TMI Tax Updates - e-Newsletter
August 14, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Law of Competition Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Claim of ITC through GSTR-3B justified since Form GST ITC-02 was not live on common portal

   By: Bimal jain

2. ITC ON SUPPLY OF ALCOHOLIC LIQUOR TO BE REVERSED

   By: Dr. Sanjiv Agarwal

3. R&D services provided to the foreign company considered as export of service

   By: Bimal jain

4. No service tax on transportation of articles which are not goods as per Sales of Goods Act

   By: Bimal jain

News

1. THE INTEGRATED GOODS AND SERVICES TAX (AMENDMENT) BILL, 2023

2. THE CENTRAL GOODS AND SERVICES TAX (AMENDMENT) BILL, 2023

3. DPIIT and Ministry of Rural Development jointly launch ‘One District One Product’ Wall at SARAS Ajeevika Store

4. Closing Remarks by Shri Shaktikanta Das, Governor, RBI at the Seminar on Global Economy: Challenges, Opportunities and Way Forward organised by the Ministry of Finance, Government of India and the Reserve Bank of India, August 11, 2023, Mumbai

Notifications

GST - States

1. 26/2023-State Tax - dated 27-7-2023 - Gujarat SGST

Amnesty to GSTR-10 non-filers in form of waiver of late fees

2. 25/2023-State Tax - dated 27-7-2023 - Gujarat SGST

Amnesty extended to 31.08.2023 for GSTR-9 non-filers in form of waiver of late fees

3. 23/2023-State Tax - dated 27-7-2023 - Gujarat SGST

Extension of time limit for application for revocation of cancellation of registration upto 31.08.2023

4. 09/2023-State Tax (Rate) - dated 27-7-2023 - Gujarat SGST

Seeks to amend Notification No. 1/2017-State Tax (Rate) dated 30th June, 2017

Circulars / Instructions / Orders

GST - States

1. CCT/26-4/2023-24/G/1374 - dated 4-8-2023

Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons.

2. CCT/26-2023-24/G/1375 - dated 4-8-2023

Clarification on issue pertaining to e-invoice.

3. CCT/26-4/2023-24/G/1376 - dated 4-8-2023

Clarification on refund-related issues

Highlights / Catch Notes

GST

• Revenue Authorities Liable for Interest on Delayed Refunds if Not Processed in 60 Days per Section 54(7.

  Case-Laws - HC : Refund of amount recovered from the petitioner upon encashment of the bank guarantee - the revenue authorities were obligated in law to deal with that application in terms of Section 54(7) of the Act, within a period of 60 days. Failing that, the revenue further became exposed to discharge interest liability on the delay in making the refund at the statutory rate from the end of 60 days from 02.06.2019. - HC
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• Ex-parte order invalidated due to natural justice breach; authority failed to notify parties of new hearing date.

  Case-Laws - HC : Violation of principles of natural justice - ex-parte impugned order - There are no reason for the adjudicating authority to pass that ex parte order, without any further notice. Since no order had been passed on that date, the adjudicating authority was obligated to fix another date. To that extent the petition must succeed. - HC
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Income Tax

• Tax Authority Challenges CIT(A) Decision Overlooked Evidence of Undisclosed Cash Payments in Capital Gains Assessment.

  Case-Laws - AT : Reopening of assessment - Undisclosed long term capital gain - the ld CIT(A) was not correct and right in granting relief to the assessee ignoring the vital self speaking evidence showing cash payment by the purchaser to the seller assessee and his co owner out of which assessee received 50% amount in cash. - AT
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• Assessee's Advance Tax Credit Granted After Delay; CBDT Section 119(2)(b) Application and AO's Section 154 Failure Addressed.

  Case-Laws - AT : Denial of credit of advance tax paid by assessee - filing of application before CBDT u/s 119(2)(b) for condonation of delay in claiming the advance tax credit - AO erred in not rectifiying this apparent mistake when the same was pointed out by the assessee vide its application under section 154 of the Act. Accordingly, we direct the jurisdictional AO to grant the credit of advance tax paid by the assessee- AT
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• Taxpayer Challenges Property Valuation u/s 56(2)(vii)(b); Corrective Measures Allowed for Valuation Discrepancies.

  Case-Laws - AT : Unexplained income u/s 56(2)(vii)(b) - amount by which an immovable property purchased by the assessee fell short of its stamp duty value - The contention of the AO is bound to accept the DVO’s report, we agree with the same. But at the same time Valuation of property is only an exercise in approximate estimation. And therefore there is always scope for correction of the estimates on account of discrepancies. Assessee is well within his rights to contest the valuation, which if found justified, the appellate authorities cannot shut their eyes to the same. - AT
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• Reassessment Invalid if AO Assumed Jurisdiction in Original Order under Sec 143(3) & 147; No Sec 148 Notice Permitted.

  Case-Laws - AT : Validity of reopening of assessment - Once the AO rightly or wrongly assumed jurisdiction in framing the assessment order u/s 143(3) r.w.s. 147 of the Act, in view of the fact that once the assessment order is subject matter of the further appeal, reassessment cannot be framed on the same issue on issuing notice u/s 148 as the original assessment gets merged with the order of the Higher Appellate Authority. - AT
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• Tribunal's decision on section 36(1)(viia) deduction stands; AO must verify and allow claim in remand.

  Case-Laws - AT : Deduction u/s 36(1)(viia) - revenue had not taken any action against the directions of the Tribunal as per the original order, and therefore the directions have crystallized which means that the Assessing Officer has no alternate course except to follow the directions. Accordingly, AO in the remand proceedings ought to have verified the availability of sufficiency of provisions as per the books of accounts of the assessee and allow the claim u/s. 36(1)(viia). - AT
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• Transfer Pricing Order Invalidated for Missing Deadline by One Day u/s 92CA(3.

  Case-Laws - AT : Validity of TP order stating that the orders are passed u/s 92CA (3) - Period of limitation - 60 days period from 31/3/2015 expires on 29 January 2015. But the ld TPO has passed TP Assessment order u/s 92CA (3) of the Act on 30th January 2015. Thus, the order of ld TPO is passed beyond statutory time available. - AT
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• Taxable Income Increased Due to Unsupported Sales Commission Claim Lacking Invoices and Vouchers.

  Case-Laws - AT : Disallowance of expenditure of sales commission - genuineness of expenditure - Nonetheless except for this agreement, the assessee not produced any invoice or voucher of the sales commission neither furnished quantitative details or details of sales of which commission had been computed and paid. - Additions confirmed - AT
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Customs

• Debate on Import Classification: Should Lawn Mowers Fall Under CTH 8433 as Harvesting Machinery or CTH 8467?

  Case-Laws - AT : Classification of imported goods - lawn mowers - to be classified under CTH 8433 or 8467? - harvesting or threshing machinery, including, inter-alia, grass or hay mowers. - the lawn mower in question is specifically included under heading 8433.11. - AT
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• Amendment and Reassessment of Bill of Entry Upheld; No Errors Found in Customs Duty Refund Claims u/s 3.

  Case-Laws - AT : Benefit of exemption - Amendment in Bill of entry - Refund claims in respect of additional duty of customs leviable u/s 3 of the Customs Tariff Act, 1975 - assessment order before Commissioner(Appeals) not challenged. - the amendment and reassessment to be carried out has been correctly allowed by the Commissioner (Appeals), and there are no infirmity in his order. - AT
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Indian Laws

• Directors' Vicarious Liability in Cheque Dishonor: Understanding Section 141 of the Negotiable Instruments Act.

  Case-Laws - SC : Dishonour of Cheque - icarious liability of directors - It is apparent that the words "was in charge of" and "was responsible to the company for the conduct of the business of the company" cannot be read disjunctively and the same ought be read conjunctively in view of use of the word "and" in between. - Only by saying that a person was in charge of the company at the time when the offence was committed is not sufficient to attract sub-section 1 of Section 141 of the NI Act. - SC
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• Director Issued Dishonored Cheque; Trial Court Allows Complaint Amendment Despite Acquittal Details Omitted.

  Case-Laws - HC : Dishonour of Cheque - acquittal of the accused - The petitioner as director of the company was the person who issued the cheque in this case and the transaction was carried out by the petitioner as director on behalf of the company. As such there is clear averments in the complaint itself, against the company and also its director. - The trial court shall permit the complainant to amend the petition of complaint - HC
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IBC

• Resolution Professional Criticized for Not Withdrawing CIRP Application, Incurring Excessive Fees Over Unrecoverable Claim.

  Case-Laws - AT : Closure of CIRP - integrity and fairness demanded that the Resolution Professional ought to have facilitated the withdrawal of the CIRP application as was desired by the sole CoC member/Respondent No.1 without unduly prolonging the proceedings. It is commonsensical that for recovery of a claim of about Rs.10 lakhs, incurring an expenditure of Rs.19 lakhs by way of fees/expenses of the Resolution Professional would be outlandish and that too when there seems to be no possibility of revival of the Corporate Debtor - AT
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• NCLT Grants 90-Day Extension for EOI Re-publication to Maximize Corporate Debtor Value, Appellate Tribunal Supports Decision.

  Case-Laws - AT : Submission of Resolution Plan - NCLT allowed the request for Extension/ exclusion of 90 days for re-publication of invitation for the Expression of Interest (EOI) (Form-G). - the CoC took a decision to issue fresh Form-G to give opportunity to all with the object of maximizing the value of Corporate Debtor - there are no error in the impugned order, warranting interference by this Appellate Tribunal in exercise of its appellate jurisdiction. - AT
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Service Tax

• Autologous Micrograph Treatment Exempt from Service Tax: No Surgery Involved, Falls Under Notification 25/2012.

  Case-Laws - AT : Exemption from Service Tax - cosmetic or plastic surgery - There is only injection of a stem cell -like rich solution into the thinning areas of the head. This does not involve any surgery or surgical procedure which involves cutting of a patient’s tissues or closure of a previously sustained wound. Accordingly, the Autologous Micrograph Treatment is eligible for exemption under Notification 25/2012 - AT
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• Supreme Court Decision: Service Tax on Reimbursable Expenses for Pure Agent Services Not Sustainable Pre-2015.

  Case-Laws - AT : Valuation of services - pure agent services - getting certain reimbursements on account of salaries paid to their employees engaged in the work of recovery - In view of the above decision of the Hon’ble Supreme Court for the period prior to 2015 the demand or service tax in respect of reimbursable expenses cannot be sustained - AT
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Central Excise

• Extended Limitation Period u/s 11A(4) of Central Excise Act Not Applicable Due to AVAT Discrepancy in Invoices.

  Case-Laws - AT : Extended period of limitation - Valuation of goods - The Appellant has to charge full amount of AVAT and it cannot charge 1% in the invoices as per the provision of AVAT Act, 2003. The same was reflected in the audited Profit & Loss account and balance sheet of the impugned periods - extended period of limitation as provided under section 11A(4) of the Central Excise Act, 1944 cannot be invoked for recovery of the short paid duties - AT
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VAT

• Interstate Sales Confirmed: Goods Fabricated in Raipur for Southern Railways, Transported to Tamil Nadu for Installation.

  Case-Laws - HC : Intra-State Transaction or Inter-State transaction? - the contract is between the assessee in Raipur and Southern Railways. It is not known where the contract was entered into by the parties. However, there is no dispute on the position that the goods forming the subject matter of the contract, have been fabricated in Raipur and thereafter brought to Tamil Nadu for installation - the transactions in question constitute interstate sales - HC
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Case Laws:

• GST

• 2023 (8) TMI 647
  Refund of amount recovered from the petitioner upon encashment of the bank guarantee furnished by the petitioner to secure its interest qua the penalty - before the petitioner could have availed any remedy in appeal, that Bank Guarantee is disclosed to have been encashed on that date itself - HELD THAT:- Section 54 of IGST Act required the petitioner to move an application in the prescribed form and manner within two years from the refund being becoming due. By virtue of Section 54(7) of the Act, that claim ought to have been dealt with and disposed of within 60 days of its receipt. It is also not in dispute, by virtue of Section 56, any delay beyond statutory period of 60 days in dealing with the claim for refund, the revenue entailed the interest liability @ 6% from the end of period of 60 days. In the first place, there is no contrary opinion existing and perhaps none may arise as the language of the statute as it stands admits of no doubt. As to the filing of physical/offline application on 02.04.2019, there is no doubt raised by the revenue. Therefore, that application had been filed within the statutory period of two years from the date when the refund became due i.e., upon the first appeal order dated 09.03.2018 being passed. Therefore, the revenue authorities were obligated in law to deal with that application in terms of Section 54(7) of the Act, within a period of 60 days. Failing that, the revenue further became exposed to discharge interest liability on the delay in making the refund at the statutory rate from the end of 60 days from 02.06.2019. A writ of mandamus is issued to respondent no. 3 to dispose of the petitioner s refund claim application dated 02.04.2019 and to pay up the amount of refund claim together with statutory interest, within a period of three months from today - Petition allowed.

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• 2023 (8) TMI 646
  Maintainability of appeal - appeal dismissed on the technical ground of filing certified copy of the order against which appeal was filed as beyond time - HELD THAT:- It is an admitted position that the appeal has been filed electronically within time but due to bonafide mistake of the petitioner it could not be filed within time. Considering the facts and circumstances of this case and in the interest of justice and in view of the fact that the appeal of the petitioner was dismissed only on the technical ground without going into the merit, the order of the appellate authority dated 1st May, 2023 is set aside and the matter is remanded back to the appellate authority concerned to accept the certified copy filed by the petitioner beyond time and consider and dispose of the appeal in question in accordance with law - Appeal allowed by way of remand.

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• 2023 (8) TMI 645
  Maintainability of petition - availability of alternative remedy of appeal u/s 112 of the Bihar Goods and Services Tax Act - non-constitution of Tribunal - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. The petition is disposed off subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under sub-section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under sub-section (9) of Section 112 of the B.G.S.T. Act.

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• 2023 (8) TMI 644
  Permission for withdrawal of petition - Constitutional validity of the provisions of Section 17(5)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act) and Section 17(5)(c) of the Maharashtra Goods and Services Tax Act, 2017 - Restriction on benefit of ITC on works contract services - HELD THAT:- Petition disposed as withdrawn.

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• 2023 (8) TMI 643
  Violation of principles of natural justice - ex-parte impugned order - petitioner could not appear on the date fixed for personal hearing - HELD THAT:- Having perused the record, in the first place, it is not in doubt that rules of natural justice have been breached. The adjudicating authority ought to have fixed reasonable date for filing reply and for personal hearing. That procedure was not followed. It may be true that the petitioner may have been at fault in not filing reply on the date fixed and having not filed any application thereafter. Yet, the adjudicating authority chose not to pass any order and did not fix any other date for hearing in the matter for a long period of five months. There are no reason for the adjudicating authority to pass that ex parte order, without any further notice. Since no order had been passed on that date, the adjudicating authority was obligated to fix another date. To that extent the petition must succeed. However, at the same time, there is fault on the part of the petitioner in neither filing appeal within limitation nor approaching this Court within reasonable time. Therefore, equities have to be balanced. The writ petition is disposed of with the observation, in case the petitioner deposits a sum of Rs. 75,000/- before the adjudicating authority-respondent No.2 within three weeks from today, the impugned order shall stand set aside. Further, petitioner may file its reply to the contents of the notice and the order within a period of two weeks thereafter.

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• Income Tax

• 2023 (8) TMI 642
  Penalty u/s. 271B - delay in completion and submission of the Tax Audit Report as required u/s. 44AB - HELD THAT:- On perusal of the documents submitted before us, it is apparent that the statutory audit as well as tax audit of assessee society was completed after the due date prescribed for filing of Audit Report. Even the Tax Auditor was appointed by the regulatory body after the due date prescribed, therefore, there was sufficient cause for delay in completion and submission of the Tax Audit Report as required u/s. 44AB of the Act. We, considered that penalty levied by the AO u/s. 271B on account of not getting the accounts audited within the specified due date and confirming by the Ld.CIT(A), deserves to be deleted. Resultantly the appeal of the assessee is allowed.

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• 2023 (8) TMI 641
  Reopening of assessment - Undisclosed long term capital gain - AO granting cost of indexation to the assessee and thereafter calculated the long term capital gain on the 50% share of the assessee in the property sold - HELD THAT:- As we in agreement with the contention AO as well as CIT DR that the said excel sheet was containing all details including description of land, sale consideration as per registered sale deed, cash payment of part consideration and amount written in an appropriate form. Assessee is merely taking shelter that the sale consideration mentioned in the sale deed is the only amount which is received by cheque but he has no explanation regarding mentioning of transactions and payment of cash to the purchaser to the sellers including the assessee in cash. At the cost repetition, we may point out during the assessment proceeding the assessee did not appear before the AO and AO passed ex parte order u/s 147/ 144 of the Act on the basis of material available, particularly report of Investigation Wing supported by excel sheet recovered from the Assistant Manager of Accounts Ms. Dadlani of the purchaser entity. In our considered opinion the ld CIT(A) was not correct and right in granting relief to the assessee ignoring the vital self speaking evidence showing cash payment by the purchaser to the seller assessee and his co owner out of which assessee received 50% amount in cash. Accordingly, the AO was right and justified in calculating long term capital gain after allowing index cost of acquisition to the assessee. CIT(A) granted relief to the assessee without any basis therefore, impugned first appellate order is set aside by restoring the assessment order passed u/s 147/144 as well as addition made therein. Accordingly, grounds of revenue are allowed.

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• 2023 (8) TMI 640
  Taxability of foreign income in India - amount received by the assessee from certain entities in India - Royalty/Fee for Included Services (FIS) u/s 9(1)(vi) and Article 12 of India USA DTAA - assessee is a non-resident corporate entity and a tax resident of United States of America (USA) - HELD THAT:- As considering the fact that the issue in dispute is squarely covered in favour of the assessee by the decision of Hon ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] and various orders of the Tribunal in assessee s own case in past assessment years amounts received from sale/supply of software licences and associated services are not taxable as royalty/FIS. Accordingly, he deleted the addition. Decided in favour of assessee.

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• 2023 (8) TMI 639
  Penalty u/s 271(1)(c) - wrong claim of loss of stock - HELD THAT:- There is no findings of the authorities below that the claim of assessee was incorrect or false to allege that the assessee has either furnished incorrect particulars of income or has concealed particulars of income to alleged penalty provisions of section 271(1)(c) of the Act. We are unable to ignore the claim of loss of stock has not been disputed by the Sales Tax Department and no discrepancy has been pointed out by the Sales Tax Authorities to the claim of loss of stock. In the case of Reliance Petro [ 2010 (3) TMI 80 - SUPREME COURT] held that merely because the claim of assessee was not accepted or not found to be acceptable by the tax authorities does not entitle the AO to impose penalty u/s 271(1)(c) - AO was imposing penalty has held that the penalty was leviable in the case of concealed income represents the returned loss. AO while imposing the penalty recorded findings that the penalty is being imposed for furnishing inaccurate particulars of income or concealed income which shows that even at the time of imposition of penalty the AO himself was not clear as to whether the assessee has furnished inaccurate particulars of income or has concealed particulars of income. CIT(A) while confirming part penalty alleged that there is no doubt that the income has been concealed. Thus we reached to a logical conclusion that the penalty imposed by the AO and confirmed by the ld CIT(A) on account of loss to stock is not sustainable - Decided in favour of assessee.

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• 2023 (8) TMI 638
  Penalty u/s 271FAA - furnishing inaccurate statement of financial transaction or reportable account - HELD THAT:- In this case, the Prescribed Authority has notified the discrepancies vide his letter to the Reporting Entity to rectify the defects and accordingly, the revised/rectified Form 61-B was filed on 13.04.2021, 13.04.2021 and 15.04.2021 for the CY 2017, 2018 and 2019 respectively, which appears to be well within the time allowed u/s 285BA(4) of the Act. Therefore, CIT(A) was not correct in confirming the order of the Prescribed Authority that the assessee has not rectified the defects within time. Provisions of sub-section (4) of section 285BA of the Act mandate that the defect should be rectified within a period of one month from the date of such intimation and in the present case, the Reporting Entity has rectified the defects within the time limit as provided u/s 285BA(4) - In view of the above, we set aside the order passed by the ld. CIT(A) and delete the penalty levied under section 271FAA - Appeals filed by the Reporting Entity are allowed.

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• 2023 (8) TMI 637
  Denial of credit of advance tax paid by assessee - AR submitted that the assessee has filed an application before CBDT u/s 119(2)(b) for condonation of delay in claiming the advance tax credit, which is pending consideration, and also placed on record a copy of the challan payments of advance tax as well as relevant extracts of Form 26AS wherein the aforesaid payment is duly reflected - HELD THAT:- It cannot be disputed that the claim made by the assessee was limited to the grant of credit of the aforesaid advance tax paid during the year under consideration and the same doesn t pertain to fresh claim of any allowance/deduction. It is not a case wherein the assessee sought credit of TDS which needs to be verified with documentation and correlated with the corresponding income. Section 219 of the Act also mandates that the credit of advance tax shall be given to the assessee in the regular assessment. Thus, the inadvertence on the part of the assessee to claim the credit for the advance tax while filing its return of income or filing the revised return of income in this regard does not absolve the AO from its statutory duty as per section 219 of the Act to grant the credit in the regular assessment, particularly when the said amount is duly reflected in Form 26AS which forms part of the record of the Revenue. AO erred in not rectifiying this apparent mistake when the same was pointed out by the assessee vide its application under section 154 of the Act. Accordingly, we direct the jurisdictional AO to grant the credit of advance tax paid by the assessee during the financial year 2012-13 - Decided in favour of assessee.

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• 2023 (8) TMI 636
  MAT computation - disallowance of CSR expenses made by the AO for calculating book profit to arrive at MAT u/s 115JB - HELD THAT:- Since the department has not raised any argument with respect to preparation of account of the company or doubted on audited accounts of the assessee that the same are not in accordance with the provisions of the Companies Act. Respectfully following the ratio of law laid down in the case of Apollo Tyres [ 2002 (5) TMI 5 - SUPREME COURT] which was further followed in the case of GE Powers Systems India Pvt. Ltd [ 2022 (9) TMI 815 - ITAT DELHI] we are of the considered opinion that the adjustment made by the AO by invoking provisions of sec. 154 making addition of CSR expenses to the book profit of the company while determining the book profit u/s. 115JB was bad in law which was rightly deliberated and comprehended by the CIT(A). Therefore, the order of the Ld.CIT(A) cannot be held as erroneous, thus, the same deserves to be sustained, and we do so. In the result, appeal filed by the Revenue stands dismissed.

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• 2023 (8) TMI 635
  Condonation of delay filling appeal before ITAT - main contention behind the delay was that he was ill-advised by the Counsels and by the time, he engaged new Counsel and got the correct advice to file the appeal, the time of limitation was already surpassed - HELD THAT:- As contention of the assessee cannot be acceded to for the reason that the assessees were unable to substantiate its contention by way of producing or submitting any information like who was the earlier Counsel, copy of any written opinion, on whose opinion, assessees have not filed the appeals in time and also no material supporting evidence could be placed on record in support of this contentions of the assessee. Therefore, in our considered opinion, there was no sufficient cause, whereby, the assessee was prevented to file the appeals in time, it was only the assessee who has not acted diligently or remain inactive. As assessee has failed to come forth with any good and sufficient reason that would justify condonation of the substantial delay involved in preferring of the captioned appeals. Therefore, the condonation of delay which was without any reasonable cause was declined. Thus dismissing all the captioned appeals of the assessee as barred by limitation.

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• 2023 (8) TMI 634
  Reopening of assessment - confirming notional income on account of client code modification - reason to believe towards escapement of income - HELD THAT:- The instances of transactions resulting in loss/profit to the assessee on account of client code modification do not feature in the reasons at all. The reasons recorded appears to be a token exercise for assumption of jurisdiction and without compliance of jurisdictional parameters. AO in the instant case has proceeded on a hypothesis flowing from a generic information rendering the whole exercise to be arbitrary and unsustainable in law. The believe towards escapement in the instant case is only pretense and a mere doubt and suspicion towards probable escapement though worded as reasonable to believe . The Hon ble Supreme Court in Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT ] has underscored that the word of the statute reason to believe are not reason to suspect . The vague feeling or suspicion of the AO towards possible escapement would not permit to reopen a completed assessment in defiance of statutory requirement of substantial nature. The notice issued under Section 148(1) is thus ultra vires the provision of Section 147 of the Act.Thus considerable force in the plea of the assessee for non maintainability of re-assessment order passed in pursuance of a notice u/s 148 of the Act which is vitiated in law. Decided in favour of assessee.

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• 2023 (8) TMI 633
  Unexplained income u/s 56(2)(vii)(b) - amount by which an immovable property purchased by the assessee fell short of its stamp duty value - Assessee argued that land purchased by the assessee had several defects effecting its market value which he pointed out were also noted by the DVO in his valuation report and therefore the market value of the land was comparatively lower - HELD THAT:- As we agree with assessee that majority of the comparable instances picked up by the DVO for valuation of impugned land falling within the acceptable range of comparison with the purchase value of the assessee, there was a good a justifiable case for treating the purchase value of land by the assessee as comparable to its fair market value. We find, there is no basis given by the DVO for arriving at fair market value of Rs. 495/- from the comparable instances listed by him in his report. We see no reason for adopting the said value as the fair market value when the facts sufficiently demonstrate that majority of the comparable instances picked up by the DVO himself showed that the purchase price paid by the assessee was comparable to the instances picked up by him. For this reason alone, we hold that the addition made to the income of the assessee u/s 56(2)(viib) was not justified and direct the same to be deleted. The contention of the AO is bound to accept the DVO s report, we agree with the same. But at the same time Valuation of property is only an exercise in approximate estimation. And therefore there is always scope for correction of the estimates on account of discrepancies. Assessee is well within his rights to contest the valuation, which if found justified, the appellate authorities cannot shut their eyes to the same. The decision relied upon by the DR of the hon ble jurisdictional high court in the case of Gayatri Enterprise vs. ITO [ 2019 (9) TMI 777 - GUJARAT HIGH COURT] has been rendered in a totally different context where the issue raised before the Hon ble Court was in the context of revisionary proceedings conducted by the Commissioner u/s 263 of the Act finding assessment order erroneous on account of the AO have not taxed difference between the purchase price of the asset and the fair market value of the property. It is in this context of facts that held that the AO was bound by the valuation done by the DVO and having not brought to tax the difference between the valuation done by the DVO and the price by which the property was purchased by the assessee the order passed by the AO was held to be in error. The said decision is of no assistance to the Revenue. The distinction pointed out by the DR on the case law referred to by the counsel for the assessee for getting the benefit of 10% difference in valuation and actual purchase price in the case of GB. Gautam [ 1992 (11) TMI 1 - SUPREME COURT] we have noted that the assessee has relied on the decision in the case of Amrapali Cinema [ 2021 (4) TMI 1160 - ITAT DELHI] for the proposition that the safe harbour of 10% difference in valuation and purchase price provided in section 50C is applicable retrospectively. No decision being cited by DR to the contrary of any higher judicial authority, the said decision will apply to the present case. There is no case for making any addition to the income of the assessee on account of purchase price of land falling short of its fair market value. The addition made to the income of the assessee on account of the same is deleted. The grounds of appeal raised by the assessee are allowed.

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• 2023 (8) TMI 632
  Validity of reopening of assessment - addition of unexplained share capital and unexplained bank deposits - assessee has challenged the assumption of jurisdiction and contended that the assessment order is contrary to Section 147 to 151 and the same is beyond jurisdiction and without complying the mandatory conditions of Section 147 to 151 - As per assessee since the Assessment was originally completed u/s 143(3)/153C was annulled, hence, assessment u/s 147 could not have been done by the A.O. - HELD THAT:- The Hon ble Supreme court in the recent Judgment in the case of Abhisar buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] while holding that, in respect of completed/unabated assessments, no addition can be made by the AO in the absence of any incriminating material found during the course of search u/s 132 or requisition u/s 132A however, observed that the completed/unabated assessments can be re-opened by the AO in exercise of powers u/s 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. Once the AO rightly or wrongly assumed jurisdiction in framing the assessment order u/s 143(3) r.w.s. 147 of the Act, in view of the fact that once the assessment order is subject matter of the further appeal, reassessment cannot be framed on the same issue on issuing notice u/s 148 as the original assessment gets merged with the order of the Higher Appellate Authority. Ratio laid down in the case of Krishna Developers Co. [ 2017 (8) TMI 241 - GUJARAT HIGH COURT] and Abhisar Buildwell P.Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] which are having effect of binding precedent, therefore by relying on the ration laid on in the case of Krishna Developers Co. and Principal Commissioner Vs. Abhisar Buildwell P. Ltd (Supra), we find no merits in the Ground No. 1 to 4 of the C.O.

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• 2023 (8) TMI 631
  TPA on account of interest payment on FCCDs - HELD THAT:- As the assessee`s calculation of estimated mean coupon rate of 16.95% on the remaining six comparables, chosen from BSE/NSE appears to be closure. It was also observed by ld CIT(A) that the 15% coupon rate paid by the assessee on the FCCDs is close to the prevalent SBI prime lending rate of 14.75% as well. Considering these facts, ld CIT(A) held that the upward adjustment made by the TPO/assessing officer the total income of the assessee by reducing the interest rate paid @ 15% to 12.58% was held to be not justified and therefore ld CIT(A) deleted the same. We have gone through the above findings of ld CIT(A) and observed that conclusion reached by ld CIT(A) is correct. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. Disallowance u/s 14 A - sufficiency of own funds - HELD THAT:- We note that during the appellate proceedings, the ld CIT(A) noted that assessee has sufficient tax-free funds available with it, which is verifiable from the copy of balance sheet attached with the financial statements filed. Investments that were brought forward at the beginning of the year (01.04.2014) were reduced to Nil at the end of the year (31.03.2015). Therefore, ld CIT(A) observed that since the assessee had sufficient interest free funds at its command as against the investments that resulted in earning of exempt income, hence ld CIT(A) deleted addition - No infirmity in the findings of ld CIT(A). The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss the ground raised by the Revenue.

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• 2023 (8) TMI 630
  Deduction u/s 36(1)(viia) - amount of provision made towards bad and doubtful debts in the books of accounts - DR submitted that the provision made on standard assets cannot be considered as provision made for bad and doubtful debts since the assessee itself has classified the asset as good and recoverable i.e. standard asset - HELD THAT:- As in the given case the Hon ble Tribunal has given a direction to the Assessing Officer to consider the issue afresh in the light of the decision of Sarvodaya Sahakari Bank Ltd [ 2014 (5) TMI 1182 - ITAT AHMEDABAD] whereby the AO is required to look into the total provision towards bad and doubtful debts as per the books of accounts of the assessee irrespective whether the provision is made in the current year or previous year and allow the claim u/s. 36(1)(viia) accordingly. However we notice that the Assessing Officer in the order giving effect has not discussed anything in this regard but has proceeded to restrict the claim based on a different ground. We notice that the revenue had not taken any action against the directions of the Tribunal as per the original order, and therefore the directions have crystallized which means that the Assessing Officer has no alternate course except to follow the directions. Accordingly, AO in the remand proceedings ought to have verified the availability of sufficiency of provisions as per the books of accounts of the assessee and allow the claim u/s. 36(1)(viia). As has been pointed out by assessee is carrying a provision of Rs. 1549 crores as on 31/03/2009 and the claim made during the year under consideration is Rs. 820.28 crores. Therefore respectfully following the decision of Sarvodaya Sahakari Bank Ltd (supra), we are of the view that no disallowance is warranted since the assessee is having sufficient provision towards bad and doubtful debts in the books of accounts and delete the disallowance made by restricting the amount claimed as a deduction u/s. 36(1)(viia) by the Assessing Officer in this regard. Decided in favour of assessee.

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• 2023 (8) TMI 629
  Validity of the order passed u/s. 92CA(3) - period of limitation - HELD THAT:- As the time limit for passing of the order by the Ld.TPO under section 92CA(3A) is linked with the time limit, as mentioned in section 153(1) of the Act. We find that, the Finance Act, 2007 inserted sub-section (3A) carrying the time limit of sixty days for passing of the order by the Ld.TPO before the expiry of time limit for completion of assessment by the Ld.AO u/s.153. The word may used in section 92CA(3A), might connote merely an enabling or permissive power in the sense of the usual phrase, but it is also capable of being construed as referring to a compellable duty, particularly when it refers to a power conferred on a court or an authority. Therefore despite the use of the word may , in section 92CA (3A), the time limit for passing the order by the Ld. TPO is mandatory. TPO is bound by the time limit for passing of his order. Thus the time limit given in sub-section (3A) of section 92CA is mandatory for the passing of the order u/s. 92CA(3) by the Ld. TPO. Based on the interpretation by PFIZER HEALTHCARE INDIA (P.) [ 2021 (2) TMI 1152 - MADRAS HIGH COURT] the period of 60 days prior to the time limit as per section 153(1), available with the Ld. TPO, for passing his order u/s. 92CA(3), for the years under consideration is to be calculated accordingly. TPO admittedly has passed the order u/s. 92CA(3) on 30.01.2014 and 30.01.2015, which is beyond the period of limitation and therefore deserves to be quashed. We therefore allow the Ground no. 1 raised by the assessee.

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• 2023 (8) TMI 628
  Validity of TP order stating that the orders are passed u/s 92CA (3) - late by 1 day therefore is not passed within the due time - HELD THAT:- Provisions of section 153 prescribes time limit for passing assessment order. It provides that no order of assessment shall be made u/s 143 or section 144 at any time after the expiry of two years from the end of the assessment year in which the income was first assessable. By virtue of the first proviso, this time limit was curtailed to 21 Months. Therefore for AY 2011-12, the time limit for passing assessment order u/s 143 (3) would be 31/12/2013. By virtue of second proviso if a reference u/s 92CA is made then this time limit is further extended to 33 months from the end of the Assessment year. Thus for AY 2011-12, it would be 33 months from 31/12/2013 i.e. 31/3/2015. TPO as per provisions of section 92CA (3A) of the Act is bound to pass the TP Order at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires. Therefore, 60 days period from 31/3/2015 expires on 29 January 2015. But the ld TPO has passed TP Assessment order u/s 92CA (3) of the Act on 30th January 2015. Thus, the order of ld TPO is passed beyond statutory time available. Whether assessee ceases to be an eligible assessee within the meaning of section 144C (15) (b)? - The moment an assessee ceases to be an eligible assessee in absence of valid transfer pricing order, the ld AO should not have passed the draft assessment order. Thus provision of section 144C does not apply to the assessee. Thus, the time limit for completion of the assessment reverts back to 21 Months from the end of the assessment year. Therefore, as held by the co-ordinate Bench in ATOS India Private Limited [ 2023 (2) TMI 1112 - ITAT MUMBAI] the final assessment order passed by AO on 26 th February, 2016 is also barred by limitation. Therefore, following the decision of the co-ordinate Bench, we quash the assessment order passed for A.Y. 2011-12 by the learned Assessing Officer on 26 th February, 2016 as it is barred by limitation.

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• 2023 (8) TMI 627
  TP adjustment - AMP expenditure computed in the hands of the assessee by adopting bright line test - HELD THAT:- As this issue has been considered in assessee s own case for A.Y. 2017-18 [ 2023 (7) TMI 1138 - ITAT BANGALORE] wherein as established that determination of arm s length price of AMP expenditure by applying BLT method is not valid. In a catena of decisions, the Hon ble Delhi High Court in Maruti Suzuki India Ltd. [ 2015 (12) TMI 634 - DELHI HIGH COURT] while disapproving the decision of Hon ble Delhi Special Bench in L.G. Electronics India (P.) Ltd. [ 2013 (6) TMI 217 - ITAT DELHI] have held that, BLT method is invalid as it is not prescribed in the statute. Also in absence of an express arrangement/agreement between the assessee and the AE for incurring AMP expenditure to promote the brand of the AE, AMP expenditure incurred by making payment to third parties for promoting and marketing the product manufactured by the assessee, does not come within the purview of international transaction - we direct the Ld.TPO to delete the adjustment made towards the AMP. Decided in favour of assessee. Disallowance of deduction claimed u/s. 80G - HELD THAT:- As relying on Sling Media (P.) Ltd [ 2021 (12) TMI 762 - ITAT BANGALORE] we direct the Ld.AO to verify the payments made by assessee towards CSE that also forms part of deduction u/s. 80G. AO then shall grant the deduction claimed u/s. 80G in accordance with law.

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• 2023 (8) TMI 626
  Disallowance of expenditure of sales commission - genuineness of expenditure of sales commission has not been found to be established by the assessee, the same was added to the total income of the assessee, confirmed by FAA - HELD THAT:- As assessee has filed a fabricated agreement during the course of appellate proceeding in order to justify the claim made by him, as the agreement was stated to be executed on 01.04.2011 but the date mentioned in such agreement was 01.04.2010. Nonetheless except for this agreement, the assessee not produced any invoice or voucher of the sales commission neither furnished quantitative details or details of sales of which commission had been computed and paid. In that view of the matter, we find no ambiguity in such order passed by the CIT(A), particularly, in the absence of any assistance made by the assessee before us. The order passed by the authorities below is found to be just and proper so as to warrant interference. The same is, therefore, upheld. The assessee s this ground of appeal fails. Travelling expenses - personal expenses or business expenses - Director who travelled to UK for exploring new market opportunity for their products in UK as the case made out by the assessee was not found to be acceptable as the assessee failed to substantiate that she explored the new market or efforts done by her to that effect - HELD THAT:- Even, before the First Appellate Authority, the assessee failed to furnish any evidence to establish that such expenditure had been incurred wholly and exclusively for the purpose of its business save and accept providing invoices and vouchers for tickets. Finally, the addition was, therefore, upheld by the Ld. CIT(A). We consider the reason assigned by the authorities below in the absence of any fresh evidence produced by the assessee before us or any argument advanced by the assessee or any assistance rendered by the assessee, just and proper without any ambiguity. The same is, therefore, upheld. This ground of appeal is, thus, dismissed. Sales promotion expenses - HELD THAT:- As addition was made and further upheld by the Ld. CIT(A) in the absence of any assistance rendered by the assessee before us, we find no ambiguity in addition made by the authorities below, the same is, therefore, upheld. The ground of appeal is, thus, dismissed. Other expenses claiming as debited in P L account - HELD THAT:- We find no ambiguity in such addition upheld by the Ld. CIT(A), particularly, in the absence of any assistance rendered by the assessee before us, this ground of appeal, therefore, found to be devoid of any merit and thus, dismissed. Assessee appeal dismissed.

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• Customs

• 2023 (8) TMI 625
  Maintainability of appeal - low tax effect involved in the appeals - Confiscation of cars imported from Japan and penalty - Type Approval Certificate/COP - HELD THAT:- There are no merit in these appeals impugning the order(s) of the Division Bench of the Delhi High Court. Further on account of the low tax effect involved in these appeals, we do not think that these appeals would survive for any further consideration. The appeals stand dismissed.

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• 2023 (8) TMI 624
  Clandestine removal - dyed grey fabrics - in the guise of making deemed exports to another EOU, goods were diverted - creation of fictitious clearance documents to M/s Neearj - goods were not physically transported to the EOU at West Bengal but instead diverted to the local market in contravention of Exim Policy and had evaded payment of duty - failure to get the goods re-warehoused at the said EOU - HELD THAT:- The contract produced by the appellant clearly shown the delivery term as Ex-factory - It is also found that the appellant has contended that they had followed the procedure as laid down in law for clearances of goods to M/s Neeraj Exim and department has not disputed on the genuineness of CT-3 certificate issued by the department and re-warehousing certificate issued by the Jurisdictional officer of M/s Neeraj Exim - it is found that this aspect has not been considered by the Ld. Commissioner in the present matter. Since the department has made the allegation of non-re-warehousing of the goods at the consignee s end, it has to prove the same by substantial evidence and it cannot be made on assumption. It has to be shown as if the goods were not warehoused then where were the same diverted. In present case there is no evidence of diversion of goods. Appellant in the present matter produced the re-warehousing certificates duly signed by the Range Superintendent of Kalyani Range (Jurisdictional officer of M/s Neeraj Exim) before the Ld. Commissioner, however he has not given any finding on the said certificate that whether the said certificate are false or manipulated. He has not verified the correctness of said certificates. It is also found that on the one hand the Revenue has made demand of central excise duty on goods consumed in the finished goods and on the other hand it is demanding duty on the finished goods which is wrong. Even if there is any duty demand, the same shall be restricted only upon finished goods. The raw material duty cannot be demanded as the same were consumed for intended purpose of manufacture. This aspect also not properly considered by the learned Commissioner. Since the above issues have not been dealt with in a proper manner by the Ld. Commissioner, the matter needs to be reconsidered as a whole - Appeal allowed by way of remand.

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• 2023 (8) TMI 623
  Classification of imported goods - lawn mowers - to be classified under CTH 8433 or 8467? - HELD THAT:- The very heading of both the Chapters in question sufficiently helps us in deciding the classification. Heading 84.33 refers to harvesting or threshing machinery, including, inter-alia, grass or hay mowers. Heading 84.67 refers to tools for working in the hand, pneumatic, hydraulic or with self-contained electric or non-electric motor. This gives a prima facie indication that the tools referred to are invariably portable, designed to be held in hand during use, which can be lifted and moved by hand by the user during the work. It is interesting to see the conclusion of the HSN Explanatory Notes to this Heading, wherein a reference is made to the exclusion category and it has specifically referred to electric lawn mowers. From the discussion vis- -vis the specific entry in the CTH, the maxim Expressio Unius Est Exclusio Alterius the special mention of one thing operates as the exclusion of things differing from it, is squarely applicable. Thus, the lawn mower in question is specifically included under heading 8433.11. The product under consideration is classifiable under CTH 8433 1110 as declared by the appellant and hence, the impugned order deserves to be set aside - Appeal allowed.

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• 2023 (8) TMI 622
  Absolute confiscation or option of redemption against the redemption fine to be provided - Smuggling - import of Foreign Currencies from Nepal - N/N. 09/1996-Cus (NT) dated 22.01.1996 - HELD THAT:- From the perusal of the above it is quite evident that the above notification in general prohibits the importation through Nepal, the goods of third country origin. Foreign Exchange management Act, 1999 (FEMA) is An Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. - there are no merits in the findings recorded by the Commissioner (Appeals) as the possession of foreign currency in India is governed by the provision of the FEMA and the RBI Circulars issued from time to time. Original Authority has referred to the RBI Circular No.45/2015-16[(1)/6(R)] dated 04.02.2016 provides the permissible limit for import of foreign exchange into India and the on the basis of that he has concluded that seized foreign currency is liable for confiscation but needs to be given an option for redemption. The Regulation 6 and RBI Circular do permit the importation of the Foreign Currency, the said importation is subject to restrictions to the extent that the appellant was required to make declaration of the Currency which he carries if the same is in excess of US$ 5000/- or equivalent. Appellant has failed to make any such declaration, and hence these currencies have been imported in contravention of the provisions of Regulation 6 read with RBI Circular and have to be held confiscable under Section 111 (d) holding the same to be prohibited - in respect of the currency which is above the value of US $ 5,000/- or equivalent needs to be confiscated by the Authorities. As importation of such currencies has been made without any declaration to the Customs or any authority the same will be prohibited and would be liable for absolute confiscation under section 111(d) of Customs Act. The currencies which are in total violation of the RBI Circular should be absolutely confiscated whereas which falls within the permissible limits as per the RBI Circular be allowed on payment of redemption fine. Appellant have already paid redemption fine of Rs.1.5 lakhs. Accordingly, the foreign currency up to the total value of US $ 5,000 allowed to be redeemed to the appellant against the above redemption fine. The remaining seized foreign currency is ordered to be absolutely confiscated. There is no serious challenge by either side to the quantum of penalty imposed on the appellant for his act of omission and commission leading to confiscation of foreign currency. Though the penalty imposed by the original authority to be low - appeal allowed in part.

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• 2023 (8) TMI 621
  Benefit of exemption - Amendment in Bill of entry - Refund claims in respect of additional duty of customs leviable u/s 3 of the Customs Tariff Act, 1975 - assessment order before Commissioner(Appeals) not challenged. Department is aggrieved with this order mainly on the ground that the once order of assessment is passed and the duty becomes liable to be paid, then unless the order of assessment has been reviewed under Section 18 or modified in appeal, the benefit of notification not claimed earlier cannot be claimed at appellate stage, after self assessment has been done and duty paid. HELD THAT:- Section 149 permits amendment to documents including bill of entry even after clearance but on the basis of documentary evidence, which ought to be in existence at the time the goods were cleared. In view of definite findings of the Commissioner (Appeals), while permitting amendment that no new documents are being used fo claim of exemption and consequent upon making such amendment the proper officer shall re assess the bill of entry as per provision of Section 17(4) of the Customs Act, 1962 - Section 17(4) allows re assessment of self assessment on verification, examination or testing of the goods or otherwise finding self assessment could be done correctly by the proper officer. The expression or otherwise is comprehensive to include judicial orders directing the same, when self assessment was not proper. Therefore, the amendment and reassessment to be carried out has been correctly allowed by the Commissioner (Appeals), and there are no infirmity in his order. Thus, the entitlement of a person, if it is eligible for exemption notification has to be liberally provided and amendment can be allowed even after clearance at any stage with in a reasonable time, as per law. Again, amendment once carried out, re assessment by the proper officer as per the direction of the higher Appellate Authority, shall definitely be the legal consequence to follow. The Learned Commissioner (Appeals) has correctly interpreted the law by Ex Visceribus Actus by reading provisions of Section 149 relating to amendment of documents with Section 17 relating to various assessments, both of which were available with in the four corners of the statute and has correctly directed amendment and then reassessment under Section 17(4). Appeal of Revenue dismissed.

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• Law of Competition

• 2023 (8) TMI 620
  Anti-Competitive agreements - abuse of dominant position - scheme of merger by absorption of the Inox with PVR was sanctioned and the appointed date of the scheme was fixed mutually as 1st January, 2023 - alleged contravention of the provisions of Section 3(1) of Competition Act, 2002 - Appellant has vehemently argued that the Commission has committed an error on the ground that actual conduct is not being shown whereas the word used in Section 3(1) of the Act is likely which mean something which is probable or something which might well happen as it conveys the sense of probability as distinguished from a mere possibility. HELD THAT:- Section 3(1) deals with the anti competitive agreements whereas Section 5 of the Act talks of combination which says that the acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises . It is apparent that both PVR and Inox have now become a single entity after merger and the effect of a combination as defined under Section 5 of the Act which is regulated by Section 6 of the Act has nothing to do with Section 3(1) of the Act which deals with the anti-competitive agreements in which both the entities retain their separate identities even after the agreement is entered into unlike the merger of two entities which takes effect of a combination in terms of Section 5 of the Act. It has come in the order itself that since the merger of PVR and Inox was not falling within definition of Section 5 because of the issue of threshold, therefore, the information under Section 19(1)(a) has been filed by the Appellant alleging the contravention of Section 3(1) of the Act despite knowing that both entities have become one and do not fall within the definition of Section 3(1) of the Act. Thus, in view of this matter, the application by itself is not in accordance with law for the purpose of initiating action under Section 19(1)(a) of the Act. As regards, Section 4 of the Act is concerned, it is pertaining to abuse of dominant position for which the Commission has rightly observed that even if the proposed transaction is concluded (merger), dominance per se is not anti-competitive and it is only the conduct which falls within the provisions of Section 4 of the Act. The Commission has also further observed that post facto, if any matter of abusive conduct under the provisions of the Act is brought, or comes to the notice of the Commission, the same may be examined at that stage in terms of the provision of the Act - Which means a liberty has been given to the Appellant or the same even be exercised suo motu by the Commission if it comes to its notice that the dominant position has been abused but until and unless there is any such allegation which prima facie prove the conduct, the action under Section 4 could not also be taken. There are no merit in the present appeal and the same is hereby dismissed.

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• Insolvency & Bankruptcy

• 2023 (8) TMI 619
  Sanction of scheme of compromise and arrangement under section 230 of the Companies Act, 2013. HELD THAT:- The application dismissed.

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• 2023 (8) TMI 618
  Seeking rectification of error which is an inadvertent one - secured creditor of corporate debtor - HELD THAT:- It must be borne in mind that the ambit of the Adjudicating Authority / Tribunal, subsequent to the Approval of Resolution Plan, is limited in character. That apart, any relief sought, which can alter, the Terms Of a Resolution Plan, cannot be acceded to, as opined by this Tribunal However, if any relief, as prayed for by the Appellant/ Petitioner, as projected in IA/361/IB/2020 in CP(IB)540/CHE/2017 (being the Correct Company Petition Number, according to the Appellant , instead of C.P.(IB)/889(CHE)/2019), is granted by the Adjudicating Authority / Tribunal or this Appellate Tribunal , for that matter, then, the same will not satisfy the requirement of Law . This Tribunal , pertinently points out that even the Hon ble Supreme Court had Approved the Resolution Plan , through, its Order dated 28/02/2020, (which is not in dispute), and the same is accepted by the Learned Counsels appearing for the respective Parties. Suffice it for this Tribunal , to succinctly point out, that in one of the Miscellaneous Applications , dated 03/07/2019 filed before the Adjudicating Authority / Tribunal , the Appellant / Petitioner had tacitly admitted , its position as an Unsecured Financial Creditor . This Tribunal bearing in mind the attendant facts and circumstances of the instant case in a conspectus and holistic manner, comes to a consequent conclusion that the Impugned Order, does not suffer from any material irregularity or patent illegality , in the eye of Law . Accordingly, the Appeal sans merits. Appeal dismissed.

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• 2023 (8) TMI 617
  Initiation of CIRP / closure of CIRP - NCLT admitted the application - Corporate Debtor failed to make repayment of its dues - existence of legally enforceable debt or not - pre-existing disputes or not - Service of demand notice - Claim of huge fees/expenses claimed by the Resolution Professional - HELD THAT:- Section 8 of the IBC requires the Operational Creditor, on occurrence of a default by the Corporate Debtor, to deliver a Demand Notice in respect of the outstanding Operational Debt. Section 8(2) lays down that the Corporate Debtor within a period of 10 days of the receipt of the Demand Notice would have to bring to the notice of the Operational Creditor, the existence of dispute, if any. Post issue of demand notice by the Operational Creditor as contemplated in Section 9 of IBC - HELD THAT:- The existence of dispute and its communication to the Operational Creditor is statutorily provided for in Section 8. In the present case, it is an undisputed fact that demand notice was issued by the Operational Creditor on 01.10.2019 claiming an amount of Rs.9,26,970/- and interest amount of Rs.1,38,055/- from the Corporate Debtor. However, no notice of dispute was raised by the Corporate Debtor. It is also an undisputed fact in the present matter that the Operational Creditor did not receive any payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC. The Appellant has however explained that the cheques issued by the Corporate Debtor were not for payment towards services rendered but for security towards commission received in advance from the Operational Creditor and hence cannot be treated as legally enforceable debt. Further these cheques were dishonoured as the Operational Creditor had presented them to the bank without knowledge of the Corporate Debtor. In the absence of any contractual agreement, no comments provided on the nature of business relationship between the two parties except for stating that it is a well settled legal proposition that the operative requirement of operational debt is that the claim must bear some nexus with a provision of goods or services, without specifying who is to be supplier or receiver. Whether there was any admitted debt on the part of the Appellant? - HELD THAT:- The emails are a clear admission of operational debt being due and payable. These emails have to be seen in the backdrop that no material has been placed on record by the Appellant controverting the content of these emails - the contention of the Corporate Debtor that there is no admitted debt is specious and lacks substance. Pre-existing disputes - HELD THAT:- The findings of the Adjudicating Authority that there is nothing on record to suggest that the Appellant raised any such dispute before receipt of invoices or at any period prior to the issue of demand notice. There is no exchange of correspondence raising any dispute prior to issue of demand notice. Even the complaint of delay purportedly received by the Appellant from its customers does not seem to have been shared with the Operational Creditor prior to Section 9 application. Thus, there is nothing credible to substantiate the pre-existence of dispute. This puts a serious question mark on the bona-fide of pre-existing disputes raised by the Corporate Debtor therefore, deserves to be disregarded being in the nature of a moonshine defence and an after-thought. Fees/expenses claimed by the Resolution Professional - HELD THAT:- During the active CIRP period, we may quickly glance through the major tasks undertaken by the Resolution Professional - there are not much substantial progress to have been accomplished in insolvency resolution by the Resolution Professional despite lapse of sufficient time. It has also been admitted by the Resolution Professional that since no resolution plan was forthcoming, the sole CoC member had decided not to proceed with CIRP. Thus, integrity and fairness demanded that the Resolution Professional ought to have facilitated the withdrawal of the CIRP application as was desired by the sole CoC member/Respondent No.1 without unduly prolonging the proceedings. It is commonsensical that for recovery of a claim of about Rs.10 lakhs, incurring an expenditure of Rs.19 lakhs by way of fees/expenses of the Resolution Professional would be outlandish and that too when there seems to be no possibility of revival of the Corporate Debtor - Keeping in mind the yardstick of reasonability, the fees of the Resolution Professional should be determined on the basis of work required to be performed or actually performed. Given the peculiar circumstances surrounding the present case, this is a fit case to invoke Rule 11 of NCLAT Rules, 2016 which provides that the inherent power of the Appellate Tribunal can be exercised to make such orders or give such directions as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal. With the closure of CIRP, the appeal has become infructuous and stands disposed of.

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• 2023 (8) TMI 616
  Submission of Resolution Plan - NCLT allowed the request for Extension/ exclusion of 90 days for re-publication of invitation for the Expression of Interest (EOI) (Form-G). It is contended that 300 days were going to expire on 15.04.2021 and the extension of 90 days on the basis of request from a stranger just two days before the expiry of the CIRP period, ought not to have been entertained. HELD THAT:- There can be no dispute to the law laid down by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors [ 2019 (11) TMI 731 - SUPREME COURT] that 330 days is the maximum period provided by the Code for the completion of CIRP - The present is a case where 300 days were expiring on 15.04.2021 and prior to expiry of the 300 days period, a decision was taken to re-publish Form-G. The CoC has reason to take a decision since they received an email from Respondent No.1 offering higher value. The objective of the IBC is to maximize the value of the Corporate Debtor and decision taken by the CoC to re-publish Form-G cannot be faulted in the facts of the present case. Reference made to judgment of this Tribunal in Vistra ITCL (India) Ltd. v. torrent Investments Pvt. Ltd. Ors. [ 2023 (3) TMI 176 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] wherein this Tribunal while deciding the jurisdiction of CoC to re-issue RFRP held even after completion of Challenge Mechanism under Regulation 39(1A)(b), the CoC retain its jurisdiction to negotiate with one or other Resolution Applicants, or to annul the Resolution Process and embark on to re-issue RFRP. Regulation 39(1A) cannot be read as a fetter on the powers of the CoC to discuss and deliberate and take further steps of negotiations with the Resolution Applicants, which resolutions are received after completion of Challenge Mechanism. The present is not a case that EOI from Respondent No.1 has been received after the due date. Rather, a decision was taken to re-publish the Form-G, giving opportunity to all including the Appellant and Respondent No.1. Thus, the judgment of this Tribunal in Dwarkadhish Sakhar Karkhana Ltd. [ 2021 (6) TMI 989 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] is clearly distinguishable. It is true that Adjudicating Authority has rejected the IA No.328/2021 observing that issue of alleged breach of confidentiality cannot be adjudicated as it has only a summary jurisdiction in the matter - Adjudicating Authority has full authority to examine all issues arising out of insolvency resolution process. However, in the facts of the present case, especially when the Appellant was asked in the 19th Meeting of the CoC to increase its Plan value and further has submitted that he has no objection for issuance of fresh Form-G, which is recorded in the Minutes, the CoC decided to issue fresh Form-G for giving opportunity to all eligible candidates including the Appellant, no exception can be taken to the process. Respondent No.1 in his application has categorically pleaded that he has filed Resolution Plan on the basis of information, which are available in the public domain, hence, any inquiry on alleged breach of confidentiality was not called for in the facts of the present case. The present is not a case that Resolution Plan submitted by Respondent No.1 by email before 15.04.2021 was considered on merits. Rather, the CoC took a decision to issue fresh Form-G to give opportunity to all with the object of maximizing the value of Corporate Debtor - there are no error in the impugned order, warranting interference by this Appellate Tribunal in exercise of its appellate jurisdiction. Appeal dismissed.

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• Service Tax

• 2023 (8) TMI 615
  Exemption from Service Tax - Interpretation of statute - N/N. 25/2012 ST dated 20.06.2012 - cosmetic or plastic surgery is excluded from the purview of the Notification or not - Autologous Micrograft Treatment - Radio Frequency Treatment - scope of Healthcare services - extended period of limitation - HELD THAT:- A conjoint reading of the notification reveals that the exemption is for healthcare services provided by a clinical establishment and authorised medical practitioner or paramedics. Healthcare services is a service whereby the diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and include services by way of transportation of the patient to and from a clinical establishment. But it specifically excludes hair transplant or cosmetic or plastic surgery except when the same is undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. It is pertinent to take cognizance of the clarification issued by TRU when the service tax was initially levied on cosmetic and plastic surgery. It is noted that the term surgery has been defined in medical technology as consisting of physical intervention on tissues. As a general rule it has defined surgery to involve cutting of patient s tissues or closure of previously sustained wound. It also includes non-invasive surgery.Non-invasive surgery procedures leave the skin intact or unbroken, meaning it does not require an incision or cutting of the skin. Rather it is usually performed by laser or using syringes. Autologous micrograph treatment is used to treat male and female pattern baldness. This treatment involves the extraction of unspecialised cell from one s body that maintain and repair tissues. Skin micrographs are taken from behind the year with the help of a biopsy punch and a stem cell - like rich solution is made out of it and it is injected into the hair thinned areas of the scalp. It is noted that this therapy is a single session treatment and the process requires to be administered under local anaesthesia - Illness such as hypothyroidism has also been associated with thinning hair, and certain dietary deficiency that may include zinc, iron, and biotin could also have same results. Autoimmune conditions such as alopecia areata (AA) have also been shown to lead to hair loss. What is clear is that the said treatment is not used to prevent or address any disease per se, rather it is to address the consequences of disease which can be drogenetic Alopecia and/or Telogen effluvium. In this context we find that the Supreme Court in the case of PUMA AYURVEDIC HERBAL (P) LTD. VERSUS COMMISSIONER OF C. EX., NAGPUR [ 2006 (3) TMI 141 - SUPREME COURT] has held that By use of the product if a person is able to grow hair on his head, his ailment of baldness is cured and the persons appearance may improve product used for the purpose cannot be termed as cosmetic simply because it has ultimately led to the improvement in appearance of the person. The primary role of the product was grow hair on his head and cure his baldness. It is apparent that the Autologous Micrograph Treatment undertaken by the appellant is to treat Androgenetic Alopecia and/or Telogen effluvium i.e. baldness which has been recognised to be an illness. Once Androgenetic Alopecia/Telogen Effluvium is recognised as illness, we hold that the same is covered by the definition of healthcare services given in 2(t) of the notification. Any improvement in appearance is not a consequence of such a treatment, as has been categorically held by the Supreme Court in Puma Ayurvedic Herbal - There is only injection of a stem cell -like rich solution into the thinning areas of the head. This does not involve any surgery or surgical procedure which involves cutting of a patient s tissues or closure of a previously sustained wound. Accordingly, the Autologous Micrograph Treatment is eligible for exemption under Notification 25/2012. Whether Radio Frequency Treatment is a cosmetic surgery or not? - HELD THAT:- The Radio Frequency process is a non-surgical chemical cautery or with electro cautery, which is used to eliminate Warts, Moles and Freckles with no side effects or scarring. It is painless and the number of sittings depends upon the size of lesion. Warts, known in medical terminology as papillomas, may emerge anywhere on the body, depending on the specific strain of the virus (known as Human papillomavirus or HPV) that causes them to develop in the body. Viral warts are infectious to the patient and others. Moles are a common type of skin growth, and often appear as small, dark brown spots and are caused by clusters of pigment-forming cells (melanocytes). Freckles are small spots on the skin that range in colour from red to brown, and are commonly seen on sun-exposed areas, such as face, neck, etc. All these common skin conditions are not usually life threatening, and any procedure to remove such warts/moles or freckles is undertaken to enhance physical appearance or beauty. Therefore, their removal would clearly fall under the category of a cosmetic surgery. Time Limitation - HELD THAT:- It is clear that the two treatments were not in the knowledge of the Department. It is evident from the fact that the Commissioner has dropped the demand of Rs. 2,39,00438/- on other services viz., Alopecia Injection, Hairloss therapy, Mesotherapy, Platelet Rich Plasma etc on the ground that these were recognised by the department in the Internal Audit Report (IAR) No. 260/2016-17 dated 10.08.2016, as these were undertaken by the appellant during the period of the last Audit. Hence, the invocation of the extended period under Section 73 of the Finance Act, 1994 relating to Radio Frequency Treatment is justified and is upheld. The demand relating to Autologous Micrograph Treatment set aside and the demand confirmed in respect of Radio Frequency Treatment upheld - the penalty amount is accordingly modified - appeal allowed in part.

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• 2023 (8) TMI 614
  CENVAT Credit - input services received by the appellant on the premises not indicated in their ST-2 certificate (registration certificate) - HELD THAT:- The issue is no longer res integra and the Tribunal has in series of cases held that so far as the receipt of input services by the output service provider is not in dispute. The credit cannot be denied merely for the reason that these services were received at the premises other than the registered premises or the invoices against which the credit has been availed while showing the name of service recipient some other address which is not mentioned in the ST-2 certificate. Reliance placed in the case of M/S BRIDAL JEWELLERY MFG CO. VERSUS COMMISSIONER OF CUSTOMS, C.E. S.T., NOIDA [ 2017 (11) TMI 940 - CESTAT ALLAHABAD] where it was held that The substantial benefit cannot be denied for mere technical or venial breach of the procedural law. In the case of M/S. ALLSPHERES ENTERTAINMENT PVT. LTD. VERSUS CCE, MEERUT [ 2015 (8) TMI 953 - CESTAT NEW DELHI] where it was held that In the absence of any such dispute regarding availment of services and their utilization for payment of service tax or proper accounting of the same, the denial of Cenvat Credit of service tax paid by Nainital office of the appellant on the sole ground that the invoices issued are in the name of the appellants unregistered office at Delhi is unjustified. Reliance placed in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT] where it was held that CENVAT Credit cannot be denied for the reason that the appellant has produced a photocopy of the invoice. Such lapses have been held to be procedural lapse for which the credit availed will not become inadmissible. The credit in the present case could not have been denied for the reason stated in the impugned order - there are no merits in the same and the same is set aside - appeal allowed.

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• 2023 (8) TMI 613
  Valuation of services - pure agent services - getting certain reimbursements on account of salaries paid to their employees engaged in the work of recovery during the period 01.04.2010 to 10.07.2014 - inclusion in taxable value or not - period prior to amendment of Section 67 and Rule 5 - non-production of evidence in support of the claim to be Pure Agent of the recipient of service - section 67 of the Finance Act, 1994 - HELD THAT:- Issue in regards to levy of service tax on the reimbursement expenses prior to amendment of Section 67 and Rule 5 has been considered by Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] while deciding the Appeal filed by revenue challenging the order of Hon ble High Court of Delhi in INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. [ 2012 (12) TMI 150 - DELHI HIGH COURT] , referred to by in the order of CESTAT. Hon ble Supreme Court while upholding the order of Hon ble Delhi Court has observed only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. In view of the above decision of the Hon ble Supreme Court for the period prior to 2015 the demand or service tax in respect of reimbursable expenses cannot be sustained - the same is set aside, demand and penalties imposed on the appellant are also set aside. Appeal disposed off.

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• 2023 (8) TMI 606
  Permission for withdrawal of appeal - declared service or not - Declared Service or not - nature of collection of amount towards compensation/penalty from the buyers of coal - HELD THAT:- The Civil Appeals are dismissed as withdrawn.

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• 2023 (8) TMI 605
  Levy of Service Tax - services of Management, Maintenance or Repairs to various department or not - SCN did not specify the appropriate clause under which the demand was proposed to be raised - invocation of extended period of limitation - HELD THAT:- The Larger Bench decision of the Tribunal in the matter of M/S. LANCO INFRATECH LTD. AND OTHERS VERSUS VERSUS CC, CE ST, HYDERABAD [ 2015 (5) TMI 37 - CESTAT BANGALORE (LB)] was not available at the time of passing of the impugned order and as such Adjudicating Authority did not have the benefit of examination and applicability of the same to the facts of the present case. Therefore the adjudicating authority must reconsider the entire matter based on the Judgments which were passed much after the impugned order passed by him. The appeal is allowed by way of remand to the Adjudicating Authority. Since this appeal is of 2013, the Adjudicating Authority shall pass denovo order within two months from the date of this order.

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• 2023 (8) TMI 604
  CENVAT Credit - input services received by the appellant on the premises not indicated in their ST-2 certificate (registration certificate) - HELD THAT:- The issue is no longer res integra and the Tribunal has in series of cases held that so far as the receipt of input services by the output service provider is not in dispute. The credit cannot be denied merely for the reason that these services were received at the premises other than the registered premises or the invoices against which the credit has been availed while showing the name of service recipient some other address which is not mentioned in the ST-2 certificate. Reliance placed in the case of M/S BRIDAL JEWELLERY MFG CO. VERSUS COMMISSIONER OF CUSTOMS, C.E. S.T., NOIDA [ 2017 (11) TMI 940 - CESTAT ALLAHABAD] where it was held that The substantial benefit cannot be denied for mere technical or venial breach of the procedural law. In the case of M/S. ALLSPHERES ENTERTAINMENT PVT. LTD. VERSUS CCE, MEERUT [ 2015 (8) TMI 953 - CESTAT NEW DELHI] where it was held that In the absence of any such dispute regarding availment of services and their utilization for payment of service tax or proper accounting of the same, the denial of Cenvat Credit of service tax paid by Nainital office of the appellant on the sole ground that the invoices issued are in the name of the appellants unregistered office at Delhi is unjustified. Reliance placed in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT] where it was held that CENVAT Credit cannot be denied for the reason that the appellant has produced a photocopy of the invoice. Such lapses have been held to be procedural lapse for which the credit availed will not become inadmissible. The credit in the present case could not have been denied for the reason stated in the impugned order - there are no merits in the same and the same is set aside - appeal allowed.

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• 2023 (8) TMI 603
  CENVAT Credit - outward freight under goods transport agency service - place of removal - appellant selling goods as per the contract at the gate of the buyer s premises - HELD THAT:- The issue has been settled by the Hon ble High Court of Karnataka in the case of Bharat Fritz Werner Ltd. [ 2022 (7) TMI 352 - KARNATAKA HIGH COURT] , wherein the Hon ble High Court held the place of removal is buyer s premises. Following the decision of Hon ble Karnataka High Court in the case of Bharat Fritz Werner Ltd., it is held that as per the contracts, the appellant is required to deliver the goods at buyer s place, therefore, till the goods reaches up to the place of buyer, the ownership of the goods remains with the appellant. In that circumstances, the appellant is entitled to take cenvat credit of service tax paid on outward transportation under the category of goods transport agency service . There are no merit in the impugned order and the same is set aside - appeal allowed.

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• Central Excise

• 2023 (8) TMI 612
  Recovery of central excise duty along with interest under Section 11A and 11AB respectively and imposed equivalent penalty under Section 11AC of Central Excise Act - demand of duty on the value charged for the development of tools and dies - it is established that the goods manufactured out of the subject tools and dies were exported without payment of duty under LUT - revenue neutrality - HELD THAT:- In the present case, the entire charges received by the appellant on account of tools and dies which were used in the production were on account of export of goods and there is no dispute regarding the export of goods, foreign remittance and proof of export - It is also found that the distinction made by the Ld. Commissioner (Appeals) that the export under LUT is different from export under rebate is against the export policy because the exported goods are not subject to central excise duty and the entire situation is revenue neutral. Inspite of the direction of the Ld. Commissioner (Appeals) in para 6 of the impugned order, the lower authority failed to calculate the duty even after the expiry of 10 years. The decision relied upon by the Ld. DR in the case of JAY CEE AUTO FAB (P) LTD. VERSUS COMMISSIONER OF C. EX., FARIDABAD [ 2010 (7) TMI 459 - CESTAT, NEW DELHI] is not applicable in the facts and circumstances of this case because the said decision relates to additional consideration which is to be included in the assessable value in terms of Rule 6 of the Central Excise Valuation Rules, 2000 pertains to the domestic sale and not export of goods and hence, the said decision is not applicable in the present case because here the entire proceedings relates to export of goods. The impugned order is not sustainable in law and is set-aside.

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• 2023 (8) TMI 611
  Valuation of goods - Includability of the sales tax concession retained by the Appellant in the assessable value for the purpose of levy of Central Excise duty - extended period of limitation - penalty - applicability of Circular No. 1063/2/2018-CX dated 16.02.2018 - HELD THAT:- The issue is no more res integra as the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [ 2014 (3) TMI 42 - SUPREME COURT] , has held that the sales tax concession retained by the assesses is required to be added in the assessable value for the purpose of levy of Central Excise duty - the sales tax concession retained by the Appellant is required to be added in the assessable value for the purpose of levy of Central Excise duty. Extended period of limitation - penalty - HELD THAT:- The Appellant has not suppressed any information from the department. There were decisions of the Tribunals that the sales tax concession retained by the assesses is not required to be added in the assessable value for the purpose of levy of Central Excise duty. Thus, the appellant cannot be faulted for not including the same in the assessable value. In the present case, we observe that the Adjudicating Authority and the Appellate Authority has failed to show any positive act of suppression on the part of the Appellant. The remission of 99% of AVAT is after collection of AVAT in the Invoice. There is no tampering of invoices. The Appellant has to charge full amount of AVAT and it cannot charge 1% in the invoices as per the provision of AVAT Act, 2003. The same was reflected in the audited Profit Loss account and balance sheet of the impugned periods - extended period of limitation as provided under section 11A(4) of the Central Excise Act, 1944 cannot be invoked for recovery of the short paid duties. The Circular issued by the Board also supports this view. The demand, if any, is sustainable for the normal period, along with interest. The demand of duty along with interest and penalty by invoking the extended period is set aside - Appeal allowed in part.

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• 2023 (8) TMI 610
  Abatement by way of refund - case of the department is that the duty paid on pro- rata basis is not correct stating that duty for entire month to be deposited first and then go for refund amount of duty for closure period of machine - HELD THAT:- Even though the Rule 9 prescribes that the duty under the scheme should be paid by 5th of the same month but at the same time Rule 10 provides abatement for the machine as not working minimum of 15 days - In the present case as regard the closure of machine for minimum 15 days and procedure for claiming the abatement has been undisputedly followed and is not objected by the department. Therefore the appellant in principle become entitled for abatement even if the appellant have not paid duty in advance by 5th of same month for the days when the machine was not working the duty was not payable in advance, the same shall stand adjusted against the duty not liable to be paid. Therefore this is a clear revenue neutral situation hence, in these circumstances, the demand cannot be raised particularly when the abatement procedure was followed by the appellant and machine was admittedly closed for minimum of 15 days in every month during August, 2011 to March, 2012 therefore, demand of duty is not sustainable. The very same issue has been considered by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S ANGADPAL INDL. PVT. LTD. [ 2015 (10) TMI 1844 - SUPREME COURT] wherein the Apex Court has held that the respondent was not supposed to pay any duty, more so, when the entire exercise was revenue neutral. It legitimately claimed the rebate. The appellant are entitled for the abatement and consequently not required to pay any duty during the period machines were not working - the impugned order is set aside - Appeal allowed.

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• 2023 (8) TMI 609
  Method of Valuation - to be valued under Section 4 or Section 4A of Central Excise Act, 1944? - branded chewing tobacco of 8 gms and 9 gms packing falling under Chapter sub-heading 2403.9910, cleared in a pack of one bag containing 40 packets of the said goods and each pack containing 50 pouches of 8 gms and 9 gms each - HELD THAT:- This issue is no longer res-integra as in various judgments this issue is decided that the individual piece, if having less than 10gms even though the number of individual pieces are packed in secondary packet and cleared the individual piece bearing MRP which is having less than 10gms, shall be considered as retail pack and since it is less than 10gms, the same should not be valued under Section 4A. Accordingly, in the present case also, the individual piece of pouch is of 8gms/ 9gms even though 50 pieces of pouches are packed in one packet, the same should be valued under Section 4 and not 4A for the reason that the each pouch is considered as retail pack and not a packet of 50 pouches. Therefore, the value should not be governed under Section 4A whereas the same should be governed under Section 4. The very same issue of chewing tobacco was considered by this Tribunal in the case of M/S ARORA PRODUCT VERSUS CCE, JAIPUR-II [ 2011 (8) TMI 928 - CESTAT, DELHI ] wherein the Tribunal held that both the legal requirements for applying section 4A were satisfied and hence Central Excise duty should have been paid adopting the value as per section 4A. The issue is no longer res-integra. Accordingly, the impugned order passed by learned Commissioner (Appeals) bears no infirmity and the same is upheld. Revenue s appeal is dismissed.

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• 2023 (8) TMI 602
  Maintainability of appeal - low tax effect in the appeal - DEEC licence - Marble - Import of marble - Tribunal extended the benefit to the importer - HELD THAT:- In view of Circular No. 17/2019 (F.No.279/Misc.142/2007-ITJ(Pt.) dated 8th August, 2019 issued by the Department of Revenue, Ministry of Finance, no adjudication is warranted in this appeal due to low tax effect. Appeal disposed off.

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• 2023 (8) TMI 601
  CENVAT Credit - imported inputs - inputs were not received in the factory and cleared out-and-out from the place of import to the customers premises - processes undertaken by the appellant on the inputs amounts to manufacture or not - HELD THAT:- The approach of the Department is ambivalent and not clear as which charge they intend to pursue for denying the cenvat credit availed by the appellant on imported inputs. Both stands taken by the Department are contrary to each other. If the Department alleges that the inputs were not received in the factory and leads evidence in this regard, then there was no need to make an allegation that after receipt of the inputs in the factory, the inputs then subjected to certain processes do not result into manufacture as defined under Section 2(f) of the Central Excise Act, 1944. Assailing the stand of the Department that the inputs have not been received in the factory, the learned advocate for the appellant furnished data relating to activity of manufacture carried out by them i.e. amounts spent on electricity consumption, fuel consumption, factory overheads etc., which indicate that processes on the inputs were undertaken in their factory premises after the inputs brought into their factory. Also, the statements of two transporters relied upon by the learned Commissioner do not inspire confidence inasmuch as further investigation was not carried out by the Department and the transporters have not categorically claimed to have not transported the goods during the period they have employed by the appellant. Besides, the statements of two transporters among 13 to 14 transporters cannot be generalised and made applicable to the entire period - the alternative argument pursued by the Department in denying the credit that the processes do not result into manufacture needs to be examined. In THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] , the Bombay High Court taking note of the arguments of the Revenue more or less in the same line observed that Once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity does not amount to manufacture. There are no merit in the impugned orders - the impugned orders are set aside and the appeals are allowed with consequential relief.

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• 2023 (8) TMI 600
  CENVAT Credit - imported/locally procured inputs when subjected to the processes by the appellant, disputed not to be a process of manufacture by the Revenue - HELD THAT:- In the present case, the appellants are engaged in the manufacture of various high precision tools, and also import certain parts used as inputs from their group companies located in Germany, Sweden and Italy. The tools were customised and sold by the appellant on payment of appropriate duty of excise on its transaction value, which was more than the credit availed on the inputs. The Revenue disputed the processes undertaken on the imported items alleging the same do not result into manufacture of a new item different from the inputs; hence the activity undertaken by the appellant purely in the nature of trading; therefore cenvat credit availed on the inputs cannot be admissible. In THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] , the Bombay High Court taking note of the arguments of the Revenue more or less in the same line observed Once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity does not amount to manufacture. There are no merit in the impugned orders - the impugned orders are set aside and the appeals are allowed.

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• CST, VAT & Sales Tax

• 2023 (8) TMI 608
  Suo moto revision taken under Section 34 of Tamil Nadu General Sales Tax Act, 1959 - Classification of goods - rate of tax - two wheeler and tractor fan belts - goods were specifically included under Entry 50(vi) of Part-D of the first schedule of TNGST Act 1959 or not - HELD THAT:- The invoice bills produced by the appellant would clearly establish the fact that the belts that have been sold by them are accessories to two wheeler or a tractor. Therefore, it is clear that the said goods would clearly fall within entry 30 of Part-C of the first schedule attracting 5% tax for the two wheeler parts. As far as the tractor belts are concerned, they fall under entry 27 of Part-B of the first schedule attracting 3% tax. A perusal of item 50(vi) of Part D of the first schedule indicates that it relates to conveyor, transmission or elevator belts or belting of rubber whether combined with any textile material or otherwise which would attract 8% tax - As rightly pointed out by the learned counsel appearing for the appellant the Division Bench in THE STATE OF TAMIL NADU REP. BY THE DEPUTY COMMISSIONER (COMMERCIAL TAXES) VERSUS PM. ENGINEERING AND CO. [ 2014 (3) TMI 233 - MADRAS HIGH COURT ] had categorically found that when there is a specific entry to deal with an item in question, the same cannot be brought under the general entry. In the present case, the two wheeler fan belts and tractor fan belts are specifically found mentioned under entry 30 of Part-C and entry 27 of Part-B. Therefore, the first respondent was not right in invoking entry 50 which is a general entry. It is brought to the notice of the Court that the first respondent had initiated suo moto revision proceedings only for the assessment year 1993-1994 and 1994-1995. However, the assessment for the previous and subsequent assessment years have not been subjected to suo moto revision. Therefore, it is clear that the first respondent has cherrypicked the said assessment years for exercising his suo moto powers for reasons best known to him. All the substantial questions of law are answered in favour of the appellant and the order impugned in the petition is set aside and this Tax Case is allowed.

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• 2023 (8) TMI 607
  Intra-State Transaction or Inter-State transaction? - entire turn over relating to the works contract is at all taxable under the TNGST Act, 1959 or not - goods have moved from Raipur State of Chhattisgarh to Madurai in the state of Tamil Nadu and the petitioner duly collected Form-D from Southern Railway - HELD THAT:- It is an admitted position that the petitioner is based at Raipur, first address, and has undertaken the fabrication work there only. The second address, the railway yard, is one assumed by the respondents, where the onsite team of the petitioner has undertaken the task of readying the sleepers for fitment onto the tracks. The third address as confirmed by learned Government Advocate, the address of the sales tax consultant at Coimbatore. Upon completion of the contract, the petitioner has, through consultant, sought refund of the sales tax deducted at source upon payments remitted to it by the Railways. It was only then, when the sales tax department was required to refund the amount, that show cause notices came to be issued to the petitioner proposing to treat the transactions as domestic works contracts . In the present case, the contract is between the assessee in Raipur and Southern Railways. It is not known where the contract was entered into by the parties. However, there is no dispute on the position that the goods forming the subject matter of the contract, have been fabricated in Raipur and thereafter brought to Tamil Nadu for installation - Explanation-3 to Section 2(n) of the Act would not stand attracted in such a case and the transaction would fall outside the ambit of domestic sale, assuming the character of interstate sale only. In fact, these very transactions have been the subject matter of assessments under the Central Sales Tax Act 1956 and CST assessment orders for the periods 2002-03 and 2003-04 have been placed on record by the petitioner at page Nos.263 and 269 of compilation dated 17.07.2023. The impugned orders of the Tribunal are set aside and questions of law are answered in favour of the petitioner to the effect that the transactions in question constitute interstate sales, not liable to tax under the provisions of the Tamil Nadu General Sales Tax Act, 1959 - Petition allowed.

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• Indian Laws

• 2023 (8) TMI 599
  Dishonour of Cheque - statutory notice of demand was not served on the accused - vicarious liability of directors - Section 141 of the NI Act - HELD THAT:- Sub-section 1 of Section 141 of the NI Act required the complainant to aver that the present appellants at the time of the commission of the offence were in charge of, and were responsible to the company for the conduct of the business of the company. In the present case, all that the second respondent has alleged is that the appellants were liable for transactions of the company and that they were fully aware of the issuance of the cheques and dishonour of the cheques. The compliance with the requirements of sub-Section 1 of Section 141 N.I. Act was made by the second respondent. The most important averment which is required by sub-Section (1) of Section 141 of the NI Act is that the directors were in charge of, and were responsible for the conduct of the company. The appellants are neither the signatories to the cheques nor are wholetime directors - the appeal must succeed and the impugned Order is quashed and set aside, only in so far as the present appellants are concerned. Whether the second respondent has incorporated the averments which are necessary to be incorporated in a complaint under Section 138 of the NI Act in view of sub-section 1 of Section 141 of the NI Act? - HELD THAT:- There is non-compliance on the part of the second respondent with the requirements of sub-section 1 of Section 141 of the NI Act - It is noted that we are dealing with the appellants who have been alleged to be the Directors of the accused No.1 company. We are not dealing with the cases of a Managing Director or a wholetime Director. The appellants Have not signed the cheques. In the facts of these three cases, the cheques have been signed by the Managing Director and not by any of the appellants. Section 141 is an exception to the normal rule that there cannot be any vicarious liability when it comes to a penal provision. The vicarious liability is attracted when the ingredients of sub-section 1 of Section 141 are satisfied. The Section provides that every person who at the time the offence was committed was in charge of, and was responsible to the Company for the conduct of business of the company, as well as the company shall be deemed to be guilty of the offence under Section 138 of the NI Act - Merely because somebody is managing the affairs of the company, per se, he does not become in charge of the conduct of the business of the company or the person responsible for the company for the conduct of the business of the company. For example, in a given case, a manager of a company may be managing the business of the company. Only on the ground that he is managing the business of the company, he cannot be roped in based on sub-section 1 of Section 141 of the NI Act. It is apparent that the words was in charge of and was responsible to the company for the conduct of the business of the company cannot be read disjunctively and the same ought be read conjunctively in view of use of the word and in between. The submission made by the learned counsel appearing for the second respondent that these averments substantially comply with sub-section (1) of Section 141 of the NI Act, cannot be accepted. The impugned judgment is set aside insofar as the appellants are concerned - appeal allowed.

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• 2023 (8) TMI 598
  Dishonour of Cheque - acquittal of the accused - acquitting the private respondents on the ground of maintainability of the instant case in terms of Section 141 of the Negotiable Instruments Act - HELD THAT:- The prosecution of other persons under Section 138 NI Act is permissible only when the Company is named as an accused in the complaint. Where the Company due to, inter alia, inadvertence of the complainant may not have been named as one of the accused(s) in the cause title of complaint, however, from a perusal of such complaint, it can be observed that specific averments/ingredients for the commission of offence under Section 138 NI Act against the company are made out. Under such circumstances, considering the same as mere curable infirmity, Courts have permitted the complainant to amend the complaint by adding the name of Company as one of the accused(s). In the present case, the petition of complaint itself starts with the statement It is the case of the complainant that he as a proprietor of M/s. Maa Manasha Enterprise had made payment to Delicious Agro Food Pvt. Ltd. for food product, but the said company had not delivered any such food item and accused being director of the said company had returned the money by issuing a cheque in favour of the complainant . The accused/petitioner had on application before the trial court also stated that the complainant had entered into the transaction with the company, Delicious Agro Food Pvt. Ltd. . The petitioner as director of the company was the person who issued the cheque in this case and the transaction was carried out by the petitioner as director on behalf of the company. As such there is clear averments in the complaint itself, against the company and also its director. The trial court shall permit the complainant to amend the petition of complaint and then proceed with the case in accordance with law - Appeal allowed.

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• 2023 (8) TMI 597
  Dishonour of Cheque - delay in filing of the complaint under Section 138 of the Negotiable Instruments Act, beyond the period of limitation as envisaged under Section 142(b) of the Negotiable Instruments Act - HELD THAT:- Admittedly, the Demand Notice was issued on 3.1.2013 and received on 7.1.2013, which was allegedly not within the knowledge of the complainant, and thus the case is made out, that the complaint is not barred by limitation. So even if it is taken that the date of receipt was not within the knowledge of the complainant, the service is deemed to be made/effected within 30 days of sending it. So in this case the period of 30 days from 3.1.2013 would end on 2nd February, 2013. 03.01.2013 being excluded. The payment within 15 days would commence on 3rd February, 2013 and end on 18.02.2013. Thirty days thereafter would end on 20th March, 2013. From 19.02.2013 to 28.02.2013 (10 days) and March 20 days. The present complaint was filed on 26.03.2013. There is clearly a delay of 5 days even if the complainant is given the benefit as prescribed. The order under revision dated 29.06.2019 the order dated 05.01.2018 of the Judicial Magistrate, 1st Court, Malda in 177C/2013 and the Magistrate taking cognizance on 02.04.2013 are all set aside being bad in law - Revision allowed.

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