TMI Tax Updates - e-Newsletter
May 23, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Seeking provisional release of vehicle invoking Section 129(1) of the GST Act - alternative remedy of statutory appeal - these are the disputed questions of facts, which cannot be gone into in the Writ Petition under Article 226 of the Constitution of India, especially when the alternate remedy is available under Section 107 of the GST Act. - HC
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GST:
Maintainability of writ petition where the assessee has failed to file the statutory appeal within the prescribed time limit - After expiry of the limitation period of filing appeal, the writ petition filed by the petitioner challenging the impugned order is not maintainable. - HC
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GST:
Maintainability of appeal before the Appellate Authority - barred by time limitation or not - Covid-19 pandemic situation - The request that, the matter be remitted back to the First Appellate Authority is also not sustainable as even after excluding the period between 15.03.2020 to 28.02.2022, filing of an appeal would not come within the extended period of limitation as ordered by Hon’ble Supreme Court and therefore, said exercise would serve no purpose. - HC
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Income Tax:
Levy of penalty u/s 271D - accepting cash loans and advances beyond the prescribed limit - The pleading of assessee that the cash was required to meet urgent business requirements is also negated by the findings of fact by the AO that the assessee had sufficient funds in its banks accounts on the day it took cash loans from the directors and the days on which the expenses were made were bank working days - Additions confirmed - AT
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Income Tax:
Bogus LTCG - Disallowance on claim of exemption u/s. 10(38) of LTCG - penny stock transactions - The price rise of the penny stock scrip was abrupt, sudden and unrealistic. No cogent material has been brought by the assessee on record to rebut the above finding of the AO. - Addition confirmed - AT
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Income Tax:
Validity of Assessment order passed u/s 143(3) - scrutiny assessment - period of limitation specified u/s 153(1) - assessment order framed by the Assessing Officer is in violation of the provisions of section 153(1) of the Act, which is bad in law, hence we quash the assessment order, dated 30.09.2021, framed by the AO u/s 143(3) of the Act, being void ab initio. - AT
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Income Tax:
Addition u/s 69 - agricultural income by the assessee from sale consideration of potato - CIT(A) has merely suspected the size of land holding used for cultivation of potato on the basis of joint ownership without rebuttal to the additional evidence admitted on record or contentions raised by the appellant. - addition deleted - AT
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Income Tax:
Determination of correct profits - percentage completion method - real estate development - when a stage is arrived that risk and rewards shift from the developer to buyer irreversibly, then project revenue and project cost associated with the real estate project should be recognised as revenue and expenses by reference to the stage of completion of the project activity at the reporting date. - AT
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Customs:
Levy of penalty under the wrong provisions of the act - proposes imposition of penalty u/s 114, 114A and 114AA of the Customs Act. Order-in-original has been passed imposing penalty u/s 114A, 114AA and Section 112(a) and (b). - Adjudicating authority imposed penalty under different provisions and the appellate authority modified the same under different provisions as seen. It is not the case of wrong mention but it is a case of a conscious decision taken under which penalty has been imposed and upheld. These decisions do not advance the case of the Revenue in this regard. - AT
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Corporate Law:
Appointment of Auditor for Forensic Audit - One partner of the firm, Haribhakti & Co. appointed to conduct audit in his individual capacity - Locus of the another partner of the firm to file the final Report of the Forensic Audit who had not been appointed for this purpose - NCLT directed to consider the objections of the appellant - AT
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Indian Laws:
Period of limitation for commencement of arbitration. - What is the breaking point? - For the purpose of section 37 (1) anction and cause of arbitration should be construed as arbitration and course of arbitration. The cause of arbitration arises when the claimant becomes entitled to raise the question, that is, when the claimant acquires that right to require arbitration. - when the bank guarantee came to be encashed in the year 2016 and the requisite amount stood transferred to the Government account that was the end of the matter. This “Breaking Point” should be treated as the date at which the cause of action arose for the purpose of limitation. - SC
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Service Tax:
Levy of Service tax - user development fee levied and collected by the airport operation, maintenance and development entities - As part of the Union’s economic policies, the upgradation and renovation of airports are funded through UDF, which is a statutory levy. Instead of the conventional practise of ensuring that amounts collected are deposited with the Government, an entirely new regulatory regime has been envisioned, under the 2011 Rules, read with specific conditions imposed by the AAI on each assessee - CESTAT correctly held that the charges collected by the assesses under Section 22A of the AAI Act cannot be regarded as considered for services rendered. - SC
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Service Tax:
Rejection of Refund claim - It is well settled principle that availment of Cenvat Credit, its utilisation and refund are different aspects dealt with under CCR, 2004. Rule 5 provides for any refund of Cenvat Credit and nowhere in this Rule there is a provision to determine the correctness about the availment of Cenvat Credit. Its only Rule 14 ibid which provides for recovery of irregularly availed Cenvat Credit. - AT
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Service Tax:
Valuation - receiving damages/compensation from the service provider - declared service - TRU has specifically clarified that the compensation received on account of breach of contract should not form part of declare service for the purpose of payment of service tax by the assessee. - AT
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Central Excise:
Valuation - adjustment of excess excise duty paid against the short payment - during the relevant period the Appellant had paid the correct duty arrived at in terms of Rule 4 of the Valuation Rules. Moreover, the Appellant has paid much higher duty than what is demanded in the impugned order and in such factual circumstances, adjustment of excise duty must have been allowed instead of raising any further demand. - AT
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Central Excise:
Seeking refund of Cenvat credit on HSD/LDO/IDO used for generation of electricity after the lapse of 14-15 years - unutilized Cenvat credit was never claimed as Cenvat credit on any of the ER-1s - Time Limitation - The lower authorities cannot be faulted for having held that the refund claim is barred by limitation as provided by Section 11B of the Central Excise Act, 1944. - AT
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Central Excise:
Refund of amount of pre-deposit made by debiting the electronic credit ledger maintained under GST - Taking note of the above facts and that the amount has now been deposited by the appellant, it is opined that the conditions of Section 35F of Central Excise Act, 1944 are complied with and the matter needs to be considered by the Commissioner (Appeals) on merits. - AT
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VAT:
Classification of goods - whether ‘pizza’ and ‘sandwich’ fall within the ambit of “cooked food” to claim benefit of exemption notification - The revenue has not brought on record any expert opinion, any scientific study or survey to prove that ‘pizza’ and ‘sandwich’ are in-fact not ‘cooked food’ - Merely by stating that cooked food is necessarily prepared on gas burner, with aid of oil/ghee and spices, using exclusively fresh ingredients and then served with traditional cutlery, the Additional Commissioner arrived at the conclusion ‘pizza’ or ‘sandwich’ are not ‘cooked food’. - benefit of exemption allowed - HC
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VAT:
Liability to pay interest on delayed payment of VAT - The assessee was required to pay the tax payable in accordance with the provisions of Section 14 of the HVAT Act and the Rules framed thereunder. Non-payment of tax according to the provision of the Act will certainly amount to failure to make payment of tax which renders the assessee liable to pay interest also as provided in Section 14(6). The liability to pay interest would be from the date the tax was supposed to be deposited by the assessee. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (5) TMI 884
Seeking provisional release of vehicle invoking Section 129(1) of the GST Act - alternative remedy of statutory appeal - order of detention under Section 129(1) of the GST Act, issued, on the ground of mismatch of delivery address - HELD THAT:- This Court has carefully gone into both the orders referred to by the learned counsels, one in M/s. Kramski Stamping and Molding Indis Private Ltd. [ 2023 (2) TMI 587 - MADRAS HIGH COURT ] and the other in M/s. DCM Shriram Limited represented by its Authorised Signatory Mr. Sindha Mohammed Fayaz [ 2023 (1) TMI 788 - MADRAS HIGH COURT ]. In almost similar set of facts, this Court directed the writ petitioner therein, to avail all the alternate remedies available under Section 107 of the GST Act. This Court also took a note of the procedure and remedy available to the writ petitioner, to seek provisional relief of vehicle invoking Section 129(1) of the GST Act. The facts in M/s. Kramski Stamping and Molding Indis Private Ltd. [ 2023 (2) TMI 587 - MADRAS HIGH COURT ], squarely applies to the facts of the present case. In fact, the second respondent has adverted to all the objections raised by the writ petitioner and answered the same as these are the disputed questions of facts, which cannot be gone into in the Writ Petition under Article 226 of the Constitution of India, especially when the alternate remedy is available under Section 107 of the GST Act. The petitioner is given liberty to file a statutory appeal, within a period of ten (10) days from the date of receipt of a copy of this order and on receipt of the said statutory appeal within 10 days, the Statutory Appellate Authority shall decide the appeal on merits and in accordance with law and shall not put a limitation in filing the appeal against the Writ Petition. Petition disposed off.
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2023 (5) TMI 883
Maintainability of writ petition where the assessee has failed to file the statutory appeal within the prescribed time limit - Violation of principles of natural justice - failure to properly determine and specify the reasons towards creating demand against the petitioner - concealment of credits - failure to file returns - time limitation - HELD THAT:- It is an admitted position that against the impugned order, the petitioner has not filed statutory appeal under Section 107 of the Act of 2017. Since the limitation of filing appeal has already expired, the petitioner now cannot prefer appeal against the impugned order. Now, the question is whether this Court, in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India, can entertain writ petition challenging the impugned order on the ground that limitation period for filing statutory appeal has already expired? - The facts, which are not in dispute, are that the impugned order was passed on 16.2.2022 and per Section 107 of the Act of 2017, limitation provided for challenging the impugned order by way of appeal is 30 days and that limitation period could be extended by the appellate authority for a further period of one month subject to the satisfaction of the appellate authority that the person aggrieved was prevented by sufficient causes from presenting the appeal within a period of three months. In the present case, the petitioner has not filed appeal before the appellate authority within the prescribed limitation and has directly filed this writ petition before this Court on 14.2.2023 i.e. almost after eight months of expiry of limitation period. After expiry of the limitation period of filing appeal, the writ petition filed by the petitioner challenging the impugned order is not maintainable. The petitioner has not filed any statutory appeal before the appellate authority within the limitation period and has directly filed this writ petition before this Court after eight months of the expiry of limitation, as per the law laid down by the Hon ble Supreme Court rendered in Assistant Commissioner (CT) LTU, Kakinada Ors. s case [ 2020 (5) TMI 149 - SUPREME COURT] , the writ petition filed by the petitioner cannot be entertained as being not maintainable. Petition dismissed.
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2023 (5) TMI 882
Maintainability of appeal before the appellate authority - barred by time limitation or not - Short payment of GST - Covid-19 pandemic situation - HELD THAT:- Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER] , considering the outbreak of Covid-19 pandemic have excluded the period during Covid-19 pandemic period with which the entire country was suffering i.e. from 15.03.2020 to 28.02.2022. In the order Hon ble Supreme Court has observed that all persons shall have a limitation period of 90 days from 01.03.2022. Even if the submission of learned counsel for petitioner is accepted that First Appellate Authority erred in observing in the impugned order that there was delay of 536 days in the light of the order of Hon ble Supreme Court to be wrong then also whether excluding the period as observed by Hon ble Supreme Court will bring the appeal filed by petitioner within limitation. The period of limitation of 90 days, which was extended by Hon ble Supreme Court starts from 01.03.2022 and will come to an end on 30-31st of May, 2022. The submission of learned counsel for petitioner that as the period of delay has wrongly been assessed by Appellate Authority in the light of the order of Hon ble Supreme Court in case of Re-cognizance for extension of limitation, the matter be remitted back to the First Appellate Authority is also not sustainable as even after excluding the period between 15.03.2020 to 28.02.2022, filing of an appeal would not come within the extended period of limitation as ordered by Hon ble Supreme Court and therefore, said exercise would serve no purpose. Further in the decision of High Court of Orissa at Cuttack relied on by petitioner in M/S. SHREE UDYOG VERSUS COMMISSIONER OF STATE TAX ODISHA, CUTTACK AND OTHERS [ 2021 (6) TMI 636 - ORISSA HIGH COURT] , the appeal was filed within time limitation, however, the certified copy of the impugned order was filed after expiry of period of limitation and considering the Covid-19 pandemic situation and also the fact that the counsel and the client were infected with Covid-19, the order was passed extending the period of limitation. In the instant case period of limitation expired after normalization of Covid-19 pandemic situation. Petition dismissed.
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Income Tax
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2023 (5) TMI 881
Settlement application u/s 245C(1) - whether there was no case existing, thus the applications for settlement of case(s) u/s 245C was not maintainable? - HELD THAT:- A plain reading of Explanation (i) to Clause (b) of Section 245A of the Act clearly indicates that the proceedings in relation to assessment or reassessment or re-computation under Section 147 of the Act had not commenced in respect of the Assessment Years 2012-13, 2013-14 and 2014-15 and therefore, we find no infirmity with the decision of the Commission that the petitioner s application under Section 245C of the Act in respect of the said assessment years, was not maintainable.
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2023 (5) TMI 880
Rejection of books of accounts - estimation of income - books of account as produced by the assessee before the AO has been rejected and the income of the assessee estimated - HELD THAT:- All grounds on the basis of which the AO has rejected the books of account and adopted the estimation of income is found to be unsubstantiated and unsustainable, the rejection of books of account by the AO itself stands reversed and the estimation of income as done by the AO stands deleted. TDS certified issued by Corporation Bank on an interest income assessed in the hands of the assesse - AR submits that the said amount has been disclosed by the constituent in his return of income, the income of the year is to be assessed in the hands in which the income is received. The income is received in the hands of JV, therefore, interest is to be assessed in the hands of JV. After taxing the same in the hands of the JVs, the profit, if any, is to be apportioned in the line with JV agreement. In these circumstances, addition as made by the AO being the interest received from Corporation Bank has been rightly made and does not call for any interference. AO shall examine whether the said amount has been disclosed by the constituent members of JV in their returns. If it is found that the amount has been disclosed by the constituent JVs in their returns, the same is to be deleted from the hands of the constituent. Appeals of the assessee stand partly allowed.
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2023 (5) TMI 879
Revision u/s 263 - addition on account of income from undisclosed sources - CIT noticed that the AO had completed the assessment without examining the case properly - HELD THAT:- Looking to the facts CIT has categorically pointed out errors in the assessment order and the finding of Pr. CIT is not rebutted by the assessee by placing any contrary evidence, therefore, in the absence of material rebutting the finding of the Pr. CIT, no reason to interfere in the finding of CIT. Order pass u/s 263 stands accordingly affirmed. Decided against assessee.
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2023 (5) TMI 878
Deduction u/s.80P - interest income earned from Cooperative banks and also Nationalised banks - HELD THAT:- Pune Bench in Rena Sahakari Sakhar Karkhana Ltd. [ 2022 (1) TMI 419 - ITAT PUNE] held that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of a co-operative society on interest income on investments/deposits parked with a cooperative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co- operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The payer of interest is also a Co-operative society registered under the Cooperative Societies Act. Respectfully following the decision of the Division Bench, overturn the impugned order and direct to grant deduction u/s.80P(2)(d) of the Act on the amount of interest earned from various cooperative banks. Allowability of deduction u/s.8P(2)(a)(i) on the interest income earned from the deposits kept with Nationalized banks - As find the Pune Benches in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [ 2019 (4) TMI 682 - ITAT PUNE] has decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction . In the said case, the Tribunal discussed the contrary views expressed by Tumkur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] allowing deduction u/s. 80P on interest income and that of the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. [ 2014 (9) TMI 833 - DELHI HIGH COURT] not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. (supra) . No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. Respectfully following the precedent, the impugned order is overturned and the interest income earned from the deposits kept with nationalised bank is also allowed as deduction u/s.80P(2)(a)(i) of the Act. Appeal is allowed.
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2023 (5) TMI 877
Levy of penalty u/s 271D - contravention of the provisions of Section 269SS accepting loans and advances beyond the prescribed limit through modes other than by way of account payee cheques - HELD THAT:- Any amount received by modes other than cheques, as loans or advances, results in violation of the provisions of Section 269SS - There is no question of genuineness or bona fides of the transactions coming into picture. Therefore, this pleading of assessee is bereft of any merit. Our view is supported by the various decisions cited by the learned DR before us as above by the case of Deepak Sales Properties (P) Ltd. 2018 (7) TMI 1314 - ITAT MUMBAI] categorically holding that for escaping from the rigors from the Section 269SS of the Act, establishing genuineness or bona fides of the transactions is not sufficient. Similar decision rendered by case of Listin Stephen [ 2019 (4) TMI 293 - KERALA HIGH COURT] and case of Vasan Healthcare (P) Ltd.[ 2021 (2) TMI 76 - SC ORDER] and Al Ameen Educational Trust [ 2021 (9) TMI 732 - SUPREME COURT] The pleading of assessee that the cash was required to meet urgent business requirements is also negated by the findings of fact by the AO that the assessee had sufficient funds in its banks accounts on the day it took cash loans from the directors and the days on which the expenses were made were bank working days; so the plea of the assessee that the cash loans were taken to meet the shortage of funds stands negated by this finding of fact by the Assessing Officer which has remained uncontroverted before us. Clearly, therefore, the assessee was unable to establish any reasonable cause for taking cash loans also so as to escape from the levy of penalty under Section 271D of the Act in view of Section 273B of the Act. All the case laws relied upon by the Ld. Counsel for the assessee deleting penalty levied u/s 271D of the Act finding reasonable cause adduced by the assessee for accepting cash loans. In the absence of any reasonable cause in the present case, the said case laws are of no assistance to the assessee. In the absence of any case made out by the learned Counsel for the assessee to escape from the rigors of Section 269SS/271D of the Act, we dismiss the appeal of the assessee.
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2023 (5) TMI 876
Bogus LTCG - Disallowance on claim of exemption u/s. 10(38) of LTCG - penny stock transactions - HELD THAT:- AO stated that though the transaction undertaken by the assessee may seen to fulfil the legal requirement of section 10(38) same are sham transactions as the share prices of M/s. HPC Biosciences Limited were manipulated to raise the same exponentially. The price rise of the penny stock scrip was abrupt, sudden and unrealistic. No cogent material has been brought by the assessee on record to rebut the above finding of the AO. We may refer the observations of SEBI vs. Kishore Ajmera [ 2016 (2) TMI 723 - SUPREME COURT] that it is the judicial duty to take note of the immediate and proximate facts and circumstances surrounding the events on which the charges/allegations are founded and to reach what would appear to be reasonable conclusion therefrom. No hesitation at all in holding that the AO/CIT(A) were perfectly justified in treating the impugned transactions as sham and discarding the assessee s explanation as not satisfactory. We concur with their findings that the assessee failed to discharge the onus cast upon her u/s 68 - addition is sustained and the assessee s ground of disallowance of exemption u/s 10(38) on long term capital gain is hereby rejected. Addition u/s 69C - year of assessment - HELD THAT:- The transaction pertained to AY 2013-14 and not AY 2015-16 which is the year under our consideration. We are, therefore, of the opinion that the impugned addition cannot be made u/s 69C of the Act in AY 2015-16. We, therefore, set aside the order of the Ld. AO/CIT(A) on the point and delete the addition - We decide ground in favour of the assessee.
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2023 (5) TMI 875
TP Adjustment - international transaction of receipt of commission fee, client coordinate fees, advisory services and client creative fees - comparable selection - HELD THAT:- There is an inherent contradiction in the comparability analysis by the learned Transfer Pricing Officer. He accepted one comparable i.e. quadrant communications limited, admittedly i.e. not the KPO and introduced four new comparables which are said to be the KPO. Furthermore, the learned Dispute Resolution Panel held that Transactional Net Margin Method is fairly tolerant about the comparability analysis. It is not so tolerant to include KPO companies with assessee company providing advertisement services of marketing communications and coordination etc. Due to this inherent inconsistency in the comparability analysis, we direct the assessee to first substantiate the comparability analysis by selecting the comparables first in advertisement industry itself providing similar functions. If such comparables are not available, then broader search of comparables may be carried out. Transfer Pricing Officer may examine the same and then decide about computation of Arm's Length Price of the international transaction after giving assessee opportunity of hearing. Accordingly, ground no.1 of the appeal is restored to the file of TPO. Adjustment on account of recovery and reimbursement of expenses - assessee did not produce details of the complete expenses but only on sample basis - DRP directed the TPO to give opportunity to assessee to produce complete invoices, verify the same and then decide the adjustment - HELD THAT:- We find that there is no such opportunity given by the learned TPO. We direct the learned TPO to give effect to the direction no. 12 of the DRP. Assessee is directed to produce the complete details of the reimbursement of expenditure before the learned TPO. Accordingly, ground no.2 of the appeal is also resorted to the file of the learned Transfer Pricing Officer. Depreciation on goodwill - disallowances on protective assessment manner - HELD THAT:- The assessee company entered into business transfer agreement with M/s. Ambience Advertisement Pvt. Ltd. - This sum was capitalized by the assessee as goodwill and claimed deprecation there on at the rate of 25%. The first claim of deprecation was made in A.Y. 2000-01. For that assessment year the assessee approached ITAT and ITAT, has set aside the issue to the file of the learned AO. Therefore, unless the issue of depreciation decided in that year, this ground of appeal cannot be decided. Accordingly, ground of the appeal are also restored back to the file of the learned Assessing Officer to decide it in accordance with the decision for A.Y. 2000-01. Short grant of TDS - HELD THAT:- As we direct the learned Assessing Officer to examine the claim of the assessee and grant appropriate credit for tax deduction at source certificates in accordance with law. Goodwill - difference between the total considerations paid in excess of net tangible asset - assessee has taken over the business including all the assets and liabilities of one company - AO disallowed the claim of the depreciation at the rate of 25% thereon - DRP also confirmed the same - HELD THAT:- AO made the addition/disallowance in the draft assessment order. No reason for the revenue to be aggrieved with the above direction of the learned dispute resolution panel when the learned dispute resolution panel confirms the addition proposed by the learned assessing officer. In view of this we find that the cross objection filed by the learned assessing officer is infructuous, hence dismissed.
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2023 (5) TMI 874
Validity of Assessment order passed u/s 143(3) - period of limitation specified u/s 153(1) - Time limit dealing with the return of income filed by an assessee - time limit for completion of assessment u/s 153(1) in the assessee`s case is within 21 months - In the assesee`s case the assessment was not framed/passed by the AO within 21 months from the end of the assessment year in which the income was first assessable, that is, on 31.12.2019 - AO should follow the time limit prescribed under the Act, otherwise assessment order passed by him will not be recognized in the eye of law - Why the time limit in the Income Tax Act is so necessary? HELD THAT:- Assessment/reassessment framed/passed by the Assessing Officer is in violation of the provisions of the Act, that is, it is outside the time limit for completion of assessment u/s 153(1) of the Act, which was within 21 months. In the assesee`s case, the assessment was not framed/passed by the Assessing Officer within 21 months from the end of the assessment year in which the income was first assessable, that is, on 31.12.2019. AO has passed/framed assessment order u/s 143(3) of the Act on 30.09.2021, which is beyond the time-limit for completion of assessment u/s 153(1) of the Act. Therefore, assessment order framed by the Assessing Officer is in violation of the provisions of section 153(1) of the Act, which is bad in law, hence we quash the assessment order, dated 30.09.2021, framed by the AO u/s 143(3) of the Act, being void ab initio. Assessment order framed by the AO was not in accordance with law, therefore we have quashed the assessment order.
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2023 (5) TMI 873
Addition u/s 69 - agricultural income by the assessee from sale consideration of potato - HELD THAT:- CIT(A) has merely suspected the size of land holding used for cultivation of potato on the basis of joint ownership without rebuttal to the additional evidence admitted on record or contentions raised by the appellant. CIT(A) ought to have brought on record corroborative documentary evidence by way of examining the issue of share of family member s in the income from the potato cultivation from the agricultural land held in joint ownership. CIT (A) has failed to disprove the claim of the cash flow and agricultural income of the appellant. Thus, CIT(A) has not appreciated the documentary evidences regarding, potato cultivation, computation of agriculture Income and cash flow filed by the appellant in the appellate proceedings before him. In our view, the amount of Rs.34,00,000/- shown as agricultural income by the assessee from sale consideration of potato is quite reasonable considering the size of land holding, calculation sheet, certificate from Horticulture Department etc., as above. Order passed by the Ld. CIT(A) is perverse to the facts on record. Accordingly, the amount u/s 69 confirmed by the CIT(A) is deleted. Decided in favour of assessee.
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2023 (5) TMI 872
Determination of correct profits by applying correct principles of percentage completion method - justification of percentage completion method in case of real estate development - HELD THAT:- In light of the principle laid down in S.S. Enterprises [ 2019 (11) TMI 698 - ITAT MUMBAI] read alongwith guidelines of the ICAI in its Guidance Note on Accounting for Real Estate Transactions (Revised 2012) we find that in case of real estate projects when a stage is arrived that risk and rewards shift from the developer to buyer irreversibly, then project revenue and project cost associated with the real estate project should be recognised as revenue and expenses by reference to the stage of completion of the project activity at the reporting date. The effect of a change in the estimate of project costs, should be used in determination of the amount of revenue and expenses recognised in the statement of profit and loss in the period in which the change is made and in subsequent periods. Project computed following the percentage completion of method is sustained. Revision of estimated cost of repairs/renovation caused due to delay in project and damage to the building on account of various litigations not being considered by the ld. CIT(A) - HELD THAT:- The events behind escalation of Renovation cost have arisen in period subsequent to AY 2011-12, and therefore, any effect of said estimate can t be given in AY 2011-12 and can only be given in subsequent assessment years. Therefore, these grounds are dismissed for AY 2011-12. Valuation of unsold flats at cost not been considered by the ld. CIT(A) - assessee has followed percentage completion method for computation of profits from the project - HELD THAT:- Under this method, after working out the profit commensurate with the construction work carried out, further expenses for maintenance of the corporate structure and other administrative and selling expenses for running the business are debited to Profit Loss A/c. and net profit is worked out accordingly. For the purpose of computing profit from the project, the valuation of closing stock has no role to play under this method. Accordingly, the ground challenging the valuation of unsold flats at market value is irrelevant, whether taken at cost or market value. We set aside the finding of the ld. CIT(A) on the issue of dispute for considering valuation of unsold flats at market value Thus, this ground of the assessee is allowed. As profit from the project computed following the percentage completion of method is sustained in the case of the assessee, as worked out above. We accordingly direct so. AO is directed to adopt above profit worked out for AY 2011-12 to AY 2013-14 for the purpose of net profit of the assessee from business or profession.
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2023 (5) TMI 851
Exemption u/s.10(38) - income from capital gains from purchase and sale of shares - sale of equity shares - assessee has shifted from the IPOs - decision final and binding on a Single Member Bench of the Tribunal - HELD THAT:- There is no dispute that the assessee earns her income from transaction in shares. Just because the assessee has shifted from the IPOs and has made a purchase of the shares in M/s Panchshul Marketing Ltd., would not shift the head of income from capital gains to the Adventure in the nature of trade , insofar as the assessee is an investor in the shares and is not in the business of dealing in shares. This being so, the decision relied on by the DR would no more survive for consideration. The revenue did not challenge the factual finding of the coordinate bench of the Tribunal in the case of Deepansu Mohapatra [ 2021 (12) TMI 1425 - ITAT CUTTACK] in regard to the claim of deduction/s.10(38) of the Act. By not challenging the merits of the addition, the revenue has accepted the decision (supra). In these circumstances, the decision of the coordinate bench of the Tribunal on merits in the case of Deepansu Mohapatra (supra) have become final and binding on a Single Member Bench of the Tribunal as the said decision has been rendered by a Division Bench of this Tribunal. Respectfully following the decision of the coordinate bench of the Tribunal in the case of Deepansu Mohapatra (supra), which has also been affirmed by the Hon ble Jurisdictional High Court of Orissa [ 2023 (2) TMI 392 - ORISSA HIGH COURT] in the appeal filed by the revenue, the addition as made by the AO and as confirmed by the CIT(A) in respect of the claim of exemption u/s.10(38) of the Act in respect of sale of shares of M/s Kailash Auto, stands deleted. Decided in favour of assessee.
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Customs
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2023 (5) TMI 871
Levy of penalty under the wrong provisions of the act - In the show cause notice, penalty was proposed to be levied under a set of provisions in the original order of the penalties were imposed under different set of provisions in the order in appeal penalty has been confirmed under different set of provisions - Benefit claimed on the DEPB Scrips for duty credit denied ab-initio - Confiscation - penalty - it was alleged that some units were issuing bogus invoices for passing fraudulent Cenvat credit to claim bogus rebate - HELD THAT:- In the present case, there is no denial of the fact that the goods have actually been exported against the shipping bills filed by the appellant. The shipping bills are the prescribed documents for all the purposes of Customs and there is no case that these goods as declared in the shipping bills were misdeclared in any respect of value, description or quantity. To determine whether the DEPB licence has been obtained by fraud and to cancel the same the proper authority is DGFT as per Import-Export Policy. A letter dated 21.12.2009 was written to the Joint Director, DGFT, Surat by Assistant Commissioner, SIIB (Export) to cancel the said scrips. Joint Director has till date not issued any notice to the appellant for cancellation of the said scrips nor any proceedings have been initiated. In such a situation Customs authorities could not have adjudicated upon the issue holding that the DEPB scrips were obtained by way of fraud. Interestingly it is noticed that while the show cause notice proposes imposition of penalty under Sections 114, 114A and 114AA of the Customs Act. Order-in-original has been passed imposing penalty under Sections 114A, 114AA and Section 112(a) and (b). In the impugned order, penalty has been upheld under Section 112(a) and (b) and also under Section 114AA of the Customs Act, while holding that the goods were liable for confiscation under Section 113(d) and (i) of the Customs Act. Show cause notice specifically provided for imposition of penalty under Section 114 - None of the authorities i.e. adjudicating authority or the appellate authority, have held that penalty to be imposed under the said section. On the contrary they have imposed penalty under Section 112(a) and (b) of the Customs Act, which are in any way not applicable as they are in relation to the imported goods and not in relation to the export of goods. For contravention leading to confiscation under Section 113(d) and (i) penalty under Section 114 has been provided for. Penalty under Section 114AA has also been imposed on the appellant. The reliance placed by learned AR on the decision in the case of SELECTIVE MINERALS COLOUR INDUSTRIES PVT LTD GILROY RODRIGUES VERSUS COMMISSIONER OF CUSTOMS (EXPORTS) , NHAVA SHEVA [ 2017 (3) TMI 701 - CESTAT MUMBAI] is totally misplaced as in the said case where it was held that the decision of the original authority to withhold the approval for allowing credit does have the sanctity of law. It is also seen that the original authority had permitted conversion of the said shipping bills to free status. Accordingly, denial of credit alone would have sufficed; more so, in the absence of any allegation of suppression or misdeclaration in the proceedings before the adjudicating Commissioner. For this reason, there is no justification for either the confiscation of goods or the imposition of penalties. For this reason, the impugned order is modified by setting aside the confiscation as well as penalties imposed on both the appellants. - The order of the Tribunal is based on the actual clarification given by the Director General of Foreign Trade in the said matter. In the present case, it is not the case of the erroneous mention of the provisions of the Act under which penalties have been imposed. Show cause notice has stated different provisions for imposition of penalty. Adjudicating authority imposed penalty under different provisions and the appellate authority modified the same under different provisions as seen. It is not the case of wrong mention but it is a case of a conscious decision taken under which penalty has been imposed and upheld. These decisions do not advance the case of the Revenue in this regard. The decision in the case of M/S MERCEDES BENZ INDIA PRIVATE LIMITED, M/S O.A. ASSOCIATES, PASHUPATI ACRYLON LIMITED VERSUS COMMISSIONER OF CUSTOMS, DELHI, ADDITIONAL DIRECTOR GENERAL (ADJUDICATION) , NEW DELHI, DIRECTORATE OF REVENUE (INTELLIGENCE) OTHERS [ 2020 (2) TMI 437 - CESTAT NEW DELHI] ] applies in the present case because the issue is not in regard to upholding penalty under Section 114AA of the Customs Act in respect of export of goods, but the issue is whether penalty could have been imposed under the provisions of a section which was not even existent at the time when the offence was alleged to be committed - Similarly, the case of M/S. MUNJAL SHOWA LTD. VERSUS COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE (DELHI IV) AND M/S. FRIENDS TRADING CO. VERSUS UNION OF INDIA AND ORS. [ 2022 (9) TMI 1076 - SUPREME COURT] is with regard to the penalties imposed on the persons importing the goods under DEPB scrips found to be forged and fake. Appellant is neither an importer nor has claimed any benefit of any exemption under any DEPB scrips found to be forged and fake. In such a situation the said judgment also does not advance the case of Revenue. Appeal allowed.
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Corporate Laws
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2023 (5) TMI 870
Appointment of Auditor for Forensic Audit - One partner of the firm, Haribhakti Co. in his individual capacity - Locus of the another partner of the firm to file the final Report of the Forensic Audit who had not been appointed for this purpose - HELD THAT:- It is not in dispute that both the parties filed objections to the Draft Report but no objection is filed to the final Report though time was granted by the Learned Tribunal for that purpose by the Impugned Order dated 25.04.2023 rather the present Appeal has been filed by the Petitioners in the main Petition raising the issue of the locus of Mr. Mitesh Parekh to file the final Report of the Forensic Audit who had not been appointed for this purpose by the Tribunal vide its Order dated 19.04.2022. Counsel for the Respondent has though argued that the Appellant is unnecessarily raising this issue and has referred to some emails but at this stage we are not going into the merits of the case because the matter is yet to be decided by the Learned Tribunal, who may take into consideration the objections of the Appellant raised before this Tribunal by way of this Appeal. Therefore, it would be just and expedient if a direction is issued to the Tribunal, seized of the matter, to consider the objections of the Appellant, including the final Report of the Forensic Audit having been prepared by Mr. Mitesh Parekh instead of Mr. Sundararaman who was not categorically appointed and also all the contentions of the Respondents in this regard as it has been argued by the Respondent that the appointment of Mr. Sundararaman of Haribhakti Co. was an employee of that Company and therefore the Report has rightly been prepared by Mr. Mitesh Parekh who is also a part of Haribhakti Company. The present Appeal is therefore disposed of with a direction to the Learned Tribunal, seized of CP No.203/241/HDB/2020, to take into consideration the objections of the Appellant including the objection to the final Report of Forensic Audit submitted by Mr. Mitesh Parekh who was not so allegedly appointed vide Order dated 19.04.2022 as according to the Appellant Mr. Sundararaman was appointed in his individual capacity though he was working with M/s. Haribhakti Co. Chartered Accountants.
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2023 (5) TMI 869
Oppression and Mismanagement - whether on the date of passing of the impugned order had ceased to be company under the Companies Act and its name was already struck off from the register of the ROC? - HELD THAT:- It is true that the appellant, while was on the role of the register of ROC, had filed a Company Petition on an allegation of oppression and mismanagement of Respondent No.1 company which was numbered as CP No.58/2012, but during the pendency of the said petition the name of the appellant company was struck off due to his own default of non-filing of statutory return before the ROC continuously after 2012 and finally on 08.08.2018 the name of the appellant company was struck off from the register of the ROC. CP No.58/2012 was filed by the appellant in the capacity of company incorporated under the Companies Act. Once the name of the appellant company was ceased to be company it was not competent to maintain the CP No.58/2012. There is no doubt that after the striking off the name, a company ceases to remain as a company. However, even after dissolution of the company in view of striking off its name from the register, its existence remains only for the purpose of realising the amount due to the company or for the payment or discharge of the liabilities or obligations of the company. Meaning thereby that after striking off the name of the appellant company the appellant was not entitled to pursue the CP No.58/2012 which was primarily filed on an allegation of oppression and mismanagement of Respondent No.1 not for realisation of any debt. The present case cannot be equated with a dispute relating to realisation/claim of the Income Tax liabilities. Since the appellant on the date of passing of the impugned order had ceased to be company under the Companies Act and its name was already struck off from the register of the ROC, the CP No.58/2012 had become infructuous and learned NCLT has rightly dismissed the CP No.58/2012 - Appeal dismissed.
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PMLA
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2023 (5) TMI 868
Jurisdiction to hear PMLA cases - whether the Adjudicating Authority consisting of only one technical member can hear the cases under the PMLA Act, 2005 and pass attachment orders? - HELD THAT:- This Court has already taken the view that under Section 26 of PMLA Act, any person aggrieved by an order is entitled to approach the Appellate Tribunal. In the recent decision of the Supreme Court in M/S. SOUTH INDIAN BANK LTD. ORS. VERSUS NAVEEN MATHEW PHILIP ANR. ETC. ETC. [ 2023 (5) TMI 798 - SUPREME COURT] ] the Court has observed that the statutory mechanism needs to be followed and writ jurisdiction ought to be exercised with caution. The opinion of the Court is that the Petitioner who claims a beneficial interest in the property ought to approach the Appellate Tribunal under Section 26 of the Act. At this stage, ld. Counsel for the Petitioner submits that he may be permitted to approach the Appellate Tribunal. The petition is dismissed as withdrawn with liberty to approach the Appellate Tribunal constituted under Section 26 of the PMLA Act.
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Service Tax
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2023 (5) TMI 867
Levy of Service tax - user development fee levied and collected by the airport operation, maintenance and development entities - HELD THAT:- In the decision of this court, in CONSUMER ONLINE FOUNDATION, ETC. VERSUS UNION OF INDIA ORS., ETC. [ 2011 (4) TMI 1275 - SUPREME COURT] , the context was the validity of the levy of development fees and their collection from embarking passengers by lessees of airports, under OMDAs, including the DIAL in this case. The court examined the history of airport regulation in India, including the legislation concerning it, and, after analysing the provisions of the AAI Act, including the amendment to it, in 2003, held that Development fees could not be levied and collected by the lessees of the two major airports, namely, DIAL and MIAL, on the authority of the two letters dated 09.02.2009 and 27.02.2009 of the Central Government from the embarking passengers under the provisions of Section 22A of the 1994 Act. The observations and findings are decisive about the nature of development fee, collected under Section 22A; they are statutory exactions and not fees or tariffs, as was contended by the Union of India. In fact, the court even underlined that the nature of the levy under Section 22A of the 2004 Act, in our considered opinion, is not charges or any other consideration for services for the facilities provided by the Airports Authority. This court, in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] , ruled that to attract service tax levy, a taxable service has to be provided to a recipient, by a service provider, for a consideration and in the absence of any nexus to any service rendered, an amount charged, or value of service or goods provided without a consideration, would not be a taxing incident. The court held that any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67. In the present case, undoubtedly, neither is there any compulsion to levy development fee nor is the collection conditional upon its deposit in the government treasury. However, the absence of these features in this court s opinion, does not render UDF any less a statutory levy. Firstly, the ruling in Consumer Online Foundation is conclusive that UDF is a statutory levy. Secondly, the collection is not premised on rendering of any service. Thirdly, the amounts collected are deposited in an escrow account, not within the control of the assesses. Fourthly, the utilization of funds, is monitored and regulated by law. In this regard, the fact that the amount is not deposited in a government treasury, per se, does not make it any less a statutory levy or compulsory exaction. As part of the Union s economic policies, the upgradation and renovation of airports are funded through UDF, which is a statutory levy. Instead of the conventional practise of ensuring that amounts collected are deposited with the Government, an entirely new regulatory regime has been envisioned, under the 2011 Rules, read with specific conditions imposed by the AAI on each assessee, which includes monitoring of amounts, nature of expenditure, submission of plans for expansion, renovation, their sanctioning etc. These rules and controls are in the public interest, and evidently intended to further efficiency in funding and swift taking up and completion of works, rather than funding through Finance Rules, which might entail delay, and cost overruns. However, the public nature of these funds does not in any manner get undermined, merely because they are kept in an escrow account, and their utilization is monitored separately. This court is of opinion that the impugned orders cannot be faulted. The revenue s appeals therefore fail and are dismissed.
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2023 (5) TMI 866
Refund claim - denial on the ground that input services had no nexus with the output services exported - deficiencies in the documents - modification of refund claims under rule 5 of CCR - HELD THAT:- It is well settled position in law that refund claim filed under Rule 5 of Cenvat Credit Rules could not have been modified for the reason that certain Cenvat credits are inadmissible to the appellant, for which proper proceedings need to have been initiated under Rule 14 of Cenvat Credit Rules. Reference has been made in various decisions - reliance can be placed in the case of M/S. CROSS TAB MARKETING SERVICES P. LTD. VERSUS C.C.G.S.T., MUMBAI EAST [ 2021 (9) TMI 979 - CESTAT MUMBAI] where it was held that Since the Commissioner (Appeals) has by the impugned order held the refund to be admissible, to the extent of CENVAT Credit held admissible by him subject to verification of the documents by the original authority I modify his order to this extent i.e. that entire credit as claimed by the Appellant for determining the refund amount is held admissible if not held admissible in proper proceedings initiated under Rule 14 of the CENVAT Credit Rules, 2004. In the case of M/S BNP PARIBAS INDIA SOLUTION PVT LTD VERSUS COMMISSIONER OF CGST, MUMBAI EAST [ 2021 (12) TMI 676 - CESTAT MUMBAI] it was held that The rule only provides that the admissible refund will be proportional to the ratio of export turnover of goods and services to the total turnover, during the period under consideration and the net Cenvat credit taken during that period. Indisputably, in the refund proceedings under Rule 5 ibid as amended, any such attempt to deny or to vary the credit availed during the period under consideration is not permissible. If the quantum of the Cenvat credit is to be varied or to be denied on the ground that certain services do not qualify as input services or on the ground of no nexus , then the same could have been done only by taking recourse to Rule 14 ibid. The impugned order denying the refund claims made in terms of Rule 5, for the reason that input services had no nexus with the output services exported or for the reason that the credit cannot be held admissible for the reasons of deficiencies in the documents against which the same is claimed cannot be sustained. Appeal allowed.
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2023 (5) TMI 865
Rejection of Refund claim - denial of refund without issuing a notice under Rule 14 of the Cenvat Credit Rules - export of output services without payment of service tax during the period from January 2016 to March 2016 - HELD THAT:- The issue involved in the present case in respect of denial without issuing a notice under Rule 14 of the Cenvat Credit Rules is no longer res integra and has been decided in the decisions referred to by the learned counsel in the case of M/S BNP PARIBAS INDIA SOLUTION PVT LTD VERSUS COMMISSIONER OF CGST, MUMBAI EAST [ 2021 (12) TMI 676 - CESTAT MUMBAI] wherein the Tribunal has held that It is well settled legal position that denial of Cenvat Credit can be done only by issuing notice under Rule 14 ibid. Having allowed the Cenvat Credit or by not denying the same, the department cannot reject refund of Cenvat Credit under Rule 5. It is well settled principle that availment of Cenvat Credit, its utilisation and refund are different aspects dealt with under CCR, 2004. Rule 5 provides for any refund of Cenvat Credit and nowhere in this Rule there is a provision to determine the correctness about the availment of Cenvat Credit. Its only Rule 14 ibid which provides for recovery of irregularly availed Cenvat Credit. Thus modifying the refund claim to the extent of Rs.29,53,467/- by the lower authorities cannot be upheld. In respect of amount of Rs.3,09,347/-, appellant agrees that the refund claim is not admissible to them - there are force in the submissions made by the appellant that this amount which is not allowed as a refund should be allowed to be taken as credit as Cenvat account - this amount should be credited back in the Cenvat account if possible. Appellant has claimed cash refund of the said amount by quoting Section 142(6)(a) of the CGST Act. In my view, it is for the appellant to deal such a claim before the concerned authorities and seek a proper order from them under CGST Act. This Tribunal is not a competent authority to decide on the admissibility of cash refund as per the CGST Act. Appeal allowed.
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2023 (5) TMI 864
Refund claim - denied on the ground that Cenvat credit against certain services was not admissible - invocation of Rule 5 of the Cenvat Credit Rules (correct or not) - HELD THAT:- The exercise taken by the lower authorities for denying the credit was to be initiated as per Rule 14 of the Cenvat Credit Rules and that could not have been taken in a proceedings under Rule 5. This view has been held contrary by the Tribunal as referred to the order of the Tribunal in the case of M/S. CROSS TAB MARKETING SERVICES P. LTD. VERSUS C.C.G.S.T., MUMBAI EAST [ 2021 (9) TMI 979 - CESTAT MUMBAI] where it was held that Since the Commissioner (Appeals) has by the impugned order held the refund to be admissible, to the extent of CENVAT Credit held admissible by him subject to verification of the documents by the original authority I modify his order to this extent i.e. that entire credit as claimed by the Appellant for determining the refund amount is held admissible if not held admissible in proper proceedings initiated under Rule 14 of the CENVAT Credit Rules, 2004. Similar view has been taken by the Tribunal in the case of M/S BNP PARIBAS INDIA SOLUTION PVT LTD VERSUS COMMISSIONER OF CGST, MUMBAI EAST [ 2021 (12) TMI 676 - CESTAT MUMBAI] where it was held that Indisputably, in the refund proceedings under Rule 5 ibid as amended, any such attempt to deny or to vary the credit availed during the period under consideration is not permissible. If the quantum of the Cenvat credit is to be varied or to be denied on the ground that certain services do not qualify as input services or on the ground of no nexus , then the same could have been done only by taking recourse to Rule 14 ibid. In view of the above the impugned order cannot be sustained on merits - appeal allowed.
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2023 (5) TMI 863
Valuation - receiving damages/compensation from the service provider - declared service as per the provisions contained in Section 66E(e) of Finance Act, 1994 - HELD THAT:- The Tribunal in the case of M/S MADHYA PRADESH POORVA KSHETRA VIDYUT VITARAN COMPANY LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, MADHYA PRADESH [ 2022 (4) TMI 773 - CESTAT NEW DELHI] has dealt an identical issue and has held against the Revenue, holding that the amount received as compensation for breach of contract should not be considered as taxable service within the purview of declared service as per Section 66E ibid. It is also found that the Tax Research Unit of the Department of Revenue in the Ministry of Finance vide Circular dated 3rd August, 2022 has specifically clarified that the compensation received on account of breach of contract should not form part of declare service for the purpose of payment of service tax by the assessee. There are no merits in the impugned order passed by the Learned adjudicating authority - appeal allowed.
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Central Excise
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2023 (5) TMI 862
Seeking waiver of requisite pre-deposit in terms of Section 35-F of the Central Excise Act 1944 - financial hardship - HELD THAT:- The reason assigned in the writ petition is only of financial crises during Covid-19 Pandemic period. Documents like balance sheet filed along with the petition would show that the petitioner is in profit after the Covid -19 Pandemic period. In the case of Ganesh Yadav Vs. U.O.I, [ 2015 (7) TMI 304 - ALLAHABAD HIGH COURT] it was held that the Allahabad High Court held that the words in the amended Section 35F indicated that on and after the date of its enforcement an Assessee in appeal was required to deposit the stipulated percentage of duty and if it failed to do so, the CESTAT shall not entertain the appeal. The amended Section 35A would, therefore, apply to all appeals filed on and from the date of the enforcement of the amended Section 35F of the CE Act. The prayer made by learned counsel for the petitioner of waiver of mandatory pre-deposit cannot be accepted and, therefore, the prayer made by learned counsel for the petitioner is rejected. However, considering the alternate prayer made by learned counsel for the petitioner for extension of time for depositing the amount of pre-deposit before the Customs, Excise Service Tax Appellate Tribunal is concerned, though in this petition only the notice/information of defect is put to challenge and no subsequent order is placed on record, considering the submission of learned counsel for petitioner of facing difficulties during Covid-19 Pandemic period, with a view to provide an opportunity to contest the appeal on merits, the alternate prayer made by learned counsel for the petitioner is allowed and the time for mandatory deposit is extended - Accordingly, three months further time is granted to the petitioner to deposit the amount of mandatory pre-deposit before the Tribunal, from the date of passing of this order. Petition disposed off.
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2023 (5) TMI 861
Valuation - adjustment of excess excise duty paid against the short payment - whether identical category of goods stock transfer is sold to the independent buyers and if so at what value? - Interest - penalty - HELD THAT:- The methodology explained by the Appellant for valuation of goods as per Rule 4 by making adjustment as to the grade of the finished goods cleared to the job workers, appears to be correct. Thus, at the first instance, duty was correctly paid by the Appellant. Even otherwise, on consideration of report of the jurisdictional Assistant Commissioner, arriving at the transaction value of goods cleared by the Appellant in the form of a number of annexures and by working out the short/ excess payment of duty by the Appellant, it emerges that in overall, the Appellant has paid much more duty than what is confirmed by the order appealed against. This bench finds that the approach of the Ld. Commissioner in confirming the demand by considering the annexures relating to short payment of excise duty alone is legally erroneous. The Ld. Commissioner ought to have allowed the adjustment of excess excise duty paid against the short payment, prior to raising any demand on the Appellant. The long range of judgments referred to by the Appellant wherein such adjustment has been allowed in the context of identical matters, matters involving CAS-4 valuation, matters involving provisional assessment and matters involving SSI exemptions are agreed upon - reliance placed in the case of THE PRINCIPAL COMMISSIONER CGST AND CENTRAL EXCISE HEADQUARTERS BHOPAL VERSUS M/S GODREJ CONSUMER PRODUCTS LTD. [ 2019 (5) TMI 222 - MADHYA PRADESH HIGH COURT ] wherein the Hon ble High Court upheld the Tribunal s order holding that The demand arose based on annual costing. Such cost price in terms of Rule 8 will apply to all clearances made during the relevant year. Admittedly, duty already discharged has to be considered for arriving at overall short payment. Selectively applying the said cost price only for months when the clearances were below such cost price is not legally sustainable. It is observed that demand raised vide the impugned order is not sustainable as during the relevant period the Appellant had paid the correct duty arrived at in terms of Rule 4 of the Valuation Rules. Moreover, the Appellant has paid much higher duty than what is demanded in the impugned order and in such factual circumstances, adjustment of excise duty must have been allowed instead of raising any further demand. Interest - penalty - HELD THAT:- As duty demand is not sustainable, there arises no question of sustaining the demand for penalty or interest. The impugned order cannot be sustained and is accordingly set aside. The appeal filed by the Appellant is allowed.
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2023 (5) TMI 860
Levy of penalty under Rule 26 of Central Excise Rules, 2002 - offence of transportation of imported goods from the port to M/s Pamis Tex Pvt. Ltd. - HELD THAT:- From the plain reading of Rule 26 it is explicitly clear that under Rule 26 the penalty is imposed when the person deals with the excisable goods which is liable for confiscation - From the plain reading of the definition of excisable goods it is clear that it is only those goods which are subject to duty of excise. From the combined reading of Rule 26 and Section 2 (d) , the penalty under Rule 26 can be imposed only on dealing with the excisable goods which is subject to excise duty - In the present case the goods transported by the appellant are indeed imported goods therefore, for dealing with the imported goods penalty under Rule 26 cannot be imposed. Penalty is set aside. Appeal is allowed.
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2023 (5) TMI 859
Seeking refund of Cenvat credit on HSD/LDO/IDO used for generation of electricity - unutilized Cenvat credit was never claimed as Cenvat credit on any of the ER-1s - Time Limitation - HELD THAT:- The undisputed fact is the amount sought to be claimed as refund of unutilized Cenvat credit was in fact never claimed as Cenvat credit on any of the ER-1s filed by the appellant. As these amounts were never claimed as Cenvat credit, this cannot be lying as unutilised balance with the appellant. The refund claim on this primary ground itself is not maintainable. It is also observed that the refund claim has been filed nearly after the lapse of 14-15 years of the date of the communication referred. The lower authorities cannot be faulted for having held that the refund claim is barred by limitation as provided by Section 11B of the Central Excise Act, 1944. Appeal filed by the appellant is dismissed.
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2023 (5) TMI 858
Levy of penalty under Rule 209A of Central Excise Rules, 1944 read with Rule 26 of Central Excise Rules, 2002 - manipulating documents by showing purchases of waste paper in the name of suppliers when both the suppliers and transactions were not genuine - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- On introduction of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019, the main noticee, M/s. Bhikusa Papers Pvt. Ltd. and other co-noticees settled the dispute under SVLDRS, but the present appellant who is a director of the main noticee failed to opt under the scheme. However, without considering the directions given in the remand order and allowing cross examination, Commissioner has imposed penalties on the appellant, just for reason that the appellant did not settle the issue along with others under SVLDRS. Such approach of Commissioner cannot be justified. Even if the appellant has not approached under SVLDRS, Commissioner should have adjudicated as directed by Tribunal. No justification for imposition of penalty on reconsideration as per order of Tribunal is forthcoming. Thus, even after failure on the part of the appellant to avail the benefits of the scheme in its totality in view of Board Circular No. 1071/4/2019-CX.8 dated 27.08.2019 and the consistent decisions of this Tribunal, the penalty imposed on the appellant is set aside. Appeal allowed.
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2023 (5) TMI 857
Refund of amount of pre-deposit made by debiting the electronic credit ledger maintained under GST - Section 35F of Central Excise Act, 1944 - HELD THAT:- It is quite evident that the appellant has now deposited the amount of pre-deposit as required under Section 35F. Appellant has fulfilled the requirement of predeposit in the manner as Commissioner (Appeals) would have accepted it. In para 3 of his order, Commissioner (Appeals) has noted that earlier the appellant had paid the pre-deposit vide DRC-03 ARN AD2712210187079 dated 10.12.2021. Even though the Commissioner (Appeals) could have taken this amount deposited by the appellant by way of above referred debit entry as a payment made under Section 35F, he chose to reject the appeal on a technical ground. Appellant should approach the concerned authorities with proper application as prescribed seeking refund of this amount and the said application needs to be dealt with in accordance with law - Taking note of the above facts and that the amount has now been deposited by the appellant, it is opined that the conditions of Section 35F of Central Excise Act, 1944 are complied with and the matter needs to be considered by the Commissioner (Appeals) on merits. This matter is remanded back to the Commissioner (Appeals) for passing decision on merits - Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2023 (5) TMI 856
Jurisdiction of DRT to waive off the pre-deposit while deciding the appeal - Section 19 of the DRT Act, as amended by Section 35 of Act No.44 of 2016 - relevant period, post amendment - HELD THAT:- This very question has been considered by this Court in A.K. SINHA, JATINDER MOHAN MITTAL VERSUS CANARA BANK, DEBTS RECOVERY APPELLANT TRIBUNAL AND OTHERS [ 2019 (7) TMI 1974 - PUNJAB AND HARYANA HIGH COURT] , whereby this Court had held that if, any amendment is made during the pendency of the appeal, the unamended provisions cannot be applied. In the present case as well, the appeal filed by the petitioner before the Appellate Authority could only be entertained, if it had deposited 25% of the additional demand as per amended provisions of Section 62 (5) of the Act. The application for waiver of pre-deposit was pending when the amendment came into force. The Appellate Authority was bound by the amendment as the application was to be decided in accordance with law. Hence, the conditions of pre-deposits, in any case, are procedural and the petitioner cannot claim that its right to appeal has to be considered as per the un-amended provisions of the Act - the judgment passed by Hon ble the Supreme Court in M/s Technimont Pvt. Ltd. s case [ 2019 (9) TMI 788 - SUPREME COURT] is very clear that right of appeal is a right granted by the statute and whatever conditions are imposed, the assessee is bound by those. In the present case, the amendment came into force w.e.f. 28.07.2015. At that time, application seeking waiver of the pre-deposit was pending. In this backdrop, the jurisdiction of the Appellate Authority to completely waive off the conditions of pre-deposit, as per un-amended provisions of Section 62 (5) of the Act, was not existing. Therefore, no ground is made out to interfere in the impugned order as no illegality, much less perversity, has been found therein. Petition dismissed.
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2023 (5) TMI 855
Classification of goods - Entitlement for exemption of payment of VAT in excess of 5% thereupon - Pizza - sandwich - falls within the notification dated 09.03.2010 or not - whether pizza and sandwich fall within the ambit of cooked food to claim benefit of exemption notification dated 09.03.2010? - HELD THAT:- It appears that the Tax Board has not even determined pizza to be food in the common parlance, even though it is cooked and served in restaurants or hotels. The Tax Board has restricted the definition of food to those meals that are consumed at regular hours/intervals for satisfaction of hunger and for sustenance, like vegetables, chapatti/roti, rice, etc. - In the opinion of this Court, both the authorities below have relied on extraneous, unsound, specious, and ill-founded factors and have therefore reached a perverse conclusion. The burden to prove that a specific product falls within a particular tariff is always on the revenue, more so when the revenue is trying to classify products in the residual entry as against the specific entry. In the instant case, the revenue has utterly failed to adduce any evidence, technical or otherwise, to substantiate its claim that pizza and sandwich are not cooked food . The revenue has not brought on record any expert opinion, any scientific study or survey to prove that pizza and sandwich are in-fact not cooked food - Merely by stating that cooked food is necessarily prepared on gas burner, with aid of oil/ghee and spices, using exclusively fresh ingredients and then served with traditional cutlery, the Additional Commissioner arrived at the conclusion pizza or sandwich are not cooked food . If the revenue wanted to rely on these factors, it was the duty of the revenue to prove/establish that these factors are themselves true and that these factors are essential for determination of what construes as cooked food . Since the same was not done by the revenue, the Assistant Commissioner has wrongly relied upon the factors and wrongly accepted them on their face value. A bare perusal of the Notification No. S.O. 263 dated 09.03.2015 would reveal that the State Government had itself considered items like pizza and sandwich to be cooked food . As rightly submitted by learned counsels for the petitioner-assessee, it is a settled position of law that subsequent legislation can be looked at in order to see what is the proper interpretation to be put upon the earlier legislation when the earlier legislation is found to be obscure or ambiguous. Since the State Government has included pizza and sandwich in the broad category of cooked food in subsequent notifications dated 14.07.2014 and 09.03.2015, therefore the sale of pizza and sandwich would qualify as sale of cooked food under the notification dated 09.03.2010 as well. This Court holds that the question(s) of law framed above are answered in the favour of the petitioner-assessee and against the respondent-revenue. As a result, pizza and sandwiches are held to be cooked foods - Revision allowed.
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2023 (5) TMI 854
Liability to pay interest on additional tax - relevant date for commencement of interest liability - Additional demand of tax and interest under Section 14(6) of the Haryana Value Added Tax Act, 2003 - Income received by the dealer from M/s. Asia Motor Works against the repair of accidental trucks - warranty claim received in the shape of credit notes from the company i.e. M/s. Asia Motor Works in respect of the goods replaced during warranty claim and reduced from purchases - HELD THAT:- The judgment referred to by learned counsel for the respondents in UNITED RICELAND LIMITED AND ANOTHER VERSUS STATE OF HARYANA AND OTHERS [ 1995 (8) TMI 296 - PUNJAB HIGH COURT ], and Chaudhary Tractor Company, Tohana, District Sirsa vs. State of Haryana [ 2006 (5) TMI 455 - PUNJAB AND HARYANA HIGH COURT] would not be applicable as these cases deal with the provision of demand of interest under Section 25(3) of the Haryana General Sales Tax Act, 1973. Even the judgment of the Hon'ble Supreme Court in Ghasi Lal's case [ 1965 (1) TMI 41 - SUPREME COURT] cannot be applied in the present case as the present case deals with the provisions of Haryana VAT Act, 2003. The relevant provision of 14(6) of Haryana VAT Act makes it abundantly clear that simple interest at one per cent per month is to be charged if the payment is made within ninety days from the last date specified for the payment of tax and two per cent per month for the whole of the period he makes the payment beyond ninety days. If the tax is not paid as per the Act, the assessee is liable to pay tax along with the interest as per provisions of Section 14(6) of the HVAT Act. The judgment referred to by learned counsel for the appellant in M/s. Faridabad Fabricators (P) Ltd., Faridabad vs. State of Haryana, is directly applicable to the facts of the present case. The assessee was required to pay the tax payable in accordance with the provisions of Section 14 of the HVAT Act and the Rules framed thereunder. Non-payment of tax according to the provision of the Act will certainly amount to failure to make payment of tax which renders the assessee liable to pay interest also as provided in Section 14(6). The liability to pay interest would be from the date the tax was supposed to be deposited by the assessee. The order passed by Haryana Tax Tribunal (respondent No. 2) is modified that the interest on the additional demand is leviable from the date of filing of the return - Appeal allowed.
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Indian Laws
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2023 (5) TMI 853
Appointment of an arbitrator for the adjudication of disputes and claims - period of limitation - what is the breaking point for commencement of arbitration - Section 11(6) of the Arbitration and Conciliation Act, 1996 - alleged wrongful encashment of warranty bond by the respondent - whether time-barred claims or claims which are barred by limitation, can be said to be live claims, which can be referred to arbitration? HELD THAT:- The starting point of limitation under Article 137 according to third column of the Article is the date when the right to apply arises . This being a residuary Article to be adopted to different classes of applications, the expression the right to apply is an expression of a broad common law principle and should be interpreted according to the circumstances of each case. In SBP. CO. VERSUS PATEL ENGINEERING LTD. ANR. [ 2005 (10) TMI 495 - SUPREME COURT] , this Court held that dragging a party to an arbitration when there existed no arbitrable dispute, can certainly affect the right of that party, and, even on monetary terms, impose on him a serious liability for meeting the expenses of the arbitration. In Panchu Gopal Bose v. Board of Trustees for Port of Calcutta [ 1993 (4) TMI 302 - SUPREME COURT] this Court had held that the provisions of the Act 1963 would apply to arbitrations and notwithstanding any term in the contract to the contrary, cause of arbitration for the purpose of limitation shall be deemed to have accrued to the party, in respect of any such matter at the time when it should have accrued but for the contract. Cause of arbitration shall be deemed to have commenced when one party serves the notice on the other party requiring the appointment of an arbitrator - Defaulting party should bear the hardship and should not transmit the hardship to the other party, after the claim in the cause of arbitration was allowed to be barred. It was further held that where the arbitration agreement does not really exist or ceased to exist or where the dispute applies outside the scope of arbitration agreement allowing the claim, after a considerable lapse of time, would be a harassment to the opposite party. It was accordingly held in that case that since the petitioner slept over his rights for more than 10 years, by his conduct he allowed the arbitration to be barred by limitation and the Court would be justified in relieving the party from arbitration agreement under Sections 5 and 12(2)(b) of the Act. The case on hand is clearly and undoubtedly, one of a hopelessly barred claim, as the petitioner by its conduct slept over its right for more than five years. Statutory arbitrations stand apart - Petition dismissed.
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2023 (5) TMI 852
Appointment of a sole arbitrator to adjudicate the disputes which have arisen between the parties - disputes arose between the parties with regard to, among other causes, execution of the project and contractual obligations of the parties - whether the claims here are ex-facie time barred, and therefore, fall under the restrictive category of deadwood? HELD THAT:- It is a settle principle of law that the limitation period in a Section 11 application is governed by Article 137 of the Limitation Act, 1963 which provides for three years from the date when the right to apply first accrues. From the facts in hand, it is palpably evident that the cause of action first arose on March 18, 2013 when the project was kept on 'Hold' by the respondent. Subsequently, on May 16, 2015, a fresh cause of action arose when the respondent informed the petitioner about short closure of the contract. Post issuance of legal notice dated March 22, 2017 by the petitioner, the respondent called for meetings between the parties to sort out the issues. The said meetings were held in April 2017, and on perusal of the minutes of the meetings, I am of the view that the discussions between the parties were exhaustive wherein both the sides made certain specific commitments in relation to the pending work at site and bill payments. Therefore, even though the respondent had unilaterally short closed the contract, the resolution recorded in the said meetings indicated their intent to have the pending work completed with set timelines. The limitation period will not be operative against the petitioner from February 05, 2019 onwards, and hence, the present petition is well within time and not barred by limitation. Ultimately, the scope of judicial interference under section 11 finds its genesis in VIDYA DROLIA AND OTHERS VERSUS DURGA TRADING CORPORATION [ 2020 (12) TMI 1227 - SUPREME COURT] , as extremely limited, and only in those cases, where no iota of doubt regarding a claim being ex-facie time-barred is present. If and when the Court is in doubt, it has to refer the matter to the arbitral tribunal for adjudication. Justice Sahidullah Munshi, Former Judge, Calcutta High Court, appointed as a sole arbitrator to arbitrate upon the disputes which have arisen between the parties - petition disposed off.
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