TMI Tax Updates - e-Newsletter
August 17, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. GENERAL DISCIPLINES RELATED TO PENALTY IN GST

   By: Dr. Sanjiv Agarwal

2. Assessee is entitled for interest in case of delayed refund by Revenue Department

   By: Bimal jain

3. DENIAL OF REGISTRATION UNDER SECTION 12AA OF INCOME TAX ACT, 1961

   By: DR.MARIAPPAN GOVINDARAJAN

4. Retrospective cancellation of registration without a valid reason is arbitrary exercise of power

   By: Bimal jain

News

1. Union Cabinet approves new Central Sector Scheme ‘PM Vishwakarma’ to support traditional artisans and craftspeople of rural and urban India

2. Cabinet approves Seven Multi-tracking Projects totalling 2339 Kms. across Indian Railways, amounting to around Rs 32,500 crore

3. Cabinet approves Mutual Recognition Arrangement of Authorised Economic Operators between India and Australia

4. Prime Minister says India’s exports rising rapidly, world rating agencies recognizing India’s potential

5. Prime Minister attributes India’s rise to 5th largest economy in the world to efforts of 140 crore people of India

Notifications

Central Excise

1. 27/2023 - dated 14-8-2023 - CE

Exemption to the excisable goods - Increase the Special Additional Excise Duty on export of Diesel - Seeks to further amend No. 04/2022-Central Excise, dated the 30th June.

2. 26/2023 - dated 14-8-2023 - CE

Special Additional Excise Duty on production of Petroleum Crude and export of Aviation Turbine Fuel - Increase in rates - Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022.

Customs

3. 60/2023 - dated 14-8-2023 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

GST - States

4. 1374-F.T. - dated 10-8-2023 - West Bengal SGST

Conditional waiver of late fee for non-filers of GSTR-9 if filed within 31.08.2023

5. 1373-F.T. - dated 10-8-2023 - West Bengal SGST

Extension of amnesty for filing an returns where assessment u/e 62 has been made (for non filers of return) till 31.08.2023

6. 1372-F.T. - dated 10-8-2023 - West Bengal SGST

Extension of amnesty for filing an application for revocation of cancellation of R.C (for non filers of return) till 31.08.2023

7. 1371-F.T. - dated 10-8-2023 - West Bengal SGST

Conditional waiver of late fee for the non-filers of GSTR-4 from July, 2017 to the F.Y.2021-22 if filed between 01.04.2023 till 31.08.2023

Circulars / Instructions / Orders

DGFT

1. Trade Notice No. 20/2023 - dated 16-8-2023

Procedure for allocation of quota for export of broken rice on humanitarian and food security grounds, based on requests received from Governments of other Countries

2. TRADE NOTICE No. 21/2023 - dated 16-8-2023

Procedure for allocation of quota for export of Wheat, Wheat Flour (Atta) and Maida/SemoIina on humanitarian and food security grounds, based on requests received from Government of Bhutan.

3. TRADE NOTICE NO. 22/2023 - dated 16-8-2023

Final Notice for on-boarding on the DGFT Common Digital platform for mandatory electronic filing of Non-Preferential Certificate of Origin (CoO) upto 31st August 2023

Highlights / Catch Notes

GST

• High Court Reviews GST Registration Cancellation Due to Natural Justice Violation, Despite Order Being Appealable.

  Case-Laws - HC : Cancellation of GST registration of petitioner - Although the impugned order is an appealable order, but considering that this is a clear case of violation of the principles of natural justice, it is considered apposite to entertain the present petition - HC
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Income Tax

• High Court Rules Reopening Assessment u/s 147 Invalid Due to Previously Disclosed Bad Debt Write-off Details.

  Case-Laws - HC : Reopening of assessment u/s 147 - Bad Debts - Petitioner clearly showed that the Petitioner had in response to specific queries raised during the assessment proceedings, disclosed to the Respondents all the material facts in respect of Bad Debts Written Off. Therefore, the reason given by for reopening the reassessment in respect of Bad Debts Writing Off cannot be a reason to reopen the Assessment u/s 148 of the Act. - HC
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• Assessment Reopening u/s 147 Challenged; Original Deduction u/s 80IA Was Fully Examined and Allowed.

  Case-Laws - HC : Reopening of assessment u/s 147 - Reason to believe - deduction u/s 80IA - The entire claim of the petitioner for deduction u/s 80IA of the Act had been examined and allowed by the assessing officer at the time of framing assessment for the relevant previous years. As such, in our opinion, it could not be claimed by the revenue that the assessee had not fully disclosed the facts. - HC
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• Assessing Officer's Profit Conversion Based on CBDT Draft Report Overturned; Losses Restored for 2018-2020 Fiscal Years.

  Case-Laws - AT : Dependent agency PE of the assessee in India - profit attribution to the said DAPE - TP adjustments - Arm's length price - it has been brought on record that assessee had incurred losses in the fiscal year 2018, 2019 and 2020 and ld. AO without analyzing the transactions had made the losses of the assessee into profit just merely rely on the draft report of the CBDT and a recommendary course of action for the profit attribution to the PE. - Additions deleted - AT
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• Section 92BA(i) Not Applicable: International Transactions Under Rs. 1 Crore, AO May Review u/s 40A(2)(b) Provisions.

  Case-Laws - AT : Applicability of section 92BA(i) on the SDT [Specified domestic transactions] - Since in this case the assessee has undertaken international transactions for a sum which is less than Rs. 1 crore, therefore the TP adjustment should not be made. - However, AO can examine the issue in terms of the provision of sec. 40A(2)(b) - AT
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• Court Upholds Transfer Pricing Adjustment; Revenue Must Be Recognized When Accrued Under Mercantile Accounting System.

  Case-Laws - AT : TP Adjustment - Assessee contents that part of the Revenue reported in future years, but the contention of the assessee cannot be accepted for the simple reason that when the assessee is following mercantile system of accounting, Revenue should be recognized as and when income accrues and arises to the assessee, irrespective of the fact that the assessee has received the income or not. - there is no error in the reasons given by the AO/DRP to make additions towards billing in excess of Revenue - AT
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• No Penalty for Assessee: Good Faith Misunderstanding of Turnover u/s 271B, Aligns with Project Completion Method.

  Case-Laws - AT : Penalty u/s 271B - non-compliance of getting accounts audited u/s. 44AB - Ostensibly, the assessee was under bona fide belief that the advance are not turnover, which was a right contention, according to project completion method of accounting. No deliberate act or defiance of law or guilty conduct was observed - No penalty - AT
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Customs

• Court Questions Undervaluation Claims of Imported Goods; No Justification to Reject Declared Value u/r 4, Customs Valuation Rules 2007.

  Case-Laws - AT : Valuation of imported goods - undervalued goods or not - allegation based on contemporaneous import prices of similar goods - there is no finding as to how this consignment was considered as contemporaneous import of identical goods in terms of Rule 4 of the Customs Valuation Rules, 2007. - there is no valid reason to reject the declared transaction value of the goods. - AT
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• Valuation Dispute: Appellant Uninformed on Revised Export Goods Values, Yet Duty Drawback Claim Approved.

  Case-Laws - AT : Valuation of export goods - overvalued goods or not - it is found that the appellant was informed as to constitution of the Valuation Committee. Even there was a communication as to what rate the exported goods were valued item wise, but, there was no reason intimated to the appellant as to the adoption of revised lesser values and the basis thereof. - Claim of duty drawback allowed - AT
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IBC

• Promoters Fail to Meet BIFR Scheme Requirements, Dispute Tax Dues and Binding Obligations on Other Parties.

  Case-Laws - HC : Seeking relief from Income Tax Dues - BIFR scheme - the promoters had not complied with the Scheme which they now submit is binding on all other parties. It also appears that the entire exercise of gifting the shares to the Company and the Company selling the same was with the object of ensuring that the capital gains arise in the hands of the Company so as to enable the Company to claim further exemption. - HC
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SEBI

• SEBI Delists Company for Not Providing Shareholder Exit as Required by 2016 and 2017 Circulars.

  Case-Laws - HC : Delisting orders from DSE - Rishab Ispat Ltd. - Promotors have failed to demonstrate the adequacy of efforts for providing exit to their shareholders in conformity with the exit mechanism - the circulars dated 10.10.2016 and 01.08.2017 issued by SEBI are legally valid, and are part of a structured scheme that deals with the situation of ELCs, and the manner in which the shareholders associated with such ELCs are to be protected. - HC
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Service Tax

• Ultratech Cement's service classified as Goods Transport Agency; reverse charge tax obligation fulfilled u/r 2(d), Service Tax Rules 1994.

  Case-Laws - AT : Classification of services - supply of tangible goods for use or work of transportation of concrete for its customers? - the appellant’s service is correctly classifiable under Goods Transport Agency service for which service recipient M/s. Ultratech Cement Limited have discharged the service tax as required under Rule 2(d) of Service Tax Rules, 1994 under reverse charge basis. Therefore, the demand under the category of Supply of Tangible Goods service shall not sustain - AT
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• Appellant and builder dispute refund claim over mistaken payment; resolution required between contracting parties, not involving tax authority.

  Case-Laws - AT : Refund claim of amount paid under mistake of law - It is also noticed that it is a dispute between the appellant and the builder, two contracting parties. This dispute has to be resolved between two parties to the contract and no refund can be made treating the disputed amount as tax which was never paid to the exchequer. - AT
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Central Excise

• Galvanized Silo Systems Classified Under Chapter 8437 10 00 of CETA, 1985, Affecting Taxation Rules.

  Case-Laws - AT : Galvanized Silo Solution systems (Silos) - classifiable under Chapter sub-heading 9406 00 93 or under Chapter 8437 10 00 of CETA, 1985 - the classification of the said Silos would be under Chapter 8437 10 00 but not under Chapter sub-heading 9406 00 99 of CETA, 1985. - AT
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• Flue Gas Not Classified as Nitrogen u/r 3(b) Without Marketability Evidence in Central Excise Case.

  Case-Laws - AT : Classification of goods - flue gas - merely because it is having contents more than 80% v/v, it cannot be said that the said gas is Nitrogen gas by applying rule 3(b) of the General Rules of Interpretation without any evidence. In the absence of any evidence produced on record that the flue gas can be sold in the market as Nitrogen and the same cannot be classified as Nitrogen. - AT
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• Extended Limitation Period Not Applicable: No Intent to Evade Taxes on Duty Short Payment; Cenvat Credit Available.

  Case-Laws - AT : Extended period of limitation - short payment of duty - suppression of facts or not - It is also found that the appellant was supplying the goods to its own sister unit and, therefore, every rupee which the appellant paid as duty would have been available to its sister unit as Cenvat credit. Therefore there cannot be any intention to evade. - AT
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Case Laws:

• GST

• 2023 (8) TMI 735
  Cancellation of GST registration of petitioner - impugned show-cause notice did not disclose any other reason or particulars for proposing the adverse action against the petitioner - suppression of facts or not - violation of principles of natural justice - HELD THAT:- The impugned show-cause notice was bereft of any particulars and it is difficult to accept that the said show-cause notice could elicit any meaningful response. It is trite law that a show-cause notice must set out the allegation in order to enable the noticee to respond to the same. Merely making the bald statement that the registration was obtained by fraud, willful misstatement or suppression of facts without alluding to any such misstatement or the allegedly suppressed facts, provides no clue to the noticee as to the allegation against him. Although the impugned order is an appealable order, but considering that this is a clear case of violation of the principles of natural justice, it is considered apposite to entertain the present petition - petition allowed.

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• 2023 (8) TMI 734
  Seeking release of retained goods - contention of the second respondent that he has not received Ext P4 request is untenable because as per the postal delivery form submitted by the learned counsel for the petitioner, it shows that Ext P4 order was delivered to the second respondent on 06.02.2023 - HELD THAT:- Section 112 of the CGST Act provides that any person aggrieved by an order passed under Section 107 or Section 108 of the Act has a remedy to file an appeal before the Appellate Tribunal. It may be true that the Appellate Tribunal has not been constituted till date. But, the fact remains that Ext P3 order was passed on 10.01.2023 and the respondents have not worked out their alternative remedies till date. Taking note of the fact that Ext P3 order was passed as early as on 10.01.2023, and the respondents have not taken any steps to challenge Ext P3 order, there are no justifiable or cogent reason for the respondents to refuse to accept Ext P3 order. The request of the petitioner is reasonable and just. The first respondent is directed to release the goods covered by Ext P1 demand, by passing a release order in Form GST MOV-05, within a period of two weeks from the date of receipt of a certified copy of this judgment, after permitting the petitioner to remit the modified demand as per Ext P3 appellate order - petition allowed.

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• 2023 (8) TMI 733
  Validity of assessment under Section 63 of the OGST Act - authority did not assign any reason and the order does not contain details of demand raised - opportunity of hearing not provided - HELD THAT:- The Petitioner submitted that the Petitioner will not oppose to participate in the proceeding for assessment, if opportunity of hearing is given to him. The assessment order in Annexure-1 is set aside and the Petitioner may appear before the Assessing Officer on or before 31st May, 2023 and furnish objection, if any. The Assessing Officer shall proceed with the matter in accordance with law - petition disposed off.

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• Income Tax

• 2023 (8) TMI 732
  Validity of seizure / requisition by income tax authority - assessment proceedings initiated by the jurisdictional Assessing Officer at Kolkata - HELD THAT:- We have perused the Miscellaneous Application filed by the respondent-Revenue seeking recalling and modifying order [ 2021 (4) TMI 1364 - SC ORDER] . The affidavit accompanying the application is incomplete inasmuch as we have no idea as to who the person who has sworn to the affidavit accompanying the application is. Petitioner also submitted that there has been no compliance of the order dated 15.04.2021 by the respondent-Revenue. The application is dismissed reserving liberty to file a fresh application if so advised. Miscellaneous application is rejected in the aforesaid terms.

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• 2023 (8) TMI 731
  Nature of expenses - expenditure incurred by the assessee for renovation of the lease hold premises for setting up a new show room - revenue expenditure or capital expenditure - HELD THAT:- No reason to entertain this petition under Article 136 of the Constitution of India. The petition seeking special leave to appeal is, accordingly, dismissed.

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• 2023 (8) TMI 730
  Addition of surrendered income - relevancy of statement recorded u/s 132(4) - retraction of statement given within reasonable time or not? - as decided by HC [ 2018 (11) TMI 953 - RAJASTHAN HIGH COURT] retraction is required to be made as soon as possible or immediately after the statement of the assessee was recorded. Duration of time when such retraction is made assumes significance and in the present case retraction has been made by the assessee after almost eight months to be precise, 237 days, thus allowed revenue appeal - HELD THAT:- No case is made out to interfere with the impugned judgment(s) and order(s) passed by the High Court. As such, we are in complete agreement with the view taken by the High Court. Special leave petitions stand dismissed.

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• 2023 (8) TMI 729
  Penalty u/s 271(1)(c) - as per HC ITAT correctly deleted penalty on the ground that quantum additions were deleted by the Tribunal and upheld by the High Court - HELD THAT:- We do not find any reason to interfere with the impugned order. SLP is, accordingly, dismissed. Pending applications, if any, shall also stand disposed of.

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• 2023 (8) TMI 728
  Deduction of tax at source u/s 194A - payments made to local authorities, including New Okhla Industrial Development Authority [in short, NOIDA ] - Order passed u/s 201(1)/201(1A) - HELD THAT:- The legal issue, (which is that the petitioner bank was not required to deduct tax at source on payments towards interest made to NOIDA with regard to fixed deposits created by them), cannot but accept that the issue is covered against the respondent/revenue, in view of the decision of the Supreme Court in Commissioner of Income Tax (TDS) Kanpur and Anr. vs Canara Bank [ 2018 (7) TMI 664 - SUPREME COURT] . According to us, insofar as the respondent/revenue is concerned, the retention of the amount from the point of view of NOIDA, is contrary to the provisions of Article 265 of the Constitution. If we allow the respondent/revenue to retain the money, it would, in effect, amount to putting the court s imprimatur, on the respondent/revenue s act of levying and/or collecting tax, without the authority of law. In our opinion, in this particular case, having regard to the fact that public funds are involved, law and justice should meld. Therefore, we are inclined to quash the order passed u/s 201(1)/201(1A) r.w.s. 194A of the Income Tax Act, 1961. The respondent/revenue will refund the amount deposited by the petitioner bank within three (3) weeks of receipt of a copy of this judgement.

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• 2023 (8) TMI 727
  Reopening of assessment u/s 147 - Bad Debts Written Off claimed as deduction, Computation of MAT liability u/s 115JB and Disallowance u/s 14(A) - HELD THAT:- A perusal of the reasons for reopening set out in the said letter show that there is no such failure on the part of the Petitioner to disclose fully and truly any material fact necessary for the Assessment. The reasons so recorded themselves clearly show that, even according to Respondent No. 1, there was no failure to disclose any material fact. According to Respondent No. 1, on the facts disclosed by the Petitioner during the assessment proceedings, it had wrongly claimed and was allowed a deduction towards Bad Debts Written Off. Further, Petitioner clearly showed that the Petitioner had in response to specific queries raised during the assessment proceedings, disclosed to the Respondents all the material facts in respect of Bad Debts Written Off. Therefore, the reason given by Respondent No. 1 in the said letter dated 23rd July 2021 for reopening the reassessment in respect of Bad Debts Writing Off cannot be a reason to reopen the Assessment under Section 148 of the Act. Computation of MAT liability under Section 115JB - A perusal of the reasons given clearly show that there is no failure on the part of the Petitioner to disclose any material fact. In fact, Respondent No. 1 records that the incorrect application of provisions of the Act by the Department resulted in under assessment of income of Rs. 50,99,00,000/- with a consequent short levy of tax of Rs. 10,68,77,590/- . This itself shows that there is merely a change of opinion on the part of Respondent No. 1 and no failure to disclose any material fact on the part of the Petitioner. In letter in response to specific queries raised during the assessment proceedings, the Petitioner had given the computation in respect of of MAT liability. This once again shows, that the Petitioner had disclosed all material facts in respect of computation of MAT liability and there was no failure on its part to disclose any material fact. Disallowance under Section 14A - In paragraph 4 of the Assessment Order passed u/s 143(3) of the Act, the Assessing Officer had discussed in detail this disallowance under Section 14A and had passed orders in respect thereof. This, by itself, shows that there is no failure on the part of the Petitioner to disclose any material fact in respect of the disallowance u/s 14A - Further, Petitioner has given the facts and the reasons as to why no disallowance can be made under Section 14A of the Act, except disallowance of 1% of exempt income considered by the Petitioner as an administrative expenditure relating to exempt income. Thus, the said Assessment Order and the said letters once again clearly show that there is no failure on the part of the Petitioner to disclose any material fact even in respect of the issue of disallowance under Section 14A of the Act. Thus reopening of assessment quashed - Decided in favour of assessee.

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• 2023 (8) TMI 726
  Reopening of assessment against company ceased to exist - Absence of a Board Resolution accompanying the writ petition - HELD THAT:- This Court finds itself unable to sustain the same bearing in mind the fact that the decision in State Bank of Travancore [ 2011 (2) TMI 1270 - SUPREME COURT ] was rendered in the context of a suit and was thus governed by the provisions of the Code of Civil Procedure, 1908. The present is a writ petition which is duly accompanied by a Power of Attorney and thus the Court finds no ground to hold against the petitioner on this score. The facts which obtain in the present writ petition clearly appear to be identical and raise the question of whether a company which ceases to exist consequent to a Scheme of Arrangement coming to be approved by the National Company Law Tribunal [NCLT] could be proceeded against u/s 148A of the Income Tax Act, 1961. Matter requires consideration. Till the next date of listing, the respondents shall stand restrained from taking further steps pursuant to the impugned show cause notices dated 23 March 2023 and 14 March 2023 marked as Annexures P-11 and P-12.

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• 2023 (8) TMI 725
  Validity of third respondent s assessment order u/s 143(3) - seeking directions to the fourth respondent to lift the attachment of his bank accoun t - HELD THAT:- As in the peculiarities of this case viz ., the petitioner has appeared before the assessing officer after issuance of notice u/s 144 of the Act and has filed financials, if the reassessment is reframed under Section 143(3) of the Act upon examination of all questions there would be no room for the grievance that the proceeding, which is begun for the best judgment assessment, has resulted in an order under Section 143(3) of the Act. On a careful consideration of the submissions, and the undisputed fact that the balance is about Rs. 1,25,00,000/- this Court is of the view that the third respondent must reframe the assessment order for the relevant year expeditiously within a time frame and the petitioner until then should be permitted to operate his account with M/s Kotak Mahindra Bank subject to maintaining a certain reasonable minimum balance. Order:- Writ petition is allowed in part and the third respondent s assessment order u/s 143(3) of the Income Tax Act, 1961 is quashed. The third respondent shall reframe assessment for the assessment year 2021-22 within six [6] weeks from the petitioner s first date of appearance after this order with due opportunity to the petitioner. The petitioner until then is permitted to operate his account with M/s Kotak Mahindra Bank subject to maintaining a minimum balance of Rs. 75,00,000/-. The petitioner without further notice shall appear before the third respondent on 05.04.2023.

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• 2023 (8) TMI 724
  Reopening of assessment u/s 147 - Reason to believe - deduction u/s 80IA - HELD THAT:- As noticed that deduction u/s 80IA (4) was virtually the sole claim of the petitioner in the returns filed by it. It is revealed from the record that after filing of return for the A.Y. 2008-09 and framing of assessment for the said year, the assessing officer had issued notice to the petitioner with a questionnaire seeking detailed information not only with regard to the income of the petitioner-assessee but also with regard to nature of its business etc. The petitioner is shown to have submitted reply thereto supplying the requisite information including the nature of its business. The decision for the deduction sought to be made under that section while disclosing the details of its income for the previous years was given in the audit report on requisite form No.10-CCB as required u/s80-IA (7)/80-IC of the Act. Also further revealed from the record produced with regard to A.Y. 2008-09 that the details of the contract which was executed between the Government of Himachal Pradesh and petitioner-assessee had also been provided to the assessing officer which contained information that the contract was for infrastructural development. The assessee is even shown to have appended a note with the return for the year 2008-09 pointing out that a composite agreement had been entered into between the Government of Himachal Pradesh and itself and the work was awarded to it on built, operate and transfer basis. In our opinion, all the primary facts had been disclosed by the petitioner and its duty did not extend beyond the full and truthful disclosure of primary facts and once such facts were put before the assessing authority, the assessee was not required to give any further assistance. Then it was for the assessing officer to make further inquires and draw inferences and if he did not do so at the time of framing original assessment, then it could not be contended by the revenue that there was any failure or omission on the part of the assessee or that he had not fully disclosed the facts. It is only after the detailed scrutiny, after considering all the documents and on being satisfied that the assessee was held entitled to claim deduction under Section 80IA of the Act, that the assessment order for the relevant year had been passed. It cannot be stated that the terms of contract and the nature of the contract between them had come to the notice of the assessing officer only while framing assessment for the A.Y. 2012- 13. The entire claim of the petitioner for deduction u/s 80IA of the Act had been examined and allowed by the assessing officer at the time of framing assessment for the relevant previous years. As such, in our opinion, it could not be claimed by the revenue that the assessee had not fully disclosed the facts. it was also not the case of the revenue that re-opening was initiated by it on the basis of any subsequent information which was found to be definite, specific and reliable. Rather, there is nothing new which is shown to have come to the notice of the revenue for this purpose. As such, the facts which were taken into consideration by the assessing officer cannot be stated to have come to his knowledge after the assessment proceedings for the relevant years had completed. All the primary facts necessary for the assessment had undisputedly been disclosed by the petitioner qua the A.Y. 2008-09. In our opinion by issuing notice beyond a period of four years from completion of that assessment, the revenue could not take benefit of extended period of limitation. No hesitation to conclude that the jurisdictional condition precedent as laid down by the proviso to Section 147 i.e. failure to disclose material fact, which was proximate cause of escapement of income, has not been fulfilled at all in the present case and, therefore, the impugned notices, re-opening the assessment for all the relevant years are liable to be quashed - Decided in favour of assessee.

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• 2023 (8) TMI 723
  Stay of petition - recovery proceedings - high pitched assessments - HELD THAT:- In the instant case, since the appeals were filed in 2018 and the stay applications filed before the Deputy Commissioner of Income Tax during the year 2018 followed by subsequent reminders, were rejected only on 8th December, 2022 and the assessments orders were not given effect to till date, we are of the view that the appeals filed before the CIT (Appeals) could be disposed of at an early date and until then, the respondents/department should not take any coercive action against the appellant / assessee for recovery of the income tax, which has been assessed. See Great Barter Private Limited Vs. Assistant Commissioner of Income Tax [ 2022 (12) TMI 1432 - CALCUTTA HIGH COURT] These appeals are allowed and the orders passed in the writ petitions are set aside with a direction to keep the recovery proceedings initiated by AO in abeyance with a further direction to the CIT (A) to dispose of the appeal petitions filed by the assessee on merits and in accordance with law after affording an opportunity of personal hearing to the authorised representative of the assessee as expeditiously as possible, preferably within a period of 45 days from the date of receipt of the server copy of this judgment and order.

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• 2023 (8) TMI 722
  Disallowance u/s 14A made under Rule 8D(2)(ii) and 8D(2)(iii) of the Rules - HELD THAT:- For Assessment Year 2013-14, we notice that the accumulated interest free funds as on 31/03/2013 are more than investments -Similar is the situation for the remaining assessment years wherein also the interest free funds available with the assessee company in the form of shareholder funds is almost 9 to 10 times of the investments held by the assessee in the equity shares. It is an admitted fact that there is no finding of the revenue authorities at any stage indicating specifically that interest bearing funds have been applied for the purpose of making investments. In absence of any such finding, we find that the judgement of Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] are squarely applicable on the facts of the present case and, therefore, on account of sufficient availability of interest free funds, we find no merit in the finding of the ld. AO making interest disallowance under Rule 8D(2)(ii) of the Rules. Thus, the finding of the ld. CIT(A) is set aside and disallowance made under Rule 8D(2)(ii) for the impugned assessment years are hereby deleted. Remaining disallowance u/r 8D(2)(iii) assessee has not challenged the said disallowance of Rs. 2,22,977/- and, therefore, the same is confirmed. So far as Assessment Year 2014-15, is concerned, we notice that AO has made a disallowance under Rule 8D(2)(iii) at Rs. 5,01,386/- and the same has been calculated taking the average investment figure at Rs. 10.03 Crores, whereas as per the details filed in the paper book, the correct figure is Rs. 5,93,89,491/- which is the investment fetching exempt income and taking this correct figure, the disallowance under Rule 8D(2)(iii) will work out to Rs. 2,96,947/- and the same is hereby confirmed. For Assessment Year 2016-17, we notice that the ld. Assessing Officer has calculated the sum @ 0.5% of the average investment at Rs. 10.23 Crores, whereas the actual average value of investment is Rs. 4,41,09,065/- and, therefore, the correct amount of disallowance shall work out to Rs. 2,20,545/- and the same is hereby confirmed. For Assessment Year 2017-18, AO made total disallowance of Rs. 1,40,266/- whereas assessee has suo-moto disallowed a sum of Rs. 4,45,692/- and has mentioned in the audit report and AO has failed to take note of the said disallowance. It means that the ld. AO has not complied with the provisions of Section 14A of the Act of recording satisfaction before applying Rule 8D of the Rules. On this ground itself the disallowance made under section 14A r.w.r. 8D, for Assessment Year 2017-18 is deleted. Deemed dividend u/s 2(22)(e) - sum received by the assessee company from another group company - HELD THAT:- As respectfully following the ratio laid down in the decisions and judgments of Bhaumik Colour Pvt. Ltd. [ 2008 (11) TMI 273 - ITAT BOMBAY-E] , DCIT 1(1)(2), Mumbai Vs Gilbarco Veeder Root India (P) Ltd. [ 2018 (8) TMI 437 - ITAT MUMBAI] as well as CIT Vs. Vatika Township (P) Ltd. [ 2014 (9) TMI 576 - SUPREME COURT] since undisputedly the assessee is not a shareholder in Apeejay Tea Ltd., which has given loan/advance to assessee, therefore, the assessee does not fall under any of the limbs provided under section 2(22)(e) of the Act, and the same cannot be invoked in the hands of the assessee. We, thus set-aside the finding of the ld. CIT(A) and delete the addition made under section 2(22)(e) of the Act and allow these common grounds of appeal raised by the assessee against the addition made u/s 2(22)(e) of the Act. Disallowance u/s 2(24)(x) - delayed deposit of employees contribution to PF/ESI i.e. after the due date as provided under the respective welfare enactments - HELD THAT:- This issue is no more res integra in view of the judgment of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees contribution to PF/ESI cannot be claimed even though deposited within the due date of filing of return of income read with Section 43B of the Income-tax Act, 1961. Therefore, the amounts are liable to be added as income in the hands of the assessee, the disallowance so made are confirmed and the grounds raised by the assessee are dismissed. Disallowance on account of interest on delay deposit of TDS and interest of delay payment of service tax - HELD THAT:- We notice that the issue of interest on delay deposit of TDS has been extensively dealt in the case of M/s Premier Irrigation Adritec (P) Ltd. [ 2023 (1) TMI 1124 - ITAT KOLKATA] wherein the Tribunal has held that interest payment on delayed deposit of income tax, whether TDS or otherwise is not an allowable expenditure. Respectfully following the decision of the Tribunal, the disallowance of interest on delayed deposit of TDS stands confirmed. So far as the interest on delayed payment of Service tax is concerned, we notice that the same is allowable in view of the ratio laid down in the case of Lachmandas Mathuradas [ 1997 (12) TMI 16 - SUPREME COURT] Since the bifurcation of the alleged disallowance is not available on record, we direct the Assessing Officer to carry out the necessary exercise for which the assessee shall provide the related documents and then shall confirm the disallowance for the interest on delay in deposit of TDS and allow the interest paid on delay in deposit of service tax. Accordingly, this issue raised for AY 2016-17 and 2017-18, is partly allowed for statistical purposes.

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• 2023 (8) TMI 721
  Order passed by ACIT against principles of natural justice - assessee submitted that Ld. CIT(A) without giving opportunity of being heard to the assessee, proceeded to dismiss the appeal - HELD THAT:- Considering the submissions made at bar and the material placed before us, we are of the considered view that the assessee should have been given adequate opportunity of being heard to represent his case. We, therefore, in the interest of principle of natural justice, hereby, set aside the impugned order and restore the issue to the file of Ld.CIT(A) to decide it afresh after giving adequate opportunity of being heard to the assessee. Grounds raised by the assessee are thus, allowed for statistical purposes.

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• 2023 (8) TMI 720
  Weighted deduction claimed u/s 35(2AB) - expenditure incurred on bio equivalence and clinical study outside the approved facility - whether the expenditure incurred on scientific research outside the research and development facility as approved by the prescribed authority is eligible for deduction u/s 35(2AB)? - HELD THAT:- Since the activities of bio equivalence and clinical study cannot be carried out only in the laboratory of the pharmaceutical company and they have to be necessarily carried out outside the research and development facility. However, the prescribed authority approved this expenditure by incorporating the same in form 3CL. We, therefore, respectfully following the decision of Cadila Healthcare Ltd. [ 2013 (3) TMI 539 - GUJARAT HIGH COURT] and followed by the Co-ordinate Benches of the Tribunal, consistently, hold the issue in favour of the assessee and direct the learned Assessing Officer to delete the addition made on this account. Decided in favour of assessee. Foreign Tax Credit (FTC) - Claim denied on the ground that Form 67 shall be furnished on or before the due date specified for furnishing of the return of income under section 139(1) of the Act and on furnishing the documents specified in Form 67 - case of the assessee is that rule 128 of the tax rules was introduced w.e.f. 01/04/2017 and since it is a new provision, and first year of implementation, by inadvertence, the assessee missed to file Form 67, but it complied with such a provision immediately - HELD THAT:- This issue is no longer res integra and we find that in the case of M/s.42 Hertz Software India Pvt.Ltd. [ 2022 (3) TMI 834 - ITAT BANGALORE] decided an identical issue and held that FTC cannot be denied to the assessee, where the assessee filed FTC in Form 67, although belatedly since filing of such Form 67 is not mandatory but directory in nature. Decided in favour of assessee.

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• 2023 (8) TMI 719
  Dependent agency PE of the assessee in India - profit attribution to the said DAPE - TP adjustments - Arm s length price - international transaction between assessee and the Indian AE -HELD THAT:- It has been brought on record that assessee has been subjected to TP adjustment and in the case of the assessee also the transactions have been found to be at arm s length and additionally one of the two Indian AEs have also been subjected to TP adjustment and its transaction with assessee also to be at arm s length and new adjustments have been made. Before us, ld. Counsel had also brought on record and also showed from TP documentation for A.Y.2018-19 of the assessee and both the Indian AEs and also from the TP order of the assessee and TNT India for the same year, that the international transactions of the Indian AEs with the assessee, are at arm s length price wherein the mean margin determined based on five comparable companies in the case of both Indian AEs was 2.85% of income while the assessee has remunerated at a higher margin of 4% on their gross income. Apart from that, the ld. TPO has not recorded any finding that suggests that all the FAR undertaken by each of the parties were not adequately captured which negates any requirement for further attribution of profits in the absence of any left-out functions and risk taking activities. Accordingly, we agree with the contention of the ld. Counsel that once the transactions have been found to be at arm s length, no further profit attribution can be made. In any case, it has been brought on record that assessee had incurred losses in the fiscal year 2018, 2019 and 2020 and ld. AO without analyzing the transactions had made the losses of the assessee into profit just merely rely on the draft report of the CBDT and a recommendary course of action for the profit attribution to the PE. Before, us, ld. Counsel has also demonstrated as to how no income can be taxable in the hands of the assessee looking to the fact that already in relation to the operations carried out by the assessee for its Indian AE already income has been subjected to tax in India in the hands of the AE DRP somewhere had stated that remuneration paid to Indian AE does not capture the functions/risks and return on the use of intangibles and therefore, it has upheld the profit attribution. Such a finding is not based on any proper analysis of the facts and documents and it is merely a hypothesis. Accordingly, such an observation of the ld. DRP cannot be sustained for the reason that already international transaction between assessee and the Indian AE have been subject matter of TP analysis and which had been concluded at arm s length price. Even if no reference to the TPO has been made in A.Y. 2019-20, since the facts and circumstances and the margins on same transactions are the same and ld. AO was also not alleged that the transaction between the assessee and its AE are not at arm s length, then in such case also, we do not find any reason to deviate from the decision as applicable for A.Y.2018-19 also. Accordingly, this issue is decided in favour of the assessee.

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• 2023 (8) TMI 718
  Nature of expenses - Capitalization of Engineering Research and Development cost incurred by the assessee during the year claimed as revenue expenditure - HELD THAT:- As manifest from the key points of the Agreement as culled out above that the assessee did not have any dominion and control over the intellectual property rights of the technology developed by Lear and Tachi-S, which was simply licensed to it on non-exclusive basis. Thus, the payment by the assessee did not result in acquiring and owning the Engineering and Development Technology so as to be characterized as an intangible asset capable of capitalization. Rather, it is a case of payment in the nature of royalty for the use of such Technology, being an item of revenue nature. As such, the view point of the authorities below in this regard does not merit our concurrence. We, therefore, overturn the impugned order on this score and direct to delete the disallowance made by the AO and affirmed in the first appeal.

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• 2023 (8) TMI 717
  Applicability of section 92BA(i) on the SDT [Specified domestic transactions] - HELD THAT:- As relying on EDELWEISS RURAL CORPORATE SERVICES LIMITED case [ 2022 (6) TMI 1373 - ITAT MUMBAI] we hold that the reference made to the TPO in respect of specified domestic transactions mentioned in clause (i) of sec. 92BA is not valid, as the said provision is omitted since inception. We also note in the above judgment that the issue has been remitted for fresh examination with respect to the claim of SDT in terms of the provision of sec. 40A(2)(b) of the Act. Since in this case the assessee has undertaken international transactions of Rs. 21,15,692 which is less than Rs. 1 crore, therefore the TP adjustment should not be made. With these observations, we remit this issue to the file of the AO for examination and decide as per law. This issue is allowed for statistical purpose. Not giving setting off of loss form the brought forward business loss and unobserved depreciation loss - This issue has been addressed by the AO at para No. 9 in the final Assessment Order at the request of the learned AR. This issue is also remitted back to the AO for deciding the issue afresh in accordance with law and the assessee is directed to produce necessary documents for substantiating its case and not to seek unnecessary adjournments. Appeal by the assessee is allowed for statistical purposes.

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• 2023 (8) TMI 716
  Disallowance of interest component on EMI paid to Non-Banking Financial Companies ( NBFCs ) u/s 40(a)(ia) - HELD THAT:- As assessee though has taken the plea on the basis of the second proviso to section 40(a)(ia) of the Act, however, failed to establish or prove that NBFCs had paid income tax on interest received from the assessee. Now, in the present appeal, the assessee by way of additional evidence has produced a copy of Form No. 26A issued by the Chartered Accountant under the first proviso to sub-section (1) of section 201 of the Act in respect of interest paid by the assessee to Reliance Capital Ltd., wherein it has been certified that Reliance Capital Ltd. has taken into account the sum received as interest from the assessee while computing its taxable income in the return of income filed. We deem it appropriate to admit the additional evidence filed by the assessee before us. We are further of the view that in the interest of justice, this issue be remanded to the Assessing Officer for de novo adjudication as per law after necessary verification of details as submitted by way of additional evidence before us. Before concluding on this issue, we may add that in respect of interest paid to the other NBFCs, i.e, Tata Capital, Kotak Mahindra P. Ltd., and Shagun Corporation, if the assessee is able to furnish similar details before the Assessing Officer, same shall be taken into consideration while deciding the issue as per law. Accordingly, ground no. 1 raised in assessee s appeal is allowed for statistical purposes. Admission of additional ground of appeal - disallowance if any has to be restricted to 30% of the amount on which TDS has not been deducted due to amendment made in section 40(a)(ia), which has been introduced to avoid undue hardship and therefore is applicable retrospectively - HELD THAT:- CBDT, while explaining the provisions of the Finance (No. 2) Act, 2014, vide Circular No. 1 of 2015 dated 21/01/2015 clarified that the amendment by the Finance (No. 2) Act, 2014 to the provisions of section 40(a)(ia) of the Act takes effect from 1st April 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years. We further find that in Shree Choudhary Transport Company [ 2020 (8) TMI 23 - SUPREME COURT ] held that the amendment by the Finance (No. 2) Act, 2014 is with effect from 01/04/2015 and shall be applicable from the assessment year 2015-16. Since the amendment to section 40(a)(ia) of the Act by the Finance (No. 2) Act, 2014 is with effect from the assessment year 2015-16, therefore, the said amendment is not applicable to the year under consideration. As a result, the additional ground raised by the assessee is dismissed.

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• 2023 (8) TMI 715
  Validity of order passed by the TPO u/s 92CA(3) - Computation of period of limitation - HELD THAT:- As it is undisputed fact that transfer pricing officer has passed order u/s 92CA(3) on 30.01.2013 whereas the limitation for passing the said order u/s 92CA(3) expires on 29.01.2013. Therefore, taking into consideration the provision of the Act and decision of PFIZER HEALTHCARE INDIA (P.) LTD [ 2021 (2) TMI 1152 - MADRAS HIGH COURT] and SAINT GOBAIN INDIA [ 2022 (4) TMI 808 - MADRAS HIGH COURT] the order u/s 92CA(3) of the Act is time barred by 1 day. Thus the order of the TPO and draft assessment order are barred by limitation, therefore, resulting in assessee not being a eligible assessee u/s 144C(15)(b)(i) of the Act. Consequently, the final assessment was also bad in law. Appeal of the assessee is allowed.

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• 2023 (8) TMI 714
  TP Adjustment - downward adjustment towards management fees paid to AE - HELD THAT:- This issue needs to go back to the file of the AO/TPO for the impugned assessment year also. In so far as the arguments of the CIT-DR in light of decision of M/s. Lite-On Mobile India Pvt. Ltd [ 2021 (11) TMI 678 - ITAT CHENNAI] we find that although co-ordinate Bench of the Tribunal has taken a different view, but in assessee s own case, this issue has been remitted back to the file of the lower authorities with specific directions, we prefer to follow the decision of the co-ordinate Bench in the assessee s own case for earlier assessment years and set aside the issue to the file of the AO/TPO for the impugned year also with similar directions to re-examine the issue of management fees paid to AE in light of various averments made by the assessee. Thus, we set aside the issue to the AO/TPO and direct the AO/TPO to re-examine the claim of the assessee in accordance with law. Accrual of income - Addition towards billing in excess of Revenue - HELD THAT:- When the assessee rises bills, the customer has also claimed the expenditure based on the invoices raised by the assessee. So, on one side, the customer claims the expenditure for the works executed by the assessee and the other side, the assessee does not recognize the income and shown it in current liabilities. This leads to clear anomaly in reporting income and expenditure. Assessee contents that part of the Revenue reported in future years, but the contention of the assessee cannot be accepted for the simple reason that when the assessee is following mercantile system of accounting, Revenue should be recognized as and when income accrues and arises to the assessee, irrespective of the fact that the assessee has received the income or not. In this case, the assessee has already raised invoices to its customers on the basis of percentage completion method and in our considered view, the moment assessee rises invoices, income accrues to the assessee. Therefore, the assessee needs to recognize Revenue when it has risen invoices. However, the assessee is postponing recognition of Revenue, even though, it has completed certain percentage of work and rise bills to the clients for the reasons best known to the assessee. There is no error in the reasons given by the AO/DRP to make additions towards billing in excess of Revenue, and thus, we are inclined to uphold the findings of the DRP and reject the ground taken by the assessee. Refund of excess DDT paid over and above the DTAA rate - HELD THAT:- This issue has been decided against the assessee in the case of Total Oil India Pvt. Ltd [ 2023 (4) TMI 988 - ITAT MUMBAI (SB)] where it has been held that non-resident shareholders cannot take advantage of the lower tax prescribed in DTAA over taxation of dividend where dividend tax is applicable. Therefore, we reject the additional grounds of appeal filed by the assessee. Deduction of cess paid in computing business income - HELD THAT:- We find that the Hon ble Supreme Court in the case of JCIT v. Chambal Fertilizers Chemicals Ltd [ 2022 (12) TMI 1098 - SC ORDER] had considered the issue and held that education cess claimed by the assessee would not be allowed as expenditure u/s. 37 r.w.s.40(a)(ii) of the Act. Therefore, we reject the additional grounds of appeal filed by the assessee on this issue. Procedural irregularity and breach of time limit for completion of proceedings - TP order passed which is beyond the timeline for completion of proceedings u/s 92CA(3A) - HELD THAT:- As per provisions of Sec. 92CA of the Act, the TPO should pass their order at least 60 days prior to the last date, the period of limitation referred to in sec. 153 of the Act, for making assessment aspects. The assessment year involved in the present case is AY 2016-17. The extended time limit for completion of assessment in the given case is 31.12.2019. The period of 60 days prior thereto would run till 01.11.2019 and any date prior thereto would come to 31st October or before. If an order was passed on 01.11.2019, then same would be barred by limitation and this legal principle is supported by the decision of Hon ble jurisdictional High Court of Madras in the case of M/s. Pfizer Healthcare India Pvt. Ltd. Ors [ 2021 (2) TMI 1152 - MADRAS HIGH COURT] . In this case, the TPO has passed their order on 01.11.2019 and assessment year involved is AY 2016-17. In our considered view, the case is squarely covered by the decision of ITAT Chennai Benches in the case of M/s. Verizon Data Verizon Data Services India Pvt. Ltd [ 2023 (3) TMI 190 - ITAT CHENNAI] Thus, we quashed order passed by the TPO and consequent draft assessment order passed by the AO, directions issued by the DRP and final assessment order passed by the AO.

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• 2023 (8) TMI 713
  Penalty u/s 271B - non-compliance of getting accounts audited u/s. 44AB - HELD THAT:- As respectfully following the decision of Exque Finmark Pvt. Ltd. [ 2015 (10) TMI 1386 - ITAT MUMBAI] followed by SHREE BALAJI CONSTRUCTION [ 2020 (2) TMI 77 - ITAT INDORE] wherein judgment of Hon ble Apex court in the case of Hindustan Steel Ltd. [ 1969 (8) TMI 31 - SUPREME COURT] was quoted a penalty, even where the provision stands attracted, may lawfully be not levied where the default is not found to be a result of a conscious disregard by the tax payer of his legal obligations or a conduct contumacious, . Ostensibly, the assessee was under bona fide belief that the advance are not turnover, which was a right contention, according to project completion method of accounting. No deliberate act or defiance of law or guilty conduct was observed by either of the revenue authority neither the revenue has produced any such evidence or decision contrary to what is transpired by the submission of the assessee and its reliance on the case laws. The case of the assessee AOP is covered by decisions in the judgements referred, thus, under identical circumstances in the instant case, we are of the considered opinion that penalty imposed by the Ld AR and confirmed by the Ld CIT(A) is liable to be deleted and we direct to do so. Appeal of the assessee is allowed.

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• Customs

• 2023 (8) TMI 712
  Valuation of imported goods - undervalued goods or not - Raw Silk Yarn in hanks - rejection of declared value - allegation based on contemporaneous import prices of similar goods of same description - re-determination of the transaction value is in accordance with the provisions of Section 14 of the Customs Act 1962 read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 or not? - allegation of mis-declaration against the importer is justifiable or not - Confiscation - penalty. HELD THAT:- In order to examine the issue of under-valuation of the imported goods, we find it enlightening to refer to the Hon ble Supreme Court s analysis of the statutory provisions relating to valuation under the Customs Act, 1962 in the case of CENTURY METAL RECYCLING PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (5) TMI 1152 - SUPREME COURT] where it was held that Declared valuation can be rejected based upon the evidence which qualifies and meets the criteria of certain reasons . Besides the opinion formed must be reasonable. Reference to foreign journals for the price quoted in exchanges etc., to find out the correct international price of concerned goods would be relevant but reliance can be placed on such material only when the adjudicating authority had conducted enquiries and ascertained details with reference to the goods imported which are identical or similar and certain reasons exists and justifies detailed investigation. It is found that the original adjudicating authority has rejected the declared transaction value in terms of Rule 12 of the Customs Valuation Rules, 2007 basing on the assessable value of identical goods imported vide Bill-of-Entry No. 699388 dated 25.11.2010, which was proposed to be adopted as the transaction value under Rule 4 of the Customs Valuation Rules, 2007 - The declared value of the impugned consignment, which was said to be based on the said contract, was rejected as not representing the actual transaction value contemplated in Rule 3 of the Customs Valuation Rules, 2007 and the contract was found to be extraneous to the transaction between the importer and the supplier on account of non-fulfilment of the conditions of the said contract. The Ld. adjudicating authority has communicated the basis for enhancement of the transaction value to the importer relying on the contemporaneous import of Silk Yarn of Uzbekistan origin vide Bill-of-Entry No. 699388 dated 25.11.2010 at USD 28.5 per kg., but it has to be commented that the crucial commercial details of this consignment as to the type, quality, quantity imported, whether under any contract, whether any advance paid, etc., are not ascertainable from the records in these appeals. There was no discussion either by the original adjudicating authority or by the lower appellate authority in this regard. Thus, there is no finding as to how this consignment was considered as contemporaneous import of identical goods in terms of Rule 4 of the Customs Valuation Rules, 2007. Thus, there is no valid reason to reject the declared transaction value of the goods. The transaction value, as declared by the importer-respondent, accepted. As earlier imports of the respondent were cleared accepting the values declared and also since the value of the contemporaneous import of identical goods has not been conclusively arrived at by the lower adjudicating authority, the declared transaction value has to be accepted. Hence, there is no need to pass any order in respect of confiscability of the goods or on imposition of penalty. The appeals filed by the Revenue are rejected.

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• 2023 (8) TMI 711
  Valuation of export goods - overvalued goods or not - reduction of claim of duty drawback amount - Re-fixation of transaction value of export goods on the basis of the value fixed by the Valuation Committee which has the effect of sanction of less draw back - method adopted for re-fixation of the transaction value is proper or not - HELD THAT:- The appellant have filed 7 shipping bills for export of various Wool Knitted Baby readymade garments under claim of duty drawback of Rs.7,76,096/-. Suspecting that the export goods are overvalued, samples were drawn and examined by the Valuation Committee which has re-fixed the value of the exported goods in terms of Rule 4 of Customs Valuation (Determination of value of export goods) Rules, 2007 and which has reduced the duty drawback amount to an extent of Rs.1,72,989/-. It is found that the Ld. adjudicating authority has re-determined the transaction value of the export goods on the basis of this Valuation Committee report. Though the appellant had been informed as to re-fixation of the value of the garments, the reason for reduction in the transaction value has not been communicated; a mere mention that Valuation has been done in terms of Rule 4 of Customs Valuation (Determination of value of export goods) Rules, 2007 is not adequate in the absence of any evidence to arrive at the contemporaneous value. Here in this case, it is found that the appellant was informed as to constitution of the Valuation Committee. Even there was a communication as to what rate the exported goods were valued item wise, but, there was no reason intimated to the appellant as to the adoption of revised lesser values and the basis thereof. The unilateral reduction in the transaction value of the export goods by the Valuation Committee is not legally sustainable. The Ld. adjudicating authority has categorically stated that he has adopted the value fixed by the Valuation Committee without giving reasons for arriving at that decision. Appeal allowed.

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• Securities / SEBI

• 2023 (8) TMI 710
  Delisting orders from DSE - Rishab Ispat Ltd., of which the petitioner herein was a former Director, was listed on the Delhi Stock Exchange was suspended from DSE on account of non-compliance with certain norms of the respondent no. 1/Securities and Exchange Board of India (hereinafter SEBI ) - Directions to Stock Exchanges to deal with companies exclusively listed on non-operational stock exchanges - Scope of exit policy for all derecognized/non-operational stock exchanges - On 10.10.2016, SEBI issued a circular facilitating the exit of derecognized/non-operational stock exchanges and shareholders of the Exclusively Listed Companies (hereinafter ELCs ) by allowing them to get listed on the nationwide stock exchanges after complying with the diluted listing norms, failing which they will be moved to the Dissemination Board - HELD THAT:- Since Rishabh Ispat Ltd., had neither got itself listed on a nationwide stock exchange, nor had provided an exit option to all of its shareholders, and furthermore, had also not provided a plan of action to BSE, the impugned action/order dated 30.04.2018 was taken. It can, thus, be seen that firstly, Rishabh Ispat Ltd., received a letter from BSE dated 20.10.2016, seeking from it and also from its management, compliance with SEBI s circular dated 10.10.2016. Secondly, the circular of SEBI itself provided under paragraph 6 that coercive actions may be taken against the promoters/directors of ELCs that have failed to demonstrate the adequacy of efforts for providing exit to their shareholders in conformity with the exit mechanism, as provided for under the said circular; and thirdly, Rishabh Ispat Ltd., did in fact, fail to demonstrate the adequacy of efforts for providing exit to its shareholders in conformity with the exit mechanism. Since the provisions of the circular dated 10.10.2016 had been violated by Rishabh Ispat Ltd., and also because the requirements of paragraph 3 of the circular dated 01.08.2017 had been met, BSE rightfully, in discharge of its obligations under SEBI s circular dated 01.08.2017, took the action/order dated 30.04.2018. This court finds that sufficient opportunity of hearing was provided to Rishabh Ispat Ltd., as also to the petitioner, in order for BSE to have taken the action/order dated 30.04.2018. The argument of the learned counsel for the petitioner that the petitioner having resigned from the post of the Director on 05.03.2018, and therefore, the action/order dated 30.04.2018 could not have been taken against the petitioner, is also liable to be rejected as the same is found to be baseless. If at all such an argument is to be accepted, then every director, who blatantly violates the mandatory terms of the circulars of the SEBI dated 10.10.2016 and 01.08.2017, could simply resign and claim impunity from the coercive actions that are envisaged by SEBI. The object and purpose for which the circulars were issued would, therefore, get frustrated. It must be seen that when the circular dated 01.08.2017 was issued by SEBI, in furtherance of which BSE took the impugned action/order dated 30.04.2018, the petitioner remained a Director of Rishabh Ispat Ltd. Importantly, it must also be considered, that the terms of the order dated 01.08.2017 do not require a person to hold a continued position of directorship in the ELC. The circular dated 01.08.2017, specifically paragraph 3, merely requires non-compliance with the circular dated 10.10.2016 on the part of an ELC. The petitioner s representations that are placed on record may now be briefly considered. It may be noted that the first representation placed on record is a joint letter by the petitioner and one Sh. Naresh Kumar Jain, Director, Rishabh Ispat Ltd., dated 28.04.2018.The letter is addressed to SEBI and is concerned with an action taken by SEBI on 04.04.2018. The petitioner, in the present petition, has not assailed any order/action of SEBI dated 04.04.2018. This court, therefore, finds this representation to be wholly irrelevant. The second representation is a letter by the petitioner addressed to SEBI, dated 13.11.2019. This letter is again not concerned with the action/order of BSE dated 30.04.2018. This court does not find the representations to be either relevant or supporting the case of the petitioner insofar as the present writ petition is concerned. In relation to the submission of the learned counsel for the petitioner, that the order dated 30.04.2018 is non-speaking and therefore violative of Section 11(4) of the SEBI Act, this court finds it to be wholly without merit. The action/order dated 30.04.2018 was taken by BSE and not by SEBI. While the action/order was taken by BSE, it was complying with, and taken in furtherance of, the circular dated 01.08.2017 of SEBI. With this factual matrix, this court, is unable to find any relevance or applicability of Section 11(4) of the SEBI Act. This court is, therefore, of the considered opinion that the circulars dated 10.10.2016 and 01.08.2017 issued by SEBI are legally valid, and are part of a structured scheme that deals with the situation of ELCs, and the manner in which the shareholders associated with such ELCs are to be protected. This court also does not find any infirmity in the order dated 30.04.2018 passed by BSE.

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• Insolvency & Bankruptcy

• 2023 (8) TMI 709
  Seeking relief from Income Tax Dues - Benefit of Board for Industrial and Financial Reconstruction (BIFR) scheme denied - scheme came to an end - SICA was repealed - it is submitted that an appeal would now lie with the NCLAT in terms of the Insolvency and Bankruptcy Code (Removal of Difficulties) Order, 20172, issued by the Central Government in exercise of its powers under Section 242(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The contention that an appeal would lie against the order of BIFR to NCLAT after the repeal of SICA, is unmerited as the said provisos have been held to be ultra vires the Insolvency and Bankruptcy Code, 2016, by the NCLAT in PR. DIRECTOR GENERAL OF INCOME TAX (ADMN. AND TPS) AND GMB CERAMICS LTD. VERSUS M/S. SPARTEK CERAMICS INDIA LTD. ANR. [ 2018 (6) TMI 350 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ]. Thus, the contention that an appeal would lie against the order of the BIFR before the NCLAT is rejected. It also cannot be accepted that the DGIT is remediless against an order passed by the BIFR solely for the reason that SICA, which provided for an appeal against a rehabilitation scheme or any orders passed by the BIFR, stands repealed - It is settled law that there is no inherent or fundamental right of an appeal, the right to appeal is available only if the statute provides for the remedy of an appeal. However, the fact that there is no statutory appellate remedy does not preclude this Court from exercising powers under Articles 226 and 227 of the Constitution of India. The recourse of this Court under Articles 226 and 227 of the Constitution of India is not precluded or proscribed where the relevant statues do not provide a remedy of appeal. Although this Court while exercising its powers under Articles 226 and 227 of the Constitution of India does not undertake a full merits review which may be available in cases where an appeal is provided by the statute a party is not precluded from challenging the orders passed by the statutory authorities on the ground that they fall foul of the constitutional guarantees or are otherwise contrary to law. The present petition is not maintainable. Whether the impugned order is contrary to law? - HELD THAT:- Clearly, no modification of the Scheme could be sanctioned requiring the Income Tax Department to give further concessions without the department consenting to grant such an extension - Admittedly, the Company s application seeking modification of the scheme by extending the term remained pending with the BIFR. In terms of Section 18(5) of SICA, it was open for the BIFR to modify the Scheme and extend its term if it considered it apposite. However, no such modification could be sanctioned without the consent from the said concerned government, banks, institutions or authorities if the modification of the Scheme entailed any concession or financial assistance from such persons. There is merit in the contention that the Scheme sanctioned by the BIFR had expired. The Scheme contemplated measures for exceeding the net worth within the period specified in the Scheme and in the manner as stipulated therein viz by settlement with banks and workmen, repayment of statutory dues in instalments over a specified period of time, and infusion of funds by the promoters and sale of certain assets, and other measures - the measures mentioned in the Scheme were timebound measures and were required to be implemented within the given time frame stipulated, therein. Whether the BIFR s order dated 26.02.2013, whereby the Scheme was modified, necessarily required the Income Tax Department to grant further additional concessions? - HELD THAT:- Plainly, the answer to this question is in the negative. This is for two reasons. First, that the obligation to extend further concessions could not be imposed on the Central Government (Income Tax Department) without its consent. The Income Tax Department had not consented for extending any further concession. And therefore, the order dated 26.02.2013 requiring the department to consider the grant of the further concessions, cannot be interpreted as making it obligatory on the department to grant such concessions. Second, it was the Company s stand before the BIFR that the modifications of the Scheme as proposed did not prejudice the Income Tax Department as it retained the discretion whether to grant such concessions. Also, the Scheme did not envisage the promoters contributing shares or other assets to make good the shortfall in the projections. The promoters were required to make the shortfall in liquid funds. Thus, the promoters had not complied with the Scheme which they now submit is binding on all other parties. It also appears that the entire exercise of gifting the shares to the Company and the Company selling the same was with the object of ensuring that the capital gains arise in the hands of the Company so as to enable the Company to claim further exemption. The impugned order cannot be sustained. The same is set aside. The Income Tax Department is not required to grant any further concessions contrary to the IT Act, to the Company.

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• 2023 (8) TMI 708
  Stay on CIRP process - Immediate restoration of Authorised Signatories in the accounts maintained by the Applicant in various banks, including the only operational account of Applicant with Yes Bank Limited as it existed prior to the Admission Order - removal of the name of the Interim Resolution Professional from the list of Authorised Signatories in the bank accounts of the Applicant - HELD THAT:- Staying of the CIRP does not entitle the Corporate Debtor to put back in position which has already been held by this Appellate Tribunal in Ashok Kumar Tyagi s case [ 2022 (11) TMI 984 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] . Application filed by the Corporate Debtor cannot be allowed. Application is rejected accordingly.

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• Service Tax

• 2023 (8) TMI 736
  Non-payment of Service Tax - taxability of reimbursement of advertisement charges from their clients - period from October 2007 to January 2010 - HELD THAT:- This Bench in M/S. ABC CONSULTANTS PVT. LTD. [ 2018 (2) TMI 1114 - CESTAT CHENNAI ] has, after following the decision of the Hon ble Madras High Court in the case of COMMISSIONER OF SERVICE TAX VERSUS M/S. SANGAMITRA SERVICES AGENCY [ 2013 (7) TMI 862 - MADRAS HIGH COURT ], set aside the demand, holding that it can be seen from the advertisement charges, which was incurred to be a one-time occasion and was only expenses incurred on behalf of the client which are reimbursed on actual basis. We therefore follow the decision in the in the case of Sangamitra Services Agency and hold that the demand is unsustainable. Thus, the issue is no more res integra since the same has been decided in the appellant s own case for a different period by this very Bench. Further, the Revenue has also not made out any case for deviating from the above order. Appeal allowed.

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• 2023 (8) TMI 707
  Classification of services - supply of tangible goods for use or work of transportation of concrete for its customers? - providing services of transportation of Ready-mix Concrete (RMC) to Ultratech Cement Limited (RMC Division) by Transit Mixture Vehicles from batching plant of Ultratech Cement Limited, Udhna Magdalla, Surat to the construction sites. The claim of the appellant is that they are not provider of vehicles on rental basis whereas they have provided service of transportation of goods i.e. RMC to M/s. Ultratech Cement Limited for transportation of their goods from M/s. Ultratech Cement Limited to the sites of their customers. HELD THAT:- From the plain reading of the terms and condition of the contract, it is absolutely clear that M/s. Ultratech Cement Limited is concerned only about the transportation of RMC from their plant to their customer s site and the charges for such transportation is also on the basis of quantity of the goods and per kilometer basis. It is also observed from the clauses of the contract that entire operation and maintenance activity is the responsibility of the appellant only. The contract also prescribes that essential consignment notes of loads and obtain proper receipt from the customers after goods are delivered. It is also the fact that all the transporters to charge M/s. Ultratech Cement Limited as recipient of service for discharging service tax of such transportation. On the basis of these facts, it is absolutely clear that the appellant are providing service of transportation of goods whereas the demand is raised under the category of service of Supply of Tangible Goods for Use. There are no hesitation to opine that as per facts of the present case, the activity cannot be classified under the supply of Tangible Goods for Use service therefore, the demand cannot be sustained. In the case of Gunesh Logistics [ 2019 (9) TMI 1419 - CESTAT NEW DELHI] , this Tribunal held that the appellant has been rendering GTA service by transporting RMC from one place to another as per the directions of the service recipient. The finding to the contrary recorded in the impugned order by the Commissioner that the appellant was not performing GTA service but was performing STG service cannot be sustained. From the above decision of the principal Bench of this Tribunal, it can be seen that the facts such as transportation of RMC by similar vehicles for M/s. Ultratech Cement Limited for transportation from M/s. Ultratech Cement Limited plant to the customer s site of M/s. Ultratech Cement Limited, it was held that appellant in that case are rendering GTA service by transportation RMC from one place to another as per the direction of the service recipient. Therefore, the same is not classifiable under supply of Tangible Goods for Use service. Thus, the appellant s service is correctly classifiable under Goods Transport Agency service for which service recipient M/s. Ultratech Cement Limited have discharged the service tax as required under Rule 2(d) of Service Tax Rules, 1994 under reverse charge basis. Therefore, the demand under the category of Supply of Tangible Goods service shall not sustain - appeal allowed.

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• 2023 (8) TMI 706
  Rejection of Refund claim - refund application rejected on the ground that the receipt voucher indicates only the amount paid to the builder towards service tax but the ledger filed with the claim does not show any entry regarding the payment of service tax - Rule 4A of Service Tax Rules, 1994 - HELD THAT:- As per the finding in Para 9 of the impugned Order-In-Appeal it is admitted that the document furnished by the appellant is sufficient to prove that appellant are ultimate purchaser of the apartments from the builder. Though the detail Final Order in JOSH P JOHN AND OTHERS [ 2014 (9) TMI 597 - CESTAT BANGALORE ] issued by this Tribunal in similar matter was not available before the Adjudication Authority at the time of issue of impugned Order-In-Original, appeal was considered by the learned Commissioner (Appeals) on 29.09.2015 and said order was available with Commissioner (Appeals). Thus Commissioner (Appeals) ought to have considered the guidelines issued by this Tribunal when considering the appeal filed by the appellant. Moreover one of the finding given by the Adjudication/Appellate Authority is that the refund application is premature on the ground that appellant is not barred by any law for time being in force from disposing the property and for that reason, appellant is not eligible for refund filed. Such finding is nothing but rejecting an eligible claim only on flimsy and vague ground. If the Adjudication Authority/Appellate Authority have reasons to believe that tax payers like appellant is not barred by disposing the property by law, service tax collected by them can be obtained, such finding is illegal and unsustainable. The appellant is eligible for refund of Rs.55.284/- erroneously collected from the appellant with interest. Appellant is also eligible to get interest 3 Months after filing the refund claim i.e. from 05.09.2009 - Appeal allowed.

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• 2023 (8) TMI 705
  Short payment of Service Tax on various services - reimbursable expenses collected by the appellant from the clients in the nature of Bill of Lading expenses, Terminal handling charges, Liner DO fees, Container halting and movement charges, etc. - demand of differential tax alongwith interest - HELD THAT:- The issue stands covered by the decision of the 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] where it was held that 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. The period involved in the appeal is prior to 2015 - therefore the demand cannot sustain. Impugned order is modified to the extent of setting aside the confirmation of duty along with interest. Appeal allowed in part.

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• 2023 (8) TMI 704
  Refund of the amount already paid on demand made by the Authorities - taxability of chit fund - Applicability of CBEC Circular No. 96/7/2007-S.T (Circular No. 034-04) dated 23.08.2007 - HELD THAT:- As per the decision in ALL KERALA ASSOCIATION OF CHIT FUNDS (STATE UNIT OF THE ALL INDIA ASSOCIATION OF CHIT FUNDS, NEW DELHI) AND ST. GEORGE CHITTIES (KARAKKATT) PRIVATE LIMITED VERSUS UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, DEPARTMENT OF THE REVENUE MINISTRY OF FINANCE, NEW DELHI, CENTRAL BOARD OF EXCISE AND CUSTOMS, NEW DELHI, DIRECTOR GENERAL OF SERVICE TAX, MUMBAI, CHIEF COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, COCHIN, RESERVE BANK OF INDIA, REPRESENTED BY THE ASSISTANT GENERAL MANAGER, MUMBAI [ 2018 (10) TMI 902 - KERALA HIGH COURT] , Hon ble High court specified that the limitation for filing refund application will be extended for one year from 14.03.2018. However, Adjudication/Appellate Authorities have not extended the period of limitation on the ground that the appellant was not party to the proceedings pending before the Hon ble High Court. Such finding is unsustainable. If benefit can be denied on the ground that appellant is not a party to such a proceeding, Adjudication/appellate authority have no reason to consider even the date of judgment of Hon ble Supreme Court on 4.07.2017 as date of commencement of the period of limitation since appellant was not party to proceedings before the Hon ble Supreme Court also. When the Hon ble High Court specifically ordered that limitation if any permitted for refund application would arise from the date of order i.e. 14.03.2018, it is applicable to members of the litigant i.e. All Kerala Association of Chit Funds. On perusal of the documents produced by the appellant, it is evident that they were members of the association since 09.04.2009 and still continues as members as per the communication issued by the All Kerala Association of Chit Fund vide letter dated 20.04.2023. Thus there is no reason of justification to reject the extended period of limitation as per judgment of Hon ble High Court in appellant s case. As per impugned order, Adjudication authority considered the issue regarding unjust enrichment and given a finding that question of unjust enrichment does not arise in appellants case. Appeal allowed.

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• 2023 (8) TMI 702
  Refund claim of amount paid under mistake of law - applicability of time limitation as provided under section 11B of Central Excise Act - HELD THAT:- It cannot be agreed that in case of mistake of law refund claim could be allowed beyond the period of limitation provided by the section 11B of Central Excise Act, 1944. A nine judge bench Hon ble Supreme Court has in case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ] held that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee s case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. Thus, there are no merits in the arguments advanced by the appellant or on his behalf by his counsel. Even if for a moment the argument advanced is accepted then also has to be shown that the amount claimed as refund was paid under mistake of law. Nothing has been produced in respect of payment of this amount as tax with the exchequer and if paid that tax was paid under mistake of law. Even no objection certificate from the builder who might have paid this tax in the exchequer has been produced - If the service tax paid in respect of first unit allocated has been adjusted against the tax due in respect of the second unit then where can be a question about refund to the appellant. No evidence to the contrary has been produced by the appellant. It is also noticed that it is a dispute between the appellant and the builder, two contracting parties. This dispute has to be resolved between two parties to the contract and no refund can be made treating the disputed amount as tax which was never paid to the exchequer. Thus, the appellant even after dismissal of this appeal should be allowed opportunity if he can at any time produce the documents claiming this amount is admissible in refund to him for the reason that this tax was paid under mistake of law - appeal dismissed.

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• 2023 (8) TMI 699
  Refund of unutilized service tax paid on input services used for providing output services - absence of nexus between input service and output service - non-submission of documents - claim being time barred - period April 2009 to September 2009 - HELD THAT:- It is found that the finding of the Appellate Authority to reject the claim of the assessee on the ground that they are not eligible for the CENVAT credit since the input services have no nexus with the export service and it is unsustainable. As held by the Hon ble Telangana High Court in the case of Commissioner, Customs Central Excise, Hyderabad-IV Vs. M/s Qualcomm India Pvt. Ltd. [ 2021 (11) TMI 72 - TELANGANA HIGH COURT] Rule 14 provided that in the case of irregular availment of CENVAT credit or its utilization, the authorities under the Finance Act are empowered to recover the same from the assessee and not by denying to the grant of refund under Rule 5 of the Finance Act without there being any proceedings initiated under Rule 14 of Rules seeking to deny the refund, especially since the claim pertains to the period prior to amendment under Rule 5 of CENVAT Credit Rules w.e.f. 01.04.2012. Appeal of assessee allowed.

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• Central Excise

• 2023 (8) TMI 703
  CENVAT Credit - inputs - Welding Electrodes - Wire FLR - Filler Wires - Welding Wire - Wire Rope - material used for railway line and capital goods viz M.S. Gratings / G.I. Coated Gratings - HELD THAT:- These issues are no longer res integra as this Tribunal has already decided these issue in NAYARA ENERGY LIMITED VERSUS C.C.E. S.T. RAJKOT [ 2021 (8) TMI 644 - CESTAT AHMEDABAD] and A/10084/2020 dated. 14.01.2020 in the Appellant s own case [ 2020 (2) TMI 749 - CESTAT AHMEDABAD ] wherein, considering various judgments on similar issue held that On every item, this Tribunal has considered the admissibility of the cenvat credit and in various judgements, it was held that the credit is admissible on the goods in question. Thus, the appellant are entitled for the Cenvat credit on the said goods - appeal allowed.

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• 2023 (8) TMI 701
  Classification of goods - Galvanized Silo Solution systems (Silos) - classifiable under Chapter sub-heading 9406 00 93 or under Chapter 8437 10 00 of CETA, 1985 - whether these are silos for storing ensilage or not - demand alongwith interest and penalty - HELD THAT:- The Commissioner in the impugned orders, analysing the functions and implications of the relevant chapters of the sub-heading, came to the conclusion that it is classifiable under Chapter 94 and not Chapter 84 of CETA, 1985. Also, discussing in the impugned orders, the learned Commissioner also made a reference to the order of Commissioner, Pune about the classification of identical items by B.G. Shirke Construction Technology Pvt. Ltd. The Pune Commissionerate also classified the items manufactured by M/s. B.G. Shirke Construction Technology Pvt. Ltd., under Chapter sub-heading 9406 00 99 and the appeal was stated to be pending before the Tribunal of Mumbai Bench in [ 2023 (1) TMI 296 - CESTAT MUMBAI ]. The Tribunal at Mumbai, after detailed discussion of the Silos functions, HSN etc. in its order dt. 25.11.2022 concluded that the classification of the said Silos would be under Chapter 8437 10 00 but not under Chapter sub-heading 9406 00 99 of CETA, 1985. There are no merit in the impugned orders. Consequently, the same are set aside and the appeals are allowed.

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• 2023 (8) TMI 700
  Method of Valuation - Rule 8 of the Valuation Rules, 2000 applicable or not - activities carried on job-work basis - intent to evade duty or not - revenue neutrality - time limitation - HELD THAT:- In the present case, it is seen that the appellant has adopted the value based on the costing given by the principal. Based on this costing the appellant has adopted their assessable value. During many months, the value adopted by them is more than 110% value arrived at by the department. This itself shows that the appellant had no intention to evade any excise duty. Further as submitted by the appellant, the entire excise duty paid by the appellant is available as Cenvat Credit to their principal, M/s. Tata Steels Ltd.. Therefore this has resulted in a revenue neutral situation - In various cases, it has been held that in such cases the demands do not survive both on merits as well as on the point of limitation. In the case of CCE AHMEDABAD-II VERSUS M/S RECLAMATION WELDING LTD. [ 2014 (8) TMI 186 - CESTAT AHMEDABAD] , the Tribunal observed that No evidence has been introduced by the Revenue as to how job worker and the raw material supplier are related persons for the purpose of attracting Rule 8 of the Central Excise Valuation Rules, 2000. Even if any additional duty was payable the same was also available as credit to the recipient of goods. It is an exercise entirely covered by the concept of revenue neutrality, as per the case laws relied upon by the respondent. Secondly, in the event of credit being admissible to the recipient of the same group of companies it cannot be held that there could be any intention on the part of the respondent to evade payment of duty and accordingly extended period is not attracted in the present demands. The appeal allowed both on merits as well as on the point of limitation.

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• 2023 (8) TMI 698
  Extended period of Limitation - marketability - classification of goods - flue gas - to be classified as Nitrogen under CTH 28043000 or not - content of Nitrogen - burden to prove that he goods are marketable - HELD THAT:- In this case it is fact that the flue gas is generated during the course of manufacturing of coke. It is not manufactured by the appellant, but it is a waste gas which arises inevitably without beyond the control of the appellant. In that circumstances it is to be seen that the flue gas which was not intended to be produced by the appellant can fulfill the test of manufacture or not. The issue has been examined by the Hon ble Bombay High Court in the case of Hindalco Industries Ltd. [ 2014 (12) TMI 657 - BOMBAY HIGH COURT ], wherein the Hon ble High Court observed whole purpose of making these observations is to justify the conclusion that because there is a reference to these items in the Tariff Entry or the Tariff Schedule that would change the colour of the controversy. That would enable the Tribunal to then hold that the earlier Judgments and in the case of this very Assessee are no longer good law - The said decision has been affirmed by the Hon ble Apex Court [ 2019 (3) TMI 1933 - SC ORDER ] wherein it has been held that dross and skimming of aluminium, zinc or other non-ferrous metal emerging during manufacture of aluminium/non-ferrous sheets/foils and other products and sold by assessee were not manufactured goods. In the case of UOI v. Indian Aluminium Co. [ 1995 (4) TMI 62 - SUPREME COURT ], the Hon ble Apex Court has an occasion to deal the issue - Further, in the case of Ahmedabad Electricity Co.Ltd. [ 2003 (10) TMI 47 - SUPREME COURT ], the Hon ble Apex Court has occasion to deal such issue - In view of the above judicial pronouncements, it is held that the flue gas which is generated in the manufacture of coke is not manufactured product, therefore, duty is not payable. Further, it is noted that merely this flue gas has been sold by the appellant in terms of the agreement with TPCL, it does not make it marketable as held by the Hon ble Apex Court in the case of Hindustan Zinc Ltd. [ 2005 (2) TMI 119 - SUPREME COURT ], wherein it has been held that burden of proof that the product is marketable is on the revenue to prove that the flue gas in question is a marketable product. There is no market enquiry was conducted by the revenue in this case to hold that the gas in question is marketable and freely be sold, therefore, revenue has failed to prove the test of marketability also. Thus, merely because it is having contents more than 80% v/v, it cannot be said that the said gas is Nitrogen gas by applying rule 3(b) of the General Rules of Interpretation without any evidence. In the absence of any evidence produced on record that the flue gas can be sold in the market as Nitrogen and the same cannot be classified as Nitrogen. The flue gas generated during the course of manufacture metallurgical coke, is not a manufactured product and is also not marketable. The same cannot be classified as Nitrogen - Appeal allowed.

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• 2023 (8) TMI 697
  Extended period of limitation - short payment of duty - suppression of facts or not - case of Revenue is that short payment of duty came to light only when the audit was conducted - HELD THAT:- As per Section 11A of CEA, extended period of limitation can be invoked only in case of fraud, collusion, willful mis-statement, suppression of facts or violation of the Act or Rules with an intent to evade payment of duty - It is a well settled legal position that suppression does not mean mere omission, but a positive act of suppressing facts with a willful intent. In this case, the Department seeks to attribute this intent to the appellant because the Department itself chose not to scrutinize the returns based on Departmental instructions. Had the Department scrutinized the returns the alleged short payment would have come to light. The Department is seeking to use its own inaction as the basis to impute the motive of suppression of facts with intent to evade on the appellant. This cannot be permitted. The Department s inaction cannot be the basis for invoking extended period of limitation, let alone basing such inaction to impute motive to the appellant. It is also found that the appellant was supplying the goods to its own sister unit and, therefore, every rupee which the appellant paid as duty would have been available to its sister unit as Cenvat credit. Therefore there cannot be any intention to evade. The entire demand is time barred and neither the demand of duty nor the interest nor the penalty can be sustained - Appeal allowed.

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• 2023 (8) TMI 696
  Wrongful availment of CENVAT Credit - Central Excise Tariff Act, 1985. A show-cause notice for the period April 2010 to June 2012 was issued to them alleging that they have wrongly availed and utilized cenvat credit on MS Plates, HR Plates, Steel Plates etc. which are used for the fabrication of huge storage tanks - period April 2010 to June 2012 - HELD THAT:- The issue is no more res integra and decided by the jurisdictional High Court in the case of COMMISSIONER OF C. EX., MYSORE VERSUS ICL SUGARS LTD. [ 2011 (4) TMI 1065 - KARNATAKA HIGH COURT] where it was held that assessing authority has himself extended the benefit to storage tank storing water as a component to main machinery namely, boiler, he ought to have extended the benefit to the storage tanks which are also part of the factory premises, in which the bye-products are stored and thereafter sold as a finished product, no justification to interfere with the orders passed by appellate authority. The said principle was later followed by the Hon ble High Court in the case of SLR Steels Ltd. [ 2012 (9) TMI 169 - KARNATAKA HIGH COURT] and Hindalco Industries Ltd. [ 2012 (11) TMI 201 - KARNATAKA HIGH COURT] - demand set aside - appeal allowed.

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• Indian Laws

• 2023 (8) TMI 695
  Dishonour of Cheque - existence of legally enforceable debt or not - acquittal of accused u/s 138 of NI Act - rebuttal of statutory presumption u/s 139 of NI Act - HELD THAT:- An examination of fact situation in the instant case reveals that Rupesh Jain, PW-1 has stated that the accused has requested for loan of Rs.20,00,000/- for her personal need, but in cross-examination he could not specify on what date, month or year, he had advanced loan of such a big amount to accused Chanda Bansal. Although he had financial transactions with the husband and son of accused, but there was no transaction between him and the accused. In the opinion of this Court, learned trial Court has considered the entire material against accused on record and on reasonable appreciation of evidence, after assigning detailed and cogent reasons, has acquitted the accused/respondent. The findings of Lower Court cannot be said to be contrary to the evidence on record. The judgment is not patently illegal or perverse, therefore, no case for interference in the finding of acquittal is made out. This application for leave to appeal against acquittal deserves to be and is hereby rejected - Appeal dismissed.

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