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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter August 13, 2024 Case Laws in this Newsletter: GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI Short Notes 1. Navigating the Taxation Labyrinth: The Supreme Court's Guidance on Transfer of Right to Use Goods Service Tax: Summary: The Supreme Court of India analyzed a case involving the interpretation of sub-clause (d) of Clause 29A of Article 366 of the Constitution concerning whether transactions involving trailers, cranes, and tank trucks constituted a "sale" under the VAT Act or were service contracts. The Union of India argued these were service contracts, while the assessees claimed they were "deemed sales" attracting VAT. The Court applied tests from the BSNL case and determined that the transactions did not meet the criteria for transferring the right to use goods, as the contractors retained control. Thus, the contracts were classified as service agreements, not sales. 2. Supreme Court Upholds Forfeiture of Earnest-Money Deposits under SARFAESI Rules Indian Laws: Summary: The Supreme Court of India upheld the forfeiture of an earnest-money deposit under Rule 9(5) of the SARFAESI Rules, rejecting the applicability of Sections 73 and 74 of the Indian Contract Act, 1872, which pertain to compensation for breach of contract. The court ruled that the forfeiture is a legal consequence of the auction terms, not subject to unjust enrichment claims, even if the secured creditor recovers dues from a subsequent sale. It emphasized that only exceptional circumstances, like those in a previous COVID-19-related case, might justify refunding deposits. The decision underscores minimal judicial intervention in SARFAESI-related forfeitures to ensure efficient debt recovery. 3. The Generality vs. Enumeration Principle: A Key to Interpreting Delegated Rule-Making Power: Validity of Rule 9(3) of the Chartered Accountants' Rules, 2007 Indian Laws: Summary: The Supreme Court of India upheld the validity of Rule 9(3) of the Chartered Accountants' Rules, 2007, under the Chartered Accountants Act, 1949. The central issue was whether Rule 9(3) exceeded the rule-making power conferred by the Act, potentially rendering it ultra vires. The Appellant argued that it surpassed the provisions of Section 21A(4), while the Respondent contended it was within the general delegation of power under Section 29A(1). The Court discussed the "generality vs. enumeration" principle, concluding that Rule 9(3) aligns with the Act's objectives, ensuring accountability and ethical standards in the profession. Articles 1. PROVISIONAL ATTACHMENT OF BANK ACCOUNTS UNDER SECTION 110(5) OF CUSTOMS ACT, 1962 By: DR.MARIAPPAN GOVINDARAJAN Summary: Section 110(5) of the Customs Act, 1962, allows provisional attachment of bank accounts to protect revenue or prevent smuggling, requiring approval from the Principal Commissioner of Customs. The attachment period is initially six months, extendable by another six months with written justification. In a case involving a company importing overpriced stones, the Bombay High Court ruled that the provision is coercive, necessitating strict procedural compliance. Recent departmental instructions emphasize that officers must justify attachments with evidence and ensure timely investigations. Attachments should not be routine, and affected parties must be informed and given a chance to respond. 2. Is section 74 notice, a Brahmastra, which cannot be taken back, once activated? By: Subbarao PV Summary: Sections 73 and 74 of the CGST Act, 2017 address tax determination, with Section 74 involving fraud or willful misstatement, allowing for extended limitations and penalties. Concerns arise when Section 74 notices are issued without proper grounds, as officers claim they lack the authority to revert to Section 73. Legal precedents emphasize the need for substantial evidence of fraud or misstatement to justify Section 74 notices. Taxpayers can contest such notices, requiring officers to provide clear reasons if allegations are upheld. Proper officers are urged to exercise diligence and fairness, ensuring compliance with natural justice principles. 3. AMENDMENT TO COMPANIES (ADJUDICATION OF PENALTIES) AMENDMENT RULES, 2024 By: DR.MARIAPPAN GOVINDARAJAN Summary: The amendment to the Companies (Adjudication of Penalties) Rules, 2014 introduces a new Rule 3A, mandating that all penalty adjudication proceedings under the Companies Act, 2013 be conducted electronically via the Central Government's e-adjudication platform. This includes the issuance of notices, hearings, and payment of penalties. Notices will be sent to the concerned person's email or last known address. Additionally, Form ADJ, used for filing appeals, must be digitally signed and include detailed information about the appellant, respondent, and penalty order. The form requires attachments such as certified copies of the order and authorization documents. 4. RETRACTION OF STATEMENTS - MEANING, CONCEPT & LAW By: MANOJ NAHATA Summary: The article discusses the legal framework and implications of retracting statements in taxation proceedings. Statements recorded during investigations can be crucial evidence, but they can be retracted if they were made under duress, coercion, or misunderstanding. Retraction shifts the burden of proof to the party claiming the statement was voluntary. The article outlines the legal provisions under various tax laws, emphasizing the importance of timely and well-supported retraction. It highlights that retraction should be made by the person who gave the statement and must be substantiated with evidence. Retraction is not straightforward and requires careful consideration and legal guidance. News 1. PM GatiShakti Capacity Building Workshop to be organized in Thiruvananthapuram on 13th August, 2024 Summary: The PM GatiShakti Capacity Building Workshop will be held in Thiruvananthapuram on August 13, 2024, as part of a series of district-level workshops organized by the Department for Promotion of Industry and Internal Trade. The event will include 14 districts from Kerala, Karnataka, Andhra Pradesh, Tamil Nadu, and Telangana, focusing on best practices and use cases of PM GatiShakti. The workshop aims to enhance planning and implementation under the Area Development Approach, improve connectivity, and support inclusive growth. This initiative is part of a broader effort to integrate infrastructure planning across India, with previous workshops held in Bhopal and Pune. Highlights / Catch Notes GST Writ petition maintainability depends on statutory redressal mechanism availability, not purely legal issues. High Court discretion upheld. Case-Laws - HC : Petition maintainability hinges on alternative remedy availability. Excess tax refund due to ignorance and legal ambiguity. Supreme Court ruled that purely legal controversies without factual disputes should be decided by High Court, not dismissed for alternative remedy availability. However, where statute provides grievance redressal mechanism, writ petition should not be entertained. Appellant company did not dispute authority's jurisdiction or lack of CGST Act's redressal mechanism. High Court's discretion in refusing writ petitions due to efficacious alternate remedy was upheld, dismissing appeals. Visit to Get Source Bio-fertilizers classified under different chapters leading to disparate GST rates. Order quashed, remanded for fresh hearing. Case-Laws - HC : Contradictory findings by Appellate Authority regarding classification of bio-fertilizers produced by petitioner and another manufacturer under different chapters leading to disparate GST rates of 12% and 5% respectively. Impugned order classifying petitioner's bio-fertilizers under Chapter 3002 quashed and matter remanded to Appellate Authority for fresh consideration after providing opportunity of hearing to petitioner due to anomaly in classification. Visit to Get Source Validity of GST demand notice challenged for licensing services on minerals from 1/7/17 to 31/12/18. HC issued notice, no coercive recovery. Case-Laws - HC : Validity of SCN issued u/s 73 of CGST Act challenged - recovery of demand of differential tax for tax period from 1-7-2017 to 31-12-2018 - transactions related to licensing services for right to use minerals including exploration and evaluation under Service Code 9973 37 - retrospective operation of CBIC circular dated 6-10-2021 - High Court issued notice to Opposite Parties - directed no coercive action for recovery of demand till next date of hearing - matter listed along with related writ petition. Visit to Get Source AAR denied error rectification. Queries not ruled. No error found. Differential IGST ineligible for ITC. Application rejected. Case-Laws - AAR : Rectification of certain errors apparent on face of order denied in AAR ruling. AR contended AAR should have ruled on all queries. Held: No error apparent on record noticed, so no rectification required. As Customs Act provisions not attracted, differential IGST paid by applicant ineligible for ITC u/s of CGST Act, 2017. No apparent error or mistake on record as alleged by applicant, so application for advance ruling liable for rejection u/s 98(2) of CGST/TNGST Acts, 2017. Visit to Get Source Plastic parts like rope handle & vent plug for lead acid batteries fall under heading 8507, not plastic chapters. Case-Laws - AAR : Plastic articles rope handle, vent plug, and split top/bottom support, used as parts/accessories for lead acid batteries, are classifiable under heading 8507 (electric accumulators) and not under headings 3901 to 3914 or 3926 (plastic articles). Though made of plastic, they are excluded from Chapter 39 by Note 2(s). They attract 14% CGST and SGST under Sl. No. 139 of Schedule IV of relevant notifications, as parts of electric accumulators under sub-heading 8507 90, covered under heading 8507. Visit to Get Source Electricity services exemption challenged. Distribution licensee entitled to exemption notification. Circular ultra vires. Interim protection granted. Case-Laws - HC : Exemption of Central Tax for electricity services under Serial no. 25 of notification dated 28th June, 2017 - respondent invoked Section 74 of CGST Act, 2017 based on circular dated 1st March, 2018 - petitioner, a distribution licensee under Electricity Act, 2003, entitled to exemption notification - clarification in circular cannot be treated as clarification of exemption notification u/s 11(1) - circular declared ultra vires to Section 8 and notification no. 12/2017-CT (R) - petitioner made prima facie case, raised jurisdictional issue, entitled to interim protection - directed to participate in proceedings, no final order without court's leave - liberty to mention after affidavits exchange period. Visit to Get Source Summary order quashed, bank accounts unattached due to lack of order. Lift attachment directed. Case-Laws - HC : Summary order quashed due to absence of underlying order - Annexure-A summary dated 13.08.2019 in Form GST DRC-07 set aside as no order passed under Act - consequent recovery action including attachment of bank accounts quashed - respondents directed to lift attachment of petitioner's bank accounts forthwith - petition disposed of. Visit to Get Source Appeal rejected wrongly. Explanation overlooked. Hear appeal on merits soon per HC order. Case-Laws - HC : Appeal rejected on limitation grounds but petitioners' explanation ignored; appellate authority directed to note explanation per HC precedent, condone delay, hear appeal on merits expeditiously within 8 weeks; appellate order set aside. Visit to Get Source Cancellation order sans reasons, violating natural justice. SCN lacked specifics on alleged fraud/misstatement. Order lacks grounds. Case-Laws - HC : The proper officer's order cancelling GST registration ab initio (from the initial date) is bereft of reasons and does not spell out grounds, violating principles of natural justice. The show cause notice (SCN) merely reproduces statutory provision u/s 29(2)(e) of CGST Act regarding cancellation on grounds of fraud, wilful misstatement, or suppression of facts, without disclosing nature of alleged fraud, misstatement, or suppressed facts. SCN fails to meet requisite standards, not enabling meaningful response. Cancellation order also lacks reasons or grounds. HC directs cancellation order to take effect from SCN date (28.06.2023), not retrospectively from 29.12.2022. Petition disposed of. Visit to Get Source Extension of time for tax recovery order contested. Affidavits required. Jurisdictional issue raised. Interim stay till Dec 2024. Case-Laws - HC : Extension of time for issuance of order u/s 73(9) for recovery of unpaid/short-paid tax or wrongly availed/utilized input tax credit. State GST authorities contend affidavits required. Jurisdictional issue raised, writ petition to be heard. Affidavit-in-opposition within 4 weeks, reply within 3 weeks thereafter. Prima facie case made out, interim stay on impugned demand order till December 2024 or further order. Liberty to mention after expiry of period for exchange of affidavits. Visit to Get Source Income Tax Reopening notice invalid, income already considered in regular assessment. General info insufficient reason. Mechanical sanction, no application of mind. Case-Laws - HC : Reopening of assessment challenged on grounds that Assessing Officer had already considered entries related to Long/Short Term Capital Gains/Losses, Unsecured Loans, Share Premium, Bogus Gains, Contrived Losses during regular assessment. Court held that since AO had considered issue during regular assessment, impugned notice u/s 148 for reopening based on general information received from investigation wing regarding script Kaushal Limited was not valid. Reasons recorded did not disclose particular income escapement. Impugned notice issued without application of mind and sanction granted mechanically. Notice based on information already considered during regular assessment, hence quashed and set aside in favor of assessee. Visit to Get Source Income from BCCI to Kerala Cricket Association - exempt u/s 2(15) or business income? Remanded to decide based on Ahmedabad case. Fresh orders in 6 months. Case-Laws - HC : Income received by Kerala Cricket Association - whether exempt u/s 2(15) r.w.s. 12AA - matter remanded to Appellate Tribunal to determine if amount from BCCI was infrastructure subsidy or business income - Tribunal to adjudicate afresh in light of Ahmedabad Urban Development Authority case - final orders within 6 months. Visit to Get Source Disallowed interest on interest-free loans to related parties. Onus on assessee to prove commercial expediency. Failed to justify. Case-Laws - AT : Addition of interest on interest free loans advanced by assessee Company to sister concerns/related parties disallowed. Onus on assessee to prove commercial expediency for advances taken interest free from related parties. Assessee failed to substantiate commercial expediency for interest free advance to related party M/s. Diehard Dies Pvt. Limited. CIT(A) erred in considering transaction arose out of business/commercial expediency. Order of CIT(A) set aside, restoring AO's order. Revenue's appeal allowed. Visit to Get Source Penalty Overruled: Taxpayer's Detailed Disclosure Leads to Deletion of Section 271(1)(c) Penalty for Excess Deduction Claim. Case-Laws - AT : Penalty u/s 271(1)(c) was imposed for excess deduction claimed u/s 10B. The assessee furnished all relevant facts for computing total income, and provided detailed explanations regarding the claim u/s 10B, including the number of manufacturing divisions, bifurcation of expenditure, and availability of carried forward losses. The explanation was not found false, and the onus to prove falsity lies on the revenue. The claim was an allowable deduction, though the quantum was reworked by the Assessing Officer using different arithmetic. All details and justifications were provided in the return itself. The amount of tax sought to be evaded under explanation 1 to section 271(1)(c) was indeterminable for imposing penalty. The assessee's decision to not appeal the reduction of claim does not imply lack of bona fides. The CIT(A) rightly deleted the penalty, and no interference is warranted. Visit to Get Source Reopening upheld on info of escaped income. Addition u/s 68 deleted as books not rejected. Cross-exam denied. Edelweiss transactions misunderstood. Case-Laws - AT : Reopening assessment u/s 148 upheld based on specific information from DDIT (Inv) about transactions with M/s Vishnu Trading Co, providing reasonable belief of escaped income. Addition u/s 68 as unexplained cash credits deleted as books not rejected, quantitative details provided, and lack of evidence of accommodation entries. Cross-examination opportunity denied, violating natural justice principles. Transactions with M/s Edelweiss Commodities misunderstood. Consequential deletion of taxation u/s 115BBE, interest u/ss 234A, 234B, 234C, 234D, and penalty u/s 271(1)(c). Visit to Get Source Exemption u/s 54F/54 allowed if new property acquired within 1 year before sale; possession date key, not legal transfer. Case-Laws - AT : Assessee entitled to exemption u/s 54F/54 as possession of new house property acquired within one year before sale of original asset; crucial date for purchase is when possession and control given to purchaser, not legal transfer; mere allegation of fabricated document cannot be sustained without evidence; reliance on precedents of Shahzada Begum, Laxmichand Nagda, and T.N. Aravinda Reddy cases. Visit to Get Source AO can't reject DCF method & apply NAV for share valuation. Independent parties' Rs 13.94/share value accepted under FEMA/RBI. Case-Laws - AT : AO cannot interfere in assessee's chosen valuation method u/s 56(2)(viib). AO exceeded jurisdiction by rejecting DCF method and applying NAV method. Transaction between independent parties at Rs. 13.94 per share accepted under FEMA and RBI guidelines. Same value adopted by assessee cannot be disturbed for share issue. Addition u/s 56(2)(viib) deleted. Assessee's appeal allowed. Visit to Get Source NRI's US Asset Gain Ruled Non-Taxable in India; Tribunal Accepts Long-Term Filing Despite Short-Term Classification. Case-Laws - AT : The assessee, an NRI and resident of USA, transferred a capital asset and derived capital gain. The asset comprised rights and interests acquired through an assignment deed executed in USA. The Assessing Officer treated the gain as short-term, restricting the holding period to less than 24 months based on an employment agreement. However, the Tribunal held that since no shares were delivered to the assessee, the capital asset did not qualify as shares/securities of an Indian company u/s 2(42A). As the asset was held for less than 36 months, it was rightly treated as short-term. Regarding taxability in India u/s 9(1)(i), the Tribunal held that the situs of the capital asset was in USA, where the assignment deed was executed, and the termination agreement specified California courts' jurisdiction. Therefore, the capital gain derived from transfer of the asset situated outside India was not taxable in India. However, as the assessee had voluntarily filed a return offering the gain as long-term, the Tribunal directed the AO to accept the capital gain offered in the return. Visit to Get Source Bank's gratuity & leave provisions are real expenses, not notional. Taxable income is real, not book entries. ITAT upheld assessee's claim. Case-Laws - AT : The assessee bank made provisions for group gratuity and leave encashment by debiting expenses in its books, but these provisions were never treated as real expenses for income tax purposes. The AO made additions for the difference between the book provisions and actuarial valuations. The ITAT held that the expenses debited pertained to the assessment year and were real expenses, not provisions. The AO's findings that the amounts did not pertain to the year were perverse. Only real income is taxable, not provisions, as held in Shoorji Vallabhdas case. The assessee did not claim notional expenses to reduce profits. The AO's additions were deleted. Visit to Get Source AO made u/s 68 addition for director's loan account mismatch but Tribunal held previous year transactions can't be income for current year. Case-Laws - AT : Addition u/s 68 for director's loan ledger account was made by assessing officer (AO) considering transactions not matching previous year's financial statements. Assessee stated transactions pertained to prior assessment years. Tribunal held previous year's transactions cannot be considered income in current assessment year. Transactions related to FY 2012-13 and 2013-14, for which AO passed order u/s 143(3) on 29.01.2016 accepting closing balance of director's ledger account. AO cannot consider opening balance in current assessment year for making addition, relying on Sridev Enterprises judgment. Tribunal upheld CIT(Appeals) order deleting the addition, decided in favor of assessee. Visit to Get Source Customs Tribunal upheld confiscation & penalties on 5 unexported containers but set aside same for 231 exported containers due to dept's delay. Case-Laws - AT : Appellants challenged confiscation of containers, imposition of redemption fine, and penalty due to inordinate delay in adjudication. Tribunal found procedural lapse by appellants but acknowledged delay caused by department's hold on containers. 231 out of 236 containers exported before show cause notice. Tribunal ruled confiscation, redemption fine, and penalty on exported containers incorrect. However, duty payable on remaining 5 unexported containers and penalty of Rs. 50,000 u/s 112 of Customs Act imposed for infractions. Appeal partly allowed, confiscation and redemption fine on exported containers set aside. Visit to Get Source Tariff Classification of Imported Meters Challenged; Appeal Allowed for Reassessment Due to Inadequate Justifications. Case-Laws - AT : Imported flow meters, pressure transmitters, level transmitters, parts and accessories were classified under tariff headings 9032 8990 and 9032 9000 or 9026 of Customs Tariff Act, 1975. Assessing authority insisted on revising classification with duty implications. Importers challenged before appellate authority. No speaking order issued by assessing authority. Appellate authority offered justifications akin to dual-headed assessment. Appellate jurisdiction is to determine validity of justification for detriment. Correctness of classification by customs and excise authorities for finished/manufactured products differs from classification of parts and accessories derived from rival headings. Heading 9032 intended for autonomous calibrating and regulating equipment. Nature of goods not examined for conformity. Onus on authorities to comply with interpretation rules not discharged. Lack of determination on correctness of classification. Disputes to be adjudicated afresh by original authorities for proper determination. Impugned orders set aside, matters remanded for de novo proceedings. Appeal allowed by way of remand. Visit to Get Source Customs valuation of cyanuric chloride rejected by revenue. Appellant's 2000MT import at lower price upheld by CESTAT. Case-Laws - AT : Customs valuation of imported cyanuric chloride - revenue rejected declared value based on NIDB and contemporaneous import data showing higher prices for smaller quantities - appellant imported 2000 MT at lower negotiated price - CESTAT held quantity imported significantly different from NIDB data relied upon by revenue, hence cannot be compared - no other evidence cited by authorities - orders set aside, appeal allowed. Visit to Get Source Tire and Differential Pressure Sensors Classified Under Heading 9026 for Measuring Gas Pressure per Customs Tariff Act. Case-Laws - AAR : Tire Pressure Monitoring Sensors (TPMS) and Differential Pressure Sensors (DPS) are used for measuring gas pressure and are fitted with sensors sensitive to pressure variations. They fall under Heading 9026 which covers instruments like manometers for measuring or checking liquid or gas pressure, including electrical pressure gauges based on variations in electrical phenomena or using ultrasound, as well as differential pressure gauges used to measure pressure differences. The devices under consideration use electrical phenomena to measure pressure, hence classifiable under Heading 9026. Sub-heading 9026 20 00 specifically includes instruments for measuring or checking pressure. Previous rulings support classifying similar devices like air leak testers and water sensors under Heading 9026 instead of residual Heading 9031 when a specific entry exists. Therefore, TPMS and DPS merit classification under sub-heading 9026 20 00 of the Customs Tariff Act, 1975. Visit to Get Source Advance Ruling Application Dismissed: Pending Classification of Lithium-Ion Cell Products Under Review by Customs Officer. Case-Laws - AAR : Maintainability of advance ruling application questioned due to pending classification issue before Customs Officer for 13 imported products used in Lithium-ion cell manufacturing. Advance ruling definition u/s 28E allows rulings on pre-importation questions, but Customs Authorities have issued rulings on post-importation queries for consistency and facilitation. Section 28 provides for pre-notice consultation and duty payment by importer before notice for short-levy. Applicant initiated reassessment process, rendering advance ruling application liable for rejection as classification issue pending before Customs Officer. Advance ruling application dismissed. Visit to Get Source SEZ 1.11 hectares de-notified from Pune IT SEZ, leaving 3.95 hectares. Land to aid SEZ infrastructure. Approved by authorities. Notifications : Central Government de-notified 1.11 hectares from the Special Economic Zone for Information Technology and Information Technology Enabled Services at Survey No. 128/2/A Near Rajiv Gandhi Infotech Park - Phase-I, Hinjewadi, Taluka- Mulashi, District Pune, Maharashtra. Resultant area of the SEZ stands at 3.95 hectares after de-notification. The de-notified land parcels will be utilized for infrastructure creation to sub-serve the SEZ's objective. The proposal was recommended by the Development Commissioner, SEEPZ SEZ and approved by the State Government of Maharashtra. Visit to Get Source Notification amends previous ones, changing Developer's name from "M/s. GIFT SEZ Limited" to "M/s. Gujarat International Finance Tec-City Company Limited". Notifications : Notification amends previous notifications issued by Ministry of Commerce and Industry under Special Economic Zones Act, 2005 and Rules, 2006. Name of Developer changed from "M/s. GIFT SEZ Limited" to "M/s. Gujarat International Finance Tec-City Company Limited". Visit to Get Source FEMA Non-residents can buy/sell Indian Sovereign Green Bonds in IFSC. Inward remittance for purchase & outward remittance of sale proceeds allowed. Notifications : The notification amends the Foreign Exchange Management (Debt Instruments) Regulations, 2019, allowing persons residing outside India to purchase and sell Sovereign Green Bonds issued by the Government of India in the International Financial Services Centre (IFSC), subject to specified terms and conditions. It permits inward remittance or use of foreign currency account funds for purchase consideration and outward remittance of sale/maturity proceeds (net of taxes). The amendment aims to facilitate investment in Sovereign Green Bonds by non-residents in the IFSC. Visit to Get Source Indian Laws Cheque dishonour case valid if filed within 30 days of notice. No need to prove notice service. Onus on accused to rebut service presumption. : Case-Laws - HC : Dishonour of cheque case instituted within 30 days from legal notice date satisfies condition precedent for cognizance u/s 138 and 142(b) of NI Act. Complaint within limitation even if presumption of notice service within reasonable 30 days applied. Complainant not required to prove notice service before institution; accused to rebut deemed service presumption under Evidence Act. Trial courts must ensure compliance with NI Act provisions at registration stage. Appellate court judgment set aside, case remitted for fresh hearing. Visit to Get Source PMLA Bail Granted Due to Prolonged Incarceration and Right to Liberty; Supreme Court Overturns High Court Decision. Case-Laws - SC : The appellant was granted bail in the Excise Policy case due to prolonged incarceration and denial of the right to speedy trial, despite the seriousness of the allegations. The Supreme Court observed that the trial was unlikely to conclude anytime soon, given the voluminous evidence and witnesses involved. Keeping the appellant incarcerated indefinitely would violate their fundamental right to liberty under Article 21. The court noted the appellant's deep societal roots and imposed conditions like furnishing bail bonds to address concerns about tampering with evidence or influencing witnesses. The High Court's order denying bail was quashed, and the appellant was directed to be released on bail upon furnishing bonds of Rs. 10,00,000 with two sureties of the same amount. Visit to Get Source Service Tax Cenvat credit on immovable property post completion certificate denied, treated as sale of goods. Credit allowed only on inputs within 1 year. Case-Laws - AT : Cenvat credit on immovable property constructed after issuance of completion certificate is not permissible, as transaction is treated as sale of goods, not service. Cenvat credit can be taken only on receipt of inputs and within one year from date of documents. Extended period of limitation rightly invoked as appellant was aware of ineligibility for credit after completion certificate. Imposition of penalty u/s 78 and levy of interest upheld. Appeal dismissed by Appellate Tribunal. Visit to Get Source Service tax demand on income shown in IT Return justified. Suppression of facts to evade tax. Extended period invoked. Penalty upheld. Case-Laws - AT : Service tax demand on income shown in Income Tax Return - Suppression of facts and contravention of Act/Rules with intent to evade tax - Extended period of limitation rightly invoked as appellant filed ST-3 Returns without fully disclosing taxable value - Differential value learnt from Income Tax Department - Penalty u/ss 78 and 77 upheld along with interest - No merits to interfere with impugned order - Appeal dismissed. Visit to Get Source Central Excise Interest rate on delayed excise refunds capped at 6% p.a. despite claims for higher rates. Govt empowered to fix 5-30% rate. Case-Laws - AT : Interest rate on delayed refunds u/s 11BB of Central Excise Act, 1944 restricted to 6% p.a. as per Notification 67/2003-CE (N.T.), overruling appellant's claim of 12%. Madras and Karnataka High Courts upheld 6% rate, rejecting higher rates claimed. Section 11BB empowers Central Government to fix rate between 5-30% through notification. Notification 67/2003 validly issued fixing 6% rate. Appellant's contention of order being beyond show cause notice unsustainable. Appeal dismissed, affirming impugned orders. Visit to Get Source Duty paid by mistake to govt passed on to contractor under protest. Contractor withheld excess payment. No proof duty wasn't credited. Unjust enrichment. Case-Laws - AT : The appellant agreed that duty paid by mistake to the government was passed on to the principal contractor under protest. Their argument was that the principal contractor withheld payment exceeding the refund amount to adjust the excise duty paid by the appellant. However, no factual proof was provided or shown that the duty paid by the principal contractor was not passed on or credited against duties payable. The appellant failed to discharge the burden of proving that unjust enrichment did not occur. The impugned order upholding the rejection of refund claims due to the unjust enrichment bar was upheld, and the appeal was rejected. Visit to Get Source Duty abatement allowed for machine closure period sans prior payment. Claimable under Pan Masala Rules & CESTAT precedents. Demand unsustainable. Case-Laws - AT : Appellant eligible for abatement without prior payment of duty for period when machine under closure. As per Rule 10 of Pan Masala Packaging Machine Rules, 2008, and CESTAT precedents, abatement claimable sans duty payment for closure period. Demand of duty unsustainable, impugned orders set aside, appeal allowed. Visit to Get Source Port services qualify as 'place of removal' for CENVAT credit on cargo handling services for exports. Interpretation issue, not suppression. Case-Laws - AT : The CESTAT dismissed the Revenue's appeal, ruling that port services qualify as 'place of removal' for availing CENVAT credit on cargo handling services used for exporting goods. The Gujarat High Court had previously held that cargo handling services availed for exporting goods are essentially rendered at the port from where goods are taken out of the country. Furthermore, the issue was one of interpretation rather than suppression, so the extended period for issuing the show cause notice demanding reversal of CENVAT credit was not justified due to time limitation. Visit to Get Source Items like Polycril & Sector 130/140 can't be treated as raw materials but consumables as they don't remain in final product. Case-Laws - AT : The items Polycril and Sector 130, 140 cannot be treated as raw materials but as consumables, as they do not remain until the final product reaches the end user and are only used for processing without becoming part of the final product. The department was unjustified in treating these items as raw materials. The ratio of the Supreme Court's decision in Commissioner of Customs, Cochin versus GTN Textiles is applicable here, as there is no difference between Notification No. 8/97-CE and Notification No. 23/2003-CE regarding conditions for availing the benefit. The impugned order is set aside, and the appeal is allowed. Visit to Get Source Case Laws: GST 2024 (8) TMI 648 Maintainability of petition - availability of alternative remedy - Refund of taxes oaid in excess inadvertently due to ignorance and lack of clarity of the provisions of law - HELD THAT:- It is true that the Hon ble Supreme Court in various pronouncements and in M/S GODREJ SARA LEE LTD. VERSUS THE EXCISE AND TAXATION OFFICERCUM- ASSESSING AUTHORITY ORS. [ 2023 (2) TMI 64 - SUPREME COURT] has observed that where the controversy is purely a legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the High Court instead of dismissing the writ petition on the ground of alternative remedy being available. However, at the same time, the Hon ble Supreme Court has also laid down that where the statute under which the action complained of contains a complete mechanism for redressal of grievances of a person complaining, a writ petition should not be entertained. In the present cases, it is not the case of the appellant Company that the authority has no jurisdiction to pass the impugned orders. It is also not the case of the appellant Company that the CGST Act, 2017 do not contain a comprehensive mechanism for redressal of its grievances. The discretion exercised by the learned Single Judge in refusing to entertain the writ petitions on the ground of availability of efficacious alternate remedy is not liable to be interfered with and, therefore, the present writ appeals are dismissed. 2024 (8) TMI 647 Extension of time limit as specified in Section 73(10) of the WBGST/CGST Act, 2017 - recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized - HELD THAT:- Taking into consideration the fact that a prima facie case has been made out by the petitioner, and the fact that a Coordinate Bench of this Court by an order dated 13th February, 2024 in an identical matter in the case of OSL EXCLUSIVE PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2024 (3) TMI 1338 - CALCUTTA HIGH COURT] had been pleased to pass a limited interim order, it is proposed to stay the impugned demand made in the order dated 26th December 2023 as appearing at annexure P-7 to the writ petition till the end of December, 2024 or until further order whichever is earlier. Liberty to mention after expiry of the period for exchange of affidavits. 2024 (8) TMI 646 Classification of goods - RhizoMyx - Rhizo Myco - to be classified under Chapter Heading 3002 of the First Schedule to the Customs Tariff Act, 1975 or not - rate of GST - HELD THAT:- It is apparent from the impugned order dated 08.03.2021 that the bio-fertilizers produced by the petitioner are held to be classified under Chapter 3002 whereas in the order dated 20.07.2021, passed by the Appellate Authority, the bio-fertilizers are held to be classified under Chapter 3105 in case of IN RE: M/S. G.B. AGRO INDUSTRIES, [ 2021 (10) TMI 59 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT] . Thus, there are contradictory findings arrived at by the Appellate Authority pertaining to the classification of the bio-fertilizers produced by the petitioner and the other manufacturer i.e. M/s. GB Agro Industries. It is also pertinent to note that the GST rate applicable for the Chapter 3105/3101 is 5% whereas the rate applicable for Chapter 3002 is of 12%. Thus the petitioner is at loss by approaching before the Advance Ruling Authority, more particularly, when the Appellate Authority in the case of M/s. GB Agro Industries has taken a contradictory view than that in case of the petitioner by applying Chapter 3105/3101 having GST rate of 5% whereas in case of the petitioner the bio-fertilizers are held to be classified under Chapter 3002 having GST rate of 12%. Thus there is an anomaly in the impugned order passed by the Appellate Authority of the Advance Ruling. The impugned order dated 08.03.2021 passed in case of the petitioner by the Appellate Authority is hereby quashed and set aside and the matter is remanded back to the Appellate Authority to consider de novo afresh in accordance with law after giving opportunity of hearing to the petitioner - Petition disposed off by way of remand. 2024 (8) TMI 645 Mis-match between the Input Tax Credit availed and the tax paid by the supplier and the demand of tax on the renewal charges paid for Factory License - HELD THAT:- The demand can be adjudicated by the petitioner before the Appellate Commissioner. Therefore, the petitioner can file an appeal on these issues. Other demands regarding RCM on the Ocean freight charges dropped. This Writ Petition stands partly allowed. 2024 (8) TMI 644 Validity of SCN issued u/s 73 of CGST Act - recovery of demand of differential tax - tax period from 1-7-2017 to 31-12-2018 - transactions qua Serial No. 257 with Group 997334 Service Code (Tariff) 9973 37 having Service Description: Licensing services for the right to use minerals including its exploration and evaluation qua Sl. No. 17 under Heading 9973 (Leasing or rental services, with or without operator) with residuary entry under Description of Service - retrospective operation of CBIC-190354/207/2021-TO (TRU-II)-CBEC, dated 6-10-2021. HELD THAT:- Issue notice to the Opposite Parties. It is directed that in the meantime, no coercive action for recovery of demand of differential tax as reflected in the Summary of Show Cause Notice vide Annexure-6 be taken by the opposite party No. 5 till the next date of hearing. List this matter along with W.P. (C) No. 3181 of 2022 on the date fixed therein. 2024 (8) TMI 643 Rectification of certain errors that were apparent on the face of the Order - AAR Ruling - The AR contended that having admitted the application in the first place, the AAR ought to have passed rulings in respect of all the three queries raised by the applicant. - HELD THAT:- Since no error apparent on the face of the record is noticed in the instant case, no rectification is required to be made and as the provisions of the Customs Act do not get attracted in the instant case, the differential IGST paid by the applicant becomes ineligible for availment of ITC, in terms of Section of the CGST Act, 2017. There is no apparent error or mistake on the face of the record as alleged by the applicant - the instant application for of advance ruling is liable for rejection in terms of Section 98 (2) of the CGST/TNGST Acts, 2017. 2024 (8) TMI 642 Classification of goods - rope handle, vent plug and split top / bottom support, made from plastic - to be classified under headings 3901 to 3914 or under heading 3926 or 8507 - rate of GST - HELD THAT:- The said articles Rope handle , Vent plug and Split top /bottom support are not specifically described in either of the headings or the subheadings of the two competing headings i.e. heading 3926 and heading 8507 . The said articles are manufactured by moulding using injection moulding machine and the raw materials used is Reprocessed Polypropylene / Low linear density polyethylene and hence the applicant has contended that the right classification of the said articles is under heading 3926 . Though the impugned articles are all made of plastic (polypropylene / High density Polyethylene) the said articles are all used as parts of Lead acid battery. We find that the applicant themselves have submitted that the said articles are all used as parts are accessories for lead acid battery / electric accumulator . The applicant has also submitted that the uses of each of the articles i.e. the said articles are used for lifting of lead acid battery, transportation purposes and providing support to top and bottom of the battery plates. Further, the applicant also submitted that the vent plug to be maim factored by them can not only be used for transportation but also few customers would use it as a regular vent plug. Hence there is no doubt regarding the purpose of manufacturing the impugned articles i.e. the said articles are manufactured with the purpose of transporting/ lifting the lead acid battery or providing support to the lead acid battery. Though the impugned articles are all made of plastic, by virtue of Chapter Note 2(s) to Chapter 39 the impugned articles are not covered under Chapter 39. Further the explanatory notes given under General content of Section XVI mentions that the goods of the said section can be of any material including plastics. Also Rule 3(b) of GRIs is also not applicable in the instant case as the same deals with mixed goods, composite goods and goods put up in sets for retail sale which cannot be classified by reference to 3(a). Rate of tax - HELD THAT:- As the impugned goods are to be classified under the heading 8507 and more particularly under sub heading 8507 90 , the applicable tax rate is 14% CGST as per SL No, 139 of Schedule IV of Notification No. 01/2017-C.T.(rate) dated 28.06.2017 as amended and 14% SGST as per SI No. 139 of Schedule IV of G.O. (Ms] No. 62 dated 29.06.2017 No. II(2)/CTR/532(d-4)/2017 as amended - It is found that the applicant has contended that Sl.No. 139 does not even refer to parts of the electric accumulators and that it is a well settled principle of law that no terms or words can be read into the provisions of law and similarly, SL No. 139 of Notification No. 1/2017-CT (R) cannot be read into to include parts and accessories of electric accumulators In this regard all the goods falling under Heading 8507 attracted 14% CGST initially as per Notification No. 1/2017-CT (R) dated 28.06.2017 and later the GST on Lithium -ion batteries was reduced to CGST 9% vide subsequent Notification. The impugned goods which are Parts of Electric accumulators are classifiable under subheading 8507 90 which is covered under heading 8507 and attracts CGST rate and SGST rate. 2024 (8) TMI 641 Release of attached bank accounts - challenge to summary order - HELD THAT:- On perusal of the summary of the order dated 13.08.2019 placed at Annexure-A to the petition, it only says the order no., order date:14.06.2019, Tax Period: April 2018 to September 2018 and issues involved is difference of Rs. 94,71,738/- between GSTR-3B and GSTR-2A. In absence of any order for which the summary of the order was issued on 13.08.2019, the same cannot be sustained and accordingly, the Annexure-A, summary of the order dated 13.08.2019 in Form GST DRC-07 is hereby quashed and set aside and the consequent action for recovery on the basis of such summary of the order in absence of any order passed under any of the provisions of the Act is also quashed and set aside including the attachment of the bank accounts of the petitioner. The respondents are directed to pass an appropriate order for lifting the attachment of the bank accounts of the petitioner forthwith - the petition is disposed of. 2024 (8) TMI 640 Extension of time for issuance of the order u/s 73(9) of the said Act for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized - State GST authorities submits that the present writ petition cannot be decided without calling for affidavits - HELD THAT:- Since a jurisdictional issue has been raised, the writ petition shall be heard. Let affidavit-in-opposition to the present writ petition be filed within a period of four weeks from date. Reply thereto, if any, be filed within three weeks thereafter. Taking into consideration the fact that a prima facie case has been made out by the petitioner, and the fact that a Coordinate Bench of this Court by an order dated 21st March, 2024 in an identical matter in the case of OSL Exclusive Pvt. Ltd. v. Union of India Ors. [ 2024 (3) TMI 1338 - CALCUTTA HIGH COURT ] had been pleased to pass a limited interim order, it is proposed to stay the impugned demand made in the order dated 26th February 2024 as appearing at annexure P-7 to the writ petition till the end of December, 2024 or until further order whichever is earlier. Liberty to mention after expiry of the period for exchange of affidavits. 2024 (8) TMI 639 Rejection of appeal on the ground that the said appeal was barred by limitation - time limitation - HELD THAT:- In this case it would appear, although the appeal was filed beyond the time prescribed, however, explanation had been afforded by the petitioners. The appellate authority appears to have ignored such explanation and proceeded to reject the appeal on the ground of limitation. The appellate authority ought to have in the given facts taken note of the explanation given by the petitioners, especially in view of the judgement delivered by the Hon ble Division Bench of this Court in the case of S.K. CHAKRABORTY SONS VERSUS UNION OF INDIA ORS. [ 2023 (12) TMI 290 - CALCUTTA HIGH COURT] . The petitioners have been able to sufficiently explain the delay in filing the appeal. In view thereof, while condoning the delay for filing the appeal beyond the time prescribed, it is directed that the appellate authority to hear out and dispose of the appeal on merits as expeditiously as possible preferably within a period of eight weeks from the date of communication of this order. The order passed by the appellate authority dated 24th May, 2024 is set aside - the writ petition is disposed of. 2024 (8) TMI 638 Maintainability of petition - availability of alternative remedy - Challenge to the vires of Section 16(2)(c) of the CGST/Gujarat GST Act 2017 - disallowance of input tax credit claimed by the petitioner - HELD THAT:- It appears that the impugned order passed by the respondent Assessing Officer is appealable under Section 107 of the GST Act. The Hon ble Apex Court in case of THE ASSISTANT COMMISSIONER OF STATE TAX AND OTHERS VERSUS M/S COMMERCIAL STEEL LIMITED [ 2021 (9) TMI 480 - SUPREME COURT] after considering the provisions of Section 107 of the GST Act, has held In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority. As a matter of fact, the High Court has while doing this exercise proceeded on the basis of surmises. When there is alternative efficacious remedy available to the petitioner under Section 107 of the Act, the petitioner is relegated to avail the same - petition disposed off. 2024 (8) TMI 637 Action of the proper officer to cancel his GST registration ab initio (from the date it was initially granted) - cancellation order is bereft of any reason and does not spell out the grounds - violation of principles of natural justice - HELD THAT:- A plain reading of the SCN indicates that same is not intelligible. Although, the SCN alleges that the petitioner has obtained registration by means of fraud, wilful misstatement, or suppression of facts. It does not disclose as to the nature of fraud allegedly committed; statement which is alleged to be a wilful mistake; or the nature of the relevant facts, which are alleged to have been suppressed by the petitioner. Section 29 (2) of the CGST Act empowers the proper officer to cancel a taxpayer s registration, including with retrospective effect, on the grounds as set out in Section 29 (2) of the CGST Act. In the present case, the SCN refers to clause (e) of Section 29 (2) of the CGST Act which provides for cancellation of a taxpayer s GST registration if it is obtained by means of fraud, wilful misstatement or suppression of facts. The SCN merely reproduces the statutory provision. It is apparent that the SCN does not meet the requisite standards of a show cause notice inasmuch as it does not enable the noticee to meaningfully respond to the allegations on the basis of which an adverse action was proposed - The cancellation order is also bereft of any reason and does not spell out the grounds for which the petitioner s GST registration has been cancelled. It is considered apposite to accede to the prayer made by the learned counsel for the petitioner. It is directed that the cancellation order shall take effect from the date of the SCN, that is, with effect from 28.06.2023, and not with retrospective effect from 29.12.2022 - petition disposed off. 2024 (8) TMI 636 Cancellation of GST registration of petitioner - absence of a copy of the memo - non-application of mind - violation of principles of natural justice - HELD THAT:- Although, the impugned SCN mentions memo no. 751 dated 10.06.2024, it does not indicate that any softcopy/file was attached to the impugned SCN. Since the only reason for proposing to cancel the petitioner s GST Registration is stated to be the aforesaid memo no. 751 dated 10.06.2024, the impugned notice is incapable of eliciting any response, in the absence of a copy of the said memo. It is also material to note that although the petitioner was put to notice that if it does not appear for a personal hearing on the appointed date and time, the matter would be decided ex-parte, however, the impugned SCN does not mention any date or time at which the petitioner was required to appear for availing the opportunity of a personal hearing - It is apparent that the impugned SCN was issued without application of mind and fails to meet the standards required of a show cause notice. The impugned SCN is set aside and the petitioner s GST registration is directed to be restored forthwith - Petition allowed. 2024 (8) TMI 635 Maintainability of petition - time limitation - assessment year 2017-18 - HELD THAT:- This Court is of the view that the petitioner may be given partial relief by quashing the impugned order and remitting the case back to the respondent to pass fresh orders subject to the petitioner depositing Rs. 1,00,000/- from its Electronic Cash Register. Needless to state, the aforesaid amount shall be deposited without prejudice to the rights of the petitioner in De-Novo proceedings. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order. Petition allowed. 2024 (8) TMI 634 Challenge to SCN issued u/s 74 of the CGST Act, 2017 - exemption of Central Tax for electricity services - Serial no. 25 of the notification dated 28th June, 2017 - HELD THAT:- Admittedly, in this case it is noticed that the respondent no.1 has proceeded to invoke the provisions of Section 74 of the said Act by placing reliance on a circular dated 1st March, 2018. It is, however, an admitted position that the petitioner is a distribution licensee within the meaning of the Indian Electricity Act, 2003 and it is otherwise entitled to the benefit of the notification dated 28th June, 2017. It would appear from the said notification that the same had been issued in terms of Section 11 (1) of the said Act whereunder the Central Government has exempted the intra-State supply of service of description specified in column (3) of the Table to the said circular and under serial number 25, column 3, transmission or distribution of electricity by an electricity transmission or distribution utility had been notified. The exemption granted in favour of the transmission or distribution licensee, though had been recognised, other services attached thereto have been clarified as taxable. Prima facie the aforesaid clarification cannot be treated to be a clarification of the notification issued under Section 11 (1) of the said Act, since the circular is an independent document and has not been introduced by way of an explanation to exemption notification issued under Section 11 (1) of the said Act - Admittedly, the circular dated 1st March, 2018 has been declared ultra vires to the provisions of Section 8 of the said Act as well as the notification no. 12/2017-CT (R). The petitioner having made a prima facie case and having raised a jurisdictional issue, is entitled to interim protection. However, taking into account the fact that the show cause notice has already been issued, and the final decision is yet to be taken, at this stage, it would be prudent to direct the petitioner to participate in the said proceeding. However, no final order shall be passed on the basis of the aforesaid show cause notice without leave of this Court Liberty to mention after expiry of the period for exchange of affidavits. Income Tax 2024 (8) TMI 633 Reopening of assessment - accommodation entries under various heads such as Long Term Capital Gains/Loss or Short Term Capital Gains/Loss, Unsecured Loans, Share Premium, Bogus Gains, Contrived Losses etc. received - HELD THAT:- As during the course of the regular assessment, AO has considered the Short Term Capital Gain as well as Long Term Capital Gain claimed by the assessee from the script Kaushal Tradelink Limited. Therefore the Assessing Officer has already considered the issue during the regular course of assessment and the impugned notice under Section 148 of the Act issued by the respondent no. 1 for reopening of the assessment is nothing but based on the general information received from the investigation wing pertaining to the script Kaushal Limited. The reasons recorded also does not disclose as to the particular escapement of the income. AO has issued the impugned notice on the borrowed satisfaction without application of mind and the respondent no. 2 has also granted the sanction mechanically under the pressure of work as explained in the aforesaid affidavits. The impugned notice is issued only on the basis of the information which has already been considered for making addition during the regular course of assessment, could not have been issued if the respondent authorities would have perused the material available on record in form of the Assessment Order passed under Section 143 (3) of the Act. The impugned notice, therefore cannot be sustained and therefore is accordingly quashed and set aside - Decided in favour of assessee. 2024 (8) TMI 632 Entitlement for exemption u/s 2 (15) r.w.s. 12AA - whether the income received by the Kerala Cricket Association would partake of the nature of exempted income going by the provisions of Section 2 (15)? - HELD THAT:- We are of the view that the present appeals need to be remanded to the Appellate Tribunal for a fresh adjudication on the facts, especially with regard to whether or not the amount made over to the assessee Cricket Association by the Board for Control of Cricket in India (BCCI) were in the nature of infrastructure subsidy or business income. We, therefore, set aside the impugned orders of the Income Tax Appellate Tribunal and remand the matter to the Tribunal for a fresh determination of the issue in the light of the observations of the Supreme Court in Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT ]. The Income Tax Appellate Tribunal shall consider the matter afresh as above and pass final orders in the appeal within an outer time limit of six months from the date of receipt of a copy of this judgment. 2024 (8) TMI 631 Disallowance u/s.14A r.w.r. 8D - assessee did not earn any exempt income - HELD THAT:- Since the assessee has not earned any exempt income during the year under consideration, the disallowance u/s. 14A of the Act is not required to be made as per the decision of Era Infrastructure (India) Ltd[ 2022 (7) TMI 1093 - DELHI HIGH COURT] . Respectfully following the said decision, we set aside the order passed by the CIT(A) and direct the AO to delete the disallowance made u/s. 14A of the Act during the year under consideration. Appeal filed by the assessee is allowed. 2024 (8) TMI 630 Validity of reopening of assessment u/s 147 - unexplained cash deposits in the bank account - addition u/s 68 - notice having been served after expiry of six years - HELD THAT:- The fact that the cash deposits appearing in assessee s bank account in different assessment years are receipts from his business activity has been accepted by the learned first appellate authority. However, he has estimated the income at 25% of the receipts. From the materials placed before us, it is observed that the assessee had not filed any return of income for assessment year 2007-08 to 2011-12. When the cash deposits were found in his bank account, the assessee came forward to disclose income from the profit derived from his business. As by that time, the limitation for filing return of income had expired for assessment years 2007-08 to 2010-11. The assessee offered the entire income for assessment years 2007-08 to 2011-12 by offering income of Rs. 5,49,320/- computed by applying 3% net profit rate on the receipts appearing in the bank account. The assessee had also discharged tax liability for the income declared by paying tax of Rs. 45,180/-. This is clearly discernible from the copy of the bank challan and chart showing computation of profit placed in the paper book. Thus, the contention of the assessee that it has offered the profit from business to tax is believable. Once the assessee has offered the income to tax in a consolidated manner in assessment year 2011-12, no further addition can be made in the respective assessment years. Assessee appeal allowed. Penalties u/s 271(1)(c) cannot be imposed as in quantum appeals (supra) we have decided the issues in favour of the assessee. 2024 (8) TMI 629 Addition of interest made with respect to the interest free loans advanced by the assessee Company to its sister concerns / related parties - Whether CIT(A) is correct in law and facts of the case, in allowing the expenditure, when the assessee has failed to prove that the funds were completely utilized by the sister concerns/related companies for business purposes alone? - HELD THAT:- Onus is on the assessee to prove that there is commercial expediency for the advances taken as interest free from the related parties. From the financials of the M/s. Coastal Packagings, we find that the assessee is an individual and proprietor of M/s. Coastal Packagings and also has accepted the interest free advances outstanding as on 31.03.2014 from the assessee company where he also the Wholetime Director and further has made investment in assessee Company itself for Rs. 23.96 crores. We consider this as benefit derived by the Individual Director s in his proprietary concern where he holds 100% ownership as proprietor of M/s. Coastal Packagings. Therefore, in the case of S.A. Builders [ 2006 (12) TMI 82 - SUPREME COURT] relied on by the CIT(A) cannot be applied to the instant case. With respect to the interest free advance to M/s. Diehard Dies Pvt., Limited, no documentary evidences have been provided before us to substantiate that it arose due to commercial expediency of the related parties. CIT(A) has erred in considering the transaction has arisen out of business / commercial expediency and therefore we have no hesitation to set-aside the order of the CIT(A) thereby restoring the order of the AO on this issue. Appeal of the revenue is allowed. 2024 (8) TMI 628 Bogus LTCG - Addition u/s 68 - denying exemption claimed under section 10(38) for the sale proceeds of listed equity shares alleged as penny stock - HELD THAT:- As we notice that assessee has a. purchased the shares under accepted off-line mode by making payment through banking channel. b. dematerialized the shares purchased by credit to the DMAT account and part of it were later sold out of the holding. c. sold the shares on the platform of recognised stock exchange on the then prevailing prices. d. received the sale proceeds through stock market process in his bank account. We note that AO has not brought on record any material to show that assessee was part of any group which was involved in the manipulation of share prices. Suspicion by the AO on the purchase and sale of shares is baseless. We also note that AO did not allow the assessee to cross examination the parties whose statements were relied upon by him for drawing the adverse conclusion. Such an approach adopted by ld. Assessing Officer is not in compliance with the provisions of section 142(3) of the Act which is a statutory mandatory procedural requirement for making a valid assessment. We note that the required compliance with section 142(3) has not been met. AO has referred to the theory of preponderance of probability which according to us is applied to weigh the evidence of either side and draw a conclusion in favour of a party which has more favourable factor in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of fact that might go against the assessee. Once nothing has been proved against the assessee with the aid of any direct material, nothing can be implicated against the assessee on the presumption or suspicion, howsoever, strong it might appear to be true. Thus, we uphold the finding arrived at by the CIT(A) and accordingly delete the addition made u/s 68 towards proceeds of sale of listed shares which gave rise to Long Term Capital Gain on the said sale, claimed exempt by the assessee u/s 10(38). Accordingly, grounds taken by the Revenue in this respect are dismissed. Commission for arranging alleged artificial capital gains @ 3% also deleted. Decided against revenue. 2024 (8) TMI 627 Penalty u/s. 271(1)(c) - excess deduction u/s. 10B - onus to prove - HELD THAT:- All the relevant facts material to the computation of total income are duly furnished by the assessee and no deficiencies in furnishing of such facts are pointed out by the authorities below. In respect of claim u/s 10B, assessee had explained the facts in detail vide its submissions before the AO as to the number of manufacturing divisions run by it and how the business expenditure incurred is bifurcated towards each division. The explanation of the assessee has not been found to be false. The onus of proving that the explanation is false is on the revenue and there is no finding in this direction at all. Claim made by the assessee is an allowable claim though quantum of the same has been reworked by the AO by applying a different arithmetic. All the details and justifications of claim have been set out in the return of income itself. There was a detailed note giving rationale and computation of the claim along with facts relating to carried forward losses available with the assessee which even after set off are available in the subsequent assessment years. There is nothing on record brought by the revenue to negate the availability of carried forward losses. Thus, the amount of tax sought to be evaded as required in explanation 1 to section 271(1)(c) is indeterminable for the imposition of penalty as rightly observed by the ld. CIT(A). Effect of decision of the assessee to pursue or not to pursue legal remedy against rejection of its stand - The fact that the assessee has not carried in appeal the reduction of its claim by the Assessing Officer is sought to be used against the assessee s claim of bona fides. We are unable to see any rationale in this. The decision to go in litigation or not does not depend on the merits alone. Merely because an assessee does not challenge a particular addition or disallowance in appeal does not mean that the claim for such exclusion from income or deduction lacked bona fides . No reason to interfere with the observations and findings arrived at by the ld. CIT(A) in deleting the penalty imposed on the reduction of claim u/s 10B - Decided in favour of assessee. 2024 (8) TMI 626 Validity of reopening of the assessment u/s. 148 - borrowed satisfaction and without application of mind - addition u/s 68 - HELD THAT:- In the present case, it is important to note that the return of the assessee was proceeded u/s. 143(1) and there was no instance of original assessment u/s. 143(3). AO received specific information from the DDIT (Inv) indicating that there were transactions between the assessee and M/s. Vishnu Trading Co. During the preliminary enquiry AO observed that the name of M/s Vishnu Trading Co. appeared in the bank account statement of assessees and also the name of assessee was found in the bank statement of M/s Vishnu Trading Co. AO recorded his reasons for satisfaction for reopening and had a reason to believe that income had escaped assessment. This belief was based on the substantial material provided by the DDIT (Inv.), which warranted further investigation. It is also noted that the prior approval of the PCIT was obtained as per procedure. The sufficiency of the reasons is not the test for deciding the validity of a notice issued u/s 148 of the Income Tax Act. The correct test is whether the AO had a reason to believe that income chargeable to tax had escaped assessment. This principle is well established in judicial precedents and reason to believe does not mean that the AO should have finally ascertained the fact by legal evidence or conclusion. It only means cause or justification to believe that income has escaped assessment. The sufficiency or correctness of the material is not a matter for consideration at the stage of issue of notice. Therefore, AO s action of reopening the assessment was in line with the principles laid down in Pushpak Bullion (P.) Ltd [ 2017 (8) TMI 961 - GUJARAT HIGH COURT] where the reopening was justified based on tangible and specific information. AO had a valid reason to believe that income chargeable to tax had escaped assessment. The information received from the DDIT (Inv.) provided a substantial basis for the AO s belief, and his decision to reopen the assessment was justified. AO s action was not merely based on borrowed satisfaction but on specific information that required further investigation to ascertain the correctness of the transactions. Accordingly, Ground No.1 is dismissed, and the reopening of the assessment under Section 148 of the Act is upheld. The appeal of the assessee on this ground is dismissed. Unexplained cash credits u/s 68 - Amounts credited to the sales account cannot be treated as unexplained - HELD THAT:- AO did not reject the books of accounts or question the quantitative details of the stock. We also observe that the AO has not placed any conclusive evidence on record to prove that the credits in the assessee s bank account are accommodation entries. The addition as unexplained cash credit cannot be sustained without such evidence. The assessee has provided sufficient documentary evidence, including sales invoices, sales register, item register showing quantitative details, and the bank book, to substantiate the transactions. We have noted the other judicial precedents relied on by the assessee can be distinguished on the basis of facts and circumstances but in case of Manoj Sharma [ 2019 (3) TMI 1129 - ITAT DELHI] it was held that the addition cannot be made when the quantitative details of purchase, sale and stock tally. The failure to provide an opportunity for cross-examination of individuals whose statements were relied upon for making the addition violates the principles of natural justice, as established in many judicial precedents. We also note the assessee s clarification that transactions with M/s. Edelweiss Commodities Ltd. were purchase transactions and not related to the alleged sales to Vishnu Trading Co - AO s and the Ld.CIT(A) s misunderstanding of these transactions led to incorrect conclusions. We conclude that the addition as unexplained cash credit under Section 68 of the Act is unwarranted, given that the amount represents sales already declared and taxed. Therefore, the addition made by the AO and confirmed by the Ld.CIT(A) is deleted, and these grounds of appeal are allowed. Taxing income u/s 115BBE - Since we have deleted the addition under Section 68 of the Act, the confirmation by the Ld.CIT(A) of the AO s action to tax the income under Section 115BBE of the Act is also unwarranted. Levy of interest under Sections 234A, 234B, 234C, and 234D - As the principal addition itself is deleted, the consequential levy of interest under section 234A, 234B, 234C and 234D of the Act is accordingly deleted. Penalty u/s 271(1)(c) - With the deletion of the addition, the initiation of penalty proceedings under Section 271(1)(c) of the Act becomes unjustified 2024 (8) TMI 625 Exemption u/s 54F/54 - possession date of the New Asset i.e house property versus date of registered document - HELD THAT:- It is settled position of law that the crucial date for the purpose of determination is when the property is purchased for the purpose of section 54 and the date when the possession and control of the property is given to the purchaser s hands. Reliance can be made to the decision of Hon ble Andhra Pradesh High Court in the case of CIT Vs. Shahzada begum [ 1988 (3) TMI 456 - ANDHRA PRADESH HIGH COURT] and also the decision of Dr. Laxmichand Narpal Nagda (deceased) [ 1991 (12) TMI 3 - BOMBAY HIGH COURT] wherein the Hon ble High Court after referring to the decision of CIT Vs. T.N.Aravinda Reddy [ 1979 (10) TMI 1 - SUPREME COURT] and the decision of Mrs. Shahzada Begum [ 1988 (3) TMI 456 - ANDHRA PRADESH HIGH COURT] held that the term purchase employed in sub-section (2) of section 54, is not used in the sense of legal transfer and therefore, the holding of a legal title within a period of one year is not a condition precedent for availing deduction u/s. 54. The recital of the sale deed clearly says that possession of the property was taken on 31.03.2015 which is within the period of one year before the date of sale of original asset. The covenants in the sale deed executed and registered are conclusive in the absence of any evidence to the contrary. The finding of the CIT(A) that it is a fabricated document is a mere bald allegation and cannot be sustained in the eyes of law. We are of the considered opinion that the appellant is entitled for deduction u/s. 54/54F as claimed by the assessee. 2024 (8) TMI 624 Addition u/s 56(2)(viib) - valuation of the shares done using the discounted cash flow method is far from reality - change in method for valuing the shares by AO - method changed from DCF to NAV method - AO was of the view that the valuation has been done by the valuer to achieve the desired valuation of the share i.e. Rs. 13.94 per share, which is far away from the reality - figures given in the project report did not match, which can be verified from the financial statements of the last years prepared by the assessee - HELD THAT:- As transpired that option to choose the method provided under clause (a) or clause (b) is available with assessee. Admittedly, the method adopted by the assessee i.e. DCF method for determining fair market value was one of the methods prescribed under the provisions of section 56(2)(viib) read with income tax rule 11UA of Income Tax Rule. AO cannot interfere in the method selected for the valuation of the shares. AO can scrutinize the contents or working of the method adopted by the assessee so as to find out the fair valuation. In case, the AO is not satisfied with the working of the assessee, then the AO may draw fresh valuation or get fresh valuation report from independent valuer, but such fresh valuation can only be done as per the method adopted by the assessee as in the present case assessee adopted DCF method. As such the AO cannot change the method from DCF to NAV method. AO has exceeded his jurisdiction by rejecting the method adopted by the assessee and brought another method for valuing the shares of the company. The action of the AO by substituting the method for the valuation of shares which was subsequently upheld by the learned CIT(A) is contrary to the provisions of law and therefore the same is not sustainable. There was a transaction between the independent parties namely Delivery Hero and ANI Technology for transfer of the shares of the assessee company at a price of Rs. 13.94 per share. The Delivery Hero is a foreign company which transferred equity share to a resident company i.e. ANI Technology. The value of the share i.e. Rs. 13.94 per share was accepted under the provisions of FEMA and RBI requirements, the Pricing Guidelines for downstream investment. Thus, it transpired that the price at which M/s Delivery Hero transferred the equity share of assessee company to ANI Technology was in accordance with the requirement of FEMA and RBI. In such circumstances, we are of the view that the same value adopted by the assessee cannot be disturbed for issuing shares to M/s ANI Technologies. The transaction in question cannot be disturbed under the provisions of section 56(2)(viib) of the Act. Accordingly, we set aside the order of the ld. CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed. 2024 (8) TMI 623 Capital gain on sale of shares - LTCG or STCG - period of holding of shares - assessee is a NRI and a resident of USA - Assessing Officer has selectively used the Third Employment Agreement to restrict the period of holding of asset to less than 24 months -Whether the capital asset held by the assessee and subsequently transferred is any share/security of an Indian company or some other asset? HELD THAT:- Since, in the facts of the present appeal the shares were never delivered in the name of the assessee, it cannot be said that the assessee had held any capital asset in the nature of share or security of an Indian company so as to get the benefit of the third proviso to section 2(42A) of the Act. In our view, the capital asset held by the assessee, which is subject to capital gain, would not fall within the exceptions provided under section 2(42A) of the Act at all. Therefore, to qualify as long term capital asset, the assessee should have held it for a period exceeding 36 months. Factually, the rights and interests acquired by the assessee under the assignment deed were held for a period less than 36 months. Therefore, the capital asset transferred by the assessee has to be treated as short term capital asset. Taxability of such asset in India - It is the case of the assessee that as per section 9(1)(i) of the Act, which is a deeming provision, income accruing or arising whether directly or indirectly through the transfer of capital asset situated in India has to be taxed in India - HELD THAT:- Patently, the capital asset in the nature of rights and interests accrued to the assessee as part of employment benefit and was acquired by him through assignment deed dated 29th December, 2014. Thus, the source of assessee s rights and interests constituting a capital asset was through aforesaid agreement, executed in USA. It is further relevant to observe that the amended employment agreement dated 16.07.2014 says that any legal action or suit related in any way to the agreement shall be brought exclusively in the Federal State Court of California. Considered in the aforesaid perspective, the situs of capital asset in the nature of rights and interests acquired by the assessee, which were subsequently transferred and subjected to capital gain, was in USA and not located in India. Therefore, in terms of section 9(1)(i)(a) of the Act, the income derived from transfer of such capital asset is not taxable in India. Thus, we hold that the location of the asset transferred by the assessee, being situated outside India, the capital gain derived would not be taxable in India. Assessee had filed a return of income in India voluntarily offering to tax the capital gain derived by treating it as long term capital gain - We must observe that in the termination agreement dated 1st February, 2017, a copy of which is placed at page 293 of the paper-book, it has been clearly stipulated that the payments to be received by the assessee towards transfer of his right and interests will represent capital gain taxable under the domestic law of India and has to be offered to tax by the assessee by filing a return of income in India. The return of income filed by the assessee offering to tax the long term capital gain is strictly in compliance with the terms of termination agreement. Therefore, the assessee is entitled for relief only to the extent of claims made in the return of income. We direct the AO to accept the capital gain offered by the assessee in the return of income filed for the impugned assessment. 2024 (8) TMI 622 Excess payments towards gratuity as per fund houses - wrong claim of group gratuity and leave encashment in its return of Income - Addition being the difference in valuation of group gratuity and leave encashment funds as per books of accounts and actuarial valuation of the fund made by LIC and SBI Life Insurance Companies - assessee bank makes provision every year and these provisions never shown as real expenses for income tax purposes - HELD THAT:- The expenses debited and shown in schedule 16 are provisions and real expenses for the year under consideration. The provisions are being reduced by the assessee bank and net expenses are being shown by the assessee in its profit and loss account. Therefore, the real expenses pertain to the assessment year under consideration are taken into account only. Therefore, the findings of the A.O. that the same amount does not pertain to the year under consideration does not match with accounting treatment made by the assessee bank, which we have explained with factual data mentioned above. AO also noted that the assessee cannot reduce the said amount from the profit and loss account as it does not pertain to the assessment year under consideration, but this findings of the A.O. is perverse in nature and does not have any connection with the issue under consideration. As we have explained that the real expenses and provisions mentioned in schedule 16 pertains to the assessment year under consideration i.e. assessment year 2015-16 and do not pertain to earlier year. Hence, there is no question arises to reduce the earlier year provisions from the current profit and loss account. Therefore, the findings given by the A.O. are not acceptable in the light of the facts narrated above. Taxability of real income - Allowability of provisions for gratuity and leave encashment - As we find that these are two provisions made by the assessee bank and assessee bank has to make provision every year because the assessee bank would have an obligation to pay the gratuity to employees at the time of retirement. Had the bank does not make provision for gratuity and leave encashment, as per accrual system of accounting, then in that situation immediate financial burden may come on the assessee bank and in order to avoid this situation, the bank, by following accrual basis of accounting recorded the expenses based on the accrual system of accounting and makes the provision based on the accrual system of accounting. However, the provisions are never treated as expenses by the assessee bank, on actual payment assessee bank treats expense. Hence, we find that Hon ble Supreme Court in the case of Shoorji Vallabhdas and Co. [ 1962 (3) TMI 6 - SUPREME COURT] wherein it was held that real income earned by the assessee is taxable and provisions are not included in the real income of the assessee unless there is a specific provision provided under the Act to the contrary. Therefore, we note that assessee is not taking into consideration the hypothetical expenditure to reduce its income, we have gone through the schedule 16 is reproduced above and noted that no notional expenses are being debited by the assessee in order to reduce its profit. Addition made by the assessing officer needs to be deleted. Decided in favour of assessee. 2024 (8) TMI 621 Addition u/s 68 - addition for director s loan ledger account -transactions are not matching with previous year s financial statements - assessee stated that the transactions did not pertain to this assessment year and it relates to previous assessment year - HELD THAT:- We find substance in the submissions of the ld. AR that the previous year s transaction cannot be considered as income in the current assessment year. We note that the transactions pertain to FY 2012-13 to 2013-14 and the AO has passed assessment u/s. 143(3) for AY 2013-14 on 29.01.2016 wherein the AO has accepted the closing balance of the ledger account of director/Sri B. Ravi Kumar Reddy. We note from the ledger account of Sri B. Ravi Kumar Reddy that there is a credit of Rs. 12,40,74,520 and money has been transferred through bank account and only Rs. 9,00,000 has been credited towards director s remuneration. AO has completed the assessment for the current AY 2015-16 by considering the transactions of the assessee made in the previous assessment year. We also note that the AO has passed order u/s. 143(3) for AY 2013-14 on 29.01.2016 considering the transactions pertaining to FY 2012-13 and 2013-14 wherein the AO has considered the closing balance of this ledger account. AO cannot consider the opening balance in the current assessment year for making addition. In this regard, we rely on the judgment of Sridev Enterprises [ 1991 (1) TMI 52 - KARNATAKA HIGH COURT] Therefore, we do not find any infirmity in the order of the CIT(Appeals) deleting the addition - Decided in favour of assessee. Customs 2024 (8) TMI 620 Challenge to the SCN issued by the Principal Additional Director General of the Directorate of Revenue Intelligence under Section 28 read with Section 124 of the Customs Act, 1962 - HELD THAT:- As and by way of ad-interim relief, the impugned order dated 5-12-2023 is stayed, however, liberty granted to the respondents to make an application for vacating the said order in the event the respondents are of the opinion that the same ought not to be continued and/or after the decision of the Supreme Court in the pending Review/Writ Petition in the case of COMMISSIONER OF CUSTOMS VERSUS CANON INDIA PVT. LTD. [ 2022 (8) TMI 888 - SC ORDER] . Respondents waive service. 2024 (8) TMI 619 Confiscation of containers imported by the appellants - imposition of redemption fine and penalty - inordinate delay occurred in the adjudication - It is the case of the appellants though there was delay in export of the containers, the delay was not due to the appellants but due to the fact that the containers were under hold by the Department itself - HELD THAT:- It is found that the impugned case is at best a case of procedural lapse committed by the appellants. It is found from the records of the case that the appellants have exported 231 containers out of 236 containers as on the date of show cause notice. This being the case, it is not correct on the part of the Revenue to confiscate the containers and to impose redemption fine and penalty. It is found that it was held by the Tribunal in the cases cited by the appellants that the appellants are not liable to pay duty or penalty when the containers are exported. When the containers are accounted for and have been exported, seeking extension or denial of permission are of no consequence. The department has not made any case for confiscation of the containers which are exported and the demand of duty thereof. However, as submitted by the appellants and as acknowledged in the show cause notice 5 containers remain to be exported and even after 14 long years the appellants did not either exported the containers nor sought permission. To this extent the commission of the violations of the appellant are on record - the appellants have rendered themselves to pay duty on the five containers in question and a suitable penalty for the infractions they have committed. The appeal is partly allowed by restricting the duty demand to the five containers in question and by imposing a penalty of Rs. 50,000/- under Section 112 of the Customs Act, 1962 on the appellants. Confiscation and redemption fine imposed on 231 containers already exported is however set aside. 2024 (8) TMI 618 Classification of imported goods - flow meters - pressure transmitters - level transmitters - parts and accessories - to be classified as tariff item 9032 8990 and 9032 9000 of First Schedule to Customs Tariff Act, 1975 respectively or within heading 9026 of First Schedule to Customs Tariff Act, 1975? - applicability of N/N. 24/2005-Cus dated 1st March 2005 (sl. no. 31 and sl. no. 39 respectively) - HELD THAT:- It is on record that the assessing authority insisted on revising the classification with consequential duty implications and that, admittedly, the reluctant compliance thereto by the importers was momentary with challenge mounted immediately before the first appellate authority. It is also on record in the impugned order that neither was any speaking order issued by the assessing authority nor was advantage taken of the offer from the first appellate authority to obtain a first hand account of the justification for revision. And yet, the impugned order has gone on to offer justifications, in the manner that the original authority should have, for the classification; almost akin to a dual-headed assessment that is not contemplated either in section 17 or section 128 of Customs Act, 1962. The jurisdiction of the first appellate authority is to acknowledge the existence of a dispute over assessment and then to determine the validity of justification offered for any detriment visited on an assessee. The correctness of classification adopted by the customs authorities for the finished product and the like adopted by the central excise authorities on manufactured product the classification of parts and accessories is merely derived inasmuch as such goods are separately enumerated within the rival headings. The scope of the description in heading 9032 of First Schedule to Customs Tariff Act, 1975 is not amenable to stretching as a free standing description may be. Heading 9032 of First Schedule to Customs Tariff Act, 1975 must, therefore and inclusive of residual entry therein, be read to have been intended for autonomous and self-contained calibrating and regulating equipment. The nature of the impugned goods have not been examined for conformity thereto or otherwise - the onus devolving on customs and central excise authorities to comply with the rules for interpretation, as statutorily articulated, and rules of engagement, as judicially determined, has not been discharged. Owing to lack of such determination, the correctness, or otherwise, of classification that falls to the original authority to have established cannot be ascertained. The disputes would have to be adjudicated afresh for proper determination of the proposals in the respective show cause notices - the impugned orders are set aside and the matters remanded back to the original authorities for de novo proceedings - Appeal allowed by way of remand. 2024 (8) TMI 617 Valuation of imported goods - Cyanuric Chloride - rejection of the value declared for the purpose of the import - revenue relied upon NIDB and contemporaneous import data - HELD THAT:- From the NIDB and contemporaneous import data relied by the revenue, it is seen that the maximum import is of 108 MT vide bill of entry No. 4552563. In the said case the import has happened at Rs. 136.52 per kg. In the same table. It is also seen that, for a quantity of 15 tons imported roughly at the same time, the price assessed was Rs. 159.89 per kg. From the above, it is seen that for a small variation for import quantity from 20 tons to 108 tones, there is a price variation from Rs. 150.89 per kg. to Rs. 136.52 per kg. In the instance case, the price negotiated is for 2000 MT does not appear to be out of place. The appellant has submitted data which indicates out of 2000 MT, they had imported 1128 MT during 15-7-2019 to 3-1-2020. Moreover, it is seen that no evidence other than NIDB data has been cited in the proceedings by the lower authorities. In these circumstances, the quantity imported by the appellant is significantly different from the quantity listed in NIDB data relied by the revenue and therefore, the two cannot be compared in this circumstances. There are no merit in the orders the said order is set aside - appeal allowed. 2024 (8) TMI 616 Classification of Tire Pressure Monitoring Sensors (TPMS) and Differential Pressure Sensors (DPS) - to be classified under Heading 9031 or under sub-heading 9026 20 00 of the first schedule of the Customs Tariff Act, 1975? - HELDTHAT:- The devices are used for measuring the pressure of gases. They are fitted with sensors sensitive to the variations in pressure. Heading 9026 covers instruments and apparatus like manometers for measuring or checking the pressure of liquids or gases. Pressure gauges indicate the pressure of a liquid or gas in a closed space. One of the types of pressure gauge, as per explanatory notes is an electrical pressure gauge based on variations of an electrical phenomenon (e.g., resistance, capacitance) or using ultrasound. Further, Heading 9026 also includes differential pressure gauges used to measure pressure differences. The devices under consideration use electrical phenomena to measure the pressure. Therefore, these instruments can be classified under Heading 9026. Sub-heading 9026 20 00 specifically includes instruments for measuring or checking the pressure. In the case of COMMISSIONER OF CUSTOMS, BANGALORE VERSUS SPM INDIA LTD. [ 2006 (12) TMI 368 - CESTAT, BANGALORE] , the issue of classification of air leak tester was under consideration. It was observed by the Hon ble Tribunal that the air leak tester is a high precision measuring instrument and can be classified under Heading 9026, and that when there is a specific entry, there is no need to choose a residual entry under Heading 9031. Accordingly, the Hon ble Tribunal ruled that the Heading 9026 as an appropriate heading for air leak tester. The issue of classification of water sensors used for monitoring and detecting the presence of water in the fuel feed system under consideration. The Hon ble Tribunal, observed that as the device does not have controlling and operating functionalities, they are not classifiable under sub-heading 9032 as an automatic controlling instrument and is eligible for classification under Tariff Item 9026 80 90 of the Tariff Act, 1975. The Tire Pressure Monitoring System (TPMS) and Differential Pressure Sensor (DPS) merit classification under sub-heading 9026 20 00 of the first schedule of the Customs Tariff Act, 1975. 2024 (8) TMI 615 Maintainability of advance ruling application - question raised here is pending before the Officer of Customs - Classification of 13 products imported/to be imported by the applicant - products used for manufacturing the Lithium-ion cells - correct classification of all the 13 products and their applicable effective rate of IGST leviable on the import of the said Products - HELD THAT:- As per definition of advance ruling under Section 28E, it means a written decision on any of the questions referred to in Section 28H, raised by the applicant in his application in respect of any goods prior to importation or exportation. In this regard, it is noted that the Customs Authority for Advance Rulings, in a number of rulings has maintained that though the definition of advance ruling in Section 28E refers to rulings on questions related to goods prior to their importation but in the interest of consistency, certainty and trade facilitation, applications for advance rulings have been allowed and rulings have been issued on the questions raised in the application for advance rulings when the questions raised are not hit by the conditions in the first proviso to sub-section (2) of Section 28-I of the Customs Act, 1962. Also, provisions under the Section 28 of the Customs Act, 1962 provides for issue of notice on the person for short-levy or short-payment of duty, requiring him to show cause as to why he should not pay the amount specified in the notice provided that before issuing notice, the proper officer shall hold pre-notice consultation with the person chargeable with duty or interest in such manner as may be prescribed. It is further provided under Section 28 that the person chargeable with the duty or interest, may pay before service of notice on the basis of (i) his own ascertainment of such duty; or (ii) the duty ascertained by the proper officer. Though the fact of issue of pre-consultation notice is not on record but the applicant has taken further steps to take up the matter for reassessment of Bills of Entry and payment of differential duty. The issue of reassessment needs to be decided by the proper officer. Thus, the question raised in the instant application for advance ruling is pending before the Officer of Customs which makes the instant application for advance ruling liable for rejection. Advance ruling application dismissed. PMLA 2024 (8) TMI 651 Seeking grant of Regular Bail - Money Laundering - predicate offence - delay of trial - policy worked to the benefit of select individuals and large businesses or not - HELD THAT:- Issue notice, returnable on 29.07.2024. 2024 (8) TMI 649 Seeking enlargement on bail - leakage of the question paper and use of unfair means in the Rajasthan Eligibility Examination for Teachers (REET), 2021 - receiving bribe - scheduled offence - HELD THAT:- On a perusal of the complaint filed by the ED, it is revealed that the schedules offences alleged against the petitioner includes two FIRs, namely, FIR No.402/2021 and FIR No.298/2021. The first FIR which was registered under Sections 420, 120-B IPC and under Section 4/6 of Rajasthan Public Examination (Prevention of Unfair Means) Act, 1992 pertains to the leakage of the REET question paper. The second FIR was registered under Sections 302, 365 and 120B IPC and Section 3(2)(v) of the Scheduled Castes Scheduled Tribes (Prevention of Atrocities) Act, 1989 at PS Balaghat, District Karauli. Thereafter, an investigation was initiated by the ED under the provisions of the Prevention of Money Laundering Act, 2002 to trace out the process of crime and ascertain the role of suspected persons in the above-mentioned offences. The only scheduled offence against the petitioner is the one under Section 420 IPC, which is in relation to the leakage of REET question paper, and in which the petitioner has already been enlarged on regular bail by this Court. Adverting to the prayer for grant of bail in the instant case, it is pointed out by learned counsel for ED that the complaint case is at the stage of framing of charges and 24 witnesses are proposed to be examined. The conclusion of proceedings, thus, will take some reasonable time. The petitioner has already been in custody for more than a year - Taking into consideration the period spent in custody and there being no likelihood of conclusion of trial within a short span, coupled with the fact that the petitioner is already on bail in the predicate offence, and keeping in view the peculiar facts and circumstances of this case, it seems that the rigours of Section 45 of the Act can be suitably relaxed to afford conditional liberty to the petitioner. The petitioner is, accordingly, directed to be enlarged on bail subject to such terms and conditions as may be imposed by the learned Special Judge - SLP disposed off. 2024 (8) TMI 614 Maintainability of the second set of appeals - Rejection of bail application - predicate offence - irregularities in the framing and implementation of Delhi s Excise Policy for the year 2021-22 - right to speedy trial - delay and prolonged period of incarceration - whether the appellant is entitled for bail? - HELD THAT:- A perusal of the impugned judgment and order would reveal that though the learned Single Judge of the High Court has dismissed the applications for bail on merits, on medical grounds, it has permitted the appellant to visit his residence to meet his wife in custody once every week - It could thus clearly be seen that this Court expected the trial to be concluded within a period of 6-8 months. The liberty was reserved to approach afresh if the trial did not conclude within the period of 6-8 months. The liberty was also granted in case the trial proceeded at a snail s pace in next three months. A perusal of the material placed on record would clearly reveal that far from the trial being concluded within a period of 6-8 months, it is even yet to commence. Though in the first order of this Court, liberty was reserved to move afresh for bail if the trial proceeded at a snail s pace within a period of three months from the date of the said order, the commencement of the trial is yet to see the light of the day. In these circumstances, in view of the first order of this Court, the appellant was entitled to renew his request - The learned Special Judge and the learned Single Judge of the High Court have considered the applications on merits as well as on the grounds of delay and denial of right to speedy trial. There are no error in the judgments and orders of the learned Special Judge as well as the High Court in considering the merits of the matter. The question that arises is as to whether the trial court and the High Court have correctly considered the observations made by this Court with regard to right to speedy trial and prolonged period of incarceration. The courts below have rejected the claim of the appellant applying the triple test as contemplated under Section 45 of the PMLA. In our view, this is in ignorance of the observations made by this Court in paragraph 28 of the first order wherein this Court specifically observed that right to bail in cases of delay coupled with incarceration for a long period should be read into Section 439 Cr.P.C. and Section 45 of the PMLA. The right to speedy trial and the right to liberty are sacrosanct rights. On denial of these rights, the trial court as well as the High Court ought to have given due weightage to this factor. In the present case, in the ED matter as well as the CBI matter, 493 witnesses have been named. The case involves thousands of pages of documents and over a lakh pages of digitized documents. It is thus clear that there is not even the remotest possibility of the trial being concluded in the near future. In our view, keeping the appellant behind the bars for an unlimited period of time in the hope of speedy completion of trial would deprive his fundamental right to liberty under Article 21 of the Constitution. As observed time and again, the prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial. In the present case, the appellant is having deep roots in the society. There is no possibility of him fleeing away from the country and not being available for facing the trial. In any case, conditions can be imposed to address the concern of the State. Insofar as the apprehension given by the learned ASG regarding the possibility of tampering the evidence is concerned, it is to be noted that the case largely depends on documentary evidence which is already seized by the prosecution. As such, there is no possibility of tampering with the evidence. Insofar as the concern with regard to influencing the witnesses is concerned, the said concern can be addressed by imposing stringent conditions upon the appellant. The impugned judgment and order dated 21st May 2024 passed by the High Court of Delhi in Bail Application Nos. 1557 and 1559 of 2024 is quashed and set aside - The appellant is directed to be released on bail in connection with ED Case No. HIU-II/14/2022 registered against the appellant by the ED and FIR No. RC0032022A0053 of 2022 registered against the appellant by the CBI on furnishing bail bonds for a sum of Rs.10,00,000/- with two sureties of the like amount - Appeal allowed. Service Tax 2024 (8) TMI 613 Rejection of declaration under Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS) - rejection on the ground that as per respondents records the tax dues had not been quantified before 30th June 2019 and hence, it is not covered under the investigation category - HELD THAT:- The amount payable has been quantified before 30th June 2019. In the circumstances, respondents shall constitute a Committee to decide the declaration that was filed by petitioner on 30th December 2019 and, on or before 30th September 2024, dispose the same in accordance with law. The show cause notice dated 21st September 2021 issued to petitioner is also quashed and set aside. Accordingly, impugned orders dated 18th August 2021 and 31st March 2022 are also quashed and set aside. Consequently, the appeal filed by petitioner before the Central Excise Service Tax Appellate Tribunal (CESTAT) being Appeal No.86611 of 2022 filed on 4th July 2022 also stands disposed. Petition disposed off. 2024 (8) TMI 612 Requirement to deposit 7.5% of the duty amount as a pre-condition for preferring the appeal - primary reason for entertaining this Petition is on account of the lack of opportunity of hearing to the Petitioner in the case for determination of value of services and the service tax liability - HELD THAT:- The department delivered an order on 28.03.2024, which is assailed by the Petitioner. The total service tax including cess liability for the period October 2015 to March 2016 and for the financial year 2016 to 2017, was an amount of Rs.3,29,60,809/-. This Petition has been filed on 02.07.2024, which is after three months and one week. It is an admitted position that an appeal has to be filed before the CESTAT within 90 days from the date of the communication of the order. The parties concede that the Tribunal has the power to condone the delay beyond 90 days. The ends of justice would be met by granting the Petitioner an opportunity to appear before the Principal Commissioner, Central GST and Central Excise, Nagpur-I, Commissionerate, for a re-hearing in the matter with relation to the show cause notice dated 21.04.2021. To balance the equities, it is deemed appropriate to direct the Petitioner to deposit 5% of the amount which is assessed towards service tax by the impugned order dated 28.03.2024. Appeal allowed in part. 2024 (8) TMI 611 Levy of service tax - Intellectual property services - supply of designs and drawings, by SSIT - penalty u/s 78. Levy of service tax - HELD THAT:- The appellant has paid service tax of Rs.48,78,395/- along with interest, with respect to import of design and drawings. According to them there is no liability of service tax on these services. As these designs and drawings were considered as goods under Customs Act, 1962 and customs duty has already paid on the importation of the goods, the demand of service tax to the extent of Rs.48,78,395/-in the impugned order, under the category of Intellectual property services , paid by the appellant under protest, is not sustainable and accordingly we set aside the same. The appellant has made payments towards receiving of various other services such as supervision charges and Training of personal etc. for which the appellant paid service tax, under reverse charge without any protest. It is found that the appellant has rightly paid service tax on the taxable services such as supervision charges and Training of personal, without any protest. Thus, the payment of service tax by the appellant on other services received by them, under reverse charge upheld. Penalty u/s 78 of the Finance Act, 1994 - suppression of facts or not - HELD THAT:- There is no suppression of facts with intention to evade the payment of tax established in this case. The appellant has paid service tax under the category of consulting engineering service instead of intellectual property service as claimed by the Department. If service tax is paid under a different category, it is only a procedural lapse, for which no penalty can be imposed. Accordingly, no penalty imposable on the appellant and thus, the penalty imposed under Section 78 of the Finance Act, 1994 set aside. Appeal disposed off. 2024 (8) TMI 610 Valuation of services rendered by the appellant under Section 67 of Finance Act - extended period of limitation - penalty. Leviability of service tax, as per provisions of Section 67 of the Act - HELD THAT:- The sub-section 1(i) of Section 67 provides that in case where the provision of service is for a consideration in money, the service tax chargeable on any taxable service with reference to its value, shall be the gross amount charged by the service provider for such service provided or to be provided by him. In view of the provisions of Section 67, it is clear that the appellant is liable to pay service tax on the gross amount of Rs.6,15,495/- collected by the appellant and no deduction on account of royalty of Rs.2,13,200/- paid to SEL is available to them. In this regard, reference made to the decision in the case of SARASWATI SHIKSHA KENDRA VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [ 2008 (2) TMI 142 - CESTAT, NEW DELHI] , wherein the Tribunal on the identical facts held that the appellant is liable to pay Service tax on the entire amount collected from the students. It was submitted that the money received from the students is deposited in a joint account in the names of M/s. Saraswati Shiksha Kendra i.e the appellant herein and Career Point Infosystems Ltd., but in our view, as the service is provided by the appellant and it is the appellant which is collecting the amount, 100% liability is on the appellant and thus we do not find any error in the adjudication order. Extended period of limitation - HELD THAT:- The submission that the extended period of limitation has wrongly been invoked, is also not sustainable because the period involved in the present case is April 2008 to September 2009 and show cause notice was issued on 23.02.2010, hence, entire demand is within limitation. Penalty - HELD THAT:- The appellant had a bona fide belief that they are liable to pay service tax only on the amount retained by them i.e. 80% of the gross receipts and they are not liable to pay service tax on 20% of the total fees collected from the students. Since the appellant have been filing the ST Returns except for the period of half year ending in September, 2008, in view of this, penalty imposed under Section 78 is not justified. The impugned order to the extent of demand of service tax to the tune of Rs.25,720/- along with interest and penalty of Rs.1000/- under Section 77 upheld, but the penalty under Section 78 of the Act is dropped. Appeal disposed off. 2024 (8) TMI 609 Classification of service - works contract service or not - whether the Commissioner was legally correct dropping the demand of Rs. 1,12,10,641/- along with interest and penalty? - Eligibility for exemption from service tax for services rendered to Delhi Development Authority (DDA) - HELD THAT:- For the period prior to 01.07.2012, it is settled law that any agreement which involved supply of materials as per specifications with provision of material and labour would qualify as composite and indivisible Works Contract, prior and post 01.06.2007. However, in the instant case, the impugned order has observed that the appellant had been awarded the following four contracts which the Department was aware. It has been recorded by the Commissioner that the appellant was not provided with any material by DDA, the contractee, nor did the work involve construction of any residential complex. It is also noted that the Commissioner, in the impugned order, has carefully considered the three contracts and has relied on CBEC Circular No. 138/07/2011 dated 06.05.2011 to hold that services received by Works Contract Service providers from their sub-contractors are classifiable under respective sub-clauses of Section 65(105) of the Finance Act, 1994 - the Commissioner was correct in holding that the services provided by the appellant was correctly classifiable under Works Contract Service. In order to extend the benefit of any exemption from service tax, it is essential that copies of the agreements are examined in totality. Further, it is found that it is a fact that even though DDA was created by the Parliament in exercise of the powers conferred under Article 53(3)(b) of the Constitution, it is still a juristic entity separate from the State and does not fall within the scope of a Central/State Government or Local Authority - without the requisite details/information regarding the projects completed by the respondent, the conclusion arrived at by the adjudicating authority is open to debate. Therefore, it would be appropriate to remand the matter giving an opportunity to the respondent to satisfy that the work undertaken by them is non-commercial in nature and is eligible for exemption from payment of service tax. Appeal allowed in part by way of remand. 2024 (8) TMI 608 Non-payment of tax - activity of laying of cables/wires - Erection, Commissioning and Installation Services - Invocation of extended period alleging suppression and fraud along with interest and penalty under section 78 of the Finance Act, 1994. Non-payment of service tax - HELD THAT:- There is considerable merit in the contention of the Appellant that composite contracts involving supply of both goods and services could not have been taxed under the category, Erection, Commissioning and Installation Services in view of the law laid down by the Hon ble Supreme Court in the COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] where it was held that It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of properly in goods transferred in the execution of a works contract. Thus, the taxable category Erection, Commissioning and Installation Services could only cover pure service contracts within its fold. In the present case, it is noted that the work order in respect of Chhatrasal Stadium involved supply of material and installation commissioning of the EPABX system. Consequently, with effect from 01.06.2007 only, such composite contracts would be eligible to tax under Works Contract Service. The demand will have to be calculated based on the actual turnover figures. In view of the above, it is held that it would be appropriate to remand the case for recalculation of the demand by giving the benefit of abatement to the appellant. Invocation of extended period alleging suppression and fraud along with interest and penalty under section 78 of the Finance Act, 1994 - HELD THAT:- There is evidence that the appellant had tampered with four of his VAT returns, in order to substantiate his claim that as VAT had been paid on the transactions, hence no service tax is leviable. This act of the appellant cannot be overlooked. This clearly indicates his intent to evade payment of duty, and satisfies the requirement for invocation of the extended period. Consequently, the penalty under Section 78 is also leviable - The interest liability is upheld as it is a statutory. Appeal allowed in part and part matter on remand. 2024 (8) TMI 607 Liability of service tax - service of software product updates provided by the appellants to its customers - invoices issued prior to 16.05.2008 - payments received prior to 16.05.2008 but were valid for a calendar year where the period involved was beyond 16.05.2008 - Time Limitation. Liability of service tax - HELD THAT:-The definition of taxable service speaks about services provided or to be provided but as rightly argued by the appellant to be provided cannot be extended to the period when the service tax itself was not liable to be paid. Since the software updates and right to use the software was prior to 16.05.2008 and also the payments were prior to 16.05.2008, the question of levying of service tax on these updates only because their validity periods extend beyond 16.05.2008 cannot be the criteria for levy of service tax. Nowhere the provisions of service tax call for such levy. In the case of CARRIER POINT VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2018 (3) TMI 1288 - RAJASTHAN HIGH COURT] , the Hon ble High Court of Rajasthan, was dealing with the question whether service tax can be levied on the amount received prior to the date of levy when registration and invoice could not be raised to collect indirect tax and provisions of Provisional Collection Act were not applicable and Section 66 of the Act, impose the levy with effect from 01.07.2003. Their Lordships have held that any payment of contract which are entered after 1-7-2003 will invite Service Tax and any contract which is concluded prior to 1-7-2003 will not invite imposition of Service Tax. In the present case, admittedly all the invoices and payments were made prior to 16.05.2008 when service tax was levied on software services under ITSS. Therefore, in view of the above decision, the question of levying Service Tax on the invoices and payments prior to 16.05.2008 when the service itself was not leviable to tax, cannot be sustained. Clause (5) of Notification No.7/2005 relied upon by the Revenue supports the case of the appellant as the entire consideration for services was received prior to 16.05.2008 and no service tax shall be payable for the part or whole of the value of the services which is attributed to services provided during the period when such services were not taxable and therefore, the question of bifurcating the value on pro-rata basis is not in accordance with law. The reliance placed by the learned counsel on the Circular No.B.11/1/2002 dated 01.08.2002 issued with regard to Health Club Services where the Board clarified that no Service Tax will be payable on membership fee already collected prior to the date on which the new Service Tax has come into force, is admittedly applicable in the present case, since admittedly the invoices and payments have been made prior to introduction of Service Tax on ITSS on 16.05.2008. Time Limitation - HELD THAT:- In the present case, the DGCEI issued notice only after refund claim was filed by the appellant and the notice does not reveal any facts that were suppressed or mis-declared. The Revenue cannot expect the appellant to declare those invoices and payments paid prior to the levy of tax on ITSS to be declared in their returns. Moreover, when the same transactions were considered as Business Auxiliary Service, the question of suppression does not arise. Hence limitation fails. The impugned order is set aside - Appeal allowed. 2024 (8) TMI 606 Enhancement of penalty u/s 78 of FA - HELD THAT:- It is noticed from the findings of the Commissioner (Appeals) that the entire proceeding has been set aside by Commissioner (Appeals) and consequently no demand and penalty survived. Since no penalty survived on account of order dated 16.02.2023 the question of enhancing penalty vide order dated 28.02.2023 does not arose. The subsequent order enhancing the penalty imposed is, therefore, totally wrong and passed by mistake due to non-production of earlier order dated 16.02.2023. The appeal filed by the appellant is allowed. The order impugned enhancing the penalty under section 78 is set aside and the appeal is allowed. 2024 (8) TMI 605 CENVAT Credit - mismatch between the Cenvat credit register and the credit taken in the ST-3 returns filed by the appellant - amount of Rs. 12,12,894/- taken in the month of June, 2017 on the strength of invoices allegedly issued in July, 2017. CENVAT Credit - mismatch between the Cenvat credit register and the credit taken in the ST-3 returns filed by the appellant - HELD THAT:- It is seen that Commissioner (Appeals) has not examined any facts whatsoever he has simply confirmed the demand. Ideally he should have called for list of the documents on which the Cenvat credit has been taken and compared with the total credit taken. From the data submitted by the appellant it is apparent there is no mismatch, but only a technical difference. The impugned order is set aside and the matter remanded to the adjudicating authority to call for the invoices from the period October 2015 to March 2016 and compare the credit taken with invoices. If there is any mismatch in that, the demand can be confirmed, if there is no mismatch, then Cenvat credit should be allowed. CENVAT Credit - amount of Rs. 12,12,894/- taken in the month of June, 2017 on the strength of invoices allegedly issued in July, 2017 - HELD THAT:- It is seen that the arguments raised by the appellant, including ground about the Circular F. No. 137/16/2017-Service Tax dated 28th September 2017 has been totally ignored by the Commissioner (Appeals). Prima facie, the issue seems to be covered by the Circular cited by the appellant, however, for a closure scrutiny with the relevant invoices, the matter needs to be remanded to the original adjudicating authority to examine the issue in the light of the circular afresh. The appeal is allowed by way of remand. 2024 (8) TMI 604 Cenvat credit on immovable property constructed by them after issuance of completion certificate - Applicability of Rule 6 of CCR - extended period of limitation - interest and penalty. CENVAT Credit - HELD THAT:- The appellant is not entitle to the cenvat credit availed during the period October, 2014 to June, 2017 as the completion certificate was issued on 20.12.2012 and by virtue thereof the transaction was out of the purview of service tax and was to be treated as mere sale of goods. Needless to mention, the requirement under CCR is that cenvat credit in respect of inputs may be taken immediately on receipt of the inputs and the provider of output service shall not take cenvat credit after one year from the date of issuance of the documents. Invocation of the extended period of limitation - HELD THAT:- The appellant was aware that after the issuance of the completion certificate, the immovable property is no longer treated as a service rather, it is a mere transfer of the title of goods or immovable property, and hence, for the period October 2014 to June 2017, the appellant was not entitle to avail the credit. The shelter sought to be taken by the appellant on the basis of the Explanation-3 inserted in Rule 6 is misconceived - In the circumstances, the Revenue has rightly invoked the period of limitation under Section 73 (1) of the Act. Penalty - HELD THAT:- The imposition of penalty under Section 78 of the Act is justified and the levy of interest is upheld. There are no merit in the appeal - appeal dismissed. 2024 (8) TMI 603 Recovery of service tax with interest and penalty - services received from abroad before and after 18.04.2006 - GTA Service - penalty under Section 78 of the Finance Act, 1994 read with Sec. 76 of the said Act - malafide intent or not - invocation of extended period of limitation - HELD THAT:- Admittedly, Commissioner (Appeals) have in the impugned order come to conclusion that the issue involved in the matter is more in nature of interpretation of law and there are conflicting decision of this Tribunal on the issue involve. Therefore, no malafide can be attributed to the appellant that being so, there are no merits in the demand made by invoking the extended period of limitation, as it has been found in series of decisions this Tribunal and various High Courts where in respect of interpretation of law there are conflicting decisions, extended period of limitation cannot be invoked. Impugned order remanding the matter to the Original Authority after setting aside the demand made to the extent it was prior to the period 18.04.2006 relying upon the decision of Hon ble High Court of Bombay in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [ 2008 (12) TMI 41 - BOMBAY HIGH COURT] and decision of Hon ble Delhi High Court in the case of UNITECH LTD. VERSUS CST, DELHI [ 2009 (5) TMI 56 - DELHI HIGH COURT] as the matter has been remanded back for re-quantification to the Original Authority, the Adjudicating Authority is directed to re-quantify the demand. Appeal is disposed of upholding the remand order for re-quantification of demand. 2024 (8) TMI 602 Recovery of service tax with interest and penalty - failure to discharge service tax liability on the differential value during the Financial Year 2015-16 and 2016-17 - extended period of limitation - HELD THAT:- It is observed that the impugned order has been passed without any inputs from the appellant with regard to reconciliation of the figures provided by the Income Tax Authorities and ST-3 return. It is found that appellant have completely reconciled the differences between the information i.e. the proof of income and ST-3 return. However, as the reconciliation certificate was not produced before the Original Adjudicating Authority, it is deemed fit to remand the matter back to the Original Authority for reconsideration of the matter in the light of said certificate. Appeal is allowed by way of remand to the Original Authority. 2024 (8) TMI 601 Levy of service tax - income of service provider shown in the Income Tax Return - suppression of facts and contravention of the Act/Rules with intent to evade payment of tax or not - extended period of limitation - interest and penalty. Levy of service tax - HELD THAT:- The Department has proceeded in the present case on the basis of the information received from the Income Tax Department relating to the income from the provision of services shown in the ITR as well as income on which TDS has been deducted and the gross amount of value of service shown in the ST-3 Returns was provided. The Tribunal in the case of VATSAL RESOURCES PVT LTD VERSUS C.C.E. S.T. -SURAT-I [ 2022 (7) TMI 718 - CESTAT AHMEDABAD] , following the earlier decisions in line, observed that by relying on the TDS/26-AS statements, the demand of service tax under the Service Tax Act cannot be made. There is no quarrel to the settled principle that amounts shown in the ITRs or Balance Sheets are not liable for service tax, however, here the conduct of the appellant cannot be ignored as he failed to produce the documents when asked for by the Department. Extended period of limitation - HELD THAT:- Perusal of the impugned order shows that the Appellate Authority accepted that the demand, which was beyond the period of 5 years was unsustainable and consequently, set aside the demand for the period April, 2015 to September, 2015. The demand for the remaining period was upheld as per the proviso to Section 73(1) of the Act as the appellant has filed the ST-3 Returns without fully disclosing the taxable value to the Department and thereby willfully suppressed the taxable value with intent to evade the payment of requisite tax. The Department learnt about the differential value only on the information provided by the Income Tax Department and therefore, the extended period of limitation has been rightly invoked. Interest and penalty - HELD THAT:- On the principles of invoking the extended period of limitation, the penalty under Section 78 and 77 as imposed under the impugned order is upheld. The appellant is also liable to pay the interest as the tax liability has been affirmed. There are no merits to interfere with the impugned order and hence the same is affirmed - appeal dismissed. 2024 (8) TMI 600 Short payment/non-payment of service tax - Commercial or Industrial Construction Service - Construction of Complex Service - Completion and Finishing Job undertaken by the appellant - period 2005-06 to 2009-10 - Wrongful availment of benefit of N/N.01/2006-ST dated 01.03.2006 - HELD THAT:- In this case, it is not in dispute that the appellant is providing the services along with materials. Therefore, the appropriate classification of the above services is under Works Contract Service and no demand of service tax is raised against the appellant under Works Contract Service in view of the decision of the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] , wherein the Hon ble Apex Court has observed the finding that Section 67 of the Finance Act, which speaks of gross amount charged , only speaks of the gross amount charged for service provided and not the gross amount of the works contract as a whole from which various deductions have to be made to arrive at the service element in the said contract. For the period prior to 01.06.2007, no service tax is payable by the appellant as the Works Contract Service came into effect w.e.f. 01.06.2007 and for rest of the demand, no demand has been raised against the appellant under the category of Works Contract Service . No service tax is payable by the appellant. Therefore, whatever service tax paid by the appellant during the impugned period, the same is appropriated and no further demand is sustainable against the appellant on account of short payment or non-payment of service tax by the appellant. The differential demands of service tax confirmed against the appellant are set aside. Consequently, no penalty is imposable on the appellant. The impugned order is set aside - appeal allowed. 2024 (8) TMI 599 Liability of service tax - Business Auxiliary Service - Appellant have received certain amounts under the category of Miscellaneous Income and they have not paid any service tax in respect of such receipts - HELD THAT:- From the perusal of the SCN and the order of the Original Authority and Appellate Authority it is found that the demand has been made by referring to certain incomes reflected in the ledger of the Appellant. However, show cause do not specify the source of income i.e. the person who has made these payments to the Appellant i.e. demand stands made without specifying the service recipient. The definition of Taxable service itself contemplates that service should be provided to an identified client and consideration should have been received from the said client or on his behalf. In the absence of such an identification at any stage of proceeding the demand made under this category cannot be upheld. Reliance placed in the case of M/S. THE MADHYA PRADESH STATE MINING, CORPORATION LIMITED VERSUS PR. COMMISSIONER, CGST CENTRAL EXCISE, BHOPAL (M.P.) [ 2023 (4) TMI 1075 - CESTAT NEW DELHI] where it was held that There is no mention of any service which would be performed by the appellant in exchange of such amount. Thus, allocation of area development charges by the State Government can be regarded as income of the appellant, but it cannot be treated as consideration towards a service. There are no merits in the impugned order though in both the order the Commissioner (Appeals) very strenuously tried to establish that these services are finally going to benefit Maruti Udyog Ltd. We do not find any merit in the same arguments. In the absence of any such agreement to provide specific service between the appellant and Maruti Udyog Limited there are no merits in the findings so recorded by the Commissioner (Appeals). The impugned order is set aside and appeal is allowed. 2024 (8) TMI 598 Non-payment of service tax - commissioning installation service - maintenance or repair service - period April, 1, 2005 to March, 31, 2010 - HELD THAT:- In the appellant s own case, this Tribunal on identical case M/S. TATA STEEL LTD. VERSUS COMMR. OF CENTRAL EXCISE SERVICE TAX, JAMSHEDPUR [ 2019 (10) TMI 588 - CESTAT KOLKATA] , has observed the demand cannot be raised beyond of the Normal period. The said order was challenged before the Hon ble Jharkhand High Court and the Hon ble High Court in COMMISSIONER OF CENTRAL G.S.T CENTRAL EXCISE, JAMSHEDPUR VERSUS M/S TATA STEEL LTD. AND TATA STEEL LTD. (GROWTH SHOP) , GAMHARIA SARIAKELA KHARSAWAN VERSUS COMMISSIONER, CENTRAL EXCISE AND SERVICE TAX, JAMSHEDPUR [ 2024 (6) TMI 1114 - JHARKHAND HIGH COURT] has set aside the order of this Tribunal following the decision of the Hon ble Apex Court in the case of CCE., NAVI MUMBAI VERSUS AMAR BITUMEN ALLIED PRODUCTS PVT. LTD. [ 2006 (8) TMI 187 - SUPREME COURT] , wherein it has been held that the issue is no more res-integra that a Company incorporated under the Companies Act, 1956 is a single person/entity in the eyes of law and cannot re-constitute itself to several legal entities. Divisions/Branches cannot have identity different and distinct from the Company. Therefore, the findings of this Tribunal demanding service tax was set aside. Therefore, following the decision of the Hon ble High Court of Jharkhand, it is held that TGS TSL are the same identity and it is well settled that the credit of input is to be utilized for payment of service tax towards output services. There is or can be no dispute with this legal position and this is what the representatives of TGS and TSL, agreed with. Further, it is also settled legal position that under the Central Excise law there is no requirement of one-to-one correlation between the credits availed in respect of the input and input service and utilization thereof in payment of central excise duty or service tax in respect of dutiable goods manufactured and cleared and/or output service rendered. Hence, TGS has rightly availed the subject cenvat credits of service tax paid, without there being any concomitant obligation to make payment of service tax on the services rendered to another unit of TSL. The impugned order is set aside - appeal allowed. 2024 (8) TMI 587 Eligibility for the benefit of tax exemption under NN. 4/2004-ST dated 31.03.2004 - services provided to the SEZ unit. - Classification of services - Tour Operator Services or Rent-a-Cab Services - transportation of their employees from their residence to workplace - non-payment of service tax. Classification of service - HELD THAT:- From the nature of the services explained in the Show Cause Notice, as well as, in the Order-in-Original, it is seen that the appellant was transporting the employees of the SEZ company from their residence to the workplace. There was no planning, scheduling of the tour involved in the said transportation of employees. The nature of services would fall under Rent-a-Cab Services only. Moreover, the appellant has been paying service tax under Rent-a-Cab Services for transportation of employees of companies other than SEZ units. The first issue is held in favour of the appellant. Whether the appellant is eligible for benefit of exemption under N/N. 4/2004-ST dated 31.03.2004? - HELD THAT:- The said Notification uses the words services consumed within SEZ . In the present case, the service recipient is SEZ company. Though, the services have been provided partly outside the SEZ so as to facilitate the transportation of the employees from their residence to the workplace, it cannot be said that the services are not consumed within the SEZ. The issue stands covered by the decision in the case of ORIX AUTO INFRASTRUCTURE SERVICES LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI I [ 2015 (11) TMI 346 - CESTAT, MUMBAI] . The Hon ble High Court in the case of GMR AEROSPACE ENGINEERING LIMITED AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT] has categorically held that since Section 51 has an overriding effect, the exemption benefit cannot be denied by conditions imposed in a Notification. The appellant is eligible for the benefit of Notification No. 4/2004-ST dated 31.03.2004 - demand do not sustain - the impugned order is set aside - appeal allowed. 2024 (8) TMI 586 Short payment of service tax - difference of the taxable value in their S.T.3 Returns and the balance sheeet figures shown during the period 2007-08 till 2010- 2011 - HELD THAT:- The appellant has explained that the figure shown as income in the balance sheet includes the amount recovered on account of sale of Diesel cost recovered from with M/s Reliance Infocomm Engineering Private Limited and to such effect, the appellant has produced the Work Order. On the sale of Diesel, VAT has also been paid. In that circumstances, on the value of Diesel, which has been supplied by the appellant, the same cannot be included in the taxable value of service provided by the appellant and if the said amount for supply of Diesel is taken into consideration, the demand on account of differential figure in the balance sheet and the ST-3 Returns, is not sustainable - It is further noted that the sale amount of Rs.85,674/- is also found short paid by the appellant, which relates to Renting Immovable Property Service, which the appellant has admitted and paid. Therefore, the said demand of Rs.85,674/- is confirmed against the appellant. Service tax on composite work order at the rate of 12.36% or 4% or 2%? - HELD THAT:- The service tax is payable under the composite work order, which has been paid, no demand is sustainable against the appellant. No penalty is imposable on the appellant in the facts and circumstances of the case. The impugned order is set aside - appeal allowed. Central Excise 2024 (8) TMI 597 Condonation of delay of 2154 and 1929 days in filing the Civil Appeals - HELD THAT:- There are no justifiable grounds for condoning the delay of 2154 and 1929 days in filing the Civil Appeals against the orders passed by the Customs, Excise Service Tax Appellate Tribunal (CESTAT), Chandigarh. The Civil Appeals are dismissed on the ground of delay. 2024 (8) TMI 596 Rate of interest on delayed refunds - appellant claimed the interest @12% for the delayed payment - interest would be restricted to 6% p.a. as per Section 11 BB of the Central Excise Act, 1944 or not. Whether rate of interest on delayed refunds, which vary within the range @5% to 30% as per Section 11BB of Central Excise Act, 1944 can be given @ 12% per annum as claimed by the appellant, or as per the N/N.67/2003-CE (N.T.) issued under Section 11BB which restricts the rate of interest at 6% in case of delayed refund? HELD THAT:- The issue is no longer res integra and has been considered and settled by the two High Courts. In the case of C. PADMINI CHINNADURAI VERSUS ASSTT. COMMR. OF C. EX., TIRUNELVELI [ 2010 (7) TMI 356 - MADRAS HIGH COURT] , the Division Bench rejected the contention of the appellant that since it is pre-deposit and not central excise duty , therefore, the notification no.67/2023 would not apply, observing the respondent was directed to pay interest at the rate of 8% from 2-9-2003 to 11-9-2003 and 6% from 12-9-2003 to till the date of payment. Similarly, the Karnataka High Court in COMMISSIONER OF C. EX., BANGALORE VERSUS HINDUSTAN GRANITES [ 2015 (1) TMI 1385 - KARNATAKA HIGH COURT] considered the said notification, which was issued in exercise of the powers conferred by Section 11BB of CEA fixing the rate of interest @6% p.a. for the purpose of said section and holding that interest payable in terms of Section 11BB of the Act, which in turn is with reference to the notification referred above, the rate of interest was reduced from 9% to 6%. Section 11BB specifies that interest shall be paid to the applicant at such rate not below 5% and not exceeding 30% p.a., which may be fixed by the Central Government by issuing the notification on such duty and, therefore, the notification no.67/2003 has been issued fixing the interest @ 6% p.a. on the delayed payment of refund and hence, the same has been rightly allowed to the appellant. Merely because the appellant has claimed interest @12% mis-interpreting the earlier decisions, does not entitle him to the said rate. The contention of the appellant that the order has been passed beyond the scope of the show cause notice is not sustainable as the same has been passed in consonance with the notification, which has been validly issued under the provisions of Section 11BB of the Act. There are no reason to interfere with the impugned orders and hence, the same are affirmed - appeal dismissed. 2024 (8) TMI 595 Principles of unjust enrichment - Refund of duty earlier paid under protest - rejection refund claims on the ground that they were not eligible for refund as the same was hit by the bar of unjust enrichment and vacated the payment of duty paid under protest and credited it to Consumer Welfare Fund u/s 12C of the Central Excise Act, 1944 - eligibility for the duty exemption under N/N. 108/1995 dated 28.08.1995 - HELD THAT:- In the instant case the appellant agrees that the duty paid by mistake to government had been passed on to the principal contractor under protest. Its their argument that the principal contractor has later withheld payment which exceeds the amount claimed as refund in order to adjust the excise duty already paid to the appellant. No factual proof of the same has been given or placed before the proper officer nor has it been shown that the duty paid by the principal contractor for whom the amount is an expense in turn have not passed it on to someone else or have not taken credit of the same and set it of against duties to be paid. This could have been done by way of a Chartered Accountant certificate as is in vogue in the case of certain refunds under a well-defined procedure. In the instant case the appellant agrees that the duty paid by mistake to government had been passed on to the principal contractor under protest. Its their argument that the principal contractor has later withheld payment which exceeds the amount claimed as refund in order to adjust the excise duty already paid to the appellant. No factual proof of the same has been given or placed before the proper officer nor has it been shown that the duty paid by the principal contractor for whom the amount is an expense in turn have not passed it on to someone else or have not taken credit of the same and set it of against duties to be paid. The impugned order categorically mentions that the unjust enrichment hurdle has not been crossed. No request has been filed to present these factual details before the Bench and discharge their onus, even at this distant date. The appellant has hence failed to discharge the burden cast upon them. The impugned order is upheld. The appeal stands rejected and is disposed of. 2024 (8) TMI 594 Liability of appellant to pay the service tax - only contention of the department is that the appellant should have first paid the excise duty for the entire period and thereafter, they should have claimed the abatement in respect of the proportionate duty attributed to the period when the machine was under closure. Whether the appellant is liable to pay the service tax for the entire period and thereafter should claim the abatement of the duty attributed to the period when the machine was sealed as contended by the Revenue or whether the appellant can claim the abatement without payment of duty for the said period, as claimed by the appellant? HELD THAT:- This very issue has been considered time and again in various decisions by this Tribunal and held that there is no need to first pay the duty and thereafter claim the abatement. This Tribunal considering Rule10 of the Pan Masala Packaging Machine (Capacity Determination and Collection of Duty) Rules, 2008 held that the claiming the abatement without paying the duty for the period when the machine was under closure is in order, therefore, on this account the demand is not sustainable. In the case of P.M. PRODUCTS VERSUS COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD-II [ 2023 (9) TMI 1370 - CESTAT AHMEDABAD] Division Bench of this Tribunal on the identical issue has held that In the present case, the appellant is eligible for abatement in principle and under no circumstances the full duty can be demanded for the period of abatement when the machine was not in operation. The issue is no longer res-integra and the appellant are entitled for the abatement even without first payment of the duty for the period of closure of machine. Therefore, the demand of duty in the present case is not sustainable - the impugned Orders are set aside - Appeal allowed. 2024 (8) TMI 593 CENVAT Credit - port services - place of reoval - SCN issued on the ground that the services were rendered beyond the place of removal and therefore they do not fall within the definition of Cenvat Credit in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 - time limitation. Merits of the case - HELD THAT:- This very issue was before the Hon. Gujarat High Court in the case of CENTRAL EXCISE VERSUS INDUCTOTHERM INDIA P LTD [ 2014 (3) TMI 921 - GUJARAT HIGH COURT] where the Hon ble High Court has held the cargo handling service is availed essentially for the purpose of exporting the goods and in such case, the services of cargo handling used by the manufacturer for transportation of the finished goods from the place of removal shall have to be essentially the port from where goods are actually taken out of the country. Time limitation - Show Cause Notice for the period 2008 to March 2012 was issued on 3rd May 2013 - HELD THAT:- The issue as to whether the exports done through port can be taken as a place of removal was a matter of interpretation and the same was resolved by the Gujarat High Court in the case of Inductotherm India Pvt. Ltd. Therefore, at the most, the issue can be said to be that of interpretation and not a case of suppression. Therefore, there are no justification for the Revenue to have invoked the extended period provisions to issue the first Show Cause Notice demanding reversal of Cenvat Credit of Rs. 1,14,24,881/-. Therefore,the Revenue s Appeal to this extent dismissed even on account of time bar. The Revenue s Appeal stands dismissed. 2024 (8) TMI 592 Classification of goods - raw-materials or consumables - Whether, the appellant s claim that the items namely Polycril Sector 130, 140 could be treated as consumables or, as Raw materials, as held by the Ld. Commissioner? - Applicability of Notification No. 23/2003-CE dated 31.03.2003. Classificatio of goods - HELD THAT:- The Hon ble Supreme Court had in the case of COMMISSIONER OF CUSTOMS, COCHIN VERSUS GTN TEXTILES [ 2022 (10) TMI 579 - SUPREME COURT] in a more or less identical issue held that on merits the Learned CESTAT is not right in holding that the Assessee was entitled to benefit of Notification No. 8/97 for concessional rate of duty . In the present case, the items in question would not meet the parameters laid down therein to hold these items under dispute before us as raw materials, since they do not remain until the final product reaches the end user. This is because, the item Polycril, as understood, would enable the dust particles on the granite block to get sedimented whereas, Sector 130, 140 is used in polishing the rough granite block which disappears finally. The goods are hence only used for processing of the final product and does not become a part of the final product. Further the products are not so essential that the final products cannot be manufactured without their use - the said items under dispute could never be treated as raw material but could only be used as consumables. Thus, the department was not justified in treating the items in question as raw materials and hence, there are no merit in the impugned order. Applicability of Notification No. 23/2003-CE dated 31.03.2003 - HELD THAT:- The Notification under reference before the Hon ble Apex Court was No.8/97 CE dated 01.03.1997 and here, in the present case, the Notification No.23/2003 CE dated 31.03.2003 is involved; there are no difference between these two Notifications insofar as the conditions for availing the benefit are concerned. Hence, the ratio of the above cases could be applied here. The department was not justified in treating the items in question as raw materials and hence, there are no merit in the impugned order - the impugned order is set aside - appeal allowed. 2024 (8) TMI 585 Wrongful availment of Modvat Credit - month of August, 1997 - short payment of central excise duty. Wrongful availment of Modvat Credit - month of August, 1997 - HELD THAT:- It is noted that during the month of August, 1997, the Modvat Credit was available with the appellant and has only lapsed w.e.f. 01.09.1997 when the N/N. 43/97 dt. 30.08.1997 was made applicable. Therefore, this Modavt credit has rightly been availed by the appellant. Short payment of central excise duty - HELD THAT:- The Commissioner finally determined the annual capacity of production of the appellant as recorded in para 3.4.6 that the appellant were paying duty @ Rs.400/- per MT. It clearly shows that they were working under Rule 96 ZP(1) instead of 96 ZP(3) of the Rules - the demand of duty on the basis of annual capacity of production of the unit fixed by the competent authority is not sustainable in view of the fact that the order of the Commissioner dated 30.10.2003 fixing the annual capacity of production was set aside by the Tribunal in OSAKA ALLOYS STEELS PVT. LTD. VERSUS COMMISSIONER OF C. EX., JALANDHAR [ 2005 (7) TMI 236 - CESTAT, NEW DELHI] . The appellant have fully discharged payment of duty in accordance with Section 3A, Rule 96 ZP(1) (2) and the impugned order is not sustainable in law - Appeal allowed. 2024 (8) TMI 584 Refund/rebate claim - rejection of refund on the ground that no refund can be claimed on the same issue where already rebate orders has been passed on the FOB value - HELD THAT:- The Tribunal in the case of M/S. UTTAM GALVA STEELS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD [ 2017 (5) TMI 692 - CESTAT MUMBAI] has dealt with this issue in detail and held that the filing of refund is a fresh case which cannot be pursued by appeal remedy. Therefore, the contention of the lower authorities regarding the non-filing of the appeal is not sustainable. As regards time bar, the refund of duty arose only after the decision of the rebate claim whereby the rebate was reduced. Therefore, the period for filing refund is reckoned from the date of rebate sanctioning order and not from the date of payment of duty. Hon ble High Court of Gujarat in the case of GARDEN SILK MILLS LTD VERSUS UNION OF INDIA [ 2018 (2) TMI 15 - GUJARAT HIGH COURT] , while allowing the appeal held that Government observes that the applicant is entitled for the take (sic) credit in their cenvat account in respect of the amount paid as duty on freight insurance charges. The applicant was not even required to make a request with the department for allowing this recredit in their cenvat account. The adjudicating officer/Commissioner (Appeals) could have themselves allowed this instead of rejecting the same as time-barred. The appellant is entitled to the refund claims made. Consequently, the impugned order is set aside. The appeal is allowed. CST, VAT & Sales Tax 2024 (8) TMI 591 Declination by High Court to entertain the writ petitions filed by the respondents for challenging the assessment orders - relegated to the remedy of statutory appeal - objection of the appellants is to that part of the impugned order by which till the disposal of the appeal, the High Court granted interim relief subject to respondents depositing 25% of the disputed tax within eight weeks - HELD THAT:- The appellants are right to the extent that the High Court could not have granted interim relief which will operate till the disposal of the appeals which were likely to be filed by the respondents. Grant of interim relief is something which should have been left by the High Court to the Appellate Authorities. At highest, the High Court could have granted interim relief for a limited duration to enable the respondents to prefer an appeal and seek appropriate interim relief therein. Though the approach of the High Court of granting interim relief till disposal of the appeal, not approved on facts, the impugned orders are not interfered with - appeals are disposed of. 2024 (8) TMI 590 Non-compliance of the order of pre-deposit - second appeal dismissed on the ground of non-payment of pre-deposit amount at the rate of 20% of the tax amount - HELD THAT:- Considering the audited balance-sheet of the appellant for the year ended on 31st March, 2018 wherein cash balance is shown at Rs.31,961.60 and there being no fixed assets available with the appellant, interest of justice would be meet if the appellant is directed to deposit Rs.10.00 lakh within a period of four weeks from today. On condition of deposit of Rs.10.00 lakh within four weeks, the impugned order passed by the Tribunal as well as the first appellate authority are hereby quashed and set aside and the matter is remanded back to the first appellate authority to consider the same on merits. Appeal disposed off. 2024 (8) TMI 589 Denial of Concessional rate of tax on the price of diesel which is used in the process of manufacture of taxable goods against a certificate prescribed by the Commissioner - benefit of Notification issued by the State of U.P. dated 10.08.2017 - concession could not be availed by the revisionist due to want of certificate of the Commissioner as prescribed therein. Whether the process of manufacturing commences from Cane Purchase Centre or after the sugarcane reaches the factory premises? - HELD THAT:- The issue is no longer res-integra and a Coordinate Bench of this Court in the case of TRIVENI ENGINEERING INDUSTRIES LTD. VERSUS COMMISSIONER, TRADE TAX [ 2014 (1) TMI 1619 - ALLAHABAD HIGH COURT] has extensively dealt this aspect and held that In the present case, sugarcane in its entirety cannot be purchased by sugar factory at its factory premises and under law, it is bound to purchase from the farmers at cane purchase centres. For manufacturing of sugar, crushing of surgarcane is an integral part and for that purpose, sugarcane has to be transported from its place of storage or where it has been purchased to the point of crushing pit where it has to be off loaded for crushing. To my mind, this is integrally connected part of process of manufacturing of sugar and therefore diesel purchased against Form-C if used for cane procurement from centres to factory, it would not amount to violation of purpose for which the said diesel was purchased. Thus, undoubtedly, the transportation of sugarcane from the Cane Purchase Centre to the Factory Premises is included in the term manufacture of sugar and the Tribunal has not correctly appreciated the controversy and has clearly erred in law. Benefit obtained by the revisionist under the Notification dated 07.12.2019 which according to the State Advised Price, the revisionist was also given 42 paisa per quintal per kilometer to a limit of Rs. 8.35 p per quintal for transportation of the sugarcane from the Cane Purchase Centre to the Factory Premises - HELD THAT:- The benefit granted by Notification dated 07.12.2019 clearly confines to the industrial units who are engaged in manufacture of sugar after purchasing sugarcane from the farmers where benefits of transportation from the Cane Purchase Centre to the Factory Gate was provided, while by Notification dated 10.08.2017. Benefit for concessional rate of tax was provided to all the industrial units for the purpose of manufacture of taxable goods. Clearly even if the revisionist has received benefit under the Notification dated 07.12.2019 he cannot be denied the benefits under Notification dated 10.08.2017 inasmuch as there is no provision for excluding the revisionist for being granted benefit under the said Notification, and no such restrictions could be placed. Had it been the intention of the Government to deny the benefit of the Notification dated 10.08.2017 in light of the fact that the sugar industrial units are already obtaining benefits under Notification dated 07.12.2019, the said facts would have been clearly mentioned in the Notification dated 10.08.2017. In absence of any restrictive clause in the Notification dated 10.08.2017, the Tribunal as well as the Commissioner, Commercial Tax had erred in interpreting and restricting the interpretation of the Notification dated 10.08.2017 in its application to the sugar manufacturing units. This Court is of the considered view that Commissioner, Commercial Tax as well as Commercial Tax Tribunal both have erred in interpreting the provisions of Notification dated 10.08.2017, according this Court is of the considered view that the revisionist clearly falls within the ambit of provisions contained in the aforesaid notification and was entitled to the benefit for purchase of diesel at the concessional rate of tax as prescribed therein. Revision allowed. Indian Laws 2024 (8) TMI 650 Denial to release the appellant on bail - right to speedy trial as enshrined under the Constitution of India - HELD THAT:- The requirement of law as being envisaged under Section 19 of the National Investigation Agency Act, 2008 mandates that the trial under the Act of any offence by a Special Court shall be held on day-to-day basis on all working days and have precedence over the trial of any other case and Special Courts are to be designated for such an offence by the Central Government in consultation with the Chief Justice of the High Court as contemplated under Section 11 of the 2008. In the recent decision, SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION ANR. [ 2022 (8) TMI 152 - SUPREME COURT ], prolonged incarceration and inordinate delay engaged the attention of the court, which considered the correct approach towards bail, with respect to several enactments, including Section 37 NDPS Act. The court expressed the opinion that Section 436A (which requires inter alia the accused to be enlarged on bail if the trial is not concluded within specified periods) of the Criminal Procedure Code, 1973 would apply. If the State or any prosecuting agency including the court concerned has no wherewithal to provide or protect the fundamental right of an accused to have a speedy trial as enshrined under Article 21 of the Constitution then the State or any other prosecuting agency should not oppose the plea for bail on the ground that the crime committed is serious. Article 21 of the Constitution applies irrespective of the nature of the crime. The impugned order passed by the High Court is set aside - The appellant is ordered to be released on bail subject to the terms and conditions which the trial court may deem fit to impose - appeal allowed. 2024 (8) TMI 588 Dishonour of Cheque - time limitation - complaint case instituted under section 138 of N.I. Act within the period of 30 days from the date of issuance of legal notice demanding the cheque amount from its drawer is pre-matured or not - necessity to make averments in the complaint about the service of notice to the accused or accused has evaded or deliberately not replied to the legal notice - HELD THAT:- The condition precedent for taking cognizance as prescribed under section 138 of proviso (c) and 142(b) are satisfied. Admittedly, notice was sent by the speed post on 07.01.2001 and the complaint was filed on 20.04.2001. Even if the presumption of deemed service within a reasonable time of 30 days (i.e., 16.02.2001) is taken, the accused was required to make payment within 15 days i.e. on or about 02.03.2001. The complaint petition which should have been filed on 02.04.2001 was filed on 20.04.2001 was clearly barred by the limitation. It was further observed that proviso appended to section 138 of N.I Act limits the applicability of the main provisions. Unless the conditions precedent for taking cognizance the offence under section 138 of NI Act is satisfied, the court will have no jurisdiction to take cognizance. The complaint petition in view of section 142 (b) of the NI Act was required to be filed within one month from the date on which the cause of action arose in terms of the clause (c) of the proviso to section 138 of the NI Act. The legal notice admittedly was issued on 17.01.2001. It was sent by the speed post. It was supposed to be served within a couple of days. Although the actual date of service of notice was allegedly not known, the complaint proceeded on the basis that the same was served within a reasonable period. The complaint petition admittedly was filed on 20.04.2001. The notice having been sent on 17.01.2001, if the presumption of the service of notice within a reasonable time is raised, it should be deemed to have been served at best within the period of 30 days from the date of issuance of thereof. In the situation, the complaint was hopelessly time barred. It is crystal clear that in the instant case, legal notice was issued on 19.12.2007 and the complaint was instituted just within one month i.e. 18.01.2008. As per presumptions under section 114 of Illustration(f) of the Evidence Act and section 27 of General Clauses Act, the service of notice upon the accused within a reasonable time is to be deemed and anything otherwise has to be rebutted by the accused by leading evidence. The complainant is not required to prove the service of notice on accused before institution of the case. In the instant case, the drawer has not denied about receipt of copy of complaint with summons and he appeared and contested the case throughout without raising any other substantial issues absolving him from the legal liability. Accordingly, a dishonest drawer of cheque can t get a premium from his own default. It is not out of place to observe that the learned trial courts must always adhere to the aims and object of giving notice to accused and examine the contents of complaint petition at the very stage of its registration and ensure that all legal formalities are complied with as prescribed under section 138 142 of N.I. Act, so as to alleviate any technical issue to crop up at the trial. The judgment passed by the learned Appellate Court cannot be sustained in view of the legal principles propounded by the Hon ble Apex Court as discussed above, which is hereby set aside. The case is remitted back to learned Appellate Court to re-hear the appeal and pass a fresh judgment after giving opportunity of hearing to the parties. Both parties are directed to appear before the concerned Appellate Court within six weeks from the date of this order - this revision application is allowed.
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Newsletter: Where Service Meets Reader Approval.

TMI Tax Updates - e-Newsletter August 13, 2024

TMI Short Notes

1. Navigating the Taxation Labyrinth: The Supreme Court's Guidance on Transfer of Right to Use Goods

2. Supreme Court Upholds Forfeiture of Earnest-Money Deposits under SARFAESI Rules

3. The Generality vs. Enumeration Principle: A Key to Interpreting Delegated Rule-Making Power: Validity of Rule 9(3) of the Chartered Accountants' Rules, 2007

Articles

1. PROVISIONAL ATTACHMENT OF BANK ACCOUNTS UNDER SECTION 110(5) OF CUSTOMS ACT, 1962

2. Is section 74 notice, a Brahmastra, which cannot be taken back, once activated?

3. AMENDMENT TO COMPANIES (ADJUDICATION OF PENALTIES) AMENDMENT RULES, 2024

4. RETRACTION OF STATEMENTS - MEANING, CONCEPT & LAW

News

1. PM GatiShakti Capacity Building Workshop to be organized in Thiruvananthapuram on 13th August, 2024

Highlights / Catch Notes

GST

Writ petition maintainability depends on statutory redressal mechanism availability, not purely legal issues. High Court discretion upheld.

Bio-fertilizers classified under different chapters leading to disparate GST rates. Order quashed, remanded for fresh hearing.

Validity of GST demand notice challenged for licensing services on minerals from 1/7/17 to 31/12/18. HC issued notice, no coercive recovery.

AAR denied error rectification. Queries not ruled. No error found. Differential IGST ineligible for ITC. Application rejected.

Plastic parts like rope handle & vent plug for lead acid batteries fall under heading 8507, not plastic chapters.

Electricity services exemption challenged. Distribution licensee entitled to exemption notification. Circular ultra vires. Interim protection granted.

Summary order quashed, bank accounts unattached due to lack of order. Lift attachment directed.

Appeal rejected wrongly. Explanation overlooked. Hear appeal on merits soon per HC order.

Cancellation order sans reasons, violating natural justice. SCN lacked specifics on alleged fraud/misstatement. Order lacks grounds.

Extension of time for tax recovery order contested. Affidavits required. Jurisdictional issue raised. Interim stay till Dec 2024.

Income Tax

Reopening notice invalid, income already considered in regular assessment. General info insufficient reason. Mechanical sanction, no application of mind.

Income from BCCI to Kerala Cricket Association - exempt u/s 2(15) or business income? Remanded to decide based on Ahmedabad case. Fresh orders in 6 months.

Disallowed interest on interest-free loans to related parties. Onus on assessee to prove commercial expediency. Failed to justify.

Penalty Overruled: Taxpayer's Detailed Disclosure Leads to Deletion of Section 271(1)(c) Penalty for Excess Deduction Claim.

Reopening upheld on info of escaped income. Addition u/s 68 deleted as books not rejected. Cross-exam denied. Edelweiss transactions misunderstood.

Exemption u/s 54F/54 allowed if new property acquired within 1 year before sale; possession date key, not legal transfer.

AO can't reject DCF method & apply NAV for share valuation. Independent parties' Rs 13.94/share value accepted under FEMA/RBI.

NRI's US Asset Gain Ruled Non-Taxable in India; Tribunal Accepts Long-Term Filing Despite Short-Term Classification.

Bank's gratuity & leave provisions are real expenses, not notional. Taxable income is real, not book entries. ITAT upheld assessee's claim.

AO made u/s 68 addition for director's loan account mismatch but Tribunal held previous year transactions can't be income for current year.

Customs

Tribunal upheld confiscation & penalties on 5 unexported containers but set aside same for 231 exported containers due to dept's delay.

Tariff Classification of Imported Meters Challenged; Appeal Allowed for Reassessment Due to Inadequate Justifications.

Customs valuation of cyanuric chloride rejected by revenue. Appellant's 2000MT import at lower price upheld by CESTAT.

Tire and Differential Pressure Sensors Classified Under Heading 9026 for Measuring Gas Pressure per Customs Tariff Act.

Advance Ruling Application Dismissed: Pending Classification of Lithium-Ion Cell Products Under Review by Customs Officer.

SEZ

1.11 hectares de-notified from Pune IT SEZ, leaving 3.95 hectares. Land to aid SEZ infrastructure. Approved by authorities.

Notification amends previous ones, changing Developer's name from "M/s. GIFT SEZ Limited" to "M/s. Gujarat International Finance Tec-City Company Limited".

FEMA

Non-residents can buy/sell Indian Sovereign Green Bonds in IFSC. Inward remittance for purchase & outward remittance of sale proceeds allowed.

Indian Laws

Cheque dishonour case valid if filed within 30 days of notice. No need to prove notice service. Onus on accused to rebut service presumption. :

PMLA

Bail Granted Due to Prolonged Incarceration and Right to Liberty; Supreme Court Overturns High Court Decision.

Service Tax

Cenvat credit on immovable property post completion certificate denied, treated as sale of goods. Credit allowed only on inputs within 1 year.

Service tax demand on income shown in IT Return justified. Suppression of facts to evade tax. Extended period invoked. Penalty upheld.

Central Excise

Interest rate on delayed excise refunds capped at 6% p.a. despite claims for higher rates. Govt empowered to fix 5-30% rate.

Duty paid by mistake to govt passed on to contractor under protest. Contractor withheld excess payment. No proof duty wasn't credited. Unjust enrichment.

Duty abatement allowed for machine closure period sans prior payment. Claimable under Pan Masala Rules & CESTAT precedents. Demand unsustainable.

Port services qualify as 'place of removal' for CENVAT credit on cargo handling services for exports. Interpretation issue, not suppression.

Items like Polycril & Sector 130/140 can't be treated as raw materials but consumables as they don't remain in final product.

Case Laws:

GST

Income Tax

Customs

PMLA

Service Tax

Central Excise

CST, VAT & Sales Tax

Indian Laws

Quick Updates:

TMI Tax Updates - e-Newsletter
August 13, 2024