 of IBC, 2016 - Resolution Professional has not given clear opinion or determination or finding as required under Regulation 35 A - Fraudulent transaction or not - HELD THAT:- The Resolution Professional had informed the CoC that there are no matching assets/inventory with the Corporate Debtor. Only thereafter, Application under Section 66 IBC was filed thereby showing that the Resolution Profession had complied with the Regulation 35A of IBBI (Resolution Process for Corporate Persons), Regulation 2016. As per provisions of sub-section (1), the Adjudicating Authority can pass an order directing any person , who was party to carrying on the business of Corporate Debtor in such manner as to defraud creditors of the Corporate Debtor, or for any fraudulent purpose, to make him liable to make such contribution to the assets of the Corporate Debtor as it may deem fit. A plain reading clearly shows that action can be taken against any person for recovery of amount involved in the fraudulent transaction. In the present case, there is a finding that Manoj Punamia was running several companies in its business of gold refinery. The finding of the Customs Department was that both the Appellant Company (RICL) and Corporate Debtor (RRPL) were being managed by Mr. Manoj Punamia. Mr. Manoj Punamia and his wife were said to be shareholders of the Appellant Company. In these circumstances, the appellant cannot be said to be a third party, as both RICL and RRPL are under the control of same person - This is a case where the outstanding of Appx. Rs. 158 Cr. was brought down to Rs. 31 Cr. by alleged entries so as to reduce the amount due to the Corporate Debtor thereby reducing likelihood of recovery, causing loss to the creditors of the Corporate Debtor. On similar facts, in the case of MR. NANDKISHORE VISHNUPANT DESHPANDE (RESOLUTION PROFESSIONAL FOR ROYAL REFINERY PVT. LTD. VERSUS SHRI BAIJU TRADING AND INVESTMENT PRIVATE LIMITED; MR. VISHAL CHOUDHARY; MR. GAURAV D PANWAR; MR. MANISH PANWAR; MR. MUKESH MEHTA AND RAKSHA BULLION VERSUS ROYAL REFINERY PRIVATE LIMITED [ 2021 (1) TMI 1322 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI] the order of NCLT under Section 66 of IBC, 2016 was upheld by this Tribunal [ 2023 (7) TMI 958 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH ], vide order dated 29.03.2023 - Similarly, in the case of Tridhaatu Kirti Developers LLP [ 2023 (1) TMI 455 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] against the same respondents, who are also Respondents in the present appeal, the order of NCLT under Section 66 IBC was upheld by this Tribunal. Section 66 of IBC, 2016 empowers the Adjudicating Authority to pass an order for recovery from such fraudulent transactions as contribution to the assets of the Corporate Debtor. Such action has also been upheld by Hon ble Supreme Court in the case of Phoenix Arc (P) Ltd. vs. Spade Financial Services Ltd. [ 2021 (2) TMI 91 - SUPREME COURT ]. Thus, it is apparent that entries were made in its accounts by the Appellant to reduce its liability towards the Corporate Debtor - there are no reason to interfere with the order of the Adjudicating Authority. The Appeal is accordingly dismissed.

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• 2024 (5) TMI 998
  Dismissal of application filed for resolution - application dismissed on the ground that since the name of the Corporate Debtor has already been struck off by the RoC, therefore, the application under Section 9 cannot be further prosecuted - whether the application under Section 9 is filed for winding up or for initiation of CIRP? - HELD THAT:- Winding up is the process by which a company is dissolved and its assets are liquidated to pay off its creditors and any remaining assets are distributed to its shareholders. The winding up of a company can be initiated voluntarily by the company s shareholders by passing a resolution and appointing liquidator to oversee the process and winding up can also be by an order of the Court wherein the Court appoints the liquidator and the process is governed by the Rules set up in the Act and other applicable laws. This process is initiated when the company is unable to pay its debts or when it is just and equitable to do so. The mechanism of winding up is applied for the recovery of debt. On the other hand, it has been repeatedly held by the Hon ble Supreme Court that the Code is not a debt recovery mechanism but a mechanism for revival of a company fallen in debt. It has been held that the Code is a beneficial legislation intended to put the corporate debtor back on its feet and is not a mere money recovery legislation. The CIRP is not intended to be adversarial to the CD but is aimed at protecting the interests of the CD. The primary focus of the legislation is thus to ensure the revival and continuation of the CD by protecting the CD from its own management and from a corporate death by liquidation. The preamble of the Code speaks of maximisation of value of assets of the CD and balancing the interests of all the stakeholders with an object to keep the CD as a going concern. Section 252(3) travels into an altogether different direction rather than the way it has been observed in the case of Hemang (Supra) because Section 252(3) gives a right of appeal to a company, member, director or workmen to challenge the order of the Registrar passed under Section 248 (5) on the three grounds, namely, while its name was struck off it was carrying on business, or was in operation or otherwise it is just which has to be established by pleadings and evidence before the Tribunal and only then the order can be passed which shall again be a subject of an appeal in terms of Section 61 of the Code but in our humble opinion, there is nothing like automatic restoration on the filing of the application under Section 7 or 9 of the Code. There are no error in the order of the Adjudicating Authority which requires any interference by this Court - appeal dismissed.

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• PMLA

• 2024 (5) TMI 997
  Money Laundering - petitioner once again came back to section 2(u) of the PMLA Act to submit that forcible possession of landed property is not the proceeds of crime, no predicate offence and no definite conclusion is here - it was held by HIgh Court that ' The learned senior counsel for the petitioner concluded his arguments, and the judgment was reserved for further deliberation.' - HELD THAT:- The present special leave petition has become infructuous and is accordingly disposed of.

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• Service Tax

• 2024 (5) TMI 996
  Condonation of delay in filing Appeal - challenged the order passed by the appellate authority u/s 85 of the Finance Act, 1994 for dismissing the appeal as time-barred due to delay in filing beyond the prescribed period - HELD THAT:- Upon a perusal of the memo of appeal filed by the petitioner, it is clear that the order was communicated on January 17, 2023, as admitted by the petitioner itself. The petitioner has explained the delay stating that the delay was caused due to the ignorance of AR/legal counsel and also because the petitioner suffered with medical emergency caused by acute viral hepatitis between the period April 10, 2023 to May 31, 2023. The petitioner has relied upon a judgment of the Delhi High Court in Pioneer Corporation v. Union of India [ 2016 (6) TMI 437 - DELHI HIGH COURT] to argue that in exceptional circumstances and in the rarest of rare cases, the writ court has the power to condone the delay. However, as pointed out in the appellate order, which is under challenge before this Court, the Hon ble Supreme Court in Singh Enterprises vs. C.C.E., Jamshedpur [ 2007 (12) TMI 11 - SUPREME COURT] has held that u/s 35 of the Central Excise Act, the delay cannot be condoned beyond what is prescribed under the Central Excise Act as the language of the said section specifically provides for condonation of delay of additional 30 days only. Section 85 of the Act is in pari materia with the above section. The Finance Act, 1994 is a special statute and a self-contained code by itself having an inbuilt mechanism wherein it has impliedly excluded the application of the Limitation Act, 1963 ( Limitation Act ). It is a trite law that the power of Section 5 of the Limitation Act will be available only if it is extended to a special statute. The adjudication of matters involving statutory timelines often raises questions regarding the interplay between general statutes such as the Limitation Act and special statutes with their own prescribed limitations. Thus, no interference is warranted with the impugned order. Accordingly, this writ petition is dismissed.

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• 2024 (5) TMI 995
  Transportation services - liability to pay Service Tax u/s 65(50b) - GTA Service - transportation of Pre-Stressed Concrete Poles (PSC Poles) - GTA service - HELD THAT:- Admittedly vehicles were being hired by the appellant through a contract for transportation of the goods does not make them a Goods Transport Agency. Admittedly, no consignment notes were generated but fortnightly waybills were submitted by the appellant to their consignee for collecting the transport charges. Thus, I am of the view that they cannot be considered as Goods Transport Agency , therefore, not liable to service tax. In the result, the impugned order is set aside and the appeal is allowed.

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• 2024 (5) TMI 994
  Service tax liability on the amount retained by the appellant from the sale proceeds of unclaimed imported goods - consideration for providing service or not - storage and warehousing services - service tax paid under protest for the period February 2004 to 17.07.2008 - appellant is operator of container freight station and custodian of goods - Applicability of precedent decision of this Tribunal in appellant s own case ALL CARGO GLOBAL LOGISTICS LTD. VERSUS CCE RAGIAD AND VICE VERSA [ 2015 (10) TMI 2216 - CESTAT MUMBAI] - HELD THAT:- On going through the precedent decision of this Tribunal in appellant s own case, it is very clear that the said decision is in favour of the appellant and exactly on the same issue for earlier period. Judicial proprietary and decorum requires that coordinate Bench must follow precedent decision passed by another Bench of this Tribunal but there comes little bit reluctance in completely following the said decision in which distinction between charges received towards storage and warehousing and balance of auction proceeds of abandoned goods is not forthcoming and also there is change of law post 2011 effected through introduction of negative list for the part period, coupled with insertion of proviso to section 150 (2) of the Customs Act with effect from 08.04.2011. To start with, it has be to placed on record that Appellant was paying service tax under protest after being summoned by the Superintendent (preventive) Central Excise, Raigad, as could be inferred from the covering letter of the Appellant dated 10.11.2006, 17.07.2008, 08.08.2008 and 13.10.2008, annexed to the appeal memo from page no. 16 onwards. Appellant had paid service tax under protest for the period February 2004 to 17.07.2008 but such protest was with regard to auction surplus of abandoned cargo in which service tax was stated to be not payable since no service was provided to any person by the Appellant. This stand might have been taken by the Appellant by following the Board circular of 2002 but taking note of the said circular this Tribunal vide its order passed in 2015 for the period of 2009, allowed the appeal of the Appellant only to the extent of surplus lying in their account from auction sale proceeds. Appellant also had relied on the decision of this Tribunal passed in the case of M/S. TRANSINDIA LOGISTICS PARK VERSUS COMMISSIONER OF SERVICE TAX, RAIGAD [ 2016 (5) TMI 135 - CESTAT MUMBAI] and pleaded the same in its written note of the argument as a decision passed in its favour without any reference as to if the present Appellant and the said Trans India Logistics Park Limited are one and same or sister concern of each other but the said order was passed in respect of availment of CENVAT credit on certain services which were exclusively used for auction of abandoned goods that was held to be inadmissible by the Adjudicating Authority by holding such auction sale as trading activity - Placing reliance on this decision the Appellant could no absolved its liability for the reason that trading is a sale of goods which is outside the purview of the service tax in view of operation of Article 366 (29A) of the Constitution of India but as observed above activity of trading is not the purpose of the entire process of auction, when the same is meant to discharge the liability including liability that had arisen from availment of services of custodian of goods etc., in terms of section 150 of the Customs Act. Change of law occurred both in service tax laws after introduction of negative list by broadening the horizon of service tax network and also by amending section 150 of the Customs Act in making deposit of surplus money, retained by the auctioneer, with the Government within six months, if the importer did not come for want to receive the same. With protest upto the year 2008 and without protest thereafter, Appellant had discharged its service tax liability in respect of storage and warehousing services upto the present dispute that arose from April 2011. It is, therefore, not understood as to why Appellant has change its stand in not making payment of service tax against receipt of the amount towards storage and warehousing services rendered by it and clubbing both the amount of these services as well as surplus that was retained on behalf of the exporter and showing the same as non-taxable income in its account statement and therefore, the Appellant is liable to pay service tax on storage and warehousing services for the period under dispute and it would not suffer any loss on that account as the entire amount retained by him would otherwise go back to the Government treasury in view of the operation of section 150 clause 2(e) read with its proviso. Therefore, no irregularity is noticeable in the order passed by the Commissioner of Service Tax-IV, Mumbai who also has followed this Tribunal s order passed in 2015 for the earlier period - appeal dismissed.

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• 2024 (5) TMI 993
  Delay in filling Refund Claim - limitation of 01 year u/s 11B - Imports crude oil - Unjust Enrichment - Liability for payment of service tax on reverse charge mechanism on the ocean freight - HELD THAT:- The issue in the present appeal is no more res integra and the Tribunal in the case of M/s RGI Meditech Pvt. Ltd. V/s Commissioner of Central Excise Service Tax [ 2024 (1) TMI 578 - CESTAT ALLAHABAD] The Hon ble Supreme Court in the case of Mafatlal Industries Ltd. V/s UOI [ 1996 (12) TMI 50 - SUPREME COURT] has laid the law by holding that the very collection/retention of tax without the authority of law entitles the person from whom it is collected to claim its refund. Thus, I do not find any infirmity in the impugned Order-In-Appeal and accordingly, the same is upheld. The appeal filed by the Revenue being devoid of any merits is dismissed.

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• Central Excise

• 2024 (5) TMI 992
  Wrongful availment of CENVAT Credit - appellant did not produce the input tax invoices for verification at the time of audit - HELD THAT:- It is found from the orders passed by the lower authorities that the cenvat credit has been denied to the appellant on the sole reason that the input service invoices were not produced by the appellant for verification during the audit and when these invoices were produced by the appellant before the Adjudicating Authority, instead of considering the same, he sent the invoices to the jurisdictional Division Office for verification and disallowed the credit relying on the verification report of the Divisional Office. The Commissioner (Appeals) ought to have remanded the matter in entirety and should not have bifurcated the amount when according to the appellant it is on the same footing. Learned counsel for the appellant has prayed that the dispute in the present appeal relating to the amount of Rs.10,02,461/-should also be remanded to the Adjudicating Authority to be considered de novo in the light of the documents specially the invoices to be placed on the record. The proper course would be to remand the matter in respect of the present issue to the Adjudicating Authority to be considered on merits. Appeal allowed by way of remand.

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• 2024 (5) TMI 991
  CENVAT credit - process amounting to manufacture or not - process of drawing from bars and rods - HELD THAT:- There is no provision in the CENVAT Credit Rules to deny credit at the end of the manufacturer who uses the inputs on which duty has been paid though under mistaken notion of law. The appellants having procured the inputs on payment of duty are entitled to avail CENVAT credit on the same. Credit allowed - The appeal is allowed.

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• 2024 (5) TMI 990
  Wrongful availment of benefit of SSI exemption - clubbing of clearances - commonality of the directors and financial dealings between them - HELD THAT:- The very same issue has been decided in favour of the appellant by this Bench of the Tribunal in NOBLE CHLOROCHEM PVT. LTD., NOBLE ALCHEM PVT. LTD., SHRI KAILASH CHAND GUPTA, DIRECTOR, SHRI SURESH CHAND GUPTA, DIRECTOR VERSUS CCE ST, ROHTAK [ 2020 (7) TMI 291 - CESTAT CHANDIGARH] on the show cause notice issued for the period 2006 to 2012, wherein the Tribunal has held 'As per the CBEC Circular No.6/92 dated 29.5.1992, the Board has clarified that private limited companies are treated as separate, therefore, we have no hesitation to hold that both the units are separate units.' T he impugned order is not sustainable and requires to be set aside - Appeal allowed.

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• 2024 (5) TMI 989
  Rejection of refund claim - refund of duty paid on outward freight charges - no requirement to pay duty on the transportation charges, as the appellant was clearing goods from their factory gate - goods are sold on FOR basis - difference of opinion - majority order - HELD THAT:- Following the ratios of the law laid down by the Larger Bench of the Tribunal in the case of M/s The Ramco Cements Limited [ 2020 (6) TMI 794 - CESTAT CHENNAI] and the decision of Hon ble High Court of Himachal Pradesh in the case of M/s Inox Air Products Pvt Ltd [ 2024 (4) TMI 32 - HIMACHAL PRADESH HIGH COURT] , it is opined that the impugned orders denying the refund of the excise duty paid by the appellant on transportation of the goods up to the buyer s premises are not sustainable in law and hence, the same is set aside by allowing all the appeals of the appellant with consequential relief, if any, as per law. When the sale is on a FOR basis and the outward freight charges are included in the assessable value, the appellant is entitled to claim a refund of the central excise duty paid on the freight. Appeal allowed.

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• 2024 (5) TMI 988
  Exemption /effective rate for goods falling under Chapter Heading Nos.84 to 98 of of the Central Excise Tariff Act, 1985 under N/N. 6/2006-CE dated 01.03.2006 - Clearance of goods without payment of duty to M/s.Nagarjuna Thermal Power Project, Udipi, Karnataka for setting up of a Mega Power Project - demand on quantity of M.S.Rebars, cleared in excess of the quantity allotted to them by the Project Authority - Extended period of limitation. The department was of the view that the supply of M.S.Rebars is not against the International Competitive Bidding, as the appellant is only a sub-contractor and thus the exemption has been wrongly availed by them. Eligibility for benefit of Notification No.6/2006-CE dated 01.03.2006 for the goods supplied - HELD THAT:- Admittedly, the appellant is a sub-contractor who has supplied goods to the main contractor, M/s.Lanco Infratech Ltd, who has participated in the International Competitive Bidding. The issue whether the sub-contractor, who has supplied the goods to the main contractor, who has participated in the International Competitive Bidding is eligible for exemption has been clarified by vide Board Circular dated 10.07.2014. Also, the Tribunal in the case of KENT INTROL PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2014 (2) TMI 633 - CESTAT MUMBAI ] has held that when the supply of goods are made to the main contractor who has participated in the International Competitive Bidding and has been awarded the contract; the sub-contractor is also eligible for exemption under Notification No.6/2006-CE dated 01.03.2006. The Tribunal in the case of M/S TOSHNIWAL INDUS. PVT. LTD. VERSUS CCE, JAIPUR-II [ 2017 (5) TMI 387 - CESTAT NEW DELHI ] has taken a similar view, which held that the sub-contractor is also eligible for the Benefit of Notification. Thus, the view taken by the Adjudicating Authority that the goods are not eligible for exemption for the reason that the appellant is only a sub-contractor is not justified. The second ground on which the Benefit of Exemption has been denied is by alleging that the appellant has not satisfied Condition No.19 of the Notification No.6/2006 - HELD THAT:- The goods irrespective of their individual classification and rate of duty, if intended for use in execution of a project which is satisfied under CTH 98.01 are eligible for Benefit of Exemption from Customs duties. Thus, goods imported when intended for use in Mega Power Project are eligible for exemption from Customs duties, in terms of Sl.No.400 of Notification No.21/2002-CUS dt. 01.03.2002. The condition prescribed under Sl.No.91 of Notification No.6/2006 thus stands satisfied. In the case of SARITA STEELS INDUSTRIES LTD. VERSUS COMMR. OF C. EX., VISAKHAPATNAM [ 2010 (7) TMI 568 - CESTAT, BANGALORE ] the issue considered was that whether the angles, channels, beams, etc. supplied by the assesse to M/s.Bharat Heavy Electricals Limited, was eligible for exemption under Notification No.6/2006. The goods having been intended to use for the Mega Power Project, the Tribunal held that the goods would be relatable to Chapter Heading 98.01 and would be eligible for Benefit of Exemption of under Notification No.21/2002. The Tribunal in the case of M/S GANGES INTERNATIONAL PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 14 (8) TMI 498 - CESTAT NEW DELHI ] considered the same issue and held that the case is in the nature of General Fabrication Structures, Auto Welded Beams and Boxes, cleared by appellants for use in the Mega Power Project would be eligible for benefit of notification. From the above, it is clear that the supply of goods required to set up mega power project is covered by Chapter Heading 98.01. The Project Authority Certificate issued to the appellant clearly states that the goods have been supplied for Nagarjuna Thermal Power Project, Udupi. This being the fact, the order passed by the adjudicating authority that M S Rebars do not fall under CH 98.01 is erroneous and not supported by any basis. Thus, the denial of exemption is without any legal or factual basis. The appellant is eligible for exemption under Notification No.6/2006-CE dated 01.03.2006. The Impugned Order is set aside - The appeal is allowed.

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• CST, VAT & Sales Tax

• 2024 (5) TMI 987
  Penalty u/s 7-A(2) of AP GST Act, 1957 - penalty levied on the ground of mere possession of the bills alleged to be false though the Petitioner did not produce the same before the assessing authority in support of claim or exemption as second sale - burden to prove - case of petitioner is that the petitioner did not claim exemption and that he did not produce the invoices etc., so as to attract Section 7-A(2) - HELD THAT:- It is evident from a bare reading of Section 22(1), that the revision lies to this Court against the order of the Appellate Tribunal on the ground either that a question of law has not been decided or a question of law has been erroneously decided - In THE SALES TAX APPELLATE TRIBUNAL VERSUS ANDHRA CEMENTS LIMITED [ 2023 (2) TMI 1302 - ANDHRA PRADESH HIGH COURT] , it was held that as per Section 22(1) of the AP GST Act, the Tax Revision Case lies to the High Court only on the question of law. Recently in the THE STATE OF A.P., REP. BY THE STATE REPRESENTATIVE VERSUS M/S. JAI SREE ENTERPRISES, VIJAYAWADA [ 2024 (5) TMI 720 - ANDHRA PRADESH HIGH COURT] , this Court has held that the revision does not lie on a question of fact. It lies only if the question of law has either not been decided or has been erroneously decided. So there is no dispute on the proposition that under Section 22 of the AP GST Act, revision would not lie on a question of fact. In Eswara Oil Company [ 1983 (3) TMI 241 - ANDHRA PRADESH HIGH COURT] , the STAT Tribunal therein found that the petitioner therein had not actually produced the bill said to have been falsely obtained nor did he file any declaration in Form E. In view thereof it was held that the penalty under Section 7-A(2) could not be imposed. The said case is of no help to petitioner as in the present case the petitioner produced false bills and claimed exemption on part of the turnover as second sale - In South India Agencies [ 1988 (6) TMI 301 - ANDHRA PRADESH HIGH COURT] , it was held that action, under Section 7-A(2) of the Act, 1957 has to be taken by the Assessing Authority on detecting such issue or production . The sub-section itself specifies the starting point for the action there under. It was observed that there could be no question of taking proceedings for levying penalty for issuing or producing a false bill, voucher, etc., unless it is first found that such thing had happened. It was also observed that the Analogy of Section 14 has no application at all. Levy of penalties under Section 14 of the Act and levy of penalty under Section 7-A of the Act are distinct proceedings based on distinct grounds. The revision has no force. The STAT has neither failed to decide a question of law nor has decided the question of law before it erroneously. No case for interference is made out. The Tax Revision Case is dismissed.

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• 2024 (5) TMI 986
  Admission of appeal for requirement of compliance of deposit of 12.5% under proviso to Section 31 of the AP VAT Act - Rejection of endorsement dated 26.04.2023 - rejection on the ground that the Form- H could not be considered since those forms were filed after completion of the CST assessment for the year 2011-12 - HELD THAT:- A bare perusal of Section 31(1) IIIrd proviso, shows that the appeal preferred under Sub-Section (1) shall not be admitted by the Appellate Authority unless the dealer produces proof of payment of tax, penalty, interest or any other amount admitted to be due, or of such installments as have been granted, and the proof of payment of twelve and half percent of the difference of the tax, penalty, interest or any other amount admitted by the appellant, for the relevant tax period, in respect of which appeal is preferred. So the IIIrd proviso, specifically refers to the amount of 12.5% of the tax, interest and penalty or any other amount admitted. The endorsement impugned before the Appellate Authority the petitioner has not to pay any tax, penalty or interest or any other amount. Consequently, there would no question of deposit of 12.5% of the tax pursuant to the IIIrd proviso. In M/s. Sri Hari Maharalayam Company [ 2019 (9) TMI 1550 - ANDHRA PRADESH HIGH COURT ] direction was given to the appellate authority to entertain the appeal without insisting upon payment of 12.5%. The impugned order is set aside with direction to the respondent No. 2 to consider the admission of the appeal without insisting for the compliance with the III proviso of Section 31 of the AP VAT Act - this writ petition is allowed.

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• 2024 (5) TMI 985
  Validity of assessment orders - assessment order challenged on the ground of existence of alternative remedy - extent of labour involved in execution of works contract - levy of purchase tax on the basis of purchases made from unregistered dealers - Processing loss - HELD THAT:- It would be evident from the records that the question as to the extent of labour involved in execution of works contract is a question of fact which ought to be demonstrated / proved on the basis of documentary evidence. Secondly, levy of purchase tax on the basis of purchases made from unregistered dealers also gives rise to disputed question of facts. Processing loss is again an aspect, which would require examination of facts of each case. The claim of deduction of TDS requires filing of statutory form, again an exercise which is alien to writ jurisdiction. Thus, there are no reason to interfere with the order relegating the appellant to avail statutory remedy of appeal. The appellate authority is the appropriate authority / forum to examine the above disputed questions of fact. It is trite law that the power under Article 226 of the Constitution of India is neither an appellate or a revisional jurisdiction nor can writ jurisdiction be converted into a Court of appeal. Yet another reason as to why it is found that the order of the learned judge rejecting the writ petitions and granting liberty to file appeal, does not warrant interference is that despite revised notices having been issued by the assessing authority, the appellants have not filed their objections. There are no reason to interfere with the order of the learned Judge. The appellant is granted liberty to avail statutory remedy within a period of 4 weeks from the date of receipt of a copy of this judgment subject to complying with all conditions relating to appeal including pre-deposit, if any. Appeal disposed off.

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• 2024 (5) TMI 984
  Penalty u/s 53(12) of the Karnataka Value Added Tax Act, 2003 - discrepancies in the documents tendered by the person incharge of the vehicle - HELD THAT:- The transport of arecanut was being done by the Assessee from Puttur to Diu and Delhi and the place at which the vehicle of the Assessee was intercepted i.e., Shiradhi Ghat was not the ordinary route to reach the place of destination. Further, it was also noticed that in the documents issued the vehicle number was also not mentioned. Hence, noticing the various discrepancies the statutory authorities have categorically recorded a finding that there was an intention to evade tax by the Assessee. Further, in view of the discrepancies noticed, the Assessee was imposed with a penalty. In the present case, the statutory authorities have categorically recorded a finding of fact that there has been various irregularities in the petitioner carrying the goods as required under Section 53 (2) of the KVAT Act - the authorities having recorded concurrent findings of fact that there has been non compliance of the requisite provisions of the KVAT Act, inasmuch as the petitioner was not carrying the required documents at the time of transportation. Hence, it cannot be said that the Assessee has the necessary documents in terms of Section 53 (2) of the KVAT Act. It is clear that no question of law arises for consideration in the present revision petition. The revision petition is dismissed as being devoid of merit at the stage of admission itself.

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• Indian Laws

• 2024 (5) TMI 983
  Dishonour of Cheque - dispute has been settled amicably - respondent has submitted that he has no objection if petitioner is acquitted from the charge under Section 138 of Negotiable Instruments Act, 1881 - HELD THAT:- Since the parties are entering into compromise at the stage of revision, therefore, law laid down by the apex Court in the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] will be applicable in this case, where it was held that ' if the application for compounding is made Criminal Revision No.3198/2021 before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs.' Considering the fact that the parties have amicably settled their dispute and have entered into compromise before this Court in the revision and decided to avoid further litigation, hence, the applicant is liable to pay 3% of the cheque amount i.e. Rs. 900/- by way of cost to be deposited with the State Legal Services Authority Indore - Subject to payment of cost at the rate of 3% of the cheque amount with the State Legal Services Authority Indore, within seven days from the date of this order, the applicant be acquitted and released from the jail thereon, if he is in jail. The revision stands disposed of.

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• 2024 (5) TMI 982
  Rejection of prayer for grant of renewal of license - requirement of minimum distance between L-10BB and L-2 vend - Section 68 (2) of the Himachal Pradesh Excise Act, 2011. Financial Commissioner (Excise), Himachal Pradesh, Shimla while passing order dated 16.04.2024 specifically concluded that license in form L-10BB granted to application was approved and granted only in respect of branch at 269 Ward No.4, The Mall Road, Manali and not for the principal place of business and as such, same cannot be renewed. HELD THAT:- This Court finds that it is not in dispute that in the financial year 2020-21, petitioner-firm was granted license form L-10BB for retail sale of beer, wine, cider and RTD beverages and BIO brands in departmental stores at Manali. Aforesaid license issued initially in year 2021 was renewed continuously till financial year 2023-24. It is also not in dispute that prior to issuance of clarification dated 20.12.2023 (Annexure P-4), license holder in form L-10BB were entitled to run their business from branch office. It is only after issuance of aforesaid clarification dated 20.12.2023, condition of doing business from principal place of business came to be imposed as per condition No. 10.8 of Excise Policy for year 2023-24. Careful perusal of clarification issued by respondent-department vide communication dated 20.12.2020 reveals that after issuance of aforesaid communication, business in terms of license in form L-10BB could only be done in terms of condition No. 10.8(vi) of Excise Policy 2023-24, meaning thereby, after issuance of aforesaid clarification, L-10BB license holder are not permitted to function from the branches of departmental store, but there is nothing in the aforesaid announcements, especially detailed in condition No. 10.8 that prayer, if any made, for renewal of license in form L-10BB made on behalf of such of the licensees, who though earlier in terms of aforesaid license were doing their business from branch but had eventually decided to shift their branch to principal place of business, cannot be accepted. Reliance is also placed upon judgment by Principal Division Bench in MOHAN MEAKIN LTD. AND ORS. VERSUS STATE OF H.P. AND ORS. [ 2019 (9) TMI 1728 - HIMACHAL PRADESH HIGH COURT] , wherein it specifically came to be ruled that till the time, amendment is not made in the Rules, the conditions contained in Excise Policy cannot be enforced, especially when same is in contradiction with the provision contained in the Rules - It is quite apparent from the law laid down by the Division Bench of this Court that conditions contained in Excise Announcements made for a particular financial year cannot be enforced, in case, same are contrary to the Rules, whereunder licensee is granted license to do the business of liquor, be it in form of L-10BB or L-2 vend. This Court finds merit in the present petition and as such, same is allowed and impugned order dated 16.04.2024 passed by Financial Commissioner (Excise), Himachal Pradesh (Annexure P-10) is quashed and set aside with the direction to respondents to accept the prayer made by the petitioner for grant of renewal of license L-10BB on account of the fact that premises, wherein business was being run in previous years in terms of form L-10BB stands upgraded to principal place of business, as is evident from the amended GST Registration Certificate issued by the authority concerned. Petition allowed.

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• 2024 (5) TMI 981
  Betting - amount from the punters towards payment of GST and from the winning bettors towards payment of TDS and have not deposited the same to the concerned Department - misappropriation of the money - whether the nature of accusations and allegations made in the first information report prima facie discloses the commission of a cognizable offence or not? - HELD THAT:- In almost identical circumstances, the Hon'ble Supreme Court in the case of State of West Bengal vs. Narayan K. Patodia [ 2000 (4) TMI 777 - SUPREME COURT] , wherein the High Court of Calcutta had quashed the first information report on the ground that the person who forwarded the same to the police had no authority to do so, has set-aside the order passed by the High Court of Calcutta. In the said case, FIR was registered under the Indian Penal Code and the provisions of West Bengal Sales Tax Act and FIR contained allegations that on the basis of fabricated documents, the accused had obtained the registration under the Sales Tax Act, which entitled him to make purchase at concessional rate of sales tax and also receive permits for importing spices from outside the state. The High Court had quashed the first information report by expressing its opinion that under the Sales Tax Act, only Bureau of Investigation constituted by the State Government can conduct the investigation or hold inquiry and police officer cannot register first information report for the offence punishable under the Indian Penal Code or any other Act. In the case of ANJAN DASGUPTA VERSUS THE STATE OF WEST BENGAL AND ORS. [ 2016 (11) TMI 1755 - SUPREME COURT] , the Hon'ble Supreme Court has observed that the receipt and recording of first information report is not a condition precedent for setting in motion of a criminal investigation and when information is received with regard to cognizable offence, the police was duty bound to start the investigation. In the present case only for the purpose of verification of the correctness of the credible information received, the first informant, who is a police officer had visited the premises of the Bangalore Turf Club and after holding a preliminary enquiry, being satisfied with regard to the correctness of the first information received by him, had proceeded to lodge a first information before the jurisdictional Police Station, which had culminated in registration of FIR in Crime No. 9/2024 and investigation in the case was conducted only thereafter and therefore, the contention raised by the learned Senior counsel for the petitioners that procedure followed by the police in the present case is contrary to the principles laid down by the Hon'ble Supreme Court in the case of Lalita Kumari [ 2013 (11) TMI 1520 - SUPREME COURT] is devoid of any merit. The only point that arises for consideration before the High Court at that stage is whether the nature of accusations and allegations made in the first information report prima facie discloses the commission of a cognizable offence or not. In the event, it is found that allegations made in the first information makes out a prima facie case for cognizable offence, the investigating agency is required to be permitted to carry on with the investigation. Section 482 of Cr.P.C cannot be a tool to be used by accused to short-circuit a prosecution and close the same without full fledged enquiry, more so, when serious allegations are found against the accused. Section 482 of Cr. P.C. should not be exercised to stifle a legitimate prosecution. When a prosecution is sought to quashed at the initial stage, the test to be applied by the Court is as to whether the uncontroverted allegations made, prima facie makes out the offence/offences. The correctness of the allegations as well as the reliability and credibility of the witnesses cannot be considered by this Court while exercising its powers under Section 482 of Cr. P.C. - In the present case, as stated earlier, the allegations found in the first information and the material collected by the Investigation Officer during the course of investigation prima facie make out a cognizable offence as against the accused and in view of the interim order granted by this Court, the investigation which was under progress has been stalled. The allegations against the accused is of very serious nature and the accused amongst other allegations, allegedly have misappropriated crores of money collected by them towards payment of GST and TDS. The prayer made by the petitioners for quashing the FIR registered against them cannot be granted - Petition dismissed.

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