TMI Tax Updates - e-Newsletter
May 3, 2024
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Levy of interest and penalty - transition of amount wrongly claimed as input tax credit under the CENVAT Credit Rules, 2004 - The court confirmed that the petitioner was not entitled to the ITC on basic customs duty under the CENVAT Credit Rules and thus could not transition this credit under the CGST Act. This was deemed an error by the department, but the petitioner was still liable for the repayment of the credit received erroneously. - The court upheld the decision to set aside the penalty of Rs. 21,44,097 imposed on the petitioner, agreeing that the requirements for fraud, willful misstatement, or suppression were not met, hence the invocation of Section 74 of the CGST Act was incorrect. - The court maintained the demand for interest under Section 50 of the CGST Act, noting that while the initial tax credit was granted erroneously, the petitioner still retained the undue benefit over a period, thereby justifying the interest levy.
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Levy of penalty @200% - e-way bill which was generated by the appellant had expired and at the time when the vehicle was intercepted four days had lapsed - The High Court acknowledged that penalties should not be imposed without considering mens rea. While the statute allows for a penalty of 200%, it does not absolve authorities from considering circumstances and intentions. Despite the expiration of the e-way bill, the Court found that the appellant's failure to extend the validity was a crucial factor. However, it noted that the penalty was calculated on a higher value than the invoice, indicating arbitrariness on the part of the authorities. Ultimately, the Court partially allowed the appeal, imposing a reduced penalty but refrained from completely exonerating the appellant.
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Eligibility for Input Tax Credit - Failure to report outward supply - The objection of the petitioner is that most of these items do not fall within the reverse charge mechanism - discrepancy between the petitioner's GSTR 1 and GSTR 3B - The petitioner contested taxation under reverse charge mechanisms, disputed input tax credit claims, and discrepancies in tax filings. The High Court found flaws in the tax authority's reasoning, particularly in assessing tax liabilities without proper examination and application of relevant laws. Consequently, the Court set aside the impugned order, subject to conditions such as partial payment of disputed taxes and providing further evidence.
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Seeking cancellation of the GST registration - The case involved a petitioner seeking cancellation of their GST registration due to the closure of their business operations. Despite two applications for cancellation, the respondent rejected them without providing valid reasons. The High Court found the rejection unjustified, emphasizing that unless the revenue's interests were compromised, there were no grounds for refusal. It ruled in favor of the petitioner, ordering the cancellation of the registration with effect from the date of the initial application. The court clarified that the respondent could still pursue recovery of any dues in accordance with the law.
Income Tax
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Reference to Departmental valuation officer [DVO] without first rejecting the books of accounts - The Court reiterated the importance of rejecting the books of accounts before referring the matter to the valuation officer. It found that the Tribunal had erred in not considering this crucial aspect, as affirmed by Supreme Court precedent. Consequently, the Court set aside the Tribunal's order and remitted the matter for fresh consideration, emphasizing the necessity of determining whether the books of accounts were rejected before making the reference to the valuation officer.
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Validity of reopening of assessment - Validity of grant the approval by the PCIT - relevancy of information reported by Insight portal - Despite the petitioner's explanations and evidence of proper accounting, the Assessing Officer issued an impugned order claiming significant income escapement. However, the Court found discrepancies between the notice and the order, highlighting the AO's limited authority to reassess income based solely on the issues raised in the notice. Ultimately, the Court allowed the petition, quashing both the impugned order and notice.
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Validity of reopening of assessment - Petitioner received another notice u/s 148A(b) once again, alleging escapement of income - The High Court quashed and set aside the impugned order dated 24th March 2023, along with the order passed under Section 148 of the Act. The High Noted that the second notice lacked clarity and failed to explain how there was any escapement of income. Additionally, the assessment order based on this notice was passed without proper consideration of crucial information. The assessment order was flawed as it did not refer to certain crucial information and indicated a lack of application of mind by the Assessing Officer and the Principal Chief Commissioner of Income Tax.
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Penalty levied u/s 271(1)(c) - Transfer pricing adjustment - assessee advanced interest free loan to its AE - The Tribunal noted that the assessee had disclosed all relevant particulars, including the arm's length price (ALP) of interest in the transfer pricing study report. - The Appellate Tribunal observed that the loan transaction between the assessee and its AE was indeed a matter of international transaction. However, considering the explanations provided by the assessee, including the nature of the transaction as an equity investment, the Tribunal ruled that the imposition of penalties was not warranted.
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Disallowance of commission paid to foreign agents - The Tribunal upheld the disallowance of commission expenses to both domestic and non-resident companies due to the lack of evidence of services provided and non-compliance with TDS requirements. Similarly, the disallowance of legal and professional charges was upheld as the services originated from India. Additionally, the Tribunal upheld the disallowance of interest expenses, noting the diversion of interest-bearing funds for non-business purposes
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Penalty u/s. 271(1)(c) - Referring to a precedent set by the Hon’ble Supreme Court in CIT vs. Suresh Chandra Mittal, the Tribunal emphasized that when an assessee voluntarily discloses additional income to resolve tax disputes, such disclosure should be considered bona fide. - The Tribunal observed that the vouchers for the purchases were self-made and subsequently treated as bogus by the AO. It concluded that this situation mirrored the circumstances in the Suresh Chandra Mittal case, where penalties were canceled due to the assessee's bona fide explanation. Consequently, the Tribunal deleted the penalties imposed by the AO.
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Deduction u/s 80IA(4) - Disallowance of project facility expenses - Revenue expenses or Capital expenditure - Appellant was engaged in infrastructure development and toll road operation - Ld. CIT(A) upheld the appellant's claim, stating that these expenses did not create capital assets and were eligible for deduction under Section 80IA(4). The tribunal, following the principle of consistency, upheld the Ld. CIT(A)'s decision, citing precedents where similar deductions were allowed, and dismissed the Revenue's appeal. Condonation of Delay: Despite the initial delay, the tri
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LTCG - deduction u/s 54 denied - Despite the assessee's claim of having constructed a residential property within the specified timeframe, a physical inspection revealed the inadequacy of the alleged residential house. The property lacked basic amenities necessary for habitation, such as proper boundary walls, kitchen, electricity, and water connections. Certificates provided by the assessee were deemed insufficient to counter the findings of the physical inspection. Consequently, the Tribunal upheld the decision to deny the deduction under section 54, ruling that the assessee had not constructed a residential house within the prescribed time and without the necessary amenities for dwelling.
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Validity of assessment framed u/s 143(3) by Non- jurisdictional ITO - Jurisdiction of AO based on income threshold / monetary limits as per the return of income - The Appellate Tribunal allowed the appeal, primarily focusing on the jurisdictional issue. It held that the notice issued by the Income Tax Officer lacked jurisdiction due to the appellant's income exceeding the threshold. Consequently, the assessment was quashed as void ab initio.
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Addition u/s 69A - cash loans given by the assessee as unexplained - decoding of the entries in the seized materials - The tribunal found that the assessing officer's reliance on statements recorded during the search was insufficient to justify the addition under section 69A. They emphasized that the assessing officer did not entertain the appellant's request for cross-examination, and the retracted statements raised doubts about their reliability. Additionally, the tribunal noted discrepancies in the interpretation of entries and the lack of concrete evidence connecting the appellant to the transactions. Therefore, they deemed the addition unjustified and deleted it.
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Addition u/s 68 in the hands of partnership firm - capital introduced by five partners, which in turn was out of the loan advanced - The Appellate Tribunal (AT) examined the arguments and evidence presented by both parties. It held that the responsibility of the firm ends once it provides satisfactory evidence regarding the introduction of capital by its partners. The Tribunal cited precedents where it was established that once the partner invests capital, the burden shifts to that individual to explain the source of the investment. Therefore, the Tribunal directed the deletion of the addition made by the AO.
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TDS u/s 194H - non deduction of TDS commission paid to Primary Agriculture Co-operative Society (PACS) The Tribunal analyzed guidelines issued by the State Government and concluded that PACS functioned as agents of the State Government. Therefore, the commission paid by the assessee to PACS was subject to deduction of tax at source under section 194H of the Act. It was observed that the assessing officer had calculated TDS at the maximum rate without considering relevant factors such as the availability of PAN for PACS. Hence, the matter was remanded back to the assessing officer for proper verification and calculation of TDS.
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Interest u/s. 244A - interest on unpaid interest - refund awarded in the rectification order u/s. 154 - The appellant contested the decision of the Commissioner of Income Tax (Appeals), emphasizing their entitlement to interest from April 1, 2017, onwards. Despite initial denial by the Assessing Officer, the Tribunal ruled in favor of the appellant, considering the rectification order and the acceptance of Minimum Alternate Tax (MAT) credit. The Tribunal's decision aligned with the appellant's interpretation of section 244A, leading to the allowance of interest from the start of the assessment year to the date of refund.
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Rental income earned on immovable properties owned by his family members - Benami Owner - The Revenue's case relied primarily on a CBI report, which was subsequently dropped. The Appellate Tribunal held that the Revenue failed to prove the assessee's ownership of the properties, especially considering the evidence provided by the assessee and the acceptance of rental income by the Revenue. Consequently, the addition of rental income was directed to be deleted.
Customs
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Seeking grant of permission to export of rice - Ban on export of non-basmati white rice - Non-fulfilment of the conditions entitling it to an exemption - The High Court noted that each exemption condition is independent and must be satisfied fully for an exporter to qualify for the exemption. - The court found that the doctrine of substantial compliance could not be applied in this context. The specific conditions laid out in the notifications are integral to achieving the objective of the export ban, which is to stabilize domestic food security. Thus, the appellant’s inability to meet these conditions as prescribed meant that the exemption could not be granted.
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Safeguard duty levied on the import of solar cells and modules - Validity of levy during the period when the injunction from the High Court of Orissa was active - Protection of the domestic industry - The High Court found that the impugned notification issued during the subsistence of an Orissa High Court's injunction was indeed inoperative until the Supreme Court stayed the injunction. Post the stay, the notification became effective. The court held that the assessment of safeguard duties on imports made during the period when the injunction was active was illegal and arbitrary. Consequently, related actions taken during this period were set aside.
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Release of duty drawback and a rebate under Rebate of State and Center Taxes and Levies (ROSCTL) - 13 shipping bills uploaded on the respondent's (DGFT's) online portal, with a formal application yet to be made. - The High Court directed the petitioner to file a formal application following the prescribed procedure outlined in the Foreign Trade Policy handbook for ROSCTL release. Once the application is submitted, the respondent was ordered to process it within a maximum period of four weeks.
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Imposition of Penalties u/s 112(a) & (b) and 114AA - Each appellant denied direct involvement or knowledge of the illegal activities, claiming to have played different roles in the importation process. - import of restricted / prohibited goods - The Tribunal carefully evaluated the submissions and evidence presented by both parties. It found that penalties were justified for appellants extensively involved in the importation process, including procurement, concealment, transportation, and distribution of goods. However, penalties were set aside for appellants with limited or no direct involvement in the illegal activities.
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Benefit of reduced penalty of 15% u/s 28(5) - Delay in payment of penalty due to Public Holiday - The appellant voluntarily paid the differential BCD and interest upon detection of the misclassification - The appellant argued that the delay was due to bank holidays, invoking Section 10 of the General Clauses Act, 1897, which extends deadlines to the next working day if the last day is a holiday. - The Tribunal upheld the department's invocation of penal provisions but ruled in favor of the appellant regarding the computation of the limitation period for penalty payment, setting aside the equal penalty imposed and allowing payment of the reduced penalty amount.
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Levy of penalty and Revocation of Courier license - Allegation of abetting in mis-declaration of value of imported goods - Importation of mobile parts - The Tribunal found that proceedings under Section 28(6)(i) of the Customs Act were conclusive, as duty and penalties had been paid, barring further action against the importer and related parties. - The Tribunal found that while there were regulatory violations, they were minor and didn't warrant severe penalties. It concluded by partially allowing the appeal, setting aside certain penalties and reducing others.
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Levy of penalty for abetting in mis-declaration of imported goods - Revocation of Courier License - The tribunal ruled that penalty under this section could only be imposed if no express penalty was provided elsewhere for the contravention. As penalty was already proposed under Regulation 14 of the Courier Import and Export Regulations, invoking Section 117 was deemed unsustainable. Moreover, as the appellant acted as a facilitator for customs transactions, and no illegality related to goods cleared through them was found, the tribunal held that penalty imposition was not justified. - Further, it found that the evidence did not support the allegations, and in some cases, the appellant had complied with the regulations. Therefore, the tribunal set aside the penalties imposed under Regulation 14 of the Courier Import and Export Regulations.
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Levy of maximum Penalty - Delay in submitting the documents for finalization of the Bills of Entry - The Department sought to increase the penalty from Rs. 20,000/- to Rs. 6.00 Lakhs. - The Tribunal noted that the Department failed to provide evidence showing deliberate delay by the Appellant in finalizing the Bills of Entry. It was confirmed that finalization had been completed for all relevant Bills of Entry, with no pending issues on the Appellant's side. Referring to a previous case, the Tribunal emphasized that in situations where there is no revenue implication and no evidence of deliberate delay, penalties should be nominal. - The Tribunal set aside the increased penalty.
Corporate Law
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Professional Misconduct by CA - Liability of the Engagement Partner (EP) with Audit Firm - The NFRA refuted the firm’s claims that only the EP was accountable, emphasizing that the firm itself must ensure adherence to auditing standards and maintain quality control systems. The firm’s failure to ensure compliance, oversee proper audit procedures, and maintain adequate documentation was highlighted as significant lapses. The authority found that the firm committed multiple breaches of professional duties including failing to disclose material facts, not reporting material misstatements, and gross negligence in conduct, all of which amounted to professional misconduct. NFRA imposed a monetary penalty of ₹500,000 on the firm, citing the need for strict adherence to professional standards to maintain the integrity and reliability of financial reporting.
Benami Property
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Benami Property Transactions - Real/original owner - provisional attachment order issued u/s 24(3) of the Benami Transactions Act, 1988 - The High Court found in favor of the petitioner, holding that the show cause notice and provisional attachment order lacked a sufficient basis. The court referenced a Supreme Court ruling declaring certain sections of the Act unconstitutional and inapplicable retrospectively. Since the purchase of the land preceded the amendment to the Act, the court ruled that no proceedings could be initiated by the department. - Further, the court criticized the department for relying solely on a contractor's statement without substantial evidence. It emphasized the lack of supporting material or questioning of the contractor's basis for the claim, deeming the proceedings initiated without sufficient grounds.
Indian Laws
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Smuggling - Non-Compliance with Mandatory Procedure under Section 42 of the NDPS Act - Violation of Section 50 - The Supreme Court ruled that since the search and seizure were from a public place, Section 43 applied, and compliance with Section 42 was not mandatory. Thus, the contention was rejected. As the seizure was not during a personal search, the requirement of Section 50 did not apply. Hence, the contention was dismissed. The panch witness from the Income Tax Department was deemed impartial, and the Court found no fault in the procedure. Thus, this argument was refuted. The Court affirmed the reliability of NCB officials' testimony and found no reason to doubt their evidence, rejecting the appellant's claims.
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Restraint from posting, circulating or publishing the article in respect of the respondent-plaintiff on any online or offline platform till the next date of hearing - Ex-parte ad-interim injunction against the appellants - In defamation suits involving media platforms and journalists, the Court stresses the importance of balancing free speech with the right to reputation and privacy. It references the 'Bonnard standard' to caution against unreasoned censorship and the potential stifling of public debate.
Service Tax
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Refund in cash in respect of certain amount of service tax - The appellant contends that they are entitled to refund under Section 142(3) of the CGST Act 2017, despite their inability to file a revised TRAN-1 due to changing filing dates. They argue based on case law precedents and the indefeasibility of credit. However, the Tribunal finds that the absence of specific provisions for refund under pre-GST laws prevents the appellant from claiming refund under Section 142(3).
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Reversal of proportional CENVAT Credit - trading activity - The Revenue argued that the appellant did not exercise the option u/r 6(2) in writing before the jurisdictional officer, therefore, the reversal of proportionate credit does not apply. - The Tribunal upheld the Commissioner's decision to allow the reversal of proportionate credit, considering that the appellant predominantly engaged in taxable services mainly exports, and the trading activity was minimal during the relevant period. Relying on precedents and amendments to the law in the Finance Act, 2016, the Tribunal found no merit in the Revenue's appeal against the demand.
Central Excise
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Process amounting to manufacture - activity of labelling - availing the cenvat credit of the duty paid by its Jammu unit - The Supreme Court examined whether the activity of labelling carried out by the respondent at its Taloja unit constituted manufacture. The dispute revolved around the interpretation of Note 3 to Chapter 18 of the Central Excise Tariff Act, which underwent an amendment substituting 'or' for 'and'. The appellant argued that labelling alone did not constitute manufacture, while the respondent contended otherwise. The Court interpreted Note 3 to allow for independent processes, including labelling alone, to constitute manufacture. They affirmed that the Taloja unit's activity fell within this definition and dismissed the appeal.
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Entitlement for refund of input credit in cash, which was neither transitioned in accordance with TRAN-1 (GST) procedure into the new regime nor got reflected in the ER-1 or revised ER-1 return post 01.07.2017 - The tribunal meticulously analyzed the arguments, focusing on the statutory provisions of Section 142(3) of the CGST Act, which pertains to the treatment of unutilized credits during the transition to GST. The tribunal acknowledged the appellant's argument but highlighted that the legislative intent of the GST transition provisions does not automatically allow refunds of credits that were non-refundable under the erstwhile laws.
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Levy of Personal Penalty on the Director of the company and Drivers of the trucks (transporters) - Penalties u/r 26 of CER - Abetment - Clandestine removal - gutka - The Tribunal found that the appellant was indeed a "dummy director" with no active role in the company's operations. Considering his resignation well before the period of dispute and the lack of evidence implicating him in the evasion of duty, the Tribunal set aside the penalty imposed on him. - However regarding the penalty on Drivers: the Tribunal upheld the penalties imposed on the transporters despite their arguments. It noted that even though some of the transporters were semi-literate, they were aware of the requirement to carry proper documentation for transporting goods. Therefore, the penalties imposed on them were upheld.
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Undue delay in processing refund - The Tribunal referred to Section 11B of the Central Excise Act, which requires authorities to examine refund applications and either grant the refund, credit the amount, or reject the claim with a speaking order. The Tribunal cited a judgment highlighting that authorities are obligated to adjudicate refund claims and cannot simply return them. The delay in finalizing the matter, which spanned over 10 years, was deemed unacceptable. As a result, the Tribunal directed the refund claim to be restored to the original authority for proper disposal, with instructions to follow principles of natural justice and complete the process within ninety days.
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Clandestine removal - The department relied on statements, diaries, and records, which the appellants contested, citing coercion and lack of corroboration. The Tribunal found discrepancies in the evidence, particularly regarding the validity of diaries and reliability of statements. Lack of tangible evidence and corroboration led to the dismissal of duty demands and penalties imposed on the appellants. The Tribunal emphasized the importance of corroborative evidence in such cases and concluded in favor of the appellants.
VAT
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Recovery of Tax Dues versus Secured Creditors - priority of security interest and its enforcement over the Secured Assets - The High court clarified the priority of security interests over the assets in question. It cited Section 26-C(1) of the SARFAESI Act, which establishes that registration with the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) acts as public notice. The court affirmed that SBI's mortgage, created in 2010 and registered in CERSAI in 2012, had priority over subsequent claims.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (5) TMI 119
Levy of interest and penalty - transition of amount wrongly claimed as input tax credit under the CENVAT Credit Rules, 2004 - HELD THAT:- Admittedly, the petitioner was not entitled to avail input tax credit on the Basic Customs Duty paid under the Customs Act, 1962, under the provisions of the CENVAT Credit Rules, 2004. Under Section 140 of the CGST Act, 2017, only input tax credit lying un-utilised under the CENVAT Credit Rules, 2004 and TNVAT Act, 2006 in Tamil Nadu could be transitioned - Sub- Section (2) to Section 140 of the CGST Act, 2017 also makes it clear that the registered person shall not be allowed to take credit unless the said credit was admissible as CENVAT credit under the existing law i.e., CENVAT Credit Rules, 2004 and is also admissible as input tax credit under the CGST Act, 2017 - Therefore, the question of the petitioner transitioning the amount that was wrongly claimed as input tax credit under the CENVAT Credit Rules, 2004 did not arise. The Department however committed a mistake by sanctioning the refund to the petitioner on 17.07.2018 pursuant to refund claim filed by the petitioner. There has to be restitution of the unjust benefit gained by a dealer/person. These provisions have been framed to ensure that there is proper restitution. Thus, no case is made out to interfere with the impugned order. Therefore, the impugned order is sustainable and this Writ Petition is liable to be dismissed. Petition dismissed.
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2024 (5) TMI 118
Appeal barred by time limitation - Violation of principles of natural justice - order for cancellation of registration passed without any application of mind - HELD THAT:- In the present case, the facts are similar to one in SURENDRA BAHADUR SINGH VERSUS STATE OF U.P. THRU. PRIN. SECY. COMMERCIAL TAX (GST) LKO. AND 2 OTHERS [ 2023 (8) TMI 1262 - ALLAHABAD HIGH COURT] , wherein the appeal was barred by time under Section 107 of the Act. However, the Division Bench in Surendra Bahadur Singh's case took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice. The orders impugned herein are liable to be set aside - Petition allowed.
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2024 (5) TMI 117
Principles of natural justice - Non-service of notice - demand u/s 73 (1) of Finance Act, 1994 read with Sections 142, 173 and 174 of the Central Goods and Service Tax Act, 2017 and the penalty of the same amount under Section 78 of the Act - HELD THAT:- Without going into any further details of the dispute, this court is of the opinion that the court's endeavour should be to decide the dispute on merits after giving adequate opportunity of hearing to the parties and opportunity of hearing should not be denied on hyper-technical reasons. As the petitioner is willing to cooperate in the proceedings, it would be in the interest of justice to remand the matter for being decided afresh, after giving an opportunity of hearing to the petitioner. The impugned order dated 08.01.2024, passed by the Principal Commissioner, CGST Central Excise Commissionerate, Lucknow imposing tax liability and penalty on the petitioner is quashed. The writ petition is allowed.
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2024 (5) TMI 116
Seeking enlargement on bail - evasion of GST - supply of clandestine goods without issuance of invoices - during investigation the statements of two employees were recorded in which the allegations against the applicant were found established - HELD THAT:- On perusal of record, the evidence on record and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. The bail application is allowed. Applicant is allowed to be released on bail on furnishing a personal bond and two heavy sureties each in the like amount to the satisfaction of the court concerned subject to the fulfilment of conditions imposed - bail application allowed.
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2024 (5) TMI 115
Appeal barred by time limitation - Violation of principles of natural justice - order for cancellation of registration passed without any application of mind - HELD THAT:- In the present case, the facts are similar to one in SURENDRA BAHADUR SINGH VERSUS STATE OF U.P. THRU. PRIN. SECY. COMMERCIAL TAX (GST) LKO. AND 2 OTHERS [ 2023 (8) TMI 1262 - ALLAHABAD HIGH COURT] , wherein the appeal was barred by time under Section 107 of the Act. However, the Division Bench in Surendra Bahadur Singh's case took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice. The orders impugned herein are liable to be set aside - Petition allowed.
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2024 (5) TMI 114
Levy of penalty @200% - e-way bill which was generated by the appellant had expired and at the time when the vehicle was intercepted four days had lapsed - intent to evade to tax or not - HELD THAT:- In the instant case, it is found that the order of adjudicating authority does not deal with the specific submission made by the appellant in the reply dated 13.09.2022 to the show cause notice. In other words, no reasons have been set out to record satisfaction of the authority that it is a fit case for imposition of penalty. Further, the adjudicating authority did not reject the stand taken by the appellant in their reply dated 13.09.2022. In the absence of any allegation that there is an intention to evade payment of taxes and in the absence of any adverse inference drawn pursuant to the physical verification except that e-way bill had expired, the court if of the view that some lenience can be shown to the appellant. However, the conduct of the appellant in not extending the e-way bill for four days after its expiry cannot be absolutely condoned. A transporter/owner of the goods is bound to carry certain documents as mentioned in the Act which are to accompany the goods. In the instant case, prior to the movement of the goods e-way bill was generated in which the tax invoice number was duly incorporated proof of payment of tax has also been established and e-way bill was valid till 05.09.2022 and mistake committed by the appellant is not extending the e-way bill after the expiry despite such liberty being granted under the Rules. The appellate authority in fact has accepted the contention of the appellant that the penalty amount has been computed on a higher value than the invoice value without proper evidence and reason. Cnsidering the totality of the circumstances and the peculiar facts and circumstances of the case, the court is inclined to grant some indulgence to the appellant but will not completely exonerate the appellant - Considering the peculiarity of the facts, the appellant is liable to pay Rs. 1,00,000/- - appeal allowed in part.
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2024 (5) TMI 113
Eligibility for Input Tax Credit - failure to report outward supply - discrepancy between the petitioner's GSTR 1 and GSTR 3B - items not notified for being taxed on reverse charge basis - HELD THAT:- The respondent proceeded on the basis that it was an outward supply of goods. Such conclusion indicates non application of mind. The petitioner submitted an explanation that the discrepancy was rectified while filing subsequent returns or that the discrepancy occurred on account of lower payments being made. On examining the impugned order on this aspect, it is noticeable that the respondents were not fully satisfied with the documentary evidence placed on record by the petitioner. The failure of the petitioner to provide all relevant documents certainly contributed to the state of affairs. With regard to the findings on these issues, it is appropriate to put the petitioner on terms as a condition for reconsideration. The impugned order is set aside subject to the condition that the petitioner remits 10% of the disputed tax demand, on the assumption that tax is leviable at 12% thereon. Such remittance shall be made within two weeks from the date of receipt of a copy of this order. Subject to receipt thereof, the 1st respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within a period of three months from the date of receipt of remittance from the petitioner. The writ petition is disposed off.
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2024 (5) TMI 112
Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - non-application of mind - claim of ITC - HELD THAT:- The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 24.10.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not supported with complete relevant documents, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner - Further, if the Proper Officer was of the view that any further details or documents were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, impugned order is set aside and the matter is remitted to the Proper Officer for re-adjudication - petition disposed off by way remand.
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2024 (5) TMI 111
Seeking cancellation of the GST registration on the ground of closure of business - Rejection of application for cancellation - order does not give any particulars or details - principles of natural justice - HELD THAT:- There is no cogent reason on behalf of the Respondents as to why the applications seeking cancellation of the GST registration are being denied. If a trader seeks to shut the business and surrender its GST registration, there is no ground under which the department can refuse such an application except in cases where the interest of the revenue is at stake. In the instant case, no such ground has been taken by the department. Furthermore, mere cancelation of the registration does not preclude the department from taking any action in accordance with law for recovery of any tax, penalty or fine that may be due and even from retrospectively cancelling the registration is circumstances so warrant - It may be noticed, that on an application being filed for cancellation of the registration, the registration is automatically suspended and no business can thereafter be carried out under the said registration. In view of the fact that the Petitioner does not seek to carry on business or continue with the registration, the registration of Petitioner shall now be treated as cancelled with effect from 30.05.2023 i.e., the date when Petitioner first filed an application seeking cancellation of GST registration. Petition disposed off.
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Income Tax
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2024 (5) TMI 110
Maintainability of appeal before SC on tax effect - income qualification for deduction u/s 80HHC of the Act - excluding the net profit or gross profit - Benefit of netting - HELD THAT:- As petitioner states that there is no reason to dispute the tax effect calculation submitted by the learned counsel appearing for the respondent. The tax effect is below the threshold limits. Therefore, the Special Leave Petition is disposed of. However, question of law, if any, is kept open.
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2024 (5) TMI 109
Validity of Revision u/s 263 - ITAT has set aside the said order of the Principal CIT as noted this is not a case of inadequacy of enquiry. It is a case of absence of enquiry - HC confirmed that ITAT appears to be a plausible one and not erroneous in law - HELD THAT:- We are not inclined to interfere with the impugned judgment and hence, the special leave petition is dismissed.
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2024 (5) TMI 108
Revision u/s 263 - as per CIT AO failed to enquire the deduction claimed u/s 54 - ITAT justification in holding that the order passed u/s 263 suffered from hypertechnical approach in following the provision of Section 54(2) - HELD THAT:- Tribunal has opined that the order may not have been prejudicial to the interest of revenue. Though not worded as such that appears to be the real finding of the Tribunal inasmuch as the Tribunal has observed that the revisional authority has not expressed any doubt regarding the quantum of capital gain arising at the hands of the assessee and that it was invested in purchase/construction of residential house. We find, there is no material to doubt the correctness of the findings recorded by the Tribunal. While procedural lapse may have been caused by the assessee in observing the provision of Section 54 of the Act, in absence of real prejudice having arisen to the revenue, upon claim capital gain having been allowed by the Assessing Officer the Tribunal may have rightly allowed the assessee's appeal. Seen in the context of an assessee with modest means, we find, the CIT had unnecessarily drawn up revision proceedings upon a procedural lapse as no real prejudice may have ever arisen to the revenue authorities in the context of petty amount involved. No substantial question of law arises.
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2024 (5) TMI 107
Reference to Departmental valuation officer[DVO] without first rejecting the books of accounts - HELD THAT:- Provision of law empowers the assessing officer to make a reference, however, the stage for making the reference being after rejection of books of account, the decision in Sargam Cinema [ 2009 (10) TMI 569 - SC ORDER] holds the field. Since the essential facts with respect to making of reference have not been dealt by the Tribunal, we would not like to allow that discussion to arise before us. Accordingly, the order of the Tribunal is set aside and the matter remitted to the Tribunal to pass a fresh order keeping in mind the observations made above. Thus the Tribunal may first determine if the books of account of the assessee had been rejected before reference was made to the DVO. Only in the event the books are found to have been rejected before the reference order was made, the further issue of a edition may survive for consideration.
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2024 (5) TMI 106
Validity of reopening of assessment - Validity of grant the approval by the PCIT - relevancy of information reported by Insight portal - reason to believe - AO proceeds on the basis that on a search conducted under Section 132 on one Prathamesh Constructions,as subcontracting its jobs to various subcontractors and Petitioner was one of such sub-contractors - as submitted AO is a mere post office, who finds materials and then forwards it to the Faceless Assessing Officer ( FAO ) and the FAO will go into the details to decide whether there is any escapement of income - HELD THAT:- Admittedly, in the notice issued under Section 148A (b) of the Act, certain allegations have been made to which reply has been filed and the AO has accepted that the information is accounted for by the assessee. AO, wanted to verify the genuineness of the contract work done by Petitioner or whether any accommodation entry was provided to Prathamesh Constructions. It is necessary to note that, first of all, in re-assessment proceedings, the law is clear. An Assessing Officer cannot indulge in a fishing enquiry. In this case, the AO has accepted the contention of the assessee and held that the information report by the Insight portal is accounted for by the assessee in his books and income arising out of those transactions is duly offered for taxation. Therefore, the impugned order dated 21st April 2023 under Section 148A (d) of the Act cannot be sustained. At the same time if the AO wishes to, he could issue a fresh notice under Section 148A (b) of the Act if, that is permitted in law. We are expressing no opinion. In the circumstances, the AO having accepted the explanation of Petitioner, he could not have gone ahead and recommended that it was a fit case where income chargeable to tax has escaped assessment. We would add that the approval granted by the PCIT is also without application of mind. In the approval, it is stated I have perused the facts of the case vis-a-vis information/material available on record and found the case to be fit case for issue of notice u/s 148 of the I.T. Act, 1961. Accordingly, the draft order u/s 148A (d) of the I.T. Act submitted by the AO is approved. If only the PCIT had read the impugned order and the notice issued under Section 148A (b) of the Act, he would have refused to grant the approval. The PCIT seems to have done nothing and it is clear that he has mechanically signed the approval. Decided in favour of assessee.
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2024 (5) TMI 105
Validity of reopening of assessment - During the pendency of first reassessment proceedings, Petitioner received another notice u/s 148A(b) once again, alleging escapement of income - HELD THAT:- In absence of information in the notice issued u/s 148A(b) of the Act with regard to the first two items mentioned in the order u/s 148A(d) of the Act [i.e., (i), Purchase of shares by related PAN of penny stock of EML and GBFL Limited and (ii) Sale of shares by related PAN of penny stock of EML and GBFL Ltd] and the fact that assessment orders have already been passed with regard to those two items and item 2 includes item 1 mentioned above, also clearly indicates total non-application of mind by the Assessing Officer ( AO ) as also by the Principal Chief Commissioner of Income Tax ( PCCIT ), who has granted the approval u/s 151. Such an order has been passed without referring to first two items in the notice that was issued under Section 148A(b) of the Act. Decided in favour of assessee.
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2024 (5) TMI 104
TCS u/s 206C - assessee fault as neither collecting tax at source@1% and neither submitting declaration in Form-27 BA from the buyers of the scrap - HELD THAT:- We observe that from plain language of the Statute, since no specific timeline has been prescribed on the date when such declaration is to be received by the person collecting TCS from the purchaser i.e. no specific time obligation has been cast upon the purchaser of goods to furnish Form 27C to the seller. It would be onerous on person collecting TCS (seller) to be denied the opportunity of furnishing Form 27C, provided the seller is able to demonstrate that there was no lack on his part in furnishing Form 27C as soon as it was received by him from the purchaser to whom scrap had been sold. In the case of Gopallal Ramprasad Kabra [ 2023 (2) TMI 746 - ITAT RAJKOT] ITAT held that where assessee-company sold scrap without collecting TCS, since, Form no. 27C was submitted by assessee although belatedly before Commissioner (TDS) and as there was no time-limit provided in Section 206C(1A) to furnish declaration in Form no. 27C by buyers, delay in filing said declaration to prescribed authority would not be ground to deny benefit to assessee. In the case of Chandmal Sancheti [ 2017 (8) TMI 1182 - ITAT JAIPUR ] ITAT held that since no time limit is provided in Section 206C(1A) to make a declaration in Form 27 collected from buyers; hence delay in filing declaration shall not be ground to deny benefit of declaration to assessee. Looking into the instant facts, in the interest of justice, the entire matter is restored to the file of Assessing Officer to firstly, verify the veracity/genuineness of Form 27C submitted by the assessee with respect to the aforesaid parties, and if the same is found to be in order, to grant necessary relief, accordance with law. Secondly, the AO is also directed to carry out the necessary verification in terms of the directions given by Ld. CIT(A) with respect to the balance 17 parties, in respect of whom the assessee has already furnished Form 27BA - Appeal of the assessee is allowed for statistical purposes.
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2024 (5) TMI 103
Penalty u/s 271(1)(c) - Estimation of income - bogus purchases - during the assessment, the addition was made on estimation @ 25% of the disputed purchase - In first appeal, the addition was restricted to 12.5% and on second appeal to the Tribunal, it was further reduced to 6% of the disputed purchases - HELD THAT:- The entire addition right from the assessment stage to the Tribunal was merely on estimation and there is no definite findings on the quantum of concealment of income by the assessee. It is accepted legal position that penalty under section 271(1)(c) of the Act levied on additions made purely on estimation is not sustainable - See SUBHASH TRADING COMPANY [ 1995 (11) TMI 37 - GUJARAT HIGH COURT] , NAVJIVAN OIL MILLS. [ 2001 (7) TMI 81 - GUJARAT HIGH COURT] , BOMBAYWALA READYMADE STORES [ 2014 (11) TMI 1099 - GUJARAT HIGH COURT] and SANGRUR VANASPATI MILLS LTD. [ 2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT] Thus we hold that penalty u/s 271(1)(c) of the Act is not sustainable in the present case - Decided in favour of assessee.
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2024 (5) TMI 102
Levy of penalty u/s 271BA - assessee failure to furnish report u/s 92E, though assessee had transaction with its Indian AE - assessee is a Foreign Company incorporated and resident in USA and it did not file its return of income and therefore notice u/s 148 of the Act was issued - income was received by the assessee as Royalty which was subjected to TDS @15% as per the Article 12 of India USA DTAA - HELD THAT:- Assessee was under a bonafide belief that it was not required to file any return of income as its income has been subjected to tax deducted at source. We find that the assessee did furnish report under section 92E of the Act during the course of the scrutiny assessment proceedings itself - we do not find this to be a fit case for the levy of penalty under section 271BA - Decided in favour of assessee.
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2024 (5) TMI 101
Penalty levied u/s 271(1)(c) - Transfer pricing adjustment - assessee advanced interest free loan to its AE - Assessee has not charged interest on such loan and therefore, till the stage of Tribunal, adjustment on account of interest has been confirmed which has been reduced by applying LIBOR + 300 bps - HELD THAT:- We find that it is not in dispute that assessee had advanced loan to its AE, out of which part has been repaid to the assessee. When this was pointed out, assessee has explained that the entire working capital loan was extended out of own funds of the assessee company and these were in the nature of investment in the form of equity / quasi-equity as part of investment so as to promote business in Asian region to support international customers for aircraft sales. Apart from that, assessee has disclosed all the particulars of income including ALP of interest in the TP study report, by claiming that no interest is chargeable on this transaction. Though assessee has given explanation before the ld. TPO / ld. AO, however, the same has not been accepted. The assessee has explained all the reasons for not charging of interest due to various reasons and also one of the important explanations was that these investments were in the form of equity / quasi equity then in that case there could not have been any issue of imputing any interest even under TP provisions. What was the extent of the investment in equity / quasi equity has not been elaborated however, the contention of the assessee is that it has given partly that capital loan out of its own funds and has also justified the reasons for not imputing interest, then such explanation can be said to be not bonafide and does not lead to inference that assessee has furnished inaccurate particulars. Accordingly, penalty levied by the ld. AO in both the years are deleted. Appeals of the assessee allowed.
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2024 (5) TMI 100
Validity of order passed u/s 154 - computation of commission income - Scope of rectification - modifying the assessment order passed u/s 143(3) whereby AO had wrongly computed the commission at 8% instead of 2% - contention of the ld. AR that the assessee has been regularly showing commission income at 2% in all the previous and subsequent assessment years. HELD THAT:- In the present case, CIT(A) has noted that no reply has been furnished by the assessee and that the assessee not even responded to the notice served upon him. Since the assessee has willingness to produce all the records, therefore, in our opinion, it would be appropriate if the matter is remanded back to the file of CIT(A). The order of CIT(A) clearly shows that the rectification order was passed by the Assessing Officer on the basis of internal audit party report whereby the audit party was of the opinion that instead of 2%, 8% commission rate should have been applied. Prima facie, the above said basis for rectifying the order passed by the Assessing Officer is not permissible in law. However, considering the rival contentions and willingness of the assessee to produce all the records, the assessee may be given one chance to explain the case before the ld.CIT(A). Matter is remanded back to the file of ld.CIT(A) with the following directions as CIT(A) should examine whether the Assessing Officer can rectify the assessment order dt. 12.12.2017 on the objections raised by the internal audit party or not thereby increasing the commission rate @ 8%. CIT(A) shall decide the issue in accordance with law and thereafter pass a detailed speaking order dealing with the contentions of the assessee.
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2024 (5) TMI 99
Disallowance of commission paid to foreign agents - Assesee failed to prove actual delivery of services by these agents - Disallowance of legal and professional charges - CIT(A) deleted addition relying on the information submitted before him - as per revenue payments to above said agents were in the nature of fee for technical services on which neither any TDS was deducted by the assessee nor any certificate for no deduction of TDS was furnished by the assessee - CIT(A) has deleted the disallowance of interest amount by the assessee, who has diverted its interest bearing funds to its sister concern for non-business purposes - HELD THAT:- All the above said issues were not clarified by the assessee by making proper representation and failed to utilize the several opportunities granted to the assessee. We are of the view also that the issue raised by the Revenue needs to be verified afresh and adjudicated accordingly. The issues raised by the Revenue apparently shows that the assessee has not justified in bringing on record the services rendered by the agents and how the percentage of payment of commission justified in this case. With regard to interest bearing fund, the Ld. CIT(A) has observed that the assessee has enough interest free the funds, however, it has not been demonstrated how the interest free fund were actually diverted to sister concern and not interest bearing funds. Accordingly, both appeals filed by the Revenue are allowed due to non representation from the assessee side. In the result, both appeals filed by the Revenue are allowed.
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2024 (5) TMI 98
Penalty u/s. 271(1)(c) - bogus purchases or inflated purchases not supported by proper vouchers treated the same as concealed income - HELD THAT:- In the present case before us, the assessee is unable to prove a claim because the vouchers of purchases were self-made vouchers and this fact has been recorded by AO, As noted that once these purchases are supported by self-made vouchers and the same are treated as bogus as held by the AO, how the same is concealment of particulars of income leading to concealment of income , the decision of Hon ble Supreme Court in the case of Suresh Chandra Mittal [ 2001 (6) TMI 63 - SC ORDER] squarely applies to the facts of the case. Hence, respectfully following the decision of Hon ble Supreme Court in the case of Suresh Chandra Mittal, supra, we delete the penalty and allow the appeal of assessee.
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2024 (5) TMI 97
Deduction u/s 80P(1) - assessee is registered as a Primary Agricultural Credit Society (PACS) - HELD THAT:- Banking being an eligible activity u/s. 80P(2)(a)(i), the assessee being in the said business would again matter little; rather, entitle it for the deduction on the entirety of it s profit, i.e., including that referable to business with non-members. Further still, the assessee/s, satisfying the primary condition of s. 2(19) of the Act defining a society, is, thus, a cooperative society, a pre-requisite for deduction u/s. 80P(1). The resolution of the dispute as to whether the assessee is therefore eligible for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) and, where so, its extent, thus rests solely on the assessee being, or not being, a co-operative bank, a term again defined under BRA, which stands adopted for the purpose of s. 80P, determining the issue. Copy of the bye-laws, only a certified translated copy of which, in full, can be taken cognizance of and regarded as a part of the record, is not on record. As also noted by the Tribunal in it s orders afore-referred, what value the restriction on the area for it s members, if the assessee-society is otherwise eligible to accept deposits from non-members as well! Under the circumstances, we, for the reasons afore-noted, as also the cases referred to, set aside the orders by the Revenue authorities, and restore the matter back to the file of the Assessing Officer (AO) to determine the assessee s eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) on the basis of it being or, as the case may be, not being, a co-operative bank, i.e., on the basis of it s bye-laws read with the Kerala Act and the BRA, as well as the quantum of the deduction there-under, which we clarify would be in full where the assessee is a cooperative bank, with it s entire income arising from the business of banking. Assessee s appeal is allowed for statistical purposes.
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2024 (5) TMI 96
Revision u/s 263 - claim of deduction u/s. 54B not properly verified - assessee s case before us was that the relevant enquiry had been made by the AO, who though did not write an elaborate order, and which should not therefore prejudice the assessee - HELD THAT:- Apart from a clear absence of pertinent enquiry into the several specific aspects of the matter, the assessment is not per a speaking order, a sine qua non for a judicial order. We, accordingly, find the impugned order as valid in principle We are, though, not in agreement with the ld. Pr. CIT, where he expresses an apprehension as to the fitness of the land sold for agricultural purposes. The only aspect relevant, even as pointed out by him, is if it was indeed put to use for agricultural purposes in the two-year period prior to sale (s. 54B(1)). The requirement being stricter than of the subject land being agricultural, and which would require being positively satisfied, subsumes the requirement of the land being fit for agriculture. The other infirmity we observe in the impugned order is that it is not proper for the ld. Pr.CIT to have held that the assessee is not eligible for a claim u/s. 54B of the Act, followed by direction for a de novo examination and adjudication in accordance with law per a speaking order. This is dichotomous. Accordingly, the first sentence in para 7 of his order the words is not eligible be read as may not be eligible . The material gathered by the Revenue may though; rather, ought to be, put across to the assessee, who is to establish his claims, leading evidence. See SMT. ASHA GEORGE [ 2013 (1) TMI 545 - KERALA HIGH COURT] The ensuing assessment would accordingly be sustainable only on the basis of finding/s of fact, i.e., as to whether the facts admit of, or not, a claim u/s. 54B. We may also clarify that we may not be construed as having expressed any opinion in the matter, except that the AO s enquiry is seriously wanting, and there had thus been no proper verification and examination of the assessee s claim by him, finding each of the several objections as highlighting the various aspects of the matter which ought to have been, but were not, examined by the AO, who shall though make an assessment afresh, uninfluenced by any finding/s by the ld. Pr. CIT, inasmuch as it is a de novo assessment.
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2024 (5) TMI 95
Levy of late fees u/s 234E - TDS Statement filed under form 24Q for Quarter 3 and Quarter beyond due date - enabling clause (c) was inserted in the section 200A w.e.f. 01.06.2015 - HELD THAT:- We understand that earlier, there was no enabling provision in the Act u/s 200A for raising demand in respect of levy of fee u/s 234E. As such, in respect of TDS statement filed for a period prior to 31.03.2015, no late fee could be levied in the intimation issued u/s 200A of the Act. See Sudershan Goyal [ 2018 (5) TMI 1626 - ITAT AGRA] as relying on SRI. FATHERAJ SINGHVI AND OTHERS [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] held demand u/s 200A for computation and intimation for the payment of fee under Section 234E could not be made in purported exercise of power under Section 200A by the respondent for the period of the respective assessment year prior to 1.6.2015. Thus we accept the legal position that late fees u/s 234E cannot be imposed on late filing of TDS returns u/s 200A, for both the Asst years, under appeal, and the same is deleted. Decided in favour of assessee.
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2024 (5) TMI 94
Deduction u/s 80IA(4) - Disallowance of project facility expenses - Revenue expenses or Capital expenditure - principle of consistency - assessee is engaged in business of building infrastructure facilities and earning income by way of collecting toll from vehicles running on roads constructed by the assessee - HELD THAT:- We observe that the Department on identical set of facts, has allowed the claim of deduction u/s 80-IA(4) of the Act to the assessee both for the earlier assessment year i.e. A.Y. 2013-14 and also for the subsequent assessment years. Therefore, following the principle of consistency, in our considered view there is no infirmity in the order of Ld. CIT(A) in which he had held that assessee is eligible for claim of deduction under Section 80-IA(4) - for the impugned assessment year, the assessee did not claim deduction under Section 80-IA(4) of the Act for the simple reason that the assessee had incurred losses for the impugned year. In the case of ITO vs. Keval Construction [ 2013 (7) TMI 291 - GUJARAT HIGH COURT] held that in case of disallowance / addition on account of non-deduction of TDS liability, this would increase the profits of the assessee from the business of developing housing projects and therefore, the ultimate profit would increase and the same would qualify for deduction under Section 80-IB of the Act. In the case of Virtusa (India) Pvt. Ltd [ 2013 (10) TMI 1395 - ITAT HYDERABAD] ITAT held that the amount of statutory disallowance under Section 40(a)(ia) of the Act has to be considered as business profit eligible for deduction under Section 10A of the Act. In the case of Commissioner of Income-tax vs. Gem Plus Jewellery India Ltd. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] the High Court held that where the Assessing Officer had enhanced income by disallowing employers as well as employees contribution towards Provident Fund / ESIC, exemption under Section 10A had to be granted on such enhanced income. Accordingly, when the claim of the assessee for grant of deduction under Section 80-IA(4) of the Act has not been disputed / disturbed by the Department in either the earlier or later / subsequent years, in our considered view, CIT(A) has not erred in facts and in law in holding that the assessee is eligible for claim of deduction u/s 80-IA(4) of the Act with respect to income which has been enhanced on account of disallowances made by the AO. Appeal of the Department is dismissed.
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2024 (5) TMI 93
LTCG - deduction u/s 54 denied - construction of the house was not completed on or before 25.09.2017 - AO concluded that assessee had confirmed that there was no electricity supply, water connection in the subject mentioned property for which deduction u/s 54 was claimed and even the approved map for construction of the house was not submitted - HELD THAT:- No basic amenities are present on the subject mentioned property for which deduction u/s 54 of the Act is claimed by the assessee. Though the assessee might be intending to construct a full fledged residential house on the agricultural land purchased by him, the aforesaid facts clearly bring out that such residential house, having the basic amenities was not constructed by the assessee on or before 25.09.2017 (i.e. three years from the date of transfer i.e. 25.09.2014). Even as late as on 7.12.2017, the Inspector of Income-tax along with Office Superintendent attached to the office of the learned AO, together with the Authorized Representative of the assessee (who appeared before the learned AO), had physically visited the site and had confirmed the aforesaid facts that the alleged house did not even have the basic amenities listed herein above. When there is a physical inspection carried out as late as on 07.12.2017, wherein photographs were also taken of the subject mentioned property, the basic amenities were not available in the subject mentioned property. Thus the assessee had not constructed the residential house within the prescribed time and in fact had not constructed a residential house at all on or before 25.09.2017 which could be construed as a residential house, habitable for its dwelling. Accordingly, deduction u/s 54 of the act had been rightly denied by the learned AO in the instant case. Appeal of the Revenue is allowed.
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2024 (5) TMI 92
Validity of assessment framed u/s 143(3) by Non- jurisdictional ITO - Jurisdiction of AO based on income threshold / monetary limits as per the return of income - ITO transferred the jurisdiction of the assessee from him to DCIT since the returned income for A.Y. 2015-16 is more than 30,00,000/- - jurisdiction will be that of DCIT or ITO - DR pointed out to the provisions of section 124(3) wherein it was mentioned that assessee should challenge within one month about the jurisdiction of the AO on receipt of the notice - HELD THAT:- This argument of the DR is wrong in as much as section 124(3) of the Act talks only about territorial jurisdiction, whereas the issue involved here is pecuniary jurisdiction. Provisions of section 124(3) of the Act could be taken shelter by the Revenue only when legal valid notice u/s 143(2) of the Act has been issued by the Revenue. In the instant case, notice issued u/s 143(2) on 12.04.2016 by ITO is not legal as he did not possess jurisdiction over the assessee for A.Y. 2015-16 in as much as the returned income for A.Y. 2015-16 had exceeded Rs. 30,00,000/-. We find that the issue in dispute is no longer res integra by the decision of Ashok Devichand Jain [ 2022 (3) TMI 1466 - BOMBAY HIGH COURT] as held where income declared/returned by any Non-Corporate assessee is up to Rs. 20 lakhs, then the jurisdiction will be of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC. Thus we have no hesitation to hold that the assessment framed under section 143(3) of the Act deserves to be quashed in the instant case as the initial scrutiny notice issued under section 143(3) of the Act dated 12.04.2016 by ITO was without jurisdiction as he did not possess jurisdiction over the assessee for the A.Y. 2015-16. Decided in favour of assessee.
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2024 (5) TMI 91
Addition u/s 69A - cash loans given by the assessee as unexplained - whether incriminating the assessee found in the seized materials to support the allegation that the assessee has given cash loans? - HELD THAT:- We notice from the assessment order that the AO has not brought out any specific finding on how the impugned entries are linked to the assessee and whether any other seized material other than what is shared with the assessee have been used to aid the interpretation. We further notice that other than decoding the entries as pertaining to the assessee the AO has not brought any other material on record to substantiate that the assessee has given the cash loans to Shri Nilesh Bharani. Assessee has furnished the audited financial statements for the year ended 31.03.2012 before the AO during assessment proceedings and that the AO has not recorded any adverse findings with regard to the same. From the perusal of the findings of the CIT(A), we notice that the CIT(A) has not gone into the merits of the issue and has merely confirmed the addition relying on AO's findings. Thus as nothing has been brought on record by the AO to substantiate the allegation that the assessee has entered into the impugned transactions, addition made by the AO without bringing any concrete evidence on record incriminating the assessee is not sustainable - Decided in favour of assessee.
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2024 (5) TMI 90
Addition u/s 68 - capital introduced by five partners, which in turn was out of the loan advanced - Proprietor of loan advancing concern is a non filer of income tax return and does not have the creditworthiness HELD THAT:- We find in the case of Prayag Tendu Leaves Processing Co. [ 2017 (12) TMI 932 - JHARKHAND HIGH COURT] while deciding an identical issue has held that u/s 68 of the Act, the AO, while assessing a partnership firm, can go behind the source of income of the partnership firm, but he cannot go to the source of source . We find in the case of PCIT vs. Vaishnodevi Refoils Solves [ 2018 (1) TMI 861 - GUJARAT HIGH COURT] under identical circumstances has held that if the AO is not convinced about the creditworthiness of the partners who had made the capital contribution, the inquiry had to be made at the end of the partners and not against the firm. While holding so, the Hon ble Gujarat High Court followed its earlier decision in CIT vs. Pankaj Dyestuff Industries [ 2005 (7) TMI 601 - GUJARAT HIGH COURT] . Similar view has been taken in various other decisions relied on by the assessee, wherein it has been held that the addition, if any, can be made in the hands of partners on account of introduction of capital, but no addition can be made in the hands of firm. Thus we hold that the addition made by the AO u/s 68 of the Act in the hands of assessee firm on account of introduction of capital by the partners is not sustainable in the eyes of law. We, therefore, set aside the order of CIT(A) / NFAC and direct the AO to delete the addition - Decided in favour of assessee.
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2024 (5) TMI 89
Deduction u/s 80P - interest income(s) realized from parking of alleged surplus funds in nationalized bank(s)/similar institution(s) involving varying sums - HELD THAT:- We find in this factual backdrop that this tribunal s learned co-ordinate bench s order in Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT s [ 2022 (1) TMI 419 - ITAT PUNE] has settled the issue regarding the former limb of interest income derived from cooperative bank(s) etc., in assessee s favour The outcome would be hardly any different qua the latter limb of interest income(s) from public sector bank(s) in light of The Vaveru Co-operative Rural Bank Ltd. [ 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT] that interest income(s) derived from such nationalized/other bank(s) also qualifies for Sec. 80P deduction. We thus reject the Revenue s vehement arguments qua the assessee s sole substantive grievance in very terms.
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2024 (5) TMI 88
TDS u/s 194H - non deduction of TDS commission paid to Primary Agriculture Co-operative Society (PACS) - HELD THAT:- For carrying out all the activities, PACS were given commission @ 2.05% of MSP for procurement by PACS in the kharif marketing seasons and 2% of MSP on procurement of wheat in the rabi marketing season - On subsequent dates i.e. 26.07.2013, the percentage of commission was replaced by the commission of Rs. 31.25/- per quintal for common grade and Rs. 32/- per quintal for grade A. Further, notification dated 24.11.2015 provides for the provisional rates of custom milled rice procured under specification and retained for distribution under decentralized procurement operation. In the said notification, apart from the commission paid to societies on per quintal basis, PACS are also reimbursed for the mandi and labour charges, transportation charges, driage @ 1% of MSP, custody and maintenance charges, interest charges for two months, milling charges, administrative charges, cost of new gunny bags. Before us, as assessee has contended that the transactions between the assessee corporation and the PACS are on principal to principal basis because the risk is on the PACS for the procurement of food grains and they have to make payment in advance and get it reimbursed from the State Government. On the above identical factual matrix as decided in BIHAR STATE FOOD CIVIL SUPPLIES CORPORATION LIMITED VERSUS ITO, WARD-2 (1), PATNA [ 2024 (4) TMI 884 - ITAT PATNA ] held that in order to compute the correct amount of commission paid and in order to ascertain the correct amount of tax to be deducted at source u/s 194H of the Act, the matter is restored to the file of the assessing officer for carrying out necessary verification and calculation. The assessee is also directed to provide full co-operation to the assessing officer by placing all relevant material in order to get the needful information about correct amount of commission and correct amount of TDS u/s 194H of the Act. Appeals are also allowed for statistical purposes.
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2024 (5) TMI 87
Interest u/s. 244A - interest on unpaid interest - refund awarded in the order u/s. 154 - assessee was originally granted the refund with no interest given because the refund was less than 10% of the total tax liability and only in the rectification order that the refund of tax component was given. HELD THAT:- We notice that assessee s case falls under the category of sec. 244A(1)(a)(i) of the Act because the refund order to the assessee is out of the tax deducted at source upto 31.03.2017 and the assessee had furnished its original return u/s 139(1). Even though the assessee has revised the return but for the purpose of calculating interest, assessee s return shall always be treated to be filed u/s. 139(1) of the Act. Though the refund in the present case has been awarded in the order u/s. 154 of the Act but even section 154 is also forming part of the fleet of other sections mentioned in sec. 244A(3) of the Act and that comes into action when a refund has already been granted but subsequent to the rectification order, the refund is increased or decreased then the interest given earlier also needs to be increased or decreased. However, in the instant case when the assessee was originally granted the refund no interest was given because the refund was less than 10% of the total tax liability. It was only in the rectification order dated 12.07.2022 that the refund of tax component was given. After considering the facts and circumstances of the case, and also considering the set off of MAT credit available with the assessee as on the beginning of the assessment year, we find sufficient merit in the contentions of assessee that the interest u/s. 244A of the Act in the case of the for AY 2017-18 needs to be computed from 01.04.2017 to the date of grant of refund. Accordingly, the effective issue raised in the instant appeal is allowed. Thus we hold that the assessee indeed is entitled for interest on unpaid interest and accordingly all the grounds raised by the assessee in this regard are allowed.
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2024 (5) TMI 86
FTC u/s. 90 - credit for Foreign Taxes paid denied as Appellant has claimed the credit only in the revised return of income and not in the original return of income and also not filed Form No. 67 within the due date of filing of return of income prescribed u/s. 139(1) - HELD THAT:- Co-ordinate Bench of the Tribunal in the case of Vidya Tukaram Desai [ 2023 (12) TMI 1307 - ITAT MUMBAI] following the finding of coordinate bench in the case of Sonkashi Sinha ( 2022 (10) TMI 107 - ITAT MUMBAI] has allowed the claim of foreign tax credit where Form No. 67 is filed before the completion of the assessment for the relevant assessment year. Assessee is eligible for claim of the foreign tax credit as Form NO. 67 has been filed by the assessee along with revised return of income on 28.03.2019 which is much before the processing of the return of income by CPC on 11.06.2020. We direct the AO to consider the claim of the assessee subject to the verification of the facts as mentioned above. The matter is accordingly restored to the file of AO for considering the claim of the assessee of the foreign tax credit as directed above. Appeal of the assessee is allowed for statistical purposes
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2024 (5) TMI 85
Rental income earned on immovable properties owned by his family members - Benami Owner - properties owned by relatives of the assessee - basis for treating the same as benami property of the assessee is the CBI search conducted on the assessee making out a case of assets owned by the assessee disproportionate to his source of income - assessee contended before us that this rental income had been disclosed by the owners of the property in their returns, and the same had not been disturbed or disputed till the date - HELD THAT:- As it is evident that the case of the Revenue of the impugned properties being benami of the assessee rests merely on the preliminary report of the CBI which did not see the light of day by framing concrete charges against the assessee. We have perused the statement recorded by CBI and as rightly pointed out by the Ld.Counsel the assessee denied having anything to do with the said properties, he stated the names of the owners of the properties and also revealed sources from where investment was made by them. The entire case of the Revenue rests on the CBI Charge sheet framed by the CBI which was subsequently dropped. Revenue has failed miserably to prove that the assessee was a benami owner of the impugned properties. The assessee therefore cannot be treated as owner of the properties. The decision referred of the Hon ble Kerala High Court in K. Mahim Udma [ 1999 (10) TMI 45 - KERALA HIGH COURT] casting an onerous burden on the party alleging benami transaction aptly covers the issue in hand, in favour of the assessee. Therefore there is no occasion to tax rental income earned therefrom in the hands of the assessee.Further the fact that rental income from these properties was returned in the hands of respective owners has been accepted by the Revenue all along, also strengthens the case of the assessee. In view of the above we hold that the rental income cannot be treated to be that belonging to the assessee. Addition made of the same is directed to be deleted. B adla income earned by the assessee - HELD THAT:- As entire case of the Revenue rests on the CBI charge sheet which ultimately did not culminate in any charges being framed on the assessee. Therefore, not much credence can be given to allegations levelled on the assessee in the charge sheet. Besides we have noted that Sh. Pawar filed an affidavit stating on oath that all income from badla activities carried out in D.D Enterprises related to him and had nothing to do with the assessee. The Revenue has been unable to point any infirmity in the affidavit of Shri Pawar. Even income from the badla business carried out in D D Enterprises was shown to be duly returned to tax by the said entity,being proprietorship of Sh.Pawar. Thus no substance in the addition made by the Revenue of income badla. Income earned from investments held to be benami of the assessee - interest earned on Post-Office MIS - investment being in the name of father of the assessee treated to be benami of the assessee - HELD THAT:- As there is no case for treating the impugned income as that related to the assessee, since Revenue has been unable to discharge its onus of proving that these investments were benami of the assessee.In view of the same, the addition made of interest income earned from FDR and interest earned on Post Office MIS are directed to be deleted. Appeal of the assessee is allowed.
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Benami Property
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2024 (5) TMI 84
Benami Property Transactions - Real/original owner - provisional attachment order issued u/s 24(3) of the Benami Transactions Act, 1988 - reason to believe that the petitioner is a Benamidar of respondent no.5 [her son-in-law ] - Who is original owner of the constructions? - Submission of petitioner is that the department has no evidence to prove any benami transaction or that the petitioner was a Benamidar of the constructions in question and respondent no.5 is the beneficial owner - HELD THAT:- Sri Krishna Kumar Dubey, Partner of M/s.Vishnu Mitra Buildcon has not given any basis or reason as to how he believes that the original owner of the constructions is respondent no.5 and even the department has not put a single question to Sri Krishna Kumar Dubey with regard to the basis of his knowledge. In support of his statement Sri Krishna Kumar Dubey has not provided any documentary or other evidence. Similarly, the department has also not referred to any other evidence in the show cause notice to support the said statement. Section 24 (1) of the Benami Transactions Act states that where the Initiating Officer, on the basis of material in his possession, has reason to believe . Thus, there are two pre-conditions to the issuance of the notice under Section 24(1) of the Benami Transactions Act; (i) The Initiating Officer should have material in his possession and; (ii) the material should be sufficient to cause a reason to believe. It goes without saying that while interpreting a taxing statute, the principle of strict interpretation is to be applied. As per record, in the present case a mere statement of the contractor without any substantial supportive evidence is made the basis of the entire proceedings. Such a mere statement without any supportive evidence cannot under law be held to be a sufficient material in possession of an Initiating Officer to arrive at a reason to believe that constructions are benami. There has to be sufficient material in possession of the Initiating Officer on the basis of which he can come to a logical conclusion that can be called a reason to believe for initiating proceedings. In the present case except for an oral statement of a contractor, who has not given any reason for making such a statement, and from whom the department has also not even asked as to on what basis he is making the said statement, the entire proceedings are initiated. There is not even an iota of material placed by the department before this Court, referred to in the show cause notice, on the basis of which the Court could believe the said bare statement and conclude that a reason to believe can be arrived at. Admittedly, the petitioner has already submitted her Income Tax Returns for the relevant period and the said proceedings are not yet completed. As such, in the absence of the same the department also cannot claim that her earnings for the relevant year are beyond her known sources of income. This Court has no hesitation in holding that there was no material in possession of the Initiating Officer which could be held to be sufficient for holding a reason to believe that the petitioner is a Benamidar of respondent no.5, her son-in-law, with regard to the constructions in question for initiating proceedings under Section 24(1) of the Benami Transactions Act. As regards, the order of provisional attachment under Section 24(3) of the Benami Transactions Act is concerned, Section 24(3) requires that Initiating Officer is of the opinion that the person in possession of the property held Benami may alienate the property during the period specified in the notice. Without such a satisfaction the property can not be attached by the Initiating Officer. In the present case, no such material has been referred to by the Initiating Officer in the impugned attachment order or placed before this Court which could demonstrate that the property is likely to be sold and thus require him to resort to Section 24(3) for provisional attachment. Thus, the order of provisional attachment is also without any basis. The impugned show cause notice issued under 24(1) of the Benami Transactions Act and also the provisional attachment order issued under Section 24(3) of the Act, are hereby set aside.
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Customs
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2024 (5) TMI 83
Seeking grant of permission to export of rice - Non-fulfilment of the conditions entitling it to an exemption - Notifications for imposition of ban on export of non-basmati white rice - export of Non-Basmati white rice was changed from free to prohibited with immediate effect - Whether the Appellant ought to be allowed to export 11,000 MT quantity of rice which is lying at private warehouses near the customs port at Kandla, Gujarat, on the test of substantial compliance of the conditions of exemption - HELD THAT:- It is the case of the Appellant, that despite best of its efforts and due to no fault of it, the quantity of 11,000 MT could not be handed over to the Custodian at Deendayal Port Authority prior to 20th July, 2023, due to lack of storage space at the Port, as evidenced by letter dated 2nd August, 2023, issued by the Custodian. In addition, the Appellant contends that the vessel call number was allocated to it prior to the Notification and the non-berthing of the vessel before 20th July, 2023, was beyond its control. It is, thus, the case of the Appellant that in its facts though it could have otherwise fallen within the exception of Paragraphs 2(ii) and (iii) of the Notifications, entitling it to export 11,000 MT, it was unable to strictly complete the conditions despite all actions taken at its end, due to the circumstances beyond its control. It is noted that the Appellant initially in the writ petition and in the present appeal pleaded that despite best efforts it was unable to comply with condition no. (v) of Paragraph 2 with respect to payment of export duty on ten shipping bills for 10,000 MT, despite filing the same on to the Portal (ICEGATE) of the Respondent. The Appellant s averment itself is vague. However, the Respondent in the counter affidavit at Paragraph 21 and 22 as well as in this appeal vehemently opposed the said allegation and asserted that the Appellant was making an incorrect statement. The Appellant asserted that its Portal ICEGATE was fully functional and there was no hindrance to any exporter (including the Appellant) in making payments of export duty within the stipulated period. The Appellant herein has since abandoned the said plea and not relied upon the same in its written submissions dated 27th February, 2024. We find merit in the submission of the Respondent that each condition at Paragraph 2 in the Notifications is an independent exception and the exporter seeking to invoke the said exception has to fulfil each of the stipulations set out in the said condition. This is for the reason that each condition in the Notifications is intended to independently carve out an exception for facilitating export of shipments, which were in transition and the test to determine if the shipment is in transition was identified separately as condition nos. (i) to (iv) in the Notifications. Under the Notification, the Respondent has carved out five independent exemptions so as to entitle the exporters with transitional arrangements to comply with their export obligations. The Respondent admittedly was granted the benefit of the exemption for 17,000 MT as it complied with condition no. (v) in its entirety with respect to payment of export duty. Each of the five independent exemptions have essential requirements which the applicant exporter must comply with for completing the export. The Appellant fails to comply with the essential conditions in each of the exceptions. Therefore, the doctrine of substantial compliance relied upon by the Appellant is of no assistance as the Courts have held that latitude can be shown to the applicant only with respect to requirements which are directory in nature, the non-compliance of which would not affect the essence of the Notification granting exemption. Since the vires of the Notifications and reasonableness of exemption condition nos. (i) to (v) is not under challenge; and the Appellant admittedly fails to satisfy the essential conditions contained in each of the independent exemptions, we are unable to accept the contention of the Appellant that it can be permitted by Respondent to export 11,000 MT by taking an overall view of substantial compliance, which in the opinion of this Court is in essence a subjective evaluation, which is not the remit of the Notifications. Keeping in view the objective of the Central Government in imposing this ban with immediate effect was to avert a food crisis in the country, a strict compliance of the exemption conditions would further the said intent of the Notifications. The Appellant had also placed reliance upon the interim order dated 06th December, 2023 passed by the High Court of Chhattisgarh in I.A. No. 01/2023 filed in W.P.(C) permitting the exporter therein to export non-basmati rice. In this regard, we may note that the learned Single Judge of the High Court has referred and relied upon the order dated 19th October, 2023 passed by High Court of Andhra Pradesh while passing the interim order. The Respondent has stated that it is in the process of filing a SLP against the order passed by High Court of Chhattisgarh. The High Court of Chhattisgarh has considered the fact that the exporter therein has a pre-existing contract with the foreign importer along with letter of credit for granting ad-interim permission for export. We are of the considered opinion that in view of the express suspension of the FTP, 2023, the said fact stands expressly excluded from the scope of the Notifications and therefore, could not have formed the basis for granting relief. We have been unable to satisfy ourselves in the present appeal that the Appellant herein has satisfied the exemption conditions of the Notifications. Thus, we find that there is no merit in the appeal. Accordingly, the same is dismissed.
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2024 (5) TMI 82
Safeguard duty levied on the import of solar cells and modules - Validity of levy during the period when the injunction from the High Court of Orissa was active - Protection of the domestic industry - contravention of the order passed by the High Court of Orissa - Whether the statutory scheme contained in the provisions of the Act of 1975 and the Rules of 1997 have been complied with - HELD THAT:- On navigating through the discussion and the consideration of the various aspects before arriving at the final finding, it is evident that all the pleas raised by the stakeholders were considered and opportunity was given to all the stakeholders to represent their stand. The principles of natural justice are also complied with. The said final finding thereafter is accepted by the Central Government by issuing the notification. The said issuance of the notification imposing safeguard duty is a legislative act. The courts will adopt a liberal attitude in upholding the delegation when taxing power is conferred. The impugned notification is a piece of a subordinate legislation, more particularly, when the said notification imposes the safeguard duty not in reference to a particular importer, exporter or a specific country. The final finding was arrived at by the second respondent on 16.7.2018. The interim order of injunction was passed by the Orissa High Court in W.P. The notification was issued by the Central Government imposing safeguard duty on 30.7.2018, during the subsistence of the order of interim injunction prohibiting the respondents from issuing the notification. The Supreme Court stayed the interim order of injunction passed by the Orissa High Court on 10.9.2018. The Apex Court in the case Mulraj v. Murti Raghunathji Maharaj,[ 1967 (3) TMI 111 - SUPREME COURT] , considered the effect of action taken subsequent to passing of an interim order in its disobedience and held that any action taken in disobedience of the order passed by the Court would be illegal. Subsequent action would be a nullity. In DDA v. Skipper Construction Co. (P) Ltd., [ 1996 (5) TMI 326 - SUPREME COURT] , the Apex Court after making reference to many of the earlier judgments held that those who defy a prohibition ought not to be able to claim that the fruits of their defiance are good, and not tainted by the illegality that produced them. In the present case, though the interim order of injunction was in force when the notification was issued, the said order was stayed by the Apex Court on 10.9.2018 and on and from 10.9.2018, the notification would become operative, as the prohibitory order did not exist. The contention of the petitioners that as the notification was issued during the subsistence of the prohibitory order, even after the prohibitory order was stayed by the superior court still the notification would be inoperative, cannot be comprehended. The notification issued is legislative in character. The executive exercised the powers of delegated legislation. The notification, during the subsistence of the interim order of injunction, is certainly inoperative, but on and from the date the stay was granted by the Apex Court to the prohibitory order passed by the Orissa High Court, the notification will become operative and binding upon the parties. The Central Government would not be required to issue a fresh notification after the order of injunction was stayed. In the case of V.P. Sheth [ 1999 (9) TMI 995 - MADHYA PRADESH HIGH COURT] , the appellant therein was compulsorily retired on 10.1.1989. The Central Administrative Tribunal set aside the order of compulsory retirement. The respondents filed a SLP before the Apex Court. The Apex Court stayed the final order passed by the Central Administrative Tribunal. The Apex Court in the said case observed that the effect of the stay is that the order of the Central Administrative Tribunal is not operative and the order of compulsory retirement remains in force. Thus, it can safely be held that on and from the date the order of injunction passed by the Orissa High Court was stayed by the Apex Court, i.e., 10.9.2018, the notification became operative and effective. In W.P., the petitioner has been assessed for safeguard duty vide Bill of Entry dated 2.8.2018. The same was during the subsistence of the prohibitory order passed by the Orissa High Court and before the stay was granted by the Apex Court. The respondents, certainly, could not have assessed the same, as during the said period the notification could not have been issued. The respondents also suggest that the same should not be assessed. Therefore, the order of self-assessment, vide the impugned Bill of Entry No.7474159, dated 2.8.2018, to the extent it seeks to impose safeguard duty pursuant to the notification dated 30.7.2018, is illegal and arbitrary, inasmuch as it was issued during the subsistence of the order of injunction, and accordingly the same is quashed and set aside.
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2024 (5) TMI 81
Release of duty drawback and a rebate under Rebate of State and Center Taxes and Levies (ROSCTL) - 13 shipping bills uploaded on the respondent's online portal, with a formal application yet to be made. - HELD THAT:- Learned counsel for the petitioner submits that in so far as release of IGST and interest is concerned, the same already stands allowed in favour of the petitioner and the issue now surviving is with regard to release of ROSCTL. Learned counsel submits that the same pertains to 13 shipping bills which were uploaded on the online portal of the respondent, out of which 11 were uploaded on 31.03.2020 and two were uploaded on 30.10.2020. Learned counsel for the petitioner submits that without prejudice to her rights and contentions, petitioner shall make a formal application in terms of the said procedure within a period of one week. On such an application being filed, respondent shall process the same in accordance with the rules and law within a maximum period of four weeks from the date of submission of the application. The petition is accordingly disposed of, reserving the right of the petitioner to take such further remedy as may be permissible in law in case aggrieved by any order passed by the respondent.
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2024 (5) TMI 80
Imposition of Penalties u/s 112(a) (b) and 114AA - Each appellant denied direct involvement or knowledge of the illegal activities, claiming to have played different roles in the importation process. - import of restricted / prohibited goods - confiscation of goods - allegation for never received the summons - HELD THAT:- We have no doubts in our minds that the Sushil Aggarwal was not merely an indenting agent but was an active player involved at every stage in the entire operation from placing orders for the imported goods including the import of the prohibited goods, mis-declaration in the documents, clearance of the goods, transporting them to the godown and selling them, receiving the sale proceeds and further distributing them among various operators. We find the penalties imposed on him under Section 112 and 114AA must be sustained and they call for no interference. Sunil Aidasani - claims to have never received the summons and hence he had not appeared to give his statements - As far as the allegations that 12 of the 19 containers actually belonged to him are concerned, these are based on the statements of Bhalla. A statement made by Bhalla u/s 108 of the Customs Act will be relevant to prove the case only as per section 138B. This requires the adjudicating authority to examine the person making the statement and decide if it is to be admitted in evidence. Needless to say that if it is admitted in evidence and is proposed to be used against another person, such person should be allowed to cross examine the person making the statement. Since the procedure prescribed u/s 138B was not followed, the statement is not relevant to prove the case against Aidasani. We also find that neither section 112 nor section 114AA provide for penalty for not responding to summons or not cooperating with the investigation. Therefore, the penalties imposed on Aidasani in the impugned order cannot be sustained and need to be set aside. Naveen Gulabani - T he allegation in the SCN is that he is an employee of Sunil Aidasani@ Vicky and that he had not responded to the summons and had not cooperated with the investigation. We find neither section 112 nor section 114AA makes one liable to penalty either for being an employee of the overseas supplier of goods nor for not responding to summons and not cooperating with the investigating agency. Therefore, the penalties imposed on Gulabani cannot be sustained and need to be set aside and we do so. Therefore, the penalties imposed on Gulabani in the impugned order cannot be sustained and need to be set aside.
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2024 (5) TMI 79
Benefit of reduced penalty of 15% u/s 28(5) - Delay in payment of penalty due to Public Holiday - The appellant voluntarily paid the differential BCD and interest upon detection of the misclassification - Importation of drawings and designs on paper made with aid of computer - Wrongly classification of the imported goods and claim of exemption - wilful misstatement or suppression of facts - HELD THAT:- No evidences are available on record to show that the appellant had bona-fide intention in claiming wrong classification of the disputed goods and availment of the exemption from payment of the BCD under the notification dated 17.03.2012 read with notification dated 30.06.2017. It is also an undisputed fact that the appellant had voluntarily paid the differential BCD and interest amount upon detection of wrong classification by the DRI. The reduced penalty amount as per sub-section (5) of Section 28 ibid was also paid suo-moto by the appellant, consequent upon receipt of the SCN. Thus, it cannot be said that the department s action in invoking the penal provisions u/s 114A ibid is not proper or justified. In the case in hand, since 14th and 15th of December were being holidays as second Saturday and Sunday, payments made by the appellant in the designated bank on 16.12.2019 would be considered as the deposit made within the stipulated time frame. Since, the appellant has complied with the requirement of sub-section (5) read with sub-section (6) of Section 28 ibid, in our considered view, payment of reduced amount of penalty @15% of the BCD amount would be considered as sufficient compliance in terms of the statutory provisions. Since, the appellant in this case had deposited such reduced amount of penalty, as per Section 10 of the General Clauses Act, 1897 read with Section 28 ibid, in our considered view, such deposit should meet the ends of justice for the purpose of the benefit provided for reduction in the quantum of penalty. Thus, the impugned order, imposing equal amount of penalty shall not be sustained for judicial scrutiny. Thus, the impugned order to the extent it has confirmed equal amount of penalty on the appellant is set aside and the appeal to such extent is allowed in favour of the appellant, holding that the appellant would be liable to pay the reduced amount of penalty at the rate of 15%, which they have already complied with.
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2024 (5) TMI 78
Levy of penalty and Revocation of Courier license - Allegation of abetting in mis-declaration of value of imported goods - Importation of mobile parts - G-card holder had fabricated documents - duty - Interest - Penalty imposed under Regulation 14 of Courier Import and Export (Electronic Declaration and processing) Regulations, 2010 and u/s 117 of the Customs Act, 1962 - bill of entry filed without complying with the KYC norms - violation of the Regulation 12 - HELD THAT:- There was omission on the part of appellant to engage the executive Shri M. Elias as authorized person to file courier bills of entry as per Regulation 12(ii) of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010. However considering the situation that prevailed during post-covid period, the appellant might have failed to comply with said provision and same cannot be reason to invoke harsh proceedings including revocation of courier license and enforcement of bond and bank guarantee executed in connection with registration/license as an authorized courier. We find that for such venial omission, appropriate penalty under the provisions of Regulation 12(ii) of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010, would suffice. We find that as regards the penalty under Regulation Regulation 14 of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010, considering the revocation of the Courier license, since September 2023, a lenient view can be taken. Thus, the penalty imposed on the appellant under Regulation 14 of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 is reduced to Rs. 25,000/-. In the result the impugned order is modified and appeal is partially allowed by setting aside revocation of Courier License and enforcement of Bond and Bank Guarantee executed in connection with the Registration/Issue of Courier License. In view of the discussion at Para 9 (supra), penalty imposed on the appellant u/s 117 of the Customs Act, 1962 is set aside. The penalty imposed on the appellant under Regulation 14 of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 is reduced to Rs. 25,000/-(Rupees Twenty Five Thousand only)
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2024 (5) TMI 77
Levy of penalty for abetting in mis-declaration of imported goods - Revocation of Courier License - authorized courier agent - mis-declaration of the value - Shipment without proper KYC verifications and authorization of the import - violation of the provisions of Courier Imports and Exports (Electronic Declaration and processing) Regulations, 2010 - HELD THAT:- As the appellant is only facilitating the customs transaction on behalf of principal, (importer/exporter), the absence of mens-rea, penalty is not imposable, otherwise all the customs transaction will come to halt, if penalty is imposed on the customs broker the omission /commission of exporter/importer. Moreover, in the impugned order Adjudication Authority itself held that there is no illegality revealed related to goods cleared through the appellant. Appellant has not received any authorization for filing the courier bills of entry. However, while submitting reply to show cause notice, appellant submits that the importer is identified and appellant had caried out KYC verification such as IEC and GST registration as per information provided by Mr. Ajit. Moreover, the appellant produced Email communication as proof of authorization and thereby complied with the KYC verification. The absence of any provision which mandate receipt of KYC directly by courier agency u/s 146 of Customs Act,1962, finding of violation of the Regulation 12(i) is unsustainable. The bills of entry were filed by G Card holder Shri. V.V. Suresh, who is an authorized person to file bill of entry as per section 146 of Customs Act,1962. Thus, in the absence of any evidence regarding filing of bill of entry by Shri. I. S. Patil and not G Card holder Shri. V. V. Suresh, violation of the Regulation 12(ii) is unsustainable as held by the adjudicating authority. As regards violation of the Regulation 12 (iv) (vi) of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010, the adjudicating authority held that the delivery address of the importer is in Delhi and appellant has not verified the identity of the client by using reliable, independent document. Moreover, even as per the allegation in the SCN, there is no import of prohibited/restricted goods and there is no allegation related to goods cleared by appellant. Thus, appeal is allowed by setting aside revocation of courier license and enforcement of Bond and Bank guaranty executed in connection with registration/license. Penalty imposed on the appellant u/s 117 of the Customs Act, 1962 is set aside. Penalty imposed on the appellant under Regulation 14 of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 is also set aside.
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2024 (5) TMI 76
Levy of maximum Penalty - delay in submitting the documents for finalization of the Bills of Entry - Duty paid on provisional basis - HELD THAT:- Admittedly the Department has not brought in any evidence to the effect that the Appellant has deliberately delayed the finalization of the Bills of Entry. On a query from the Bench, the Ld. Consultant submits that even in respect of the 12 Bills of Entry in question, the finalization has been completed and there is no pendency on their side. Therefore, following the ratio of the decision in the case of Jai Balaji Industries Ltd.,[ 2021 (1) TMI 767 - CESTAT KOLKATA] , I set aside the impugned Order and allow the Appeal.
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Corporate Laws
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2024 (5) TMI 75
Professional Misconduct by CA - Liability of the Engagement Partner (EP) with Audit Firm - Failure to disclose a material fact known - Failure report a material misstatement known - Failure to exercise due diligence and being grossly negligent in the conduct of professional duties - Failure to obtain sufficient information which is necessary for expression of an opinion - Failure to invite attention to my material departure from the generally accepted procedures of audit applicable - sanctions and penalties - section 132 (4) of Companies Act 2013 - HELD THAT:- It is proved that the audit firm failed to implement the quality control policies as required by SAs, within the firm. Following are the observations:- I. The audit firm committed professional misconduct as defined by clause 5 of Part I of the Second Schedule of the CA Act, which states that a CA is guilty of professional misconduct when he fails to disclose a material fact known to him which is not disclosed in a financial statement, but disclosure of which is necessary in making such financial statement where he is concerned with that financial statement in a professional capacity . This charge is proved as the audit firm failed to disclose in his report the material non-compliances by the company. II. The audit firm committed professional misconduct as defined by clause 6 of Part I of the Second Schedule of the CA Act, which states that a CA is guilty of professional misconduct when he fails to report a material misstatement known to him to appear in a financial statement with which he is concerned in a professional capacity . This charge is proved as the audit firm, who was appointed as the statutory auditor, failed to disclose in its report the material non-compliances by the company. III. The audit firm committed professional misconduct as defined by clause 7 of Part I of the Second Schedule of the CA Act, which states that a CA is guilty of professional misconduct when he does not exercise due diligence or is grossly negligent in the conduct of his professional duties . This charge is proved as the audit firm, who was appointed as the statutory auditor, failed to exercise due diligence in the audit of the company in accordance with the SAs and applicable regulations. IV. The audit firm committed professional misconduct as defined by clause 8 of Part I of the Second Schedule of the CA Act, which states that an EP is guilty of professional misconduct when he fails to obtain sufficient information which is necessary for expression of an opinion, or its exceptions are sufficiently material to negate the expression of an opinion . This charge is proved as the audit firm, who was appointed as the statutory auditor, failed to conduct the audit in accordance with the SAs and applicable regulations and failed to analyse and report the appropriateness of accounting policy for recognition of interest cost on loans classifies as NPAs. V. The audit firm committed professional misconduct as defined by clause 9 of Part I of the Second Schedule of the CA Act, which states that an FP is guilty of professional misconduct when he fails to invite attention to any material departure from the generally accepted procedure of audit applicable in the circumstances . This charge is proved since the audit firm, who was appointed es the statutory auditor, failed to conduct the audit in accordance with the SAs. It is concluded that the charges of professional misconduct enumerated in the SCN dated 04.12.2023 stand proved based on the evidence in the Audit File, the Audit Report issued by the EP on behalf of the audit firm, the submissions made by the audit firm, the annual report of Vikas WSP Limited for the FY 2019-20 and other materials available on record. Penalties and sanctions - HELD THAT:- Section 132(4) (c) of the Companies Act 2013 provides that the National Financial Reporting Authority shall, where professional or other misconduct is proved, have the power to make order for. A) imposing penalty of (I) not less chart one lakh rupees, bat which may extend to Ave times of the fees received. in case of individuals, and (II) not less than five lakh rupees, but which may extend to ten times of the fees received, in case of firms. (B) debarring the member or the firm from (I) being appointed as an auditor or internal auditor or undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate. or (II) performing any valuation as provided under section 247, for a minimums period of six months or such higher period not exceeding ten years as may be determined by the National Financial Reporting Authority. Considering the proved professional misconduct and keeping in mind the nature of violations, principles of proportionality and deterrence against future professional misconduct, and also keeping in mind that the audit firm has not accepted the charges as pointed out in thy SCN, in exercise of powers under Section 152(4)(c) of the Companies Act, 2013, it is hereby ordered imposition of a monetary penalty of Rs 5,00,000/- upon M/s S. Prakash Aggarwal Co.
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Service Tax
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2024 (5) TMI 74
Time Limitation for filing returns - revised returns filed on 14.08.2009 under Rule 7B of the Service Tax Rules, 1994 are within time or not - second SCN issued on same set of facts as first SCN - Whether the Learned Tribunal has committed the gross error by not appreciating that the revised return was filed on 14.08.2003 which is beyond the stipulated period and as such the taxable value mentioned in original ST-3 returns is to be considered as correct or not? HELD THAT:- The cases where the Returns are not submitted within 90 days are dealt with in Rule 7(3), which stipulates that where the return prescribed under Rule 7B is furnished after the date prescribed for submission of such return, the person liable to furnish the said return shall pay to the credit of the Central Government a certain sum of money which is stipulated under said Rule considering the period of time. Therefore, the ST-3 return which was filed by the assessee on 22nd May, 2009 cannot be ignored by the department and the last date for filing the revised Return ought to be calculated from the said date and if the same is done, revised Return filed on 14th August, 2009 is well within time. It must also be noted that there is an earlier show cause notice issued to the assessee dated 8th April, 2010. The said show cause notice is one of the relied upon documents in the show cause notice dated 21st September, 2010, which is the subject matter of this case. Based on an audit report, it was pointed out that the assessee has himself interpreted Rule 3 and 4 of the Rules. This was taken into consideration by the assessee and the assessee rectified the mistake, reversed the credit which was availed and also paid the interest at the applicable rate. The aspect clearly brought out by the assessee in their response to the show cause notice vide a reply dated 27th October, 2010. The contention of the assessee that the second show cause notice issued on the same set of facts which was very much available with the department when the show cause notice dated 8th April, 2010 was issued, would be a sufficient ground to hold that the show cause notice issued which was ultimately culminated in the Order-in-Original dated 10th February, 2011 could be held to be barred by time. The learned Tribunal has taken note of the undisputed facts that too from the order-in-original as passed by the adjudicating authority and granted relief to the assessee - no questions of law, much less substantial question of law, arising for consideration in this appeal - Appeal dismissed.
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2024 (5) TMI 73
Exemption from Service tax - services provided to SEZ units - conditions of N/N. 9/2009-ST dated 31.03.2009, N/N. 17/2011-ST dated 01.03.2011, N/N. 40/2011-ST dated 20.06.2011 and N/N. 12/2013-ST dated 01.07.2013 fulfilled or not - It is the case of the Appellant that since all the documents were resumed by the Officers of Service Tax Department at the time of search of the premises of the Appellant on 13.01.2015, including A-1 Forms also, the Appellant could not produce the same before the learned Commissioner (Appeals). HELD THAT:- There is no dispute that the services have been provided to SEZ units ; SEZ units to whom services have been provided were duly authorized by UAC to receive certain services without payment of Service Tax for use in the authorized operations ; SEZ units were issued duly approved list of specified services in proper prescribed form ; there is no dispute that the services provided by the Appellant were used in authorized operations of recipient SEZ units. The Hon'ble Supreme Court has consistently held that the eligibility clause of exemption Notification has to be given strict meaning of which the Notifications should be interpreted in terms of its language and once an Assessee satisfies the eligibility clause, the exemption clause may be construed liberally. Thus, an eligibility criteria deserves a strict construction, although construction of a condition thereof may be given a liberal meaning - Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] held that 'If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, thought at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption.' Since there was substantial compliance of substantive clause of the Notifications in question, the Appellant is entitled to exemption from payment of Service Tax in respect of services provided by the Appellant to SEZ units/Developers - the impugned order is set aside - appeal allowed.
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2024 (5) TMI 72
Refund in cash in respect of certain amount of service tax - appellant had not carry forward the credit of the said amount in accordance with the provisions under Section 140 of CGST Act 2017 and Rules made thereunder - reverse charge mechanism - Section 142(3) of the Act read with Section 11B of the Central Excise Act 1944 - HELD THAT:- The perusal of CCR under the existing law clearly brings out that the refund of unutilized cenvat credit can be made only for specific purpose under Rule 5, 5A and 5B, subject to certain prescribed/notified procedure, conditions and limitations etc., as may be specified or notified by notification. Also, it is obvious that there is no provision for refund of CENVAT credit either under CCR 2004 or Finance Act 1994 for service tax paid correctly, which in any case has not been disputed by the appellant. They have also admittedly not filed any revised ST-3 within the specified tax limit as would have been otherwise required under Section 142(9)(b). Essentially when there is no provision in the law either under the Cenvat Credit Rules 2004 or in the Finance Act 1994 to allow cash refund, for such accumulated credit, Section 142(3), per se, cannot make it an eligible refund merely because the appellant have not been able to utilize on the ground of not having filed the revised return or were not able to take the TRAN-1 route etc., within specified time. It is observed that in the case of Banswara Syntex Vs CCE [ 2018 (10) TMI 1064 - RAJASTHAN HIGH COURT ], the Hon ble Division Bench of Rajastan High Court held that refund of accumulated unutilized credit on account of education cess and secondary and higher secondary education cess was not entitled for cash refund in view of their having no provision under the Act of 1944. There is no infirmity in the Order passed by the Commissioner (Appeals) upholding the Order of the Original Authority, who had rejected the claim of refund in cash filed by the appellant. Accordingly, the appeal filed by the appellant is liable to be dismissed. Appeal dismissed.
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2024 (5) TMI 71
Short payment of service tax - rental income received from educational institution during 2014-15 - non-submission of material proof like invoices, bills etc. - assessee could not give details of exemption claimed and the fact that they were not mentioned in the returns filed nor any invoice/documents were provided to the audit team - N/N. 25/2012-ST was substituted by N/N. 06/2014-ST with effect from 11.07.2014 - suppression of facts or not - Extended period of Limitation - penalty u/s 78 of FA - HELD THAT:- On going through notification it is clear that the exemptions were not available during this period even though it was otherwise available prior to the period and even after the subsequent period. It is also found that the show cause notice has not given clear break up of various incomes which were received as income arising out of services provided by the appellant nor they have given any specific applicable rate of duty or exemption under which they were either liable to service tax or otherwise exempted. The mere perusal of the show cause notice shows that it has not brought categorically the grounds on which the demand was proposed. Further, it is an admitted fact that they were not liable to service tax prior to this demand period or subsequent to this demand in terms of extent notifications. Under this condition, there could have been a bonafide belief that they were not liable to pay service tax. Further, merely because they were raising the invoices in the same old fashion it does not make them defaulter who deliberately and intentionally, despite knowing the fact that they were liable to pay service tax, chose not to pay service tax. No such details or grounds to the contrary have been brought in the show cause notice for invoking proviso to Section 73. Proviso to Section 73 provides that the demand can be raised even beyond the normal period of 30 months, but within 5 years, where the service tax has not been levied or paid etc., by fraud, willful misstatement, suppression of facts, contravention of any provision of the chapter or the rules made therein with intent to evade payment of service tax - In the facts of the case, proviso to Section 73 is not applicable and therefore extended period cannot be invoked for demanding service tax on the rental income during the material period in 2014-15 as the show cause notice has clearly been issued after 30 months from the given date. Therefore, the demand is clearly time barred. Since the demand is already time barred and no deliberate suppression etc., is invokable in the facts of the case, the penalty is also not leviable under Section 78. The appeal is allowed.
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2024 (5) TMI 70
Reversal of proportional CENVAT Credit - trading activity - exempt services - respondent had neither maintained separate inventory nor had opted in terms of Rule 6(2) of CENVAT Credit Rule (CCR), 2004 - HELD THAT:- If the manufacturer or provider of service had failed to exercise the option under sub-rule 6(3) of the CCR, 2004 will be allowed to pay the proportionate credit along with the interest at the rate of 15% per annum from the due date for payment of amount till the date of payment. Hence the appellant is eligible for the benefit of reversing the proportionate credit only if it is done along with interest as per law. As per Rule 6(3) of the CCR, 2004 the appellant in the first place is not eligible to avail credit on exempted products. For the benefit of the taxpayers where common credit is availed on both dutiable and exempted goods/services, certain provisions are enabled for the convenience of the taxpayer to ensure that credit is taken only on the dutiable products/services. In the present case, the Commissioner while allowing payment of proportionate credit as per Rule 6(3A), with regard to interest holds that interest is not liable to be paid since sufficient balance was available in their account. The Commissioner has failed to notice that Rule 6(3A) is only an option given to the appellant allowing reversal of credit at a later date only if it is paid along with interest. The reliance placed by the Commissioner on the decision of the Hon ble High court of Karnataka in the case of CCE, ST LTU Bangalore vs Bill force Ltd. [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] is misplaced since the facts of that case was excess availment of credit which was unutilized and reversed. The present case is clearly distinguishable as it is allowing the option of proportionate reversal of credit provided the reversal happens along with interest. The Commissioner s order with regard to confirmation of service tax demand of Rs.1,14,64,277/- upheld - Revenue s appeal with regard to demand of interest is upheld - interest is to be paid on the above demand of Rs.1,14,64,277/- in terms of Rule 6(3A) of the Cenvat Credit Rules, 2004. Revenue s Appeal is allowed only to the extent of demand of interest.
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2024 (5) TMI 69
CENVAT Credit - Credit availed on the basis of bogus invoices issued by Automobile dealers - whether assessment to tax at the hands of the service providers end can be questioned at the hands of service receiver? - HELD THAT:- On going through the case record and perusing the order passed by this Tribunal in respect of the Appellant for the first showcause notice since this notice is based on statement of demand issued in pursuance to the said show-cause notice. As could be noticed, this Tribunal has taken note of those statement of employees of motor vehicle dealers as discussed in another case namely M/S. CHOLAMANDALAM MS GENERAL INSURANCE CO. LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, CHENNAI [ 2021 (3) TMI 24 - CESTAT CHENNAI ], while passing the order and it had relied upon the judgements passed by this Tribunal in Modular Auto Ltd. Vs. CCE [ 2018 (8) TMI 1691 - MADRAS HIGH COURT] and given the findings that assessment to tax at the hands of the service providers end can t be questioned at the hands of service receiver (Appellant in this case). The order passed by the Commissioner of Central GST, Audit-I, Pune is hereby set aside - appeal allowed.
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2024 (5) TMI 68
Time limitation - SCN issued by invoking the extended period of limitation - interpretational issue - Penalty - HELD THAT:- For an earlier period in the appellant s own case, this Tribunal has already decided the issue on merits against them and the present proceedings are by way of a periodical Show Cause Notice issued to them for the period from July 2004 to March 2007 issued on 30th March, 2009, which is highly time-barred. The whole of the demand impugned herein is barred by limitation - As the demand is not sustainable against the appellant, no penalty is imposable in the facts and circumstances of this case. The impugned order is set aside - appeal allowed.
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Central Excise
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2024 (5) TMI 67
Process amounting to manufacture - activity of labelling - Availing the cenvat credit of the duty paid by its Jammu unit - whether the labelling/re-labelling or putting additional labels on the containers in the Taloja unit amounted to manufacture in terms of Note 3 to Chapter 18 of the Central Excise Tariff Act? - suppression of facts or not - Extended period of Limitation. While contention of the appellant is that the same does not amount to manufacture, on the other hand according to the respondent, as per Note 3 to Chapter 18 of the Central Excise Tariff Act, the above activity amounts to manufacture. HELD THAT:- The word manufacture includes any process which is incidental or ancillary to the completion of a manufacture product; any process which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act as amounting to manufacture; or any process which in relation to the goods specified in the Third Schedule involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer. By way of the amendment, the word and has been replaced by the word or between the expressions labelling or re-labelling of containers and repacking from bulk packs to retail packs . Prior to 01.03.2008, the legislative intent was quite clear. The process to constitute manufacture should either be labelling or re-labelling of containers and repacking from bulk packs to retail packs. This process was construed to be one whole. In other words, the activity should not only include labelling or relabelling of containers but the same should relate to repacking from bulk packs to retail packs. This was one activity. The other activity was adoption of any other treatment to render the product marketable to the consumer. Therefore, the legislature was quite clear that if either of the two processes were followed, the same would amount to manufacture. It is already noticed the definition of manufacture in the Central Excise Act. Any one of the processes indicated in Note 3 to Chapter 18 of the Central Excise Tariff Act would come within the ambit of the definition of manufacture under Section 2(f)(ii) of the Central Excise Act - There is no factual dispute as to the activity carried out by the respondent at its Taloja unit. Whether the goods are brought from the Jammu unit or are imported, those are relabelled on both sides of the packs containing the goods at the Taloja unit of the respondent and thereafter, introduced in the market or sent for export. In terms of Note 3 to Chapter 18, this process of re-labelling amounts to manufacture . Appeal dismissed.
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2024 (5) TMI 66
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - the declaration under the scheme cannot be processed as the conditions specified in Boards Instructions to manually process the declaration has not been fulfilled - HELD THAT:- SVLDRS was a dispute resolution-cum-amnesty scheme launched with the objective of reducing litigation relating to legacy taxes so as to benefit compliant taxpayers settle their old cases. It was hence a beneficial scheme. The principle consistently held by Constitutional Courts in implementing such schemes is that when substantial justice is pitted against technical considerations, it would be always necessary to prefer the ends of justice. It is pain to observe that the scheme which was meant for reducing litigation, appears to be driving the hapless applicants to continue to litigate even for implementing the scheme, for no fault on their part. Understandably, the scheme would apply only when a litigation is pending in appeal. To settle that dispute the tax payers would opt for the benefit of such a scheme so that they pay the tax as prescribed within the time frame provided and put an end to the litigation and buy peace of mind. But the attitude of the Department as could be seen from the present case, rather pushes the tax payer, pending one litigation, to approach High Court and obtain a direction, which is certainly not the design of any statute, not to speak of the SVLDRS. The appellant is made to reach out to higher judicial forum incurring further expenses because of faults which are not attributable to him. The computer system not generating the required form-4 should not prove to be an expensive affair for the tax payer who opts for settlement, pays tax as demanded in time and thus discharges his burden but is denied substantive justice on technical ground and is forced into further litigation. The respondent Department directed to manually process the request of the petitioner for issue of Discharge Certificate within four weeks from the date of receipt of a copy of this order - appeal disposed off.
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2024 (5) TMI 65
Entitlement for refund of input credit in cash, which was neither transitioned in accordance with TRAN-1 (GST) procedure into the new regime nor got reflected in the ER-1 or revised ER-1 return post 01.07.2017 - whether the said refund could have been granted in accordance with the provisions of existing law or otherwise, except to the extent that the refund, if eligible, will still be admissible irrespective of any provisions contrary to this provision contained under the provisions of existing law, other than unjust enrichment? HELD THAT:- The perusal of CCR, 2004 under the existing law clearly brings out that the refund of unutilized Cenvat credit can be made only for specific purpose covered under Rule 5, 5A and 5B, subject to certain prescribed/notified procedure, conditions and limitations etc., as may be specified or notified by notification in this regard. They have also admittedly not filed any revised ST-3 within the specified tax limit as would have been otherwise required under Section 142(9)(b). Reliance placed by Revenue on the judgment of Hon ble High Court of Jharkhand in the case of Rungta Mines vs CCE, Jamshedpur [ 2022 (2) TMI 934 - JHARKHAND HIGH COURT] is quite relevant to appreciate the scope of Section 142(3) of the Act. In this case, it was held that the provision of Section 142(3) does not entitle a person to seek refund where no such right occurs under the existing law or under new CGST regime in terms of provision of CGST Act and the rules framed and notification issued thereunder. Meaning thereby, Section 142(3) does not confer a new right, which never existed under the old regime to the manner of giving relief, if the person is not entitled under the existing law - The ratio of the aforesaid judgment is squarely applicable to the facts of the case, in so far as the interpretation of Section 142(3) of the Act is concerned. It must also be noted that a plain reading of this provision under the Act clearly supports this interpretation. Relying on the judgment of Hon ble High Court of Jharkhand in the case of Rungta Mines, it is found that when there was no provision for grant of refund in cash in respect of tax paid/credit taken in respect of such input in the existing law, i.e., the Central Excise Act and Cenvat Credit Rules, 2004, then the refund cannot be granted in cash in respect of such unclaimed/unutilized credit on input. The options available for getting cash refund are clearly covered within the different provisions under the Act viz., Section 140, 142(3) 142(9)(b) - In the instant case, admittedly, neither Section 140 was followed nor Section 142(9)(b) was availed. Therefore, the cash refund, by virtue of Section 142(3) would not be admissible in the facts of the case. There are no infirmity in the Order passed by the Commissioner (Appeals), upholding the rejection of refund in cash, amounting to Rs.14,40,627/- by the Original Authority - appeal dismissed.
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2024 (5) TMI 64
Levy of Personal Penalty on the Director of the company and Drivers of the trucks (transporters) - Penalties u/r 26 of CER - Abetment - Clandestine removal - gutka - evasion of duty - reasons to believe - non-application of mind - non-speaking order - HELD THAT:- It is true that the transporters and trucks drivers may or may not be very well educated. It is also a fact that every truck driver and transporter who transports commercial goods carries with him the Bill to cover the goods which he was transporting. Every driver takes this precaution because if there is a check by any authority on the way, he can show the Bills. Secondly, once the goods reach the destination he shows the Bills to the recipient and gets an acknowledgment that the goods in the Bills received. Therefore, no matter how less educated the driver might be, he will certainly know that he has to carry the goods only with the Invoice or Bill. Therefore, there are no force in the submissions of the appellant that the penalties imposed on them must be set aside. The penalties imposed under rule 26 on the appellants upheld - Appeal allowed.
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2024 (5) TMI 63
Undue delay in processing refund - Duty was paid under protest - returning the claim application for refund holding to be pre-mature - applicability of time limitation - HELD THAT:- The delay of more than 10 years in finalizing the matter is shocking. No seriousness has been shown in the matter by the Divisional Authorities even though they were aware of the matter being pursued by the Appellant before higher Appellate forums. This being so the refund claim is restored back to the files of the learned Original Authority for proper disposal. In case the claim is sought to be rejected partially or in full, notice may be given to the Appellant following the principles of natural justice and afford a reasonable and time bound opportunity to the appellant to state their case both orally and in writing if they so wish, before issuing a speaking order in the matter disposing of the refund claim. Considering the huge delay and hardship already faced by the Appellant, it is desirable that the jurisdictional Commissioner monitor the timely disposal of the matter in terms of departmental instructions and the directions given herein to the Original Authority, for which a copy of this order is being marked to him. Appeal allowed.
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2024 (5) TMI 62
Clandestine removal - case of the department is mainly based upon dairies and statements of various persons - retraction of statements - reliability of statements - denial of cross-examination - existence of corroborative evidences or not. Demand of duty based on five pocket sized dairies - HELD THAT:- The seizure of the said diaries from the appellant s factory as sought to be shown by the investigation is not established; and, having wrongly shown as seized from the factory premises by the investigation; weakens evidentiary value of the said diaries - the said dairies contain certain names and figures which are taken as weight of the finished goods and duty demand has been worked out on that basis. Some of the buyers of the finished goods, whose names are shown in the diaries, have stated in their statement that they have purchased the goods from the appellant firm with as well as without invoice and that in respect of goods purchased without invoice, payment was made in cash, however cross-examination of the said buyers has been denied by the Learned Commissioner without giving any justifiable reason; the said statements are therefore not relevant and admissible as evidence. It can been seen that once untested statements and rough records/diaries are discarded, there is no tangible evidence, absent which case of clandestine removal cannot be sustained as held in the decision of this tribunal in the case of Vishwa Traders Pvt Ltd V. Commissioner of Central Excise [ 2011 (10) TMI 94 - CESTAT, AHMEDABAD] - the demand of duty of Rs. 2,22,48,302 based on said dairies as worked out at Annexure X VII is not tenable and is liable to be set aside. Demand of duty based on weighment slips/details - HELD THAT:- The third party records under the statements of buyers and weighment bridge operators cannot be straightway relied upon having denied cross-examination of the said person to the appellants. Further, the said party who has allegedly purchased goods from the appellant without invoice has not been made party to show cause, may indicate that the statements might have been obtained from the parties by way of inducement; the said statements and records produced thereunder therefore cannot relied upon to impose duty upon the appellant firm in absence of concrete and corroborative evidence in this behalf. In view of above discussion, duty demand raised cannot be sustained. Demand of duty based on rough accounts (Rojmel) of alleged buyers namely Ketan Tulsidas Sangani and Rajubhai Kacha - Demand of duty based on the duplicate invoices recovered from the factory of appellant firm - HELD THAT:- No tangible and corroborative evidence viz. buyers statement, transportation etc have been gathered to substantiate the allegation of removal of goods under earlier invoice number without payment of duty. Even, shortages of raw material and discrepancies in maintenance of daily stock account as pointed out by the department, needs to be corroborated with tangible and sufficient evidence to bring home the serious charges of clandestine removal, which are clearly absent; case of department cannot be sustained on account of weak and insufficient evidence. It has been consistently held in several judicial pronouncements of the Hon ble High Court and Apex Court that in case of clandestine manufacture and removal of goods, revenue has to prove it beyond doubt. The allegation of clandestine removal of goods as made out against the appellant firm is not substantiated with tangible and sufficient evidence; consequentially duty demand cannot be sustained and hence penalties upon all other appellants are also liable to be set aside. The impugned order is set aside. Appeals are allowed.
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CST, VAT & Sales Tax
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2024 (5) TMI 61
Recovery of Tax Dues versus Secured Creditors - Continued assertion of rights by the State of Maharashtra against the purchaser of two properties auctioned - priority of security interest and its enforcement over the Secured Assets - enforcement of a mortgage created by an erstwhile owner of the properties - HELD THAT:- Once an enforcement of a security interest is effected against a secured asset, the enforcement of the subsequently registered security interest would lead to an entitlement to any surplus or residual proceeds arising out of the enforcement of the prior security interest, and by no stretch could the subservient security interest be regarded as a fresh and wholesome security interest to be enforced again against either the asset in question or against the purchaser of such asset. Following directions and declarations have been issued:- a) SBI enjoys priority of security interest and its enforcement over the Secured Assets, as compared with the interests of the State; b) SBI having sold the Secured Assets pursuant to the enforcement measures under the SARFAESI Act (not only by reason of the priority under Section 26-C(2) but also by reason of Section 26-E of the SARFAESI Act), was entitled to be paid in priority over the State tax authorities. By a conjoint reading of the two provisions, the enforcement against the Secured Assets led to a clean and clear title free from the purported encumbrance claimed by the State s tax authorities being vested in the Petitioner, who is the purchaser of the Secured Assets in the auction; c) The State s tax authorities are indeed entitled to any residual proceeds from the sale towards discharge of the Borrower s dues owed to them. Towards this end, SBI is directed to provide to the State, a statement of accounts in respect of the dues owed by the Borrower to SBI and the appropriation of sale proceeds by SBI pursuant to the auction of the Secured Assets; d) Consequently, mutation entries indicating an interest enjoyed by the State s tax authorities over the Secured Assets towards tax dues are directed to be removed within a period of two weeks from today. The registrar s office is also directed to register the transfer of the Secured Asset from the erstwhile owners to the Petitioner in accordance with law, within a period of two weeks from today; and e) Nothing contained in this judgement is an expression of an opinion on the right of the State s tax authorities to undertake enforcement action in accordance with law against any other assets, properties and persons that are not subject matter of a registered security interest registered in favour of any secured creditor under the SARFAESI Act, and which may therefore be amenable to enforcement for recovery of tax arrears owed by the Borrower. The Writ Petition is disposed of accordingly.
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Indian Laws
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2024 (5) TMI 60
Smuggling - Non-Compliance with Mandatory Procedure under Section 42 of the NDPS Act - Violation of Section 50 - search and seizure proceedings by panch witness - delivering contraband/illicit substance - conviction of the accused as recorded by the trial Court and affirmed by the High Court - HELD THAT:- The contention of learned counsel for the appellants that the search and seizure was undertaken without associating an independent witness is untenable on the face of record. Manubhai(PW-1), the panch witness associated in the search and seizure proceedings was serving in the Income Tax Department and hence by no stretch of imagination, can it be accepted that the witness was a stock witness of the NCB or was an interested witness. Manubhai(PW- 1) in his sworn testimony proved the recovery panchnama(Exhibit P-30) and also fully supported the prosecution case regarding the search and seizure of contraband effected from Anwarkhan(A-1). Nothing significant could be elicited by the defence in the prolonged cross-examination undertaken from Manubhai(PW-1) and hence, there are no hesitation in holding that the evidence of Manubhai(PW-1) being the panch witness associated in the search and seizure effected from Anwarkhan(A-1) is reliable and trustworthy. Thus, it is well established that independent panch witness was associated in the search and seizure procedure. Section 42 of the NDPS Act deals with search and seizure from a building, conveyance or enclosed place. When the search and seizure is effected from a public place, the provisions of Section 43 of the NDPS Act would apply and hence, there is no merit in the contention of learned counsel for the appellants that non-compliance of the requirement of Section 42(2) vitiates the search and seizure. Hence, the said contention is noted to be rejected. The fact regarding the seizure of contraband narcotic drug, i.e., heroin/brown sugar weighing 2 kgs and 30 grams from the possession of Anwarkhan(A-1) has been duly established by the prosecution beyond all manner of doubt. The link evidence required to prove the sanctity of the sampling and transmission of the samples to the Chemical Analyst is also sacrosanct. The search and seizure procedure is free from all doubts. The prosecution has duly proved the guilt of Anwarkhan(A-1) beyond all manner of doubt by leading convincing and satisfactory evidence. - There is no dispute that no contraband substance was recovered from the possession of appellant Firdoskhan(A-2). The conviction of Firdoskhan(A-2) as recorded by the trial Court and affirmed by the High Court cannot be sustained and he deserves to be acquitted by giving him the benefit of doubt - Appeal filed by appellant Anwarkhan(A-1) lacks merit and is hereby dismissed - appeal preferred by appellant Firdoskhan(A-2) is allowed. Appeal allowed in part.
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2024 (5) TMI 59
Permission to 1st and 2nd respondents (writ petitioners) to construct a compound wall under police protection - the senior district-level officials of the State had stated on oath that the construction of the compound wall, would affect the rights of several third parties. HELD THAT:- The Court completely ignored the oath. Even in clause 6 (iii) of the Minutes of Order , there was enough indication that the compound wall, if not appropriately constructed, would affect the rights of owners of the other lands. Therefore, it was the duty of the Court to have called upon the 1st and 2nd respondents to implead the persons who were likely to be affected. The 1st and 2nd respondents could not have pleaded ignorance about the names of the concerned parties as they have referred to the owners of the other lands in the Minutes of Order . However, the Division Bench of the High Court has failed to make even an elementary enquiry whether third parties will be affected by the construction of the compound wall under police protection. Hence, the order passed in the Writ Petition in terms of the Minutes of Order is entirely illegal and must be set aside. The Writ Petition will have to be remanded to the High Court to decide the same in accordance with the law. Matter restored to the file of the High Court - the Registrar (Judicial) of the Bombay High Court is directed to list the restored Writ Petition before the roster Bench on the first day of re-opening of the Court after the ensuing summer vacation - appeal allowed in part,
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2024 (5) TMI 58
Direction to take down an article dated 21 February 2024 published on their online platform within a week - restraint from posting, circulating or publishing the article in respect of the respondent-plaintiff on any online or offline platform till the next date of hearing - Ex-parte ad-interim injunction against the appellants - Defamatory Article authored by Defendant Nos. 3-5 and published by Defendant Nos. 1 and 2 - HELD THAT:- Undoubtedly, the grant of an interim injunction is an exercise of discretionary power and the appellate court (in this case, the High Court) will usually not interfere with the grant of interim relief. However, in a line of precedent, this Court has held that appellate courts must interfere with the grant of interim relief if the discretion has been exercised arbitrarily, capriciously, perversely, or where the court has ignored settled principles of law regulating the grant or refusal of interlocutory injunctions. - The grant of an ex-parte interim injunction by way of an unreasoned order, definitely falls within the above formulation, necessitating interference by the High Court. This being a case of an injunction granted in defamation proceedings against a media platform, the impact of the injunction on the constitutionally protected right of free speech further warranted intervention. The High Court ought to have also at least prima facie assessed whether the test for the grant of an injunction was duly established after an evaluation of facts. The same error which has been committed by the trial Judge has been perpetuated by the Single Judge of the High Court. Merely recording that a prima facie case exists, that the balance of convenience is in favour of the grant of injunction and that an irreparable injury would be caused, would not amount to an application of mind to the facts of the case. The three-fold test cannot merely be recorded as a mantra without looking into the facts on the basis of which an injunction has been sought. In the absence of such a consideration either by the trial Judge or by the High Court, there are no option but to set aside both the orders of the trial Judge dated 1 March 2024 and of the Single Judge of the High Court dated 14 March 2024. Appeal disposed off.
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