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TMI Tax Updates - e-Newsletter July 4, 2023 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Provisional attachment - jurisdiction to pass the provisional attachment order - A cumulative reading of the provisions of Section 83(1) read with Section 122(1-A) of the Act makes it manifest that the Commissioner for the purposes of exercising power under Section 83 read with Section 122(1-A) of the CGST Act, would have a power to take action against “any person” as Section 122(1-A) mandates, even if such a person is outside his jurisdiction (i.e. he has all India Jurisdiction) - HC Visit to Get Source GST: Provisional attachment of bank account of the Petitioner - Extension of one year, which has already expired u/s 83(2) - fresh order to attach the bank account - Non-communication of order to the petitioner - In any view of the matter, mere notings in the file of the concerned Officer cannot constitute an order without a formal order as the law may mandate being passed and most importantly such order being communicated to the affected person, whose bank account is attached. - Attachment orders quashed - HC Visit to Get Source GST: Return of goods for repairs originally meant for export - Expiry of e-way bill - the eight hour period for extension of the validity fo e-way bill had expired - High Court observed that, there is no allegation of any evasion of tax rather it is not disputed that the goods were being transported under a cover of challan to the factory of the appellants for carrying out repairs - it is not a fit case where tax and penalty should have been levied on the appellants - HC Visit to Get Source Income Tax: TDS liability on payment of Cash exceeding prescribed limit - Seeking exemption u/s 194N to the primary agricultural cooperative credit societies - whether that petitioner was a cooperative society and not a bank - CBDT directed to consider the representation of the Petitioners - HC Visit to Get Source Income Tax: Fees for Technical Services (FTS) - The AO himself has stated that some of the services are of the nature of FTS. Thus, AO clearly admits that all the services rendered by the assessee are not in the nature of FTS. In spite of that the AO has treated the entire receipts as FTS and added at the hands of the assessee. - Further, the ‘make available’ condition provided under Article 13(4)(c) remains non-compliant. That being the position, the receipts would not fall within the definition of FTS as provided under Article 13(4) of India – UK DTAA. - AT Visit to Get Source Income Tax: TDS on reimbursement of expenses - The assessee has raised debit note on which there is no profit element - the AO cannot fastened the liabilities of TDS as there is clear absence of profit component and it is actual reimbursement - No TDS is required to be deducted by the assessee on reimbursement of actual expenses - AT Visit to Get Source Income Tax: Allowance of credit of taxes as withheld by the clients domiciled in Japan - The judicial precedents cited by the authorities below are in the context of the tax treaties other than Indo Japan tax treaty, and the provisions of the Indo Japan tax treaty are not in pari materia with the provisions of those tax treaties. - the assessee was wrongly declined tax credit on the facts of this case. - AT Visit to Get Source Income Tax: Benefit of exemption u/s 11 - charitable activity - Activities in the nature of trade, commerce or business - the receipts from these activities which is in the nature of trade business, or commerce is definitely more than 20% of the total receipts, hence, as per proviso to section 2(15) of the Act, the activities are not for charitable purpose. Assessee is not eligible for exemption u/s 11 - AT Visit to Get Source Customs: Seeking release of goods for re-export - import of Dried Areca Nuts Split and Black Pepper for the purpose of re-export - Insofar as the goods which are not subject matter of investigation and/or which are otherwise not the subject matter of the Bills of Entry as set out in paragraph 23 of the reply filed on behalf of the Respondents, the same cannot be kept detained. The Respondents need to take an appropriate decision in that regard as expeditiously as possible - HC Visit to Get Source Customs: Revocation of Customs Brokers License - An order beyond the inquiry report - The Commissioner should have confined himself to the two issues in mentioned / alleged in the enquery report, but it transpires that there is no discussion on these issues - Howver, the order has been passed by the Commissioner on an entirely different ground - It is, therefore, not possible to sustain the order passed by the Commissioner - AT Visit to Get Source Indian Laws: Dishonour of Cheque - vicarious liability of director - There are no allegations in the criminal complaints in relation to the petitioners, much-less any specific allegations as to their role in the alleged offence. - In these circumstances, it cannot be said that the petitioners would incur any vicarious liability alongwith the accused company merely because they were directors of the company. - HC Visit to Get Source Articles Target Incentive received from Manufacturer not Trade discount but Marketing Service - Maha AAAR What are the reasons for Company Name Rejection? Refund on account of export cannot be withheld merely on the ground that Revenue intends to file appeal No liability to pay interest in a revenue-neutral situation Notifications Customs 45/2023 - dated 1-7-2023 - Cus Effective rate of Agriculture Infrastructure and Development Cess for specified goods - Seeks to amend notification No. 11/2021-Customs dated 01.02.2021 in order to prescribe the AIDC rate for liquified Propane and liquified Butane. 44/2023 - dated 1-7-2023 - Cus Effective rates of customs duty and IGST for goods imported into India - Prescribe a concessional BCD on liquified Propane and liquified Butane - Seeks to amend notification No. 50/2017 -Customs dated 30.06.2017. 43/2023 - dated 1-7-2023 - Cus Import duty leviable on Liquified Propane and Liquified Butane increased - Seeks to amend the First Schedule of the Customs Tariff Act. DGFT 16/2023 - dated 3-7-2023 - FTP Amendment in import policy condition for items under ITC(HS) code 07019000 of Chapter 07 of ITC (HS), 2022, Schedule - I (Import Policy) GST - States 08/2023-State Tax - dated 30-6-2023 - Delhi SGST Waives the amount of late fee referred to in section 47 of the CGST Act 5/2023-State Tax (Rate) - dated 19-5-2023 - Mizoram SGST Amendment in Notification No. 11/2017-State Tax (Rate), dated the 7th July, 2017 10/2023-State Tax - dated 18-5-2023 - Mizoram SGST Amendment in Notification No. 13/2020 – State Tax, dated the 5th May, 2020 121489/2023/01(120)/XXVII(8)/2022/CTR-02 - dated 12-5-2023 - Uttarakhand SGST Amendments in the Notification of the Government of Uttarakhand, Finance Section-8, No.526/2017/9(120)/XXVI(8)/2017 dated the 29th June,2017. 121488/2023/01(120)/XXVII(8)/2022/CTR-03 - dated 12-5-2023 - Uttarakhand SGST Amendment in Notification No. 514/2017/9(120)/XXVII(8)/2017 dated the 29th June, 2017 121485/2023/01(120)/XXVII(8)/2022/CTR-04 - dated 12-5-2023 - Uttarakhand SGST Amendments in the Notification of the Government of Uttarakhand, Finance Section-8, No.518/2017/9(120)/XXVlI(8)/2017 dated the 29th June, 2017 News Sixth GST Day with vision GST@6 सरलीकृत कर, समग्र विकास celebrated at New Delhi GST promotes cooperative federalism and reduces corruption and tax evasion: Hon’ble Governor of Maharashtra, Shri Ramesh Bais ₹1,61,497 crore gross GST revenue collected for June 2023; records 12% Year-on-Year growth Statistics Shape the Setting of Monetary Policy (Speech delivered by Michael Debabrata Patra, Deputy Governor, Reserve Bank of India - June 30, 2023 - at the Statistics Day Conference at RBI, Mumbai) DPIIT successfully organizes National Workshop on Industrial Park Rating System Case Laws: GST 2023 (7) TMI 101 Provisional attachment of bank account of the Petitioner - Extension of one year, which has already expired - fresh order to attach the bank account - Non-communication of order to the petitioner - Section 83 of the CGST Act - HELD THAT:- The order sheet records the date of the noting as 21st April 2022, wherein after narrating the facts it is stated that same is submitted for necessary orders under Section 83 of the MGST Act. It further states that we may consider taking action of provisional attachment under Section 83 in respect of this bank account and, thereafter, the Joint Commissioner (Investigation) has opined that this bank account is required to be attached. The said order sheet is dated 21st April 2022 and formed the basis for issue of first provisional attachment on 21st April 2022 and which, as observed above, has ceased to expire by operation of sub-section (2) of Section 83 - there are no fresh order having being passed by the Respondents to attach the bank account on 19th April 2023. In any view of the matter, mere notings in the file of the concerned Officer cannot constitute an order without a formal order as the law may mandate being passed and most importantly such order being communicated to the affected person, whose bank account is attached. The Respondents have not shown that such order was passed and served on the Petitioner much less prior to the provisional attachment order ceasing to operate by virtue of the provisions of Section 83(2) and/or the communication dated on 19th April 2023. Thus, it is held that the communication dated 21st April 2022 (Exhibit B to the petition) provisionally attaching the Petitioner s bank account is rendered illegal and invalid by virtue of the provisions of Section 83(2) of the CGST Act. The extension of the provisional attachment by communication dated 19th April 2023 (Exhibit G-1 to the petition) is hereby quashed and set aside. Parties, including the bank, to act on authenticated copy of this order - writ petition stands allowed. Provisional attachment - jurisdiction to pass the provisional attachment order - Petitioner is in Chennai and the bank account, in respect of which the provisional attachment order is communicated, is also in Chennai - HELD THAT:- Section 122(1-A), refers to any person , who has retained benefit of a transaction and in whose presence transaction is conducted. It does not contemplate of a situation where the person should be located within the State in which the transaction is carried out. Therefore, the Respondents have the jurisdiction to resort to the provisions of Section 83 of the Act with respect to the Petitioner located in Chennai. The provisions of Section 83, which are to be read with Section 122(1-A), would be required to be read in the context of the legislation itself namely the CGST Act. As Section 1(2) would mandate, the CGST Act is operational throughout the country. This would have relevance in construing the jurisdiction of the Commissioner who has been defined under Section 2(24) of the CGST Act, for the purposes of Section 83(2) of the Act. A cumulative reading of the provisions of Section 83(1) read with Section 122(1-A) of the Act makes it manifest that the Commissioner for the purposes of exercising power under Section 83 read with Section 122(1-A) of the CGST Act, would have a power to take action against any person as Section 122(1-A) mandates, even if such a person is outside his jurisdiction. However, as it is held that the communication dated 21st April 2022 (Exhibit C to the petition), provisionally attaching the Petitioner s bank account is rendered illegal and invalid by virtue of the provisions of Section 83(2) of the CGST Act. The extension of the provisional attachment by communication dated 19th April 2023 (Exhibit H-1 to the petition) is hereby quashed and set aside. 2023 (7) TMI 100 Validity of assessment order - HELD THAT:- An identical issue, in respect of the very same assessee in M/S. SRI MUTHARAMMAN TRADERS VERSUS THE STATE TAX OFFICER, THE DEPUTY COMMISSIONER (ST) GST, CHENNAI. [ 2023 (6) TMI 1234 - MADRAS HIGH COURT] , wherein the challenge was for the assessment years 2020-21 and 2021-22 - The challenge in the present case is to an order of assessment dated 31.10.2022 passed under the provisions of the Tamil Nadu Goods and Services Tax Act, 2017 for the assessment year 2019-2020. Though the aforesaid Writ Petitions have been filed on identical premise as the present one, in that statutory appeals filed by the petitioner had been rejected as belated, and rightly so, seeing as they had been filed 10 days beyond the statutorily permissible condonable period of 120 days. In light of the identity in facts and circumstances, the aforesaid order is taken to be passed in this Writ Petition as well including the directions. Let the petitioner re-present the appeal papers within a period of one (1) week from date of receipt of a copy of this order - Petition disposed off. 2023 (7) TMI 99 Parallel proceedings - Search and seizure - inspection was carried out by the respondent no. 4 at the premises of the petitioner under Section 67(1) of the Central/State Goods and Services Tax Act, 2017 and also respondent no. 1 2 also issued summons under Section 70 of the Act to the petitioner and petitioner is asked to supply the necessary documents in connection with the inquiry initiated by the respondents no. 1 2 (which was in possession of respondent no. 4 herein) - HELD THAT:- When the respondent no. 4 has initiated the inquiry and inspected the documents and carried out the inspection at the place of the petitioner and inquiry is going on in connection with five different Firms at present including M/s. J.M. Enterprise, for which, the summon was issued by the respondent no. 1, whereas M/s Galaxy Enterprise, summon was issued by respondent no. 2. Hence, the present petition deserves consideration. The respondents no. 1 2 are directed to transfer the papers/documents to respondent no. 4 for necessary inquiry/investigation in connection with both the Firms viz. M/s. J.M. Enterprise and M/s. Galaxy Enterprise - petitioner is directed to co-operate with the respondent no. 4 and produce necessary/required documents demanded by respondent no. 4 for the purpose of investigation/inquiry and thereafter, it is open for the respondent no. 4 to pass an appropriate order/take appropriate action in accordance with the law. Petition allowed. 2023 (7) TMI 98 Provisional Attachment of Bank Account/Property - Section 83 of the CGST/SGST Act, 2017 - HELD THAT:- It appears that despite Respondent No. 2 being put to notice of the filing of this petition, which was served on 2nd December 2022, Respondent No. 2 proceeded to pass an order dated 2nd January 2023, cancelling the Petitioner's registration. It also appears that the impugned order takes within its ambit some issues, which are not part of the show cause notice. There is no reason to not accept the Petitioner s case that Respondent No. 2 acted in an arbitrary manner in exercising powers vested in him when he passed the impugned order in breach of the principles of natural justice. In these circumstances, there can be no alternative but to set aside not only the show cause notice but the impugned order dated 2nd January 2023 cancelling the Petitioner's registration - Application disposed off. 2023 (7) TMI 97 Return of goods for repairs originally meant for export - Expiry of e-way bill - the eight hour period for extension of the validity fo e-way bill had expired - the goods while being loaded into the vessel and had got damaged - HELD THAT:- On perusal of the e-Way Bill, it is seen that no tax was payable since the goods which were owned by the appellants were taken back to their factory at Ranchi for repairs. The goods were detained while in transit at about 8.20 a.m. on 13.09.2019. In terms of Rule 138(10) of the WBGST Rules an option is given to the assessee to extend the period of e-Way Bill and such extension should be done before eight hours and after eight hours of the expiry of its validity. Admittedly the eight hour period expired about 8.10 a.m. on 13.09.2019 and at about 8.20 a.m. the goods were intercepted and detained. The identical issue was considered by the Court in various matters and some of which being in the case of PROGRESSIVE METALS PVT. LIMITED VERSUS THE DEPUTY COMMISSIONER, STATE TAX, BUREAU OF INVESTIGATION SOUTH BENGAL, DURGAPUR ZONE ORS. [ 2022 (4) TMI 1542 - CALCUTTA HIGH COURT] and in KDG PROJECTS PRIVATE LIMITED ANR. VERSUS THE ASSISTANT COMMISSIONER OF STATE TAX, BUREAU OF INVESTIGATION (NORTH BENGAL) , RAIGANJ ZONE ORS. [ 2022 (9) TMI 1202 - CALCUTTA HIGH COURT ] and the decision in Medha Servo Drives Private Limited Anr. v. The Assistant Commissioner of, State Tax, Bureau of Investigation (South Bengal), Durgapur Zone Ors. [ 2022 (11) TMI 1185 - CALCUTTA HIGH COURT ]. In all these matters the Court considered the conduct of the assessee and having found that the conduct was not with the intention to evade tax, granted relief to those assessees. The case on hand also would fall under the said category since there is no allegation of any evasion of tax rather it is not disputed that the goods were being transported under a cover of challan to the factory of the appellants for carrying out repairs. This Court is of the view that it is not a fit case where tax and penalty should have been levied on the appellants - Petition allowed. 2023 (7) TMI 96 Violation of the principles of natural justice - petitioner was not given an opportunity to put forward his case - Sun Steels is an existent firm with a GST registration or not - HELD THAT:- When the matter had come up for admission, learned counsel for the petitioner pointed out that the fact, based on which the show cause notice has been issued that the supplier of the petitioner was non-existent, stands disproved by the fact that the said supplier viz., Sun Steels is registered under GST and they have also paid tax in respect of the supply made to the petitioner. Therefore, had the petitioner been afforded an opportunity of personal hearing, he could have clarified the same to the respondent. This fact has not been refuted by the respondent. Considering the fact that the petitioner has not been afforded an opportunity of personal hearing to produce his documents, particularly when the petitioner is in possession of the documents to disprove the claim of the petitioner, the impugned order has to necessarily be set aside and accordingly, is set aside - matter is remitted back to the respondent for fresh consideration - Petition allowed by way of remand. 2023 (7) TMI 95 Application for revocation of GST cancellation rejected - validity of SCN - HELD THAT:- Undeniably, the proceedings for cancellation of the petitioner s GST and registration were commenced pursuant to a Show Cause Notice dated 22.08.2022, which was cryptic and did not provide the necessary particulars for proposing cancellation of the petitioner s GST registration. It is trite law that a Show Cause Notice must set out the reasons for proposing an adverse action in order for the noticee to respond to the same. Undisputedly, in this case, the impugned Show Cause Notice did not satisfy the said standards. Thus, it would be apposite to restore the petitioner s application for revocation of cancellation of its GST registration before the concerned officer for deciding afresh. The petitioner is granted further opportunity to respond to the Show Cause Notice dated 11.11.2022 and furnish the necessary documents in support of its claim within a period of two weeks from today - petition disposed off. 2023 (7) TMI 94 Seizure of goods alongwith conveyance - section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- In the facts and circumstances of the case, by way of interim relief, it is directed that the goods of the petitioner as well as vehicle bearing registration MH-50-2399, shall be released provided the petitioner complies with the following conditions, (i) The petitioner shall deposit with the competent authority of the respondents, total amount of penalty of Rs. 93,750/-, the tax is not assessed by the authorities. (ii) Towards fine in lieu of confiscation of goods, the petitioner shall furnish Bond of amounting to Rs.19,68,750/-. (iii) The petitioner shall further deposit the amount of Rs. 93,750/- towards fine in lieu of confiscation of conveyance. Upon compliance of the aforesaid conditions, the goods and the vehicle both shall be released by the authorities. Non compliance of any of the aforesaid conditions, shall render the interim relief granted herein above, liable to be vacated - Petition disposed off. 2023 (7) TMI 93 Levy of penalty - transportation of the vehicle in contravention of Section 129 of GST Act - HELD THAT:- This Court is of the view that the vehicle, which was carrying the excavator and the excavator could not be kept under detention as it will deteriorate the value of both the vehicles and it will be counter productive as the appellant will not be able to repair and use the vehicle. Consequently, he will be declared as a defaulter in payment of the monthly instalments to the bank and the net result would be even assuming that the order of penalty is to be upheld, it will continue to remain as a paper work. The release of the vehicle shall be done within three days from the date on which the appeal is filed before the appellate authority and the pre-deposit is made and the requisite challan is produced before the detaining authority. Appeal disposed off. Income Tax 2023 (7) TMI 92 Reopening of assessment u/s 147 - Accommodation entries received - as per HC petitioner has not placed on record documents to establish genuineness of the transactions with Mridul Securities, we do not find any case for interfering in the writ proceedings and Petitioner has not brought on record anything to suggest that the reassessment proceedings are being undertaken in an arbitrary manner - HELD THAT:- We are not inclined to interfere with the impugned judgment and hence, the special leave petition is dismissed. Pending application(s), if any, shall stand disposed of. 2023 (7) TMI 91 Disallowance of bad debts as conditions laid down in Section 36(1)(vii) r.w.s. 36(2) not satisfied - debts have been taken over from the sister concerns - High court , following the decision in [ 2022 (1) TMI 1380 - MADRAS HIGH COURT] , confirmed the decision of ITAT deleting the additions - Supreme court found no ground to interfere - Decided against the revenue. 2023 (7) TMI 90 Penalty u/s 271(1) - Unaccounted cash receipts - assessment u/s 153A - HELD THAT:- Upon hearing the counsel, the Court made the following Delay condoned. Issue notice returnable in the month of August 2023. Notices will be served by all modes, including dasti. 2023 (7) TMI 89 Entitlement of refund plus interest u/s 244A - HELD THAT:- As admitted that petitioner made repeated representations to respondents. According to respondent no. 1, there was an outstanding demand of Rs. 266.73 Crores for Assessment Year 2012-2013, 2013-2014, 2014-2015 and 2017-2018 and admittedly, a stay has been granted to petitioner by respondent no. 1 vide an order dated 27th December 2022. By the said order, an adjustment of 20% of the demand against the admitted due refund of Assessment Year 2018-2019 of Rs. 153.80 Crores has been granted and for the balance, stay has been granted till 31st December 2023 or till the disposal of appeal by CIT(A), whichever event occurs earlier. Respondent no. 1 has admitted that even after such an adjustment, petitioner is entitled to receive a sum of Rs. 100.49 Crores being the balance refund for Assessment Year 2018-2019. We direct respondent No. 4, i.e., Director of Income Tax, CPC, to ensure that the refund amount of Rs. 100.49 Crores alongwith interest, if any, in accordance with law, is credited to petitioner s account within one week from the date this order is uploaded. 2023 (7) TMI 88 Reopening of assessment u/s 147 - Addition u/s 68 - allotment of shares at premium - reopening within a period of four years - as per AO no justification for the assessee to have issued shares at such a huge premium during the year under consideration and further that the very nature of transaction of the so called share premium had not been established - HELD THAT:- In the present case neither the reasons recorded nor the order disposing of the objections in any manner reflects that there was any doubt with regard to existence of the entities in whose favour the allotment of shares had been made upon receipt of share money as also the amount of premium paid on the said shares. By virtue of the impugned notice AO seeks to reopen the assessment for the assessment year 2010-11, which is within a period of four years. Admittedly, no scrutiny assessment u/s 143(3) of the Act has taken place in the present case. Even in a case where no scrutiny assessment has taken place, reassessment can be ordered only if the assessing officer has reason to believe that income chargeable to tax had escaped assessment. The Apex Court in Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. [ 2007 (5) TMI 197 - SUPREME COURT] has clearly held that notice for reopening an assessment under Section 148 of the Act could only be justified if the AO has reason to believe that income chargeable to tax has escaped assessment. Reason for the assessing officer to reopen the assessment is his belief that the share premium charged by the Petitioner was excessive and further that the transaction of the so called share premium was not established. AO apart from questioning the excessive share premium also is doubting the transaction, whereby the share premium had been received. Whether in the aforementioned facts the assessing officer could be said to have his reason to believe that income had escaped assessment and whether the material with the said assessing officer could be said to have any tangible material justifying the reopening is the issue that falls for our consideration.. Thus there was neither any basis for the assessing officer for his reason to believe that income had escaped assessment nor was there any tangible material which would have otherwise given jurisdiction to reopen the assessment even when the reopening was sought to be made within a period of four years. Decided in favour of assessee. 2023 (7) TMI 87 TDS liability on payment of Cash exceeding prescribed limit - Seeking exemption u/s 194N to the primary agricultural cooperative credit societies - HELD THAT:- CBDT directed to consider the representation of the Petitioners and decide the issue. Learned counsel for the petitioner relies on a judgment of the Hon'ble Supreme Court in the case of The Principal Commissioner of Income Tax 17, Mumbai v M/s Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Limited [ 2023 (5) TMI 372 - SC ORDER] deciding the question of whether that petitioner was a cooperative society and not a bank for the purpose of Section 80 P(4) of the Act, in favour of the society and adverse to the Department. The petitioner is at liberty to cite this judgment and any other decisions that it places reliance upon, before the authority hearing the request for exemption. 2023 (7) TMI 86 Validity of reopening of assessment - adjournment request rejected - Violation of natural justice - Petitioner sought adjournment for 15 days itself on adjournment request window on e-portal ; but ignoring the adjournment request respondent no. 1 completed the assessment, observing that the petitioner was provided personal hearing through video-conferencing - HELD THAT:- Revenue, in all fairness concedes that the above mentioned violation of right to fair hearing has vitiated the impugned orders. Under these circumstances, the impugned notice and orders are set aside and matter is remanded to the Assessing Officer to pass fresh orders after affording a fair opportunity to the petitioner or his authorized representative to be heard. 2023 (7) TMI 85 Compensation on land acquired by NHAI - petitioner was granted compensation as well as interest on the said compensation - petitioner s stand that the compensation and interest received from the NHAI was not amenable to imposition of income tax, NHAI deducted tax at source, both vis- -vis the principal amount as well as the interest - HELD THAT:- Insofar as the interest is concerned, tax at source was deposited by the NHAI for the relevant period i.e. AY 2020-21.As regards the principal amount, initially, tax at source was not deposited for the AY in issue i.e., AY 2020-21 but for another AY. NHAI, having realised that a mistake had been committed, made a course correction. The revised Form 26-AS reflects this position. There is no dispute that the petitioner, while filing its return for AY 2020-21, had taken the position that the amount received as compensation and interest, was exempt from imposition of tax. The said return was, concededly, processed u/s 143(1) - The record indicates that the intimation u/s 143(1) of the Act served on the petitioner is dated 08.05.2021. Via this intimation, demand has been raised against the petitioner, albeit, without giving credit for the tax deducted at source on compensation. It is important to record that the petitioner had earlier moved a rectification application u/s 154 of the Act, which was disposed via an order dated 15.02.2022, whereby demand for the AY in issue i.e., 2020-21 was scaled down to Rs.16,440/-. Although the rectification application seeks credit for tax deducted at source vis- -vis interest, it appears the petitioner has already received the same (as has been noted in paragraph 6 of the application dated 18.08.2022) Accordingly, this writ petition is disposed of with the directions to JAO to render a decision on the pending rectification application dated 18.08.2022, at the earliest, though not later than six (6) weeks from the date of receipt of a copy of the instant judgment. 2023 (7) TMI 84 Income taxable in India - Taxability of certain receipts earned - Fees for Technical Services (FTS) under Article 13 of India United Kingdom (UK) Double Taxation Avoidance Agreement (DTAA) - interpretation of make available Clause - assessee is a non-resident corporate entity and a tax resident of UK - HELD THAT:- As from the nature of services rendered, it is quite clear that they are in the nature of advisory services in certain areas as per the terms of the agreement. From the nature of services, it is quite evident that assessee s role in the services provided is purely to assist the Indian AE or other participating group entities in making correct decision on the aspects specifically referred to in the agreement. Thus, the nature of services provided to the Indian AE does not seem to be falling in the category of either technical or consultancy services. In fact, in the assessment orders, AO himself has stated that some of the services are of the nature of FTS. Thus, AO clearly admits that all the services rendered by the assessee are not in the nature of FTS. In spite of that the AO has treated the entire receipts as FTS and added at the hands of the assessee. This, in our view, is unacceptable. Whether the other condition of Article 13(4) of India UK treaty is fulfilled? - As in course of rendition of service, the service provider must transfer the technology, technical know-how, skill etc. to the service recipient to the extent that service recipient can perform such services in future without required the assistance of the service provider and without depending upon the service provider. Meaning thereby, the service recipient must be in a position to acquire technical knowledge, knowhow, skill etc., so as to independently apply it. In the facts of the present case, evidently, the services provided by the assessee to the Indian AE are merely for enabling and assisting the Indian AE in making the correct decisions on certain aspects as specifically provided under the group service agreement. Such rendition of services do not result in transfer of technical knowledge, know-how, skill etc. to the Indian AE. The make available condition provided under Article 13(4)(c) remains non-compliant. That being the position, the receipts would not fall within the definition of FTS as provided under Article 13(4) of India UK DTAA. The receipts, not being in the nature of FTS under Article 13(4) of India UK DTAA, are not taxable at the hands of the assessee in India - Decided in favour of assessee. 2023 (7) TMI 83 TDS on reimbursement of expenses - demand u/s. 201(1) along with levy of interest u/s. 201(1A) - HELD THAT:- The assessee has raised debit note on which there is no profit element and therefore the AO cannot fastened the liabilities of TDS as there is clear absence of profit component and it is actual reimbursement and from the records available, assessee has produced all documents where it is evidences it is an actual reimbursement and where individual is shown proves that there is no profit component. The decision relied upon the ld. Ld. DR wherein the absence of material it was held that the assessee has not proved that the same is of pure reimbursement in nature. In support, reliance was placed on case of CIT vs. Kalyani Steels [ 2018 (5) TMI 152 - KARNATAKA HIGH COURT] and Zephyr Biomedicals [ 2020 (10) TMI 370 - BOMBAY HIGH COURT] wherein the Board Circular has been taken into consideration, we come to the conclusion that reimbursement of expenses were earlier incurred by a person on behalf of another or covered as such where there is no element of profit in such reimbursement and when that reimbursement has sufficient supporting documents that no TDS is required to be deducted by the assessee on reimbursement of actual expenses incurred by the RWPL and we set aside the order passed by the ld. CIT(A). Hence, the appeal is being allowed. 2023 (7) TMI 82 Condonation of delay - delay of 6901 days - assessment proceeding finalized u/s 158BC - During the pendency of the assessment proceeding consequent to search, the appellant filed a settlement application before the Hon ble Income Tax Settlement Commission - HELD THAT:- As documents are sufficient enough to suggest poor health condition of the appellant s wife having multiple surgery, suffering from various illness, old age ailments too including thyroid disorder and were under constant medical treatment. DR has not been able to controvert such factual aspect of the matter. These documents are sufficient enough to establish the fact of the appellants and his spouse being senior citizens, having multiple health issues, visiting India for health checkup and surgery, remained under constant medical supervision. The other explanation that as the appellant is 76 years old, presently residing at New Jersey, USA, left for USA in 2003 not been able to take proper steps in the matter pending since 15 to 20 years and the business is being handled by his employee to whom power of attorney was given in the absence of appellant s son Shri Kuldeep Jamnadas who also left for USA in 2008 also requires proper consideration. According to the appellant, such attorney is neither conversant with such old matters, nor been able to take proper steps in the proceeding pending before the different judicial forums. Thus we find sufficient cause has been shown by the appellant in being unable to prefer the appeals before us within time Sufficient cause as it appears in the Act is to be interpreted and understood in its proper spirit as these terms are flexible enough to be applied liberally in the interest of justice even in the case of long delay. We, therefore, with the aforesaid observations, condone the delay. As the impugned orders passed by the Ld. CIT(A) is only on the ground that the Hon ble Income Tax Settlement Commission has exclusive jurisdiction on every aspect of this case in terms of Section 245F(2) of the Act and in terms of provision of Chapter XI-A. It is an admitted position that the Settlement Commission has already rejected the application filed by the assessee on the ground of shortfall in the payment of interest and stated that proceeding before the said Commission had abated under Section 245HA. The order passed by the Ld. CIT(A) is, therefore, found to have no consequence. Hence, appeals are dismissed as infructuous. Penalty u/s 271D 271E - default u/s 269SS and 269T - finding of the Ld.AO to the effect that the peak of receipts recorded in the name of third parties is nothing but appellant's own undisclosed income - HELD THAT:- As considered the judgment relied of CIT vs. Shyam Corporation [ 2013 (7) TMI 772 - GUJARAT HIGH COURT ] wherein receipt for which revenue intends to invoke the provision of Section 269SS or 269T of the Act as the case may be for imposing penalty under Section 271D or 271E of the Act as the case may be during the assessment proceeding treated as booking advance and consequently assessed as undisclosed income of the assessee invoking Section 68 of the Act, it has been held that in that event the same would, thereafter, not bear the character of loan or advances and thus decided against the Revenue. Respectfully relying upon the said ratio laid down by the Hon ble Court, the initiation of penalty proceeding under Section 271D r.w. s. 269SS of the Act culminating into levy of penalty holding it as loan or deposit is, thus, found to be contradictory in the case in hand. Therefore, the same is bad, void ab initio and liable to be quashed. The identical ratio is also applied for initiation of penalty under Section 271E of the Act culminating into imposition of penalty for alleged violation of provision of Section 269T of the Act. The same is, therefore, held to be bad and void ab initio and, thus, quashed. 2023 (7) TMI 81 Allowance of credit of taxes as withheld by the clients domiciled in Japan - legal services provided by the assessee to the Japanese residents - scope of Indo Japanese tax treaty - as per AO as the receipt is not taxable in Japan and thus, the tax was not required to be withheld, as it was in the nature of independent personal services - HELD THAT:- We find that the coordinate bench of the Tribunal in Amarchand and Mangaldas and Suresh A Shroff Co.[ 2020 (12) TMI 776 - ITAT MUMBAI] we hold that, in the context of Indo Japan tax treaty, article 14 comes into play only for individuals, this proposition ceases to hold good in the present context. As a corollary to this legal position, and the exclusion clause under article 12(4) not being triggered on the facts of this case as such, it is indeed reasonably possible to hold that the payments in question were rightly subjected to tax withholding in Japan. The judicial precedents cited by the authorities below are in the context of the tax treaties other than Indo Japan tax treaty, and the provisions of the Indo Japan tax treaty are not in pari materia with the provisions of those tax treaties. On the facts of this case, the conclusions arrived at by the Japanese tax authorities, directing tax withholdings from the payments made to the assessee by its Japanese clients, cannot be said to unreasonable or incorrect. In the light of these discussions, as also bearing in mind entirety of the case, we hold that the assessee was wrongly declined tax credit on the facts of this case. These are the cases in which the treaty partner source jurisdiction has taken a reasonable bonafide view which is not manifestly erroneous- even though it is not the same as is the view taken by the residence jurisdiction. Decided against revenue. 2023 (7) TMI 80 Excess sugarcane price paid by the assessee - Held that:- The issue relating to excess sugarcane price paid by the assessee is restored to the file of Assessing Officer with similar directions as above in the case of Majalgaon Sahakari Sakhar Karkhana Ltd.[ 2019 (3) TMI 906 - ITAT PUNE] . AO shall decide the issue after affording reasonable opportunity of hearing to the assessee and decide the issue as indicated above. Accordingly, ground No.2 raised by the assessee is allowed for statistical purposes. Sale of sugar at concessional rate - Similar issue has come up for consideration before co-ordinate Bench of Pune Tribunal in the case of Shree Adinath SSK Ltd. [ 2022 (5) TMI 1561 - ITAT PUNE] issue sale of sugar at concessional rate to member is remanded to the file of Assessing Officer for fresh adjudication for the purpose of giving effect to the directions of Hon ble Apex Court KRISHNA SAHAKARI SAKHAR KARKHANA LTD. [ 2012 (11) TMI 669 - SUPREME COURT] in proper perspective. Thus issue remanded back to the file of the ld. A.O for fresh adjudication. 2023 (7) TMI 79 TP Adjustment - taking the comparable of Acropetal Technologies Limited ( Acropetal ) - HELD THAT:- From the SEBI report, it is clear there are irregularities committed in the financials of the company by way of committing a fraud in utilization of funds raised in IPO and diverted majority of funds to non-business purposes which has a significant bearing on the operating margins. This is a very good reason for not accepting the Acropetal Technologies Ltd., as comparable and hence, we direct the TPO to exclude the same while computing operating margins of the assessee. In term of the above, we direct the TPO / AO accordingly. Accuspeed Engineering Ltd., and Kirloskar Consultants Ltd. - We noted that since the assessee now before us has filed financials of Accuspeed Engineering Ltd., and Kirloskar Consultants Ltd., and this is the finding of the DRP that these financials are not available either before the TPO or DRP, we feel that in the interest of natural justice, we remit back the issue of these two comparables to the file of the AO for carrying out necessary enquiry and verification and then TPO will decide whether to consider the same as comparables or not. Harita Techserv Ltd - TPO has simply rejected the comparable on the reason that it has a negative PLI whereas DRP has only considered that it is not financially similar whereas assessee now before us filed complete details that Harita Techserv Ltd., is also engaged in engineering design services and financially similar. This needs to be considered. We feel that let the matter be restored back to the file of the TPO in regard to this comparable and TPO will consider whether assessee is financially similar to Harita Techserv Ltd., or not. In term of the above, we set aside this issue to the file of the TPO and allow for statistical purposes. TDS u/s 195 - Non deduction of TDS u/s 40(a)(ia) - Ocean Freight charges paid - HELD THAT:- The assessee has paid ocean freight charges to its Korean counterpart M/s. Doosan Corporation Korea for hiring of ships. From the invoices clearly produced before us, the invoice clearly says that the M/s. Doosan Corporation Korea has been paid freight by Doosan Power Systems Pvt. Ltd., the assessee company for hiring of ship. Whether these ocean freight charges will fall within the scope of fee for technical services or royalty u/s. 9(1)(vi) or Article 12.3 of the DTAA? - The relevant consideration paid by assessee is for hiring of ships i.e., rental or ocean freight paid for ships. The assessee s case is covered by Article 8 of DTAA of India-Korea and therefore the rentals of ship are in the nature of profit from the operation of ship or aircraft in international traffic carried on by an enterprise of a contracting state. The amount can be taxable only in contracting state and not taxable in India. Hence, the assessee is not liable to deduct TDS and therefore, no disallowance by invoking the provisions of section 40(a)(i) - we reverse the order of DRP and that of the AO and allow the appeal of the assessee. 2023 (7) TMI 78 On-money paid by the assessee for purchase of the immovable property - CIT(A) directing the AO to allow 5/6 th of on-money - HELD THAT:- The fact that the assessee had share only to the extent of 1/6th remain undisputed before us. The alleged money as paid on the transaction, in our considered opinion, could not be considered fully in the hands of the assessee only as she was co-owner to the extent of 1/6th only. Therefore, the impugned adjudication, on this issue, could not be faulted with. The corresponding grounds raised by the revenue stand dismissed. Claim of Agricultural income - assessee admitted agricultural income as treated as income from other sources since details and evidences, in that regard, could not be furnished by the assessee - HELD THAT:- CIT(A), relying upon the decision of this Tribunal in assessee s own case [ 2016 (9) TMI 1656 - ITAT CHENNAI] reversed the action of Ld. AO as held that considering the land holding of the assessee, the income shown was quite reasonable. In case of petty farming, it may not always be practicable to maintain documentary evidences for carrying out agricultural activities. Aggrieved, the revenue is in further appeal before us. Since the adjudication of Ld. CIT(A) follows a binding judicial precedent, no fault could not be found in the same. We order so. Addition on Account of Loan - Addition of NRNR deposits - HELD THAT:- We find that the whole basis of addition by Ld. AO is the statement taken by other authorities. However, these statements have not been confronted to the assessee. Further, no independent verification has been carried out by Ld. AO to establish the fact that these deposits, in fact, constitute income of the assessee. For this reason alone, addition has been deleted by Tribunal in the case of Smt. Sushila Ramasamy. The remittances have come through banking channels from foreign sources and therefore, the same could not be considered as assessee s income. We order so. The corresponding grounds raised by the revenue stand dismissed. Addition on account of Accretion to Assets - HELD THAT:- We find that the stated facts could not be controverted by revenue before us. The assessee is able to demonstrate that it has extra sources to the extent of Rs. 60.95 Lacs as against impugned addition of Rs. 45.23 Lacs. Therefore, we find no reason to interfere in the impugned order, on this issue. The corresponding grounds raised by the revenue stand dismissed. The appeal of the revenue stand dismissed. Unexplained cash credit - HELD THAT:- We find that the amount of Rs. 15 Lacs as accepted by Ld. AO has similarly been received by the assessee through banking channels vide cheque no. 397154 dated 05.03.1996. Therefore, there is no reason as to why the remaining amount was to be considered as unexplained cash credit. The assessee has also placed account confirmation from the said party on page no. 57 of the paper-book. Therefore, the impugned order, on this issue, could not be faulted with. The appeal of the revenue stand dismissed. 2023 (7) TMI 77 Benefit of exemption u/s 11 - Whether activities of the assessee to be falling under the limb of Advancement of any other object of general public utility of Section 2(15) ? - HED THAT:- Hon ble Supreme Court in the case of ACIT Vs. Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] has clearly held that Parliament has proscribed involvement or engagement of GPU in any activities in the nature of trade, commerce or business or involve in providing services in relation to trade, business or commerce for fee, cess or other consideration. The limited relief granted by Parliament is that if such activities are carried out in the course of actual carrying on objects of GPU (general Public Utilities) then the quantum of receipts shall not exceed 20% of the total receipt. In the present case as observed that activities of Renting Hall, Leasing Property, Charging Fees for Certifications, Charging fees for Programs etc. is nothing but activity in the nature of Trade, Commerce, Business or providing services in relation to Trade, Commerce, Business by charging fee, cess. Basic fact in this case is that the quantum of receipt from such activities is more than 20% of the total receipt. For Example, the Leasing Income is Rs.2,23,17,651/- out of total income of Rs.10,60,58,855/- which is 21% of the total receipts. In addition to the leasing income there are other receipts like hall charges, programme fees etc. These receipts are in the nature of trade, business or commerce or providing services in relation to Trade, Commerce, Business for fee. Thus, the receipts from these activities which is in the nature of trade business, or commerce is definitely more than 20% of the total receipts, hence, as per proviso to section 2(15) of the Act, the activities are not for charitable purpose. Assessee is not eligible for exemption u/s 11 - Also observed that the net profit is 28%. The Reserve Surplus is Rs.37,13,44,294/-. This also explains that the assessee s main aim is to earn profit - Appeal of the Revenue is allowed. Customs 2023 (7) TMI 76 Seeking enlargement on regular bail - bailable offence or not - import of gold, the market price of which exceeds Rupees One Crore - offence under section 135 of the Customs Act, 1962 - HELD THAT:- The word 'person' appearing in section 135 of the Act should not be given a narrow interpretation to defeat the legal provision. Thus, if more persons than one act in concert with each other to evade or attempt to evade customs duty, the combined value of the articles can be treated as the value of goods imported by each such person. The collection of such persons will have to be treated as falling within the term 'any person' in section 135 of the Act. The quantity collectively carried by the petitioners can be treated as the quantity carried by each of them individually for ascertaining the value of goods imported. Considering the circumstances of the case, it is held, for the purpose of this bail application, that petitioners were carrying gold individually worth more than Rs. 1.20 Crores, and hence the offence alleged against them is a non-bailable offence. Be that as it may, petitioners were arrested on 18.05.2023, and they have been in custody since then. The interrogation of the petitioners ought to have been completed by now. The second petitioner is a lady and is the mother of four young children. She claims to have been induced by her husband and his cousin to act as a carrier for remuneration. Both parents of those four children are under custody. The youngest of the four children is a four-year-old. Taking into reckoning the aforesaid circumstances and the period of detention already undergone from 18-05-2023, this Court is of the opinion that further detention of the second petitioner is not essential for the purpose of an effective investigation. Therefore the second petitioner is entitled to be released on bail. However, as far as the first petitioner is considered, though the investigation has proceeded significantly, he is stated to be not cooperating. The first petitioner is the person who allegedly induced the second petitioner also to act as a carrier. The first accused is allegedly a cousin of the first petitioner. The first accused is stated to be involved in several smuggling activities. More information is yet to be obtained regarding the antecedents of the first accused. Non-cooperation of the first petitioner is prejudicing the investigation - the first petitioner is not entitled to be released on bail at this juncture. The bail application of the first petitioner is dismissed, and that of the second petitioner is allowed on the conditions imposed - bail application is allowed in part. 2023 (7) TMI 75 Seeking release of goods for re-export - import of Dried Areca Nuts Split and Black Pepper for the purpose of re-export - petitioner contended that the goods are suffering retention and pilferage and which is causing huge losses to the Petitioner if the goods are not immediately released to be re-exported - HELD THAT:- The Respondents cannot detain the goods endlessly and more particularly considering the nature of the goods which are perishable. It is observed that no reply was filed in the midst of dictating this order, Mr. Subir Kumar has removed from his brief, a reply affidavit of Shri. D. S. Garbyal, Commissioner of Customs dated 15th June 2023 and has tendered the same. Such practice of getting the affidavit affirmed and not being placed on record is unknown. This is not fair even to the deponent of the affidavit as although, the reply was affirmed on 15th June 2023, the same was not placed on record, when certainly the deponent i.e. the Commissioner of Customs who affirmed the affidavit on 15th June 2023 was made to believe that the reply is meant to be filed before the Court, and that too in compliance of the order dated 3rd May 2023. Insofar as the goods which are not subject matter of investigation and/or which are otherwise not the subject matter of the Bills of Entry as set out in paragraph 23 of the reply filed on behalf of the Respondents, the same cannot be kept detained. The Respondents need to take an appropriate decision in that regard as expeditiously as possible, intimating the Petitioner either the decision to release the said goods for the purpose of re-export or otherwise as may be permissible in law. Let such decision be taken within a period of three weeks from today, after hearing the petitioner. Petition disposed off. 2023 (7) TMI 74 Continuation of Suspension of Customs Broker Licence - Managing Director of the company (of CB) not given opportunity to submit his explanation - MD was in judicial custody - disregard to the principles of natural justice in terms of Regulation 16 (2) of CBLR, 2018 - HELD THAT:- It is nothing but gross violation of principles of natural justice. It is a settled principle of law that adequate opportunity of being heard i.e., audi alteram partem forms a cornerstone in the doctrine of principles of natural justice. The opportunity must be real, reasonable, and effective and not a mere empty formality as laid down by the Hon ble Supreme Court in MANEKA GANDHI VERSUS UNION OF INDIA [ 1978 (1) TMI 161 - SUPREME COURT] . Limitation of time cannot come in the way of giving a real and reasonable opportunity to the affected party for an effective hearing. This Court is of the view that the writ petition can be entertained despite the availability of alternative remedy the Managing Director of the petitioner company is permitted to submit their written explanation to the notices issued by the 1st respondent within two (2) weeks from the date of receipt of a copy of this order. On receipt of such explanation, the 1st respondent is directed to pass appropriate orders according to law after affording opportunity of personal hearing to the petitioner. Petition is disposed off. 2023 (7) TMI 73 Violation of principles of natural justice - no speaking order has been passed by the assessing authority as stipulated under Section 17(5) of the Customs Act, 1962 - import of mobile phones - payment of 1% countervailing duty (CVD) under serial no. 263A of Notification 12/2012 CE dated 17.03.2012 as amended by Notification 04/2011 CE dated 17.02.2014 - HELD THAT:- Declaration of the nature as sought for by the petitioner is not liable to be granted, as it would tantamount to interference with the process of assessment and hence this prayer is rejected. In light of the admitted delay in giving effect to the order of the first appellate authority, this Court moulds the relief to which the petitioner is entitled, and instead issues mandamus to R2, being the Deputy Commissioner of Customs, Group 5B, Air Cargo Complex, New Custom House, GST Road, Meenambakkam, Chennai, to pass orders in consequence to the order of the first appellate authority. Bearing in mind the elapse of time from 2015 till date, the petitioner is permitted to appear before R2 on Wednesday i.e., 28.06.2023 at 10.30 a.m. for which no notice need to be issued separately by R2. Let the judgment of the Hon'ble Supreme Court in M/S SRF LTD., M/S ITC LTD VERSUS COMMISSIONER OF CUSTOMS, CHENNAI, COMMISSIONER OF CUSTOMS (IMPORT AND GENERAL) , NEW DELHI [ 2015 (4) TMI 561 - SUPREME COURT] be taken note of by the officer. Let orders be passed by R2 within a period of eight weeks from date of personal hearing i.e., on or before 28.08.2023 - Petition disposed off. 2023 (7) TMI 72 Levy of penalty u/s 114(i), 114(iii) and 114AA of the Customs Act, 1962 - not acting judiciously and with diligence - not directly involved in the smuggling of red sanders - failure to monitor the receipts of their export proceeds in accordance with the RBI circular dated 8.11.2013 - HELD THAT:- The authorities below were under an obligation to act judiciously and they are (in particular learned Commissioner) not justified in brushing aside the case laws cited by the appellants in support of their submissions without any discussions by merely terming them as not relevant . It is the first principle that justice need not only be done but must be seen to be done and by his act learned commissioner has not only violated the said basic principle but also the principle of natural justice. Noticing that there is violation of natural justice in the cases, it would not be proper to deal with the matter on merits. Matter remanded back to the learned Commissioner to decide the same afresh after following the principle of natural justice - appeal allowed by way of remand. 2023 (7) TMI 71 Amendment in the shipping bill - failure to make a true and correct declaration while filing the shipping bill - actual exporter - Section 149 of Customs Act, 1962 - HELD THAT:- A perusal of Section 149 of CA, 1962, would make it clear that if the request of amendment is on the basis of the documentary evidence, which was in existence at the time the goods were exported then the amendment can be allowed by the proper officer. So the discretion has been left with the proper officer but the precondition is that it should be on the basis of documentary evidence existing at the time when the goods were exported. In the instant case although the export has been made by the appellant but inadvertently the name of M/s. Dinal Diamonds was mentioned and when the mistake has been realized, the exporter/CHA immediately took step and filed the amendment application alongwith the supporting documentary evidence existing at the of export viz. Export Invoice No. 43/2018-19 dated 24.8.2018 and the Airway Bill dated 24.8.2018 and all these documents contain the name of the appellant only and there is no mention of M/s. Dinal Diamond in those documents. The observation of the learned Commissioner that the appellants are not the actual exporter and hence section 149 ibid has no application is without any basis - the impugned order is set aside and the appeal filed by the appellant is allowed. 2023 (7) TMI 70 Demand of differential duty without challenging the original assessment of the Bills of entry - Undervaluation of goods imported from Bangladesh - Department alleged that the declared MRP of the cement imported by the Appellant was much less as compared to the MRP declared on the cement imported from the same manufacturer through other ports - HELD THAT:- It is observed that different lots of the impugned goods were imported by different importers through different land ports though the goods were manufactured by the same manufacturer in Bangladesh. The Appellant stated that the MRP printed on the goods imported through other ports can be different as the Place of importation itself was different and hence difference in MRP is quite natural - it is observed that MRP on the same item is decided in consideration of a number of factors besides landing cost and duty element. In the instant case the goods were imported through different ports. That itself is a valid reason for the difference in price. There is no evidence to suggest that the goods so imported through different ports under different MRP were being sold at same price. Hence, the price difference cannot be attributed to suppression of the value by the Appellant. Accordingly, the demand is not sustainable. The self-assessment of the Bills of Entry by the importer was not challenged by the department. The Hon ble Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] has held that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act. The ratio of the above said decision is squarely applicable in this case - the impugned order passed demanding differential duty without challenging the original assessment of the Bills of entry is not sustainable. Hence, the demand is not sustainable on this count also. Appeal allowed. 2023 (7) TMI 69 Classification of imported goods - Mosquito killer racket - prohibited goods as per DGFT Notification No.02/2015-20 dated 26.04.2021 or not - to be under CTH 85167920 (Electrical or electronics devices for repelling insects) or under CTH 85169000 (Parts)? - HELD THAT:- In the case cited by the appellant M/S. NAKSHATRA IMPEX, M/S. NAVYA ENTERPRISE AND M/S. BALAJI IMPEX VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA [ 2023 (2) TMI 491 - CESTAT KOLKATA] , it is recorded by this Tribunal that the goods were ordered for shipment on 09.04.2021 and the goods was shipped on 26.04.2021 and on the said date, the DGFT prohibited for import of the impugned goods. In that circumstances, this Tribunal held that as the goods were already shipped on 26.04.2021. Therefore, this Tribunal held that the restrict made by the DGFT Notification No.02/2015-20 dated 26.04.2021 was not applicable to the facts and circumstances in the said case. In the case in hand, the import itself has taken place on 09.04.2022, which is much after DGFT Notification No.02/2015-20 dated 26.04.2021. Therefore, the reliance made by the appellant on the decision in the case of M/s Nakshatra Impex is not applicable in the facts and circumstances of this case. There are no merit in the impugned appeal - appeal dismissed. 2023 (7) TMI 68 Levy of Customs Duty on Custodian - levy of penalty u/s 117 of CA - no Bill of entry was filed by any person and thus there was no declared value of the goods - vague information received by the Customs department through the Consulate General of India in Hong Kong - HELD THAT:- In absence of any inspection at any stage either at the country of loading or load port, nor by the Indian customs after arrival of the said container in India, till the date of joint inspection/ survey on 03.04.2013, when the said container was found empty while lying in the premises of the appellant custodian. There is total darkness, as to what exactly the said container was stuffed with. The demand of duty is wholly based on assumption and presumptions of the goods said to be in the said container. However, it is found that under the Customs Act r/w the HCCAR2009, the appellant was obligated to keep the container in safe custody and to offer the container in sealed condition for inspection etc., which they have failed. It is found that there is contributory negligence on the part of the customs department also, as they have failed to take timely action for disposal of the goods in spite of receiving intimation of the appellant as early as on 03.11.2010 - the demand of duty is set aside penalty is reduced to Rs. 50,000/-. Appeal allowed in part. 2023 (7) TMI 67 Revocation of Customs Brokers License - forfeiture of security deposit - levy of penalty - appellant submitted that the Commissioner while passing the order went beyond the inquiry report inasmuch as the charges in the inquiry report were that the appellant had not tried to tally/match the address given on IEC and GSTIN and that the appellant had not conducted verification of the place of business of the principal exporter - HELD THAT:- The inquiry officer had submitted the report dated 20.05.2022 and the appellant was required to file a reply to this inquiry report. The inquiry report mentions that the appellant had not made an attempt to match the addresses given on IEC and GSTIN and in fact IEC of the exporter had a different address then the one mentioned in the show cause notice or GSTIN - The Commissioner should have, therefore, confined himself to these two issues in the impugned order, but it transpires that there is no discussion on these issues and the impugned order has been passed by the Commissioner on an entirely different ground namely, that the appellant had furnished only one document as against the requirement of two documents in terms of Regulation 10(n) of 2018 Regulations and the Circular dated 08.04.2010. The order passed by the Commissioner, therefore, can be set aside on this ground alone. A bare perusal of Regulation 10(n) would show that the Customs Broker is not required to physically verify the place of business of the exporter and this is what was also held by the Tribunal in COMMISSIONER OF CUSTOMS, NEW DELHI (AIRPORT AND GENERAL) COMMISSIONERATE VERSUS M/S CRM LOGISTICS PRIVATE LIMITED (VICE-VERSA) [ 2021 (12) TMI 253 - CESTAT NEW DELHI] . The Division Bench examined the responsibility of a Customs Broker under Regulation 10(n) of the 2018 Regulations and in this context held that it is not the responsibility of a Customs Broker to physically go to the premises of each of the exporters to find out whether they are functioning at the premises and Customs Broker has to rely upon the documents that have been issued by the Government. Thus, even the two reasons assigned in the inquiry report could not have been made the basis for revoking the Customs Broker License of the appellant in terms of Regulation 10(n) of the 2018 Regulations. It is, therefore, not possible to sustain the order passed by the Commissioner - Appeal allowed. Insolvency & Bankruptcy 2023 (7) TMI 66 Initiation of CIRP - NCLT admitted the application - 1st Respondent / Bank, has made substantial recoveries, during the pendency of Legal Proceedings - Dues or Outstandings, payable by the Corporate Debtor, to the 1st Respondent / Bank / Financial Creditor or not. The stand of the 2nd Respondent / Corporate Debtor, before the Adjudicating Authority / Tribunal was that there were no Dues, payable by the Corporate Debtor to the Financial Creditor, for that the 2nd Respondent / Corporate, had repaid the Amounts, in excess of the Principal Amount borrowed, it is the Financial Creditor has to Repay, such overpaid monies to the Corporate Debtor. HELD THAT:- This Tribunal, pertinently points out that in a Proceeding (Filed under Section 7 of the I B Code, 2016, by a Petitioner / Financial Creditor), an Adjudicating Authority/ Tribunal, is not concerned with the Dispute/ Controversy, between the Respondent / Corporate Debtor and the Petitioner / Financial Creditor, as regards the quantum. Ofcourse, when a Claim is made, it is for the Resolution Professional, to quantify the Claim Sum, to be paid. An Adjudicating Authority / Tribunal, under I B Code, 2016, is necessarily to ascertain as to whether, there is any Default, and whether the Liability of the Respondent / Corporate Debtor, is more than the Limit, prescribed under the Section 4 of the Code - Although, the Debt, is Disputed, if the said Sum, is more than the Amount, specified under Section 4 of the I B Code, 2016, an Adjudicating Authority / Tribunal, has to admit the Section 7 Application of the I B Code, 2016, and the said Application, cannot be rejected, merely on technical grounds. No wonder, an Adjudicating Authority/ Tribunal, is to exercise its Judicial Discretion, in dealing with an Application (Filed under I B Code, 2016), in accordance with Law, and based on facts, evidence and circumstances of the given case. In the case on hand, before this Tribunal, although, on the side of the Appellant, a reference is made to the Order in M/S. INMA INTERNATIONAL LTD., G. RATHINAVELU, G. SUNDARAVADIVELU VERSUS INDIAN OVERSEAS BANK [ 2019 (12) TMI 1649 - MADRAS HIGH COURT] , whereby and whereunder, an Order of Ad-interim Injunction, as prayed for, till 21.01.2020, was granted, and it was made clear that till the Disposal of the Writ Petition, the Writ Petitioners, shall not create any Third Party Rights, in respect of the Properties, in question, this Tribunal, is of the earnest opinion that there was no embargo upon the Adjudicating Authority / Tribunal, in not Proceeding with the IBA/49/2019 (Filed by the 1st Respondent / Bank / Financial Creditor). The prime fact to be taken note of in repelling the plea of the Appellant that the Liability, has not crystallised in a definite manner is that a Final Order, came to be passed by the Debt Recovery Appellate Tribunal, as per Section 19 (20) r/w. Section 22 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993. It cannot be gainsaid that the Order of a Court / Tribunal, determining the Default, is a cementing platform, evidencing Financial Debt, as opined by this Tribunal. Considering the fact that the Due of the 2nd Respondent / Corporate Debtor, is more than the Threshold Limit of Rs.1 Lakh, under Section 4 of the I B Code, 2016, and the same is to be paid, both in Law and in Fact, this Tribunal without any haziness, comes to a cocksure conclusion that the aspect of Debt and Default, committed by the 2nd Respondent / Corporate Debtor, is proved to its subjective satisfaction. Therefore, the 1st Respondent / Bank / Petitioner, has rightly initiated the Corporate Insolvency Resolution Process, before the Adjudicating Authority / Tribunal (under Section 7 of the I B Code, 2016), and the same was rightly admitted, by the Adjudicating Authority (National Company Law Tribunal, Special Bench II, Chennai), exercising its Judicial Discretion, based on the attendant facts and circumstances of the case, which is free from any legal infirmities. Appeal dismissed. PMLA 2023 (7) TMI 36 Seeking grant of bail - Money Laundering - creation of fake Fixed Deposit receipts, which were created on the basis of the original FD receipts - tampering the evidence - HELD THAT:- About non-compliance of 41(A) notice, as per submission of the respondent, statement recorded under Section 50(a) under Act, Judicial Statement, need not be issued 41(A) notice - on perusal of the materials relied on by the respondent / Police, prima facie established that he was actually involved in the process connected with the crime, and he not only created fake FD receipts, but also intentionally assisted A1 and other accused persons to open the fake Current Account by preparing fake documents,forging the specimen signatures of the officials and Rubber Stamp of Port Trust and Port of Chennai's logo and also possession and enjoyment of the proceeds of the Crime by concealing its original documents and transferring the amounts to other accounts projecting and claiming the same as untainted. Furthermore, as per the submission made by the learned Special Public Prosecutor, petitioner had not disclosed the two facts pertaining to the end-use of mis-appropriated amount, which is the proceeds of the crime, and as of now Rs.7 crores were recovered and nearly about Rs.35 crores is yet to be recovered by the investigating agency and crores of rupees of Port trust which is a public money, were mis-appropriated by the petitioner /A22 along with other accused persons. Therefore, the authority relied on by the petitioner's counsel to show that the role of the petitioner is restricted only in respect of creation of the alleged fabricated fake FD receipts, as such is unsustainable one. Considering antecedence of the petitioner that he had already involved in Bank fraud case during the year 2009 in FIR.No.RC.14/E/2009- CBI-EOW/Chennai dated 04.09.2009, which was registered by the CBI, EOW, Chennai. In that case, Rs.25 Crores belonging to M/s.Northern Coal fields Limited (M/s.NCL), were fraudulently transfered by one Krishnan Rao to the Current Account No.3014563150 of his Company and subsequently, they transfered the amounts to several Accounts. In that case, the petitioner also opened an Account in ICICI Bank, for nearly about Rs.2 crores, which were credited to his Account, and subsequently, the amount were withdrawn. Thus, petitioner has not complied with the second conditions to avail the benefit of bail i.e. he was already charged for the offences of like nature. The Special Public Prosecutor said that, in the instant case, the proceedings of the Directorate of Enforcement had clearly reflected that the respondent / Police have collected sufficient materials against the petitioner to proceed under Section 3 of the Prevention of Money laundering Act. Statement recorded by Assistant Director under Section 50 PMLA for this petitioner also enclosed in counter statement by the respondent. The active participation on the part of this accused also primafacie reveals that he, knowing well the purpose of creation of the fake documents he has involved in the present offence, as stated by the learned Special Public Prosecutor. The petitioner/A22 is one of the main person and he played active role with the prime accused person, so the authorities relied on Hon'ble Division Bench of this Court, N. RAVEENDRANATHA REDDY VERSUS THE DEPUTY DIRECTOR, DIRECTORATE OF ENFORCEMENT, GOVERNMENT OF INDIA [ 2022 (3) TMI 196 - MADRAS HIGH COURT ] by the petitioner, is not applicable to the facts of the present case. Considering the antecedence of the petitioner / A22 as well as huge amount of public exchequer is involved, this Court is not inclined to grant bail to the petitioner at this stage, that too when further investigation is yet to be done by the respondent / Police. Furthermore on considering the nature of the offences committed by the petitioner and also the previous antecedents, possibility of indulge in similar offence, and that there is a possibility of tampering with witnesses and hampering the evidence and investigation, and as there is no change of circumstances, this Court is not inclined to grant bail to the petitioner. This Criminal Original Petition is dismissed. Service Tax 2023 (7) TMI 65 Waiver of penalty u/s 76, 77 and 78 of the Finance Act, 1994 - demand of service tax on prepayment charges upheld - Banking and other financial services - HELD THAT:- Reliance placed in an order passed by the CESTAT in the case of M/S SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA VERSUS CST AHMEDABAD [ 2014 (12) TMI 668 - CESTAT AHMEDABAD ] , whereby the issue in regard to whether foreclosure charges collected by the Banks and Non-banking Financial Companies on premature termination of loans attract a levy of Service Tax under the heading Banking and other financial services as defined under Section 65(12) of the Finance Act 1994, came to be referred to the Larger Bench of the Tribunal. There were two decisions which were in favour of the assessees, firstly, in the case of M/S SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA VERSUS CCE, CHANDIGARH [ 2011 (1) TMI 495 - CESTAT, NEW DELHI ] also subsequently the decision in M/S. MAGMA FINCORP LTD. VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA AND VICE-VERSA [ 2016 (4) TMI 21 - CESTAT KOLKATA ]. On the backdrop of conflicting views, the Larger Bench of the Tribunal adjudicated such issue in the case of Commissioner of COMMISSIONER OF SERVICE TAX, CHENNAI VERSUS M/S REPCO HOME FINANCE LTD. [ 2020 (7) TMI 472 - CESTAT CHENNAI ] whereby it was held that the view taken by the Tribunal in the case of M/S HOUSING DEVELOPMENT CORPORATION LTD (HUDCO) VERSUS CST, AHMEDABAD [ 2011 (11) TMI 95 - CESTAT, AHMEDABAD ] was not the correct view. It was held that service tax cannot be levied on the foreclosure charges levied by the banks and nonbanking financial companies on premature termination of loans under Banking and Other Financial Services as defined under Section 65(12) of the Finance Act and accordingly answered the question in favour of the assessees. Having considered the decision of the Larger Bench and the questions which otherwise would have fell for consideration in relation to both what has been held in the impugned order in favour of the revenue and against the assessee, and also in regard to the orders on penalty, on which the revenue is aggrieved, in our opinion, it is appropriate that these appeals are remanded to the Tribunal by setting aside the impugned orders subject matters of these appeals, with a direction that the Tribunal on remand reconsiders the issue in the light of the decision of the Larger Bench in the case of Repco Home Finance Limited. Appeal disposed off. 2023 (7) TMI 64 Classification of services - providing construction services in respect of commercial or industrial buildings and civil structures - classifiable under Erection, Commissioning or Installation Service or Commercial or Industrial Construction Service (CICS)? - Extended period of limitation - scope of SCN - HELD THAT:- The activity of appellant is of pre-casting a concrete structure or the steel body of a specific shape to be fixed underground either by pre-casting it on the ground level and then inserting it under the ground or by constructing the pillar under the ground itself by a special technique. Thus, the activity of the appellant is dominantly in relation of a building or a civil structure meant for construction of a new building/civil structure. We are therefore of the opinion that this activity cannot be called as the activity of Erection, Commissioning or Installation Services which is about installation of several things as mentioned in the definition in clause (a) to clause (f) of section 65 (39a) of Finance Act in an already constructed building or civil structure - the activity /service provided by the appellant is precisely a service of providing commercial or industrial construction/construction services as has been held by Commissioner (Appeals) in the order under challenge. Scope of SCN - HELD THAT:- In the present case, the appellant was acting as a sub-contractor/a job worker. The question of him being the owner of the goods used in pile formation works does not at all arise. The main contractor / service recipient himself was the owner of the goods. Commissioner (Appeals) has failed to appreciate the basic mandate of the definition of works contract service. Hence the services have wrongly been classified as works contract services. Commissioner (Appeals) has otherwise nowhere denied that the structure constructed by the appellant is in relation to the construction of bridges etc. which is different from structure mentioned in the definition of ECIS - the Commissioner (Appeals) has committed an error while classifying the service under work contract service. While doing so he has gone beyond the scope of Show Cause Notice. It is clear that services provided by the appellant are purely the services of CICS as defined under section 65 (25b) of the Act and when such service is provided with respect to road, bridges, tunnels etc. these are exempted from the tax liability. Hence no question arises for any service tax liability even on the main contractor - The main contractor has been awarded the contract of constructing Roads, Pillars, Bridges etc. and appellant as sub-contractor is constructing support to said construction. Time Limitation - HELD THAT:- The activity falls under construction services, and it is held that there is neither any misrepresentation nor any suppression of fact on part of the appellant. The extended period has wrongly been invoked while issuing the impugned Show Cause Notice. For the same reason, there appears no circumstance for the imposition of penalty. Resultantly the entire demand otherwise gets barred by time. The order of Commissioner (Appeals) while remitting back the matter to the Original Adjudicating Authority after classifying the impugned activity as works contract service is beyond to what was proposed in the Show Cause Notice, is not sustainable - Appeal allowed. 2023 (7) TMI 63 Short payment of Service Tax - Rent a Cab Scheme - Security Agency Service - adjustment of excess amount paid by the appellant should be allowed to be adjusted in the subsequent returns - Interest - penalty - HELD THAT:- The Ld.Commissioner(Appeals) though accepted the excess payment made by the appellant, but denied adjustment for not following the procedure by intimating jurisdictional Superintendent within a period of 15 days. It has been time and again held by the Tribunal and the superior Courts that substantial benefit should not be denied to the assessee on account of procedural lapses. Accordingly, adjustment of excess amount paid by the appellant should be allowed to be adjusted in the subsequent returns. The question of charging interest on this account and imposition of penalty is not tenable and the same is set aside. It has also been established time and again that one to one co-relation is not required and any amount paid in excess is eligible to be adjusted against the demand of the subsequent period. Further, as regards penalty imposed under section 78 of the Finance Act, 1994 - the Adjudicating authority has categorically recorded that the details were obtained from the ST-3 Returns and the financial accounts of the appellants. If the appellant had recorded the amount in their books of account and filed returns indicating therein it cannot be said that the provisions of section 78 of the Finance Act, 1994 would be applicable inasmuch as there is no intention to evade Service Tax liability - the provisions of Section 78 do not get attracted in the case in hand. Accordingly, by invoking the provisions of Section 80 of the Finance Act, 1994, the penalty imposed by the Adjudicating authority under Section 78 of the Finance Act, 1994 is set aside. Appeal allowed. 2023 (7) TMI 62 Export of service in terms of Rule 6A of the Service Tax Rules, 1994 - service rendered in the US was rendered by the appellant or by their overseas branch or not - demand at 6% of the value of alleged exempt services without giving an option as provided under Rule 6(3)(ii) of CENVAT Credit Rules, 2004 - unit has been audited in the past and no discrepancy noticed - extended period of limitation - HELD THAT:- It is seen from the Income Tax returns in Form 3CEB for the Financial Year 2012 13, that Cognizant Technology Solutions India Private Limited US branch is carrying out on-site development of software related services . At para 13 of the return particulars in respect of providing of services is reported. The appellant has responded with a Yes to having entered into international transactions in respect of services. The dispute is about the amounts received from the branch shown under the On-site development of software related services in the books of account of CTS. It is found that this issue stated in the findings of the impugned order is a secondary one. The main issue before the lower authority stems from whether the service rendered in the USA as seen in the Income Tax Return was rendered by the appellant to its overseas branch as alleged in the SCN. It has been satisfactorily demonstrated by the appellant that it was CTS USA who has rendered service to their associated enterprise in USA and received the payment for it in USA for the amount declared in the Income Tax Form 3CEB. There is no allegation in the Show Cause Notice that CTS USA was only a front company for services rendered by CTS India in the USA. This being so no taxable service has been rendered by CTS India in USA with respect to the impugned figures disclosed in their Income Tax Form 3CEB for the Financial Year 2012 13 and 2013 14. This entry was the trigger for the allegations in the show cause notice that culminated in the impugned order. Once no service was rendered by the appellant in USA, which is exigible to tax under the Finance Act 1994, all charges under the said Act against the appellant must fail. The judgment of the Hon ble High Court in LINDE ENGINEERING INDIA PVT. LTD. VERSUS UNION OF INDIA [ 2020 (8) TMI 181 - GUJARAT HIGH COURT] pertains to a case where Linde India was providing service to its parent company Linde Germany. The facts in this case show that CTS USA and not CTS India which was supplying services and that too to a foreign customer and hence the facts are distinguished and do not support Revenue s stand. Since the matter is decided in favor of the appellant on merits, the judgments cited by them are not discussed. The main charge against the appellant fails on merits. This being so, the other issues relating to CENVAT credit and the extended time limit also do not survive - Appeal allowed. 2023 (7) TMI 61 Demand of Service Tax and imposition of penalties - eligibility for availing the benefit of Notification No. 1/2006-ST dated 01.03.2006 and Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 - invocation of extended period of limitation - HELD THAT:- The appellant has executed construction works as a contractor/sub-contractor during the impugned period of the notices and consideration received for their services was accounted as contract receipts in their financial statements. In many contracts executed, as investigation has revealed, materials like cement, steel, etc., were supplied by the customers of the appellant. On the scrutiny of the Show Cause Notices and the Order-in-Original and related appeal papers indicate that the contracts entered into are contracts simpliciter - the contractors/sub-contractors are liable for payment of Service Tax as held in the case of SEW CONSTRUCTION LTD. VERSUS COMMISSIONER OF C. EX., RAIPUR [ 2010 (11) TMI 469 - CESTAT, NEW DELHI ], wherein in the CESTAT, Delhi Bench has held that there is no immunity to the sub-contractors from levy of Service Tax when taxable services are provided by them. The benefit of Notification No. 1/2006-ST dated 01.03.2006 and Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 was not extended in computation of Service Tax payable apparently as the appellant has not included the value of the materials supplied by its customers to arrive at the gross value of the services rendered. One of the important conditions that has to be satisfied to be eligible for the abatement of the above Notification and the benefit of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 is that the gross value of the services provided shall include the value of goods and materials supplied or provided or used for providing taxable service by the service provider - To be eligible for abatement under Notification No. 1/2006-ST dated 01.03.2006, it is essential that the value of free supply materials by the developer/main contractor, have to be included to arrive at the gross value of services or else computation of tax on contract receipts is as per the law, since the conditions of Notification and Rules are not fulfilled. Extended period of limitation - HELD THAT:- The impugned period in the first Show Cause Notice is from March 2006 to September 2010. The appellant has not filed ST-3 returns for this taxable services rendered from March 2006 to March 2010. It was noticed that the appellant has paid Service Tax of Rs.55,41,139/- for the period from 2006 to 2007 which was prior to initiating investigation. It is evident that Service Tax liability was not worked out or paid in many commercial projects and in all their residential projects justifing invoking extended period. The provisions of proviso to Section 73 (1) of Finance Act, 1994 are pari pasu and pari materia to the provisions of proviso to Section 11A of the Central Excise Act, 1994. The intention to evade payment of tax is clearly manifest and articulated by the non-disclosure of the details of the provision of services and receipt of consideration. Non-filing of ST-3 returns for such a long period i.e, from March 2006 to March 2010 will make the intent to evade tax obvious. So invocation of extended period is justified, consequently, the imposition of penalty are also required to be upheld. Appeal dismissed. 2023 (7) TMI 60 Liability of Service Tax - liability of Appellant as a sub-contractor when main contractor M/s Reliance Group Security Services Pvt. Ltd., Jamnagar has paid the Service tax - period April 2002 to December 2003 - time limitation - HELD THAT:- C.B.E.C. had clarified that if the main contractor discharges the ServiceTax liability, the sub-contractor need not to pay Service Tax on the same activity and only in August, 2007 the Board issued a clarification in the matter vide Circular No. 96/7/2007-S.T., dated 23-8-2007 wherein it was clarified that the services rendered by the sub-contractors are in the nature of input service and, therefore, Service Tax is leviable on any taxable service provided, whether or not the services are provided by a person in his capacity as a sub-contractor and whether or not such services are used as input service. In the present case, the period involved is 2002-2003 i.e prior to the issue of the circular. In number of decisions in the case of URVI CONSTRUCTION VERSUS COMMISSIONER OF SERVICE TAX, AHMEDABAD [ 2009 (10) TMI 97 - CESTAT, AHMEDABAD] , FOTO FLASH VERSUS COMMISSIONER OF SERVICE TAX [ 2007 (10) TMI 133 - CESTAT, BANGALORE] and SYNERGY AUDIO VISUAL WORKSHOP P. LTD. VERSUS COMMR. OF ST, BANGALORE [ 2008 (1) TMI 188 - CESTAT BANGALORE] it has been held that once the main contractor has discharged the Service Tax liability on a value which includes service provided by the sub-contractor, then the demand for ServiceTax on sub-contractor is not sustainable in law. As per the clarification in the Board s Circular dated 23-8-2007 as well as dated 7-10-1998, if the principal had not paid the Service Tax then the same can be charged. If the Service Tax has already been paid by the principal, then the same cannot be demanded again - on this particular issue once again the matter needs to be remanded to Adjudicating Authority for verification of payment particular of Principal i.e M/s Reliance Group Security Services Pvt. Ltd. In the present matter the facts on records is that on 11.07.2006 statement of Shri Kaustabh Bosh, representative of M/s Reliance Group Security Services Pvt. Ltd. was recorded by Service tax department, Jamnagar, wherein he stated that they have paid Service tax of Rs. 51,41,907/- with respect to services rendered by Appellant. Appeal allowed by way of remand. 2023 (7) TMI 59 Levy of Service Tax - service tax liability as a receiver of service, since the service provider Newsco had an office in Mumbai - suppression of facts or not - extended period of limitation - levy of penalty u/s 77 and 78 of the Finance Act 1994 - HELD THAT:- The entire issue of service provided by Newsco to the Appellant was within the knowledge of the department. The Appellant was in correspondence with the department and informed the department about the payment of service tax by them vide letter dated 11.12.2009. Thus, it is found that there was no suppression involved in this case. Since the entire service tax along with interest was paid, there was no need to issue the Notice as provided in Section 73(3) of the Finance Act. Thus, the Notice issued by invoking extended period is bad in law and it cannot be sustained. The adjudicating authority went ahead and adjudicated the Notice and imposed penalties under section 77 and 78 of the Finance Act 1994. As there was no suppression involved and there was no intention to evade payment of service tax, penalty under Section 78 of the Finance Act, 1994, not imposable in this case. As there was no violation of provisions of Section 77, no penalty imposable under this section. In the case of ORISSA BRIDGE CONSTRUCTION CORPN. LTD. VERSUS CCE., BHUBANESWAR [ 2008 (8) TMI 585 - SUPREME COURT] , it has been held that Agree with the finding recorded by the Tribunal that the activities carried out by the appellant amount to manufacture of the goods. There was no suppression involved in this case. Accordingly the penalties imposed on the Appellant under Sections 77 and 78 of the Finance, 1994 set aside - appeal allowed. 2023 (7) TMI 58 Levy of Service Tax - Work Contract Service - contracts executed involving both supply of goods and services - period 01.04.2005 to 31.03.2007 - HELD THAT:- The Appellant has executed the construction work of (i) Garment Park for West Bengal Industrial Development Corporation Ltd, (ii) Malda Food Park for West Bengal Processing and Horticulture Development Corporation and (iii) Ash Handling System for DC Industrial Plant Services Ltd., during the period 01.04.2005 to 31.03.2007. It is observed that Work Contract Service was liable to service tax only w.e.f. 01.06.2007. Prior to this date no service tax was liable to be paid on Work Contract service - the issue has already settled by the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] - In this judgment, the Hon ble Supreme Court has categorically held that Work Contract Services involving both supply of goods and service , were liable to service tax only w.e.f.01.06.2007. Prior to 01.06.2207, such services cannot be charged to service tax under any other category of taxable service, namely Commercial or Industrial Construction Service. As the demand involved in the impugned order pertains to the period prior to 01.07.2016, the demand of service tax confirmed under the category of Commercial and Industrial Construction Service is not sustainable - demand set aside. Appeal allowed. 2023 (7) TMI 57 Classification of services - convention service or not - service to various firms/companies engaged in the manufacturing activities or providing services on payment of duty/taxes - period 18.04.2006 to 15.05.2008 - HELD THAT:- On examination of definition and scope of convention and convention service provided in the Finance Act, 1994, it is clear that the convention service is taxable only when it is provided to some person in relation to holding of a convention - Wherein in the present case, it is found that the appellant do not provide any service to any person in relation to the holding of a convention. Further the scope of convention service has been clarified by CBEC vide letter F.No.B.11/1/2001-TRU dated 09.07.2001 Government of India, Ministry of Finance, Department of Revenue. The issue has further been clarified vide CBEC Circular No. 51/13/2002 dated 07.01.2003. During the relevant period, the appellant cannot be termed to be a commercial concern so as to make them liable to pay service tax for providing a necessary infrastructure for conduct of the conventions. By no stretch of imagination, the appellant can be termed as a commercial concern as they are a body of the industry formed as a trust to protect the interest of industry. Therefore, notwithstanding the fact that they are collecting certain sums for providing the infrastructure for holding conventions, they cannot be termed as a commercial concern to be liable to pay service tax for this activity - Once the convention is open to general public, then it is not a convention within the meaning of Convention under service tax law and consequently no demand of service tax can be raised on convention service. Levy of Service Tax - convention service - annual general meeting - HELD THAT:- This demand is not sustainable as the annual general meeting is organized for the members themselves as it is a members organization and the members meet in annual general meeting to discuss various issues relating to the organization and accounts etc. However, this meeting is not open to general public. This activity is squarely covered by the principle of mutuality as approved by the Hon ble Apex Court in the case of STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT ]. Demand of service tax - differential amount under convention service - HELD THAT:- This demand is also not sustainable as the figures in the balance sheet reflects the income and expenditure of the organization and has nothing to do with the liability or payment of service tax. Service tax is paid on specific heading, based on invoices and not on the gross amount. The demand of department is solely based on the gross figures available without any supporting evidence and hence is vague and liable to be dropped. Demand of service tax - reimbursement of electricity consumption related to business exhibition service - HELD THAT:- The appellant provides business exhibition service and admittedly appropriate amount of service tax is paid on that activity. The appellant also charges reimbursement of electricity charges from the exhibitor which is sought to be taxed by the department. In this regard, it is to be noted that the demand of service tax on reimbursement of expenses has been held ultra virus by the Hon ble High Court of Delhi in the case of INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT ] - the demand of service tax on reimbursement of electricity charges are set-aside as there is no nexus between electricity reimbursement and service provided. Levy of service tax - Modular Employment Scheme - Business Auxiliary Service - period 2009-10 2010-2011 - HELD THAT:- The modular employment scheme is a vocational training programme, administered by Ministry of Labour, Government of India. The appellant is approved assessing body of the programme and as per the mandate of the Government, the appellant examine and assess the students enrolled in the scheme - It is observed that the activity is integral part of vocational training and vocational training activity is outside the ambit of service tax. The assessing activity done by the appellant is part of the vocational training activity exempted vide Notification No. 24/2004-ST dated 10.09.2004 and later exempted from service tax vide Notification No. 23/2010-ST dated 29.04.2010 - the show cause notices in this regard clearly failed to provide under which category service tax is demanded on receipt under Modular Employment Scheme. In the absence of any specific category, the demand of service tax is vague and liable to be dropped. Extended period of Limitation - HELD THAT:- In the present case, the appellant-assessee has acted on bonafide belief that they are not liable to pay service tax and the department was aware of the working of the assessee and the appellant-assessee has been paying service tax wherever they are liable to pay. Further, the entire demand has been raised on the basis of figures declared by the appellant in invoices, balance sheet duly audited and submitted to various authorities and therefore in such situation extended period of limitation is not invokable - extended period of limitation has been invoked without any justified reason because the allegation made in the show cause notice does not specifically mentions as to what fact the assessee was to inform, which was suppressed - the substantial demand of service tax is barred by limitation. Levy of Penalty - HELD THAT:- Once it is held that the service tax itself is not leviable, the question of imposing penalty does not arise. The impugned order is not sustainable in law and is liable to be set-aside - Appeal allowed. 2023 (7) TMI 56 Levy of service tax - work contract Services to the State Government, local authority or governmental authority and also to private parties by way of construction of road, bridge, tunnel, ponds or irrigation work, Repairs and Maintenance of civil structure etc. - eligibility for exemption by Service Tax Notification No. 25/2012-ST vide Sr. Nos. 12(d),12(e), 12A(a), 13(a)and 29(h) - Extended period of limitation - HELD THAT:- It is settled by now that without conducting any independent inquiry or investigation, the demand of Service Tax can not be sustained only on the basis of 26AS data provided by the Income Tax authorities to the Central Excise Officers at Bhavnagar. Service Tax demand cannot be raised on the basis of assessment by the Income Tax Authorities. There is no dispute on the fact that Show Cause Notice for demand of the Service Tax is solely on Data/TDS/26AS of Appellant in Income Tax Returns for the FY 2015-16 to 2016-17, which are shared by Income Tax authorities. Declarations under Income Tax Act are Annual Consolidated Tax Statements. Income Tax and Service Tax are two different separate and independent special Central Acts and their provisions are operating in two different and independent fields. By relying only on 26AS data of Income Tax, demand of Service Tax cannot be made. The Tribunal in case of COMMISSIONER OF C. EX., JAIPUR-I VERSUS TAHAL CONSULTING ENGINEERS LTD. [ 2017 (1) TMI 657 - CESTAT NEW DELHI] has held that demand of Services Tax on the basis of TDS /26AS statements/3CD Statements are not sustainable. The demand of Services Tax on the basis of shared data of TDS/26AS/3CD statements are not sustainable. It is noted that it is settled that Service Tax demand cannot be raised only on the basis of any such assessment made by the Income Tax Authorities. Information or data or documents relied upon loses its evidentiary value in absence of any independent inquiry which was mandatorily required to have been conducted by concerned officers of Central Excise department at Bhavnagar, before issuance of the Show Cause Notice dated 19-04-2021 - the data provided by Income Tax authorities simply show the details of Income received from sale of services and Service Tax paid thereon. However, in Income Tax Returns, no further details of exemptions availed on services requires to be declared, hence, there may be mis-matched in data of Income tax vis- -vis Service Tax Returns filed, depending facts of cases. In present case, department has failed to do so. Section 65B(44) has provided definition of Service , but, various services were also placed in Negative list u/s 66D, not attracting Service Tax and there weremany Services which were allowed Exemptions from Service Tax under Notification No. 25/2012-ST and many such other Notifications issued. Hence, it is impermissible under law to issue any baseless SCN on assumption or presumptions and later on, SCN can be improvised by O-I-O in adjudication - It was necessary for Department to specify activity and nature of service that was to be taxed under specific clause of services or declared services described in the Finance Act 1994. The case laws cited by the appellant hold that Revenue cannot argue a case which was not made out in SCN and adjudicating authority cannot travel beyond the SCN, as the law settled by plethora of decisions by Tribunals, and higher forums. The decisions relied upon by Appellant support this view. Settled law is that the exemption should be interpreted strictly, but, when eligibility criteria of availing exemption is proved, liberal interpretation should be adopted to allow substantive benefit of an exemption for the assessee for whom exemption is intended to be allowed. Eligibility criteria in this case is providing services to Government Authorities in public work on Roads, Bridges etc, which is not denied in this O-I-O. Appellant has given detailed clarification and documents for services and submitted that they are eligible for exemption by clause No. 12(d), 12(e), 12A(a), 13(a) and 29(h) of Notification No. 25/2012-ST which allows the exemption in services provided to the Government, a local authority or a governmental authority. O-I-O has erred in confirming Service Tax demand on the sale transactions for FY 2015-16 with M/s kunal Enterprise for sale of Black Trap and with M/s Vijay Construction for sale of Asphalt . Extended period of limitation - HELD THAT:- Department was fully aware of the facts that Appellant had paid Service Tax and filed ST-3 Returns for FY 2015-16 to 2016-17 intimating their claim of Exemption of Notification No. 25/2012-ST, department should have objected on availment of exemption within normal time limit, if revenue had any doubts on the availment of exemption. This being a case of interpretation of provisions, charge of suppression of facts, willful misstatement, fraud, etc., cannot be leveled, for initiation of SCN beyond the normal time limitation. It is settled law that there must be deliberate attempt by the Appellant to suppress the facts from Department with an intention to evade payment of Service Tax, which is not existing in this case - the entire demand for FY 2015-16 to 2016-17 raised by the SCN dated 19-04-2021confirmed by impugned O-I-O against Appellant deserves to be set aside on this ground of limitation. When demand of Service Tax is not sustained on merits as well as on time limitation in the facts of this case and when we have examined case from all possible angles, it is not necassry to go into details of other points raised against Order-in-Original by Appellant like computing Cum-Tax-Value for Service Tax demand, though such points may have substantial force in favour of Appellant. The demand of the Service Tax confirmed by the adjudicating authority as well as imposition of interest and penalties also deserve to be set aside - appeal allowed. 2023 (7) TMI 55 Levy of service tax - Construction of Residential Complex Service - service provided to Surat Municipal Corporation under the Jawaharlal Nehru National Urban Renewal Mission - HELD THAT:- In the present case the appellant have provided the services of Construction of residential complex to the Municipal Corporation of Surat under Jawaharlal Nehru National Urban Renewal Mission which is not liable to service tax as decided in NATVAR CONSTRUCTION CO VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT [ 2023 (4) TMI 438 - CESTAT AHMEDABAD] where it was held that in respect of construction service provided to the service recipient M/s. GSPHCL and Surat Municipal Corporation under Jawaharlal Nehru National Urban Renewal Mission are non-taxable. The above judgment of this Tribunal has considered various judgment and categorically found that the service provided to the service recipient namely Surat Municipal Corporation under Jawaharlal Nehru National Urban Renewal Mission are not taxable. In the present case also the demand is not sustainable - Appeal allowed. 2023 (7) TMI 54 Recovery of service tax including the interest and penalty amount - appeal was rejected observing that the plea taken by the appellant is not supported by the documentary evidence - failure to file any reply to the show cause notice - HELD THAT:- It is found from the records of the case, that the appellant has miserably failed to contest the proceedings diligently in as much as he neither submitted the reply to the show cause notice nor attended the personal hearing either before the Adjudicating Authority or the Appellate Authority and have neither submitted the documents in support of pleas taken by him in the appeal before the Commissioner (Appeals). This being the case where the appellant has failed to co-operate with the Department by placing reliance on record the requisite documents, particularly the submissions on which he is relying, an opportunity should be given to him to place such documents before the Adjudicating Authority to consider the case in light thereof particularly for the reason that the period involved was during the Covid time. Accordingly, both the parties have agreed that it would be just and appropriate to remand the matter back to the Adjudicating Authority for denovo consideration. The ld. C.A. has pointed out several decisions of the Tribunal in M/S KUSH CONSTRUCTIONS VERSUS CGST NACIN, ZTI, KANPUR [ 2019 (5) TMI 1248 - CESTAT ALLAHABAD] , CST, SERVICE TAX, DELHI VERSUS CONVERGYS INDIA SERVICE PVT. LTD. [ 2018 (1) TMI 1174 - CESTAT CHANDIGARH] , COMMISSIONER OF C. EX., JAIPUR-I VERSUS TAHAL CONSULTING ENGINEERS LTD. [ 2017 (1) TMI 657 - CESTAT NEW DELHI ] on the merits of the matter that the Revenue cannot compare the figures reflected in ST-3 returns with those reflected in Form 26-AS filed as per the Income Tax Act, 1961 and the Department ought to have examined the reasons for said difference. The principle taken note of was that the Income Tax and Service Tax are two different/ separate and independent special Acts and their provisions operate in two different fields and therefore relying on Form 26-AS / TDS statement, demand of service tax cannot be made. The principle taken note of was that the Income Tax and Service Tax are two different/ separate and independent special Acts and their provisions operate in two different fields and therefore relying on Form 26-AS / TDS statement, demand of service tax cannot be made. The Adjudicating Authority after examining the documents as may be submitted by the parties, needs to take into account the decisions of this Tribunal also while deciding the matter afresh. The appeal is allowed by way of remand. 2023 (7) TMI 53 Levy of Service tax - Intellectual Property Services - Demand in respect of excess Cenvat Credit - Coaching or Training Services. Demand towards Coaching or Training Services is to the extent of Rs.1,06,176/- - HELD THAT:- In respect of the demand of Rs.1,06,176/-, the Appellant is not contesting the same. However, they maintain that one challan for amount of Rs.12,720/- was not considered while the proceedings were taken up for Hearing by both the Authorities. As per the Appellant, the demand should be confined to Rs.93,456/-. On specific query from the Bench as to whether the copy of this Challan is available for verification, the Learned Chartered Accountant submits that this Challan has been mis-placed and the same is not available nor the same has been enclosed along with Appeal Papers. In such a case, the Bench has no means to verify the veracity of this claim. Therefore, the Appeal to the extent of Rs.106,107/- stands dismissed. Demand of excess Cenvat Credit availed to the extent of Rs.194,600/- - HELD THAT:- Since the Appellant is not contesting the same and agrees that due to clerical mistake the Cenvat Credit was taken twice, the Appeal on this count also stands dismissed. Coming to the prayer that they have to receive Rs.14,27,916/- from the Department, as to whether this amount is refundable to them or not is an issue totally different from the present proceedings. It is for the Appellant to file the refund claim along with supportive documentary evidence and it is for the Adjudicating Authority to consider as to whether the claim is eligible or not. Therefore, their prayer that this amount of 14,27,916/- is to be considered against the present confirmed demand is not legally sustainable. Appeal disposed off. 2023 (7) TMI 52 Refund of unutilized Cenvat credit accumulated in their Cenvat Account due to exports - calculation prescribed under the formula as per Rule 5 of Cenvat Credit Rules, 2004 r/w notification No. 27/2012-CE(NT) for calculating the admissible refund - period July, 2016 to September, 2016 - HELD THAT:- Identical issue of the Appellant herein for the immediate prior period i.e. April, 2016 to June, 2016 came up for consideration before the very same adjudicating authority 3-4 months prior to the passing of the Order-in-Original herein, in which the said authority vide Oder-in-Original dated 15.2.2017 granted refund to the appellant as per the calculation they are claiming under rule 5 ibid. The said order-in-original has also been placed on record by the learned Chartered Accountant during the course of hearing. Time and again it has been held by the Tribunal that the revenue is not permitted to take contrary view on identical issue because if they are permitted to do so then the law will be in a state of confusion and will place the authorities as well as the assessees in a quandary. This contrary view of the very same adjudicating authority strengthens the submission of the appellant that they were not heard by the said authority before rejecting the refund partly. Applying the same on the facts of the instant matter, the total/net Cenvat credit is Rs.11,97,619/- whereas the credit utilized by is Rs.4,88,130/- and if we deduct the credit utilized from the total Cenvat credit then the balance would be [Rs.11,97,619 Rs.4,88,130] Rs.7,09,489/-, which has been claimed by the appellant but rejected by both the authorities below. The lower authority has totally erred in deducting the utilized Cenvat credit i.e. Rs.4,88,130/- after getting the total refund amount i.e. Rs.8,63,743/- as per formula prescribed u/r. 5 ibid. The first appellate authority also seems to have decided the appeal mechanically without properly looking into the issue and also the submission of the appellant that they were not heard by the lower authority. The impugned order is set aside - Appeal allowed. 2023 (7) TMI 51 Levy of Service Tax - dredging service - Consulting engineer service - Commercial and Industrial Construction Service - Consulting Engineer Service (import of services) - Goods Transfer Agency Service - period involved in the said case was up to June 2005 - Extended period of limitation - penalty. Dredging service - contract for Construction of Weir on River Krishna downstream of Srisailam Dam in roller compacted concrete by Andhra Pradesh Power Generation Corporation Limited - HELD THAT:- It is a case of works contract, which specifically brought into the statute book with effect from 01.06.2007. Even prior to such effective date, the services involving both provision of service and supply of goods on payment of VAT shall not fall under the category of any other defined taxable service and same should be considered as works contract service only - the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] have held that irrespective of classification of service, when the service involves supply of goods on payment of VAT, the same should be classified as works contract service alone. Since, the construction activity provided by the appellant was for the period June 2005, the same cannot be liable for payment of service tax inasmuch as works contract service was brought into the taxing net with effect from 01.06.2007. Therefore, the service tax demand of Rs.3,22,401/- confirmed in the impugned order cannot be sustained. Consulting engineer service - HELD THAT:- During the course of investigation, the appellants vide their letter dated 15.07.2006 had confirmed regarding payment of service tax in respect of the services provided to M/s Pratibha Industries Limited. Further, during the course of adjudication and in the appeal memorandum filed before the Tribunal, the appellants have not specifically contested such demand confirmed in the impugned order. Thus, such demand of Rs.2,31,397/- confirmed in the impugned order is sustainable and the appeal filed by the appellants to such extent is liable for dismissal. Commercial and Industrial Construction Service - HELD THAT:- The services provided by the appellants involved both execution of the assigned work as well as for supply of material. It is also an admitted fact that the materials used in the execution of the work were procured by the appellants on payment of appropriate VAT/Sales Tax. Thus, it is evident that the service provided by the appellants should be categorized as works contract service - Since, such services were provided by the appellants prior to the period 01.06.2007, as per the ratio of the judgment of Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] , no service tax demand shall be fastened on the appellants. Hence, an amount of Rs.4,27,623/- confirmed in the impugned order cannot be sustained. Consulting Engineer Service (import of services) - Goods Transfer Agency Service - HELD THAT:- The appellants are not contesting such demands confirmed in the impugned order. However, the appellants have pleaded that imposition of penalties in the impugned order cannot be sustained, since there was reasonable cause for non-payment of service tax by the appellants. Extended period of limitation - penalty - HELD THAT:- There was ambiguity with regard to payment of service tax by the recipient of the said services, under reverse charge mechanism. There were also divergent views expressed by the judicial forums with regard to payment of service tax by the person, other than the service provider. Since, the appellants have accepted their liability; this is a fit case for invocation of the provisions of Section 80 ibid for non-imposition of penalties. Therefore, the penalties imposed in the impugned order under Sections 76, 77 and 78 ibid are liable to be set aside. Appeal allowed in part. Central Excise 2023 (7) TMI 50 Recovery of CENVAT credit - input services - after-sale services - repair and maintenance for the products covered under warranty on a free of cost basis - whether the consideration received for those warranty services was part of transaction value? - extended period of limitation - HELD THAT:- This Tribunal in the case of M/S PIPAVAV SHIPYARD LTD. VERSUS COMMISSIONER, CENTRAL EXCISE SERVICE TAX, BHAAVNAGAR [ 2015 (8) TMI 58 - CESTAT AHMEDABAD ] has interpreted Rule 2(l)(i) of the Rules, observing that the expression any service read with for providing an output service would cover wide encompass of the definition of input service. All taxable services without which the providing of output service/manufacture of final products would be impossible or commercially inexpedient, would be covered herein - thus any service, which either has any nexus to the activity of manufacturing or if it is in relation to the business of manufacture of goods would get covered under the definition of input service - It is also observed that the value of such service is included in their assessable value, it follows that the credit thereon is admissible as per intent of Cenvat Credit Scheme. Thus service in question of providing warranty and after sales services is the input service eligible for Cenvat. Whether the warranty charges forms part of the assessable value of the final product on which Central Excise duty is paid by the Noticee? - HELD THAT:- As already observed that the cost of the disputed services forms part of the assessable value of the final products and on same applicable service tax has already been discharged as and when due. The Hon'ble Supreme Court in UNION OF INDIA ORS. ETC., ETC. VERSUS BOMBAY TYRE INTERNATIONAL LTD. ETC., ETC. [ 1983 (10) TMI 51 - SUPREME COURT ], has held that all the elements which enrich the value of the excisable goods and contribute to its marketability, must form part of the manufacturing cost of the goods. The intent of Cenvat Credit scheme is to reduce the cascading effect of taxes by preventing the build-up of taxes in the cost of products. Therefore, a manufacturer should be entitled to avail Cenvat credit of Service Tax paid on all those services, the cost of which is getting included in the assessable value of the final product. By not allowing the Cenvat Credit on such services would be against the intent of Cenvat Credit scheme - the Cenvat credit in relation to warranty services, value whereof is included in the assessable value of final product is available to the appellant as it contributes to the marketability of the product. Extended period of limitation - HELD THAT:- All the facts in the present case were in the knowledge of the Department as the appellant had regularly filed the statutory returns and the Department had conducted audits of the appellant on a regular basis. The appellant always co-operated with the Department in their proceedings and had always provided the details asked for by the Department. It is settled law that extended period cannot be invoked when the department was aware of all the facts - thus, extended period has wrongly been invoked by the department while issuing the show cause notice. The issue/s as framed stand decided in favour of the appellant - Appeal allowed. 2023 (7) TMI 49 Compounded levy scheme - wrongful/ fraudulent clearing the SS circles showing them as being produced and cleared - benefit of N/N. 17/2007-C.E., dated 01.03.2007 - It is the case of the Revenue that said notification exempts only waste and scrap arising out of manufacture of cold rolled stainless steel Patties or Pattas whereas the stainless steel scrap was generated during the manufacture of stainless steel circles and so assessee was liable for payment of central excise duty. HELD THAT:- It may be pertinent to indicate that exemption to job workers from payment of duty is conditional under Notification No. 214/86- CE dated 25.03.1986 and based on filing of the undertaking by the Principal manufacturer. This cannot be held to be a mere procedural requirement - The Notification clearly states that said notification can be rendered applicable only in respect of goods for which the supplier has furnished an undertaking to the department/ jurisdictional authorities of the job workers. In the case of KARTAR ROLLING MILLS VERSUS COMMISSIONER OF C. EX., NEW DELHI [ 2006 (3) TMI 63 - SUPREME COURT] , the benefit of exemption from duty to the job worker was denied essentially as no undertaking was filed by the principal. It is common knowledge that the responsibility in the central excise statute is on the manufacturer for payment of duty on the manufacture of finished goods which could either be a principal manufacturer or the job worker and in the event of finished goods produced by the job worker in the normal course the said job worker would be deemed to be the manufacturer. Also for entitlement of the availment of exemption notification, it is imperative that notification conditions are strictly complied with. The requirement of filing the declaration undertaking for availment of said exemption notification cannot be considered as mere procedural. In the event of non submission of such undertaking, ipso facto the said job workers of the respondent assessee automatically are the manufacturer of SS circles/ scrap so cleared by them and sent to the respondent assessee though, later cleared by them under the cover of their own invoices. Other appeals filed by the Director and the Manager of the company to assail the imposition of penalty on the two - HELD THAT:- It may be pointed out that in view of the aforesaid discussions question of imposition of penalty in the matter does not survive. Also Shri R A Khemani, Director has since expired, death certificate in respect of which has also been furnished by the learned advocate for the respondent, and therefore, impugned appeal shall abate in terms of Rule 22 of the Customs Excise and Service Tax Appellate Tribunal Procedure Rules, 1982. The order of the learned Commissioner is not riddled with any infirmity and therefore, the appeals filed by the Revenue deserve to be dismissed - the appeals filed by the Revenue stand dismissed. 2023 (7) TMI 48 CENVAT Credit - inputs i.e. sugar and input services viz manpower supply agency services and other common services - benefit of effective rate of duty of 1% was not available to them and they should have paid duty at the effective rate of 5% as per Sl. No. 11 of Notification No. 2/2011-CE dated 1.3.2011 under Chapter Sub Heading 2202 9020 - HELD THAT:- This is a case in which the appellant had opted for benefit of exemption under Notification No. 1/2011-CE dated 1.3.2011 to discharge duty at 1% - It is found that, in the year 2011, vide Union Budget, the earlier exemption granted to fruit pulp or fruit juice-based drinks was withdrawn and the said goods were subject to duty at the following concessional rates exercisable at the option of the assessee. (a) @1% vide Notification No. 01/2011-CE dated 1.3.2011 subject to condition that no CENVAT credit was taken on the inputs / input services used to manufacture the said goods. (b) @5% vide Notification No. 02/2011-CE dated 1.3.2011 with no restriction as to availment of CENVAT credit on inputs or input services. Although the appellant had opted to pay duty on fruit pulp or fruit juice based drinks at 1% under Notification No. 1/2011-CE, they had initially availed CENVAT credit. However, they have on their own reversed Rs.42,00,866/- being the proportionate CENVAT credit availed on the inputs and input services on dutiable aerated waters and beverages and exempted fruit pulp or fruit juice based drinks. This has been confirmed in the Range Officers verification report dated 15/04/2013 - as per the decision of the Hon'ble Supreme Court in CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT ], once the appellant has reversed the ineligible credit, the claim for exemption of duty on the disputed goods cannot be denied and they are hence eligible to discharge duty at 1% as per Notification 1/2011-CE. The appellant was eligible for payment of effective rate of duty of 1% on the fruit pulp or fruit juice based drinks cleared by them, during the impugned period, by availing exemption under Notification No. 1/2011-CE dated 1.3.2011 - the issue relating to interest and penalty does not survive - Appeal allowed. 2023 (7) TMI 47 CENVAT Credit - sugar cess paid as CVD in respect of import of raw sugar - HELD THAT:- This very issue has been considered by the Hon ble Karnataka High Court in the appellant s own case COMMISSIONER OF CENTRAL EXCISE VERSUS M/S SHREE RENUKA SUGARS LTD [ 2014 (1) TMI 1469 - KARNATAKA HIGH COURT] where it was held that Assessee was entitled to claim CENVAT credit in respect of the cess paid as additional duty (CVD) on raw sugar imported under the Sugar Cess Act of 1982 read with Section 3 of the Customs Tariff Act, 1975. In view of the Karnataka High Court judgment In favor of the appellant themselves, the issue is no longer res-Integra. Accordingly the appellant is legally entitled for the cenvat credit on the sugar cess paid on import of raw sugar - appeal allowed. 2023 (7) TMI 46 Levy of penalty u/r 26 of the Central Excise Rules, 2002 - Process amounting to manufacture - procuring imported and indigenous various parts of LPG/CNG Kits and clearing the same after affixing their brand name under the description of Kit Assembly - extended period of limitation - HELD THAT:- The Learned Commissioner while confirming agreed with the submission of appellant about admissibility of CENVAT credit, but he left the work of quantum of CENVAT credit to Jurisdictional Assistant/Deputy Commissioner and Pursuant to the Commissioner s directions, the Deputy Commissioner vide letter dated 14.03.2013 had worked out admissible CENVAT credit at Rs. 1,64,68,644/-. However on 25.03.2013 the Deputy Commissioner issued another letter rectifying the error of mentioning the incorrect amount of admissible CENVAT credit in previous letter dated 14.03.2013 and confirmed that the admissible CENVAT Credit was Rs. 1,70,17,818/- for the period - in the present matter appellant also claimed the benefit of cum-duty price which was denied by the learned Commissioner on the ground that no evidence of inclusion of excise duty in the price charged from the buyer has been produced by the Appellant before him - The benefit of the same is liable to be extended to the appellant. In the case of NATIONAL PLYWOOD IND. LTD. VERSUS COLLECTOR OF C. EX., SHILLONG [ 1998 (6) TMI 386 - CEGAT, CALCUTTA] the benefit of cum duty was extended to them and the price was considered to be cum-duty prices - the appellants are entitled to the benefit of cum-duty price. The demand of duty is accordingly to be re-quantified. The quantification of the demand needs to be re-worked out by the Ld. Commissioner. The penalties imposed on the appellants are also needs to be re-determined based upon the duty that has to be worked by the adjudicating authority. Since in the impugned matter quantification of demand itself was not properly done, we do not comment on the merit of the case and the same is kept open - matter remanded to Ld. Commissioner that first re-quantify the duty demand after considering the benefit of CENVAT credit and cum-duty price claimed by the appellant and pass afresh order. Appeals are allowed by way of remand to the adjudicating authority. 2023 (7) TMI 45 Applicable rate of duty for removal of any normal goods in terms of sub-section (2) to Section 3 or Section 4 or Section 4A of the Central Excise Act, 1944 - change in the rate of duty applicable from the time when the machine was sent for exhibition to the time when it was actually sold - demand of differential duty equivalent to the CENVAT Credit availed when the goods were returned to the factory - HELD THAT:- There are no dispute by the Revenue as to the fact or the contention of the appellant that upon receipt in the factory from the exhibition, the product had lost its originality or that the same required reprocess, etc., to bring it back to the original shape and only thereafter that the machine in question could be sold or removed as such. That means the product was brought back into the factory only to be re-processed and this claim of the appellant was never disputed by the Revenue - the appellant carried out the required process of quality inspection and replaced the Servo Driven Filler with a Pneumatic Driven Filler. Further, the original machine that was made, was sent to the exhibition, which was brought back and after elapsing of some time, the machine was sold and cleared like any other excisable goods. That being the case, there are no contravention of the Valuation Rules by the appellant, as an important part of the machine sold has been replaced with a less advanced component, slight reduction in the value of the machine sold is found to be normal. The impugned order demanding differential duty of Rs.1,09,489/- is not sustainable and so, set aside. Accordingly, the penalty imposed is also set aside - Appeal allowed. 2023 (7) TMI 44 Valuation of goods cleared by the appellant to sister units during two continuous periods separated by a change in law - Rule 6(b)(ii) read with Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (CVR 2000). For the period prior to 01/07/2007 - HELD THAT:- It is held that this is a case where the appellant was clearing goods to their sister units and also to un-related buyers. They have mentioned this both in the statement of their Manager recorded by the department and in their reply to the SCN which is also mentioned in para 15 of the impugned order. Para 6 of the impugned order also records that the appellant cleared around 30% of their production to their own units. The said price was not accepted as it was a contract price. Prior to 01/07/2000 the value of goods were notionally determined to be the normal price under section 4 of the Central Excise Act, 1944. It was only after the amendment of the said section in July 2000 that the concept of transaction value came to be the law - Since goods cleared as per the provisions of proviso (i) to Section 4(1)(a) are the normal price of comparable goods and the impugned order does not discuss as to why this price not acceptable except to say that they are contract price, the contention of the appellant cannot be ignored - the contract price has to be treated as the normal price , as provided in section 4, which is comparable and applicable in the appellant s case. Its only when the value of the goods cannot be determined under Rule 6(b)(i) that one needs to travel to Rule 6(b)(ii) which is not the case here. Hence the appellants prayer to adopt the value of goods cleared to their sister unit as per the comparable contract value available on the basis of Rule 6(b)(i) of CVR, 1975 upheld. For the period from 01/07/2007 - HELD THAT:- The erstwhile Section 4 of the Central Excise Act, was substituted by section 94 of the Finance Act, 2000 (No.10 of 2000), and came into force from 01/07/200. This section contains the provision for determining the transaction value of the goods for purpose of assessment of duty. The new Valuation Rules i.e. CVR 2000, enables valuation of goods for excise purposes on value charged as per commercial practices by introducing the concept of transaction value rather than determining the value of goods by a notionally determined normal price of the erstwhile section. Changes were also made in the Valuation Rules by the introduction of CVR, 2000 in place of CVR 1975 to reflect the change in laws - the appellant is of the view that even after 01/07/2000, Rule 8 is applicable to them only if the entire excisable goods are not sold but are consumed by them or on their behalf in the production or manufacture of other articles, which is not so in their case. They have sales to non-related buyers and hence Rule 8 will not be applicable in their case. Its only after Rule 8 was amended by Notification No. 14/2013-CE (NT) dated 22.12.2013 with effect from 1.12.2013, that they are liable to value the goods as per Rule 8 of CVR 2000. The appellant was eligible to clear rough castings to their sister concern on payment of duty on the assessable value based on comparable prices of goods cleared by them to non-related buyers during the entire period covered by the impugned order. The impugned order is set aside with consequential relief, if any, as per law - Appeal allowed. 2023 (7) TMI 43 CENVAT Credit - duty paying invoices - debit entries made in CENVAT account along with document on the basis of which such debit entry was made is sufficient to satisfy the requirement under Rule 9 of CCR, 2004 - demand of duty on engines with interest and the equal penalty imposed under sec. 11AC of the Central Excise Act, 1944. Whether the appellant is liable to pay interest for the delay in payment of duty on engines? - Whether the penalty imposed under Sec. 11AC of the Central Excise Act, 1944 in regard to non-payment of duty on engines is sustainable? - HELD THAT:- The demand of duty on engines has been raised on the appellant invoking Rule 12BB(1) of the Central Excise Rules, 2002 r/w section 11A(4) of Central Excise Act, 1944. The demand of interest is raised invoking section 11AA of the Central Excise Act, 1944 - Rule 12BB is a facility given to LTU to defer the payment of excise duty on the intermediate goods cleared to the sister units. When the engines were cleared and stock transferred from the Hosur Unit to the appellant unit, the excise duty was not paid by the Hosur unit. Rule 12BB allows this facility of clearances without payment of duty on complying the condition that the intermediate goods have to be cleared or used further in the manufacture of finished products by the recipient unit and such finished products should be cleared within a period of six months. In the present case, it is an admitted fact that the condition has not been satisfied. The appellant is therefore liable to pay duty on the engines. It is also an admitted fact that there is delay in making the payment. Rule 12BB not only defers the payment of duty but also shifts the liability on the recipient unit. The Rule itself states that if the condition is not satisfied the duty along with interest has to be paid by the recipient unit - there are no grounds to interfere with the demand of interest. Penalty under section 11AC of the Central Excise Act, 1944 for short-payment of duty on engines - HELD THAT:- Availment of credit is a right accruing on fulfilment of conditions. Rule 12BB offers a facility of deferred payment of duty. It is postponement of the liability to pay duty. Rule 12BB cannot stand on its own as it does not completely waive the liability to pay duty. It only defers it - the duty demand, in the present case, is on the engines. The duty liability for manufacture and clearance of engines is on the Hosur unit and not on the appellant. Only because appellant opted for the facility of Rule 12BB, the duty burden is shifted to the appellant unit. In such circumstances, when the duty liability is paid with interest, the penalty levied under Sec. 11AC is unwarranted. In the peculiar facts of this case, we are of the considered opinion that the penalty imposed requires to be set aside. Denial of CENVAT Credit - HELD THAT:- As per Rule 12BB, the burden to pay the duty on the stock transferred goods is shifted to the recipient unit. The stock transferred goods are referred to as intermediate goods in Rule 12BB. The word intermediate goods is used in the Rules for sake of convenience taking into the varieties and variable complexities of materials that may require to be stock transferred in the process of manufacture of products. This cannot mean that engines which is otherwise an input for manufacture of Earth Moving Machine, loses its nature of being an input by opting Rule 12BB. We do not find any logic or legality in this view of the department. Other ground on which the credit is denied is that there are no duty paying documents - HELD THAT:- Only if the engines are stock transferred on payment of duty to the Hosur unit, the appellant will receive duty paid invoices. While following the procedure under Rule 12BB, there is no occasion to pay duty to Hosur unit and thus no occasion to receive duty paid documents. After paying the duty on the engines, the appellant has availed credit by making debit entry in the CENVAT register. Rule 12A provides for the method of removing inputs as such under cover of a transfer challan for compliance of sub-rule (5) of Rule 3 of CENVAT Credit Rules, 2004 and then avail credit in CENVAT register. When Rule 12BB allowed removal of engines without payment of duty to the sister concern, under the cover of transfer challan and when the duty on the engines is not disputed, there are no reason to disallow the appellant the substantive right of credit - The department has raised this demand of duty on engines for not having followed Rule 12BB and then denied credit for having followed Rule 12BB, which appears to be rightly unreasonable and unjustified - credit allowed. Appeal partly allowed. 2023 (7) TMI 42 Levy of short paid excise duty - deduction of cost of transportation incurred from depot (being the place of removal) to the dealer s place - equalized freight - CBEC Circular No. 287/3/97-CX dated 14.01.1997 - Certificates of the chartered Accountant offer any classification as to as to what the primary and secondary freight actually represent or not. HELD THAT:- The Appellant has stock transferred their final products to various depots from where they sold the goods to their ultimate customers. After the amendment of section 4 and depot has been added as a place of removel freight is includable in the asseable value only upto the place of removal ie, depot in this case. The Appellant has been delivering the goods from their depot to the dealer s premises. The cost of transportation of the goods from the depot to the dealer s premised is not includable, as per the amended section 4 of the Central Excise Act, 1994. The Commissioner (Appeals) agrees that the cost of transportation upto the place of removal only includable in the assessable value. But, he rejects the claim of deduction of equalized freight made by the Appellant on the ground that the CA certificate did not clarify what constitutes primary and secondary freight. It is observed that the CA certificate has claimed deduction of equalized freight only from the depot to the dealer s premised from the assessable value. There is no other material evidence brought on record to doubt the veracity of the CA certificate. Whether it is called primary or secondary freight is only a nomenclature - there are no merit in the observation of Commissioner (Appeal). Board Circular 287/3/97 dated 14.10.97 has not disallowed deduction of equalised freight on all circumstances. Deduction of equalized freight is not allowed only on the circumstances mentioned in para 5 of the Circular. The Circular, clearly states that deduction is allowed on freight and insurance. There is no dispute that the transportation cost beyond the place of removal is not includable in the assessable value. Only the method of working needs to be checked. In the present case, the Appellant has produced the CA certificate and explained how they arrived at the equalised freight. If there is any doubt on the validity of the CA certificate, then the department should have brought in evidence to substantiate that. In the absence of any evidence to doubt the veracity of the CA certificate, the deduction of equalised cost of transportation as claimed by the Appellant is admissible. Appeal allowed. CST, VAT & Sales Tax 2023 (7) TMI 41 Calling to pay the deferred sales tax immediately - validity of G.O.Ms. No. 503 Revenue (CT-II) Department dated 08.05.2009, whereby Rule 67 of the A.P. VAT Rules, 2005 came to be amended - contrary to the industrial policy of the State Government in G.0.Ms. No. 108 dated 20.05.1996 or not - HELD THAT:- Under Section 69 read with Rule 67, all those industrial units, who availed the option of tax holiday / exemption prior to 2005, came to be converted to the unit availing tax deferment, however, with condition that the balance period of tax holiday / exemption available as on 31.03.2005 to such units shall be doubled for the purpose of tax deferment. Meaning thereby, an industrial unit having two years balance period available as tax holiday / exemption as on 31.03.2005, the same shall be converted to the unit availing tax deferment for four years, i.e., double the balance period. However, the illustration to Rule 67 provided contrary to Rule 67 and it provided for 14 years deferment. As per the settled position of law, an illustration cannot govern the Rule but it is the Rule which shall govern and the illustration is always for clarification and it is to explain what is provided under the Rule. But the illustration cannot be contrary to the main statute namely, Rule and/or Act. Therefore, thereafter when the illustration came to be amended subsequently, vide G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009, to bring it in line with the statutory provision Rule 67, it cannot be said that the same is illegal and/or contrary to the parent act and/or contrary to the original industrial scheme - In fact, the State Government has taken care of the interest of the industrial units by providing double the balance period while converting the industrial units, who earlier availed the tax holiday as the units having tax deferment. Therefore, it cannot be said that the State was not aware of the interest of the industrial units under the VAT regime. The High Court has rightly dismissed the writ petitions upholding the subsequent G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009 and amendment to Rule 67 of the Rules, 2005 - The impugned judgments and orders passed by the High Court upholding the validity of the amendment to Rule 67 of the Rules, 2005 vide G.O.Ms. No.503 Revenue (CT-II) Department dated 08.05.2009 is/are hereby confirmed. Appeal allowed in part. 2023 (7) TMI 40 Attachment of immovable property - existence of any material to establish that there was valid publication of proclamation of attachment of the property or not - HELD THAT:- There is a clear distinction between the service of notice/warrant of attachment on the defaulter - assessee, and publication of proclamation of attachment in the manner and mode prescribed by law, as elucidated in DESH BANDHU GUPTA VERSUS. N.L. ANAND RAJINDER SINGH [ 1993 (9) TMI 350 - SUPREME COURT ] and M/S. MAHAKAL AUTOMOBILES ANR VERSUS KISHAN SWAROOP SHARMA [ 2008 (4) TMI 710 - SUPREME COURT ]. Mere passing of an order of attachment and service on the defaulter - assessee is not sufficient for constructive notice to the general public, unless proclamation of attachment is publicized in the manner prescribed by law. It is, no doubt correct that the appellants had handed over a copy of the Attachment Warrant to the office of Sub-Registrar of Assurances, albeit it is also a fact that the register recording the attachments was misplaced in April 2004. Further, the sale deeds in favour of respondent nos. 1 and 2, namely, Amit Ahuja and Shalini Ahuja were registered by the Sub-Registrar of Assurances on 26.04.2006. It is a need to update and revise Rule 54 to Order XXI of the CPC, as the prescribed modes of publication for proclamation of attachment are outdated. A dedicated and specific website and publication in the electronic and social media, apparently appears to be a better method to inform and alert the general public. This would be easier, less prone to challenge and more transparent and open for the public to verify and check. It will not be appropriate and proper for this Court to interfere with the impugned judgment passed by the High Court - appeal dismissed. 2023 (7) TMI 39 Forfeiture of the refund permitted to the petitioner - third respondent has erred in his jurisdiction in upholding the fourth respondent s rectification order dated 12.07.2019 under Section 69 of the KVAT Act or not - HELD THAT:- In the present case, the petitioner, when not obliged to deduct any tax at Source from M/s. Ocean Interior Limited [its Contractor] as contemplated under Section 9-A of the KVAT Act, has deducted certain amount as tax and deposited the same along with interest because of its own reading of this provision. Subsequently, when the petitioner has made a request for VAT Form-156, its representatives are informed that it was not obliged under the provisions of Section 9-A of the KVAT Act to deduct the amount. The petitioner has repaid the amount to M/s. Ocean Interior Limited. Neither this fact, nor the further assertion that the contractor has filed full returns disclosing this transaction and offering tax is contested. This Court must opine that, given the scheme under Section 47 of the KVAT Act and the circumstances in which the petitioner has deduced TDS and deposited the same notwithstanding the provisions of Section 9(A) of the KVAT Act, there could not have been a forfeiture. The petitioner has repaid the amount deducted as TDS to its contractor on being informed that it could not have deducted any amount as TDS and the contractor has also offered such amount as tax - In the present case, without any detailing, the fourth respondent has only opined that refund is not in accordance with the proceedings dated 11.07.2019. The fourth respondent, unless could explicate in the impugned order dated 12.07.2019 how the proceedings dated 11.07.2019 related to deductions made notwithstanding the provisions of Section 9-A of the KVAT Act, could not have been relied upon the same to conclude that there was a mistake apparent from the record in permitting the refund. This Court is of the considered view that the respondents must refund a sum of Rs. 80,75,720/- in terms of Form- 185 dated 11.02.2019 (Annexure-M) within a reasonable time without interest, but if there is any delay, then must be liable to pay interest for the delayed period - Petition allowed. Indian Laws 2023 (7) TMI 38 Dishonour of Cheque - insufficiency of funds - vicarious liability of director - section 141 of the NI Act - HELD THAT:- For summons to be sustained and for trial to continue, it is absolutely essential that the basic or foundational averments must be contained in a criminal complaint against a director in relation to his alleged role in the offence. This court is constrained to observe that it appears to have become commonplace for complainants to arraign all and sundry directors of a company as accused in a criminal complaint in relation to dishonour of cheques, with the evident intention of pressurising and arm-twisting a company into paying-up a claimed debt. It is necessary to articulate that a criminal complaint under section 138 of the NI Act is not, in and of itself, a money recovery proceedings, even though fine and compensation may be imposed upon conviction. The wanton arraignment of directors without reference to their role in relation to a transaction, or to the issuance or dishonour of a cheque by the company, requires to be deprecated and discouraged, since it amounts to abuse of the salutary process of criminal law. This court is clear that for one, there are no allegations in the criminal complaints in relation to the petitioners, much-less any specific allegations as to their role in the alleged offence. In these circumstances, it cannot be said that the petitioners would incur any vicarious liability along with the accused company merely because they were directors of the company. Two, absent any allegations against the petitioners in the criminal complaints, the issuance of the summoning orders was evidently not informed by any application of mind, but was the outcome of a purely mechanical process. The summoning orders cannot be sustained in law - Petition disposed off. 2023 (7) TMI 37 Dishonour of Cheque - insufficient funds - legally enforceable debt - rebuttal of presumption - onus to prove - HELD THAT:- The complainant P.S. Deivaraj in his cross examination had admitted that, he is a financier and also doing real estate business. He is an income tax assessee and he pay tax disclosing his income. However, he is not able to recollect his annual income and tax paid. He is not sure whether he had disclosed the loan transaction of Rs. 2,00,000/- with the accused. He admits that as a financier he used to advance money after getting pro-note. According to his testimony, the transaction with the accused is concerned, the accused borrowed money on promise to repay the loan amount with 18% interest within 5 months, but had paid interest only for two months and stopped paying the interest. He admits that he has not stated in his complaint or his statutory notice about execution of pro-note or promise to repay the money with interest. If the evidence of the accused, who was examined as DW-1 is scrutinised, we find he had reiterated that the cheque was obtained from him under force with the help of the police and he has lodged the complaint to the police, Chief Minister Cell and Human Rights Commission about the crime of extortion. He has specifically admitted that he had money transaction with the finance company by name 'Subalakshmi' and 'Yogalakshmi' and he owe the money due and payable under the Hire Purchase Agreement - When the complainant was cross examined about the two finance companies, he had denied knowledge about the existence of those two finances company till he received the reply notice from the accused. The complainant has also denied about knowledge regarding the complaints made by the accused before the police, Chief Minister Cell and Human Rights Commission. Having admitted the signature found in the cheque marked as Ex.P1, whether the accused had discharged his onus of rebutting the presumption? - HELD THAT:- The accused has failed to prima faciely show that he had transaction with the finance company by name 'Subalakshmi' 'Yogalakshmi'. He had failed to prove that the signature in the cheque was obtained under threat and force. The self serving documents Ex.D1 to Ex.D5 does not probabilise the case of the accused regarding the Hire Purchase loan with some other third party and in connection with the said dealing the subject cheque was obtained with the help of police - This Court take also note of the fact that the accused has alleged in the reply notice that the signature found in the cheque are forged and fabricated, but later sent the complaint to police authorities that he was forced to sign in the blank cheque under threat. For neither of his defence, he has let evidence to probabilise. A belated complaint much after issuance of the cheque alleging that it was obtained under force cannot be taken as an evidence probabilising the case of the accused. The Criminal Revision Case, which is taken as an appeal exercising inherent power, after giving due consideration to the points raised by the learned counsels for the accused and the complainant, holds that the complainant has proved his case against the accused. The offence under Section 138 of the Negotiable Instruments Act, 1881 is made out. Appeal dismissed.
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