TMI Tax Updates - e-Newsletter
August 4, 2022

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. EXEMPTION UNDER SECTION 10B (8) OF INCOME TAX ACT, 1961

   By: DR.MARIAPPAN GOVINDARAJAN

2. Central and State Board are considered as educational institutions for the purpose of conducting examinations

   By: Bimal jain

News

1. DRI busts factory manufacturing illicit psychotropic substances; seizes drugs worth Rs 245 crore

2. DRI detects Customs duty evasion of Rs. 2,217 crore by M/s. Vivo Mobile India Pvt. Ltd.

3. Steps taken for increasing exports through e-Commerce

4. 1875 Projects are on Project Monitoring Group (PMG) Portal as on 28.07.2022

5. Revenue Deficit Grant of Rs. 7,183.42 crore released to 14 States

6. Central Bureau of Narcotics busts illicit drug manufacturing kitchen lab at Karnal, Haryana

7. Income Tax Department conducts searches on Healthcare Provider Groups in Haryana and Delhi-NCR

8. India achieves landmark milestone, over 75000 startups recognised so far

Notifications

Central Excise

1. 22/2022 - dated 2-8-2022 - CE

SAED on production of Petroleum Crude and export of Aviation Turbine Fuel -increase duty on production of Petroleum Crude and exempt export of Aviation Turbine Fuel - Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022.

2. 21/2022 - dated 2-8-2022 - CE

Special Additional Excise Duty for exports of petrol and diesel - reduce the Duty on Diesel - Seeks to further amend No. 04/2022-Central Excise, dated the 30th June, 2022.

GST - States

3. G.O.MS.No.546 - dated 25-7-2022 - Andhra Pradesh SGST

Rescinding of Go.Ms.No.599, Revenue (CT-II) Department, dated 12.12.2017

4. G.O.MS.No.544 - dated 25-7-2022 - Andhra Pradesh SGST

Amendment to G.O.Ms.No.264, Revenue (CT-II) Department, dated 29.06.2017 and G.O.Ms.No.448, Revenue(CT-II)Department, dated 21.08.2018

5. G.O.MS.No.541 - dated 25-7-2022 - Andhra Pradesh SGST

Amendment to Go.Ms.No.276, Revenue (CT-II) Department, dated 22.04.2022

6. G.O.MS.No.540 - dated 25-7-2022 - Andhra Pradesh SGST

Amendment to G.O.Ms.No.583, Revenue (CT-II) Department, dated 12.12.2017

7. 38/1/2017-Fin(R&C)(231)/528 - dated 8-7-2022 - Goa SGST

Seeks to extend dates of specified compliances in exercise of powers under section 168A of Goa Goods and Services Tax Act, 2017

8. 38/1/2017-Fin(R&C)(230)/527 - dated 8-7-2022 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(38)/323, dated the 12th January, 2018

9. 38/1/2017-Fin(R&C)(229)/526 - dated 8-7-2022 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(100)/2805, dated the 8th May, 2019

Income Tax

10. 88/2022 - dated 2-8-2022 - IT

Specified income arising to Board u/s 10(46) of IT Act 1961 - Telangana State Pollution Control Board, a Board constituted by the State Government of Telangana under the Water (Prevention and Control of Pollution) Act, 1974 (6 of 1974) notified.

Highlights / Catch Notes

GST

• Court Allows Provisional Release of Goods Under Customs Act, 1962; Section 130 Permits Interim Release Pending Final Proceedings.

  Case-Laws - HC : Confiscation of goods alongwith the vehicle - absence of valid documents - Under the provisions of the Customs Act, 1962, confiscation may be absolute if the goods in question are prohibited goods within the meaning of Customs Law. In the case of a domestic transaction like that in the present case, the question of ordering an absolute confiscation does not arise as even the provisions do not contemplate such course. The objection raised by the department is that there is an attempt to evade the payment of tax. There is no provision in Section 130 which prohibits the interim release of goods which are detained pending finalization of proceedings under Section 130. - the petitioner is entitled for provisional release subject to conditions - HC
  Visit to Get Source

  ---

• Telecom Services to Local Authority Not Exempt from GST, Says AAR, Not Linked to Article 243W Functions.

  Case-Laws - AAR : Exemption from GST - supply of telecommunication services to local authority - pure services - The applicant is providing data and voice services to GHMC and to the employees of the municipalities and there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017. - AAR
  Visit to Get Source

  ---

Income Tax

• Court Rules No Disallowance for Late TDS Deposit Due to Retrospective Proviso in Section 40(a)(ia.

  Case-Laws - HC : Disallowance u/s 40(a)(ia) - Delayed deposit of TDS colected in government exchequer - there cannot be any disallowance on this count. Assessing Officer could not have made a disallowance under section 40(a)(ia) in view of the retrospective nature of the proviso to the said section. - HC
  Visit to Get Source

  ---

• Retention Money Not Income Until Obligations Met; No Vested Right in Assessment Year.

  Case-Laws - HC : Deemed Income / accrual of income - income on account of retention money - the right to receive the retention money is accrued only after the obligations under the contract are fulfilled and the assessee had no vested right to receive the same in this assessment year, therefore, it would not amount to an income of the assessee in the year in which it is retained - HC
  Visit to Get Source

  ---

• Court Denies Interest on Tax Refund Due to Delay from Late Filing u/s 244(A.

  Case-Laws - HC : Interest on refund as per Section 244(A) - delay in refund - belated filing of return (ITR) - According to us, the effort was to get refund, the refund was ordered by this Court and what happened in the interregnum since cannot prejudice the writ petitioner and should not also prejudice the Department by directing the payment of interest for the delay period. The claim of the petitioner for interest on the refunded amount is rightly considered and rejected by both the Commissioner in Ext.P9 and the judgment under appeal. - HC
  Visit to Get Source

  ---

• Section 153C Income Tax Act: Assessee's Documents Validly Attributed, Ownership Maintained Despite Searched Entity's Involvement in Finalizing Accounts.

  Case-Laws - AT : Validity of assessment u/s 153C - Presumption - Scope of documents belongs to assessee - ven if the draft financials were provided by the assessee to the searched entity, the said documents continued to be ‘belonged to’ the assessee, as the services of the searched entity were sought only for the purpose of finalising the accounts and if at all anything can be said to be belonging to the searched entity, it can only be the final outcome of such exercise, for which searched entity’s services were availed. - Contentions of the assessee rejected - AT
  Visit to Get Source

  ---

• Taxable Income Addition Reversed: CIT(A) Deletes Audit-Based Additions Due to Flawed Assumptions and Lack of Evidence.

  Case-Laws - AT : Addition on failure to show the “gitty’ expenses in Closing Stock or WIP - addition based on audit objection - goods in transit - the AO passed the order in haste and it seems that the addition is made only for the reasons that some audit objection was raised. We also perused the alleged audit objection and find that such objection is raised without application of mind. The assumption of audit objection might be based on the idea that the office of the assessee is situated in Surat, so the material could be in transit to Surat. Though, the facts on the records were otherwise - CIT(A) rightly deleted the additions - AT
  Visit to Get Source

  ---

• Court Rules Tax Exemption u/s 11: Late PF Deposits, Prior Expenses, and Donations Not Disallowed.

  Case-Laws - AT : Exemption u/s 11 - Disallowance towards late deposit of PF, prior period expenses and disallowance of donation u/s 80G are only academic in nature and does not fall under the law while computing the income u/s 11 - AT
  Visit to Get Source

  ---

• AO's Order Lacks Enquiry: Section 263 Invoked, No Valid View Without Addressing Pr. CIT's Concerns in Show Cause Notice.

  Case-Laws - AT : Revision u/s 263 - When the order of the AO suffers from a complete lack of enquiry, then the above said principle has no application due to the obvious reason that the AO has not taken a view by conducting a proper enquiry and further the acceptance of claim by the AO without conducting an enquiry would not be regarded as a possible view on the issue. When the AO has not even taken up many of the issues raised by the Pr. CIT in the show cause notice, then the case of the assessee does not fall in the category of taking a possible view by the AO - AT
  Visit to Get Source

  ---

• Denial of Tax Deduction u/s 80IC for Plastic Packaging Products Deemed Unsustainable by Commissioner (Appeals.

  Case-Laws - AT : Deduction u/s 80IC - manufacturing of plastic packaging products such as PET and HDPE bottles, jars, caps and closures - products manufactured by the assessee come within Schedule 13 or not - There is no other specific reason or observation by the departmental authorities for denial of assessee’s claim of deduction under section 80IC - Commissioner (Appeals) has made a general observation that the assessee failed to furnish required details without specifying, what are the details required to be furnished by the assessee. - Thus disallowance of deduction claimed by the assessee under section 80IC of the Act is unsustainable - AT
  Visit to Get Source

  ---

• Section 80P Deductions Must Be Claimed in Income Return as Required by Section 80A(5) of Income Tax Act.

  Case-Laws - AT : Deduction u/s.80P - Claim not made in Return of Income - if the language of the Statute is plain and unambiguous and is not open to interpretation so that two views may be possible, then the same represents the legislative intent. Here, section 80A(5) of the Act states that for an assessee to be able to make a claim under Chapter -VI of the Act, such a claim has to be made in the return of income. - AT
  Visit to Get Source

  ---

• Determining Capital vs. Revenue Expenditure for Tools: Consider Enduring Benefit, Value, and Resale Potential. Tools Often Revenue.

  Case-Laws - AT : Nature of expenditure - purchase of tools and spares - revenue or capital expenditure - The test of enduring benefit is not the only criteria for concluding an item to be revenue or capital in nature. The value of each of the items, resale value etc also warrants consideration - tools are to be treated as revenue in nature and eligible to be claimed as expenditure in the profit and loss account. - AT
  Visit to Get Source

  ---

Customs

• Customs Broker License Canceled; Strict Adherence to CBLR 2018 Timelines Reinforced by Courts; Security Deposit Forfeited.

  Case-Laws - HC : Cancellation of the Custom Broker licence - forfeiture of security deposit - It can be seen that the timelines as prescribed under various Regulations in CBLR 2018, have been consistently held by the Courts as mandatory in nature. Each timeline is sacrosanct, and the idea of prescribing a time limit by statute becomes redundant if not adhered to. Therefore, it is not just the overall timeline of 270 days (as set forth in the Circular No. 09/2010 dated 08.04.2010) that needs to be followed, but also each and every timeline as prescribed in the CBLR 2018 - the Appellant’s customs broker licence is stated to have expired in the meantime and has not been renewed. - HC
  Visit to Get Source

  ---

• Import Valuation Must Comply with Section 14 & 17(5) of Customs Act for Transparency and Legal Compliance.

  Case-Laws - AT : Valuation of imported goods - right to speaking order under Section 17(5) of the Customs Act - In spite of the admission on behalf of the importer, the Revenue is required to satisfy the requirements prescribed under Section 14 of the Customs Act read with Customs Valuation Rules before any enhancement of valuation - AT
  Visit to Get Source

  ---

• Antecedents Insufficient as Proof of Undervaluation for Imports, Requires Concrete Evidence Specific to Each Case.

  Case-Laws - AT : Undervaluation of goods - Import of segment and saw blank - The findings of the commissioner are correct. Antecedents cannot be an evidence for the alleged undervaluation of the goods. At best antecedents may be a reason for creating a suspicion and be a reason for causing an enquiry or Investigation. Mere propensity of the respondent is not enough proof of undervaluation - the antecedents of an importer or their propensity to violations cannot be in itself an evidence prove a contravention in a completely different proceedings. - AT
  Visit to Get Source

  ---

• Nickel Hydroxide Compound I-MAS POs Classification Confirmed; Cobalt and Graphite Additives Don't Affect Primary Use.

  Case-Laws - AAR : Classification of imported goods - I-MAS POs, which is Nickel Hydroxide compound - The presence of cobalt and graphite does not render the product suitable for any different use or for a specific use - The additives are minor and do not change the nature or function of the compound; they enhance the performance and life cycle of the Nickel electrode. The formation of the electrically conductive network favourably impacts the utilization of the active material, which is Nickel Hydroxide. - The product in question is classifiable under sub-heading 2825 40 00. - AAR
  Visit to Get Source

  ---

IBC

• Corporate Debtor Challenges Agreement Validity, Cites Insufficient Stamping; CIRP Proceedings Stress Proper Documentation in Insolvency Cases.

  Case-Laws - AT : CIRP proceedings - Evidence of debt - documents insufficiently stamped - The Corporate Debtor has, in his reply as above, only raised the issue of these agreements being novated in light of the ‘settlement and larger understanding’ having taken place between the Appellant and the MJS Group. Thus, admittedly, he has not raised the question of execution of the said documents. - the issue of debt being due and payable in the present case is not interdicted by any law but only a technical deficiency of insufficiency of their stamping has been raised which can be cured. - AT
  Visit to Get Source

  ---

• Breach of Undertaking: Arbitration Clause Invoked u/s 11, Contempt Claim Challenged Due to Available Remedy.

  Case-Laws - AT : Contempt of Court - willful disobedience - The breach of undertaking amounts to contempt as defined under Section 2 (b) of Contempt of Court Act but a remedy is provided in the Clause 11.2 of Settlement Agreement to invoke arbitration clause in case of breach of undertaking. As the respondents invoked arbitration clause and filed application under Section 11 of Arbitration and Conciliation Act before the High Court of Delhi, since, such remedy is available as per the term of the settlement agreement, it is difficult to hold that the Respondent Nos. 1 & 2/ Contemnors committed wilful breach of settlement agreement. - AT
  Visit to Get Source

  ---

• Appellant claims unawareness of proceedings; Adjudicating Authority finds inaction, proceeds with Corporate Debtor liquidation as per CoC plan.

  Case-Laws - AT : Rejection of Approval Plan - When Appellant has submitted the Resolution Plan which was approved on 08.11.2018, he cannot just say that he was not aware of the proceedings before the Adjudicating Authority for approval of the Resolution Plan. The Adjudicating Authority has rightly drawn a conclusion that inaction on the part of the Resolution Applicant clearly indicates that he was not willing to proceed with the Resolution Plan approved by the CoC - the Adjudicating Authority has given valid reason in the order for proceeding with the liquidation of the Corporate Debtor. - AT
  Visit to Get Source

  ---

• Resolution Professional's Fee Not a 'Claim' u/s 3(6) of Insolvency and Bankruptcy Code; Liquidator Can't Verify.

  Case-Laws - AT : Fixing the fee of IRP - fee of an RP falls under the definition of a ‘Claim’ as defined under the Code or not - The word ‘expenses’ includes the fee to be paid to the Resolution Professional. Viewed from any angle, the fees of an RP cannot be considered to be a ‘Claim’ as defined under Section 3(6) of the Code. The Liquidator can only verify and adjudicate the ‘Claims’ as defined under the Code. Since the amount of fees payable to an RP is not a ‘Claim’, the same cannot be determined or verified by Liquidator. - AT
  Visit to Get Source

  ---

Service Tax

• Wig Sales and Optional Services: Scalp Prep, Fitment, and Maintenance Offered to Enhance Wig Use.

  Case-Laws - HC : Nature of activity - sale or service - a client could well purchase a wig without opting for the service of fitment or maintenance. The services of preparation of the scalp, fitment as well as maintenance of the wig, are merely to facilitate and aid in the utilization of the product and would have no relevance in the absence of the wig - HC
  Visit to Get Source

  ---

Central Excise

• Goods Classification: ZP-770 Kg. Not Plant Growth Regulators Due to Minimal Enzyme Content Pre-July 3, 2010.

  Case-Laws - AT : Classification of goods - Fertilizers or Plant Growth Regulators (ZP-770 Kg.) - It is seen that such enzymes help in plant growth regulation are present but in only small traces i.e. 0.26% and 0.53% prior to 03.07.2010. For the period after 03.07.2010, even the traces are absent - the impugned goods cannot be classified as plant growth regulator just because small trace of 6-BA and 4-CPA are present. - AT
  Visit to Get Source

  ---

Case Laws:

• GST

• 2022 (8) TMI 149
  Seeking grant of Regular Bail - creation of fictitious entity to pass ineligible input tax credit - Sections 132(1)(b) of the Central Goods and Services Tax Act, 2017 and Section 132(1)(b) of the Gujarat Goods and Services Tax Act, 2017 - HELD THAT:- It appears that so far 2 firms are concerne, investigation is virtually over. The applicant being an authorized attorney of 2 firms, initially he had evaded the investigation but later on after his arrest and during his remand period, he was interrogated extensively and necessary materials have been recovered. Department has also filed complaint against the applicant. The applicant herein to show his bonafide, willing to deposit Rs.2 crore, which is approximately 10% of the alleged amount. Considering the facts and circumstances of the present case, it is worthwhile to note the observation made by the Apex Court in the case of Sanjay Chandra Vs. CBI, [ 2011 (11) TMI 537 - SUPREME COURT ], wherein, it was observed that constitutionally protected liberty must be respected unless the detention becomes necessary. The balance approach is to grant bail subject to certain conditions rather than to keep the individual under detention for an indefinite period. Considering the facts and circumstances of the present case and role attributable to present applicant herein as well as his bonafide to deposit Rs.2 crore, this Court is of the considered view that case is made out for exercising discretion enlarging the applicant on bail - Bail application allowed.

  ---

• 2022 (8) TMI 148
  Seeking grant of Regular Bail - wrongful availment of Input Tax Credit - Sections 132(1)(b), 132(1)(c) of the Gujarat Goods and Service Tax Act, 2017 and Central Goods and Services Tax Act, 2017 read with Section 120B of the Indian Penal Code - HELD THAT:- In the matter of bail, there is no straitjacket formula for consideration of bail to an accused as it all depends upon the facts and circumstances of each case. In the facts of present case, the offence under the Act are compoundable and maximum punishment is upto 5 years. The applicants are in custody since December, 2021 and investigation part is concerned, it is virtually over. It is an admitted fact that, still adjudication proceedings is not commenced and no notice as provided under the Act is issued. Even after adjudication of liability, the applicants can challenge it before the appellate authority subject to deposit of 10 % and the maximum amount of deposit is upto Rs.2 crore. Considering the alleged fraudulent ITC, the applicants herein willing to deposit Rs.1 crore individually before the authority concerned within stipulated time. Entire documentary evidence and computer gadgets have been seized and they are in custody of the department - Department failed to point out that, further custody of the applicants is necessary. Irrespective of nature and gravity of charge, whether bail is granted or not, the consideration will have to be on case to case basis on the facts involved therein and securing the presence of the accused to stand trial - applications are allowed on a condition that the applicants shall deposit Rs.1 crore individually before the respondent office at Ahmedabad, within a period of one month from their release. The applicants are ordered to be released on regular bail - Bail application allowed.

  ---

• 2022 (8) TMI 147
  Confiscation of goods alongwith the vehicle - allegation is that the goods were transported without valid documents - Section 130 of CGST Act - HELD THAT:- The learned Special Government Pleader is right in contending that the validity or legality of Ext.P9, which is only a show cause notice need not be considered by this Court in proceedings under Article 226 of the Constitution of India, at this stage. While holding so, some High Courts have taken the view that in the initial stage, proceedings of this nature can be levied only under Section 129 and not under Section 130 of the CGST Act. However, that question need not be gone into in this Writ Petition, as in the facts of the present case, the notice under Section 130 was issued only after physical verification - the prayer to quash Ext.P9 is only to be rejected. Whether the petitioner is entitled to the interim release of the goods pending adjudication of the notice under section 130 of the CGST Act? - HELD THAT:- Though the learned special Government Pleader has referred to the judgment of the Supreme Court in UNION OF INDIA VERSUS LEXUS EXPORTS PVT. LTD. [ 1994 (1) TMI 153 - SUPREME COURT] , where it was held that, The proceedings of seizure and confiscation are proceedings in rem. Until the culmination of the adjudication it is difficult to envisage any right on the part of the respondents from whom they are seized to export them on the basis of a future title they expect to acquire by payment of fine , the said precedent has no application in deciding a matter arising under section 130 of the CGST Act. That case dealt with the provisions of the Customs Act, 1962. Under the provisions of the Customs Act, 1962, confiscation may be absolute if the goods in question are prohibited goods within the meaning of Customs Law. In the case of a domestic transaction like that in the present case, the question of ordering an absolute confiscation does not arise as even the provisions do not contemplate such course. The objection raised by the department is that there is an attempt to evade the payment of tax. There is no provision in Section 130 which prohibits the interim release of goods which are detained pending finalization of proceedings under Section 130. The State can insist on conditions being imposed to ensure that its revenue is protected. Thus, the petitioner is entitled to an order directing the release of goods pending adjudication of Ext.P9 notice. As a result, it is directed that pending adjudication of Ext.P9 notice, the goods and conveyance detained in terms of Expt.P9 order shall be released to the petitioner on the petitioner depositing a sum of Rs.1,00,000/- and furnishing a simple bond for the balance amount - petition disposed off.

  ---

• 2022 (8) TMI 146
  Exemption from GST - Pure services - supply of telecommunication services to local authority (Greater Hyderabad Municipal Corporation) - taxable u/s 9(1) of the CGST Act, 2017 and/or exempted vide Sr. No. 3 (Chapter 99) of Table mentioned in Notification No. 12/2017- Central Tax (Rate) dated 28 June 2017? - HELD THAT:- Under serial no. 3 of Notification No. 12/2017 pure services provided in relation to any function entrusted to a municipality under Article 243W of the Constitution of India is eligible for exemption from GST. Clearly the exemption should be directly related to the functions enumerated under Article 243W of the Constitution of India i.e., those functions listed under 12th schedule. Similarly the Hon ble Supreme Court of India in the case of HH. MAHARAJADHIRAJA MADHAV RAO JIWAJI RAOSCINDIA BAHADUR VERSUS UNION OF INDIA [ 1970 (12) TMI 87 - SUPREME COURT] observed that the expression relating to means to bring into relation or establish a relation. It was further clarified that there should be a direct and immediate link with a covenant and that there cannot be any independent existence outside such covenant. The applicant is providing data and voice services to GHMC and to the employees of the municipalities and there is no direct relation between the services provided by the applicant and the functions discharged by the GHMC under Article 243W read with schedule 12 to the Constitution of India. Therefore these services do not qualify for exemption under Notification No. 12/2017.

  ---

• 2022 (8) TMI 145
  Profiteering - bookings of the flat to attract new customer - benefit of ITC of GST has been passed by way of commensurate reduction in price or not - contravention of provisions of Section 171 of the CGST Act - HELD THAT:- The Authority finds that, the DGAP has given a categorical report based on its verification that, the benefit of ITC has been passed on by the Respondent to all 189 homebuyers/customers who have booked their units on or after 1.07.2017 by way of giving deduction in the demand note itself as per the example reproduced above. The findings at para 10 and 11 of the DGAP s Report dated 30.11.2020 are reproduced at paragraphs 50), 5(J) and 5 (k) above and the DGAP states that it has scrutinized the demand notes and allotment letters issued to these 189 homebuyers/customers by the Respondent - the Authority determines the profiteered amount for the period from 01.07.2017 to 31.12.2018, in the instant case, as 2,26,76,700/- with respect to the other 500 homebuyers/customers i.e. those who have booked their units prior to 1,07.2017 (excluding those from whom no demand was raised/ consideration received from L07.2017 to 31.12.2018) for the Project Himalaya Pride . The Authority finds that the Respondent has profiteered by an amount of Rs. 2,26,76,700/- during the period of investigation i.e. 01.07.2017 to 31.12.2018. The above amount that has been profiteered by the Respondent from his home buyers shall be refunded by him, along with interest 018% thereon, from the date when the above amount was profiteered by him till the date of such payment, in line with the provisions of Rule 133 (3) (b) of the CGST Rules 2017. Interest - HELD THAT:- This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the Units commensurate with the benefit of ITC received by him - The Respondent is also liable to pay interest as applicable on the entire amount profiteered, i.e. Rs. 2,26,76,700/-. Hence the Respondent is directed to also pass on interest @ 18% to the homebuyers/customers on the entire amount profiteered, starting from the date from which the above amount was profiteered till the date of passing on/ payment, as per provisions of Rule 133 (3) (b) of the CGST Rules 2017. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the homebuyers/customers of the Units being constructed by him in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. Section 171 (3A) of the CGST Act, 2017 has been inserted in the CGST Act, 2017 vide Section 112 of the Finance Act, 2019, w.e.f. 01.01.202 and hence, was not in force during the period of investigation i.e. from 01.07.2017 to 31.12.2018, when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (34) cannot be imposed on the Respondent retrospectively. This Order having been passed today falls within the limitation prescribed under Rule 133(1) of the CGST Rules, 2017.

  ---

• Income Tax

• 2022 (8) TMI 144
  Disallowance u/s 40(a)(ia) - Delayed deposit of TDS colected in government exchequer - scope of amended provision of section 40(a)(ia) - HELD THAT:- The proviso was originally inserted by Finance Act, 2008 with retrospective effect from April 1, 2005. The proviso was again amended by Finance Act, 2010 with effect from April 1, 2010. A bare perusal of the aforesaid proviso clearly indicates that the amendment is retrospective in nature which means that if the TDS has been deposited prior to filing of the return then there shall be no disallowance. The Supreme Court in the case of Commissioner of Income Tax Vs. Calcutta Export Company [ 2018 (5) TMI 356 - SUPREME COURT] has clearly observed that the amended provision of section 40(a)(ia) should be interpreted liberally and equitably and applied retrospectively from the date when section 40(a)(ia) with effect from assessment year 2005-06 so that an assessee should not suffer unintended and deleterious consequences beyond the object and purpose of the provision mandates. As in the present case there are concurrent findings of fact of the CIT(A) and the Tribunal that the subject TDS in the present case was deposited in the state exchequer before the due date of filing of return which is not disputed by the revenue. Also no material or facts have been brought before us even to suggest that the deduction has been granted twice to the assessee. Therefore, there cannot be any disallowance on this count. Assessing Officer could not have made a disallowance under section 40(a)(ia) in view of the retrospective nature of the proviso to the said section. We do not find any error apparent or perversity in the order of the Tribunal in confirming the order of the CIT (A) holding that no disallowance is called for under section 40(a)(ia) of the Act. - Decided in favour of assessee.

  ---

• 2022 (8) TMI 143
  Revision u/s 263 - when deduction under Section 35(2)(iv) is allowed in respect of capital expenditure on assets used for scientific research, no depreciation is allowable under Section 32 on the same assets - HELD THAT:- The order passed by the Tribunal rightly reflects the legal position and when two views are possible and the assessing officer had accepted the assessee s claim for depreciation by placing reliance on the decision of this Court, the order cannot be reversed by the CIT branding the same as being erroneous in so far as it is prejudicial to the interest of revenue. Therefore, we find that there is no error committed by the Tribunal in holding that the exercise of jurisdiction under Section 263 was not proper and justified. In the light of the above substantial question of law is answered against the revenue.

  ---

• 2022 (8) TMI 142
  Reopening of assessment u/s 147 against company amalgamated - submission of petitioner that the respondent could not have initiated proceedings under Section 148A against the company which stood amalgamated into another company - HELD THAT:- As relying upon the several decisions of the Hon ble Supreme Court in the Case of Maruti Suzuki India Limited [ 2019 (7) TMI 1449 - SUPREME COURT ] M/s. Spice Enfotainment LTD. [ 2017 (12) TMI 754 - SC ORDER ] and Dharmnath Shares and Services PVT. LTD. [ 2018 (12) TMI 606 - SC ORDER ] and the various High Courts judgments, we are inclined to pass an interim order to the effect that the proceeding initiated under Section 148 of the Act of 1961 shall not be brought to its logical conclusion and final order shall not be passed without leave of the Court.

  ---

• 2022 (8) TMI 141
  Deemed Income / accrual of income - income on account of retention money - consideration as income of the assessee for the assessment year under consideration A.Y. 2014-15 - appellant contended that the retention money was withheld by the principal in accordance with the terms of contract did not accrue to the assessee as income in the assessment year under consideration and only because the principal deducted tax u/s 194C AO ought not to have held that the retention money was includible in the gross receipts as income - HELD THAT:- In the factual circumstances especially as per the terms of contract between the assessee and the contractee, the retention money retained by the contractee is deferred payment and is contingent upon satisfactory completion of contract work. We hold that the right to receive the retention money is accrued only after the obligations under the contract are fulfilled and the assessee had no vested right to receive the same in this assessment year, therefore, it would not amount to an income of the assessee in the year in which it is retained. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and so, we confirm it and dismiss the appeal of the Revenue.

  ---

• 2022 (8) TMI 140
  Reopening of assessment u/s 147 - scope of new provision section 148A - As contended present case should be governed by the newly amended provisions relating to proceeding under section 147 and the formalities of which have not been observed and complied with, and as such, the same is bad in law - HELD THAT:- As decided in UNION OF INDIA ORS. VERSUS VERSUS ASHISH AGARWAL [ 2022 (5) TMI 240 - SUPREME COURT] impugned section 148 notices issued to the respective Assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148 as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of section 148A(b). AO shall, within thirty days from today provide to the respective Assessees information and material relied upon by the Revenue, so that the Assesees can reply to the showcause notices within two weeks thereafter; The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a one-time measure vis-avis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required; AO shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned Assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted); All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned Assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.

  ---

• 2022 (8) TMI 139
  Validity of Faceless Assessment - Penalty u/s 271C imposed - No opportunity to the assessee by serving a notice provided - whether the respondents have acted in accordance with Section 144B while issuing Exts.P13, P14 and P14(a) orders? - HELD THAT:- The assessment unit is duty bound to make in writing a Draft Assessment Order and send a copy of such order to the National Faceless Assessment Centre. Where there is a proposal to make any variation which is prejudicial to the interest of the assessee, Section 144B contemplates forwarding of Draft Assessment Order to the assessee. If any proposal for variation prejudicial to the interest of the assessee is made, Section 144B(1)(xvi)(b) mandates that the National Faceless Assessment Centre has to provide an opportunity to the assessee by serving a notice calling upon the assessee to show-cause as to why the proposed variation should not be made. In the case of the petitioner, a Draft Assessment Order was not served on the petitioner before finalising the assessment, though Ext.P13 refers to a Draft Assessment Order. There is nothing on record to show that a Draft Assessment Order was drawn as contemplated under Section 144B(1)(xiv) and served on the petitioner. The petitioner is entitled to succeed in the writ petition on that ground.

  ---

• 2022 (8) TMI 138
  Interest on refund as per Section 244(A) - delay in refund - belated filing of return (ITR) - whether once the delay in filing the return has been condoned, it becomes a valid return and therefore grant of interest is consequential? - Eligible reason for delay occasioned in the adjudication of the writ petition - HELD THAT:- The petitioner claimed for refund by condoning the delay. The delay is condoned and held that the petitioner is entitled to refund. Now the Department is strictly implementing what has been directed by this Court [ 2007 (11) TMI 294 - KERALA HIGH COURT] - Therefore, it is not a case of the petitioner that either inspite of a direction for payment of interest, the interest is not paid to the petitioner. Therefore, any claim for interest by referring to the judgment in this appeal is unsustainable and the claim is accordingly rejected. Then coming to the explanation of the petitioner that because of limitations under Section 64 of the Societies Act, 1969 returns could not be filed in time. At best it could be said the delay between 1997 to 2000 alone could be attributed to the petitioner and the delay between 2000 to 2008 cannot be attributed to the petitioner as the delay occasioned in the adjudication of the writ petition. The argument though appears to be persuasive and fails to notice that the delay in adjudication of the petition filed for condonation of the delay for refund cannot burden the Department for payment of interest as compensation. The refund claim is complying with the direction of this Court. According to us, the effort was to get refund, the refund was ordered by this Court and what happened in the interregnum since cannot prejudice the writ petitioner and should not also prejudice the Department by directing the payment of interest for the delay period. The claim of the petitioner for interest on the refunded amount is rightly considered and rejected by both the Commissioner in Ext.P9 and the judgment under appeal. The judgments relied on by the petitioner, after going through the circumstances and ratio laid down therein, we are of the view that the judgments are distinguishable in all fours. No other ground is canvassed.

  ---

• 2022 (8) TMI 137
  Reopening of assessment u/s 147 - Notice issued to company merged - HELD THAT:- The ratio laid down by the Hon ble Apex Court in case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd [ 2019 (7) TMI 1449 - SUPREME COURT] and in case of Gayatri Microns Ltd [ 2019 (12) TMI 1241 - GUJARAT HIGH COURT] is applicable in the facts and circumstances of the present case in view of the fact that now the notice has already been issued to the present petitioner-company under section 148 of the Income Tax Act for the assessment years involved in the present group of petitions. Accordingly, we hereby allow the petitions and quash and set aside Notice issued.

  ---

• 2022 (8) TMI 136
  Validity of Reopening of assessment u/s 147 - notice beyond period of four years - Deduction u/s 80IB(8A) denied - as per AO work done by the petitioner was merely that of testing laboratory and was not doing any research and development work and there was no development of technology - HELD THAT:- As it is not in dispute that the respondent authority has issued the notice under section 148 beyond a period of four years from the end of relevant assessment year on the basis of reopening notice issued for the assessment year 2010-2011 with regard to the claim of deduction under section 80IB(8A) which is meant for scientific and industrial research and development. The respondent Assessing Officer has recorded reasons for issuing notice disputing the research activities of the petitioner so as to disallow such deduction. AO has merely reproduced the material which forms part of the reopening notice for the assessment year 2010-2011 for issuance of notice for reopening the assessment for assessment year 2011-2012. AO in original scrutiny assessment has examined the claim for deduction under section 80IB(8A) in detail by raising series of queries which were answered at length by the assessee by filing several replies before the Assessing Officer. It is only after considering such documents and replies, the Assessing Officer framed the assessment for year under consideration. Issuance of notice u/s 148 to reopen the assessment for the assessment year 2011-2012 is nothing but would amount to change of opinion on the part of the Assessing Officer as admittedly such notice is issued after a period of four years from the end of the relevant assessment year under consideration and there is nothing on record to show that there is any failure on part of the assessee to disclose fully and truly all material facts relevant for such assessment. - Decided in favour of assessee.

  ---

• 2022 (8) TMI 135
  Rectification u/s 154 - assessee claimed this income of exemption on the basis of mutuality whereas CPC, Bengaluru has taxed it on the maximum marginal rate - Income wrongly taxed under section 167A rather assessee is an AOP and working and working on the different mutuality - HELD THAT:- CPC, Bengaluru assessed the same income, which has been declared by the assessee in its return of income, only the CPC, Bengaluru taxed the assessee at maximum marginal rate under section 167A. Before us Ld. Sr. DR for the Revenue raised objection that similar treatments were made in three cases of assessee, which has been accepted by the assessee. Considering the fact that the CPC, Bengaluru has accepted / assessed the same income as has been offered by the assessee though under section 167A of the Act. Therefore, we concur with the findings of Ld. CIT(A) that there is no mistake which can be classified as mistake apparent from the record. Appeal of the assessee is dismissed.

  ---

• 2022 (8) TMI 134
  Validity of assessment u/s 153C - Presumption - Scope of documents belongs to assessee - absence of the Satisfaction Note required to be prepared by the A.O. of the searched person - plea of the assessee that the books of account / documents seized during the course of search do not belong to the assessee and, therefore, the proceedings initiated under section 153C of the Act are bad in law - HELD THAT:- As in the present case, the documents which were found in possession of the Lexcorp Advisory Services Pvt. Ltd. (searched entity) were the draft financials provided by the assessee to the said entity for the purpose of finalisation of its accounts after perusing the same. It is not the case of the assessee that like the aforesaid two decisions, the original documents were in possession of the assessee, whereas, the photocopy was found in possession of the searched entity. We also don t find any merit in assessee s submission that draft financials were working papers of the searched entity, as the same were claimed to have been provided by the assessee. It has also not been denied that the draft financials were of the assessee company only. In the present case, even if the draft financials were provided by the assessee to the searched entity, the said documents continued to be belonged to the assessee, as the services of the searched entity were sought only for the purpose of finalising the accounts and if at all anything can be said to be belonging to the searched entity, it can only be the final outcome of such exercise, for which searched entity s services were availed. Analogically can be drawn with the situation where books / vouchers / bills etc. are provided to a consultant for preparation of accounts. In such a situation, the documents / books as provided and available with the consultant will always belong to the taxpayer. No infirmity in the impugned order passed by the learned CIT(A) on this issue. Accordingly, grounds raised in assessee s appeal are dismissed. Disallowance u/s 14A - Appellant prays that the disallowance be restricted to the exempt income earned by it - assessee suo moto made a disallowance under section 14A of the Act over and above the exempt income earned by the assessee - HELD THAT:- Recently, it has been held by various Hon ble Courts that disallowance under section 14A has to be restricted to the dividend income earned. Accordingly, the assessee has made a fresh claim before us. We find that Hon ble Supreme Court in Goetz India Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] and Pruthvi Brokers and Shareholders Pvt. Ltd.[ 2012 (7) TMI 158 - BOMBAY HIGH COURT] has held that the appellate authority can entertain a fresh claim made by the assessee, even if such a claim was not made in return of income or by way of revised return of income. Further, as the issue raised by the assessee by way of additional ground of appeal is a legal issue, which can be decided on the basis of material available on record, we are of the view that the same can be admitted for consideration and adjudication in view of the ratio laid down by the Hon ble Supreme Court in NTPC Ltd. [ 1996 (12) TMI 7 - SUPREME COURT] This issue, now raised by the assessee by way of additional ground, was not examined by any of the lower authorities, therefore, we deem it fit and proper to restore the same to the file of the Assessing Officer. We further direct the Assessing Officer to examine the claim of the assessee and decide the same in accordance with law. As a result, additional ground is allowed for statistical purpose.

  ---

• 2022 (8) TMI 133
  Ex-parte orders u/s 144 - HELD THAT:- As expected that the assessee may put forth some documentary evidences in support of his contentions to decide the appeal as it is the duty of the assessee to lead evidence in support of its claim and for the adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. However, the assessee did not appear before the Tribunal despite numerous adjournments allowed and notices issued through RPAD. In case of any change of address, it is for the assessee to file revised Form No.36 duly mentioning the new address as the notice issued by the Registry was returned unserved with the postal remark Incomplete address . No material has been placed by assessee to controvert the findings of lower authorities. In this view of the matter and in absence of any contrary material brought on record to rebut the findings of lower authorities, we dismiss the appeal of the assessee.

  ---

• 2022 (8) TMI 132
  Deduction u/s 54 - assessee had purchased three independent residential plots and had constructed three independent houses each having all facilities like kitchen, living rooms, toilets etc. - scope of one residential house - Whether expression a house mentioned in section 54 may mean several contiguous houses? - HELD THAT:- Relying on the decision of Hon ble Delhi High Court in the case of Gita Duggal [ 2013 (3) TMI 101 - DELHI HIGH COURT] in which the Hon ble Delhi High Court quoted with approval the decision of Hon ble Karnataka High Court in Smt. K.G. Rukminiamma s case [ 2010 (8) TMI 482 - KARNATAKA HIGH COURT] CIT(A) held that word a may represent the multiple residential units so long as they are in the same building and contiguous to each other and used as single residential house. In the present case the claim of deduction u/s 54 is for a residential house built up on three adjacent contiguous plots. He further observed that the principle of multiple residential houses/units holds good till these units are in same physical location and contiguous to each other. We are inclined to agree with the above observations and findings of the Ld. CIT(A). - Decided against revenue.

  ---

• 2022 (8) TMI 131
  Addition on failure to show the gitty expenses in Closing Stock or WIP - addition based on audit objection - material purchased from Udaipur on 31/02/2010, were in transit - CIT-A deleted the addition - HELD THAT:- AO is of the opinion that the purchases as per separate bills issued on 31/3/2010 were not consumed but represent the stock in transit, in that case, it was imperative on his part to cite cogent evidence in reassessment to prove that the material was not received earlier but retained in transit. It was held that there is no iota of evidence that the material was in transit. CIT(A) further held that the stand of assessee that he included the cost of material in sales is correct as it is evident in the ledger account of GHV India Private Limited and the sale consideration income of assessee took the amount as included in the sale construction income. CIT(A) appreciated the facts that the assessee is a contractor, the material which was used in the contract work and has been correspondingly billed and consequently stand included in sales. If the same is again added as closing stock in that case, the value of sales will have reduced by corresponding figure and the same does not have any tax effect - CIT(A) further held that if the addition amount is included in the value of closing stock in that case corresponding deduction is allowable to assessee in subsequent year by increasing of opening balance of stock. On the basis of aforesaid observation, CIT(A) held that explanation of assessee that supplier raised separate bills on account of supplies made on different dates through different challans appears to be quite legible, otherwise, the supplier would have raised only a single bill if the item is supplied on a particular day. We find that the CIT(A) also examined the facts of the case on other angle as well and held that, if the impugned amount is considered as closing stock in that case, the profit of assessee will go up to Rs. 50,88,594/- which is around 20% of sales, which is not feasible considering the fact that work was started only in the month of January, 2010. On observation of ld. CIT(A), we find that the Assessing Officer passed the order in haste and it seems that the addition is made only for the reasons that some audit objection was raised. We also perused the alleged audit objection and find that such objection is raised without application of mind. The assumption of audit objection might be based on the idea that the office of the assessee is situated in Surat, so the material could be in transit to Surat. Though, the facts on the records were otherwise. Thus, we affirm the order of ld. CIT(A) with this additional observation. - Decided against revenue.

  ---

• 2022 (8) TMI 130
  Bogus LTCG on sale of shares - Penny stock purchases - HELD THAT:- We note that issue is squarely covered against the assessee by judgment of the Hon`ble Calcutta High Court in the case of Swati Bajaj and Others [ 2022 (6) TMI 670 - CALCUTTA HIGH COURT] Unexplained cash deposits in bank account - HELD THAT:- CIT(A) noted that there is no cash deposit found in the bank account of the creditor prior to the date on which cheques were issued to the assessee. Even, no cash withdrawal was found from the bank account of the creditor repaid. The assessee was subjected to search survey on 19.02.2011 03.09.2015 i.e. before after the date of survey on GCSL, no document indicating any cash payment for obtaining accommodation entries or receiving of cash on repayment of loan was found. It is undisputed fact that no documentary evidence was found anywhere (at the premises of third party i.e. GCSL or at the premises of the assessee), which even remotely suggests that the assessee paid any cash for there transactions with GCSL. We do not agree with the sweeping allegation of the AO that Transactions were accommodation entries . This statement is totally unfounded and not based on any cogent evidence to back such high-voltage statement apparently based on conjectures and surmises. Based on these facts and circumstances, we are of the view that there is no any infirmity in the order passed by ld CIT(A). That being so, we decline to interfere in the order passed by ld CIT(A), his order on this issue is upheld and grounds of appeal raised by the Revenue is dismissed.

  ---

• 2022 (8) TMI 129
  Disallowance of business promotion expenses u/s 37(1) - expenses incurred for the benefit of Doctors/medical practitioner - AO was of the view that above expenditures were incurred in violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulation 2002 and thus, the same needs to be disallowed as per the CBDT Circular No. 5/2012 dated 01-08-2012 - CIT-A deleted the addition - HELD THAT:- We find that the issue of business promotion expenses incurred for the benefit of Doctors/medical practitioner came before this tribunal in the own case of the assessee [ 2019 (10) TMI 731 - ITAT AHMEDABAD] if the nature of this expenditure is being viewed with angle of commercial organization, then it would reveal that these were essential expenditure for the purpose of a pharmaceutical industry. The only caveat for their non-disallowance is Explanation 1 appended to section 37, which is applicable on the expenditure which are incurred for infringement of any law. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier years nor has placed any contrary binding decision in its support. Therefore, respectfully following the same, we uphold the finding of the learned CIT-A and hereby dismissed the ground of appeal raised by the Revenue. Deduction claimed u/s 80IC - whether the research and development expenses incurred by the assessee should be allocated to eligible unit while working out the deduction under section 80-IC? - HELD THAT:- This question has been answered by the judgment of the Hon ble Gujarat High Court in the case of the CIT Vs. Torrent Pharmaceuticals Ltd [ 2016 (7) TMI 1301 - GUJARAT HIGH COURT] wherein it was held that the R and D expenses should not be allocated to the units eligible for deduction under section 80-IA. Revenue in the own case of the assessee for the assessment year 2010-11 in the assessment framed under section 143(3) of the Act has not allocated the research and development expenses to the eligible unit for the purpose of computing the deduction under section 80-IC of the Act. Admittedly, there is no change in the facts and circumstances of the year under consideration viz a viz the earlier assessment year i.e. 2010-11, thus we are of the view that the principles of consistency should be adopted. Thus we hold that the research and development expenses are not to be allocated to the eligible undertaking while calculating the deduction of the assessee under the provisions of section 80 IC. Additional claim u/s 35(2AB) on account of clinical trial expenses incurred outside the approved facility - HELD THAT:- We find that the issue of allowability of weighted deduction under 35(2AB) on clinical trial expenses incurred outside approved facility came before this tribunal in own case of the assessee [ 2020 (3) TMI 333 - ITAT AHMEDABAD] decided in favour of assessee. Before us, no material has been placed on record by the Revenue to demonstrate that the decision of Tribunal as discussed above has been set aside / stayed or overruled by the higher Judicial Authorities. Before us, Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case for the year under consideration and that of earlier year nor has placed any contrary binding decision in its support. Therefore, respectfully following the same we uphold the finding of the learned CIT-A and hereby dismissed the ground of appeal raised by the Revenue.

  ---

• 2022 (8) TMI 128
  Capital gain computation - validity of reference made to the DVO u/s 142A - land(s) formed subject matter of a joint venture development agreement - Assessee foremost argument that no cost of acquisition at all regarding the asset in issue and therefore, the same ought to have been adopted at nil than 12% allegedly paid by the owner / their predecessor - HELD THAT:- We find no substance in the learned counsel s foregoing arguments as this is an instance of perfection of title by the assessee s predecessor in interest by paying 12% charges to the government; which in turn, would result in acquisition of absolute title on government land. Learned counsel could hardly dispute that his predecessor-in-interest only enjoyed possession than having title of this land earlier. We conclude in this factual backdrop that the learned lower authorities have rightly rejected the assessee s contention of nil cost of acquisition in the given facts and circumstances. This identical and first foremost ground is rejected all these appeals. Validity of impugned assessments which have been claimed to be barred by limitation - As came on record that the Assessing Officer had made section 142A reference to the DVO and the time limit in submission of such a report of valuation is further extended to 60 days in light of foregoing statutory proviso (supra). We thus reject the assessees instant second substantive ground as well. Land in issue stood converted into stock-in-trade and the learned lower authorities ought to have initiated section 147/148 reopening mechanism - No merit therein since the chargeability of capital gains to tax u/s 45(1) in an instance of a capital asset converted to stock-in-trade arises only in the year of transfer of the asset under sub-section (2) thereof. We make it clear that these assessees have transferred their respective shares in the land in financial year 2013-14 relevant to the impugned assessment year 2014-15 wherein the learned lower authorities have framed the respective assessments. We thus reject the assessees instant fourth substantive ground as well. Converting the limited scrutiny to a complete one - Reason of scrutiny selection was non corporate assessee having income to business to which section 44AB applies . Learned counsel could hardly dispute that these assessees have transferred their stock-in-trade (supra) as non corporate assessees resulting in business income. We thus reject the assessees instant last substantive ground as well. This is indeed coupled with the fact that the Assessing Officer(s) had converted this limited scrutiny to complete one as per CBDT Instruction No.20/2015 after obtaining the PCIT-2, Pune s prior approval. This identical fifth substantive ground is also rejected in all these three appeals therefore. Reference was made u/s 142A whereas the valuation as on 01/04/1981 should have been referred u/s 55A - This is an instance of assessee having converted his agricultural lands to stock-in-trade as on 01.04.2010 followed by transfer thereof in the impugned assessment year giving rise to chargeability of income tax provisions in the latter assessment year 2014-15 in light of section 45(2) - That being the case, we fail to understand as to how the amended proviso w.e.f. 01.07.2012 would not be applicable in assessment year 2014-15. We further deem it appropriate to observe that section 55A; even if it is held to be applicable herein, would come into play for the computation of assessee s capital gains as on the date of conversion coming to 01.04.2010 whereas the correct corresponding statutory provision applicable as in the instant case is section 142A(1) only. That being the case, we conclude that the CIT(A) has erred in treating the impugned section 142A(1) reference as not maintainable by drawing analogy from amended proviso to section 55A(a) which itself is not applicable. We thus reverse the learned CIT(A) s order as well as the findings herein to this limited extent and restore the Revenue s instant sole substantive ground back to him for his fresh appropriate adjudication as per law.

  ---

• 2022 (8) TMI 127
  Reopening of assessment u/s 147 - notice issued by non-jurisdictional Assessing Officer - addition of long term capital gain on sale of property - HELD THAT:- Case of the assessee falls under the jurisdiction of the ITO, Ward 1(2), Jaipur then as to how the other AO, (ITO, Ward 5(2), Jaipur having no jurisdiction can issue the notice u/s 148. An order passed by an officer without recording reasons has no relevance which is void ab initio and deserves to be annulled. The defect in the order is not curable and it cannot be rectified even by sending the matter back to the concerned officer. Since the notice u/s 148 is issued solely on the basis of information received from DDI, Wing, Jaipur without making any further enquiry and without referring the matter to the Jurisdictional Officer and non-jurisdictional officer has issued notice u/s 148 of the Act, therefore, reopening of the assessment is not valid. Hence, the reassessment proceedings consequent to notice issued by non-jurisdictional Assessing Officer is ab-inito void. Taking into consideration the above facts and circumstances, the order passed by the ld. CIT(A) is quashed. Penalty u/s 271(1)(c) - HELD THAT:- When the quantum appeal as to issuance of Notice u/s 148 of the Act and confirming the addition by ld. CIT(A) is quashed then the penalty order passed u/s 271E by the ld. CIT(A) has become infructuous. Thus appeal of the assessee is allowed.

  ---

• 2022 (8) TMI 126
  Exemption u/s 11 - Exemption denied as income allegedly constitute commercial activity and therefore provisions of first proviso to clause (15) of Sec 2 r.w.s. 13 (8) becomes applicable to it - assessee argued that activities are for advancement of General Public Utility and not of trade/ commerce for profit motive - whether assessee income is exempt on principal of mutuality? - HELD THAT:- The issue raised by the assessee is fully covered by the decision of ITAT Mumbai Bench in the case of All India Rubber Industries Association [ 2018 (10) TMI 1172 - ITAT MUMBAI] - In this view of the matter, the above assessee association is primarily and mainly carrying out its activity for advancement of any other object of general public utility and any activity by it even if regarded as business or commerce if such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility cannot be held as that income received from such activity constitutes commercial activity and so provision of first proviso to clause (15) of Section 2 read with Section 13 (8) are inapplicable. Accordingly the ground Nos. 1 and 2 of the assessee are allowed. Life membership fees/ corpus donation which are in the nature of capital receipt and not chargeable to tax - HELD THAT:- The issue in question is already mentioned in the Rules and Regulation of the Society which indicates that the fees like entrance fees as well as life membership are part of the corpus fund and accordingly are in the nature of capital receipt. As such, there is no relevance by the ld. CIT(A) to restore the same to the AO for verification. Keeping in view the rules and regulation of the society as well as submission of the ld. AR of the assessee, we do not concur with the findings of the ld. CIT(A) to restore the issue to the AO. Thus Ground No. 3 of the assessee is allowed. Disallowance towards late deposit of PF, prior period expenses and disallowance of donation u/s 80G are only academic in nature and does not fall under the law while computing the income u/s 11

  ---

• 2022 (8) TMI 125
  Revision u/s 263 - discrepancies and violation of provisions of section 40(a)(ia) as well as the income assessable in the hand of the Joint Venture on which the AO has not conducted any enquiry - assessee Joint Venture was formed by its two partners - assessee filed its return of income declaring nil income by claiming that Joint Venture was created to enter into sub contract with M/s Ratna Infrastructure Projects Private Limited on 100% back to back basis - HELD THAT:- AO had not discussed anything in the assessment order and therefore, it does not exhibit any thought process of the Assessing Officer with regard to the issue of taxability of income in the hands of the assessee Joint Venture - AO has just reproduced the submissions of the assessee summarily - assessee has argued before the Tribunal that during the course of assessment proceedings, the Assessing Officer issued notice u/s 142(1) alongwith the questionnaire. As all the queries raised by the AO are totally irrelevant and not relating to the assessee or the assessment of the assessee. Thus, it is apparent that the AO has issued this questionnaire without application of mind. In response to the said notice, the assessee though filed a reply dated 13.11.2013 and explained that the assessee is not a society or trust registered under section 12A and therefore, all these queries raised by the AO are irrelevant. This itself shows that the AO has not applied his mind while issuing notice u/s 142(1) dated 17.10.2013 therefore, mere filing of the document by the assessee in response to the notice u/s 142(1) does not lead to the conclusion or inference that the AO has applied his mind and conducted a proper enquiry on the various issues which were taken up by the CIT while invoking the provisions of section 263 of the Income Tax Act. Commissioner has raised various points / issues which were not taken up by the Assessing Officer in the scrutiny assessment. Most of these issues are factual in nature and can be considered only by examination and verification of the relevant record including the various contract / agreements. Apart from the issue of taxability of the contract receipts in the hand of the assessee Joint Venture, the Pr. Commissioner has pointed out various other issues of discrepancies in the receipts declared by the assessee in comparison to the figures appearing in the bank account of the assessee and the amount shown by the assessee as receivable. Secondly, the Pr. Commissioner has also raised the issue of violation of provisions of section 40(a)(ia) which was not even taken up by the Assessing Officer in the assessment proceedings. Though the assessee has submitted that all the contract receipts and payments are subjected to TDS however, this fact is also required to be verified from the record. Pr. Commissioner has raised various other issues and discrepancies with respect to the total contract receipts compliance of provisions of section 40(a)(ia) and non disclosure of bank guarantee and mobilization advances in the books of the assessee which were not taken up by the AO clearly manifest that there is a complete lack of enquiry on the part of the AO on these issues, much less an appropriate enquiry. Once the AO has not conducted a proper enquiry and the case falls in the category of complete lack of enquiry then it would render the order passed by the AO as erroneous so far as prejudicial to the interest of Revenue When the order of the AO suffers from a complete lack of enquiry, then the above said principle has no application due to the obvious reason that the AO has not taken a view by conducting a proper enquiry and further the acceptance of claim by the AO without conducting an enquiry would not be regarded as a possible view on the issue. When the AO has not even taken up many of the issues raised by the Pr. CIT in the show cause notice, then the case of the assessee does not fall in the category of taking a possible view by the AO - Therefore, to the extent of invoking the provisions of section 263 of the Act, we do not find any error or illegality because there is a complete lack of enquiry on the part of the AO. Directions given by the Pr. CIT to compute the income derived from execution of the project - whether the assessee is a taxable entity or not? - HELD THAT:- CIT has taken a view that the income derived from the execution of the contract is liable to be assessed in the hands of the assessee and this view is taken by the Commissioner without analyzing the terms and conditions of the various contracts, sub contracts, Joint Venture agreements, memorandum of understanding between the parties to bring into existence a multilayer and structure and arrangements under which the status of being assessee intermediatery or a pass through entity not liable to assessed to tax to be ascertained. Therefore, we modify the finding and decision of the Pr. CIT on this issue and direct the AO to properly verify the facts emanates from the various contracts, the sub contracts, MOU, Joint Venture agreement as well as the arrangements made between the parties so as to ascertain the risk and rewards owned by which party. AO is free to examine this issue and adjudicate the same on the basis of the enquiry conducted on the facts as well as terms and conditions of the various contracts, sub contracts, agreements as well as arrangements made between the parties. Needless to say the legal precedents relied upon by the parties are also required to be considered on the specific facts arrived as a result of the enquiry. Further, the income if any assessable to tax in the hand of the assessee shall be by considering the actual receipt during the year and not on the total value of the project. Difference between contract receipts declared by the assessee and the receipts reflected in the bank account as well as outstanding - HELD THAT:- Prima facie, we find that the difference as pointed out by the Pr. CIT on account of the contract receipt is due to the reason that he has considered the entire deposit made in the bank account which includes the mobilization advance received against the contract but only part of the said amount would be treated as contract receipts for the year under consideration being adjusted against the running bills value - since the AO has not conducted any enquiry therefore, we do not find any reason to interfere with the order of the CIT directing the AO to examine this issue. We clarify that the AO is free to examine and verify the details to be produced by the assessee on this issue without having any influence of the observation as the receipts of the Pr. CIT in the impugned order. Bank guarantee not reflected in the balance-sheet of the assessee - HELD THAT:- When bank guarantees were issued by Punjab National Bank in favour of Meja Urja Nigam Private Limited on behalf of M/s Ratna Infrastructure Project Private Limited. From these documents and records of bank guarantee, it is clear that these were not issued on behalf of the assessee Joint Venture and the amount was not blocked from the bank account of the assessee therefore, when the assessee has not made any payment towards these bank guarantee issued for performance security deposit as well as additional performance security deposits, then the question of the same being recorded in the balance-sheet of the assessee does not arise. The Commissioner has not even considered the bare fact as to who has arranged these bank guarantees or paid any sum towards the bank guarantee issued in favour of the Meja Urja Nigam Private Limited. Accordingly, AO is directed to verify the fact whether assessee was under obligation to furnish any bank guarantee or any amount was paid by the assessee towards bank guarantee in question and then decide this issue. Violation of the provisions of section 40(a)(ia) for want of TDS - We note that neither the Assessing Officer has considered this issue and nor the Pr. CIT has verified it from the details available on the data of the Department itself that the assessee has filed the statement of TDS submitted under section 200(3) in Form No. 26Q placed at page nos. 104 and 105 and the summary of the TDS as deducted by the assessee from the payment made to M/s R.K. Infra Engineering (India) Private Limited M/s Rithwik Projects Private Limited giving challan numbers - Therefore, prima facie it appears that the assessee has duly deducted the tax at source (TDS) and paid the same to the account of the Government however, the AO is directed to verify these details of payment of TDS and if the same are found to be correct then there will be no question of violation of provision of section 40(a)(ia) or deduction of TDS.

  ---

• 2022 (8) TMI 124
  TDS u/s 194J - Disallowance u/s. 40(a)(ia) - short deduction of tds - payments on account of Training and Refresher - HELD THAT:- With reference to the order u/s. 201(1) there has been non/short deduction of tax at source by the assessee, which is required to be disallowed u/s. 40(a)(ia). It may be that the order u/s. 201(1) dated 28/03/2014, as indeed would be the case, came to the notice of the AO after the passing of the order u/s. 143(3) on 28/03/2014. Even so, unless the reason recorded informs as to what fact had been misstated or misrepresented by the assessee in its reply dated 27/03/2014, and on the basis of which no disallowance, save for Rs. 4,96,350, was made, i.e., with reference to the facts mentioned or found in sec. 201(1) order, there could be no valid reason to believe escapement of income in law, except of course where there is a change in law retrospectively or a judicial decision clarifying the law comes to the notice of the AO, impinging clearly on facts of the case. Needless to add, no such fact or statement of law is stated in the reason/s recorded, on the basis of which jurisdiction to reassess stands assumed by the assessing authority. Why, even the amount disallowed in assessment has been included as income escaping assessment. As fairly not disputed before us by the Ld. CIT-DR, it is in our view a clear case of mechanical recording of reasons u/s. 148(2), and lack of application of mind, both by the AO as well as by the authority approving the same u/s. 151, or at best a change of opinion consequent to a review. We, accordingly, hold the impugned order as bad in law for want of jurisdiction, accepting Ground Nos. 1 to 4 of the assessee s CO, i.e., on which the arguments and pleadings were made before us.

  ---

• 2022 (8) TMI 123
  Disallowance out of PF ESI contributions to the employees, which was not paid within the due date provided - HELD THAT:- Recently we have considered this aspect [ 2022 (3) TMI 961 - ITAT KOLKATA ], wherein we took note of the earlier order of ITAT, Kolkata dated 09.03.2022 whereby the Tribunal considered the impact of amendment brought into section 36(1) as well as 43B by Finance Act, 2021 and held that if employees contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of Ld. representatives, we have specifically gone through the record and find that payments have been made within the due dates of filing of the return. With the above observation, these appeals of the assessee are treated as allowed. The disallowances stand deleted - Decided in favour of assessee.

  ---

• 2022 (8) TMI 122
  Deduction u/s 80IC - manufacturing of plastic packaging products such as PET and HDPE bottles, jars, caps and closures - claim denied as products manufactured by the assessee come within Schedule 13 of the Act, hence, do not fulfill the condition of section 80IC(2)(a) - Assessee argued that similar claim has been accepted in earlier years - Proof of manufacturing activities - HELD THAT:- The assessee has set up a manufacturing unit for manufacture of PET, HDPE bottles etc. at Barotiwala, Himachal Pradesh. As per form No. 10CCB , the date of commencement of manufacturing activity is 17.06.2004 and the first year of claim of deduction under section 80IC of the Act is assessment year 2005-06. It is further evident, the assessee had undertaken expansion of the unit in financial year 2007-08 and has invested an amount of about Rs. 4 crores in plant and machinery. AO has not specifically assigned any other reasons for denying assessee s claim of deduction under section 80IC of the Act. While deciding the issue in appeal, learned Commissioner (Appeals) has held that the finding of the Assessing Officer that the products manufactured by the assessee come within Schedule 13 of the Act is unsustainable in view of the decision of the Hon ble Delhi High Court. Admittedly, against the aforesaid observation of learned Commissioner (Appeals), the Revenue has not come in appeal. There is no other specific reason or observation by the departmental authorities for denial of assessee s claim of deduction under section 80IC - Commissioner (Appeals) has made a general observation that the assessee failed to furnish required details without specifying, what are the details required to be furnished by the assessee. Of course, one more reason learned Commissioner (Appeals) has assigned for denying assessee s claim of deduction is, on earlier assessment years the fulfillment of condition of section 80IC were not examined as the returns of income filed by the assessee were processed under section 143(1) of the Act. From the materials placed before us, the aforesaid finding of learned Commissioner (Appeals) and the Assessing Officer are found to be not borne out from record. Thus disallowance of deduction claimed by the assessee under section 80IC of the Act is unsustainable. - Decided in favour of assessee. Disallowance of fixed assets written off in profit and loss account - Addition u/s 43B on account of non-payment contribution to PF/ESI - whether since, the disallowances made go to increase the profits, the assessee is entitled to claim deduction under section 80IC of the Act, in respect of such enhanced profit? - HELD THAT:- We agree with the submissions made by the learned counsel for the assessee. The disallowance made by the Assessing Officer, which are subject matter of dispute, have the effect of enhancing the profit of the assessee. That being the case, the assessee remains entitled to claim deduction under section 80IC of the Act in respect of such enhanced profit. Therefore, we direct the Assessing Officer to allow assessee s claim of deduction under Section 80IC of the Act on the aforesaid additions. Grounds are allowed.

  ---

• 2022 (8) TMI 121
  Deduction u/s.80P - Claim not made in Return of Income - Whether if the assessee has not claimed deduction under section 80P of the Act in the return of income, can it be permitted to claim the same during the course of assessment proceedings by way of filing a revised computation in response to notice issued by the assessing officer? - HELD THAT:- It is well-settled law and when the language of the Statute is plain and unambiguous, the same represents the legislative intent. In the instant case, the language of section 80A(5) of the Act is plain and unambiguous in its wordings and the same is not open to interpretation. It is an undisputed fact, that the assessee did not make a claim for deduction under section 80P in its return of income. The said claim was made by way of filing revised computation during the course of assessment proceedings. Without prejudice to the above, CIT(Appeals) has also observed that the assessee was engaged in selling petrol to outside parties, not forming part of the society and was unable to provide any explanation during the course of assessment/appellate proceedings as to how it is eligible to claim benefit of section 80D of the Act. While we are aware of the fact that in various cases it has been held that beneficial provisions should be construed liberally and legitimate claim of the assessee should be allowed, even if the assessee has failed to claim the same in its return of income. However, in our considered view, if the language of the Statute is plain and unambiguous and is not open to interpretation so that two views may be possible, then the same represents the legislative intent. Here, section 80A(5) of the Act states that for an assessee to be able to make a claim under Chapter -VI of the Act, such a claim has to be made in the return of income. In view of the plain language of the Statute, and respectfully following the decision of the Gujarat High Court in the case of Rachna Infrastructure (P.) Ltd. [ 2022 (3) TMI 256 - GUJARAT HIGH COURT] we are of the view that Ld. CIT(Appeals) has not erred in facts and in law in confirming the order of the assessing officer. In the result, appeal of the assessee is dismissed

  ---

• 2022 (8) TMI 120
  Reopening of assessment u/s 147 - Addition u/s 69 on account of unexplained investment - Case reopened on the basis of information received from Investigation Wing, Ahmedabad that a search action under Section 132 was carried out in case of Barter Group, Ahmedabad - HELD THAT:- The addition in the assessment order dated 27/09/2017 has no connection with the addition in assessment order passed under section 143(3)/147 dated 17/12/2018. The addition in the second assessment order dated 17.12.2018 is clearly based on the incriminating evidence about the investment in the share capital of M/s Rajendra Suri Financial Services (Gujarat) Pvt. Ltd. was found. We find that the assessee throughout the proceedings either before the Assessing officer or before the CIT(A) has shown a very casual approach and only submitted in pleading that the assessee was in the business of cheque discounting. The cheque discounting business was projected as noble profession and as such no addition on account of unaccounted investment can be made. Thus, in absence of any evidence, we do not find any merit that grounds raised in the appeal is covered by the decision of Tribunal in assessee s own case for A.Y. 2011-12 [ 2018 (9) TMI 1989 - ITAT SURAT] . Therefore, do not find any error or illegality in the order of the ld. CIT(A) and we uphold the same. - Decided against assessee.

  ---

• 2022 (8) TMI 119
  Deduction u/s 80IA - necessary certificate in the form of 10CCB along with the return of income had not been filed - harmonious reading of section 80A and section 80AC of the Act shows that the assessee having failed to claim deduction u/s 80IA of the Act in his return of income filed within the due date specified u/s 139(1) - main contention of the assessee s counsel is that assessee filed original return u/s 139(1) in time on 2.11.2017 Later the assessee filed revised return u/s 139(5) of the Act on 3.9.2018 - HELD THAT:- We are fully in agreement with the contention of the A.R. that if the audit report in form No.10CCB if made available to the AO before framing assessment or processing of return u/s 143(1) of the Act, the assessee is entitled for deduction u/s 80IA of the Act. However, the Ld. A.R. not able to demonstrate that assessee has actually and digitally filed the form No.10CCB (audit report) along with the revised return of income filed by the assessee digitally so as to make available to the AO. In view of this, we remit this issue to the file of the AO with the direction to the assessee to prove that assessee has actually filed the audit report in form No.10CCB before the AO before passing of the intimation u/s 143(1)(a) of the Act. Accordingly, the issue remitted to the file of the AO for de-novo consideration. Appeal of the assessee is partly allowed for statistical purposes.

  ---

• 2022 (8) TMI 118
  TP Adjustment - Method of determining Arm s Length Price - TNMM used for determining the ALP between the AEs - assessee is in the manufacture of hydraulic valves for automobiles and industrial machinery - HELD THAT:- Under TNMM, the net profit of a controlled transaction of an associated enterprise (tested party) is determined and this net profit is then compared to the net profit realized by comparable uncontrolled transactions of independent enterprises. As opposed to other transfer pricing methods, the TNMM requires transactions to be broadly similar to qualify as comparable. Broadly similar in this context means that the compared transactions don t have to be exactly like the controlled transaction. This increases the amount of situations where the TNMM can be used and thus TNMM is the most commonly used methodology applied and accepted for determining the ALP. When TNMM is used for determining the ALP, it is not necessary for the comparable company and the taxpayer to cater to the same industries in order to be functionally comparable. Further TNMM does not require strict product comparability. Therefore we are of the considered view that that the contention of the assessee that the products of Trion Valves and the industry to which Triton Valves serve are not comparable with assessee is not tenable as the most appropriated method as chosen by the assessee for determination of ALP is TNMM. Comparable selection - Oswal Industries Ltd., for example serves mainly to oil companies and the valves manufactured by this company is different from the valves of the assessee. It is also noted that one of comparables chosen by the assessee in the TP Study, namely KAR mobiles is into Manufacture and Exporters of Engine Valves for Applications in Segments such as Agricultural / Indusrial /Stationary, Automotive - Passenger Cars / Light Commercial Vehicle / Heavy Commercial Vehicles, Battle Tanks, Farm Trackors, High Performance Cars, Locomotives and Marine. If the contention of the assessee is to be accepted then the inclusion of these companies as comparable as by assessee needs to be questioned. We are therefore in agreement with the decision of the TPO and CIT(A) that under TNMM method the comparison is done at a broader level and narrow comparison is not applied. In the light of the above, we uphold the order of the AO including the Triton Valves as a comparable and dismiss the appeal of the assessee. Working capital adjustment while computing ALP - AO is not justified in denying the working capital adjustment to the assessee. We accordingly direct the AO to allow the working capital adjustment. The assessee appeal on this ground is allowed. Nature of expenditure - purchase of tools and spares - revenue or capital expenditure - HELD THAT:- On perusal of the list of the tools treated as capital in nature and we find that the value per item in the entire list is not significant. The ratio laid down in SARAVANA SPINNING MILLS P. LTD. [ 2007 (8) TMI 16 - SUPREME COURT] is that these tools need to have independent functions and also they need to have a benefit of enduring nature. In the given case as submitted by the Ld AR these tools are spares used in the operations of the assessee to facilitate the manufacture of finished products that have short working life needing frequent replacement and do not have any independent function. The test of enduring benefit is not the only criteria for concluding an item to be revenue or capital in nature. The value of each of the items, resale value etc also warrants consideration - tools are to be treated as revenue in nature and eligible to be claimed as expenditure in the profit and loss account. Hence, we allow the ground in favour of the assessee.

  ---

• 2022 (8) TMI 98
  Credit of tds - availability of TDS credit in the appropriate assessment year - TDS credit cannot be postponed to a different assessment year on the basis of deduction carried out by the deductor when the accrued income from such transact ion has been reported in the earlier assessment year - HELD THAT:- A combined reading of Section 199(3) r.w. Rule 37BA(3) makes the position of law clear that credit for TDS is available in the year in which the income is reported and as a corollary, should not be deferred to some other assessment year. In the instant case, the Revenue has allowed the credit in the subsequent assessment year when the TDS is shown to have been credited in the form 26AS. As stated on behalf of the assessee, the corresponding income will not be found to be recorded and therefore such direct ion would belie the letter and spirit of Sect ion 199(3) and Rule 37BA(3) thereto. Thus, on first principles, we are inclined to agree with the stand taken on behalf of the assessee for eligibility TDS credit in the Assessment Year 2016-17 itself when income has been claimed to have accrued/arisen and included for determination to chargeable income. We note that no positive finding of the Revenue Authorities below is available to show as to whether tax credit for TDS reflected in form No. 26AS in Assessment Year 2017-18 has been claimed or otherwise in that assessment year. A verification of factual position is required to shun the possibility of double claim. The assessee shall be entitled to credit of TDS corresponding to the income reported in the Assessment Year 2016-17 itself provided; (i) the assessee has not claimed any credit of TDS in any other assessment year; (ii) an undertaking/affidavit is placed by the assessee before the Revenue Authorities to lend assurance that such credit claimed in Assessment Year 2016-17 shall not be doubly claimed in any other assessment year in future based on form 26AS or any other document. On being satisfied, the AO shall grant the TDS credit in terms of observations made hereinabove. With these observations, the impugned order of the CIT(A) is set aside and restore back to the fi le of the AO for grant of credit in accordance with law.

  ---

• Customs

• 2022 (8) TMI 117
  Period of limitation - Validity of assessment order - Extension of time limit in exercise of its power under the proviso to Section 110(2) of the Customs Act, 1962 - Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020 - HELD THAT:- The Special Leave Petition stands dismissed on merits. However, as it is reported that the goods are perishable goods, the authority is directed to complete the proceedings within a period six months from the date of receipt of the present order, subject to cooperation by the petitioner.

  ---

• 2022 (8) TMI 116
  Smuggling - contraband / prohibited goods - Ketamine or not - admissibility of statements - Section 50 of the NDPS Act - HELD THAT:- It is seen that in this case, the entire happenings taken place in the Customs Restricted Area. The appellant was travelling to Malaysia, not in dispute. P.W.2 is an Air Intelligence Officer and his job is to keep watch over the passengers movement in the Customs area and in case of any suspicion, question the passenger, verify his credentials for passengers travel. In this case, finding the appellant moving in suspicious manner after getting clearance from the immigration counter, PW1 questioned the appellant. Since the appellant found nervous, not behaving normally, creating doubt, taken to P.W.1, the Superintendent of Customs. As regards whether Section 52A of the NDPS Act, and Standing Orders 1/88 and 1/89 are followed, it is to be seen that Section 52-A is for the purpose of disposal of seized Narcotic drugs and psychotropic substances, in the event of the contraband seized is to be disposed of, in view of its vulnerability of theft, substitution, constraints of proper storage space, and any other consideration, Section 52A to be followed, wherein the inventory of such contraband with details relating to their description, quality, quantity, mode of packing, marks, numbers or such other identifying particulars of the narcotic drugs or psychotropic substances to be recorded. By preparing an inventory certifying the correctness and the process to be done in the presence of Magistrate, photographs of the seized drugs to be taken. The contraband tested using Test Kit from each of the 4 packets, which tested positive, weighed around 975 gms., not of bulk quantity, not in lots. Hence, 4 packets made into one homogenized and there after, specimen samples drawn. Likewise, instructions 1.7, is for number of samples to be drawn. The Instructions is that when the package / containers seized together in are of identical size and weight and contents can be harmonized provided each package give identical results on colour test by U.N. Kit - As per the instructions 1.8 numbering of packages and as per instruction 1.9 the seizing officer to prepare the Panchanama on the spot in presence of the accused and witness and required to put his signature on the samples, which is followed. Thus, the Standing Order 1/88 is followed. The accused in his statement / Ex.P2 during 313 question and at the time of question of sentence, consistently state that he hails from poor family, having aged parents to be taken care and he is only a carrier, his situation forced to take the offer of said Thameem. Admittedly, in this case, the said Thameem neither arrested, nor shown as accused, what follow up steps taken is not known, whether Thameen house was kept under surveillance. his mobile tracked, nothing is known. Admittedly, appellant is only a carrier, hails from a poor background. The conviction recorded u/s 8(c) r/w 21(c) 28 of NDPS and sentence imposed on the appellant to undergo 10 years R.I. is confirmed. The order for payment of fine of Rs.1,00,000/- for each of the offence upheld, but an order that in default of payment, the appellant shall undergo R.I., for 2 years is reduced to R.I. for 1 month. The default sentence for all offence modified to one month alone - the criminal appeal allowed in part.

  ---

• 2022 (8) TMI 115
  Cancellation of the Custom Broker licence - forfeiture of security deposit - imposition of a penalty - Whether the Customs, Excise Service Tax Appellate Tribunal (CESTAT) misdirected itself in law by holding that the timeline prescribed under regulation 20(5) of the Customs Brokers Licensing Regulations, 2013 is directory? - HELD THAT:- The issue of timelines under Regulation 17, CBLR 2018, which is pari materia to Regulation 20, CBLR 2013 are no longer res integra. This has been dealt with in a catena of judgments passed by this Court. In the matter titled OVERSEAS AIR CARGO SERVICES VERSUS COMMISSIONER OF CUSTOMS (GENERAL) NEW DELHI, [ 2016 (7) TMI 1060 - DELHI HIGH COURT] , the show cause notice was issued after the lapse of ninety days from the date of receipt of the offence report and the Inquiry Report was submitted more than three years after the show cause notice was issued. The Bombay High Court in THE PRINCIPAL COMMISSIONER OF CUSTOMS (GENERAL) MUMBAI VERSUS UNISON CLEARING PVT. LTD., AND OTHERS. [ 2018 (4) TMI 1053 - BOMBAY HIGH COURT] , wherein while deciding a batch of petitions held that the time limit contained in Regulation 20 of CBLR 2013 is directory and cannot be held to be mandatory. The Court further observed that in a case where strict adherence to the timeline cannot be ensured, the principles of fairness would require that delay must be justified by giving reasons as to why the time limit was not adhered to. It can be seen that the timelines as prescribed under various Regulations in CBLR 2018, have been consistently held by the Courts as mandatory in nature. Each timeline is sacrosanct, and the idea of prescribing a time limit by statute becomes redundant if not adhered to. Therefore, it is not just the overall timeline of 270 days (as set forth in the Circular No. 09/2010 dated 08.04.2010) that needs to be followed, but also each and every timeline as prescribed in the CBLR 2018 - the Appellant s customs broker licence is stated to have expired in the meantime and has not been renewed. The proceedings involving revocation of the appellant s custom broker license, forfeiture of its security deposit and imposition of penalty, will also stand set aside - appeal allowed - decided in favor of appellant.

  ---

• 2022 (8) TMI 114
  Valuation of imported goods - goods were re-assessed at values higher than what was declared by the Appellant in the Bills of Entry for self-assessment - right to speaking order under Section 17(5) of the Customs Act - HELD THAT:- Section 14 of the Customs Act, 1962 read with Customs Valuation Rules makes it abundantly clear that transaction value in the ordinary course of commerce is to be taken as the assessable value. The Customs Valuation Rules outlines the step-by-step methodology to be adopted for re-determination of the assessable value in certain cases. The primary requirement for re-determination of the value is that the transaction value should be rejected for cogent reasons prescribed in the Customs Valuation Rules. If the transaction value is rejected, then the Customs Valuation Rules prescribes the basis for arriving at the assessable value. Perusal of the records of the case indicates that the only reason cited for re-assessment of value is that the Appellant has accepted the enhanced value. No doubt acceptance of the enhanced value in writing waives the requirement of the issue of speaking order under Section 17(5) ibid. However, the requirement of Section 14 and the Customs Valuation Rules need to be satisfied for enhancement of value. Nothing is forthcoming from the record of the case that what is the basis for such re-assessment - Neither the provisions of Section 14 of the Customs Act dealing with Valuation of Goods nor the provisions of Customs valuation Rules, 2011 have been followed while assessing the impugned bills of entry. The assessment orders do not assign any reason for discarding the transaction value nor do they mention under which rule of Customs Valuation Rules, the value has been determined. In spite of the admission on behalf of the importer, the Revenue is required to satisfy the requirements prescribed under Section 14 of the Customs Act read with Customs Valuation Rules before any enhancement of valuation - the matter is required to be remanded to the Original Assessing Authority for sharing the basis for such re-assessment with the importer /Appellant - Appeal allowed by way of remand.

  ---

• 2022 (8) TMI 113
  Undervaluation of goods - whether the allegation of undervaluation against the respondents is substantiated by the evidence that has been put forth by the investigation? - HELD THAT:- Regarding the Evidence on the basis of Parallel invoices, we find that the Learned Commissioner enumerated differences between these invoices and held that they are not comparable. Learned Commissioner pertinently finds that the second invoice bears details of Bank, Swift code, Account number of the supplier etc, which are absent in first invoice; second invoice is the actual invoice and the first invoice looks like a Performa invoice; investigation could not find any evidence that the actual payment was made on the basis of first invoice; respondents imported only 1-2 shipments from this supplier; entire SCN is on the supplies from Mis Fujan Quanzhou Wanglong Stone Co Ltd., China and Fujian Wanlong Diamond Tools, Co Ltd China; investigation could not get any single parallel invoices in respect of imports from them; could not produce not even a single evidence of payments made over and above the price shown in the invoice submitted. It is found that the value of entire imports over a period of time cannot be arrived at on the basis of a single invoice and that as long as any differential payment is not evidenced, the value declared cannot be rejected. In the case of M/S. GLOBAL INDUSTRIES VERSUS THE COMMISSIONER OF CUSTOMS COCHIN. [ 2011 (2) TMI 742 - CESTAT BANGALORE] it was held that in the absence of data relating to the imports of goods of same quality, quantity and commercial level with higher transaction value, contemporaneous import cannot be accepted. In this instant case, Revenue has not placed any data to evidence contemporaneous imports; rather the Adjudicating Authority found that there are no contemporaneous imports. The findings of the commissioner are correct. Antecedents cannot be an evidence for the alleged undervaluation of the goods. At best antecedents may be a reason for creating a suspicion and be a reason for causing an enquiry or Investigation. Mere propensity of the respondent is not enough proof of undervaluation - the antecedents of an importer or their propensity to violations cannot be in itself an evidence prove a contravention in a completely different proceedings. Revenue has not made out any case against the impugned order - appeal dismissed.

  ---

• 2022 (8) TMI 112
  Levy of Anti-dumping duty - hot rolled flat products of steel otherwise plated or coated with zinc - exemption in terms of Notification No. 44/2016-Cus. (ADD) dated 8.8.2016 and Notification No. 17/2017-Cus. (ADD) dated 11.5.2017 - levy of interest and penalty - HELD THAT:- It can be seen that the issue is as to whether the goods are coated with zinc and is excluded from the levy of anti-dumping duty as per Notification No. 17/2017-Cus. (ADD). During the pendency of the appeal, the appellant had filed an application to send the sample of the goods for chemical analysis. The test report issued by the Metal Lab dated 22.1.2022 shows that the goods are plated with zinc. The case put forward by the assessee succeeds. For this reason, the demand of anti-dumping duty along with interest cannot sustain. The appeals filed by the department contending that penalty has to be imposed under sec. 114A of the Customs Act, 1962 does not survive - The appeals filed by the department are dismissed.

  ---

• 2022 (8) TMI 111
  Classification of imported goods - I-MAS POs, which is Nickel Hydroxide compound (containing 78% to 80% of Nickel Hydroxide, 2 to 2.5% of Cobalt Hydroxide balance Graphite) - to be classified under the Tariff Entry 2825 40 00 or not - N/N. 50/2017-Customs, dated 30-6-2017 (Sr. No. 180) - HELD THAT:- Classification of imported goods is governed by the principles set forth in the General Rules of Interpretation (GIR). Rule 1 of GIR provides that for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions [that is, GIRs 2 to 6]. This is the first Rule to be considered in classifying any product. In other words, if the goods to be classified are covered by the words in a heading and the Section and Chapter Notes do not exclude classification in that heading, the heading would apply to the said goods. As required under Rule 1 of GIRs, the classification of the compound of Nickel Hydroxide is determinable according to the terms of heading and relative Chapter Note of Chapter 28 and these headings or Notes do not leave any ambiguity that proposed goods, which is a separately defined chemical compound, is aptly classifiable under HSN Code 2825 40 00 of Heading 28. As per the chapter notes to Chapter 28, separately defined chemical compounds would remain classified under Chapter 28, whether or not containing impurities. The Nickel Hydroxide, though containing cobalt and graphite in minor quantities, remains suitable for general use in manufacture of Nickel Cadmium batteries. The presence of cobalt and graphite does not render the product suitable for any different use or for a specific use - The additives are minor and do not change the nature or function of the compound; they enhance the performance and life cycle of the Nickel electrode. The formation of the electrically conductive network favourably impacts the utilization of the active material, which is Nickel Hydroxide. Thus, it is in terms of the Chapter Note 1 of Chapter 28 read with Rules 1, 2 and 3(a) of the GIR, the goods proposed to be imported i.e. I-MAS POS, consisting of Nickle Hydroxide (78-80%), Cobalt Hydroxide (2-2.5%), Graphite (12-18%) and moisture (2.8%) is classifiable under sub-heading 2825 40 00. The applicant has claimed that consequent to the classification of the impugned under sub-heading 2825 40 00 of the First Schedule to the Customs Tariff Act, 1975, the Nickle Hydroxide compound is also eligible to avail the benefit of Notification No. 50/2017, dated 30-6-2017 Entry Sr. No. 180 which covers Nickel oxide and hydroxide classified under 2825 40 00 at nil rate of duty.

  ---

• Insolvency & Bankruptcy

• 2022 (8) TMI 110
  CIRP proceedings - Evidence of debt - documents insufficiently stamped - validity and admissibility of documents - Redeemable Non-Convertible Debentures Subscription Agreement - Debenture Trust Deed - NCLT admitted the application u/s 7 - Appellant is personal guarantor - whether the two above-mentioned documents should be impounded by the Adjudicating Authority and forwarded to the competent judicial authority for adequate stamping? - HELD THAT:- It is revealed in the reply, that the Appellant (Applicant of section 7 application) has not denied the execution of the Non-Convertible Debenture Subscription Agreement and Debenture Trust Deed, rather they admit execution of the documents. - The Corporate Debtor has, in his reply as above, only raised the issue of these agreements being novated in light of the settlement and larger understanding having taken place between the Appellant and the MJS Group. Thus, admittedly, he has not raised the question of execution of the said documents. - the issue of debt being due and payable in the present case is not interdicted by any law but only a technical deficiency of insufficiency of their stamping has been raised which can be cured. Whether the agreement has been novated through the settlement - HELD THAT:- The Settlement record mentions the Satra Hills project in Ghatkopar and security related to Borivali and Washi Projects receivables but nowhere it mentions the Jodhpur Project for which money was raised to issuance of non-convertible debentures. Moreover, even this settlement (which does not cover the NCDs) was cancelled vide letter dated 17.1. 2019 of IIFL informing of default in compliance of the corporate debtor s obligations and a letter dated 21.1.2019 of the MJ Shah Infra LLP addressed to M/s Sameer Sanghvi and Associates, (the escrow agent) stating that the transaction as contemplated under the purported Settlement stood cancelled. All these developments and circumstances/actions are very clear indication of the fact the Debenture Subscription Agreement and Debenture Trust Deed were not supposed to be part of the purported overall settlement dated 31.1.2018 - it is noted that the corporate debtor made a request to the debenture holders for resetting the interest rate from 12% to 9% vide letter dated 14.2.2018 (attached at page 69 of reply of Respondent Nos. 1 to 3). This request for resetting of the interest rate on redemption of NCDs was also done on a date after the date of Settlement , which also supports the inference that the Settlement did not cover the NCDs and that the NCD Subscription Agreement was novated. The argument of the Learned Senior Counsel of the Appellant that the Debenture Subscription Agreement and the Debenture Trust Deed, both executed on 1.3.2014, stood novated through the Settlement , cannot be agreed upon. Inadmissibility of the Debenture Trust Deed and the Non-Convertible Debenture Subscription Agreement as valid and legal documents which could be relied upon in the admission of the section 7 application as they are not sufficiently stamped as required under the Maharashtra Stamp Act - HELD THAT:- The Non-Convertible Debentures are clearly outside the purported Settlement arrived in the meeting held on 31.3.2018. Therefore, the Non-Convertible Debentures Subscription Agreement and the Debenture Trust Deed are not novated as a result of the Settlement and are relevant in establishing the debt of the corporate debtor as claimed in section 7 application, whose repayment is in default as per clause 11 of the Debenture Trust Deed. The section 7 application was admitted correctly by the Adjudicating Authority - there are no merit in the appeal - appeal dismissed.

  ---

• 2022 (8) TMI 109
  Contempt of Court - willful disobedience - willful breach of settlement agreement - Whether the Respondent Nos. 1 2/ Contemnors committed breach of settlement agreement dated 08.03.2019 and disobeyed the order of this Tribunal dated 11.03.2019 willfully? - If so, are the Respondent Nos. 1 2/Contemnors liable for punishment as per Section 12 of Contempt of Court Act? - HELD THAT:- Based on the Settlement Agreement dated 08.03.2019, the respondents/contemnors invited an order from the Court dated 11.03.2019. Thus, it is clear that the respondents gave an undertaking to pay Rs. 24,27,64,004/- as per the schedule mentioned in Clause 1.1 of the settlement agreement, extracted above. At the same time, the order passed by the Court dated 11.03.2019 permitted the Applicant to file a application for contempt and to take steps to revive the prayer for CIRP. Thus, this Tribunal in anticipation of such violation, cautiously permitted the Applicant to file contempt in the event of failure to comply with the undertaking and directions issued by this Tribunal, the order became final. The Apex Court time and again discussed about the standard of proof in a contempt proceeding, concluded that the standard of proof is almost identical to the standard of proof in a criminal case since the proceedings in contempt is quasi criminal in nature. The main endeavor of respondents is that the applicant failed to establish that the violation of the order is willful, in the absence of any material to establish that the violation is willful this Tribunal cannot find the respondents guilty for contempt to punish in terms of Section of 12 of the Contempt of Court Act. No doubt, the proceedings in contempt are quasi criminal in nature and the standard of proof is almost identical to the standard of proof in criminal cases - The power of contempt is conferred on the courts and Tribunals only to uphold the dignity of courts and to see that the orders passed by the Courts and Tribunals shall not be disobeyed and to avoid substantial loss to the parties. If no such power is conferred on the courts and Tribunals, courts and tribunals will remain as a paper tigers , therefore, the legislature thought it fit to provide claws and jaws to prevent abuse of process of the justice system. Thus, the courts and Tribunals are conferred power of contempt to punish the party who disobeyed the order of the Court or Tribunal. The breach of undertaking amounts to contempt as defined under Section 2 (b) of Contempt of Court Act but a remedy is provided in the Clause 11.2 of Settlement Agreement to invoke arbitration clause in case of breach of undertaking. As the respondents invoked arbitration clause and filed application under Section 11 of Arbitration and Conciliation Act before the High Court of Delhi, since, such remedy is available as per the term of the settlement agreement, it is difficult to hold that the Respondent Nos. 1 2/ Contemnors committed wilful breach of settlement agreement. Accordingly, it is found that Respondent Nos. 1 2 did not commit any willful breach of Settlement Agreement dated 08.03.2019. Thus, the Respondent Nos. 1 2/ Contemnors are guilty for wilful disobedience of order dated 11.03.2019, while holding that the Respondent Nos. 1 2/ Contemnors not guilty for wilful breach of settlement agreement dated 08.11.2019. Sentence to be imposed under Section 12 of Contempt of Courts Act - HELD THAT:- The maximum sentence is simple imprisonment for a term which may extend to six months or with fine which may extend to Two Thousand rupees or with both. However, the proviso to Section 12 obligates the Court or Tribunal to consider the apology tendered by the Petitioner while considering the quantum of punishment - On the other hand, they did not comply with the direction of this Tribunal as agreed in the affidavit filed on 23.09.2019, 03.10.2019 before this Tribunal, during the pendency of this contempt case also. Application disposed off.

  ---

• 2022 (8) TMI 108
  Rejection of Approval Plan - Cancellation of non-bailable warrants - failure to deposit the performance guarantee for the Resolution Plan - Section 74(3) of the IBC - HELD THAT:- The Resolution Plan when it was approved, thus, did not contain any provision for providing a performance security. It is only after the order of the Adjudicating Authority dated 03.03.2021 that non-submission of the performance guarantee is made an issue by the Resolution Professional. After the order dated 03.03.2021, the Resolution Applicant had not appeared before the Adjudicating Authority due to which bailable and non-bailable warrants were issued. The Adjudicating Authority in its impugned order has observed that despite order of the Adjudicating Authority dated 03.03.2021, Resolution Applicant has not shown any willingness to proceed with the Resolution Plan. The CIRP is a time bound process where timeline has been prescribed for each step. The CIRP cannot be allowed to continue for indefinite period. When Appellant has submitted the Resolution Plan which was approved on 08.11.2018, he cannot just say that he was not aware of the proceedings before the Adjudicating Authority for approval of the Resolution Plan. The Adjudicating Authority has rightly drawn a conclusion that inaction on the part of the Resolution Applicant clearly indicates that he was not willing to proceed with the Resolution Plan approved by the CoC - the Adjudicating Authority has given valid reason in the order for proceeding with the liquidation of the Corporate Debtor. The present was not a case where there was any violation of Section 74(3) by the Appellant. Since the Resolution Plan was never approved by the Adjudicating Authority, the Corporate Debtor or its officers or creditors or any other persons cannot be said to have knowingly and wilfully contravened any of the terms of the Resolution Plan - application allowed.

  ---

• 2022 (8) TMI 107
  Fixing the fee of IRP - direction to Appellant to file her Claim before the Liquidator as the Corporate Debtor was under Liquidation, is correct or not - fee of an RP falls under the definition of a Claim as defined under the Code or not - Whether the fee of a Resolution Professional is required to be fixed by CoC, failing which such decisions/determination is to be made by the Adjudicating Authority under the provisions of Section 60(5) of the Code read with Regulation 33(2) of the CIRP Regulation to fix the fees as payable to the RP? HELD THAT:- This Tribunal is of the considered view that the question which mainly arises in this Appeal is whether the Liquidator is having the jurisdiction to decide the fee of the RP as the CoC is no longer in existence. By virtue of Section 5(13)(e) of the Code, the fees and expenses incurred by the Appellant comes under the ambit of Insolvency Resolution Process Cost and therefore in the instant matter the Liquidator cannot adjudicate upon the Insolvency Resolution Process Cost. Regulation 34 of the IBBI Regulations specifies that the CoC shall fix the expenses which are incurred by the Resolution Professional. The word expenses includes the fee to be paid to the Resolution Professional. Viewed from any angle, the fees of an RP cannot be considered to be a Claim as defined under Section 3(6) of the Code. The Liquidator can only verify and adjudicate the Claims as defined under the Code. Since the amount of fees payable to an RP is not a Claim , the same cannot be determined or verified by Liquidator. The Hon ble Supreme Court in Alok Kaushik [ 2021 (3) TMI 1242 - SUPREME COURT ] in para 20 has clearly distinguished the fees to be paid to a professional from the penalty which can be imposed if a disciplinary committee is satisfied that sufficient cause exists . The Hon ble Apex Court has observed that the availability of a grievance redressal mechanism under the Code against an Insolvency professional does not divest the Adjudicating Authority of its jurisdiction under Section 60(5)(e) of the Code to consider the amount payable to the Appellant - the contention of the Respondent that there is a nexus between the IBBI Report and the fees to be paid to the RP, is untenable. The Adjudicating Authority shall take into consideration the facts of the attendant case together with the orders of this Tribunal, by which Order, the RP had continued performing her duties and decide the fees as expeditiously as practicable but not later than 4 weeks from the date of this Order and shall proceed in accordance with law - thus, it is Adjudicating Authority which has to decide fees in the absence of a CoC and the RP cannot be directed to prefer a Claim before the Liquidator. The matter is remanded back to the Learned Adjudicating Authority - Appeal allowed by way of remand.

  ---

• Service Tax

• 2022 (8) TMI 106
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - Petitioner has not been given credit which it had already paid even before the show cause notice was issued - Extended period of limitation - demand of Interest and penalty - HELD THAT:- For a person to know what is the reason why the designated committee does not agree with the declarant, the person has to approach the Court of law by filing a Writ Petition and wait for a reply to be filed by an officer who was never a part of the designated committee. It shocks the conscience of this Court to permit continuance of such a practice. It is a most unreasonable and unfair practice. Every declarant is entitled to know the reason why his submissions have been rejected. Therefore, it is directed that the Central Government that, in every case where Form No. SVLDRS-3 is received, a copy of the designated committee s report/opinion, i.e., detailed reason for arriving at the conclusion that it has arrived at shall be simultaneously provided on the website and if that is technically not feasible, within 48 hours a copy of the same shall either be sent by email or by courier to the declarant. There is a clear finding by the adjudicating authority that there was nothing in the challans to establish that the payment of Rs.36,72,679/- has been made against amount of demand made under the instant show cause notice and no ST-3 return containing remark about such payments or any correspondence informing the department about the said payment has been made against the demand made under the instant show cause notice and hence the amount paid could not be considered for appropriation against the demand of Rs.1,12,54,357/-. By not filing an Appeal, Petitioner has accepted this finding and therefore that has attained finality. Petition dismissed.

  ---

• 2022 (8) TMI 105
  Nature of activity - sale or service - whether the activity carried on by the petitioner in the hair studio, constitutes sale of a product, being a wig, or service of preparation of wig and fitment thereof? - whether the intrinsic or dominant nature of the transaction is one of sale of a wig or rendition of service? - HELD THAT:- The authority proceeds on the basis that none of the exceptions, including (i) transfer of title in goods or immovable property (ii) deemed sale (iii) a transaction in money (iv) actionable claim, would apply in the instant case. He, thus, proceeds to bring the entirety of the turnover as per the balance sheet of the petitioner, reducing there from, the sale value of the laser combs that have been offered to tax at 14.5% VAT, to tax as service. The petitioner must succeed. Without question, the integral component of the transaction in the present case is the wig itself, as without the wig, there would be no transaction perse. The fitment of the wig and the preparation of the scalp to receive the wig is, in my view, incidental to the product itself - The primary activity carried on by the petitioner is the manufacture of the wig, for which it remits central excise duty. The fitment of the wig, including the preparation of the scalp, and optional maintenance of the wig itself, are incidental to the product. The Hon ble Supreme Court, in the case of IMAGIC CREATIVE PVT. LTD. VERSUS COMMISSIONER OF COMMERCIAL TAXES ORS. [ 2008 (1) TMI 2 - SUPREME COURT] , has specifically noted the difference between a composite contract and an indivisible one. A composite contract is one that would involve components of sale and service whereas an indivisible contract, also involving components of sale and service, is one where the distinction between the two is very fine and difficult to determine. Thus, a client could well purchase a wig without opting for the service of fitment or maintenance. The services of preparation of the scalp, fitment as well as maintenance of the wig, are merely to facilitate and aid in the utilization of the product and would have no relevance in the absence of the wig - petition allowed.

  ---

• 2022 (8) TMI 104
  Business Auxiliary Service - sale of SIM card for a consideration - Revenue of the view that the appellant was providing taxable service under the category of Business Auxiliary Service against the consideration of 4.5% of the sale value - inclusion of trade discount in the assessable value - HELD THAT:- The issue involved in this appeal is squarely covered in favour of the appellant by various decisions of this Tribunal. The South Zonal Bench of this Tribunal in the case of R. VENKATARAMANAN VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY [ 2008 (9) TMI 46 - CESTAT, CHENNAI ] where it was held that the entire consideration charged from the customers is subjected to ST which is paid by the BSNL, therefore, the finding that the appellant is promoting the business of sale or service of BSNL is misconceived. There are no merits in the impugned order and the same is set aside - appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2022 (8) TMI 103
  Classification of goods - Fertilizers or Plant Growth Regulators (ZP-770 Kg.) - to be classified as fertilizer under CETH 3101 or as plant growth regulator under CETH 3808? - Rule 3(c), the General Rules for Interpretation of Central Excise Tariff Act, 1985 - period November, 2006 to September, 2010 - period October, 2010 to June, 2011 - invocation of extended period of limitation - HELD THAT:- The emphasis of the rule 3(c) is on the heading which provides the most specific description. The goods are to be classified as per their description and the general description should not be preferred before the specific description. Moreover, in terms of Rule 3(b), mixture consisting of different materials is to be classified with reference to the major component which gives it the essential character. We find that in the case of impugned product, the major constituent is seaweed powder extract. The learned adjudicating authority has not appreciated the provisions of Rule 3(a) and (b) correctly and has jumped directly to Rule 3(c) of the General Interpretation Rules, which is not correct to our understanding. The classification of the goods should be done by the reference of the heading and chapter note. It is pertinent to note the Explanation given in Chapter 12.12 of HSN, seaweed and other algae and it says that this Heading covers all seaweeds and other algae whether or not edible, they may be fresh, chilled, frozen, dried or ground. Seaweeds and other algae are used for various purposes (e.g. pharmaceutical products, cosmetics, human consumption, animal feeding, and fertilizers) and other that should be as such that this heading excludes Fertilizers of Heading 31.01 or 31.05. A plain reading of this note indicates that seaweed and other algae should also be used as fertilizer and when done so, they fall under Heading 3101 or 3105 and even otherwise by referring to Note 3(b) of General Interpretation Rules, the product in dispute falls under CETH 3101. Thus, it was held by the Tribunal in the case of CCE, ROHTAK VERSUS M/S. SAFEX CHEMICAL INDIA LTD. [ 2017 (9) TMI 140 - CESTAT CHANDIGARH] that though the chemical examination report indicates the presence of ingredients like, Auxin and Cytokinins are known to find use as Plant Growth Regulator, percentage compositions of these ingredients have not been ascertained. It cannot be ruled out that these ingredients can be present in the small traces in the sample; the same can be called as fertilizer also. It is seen that such enzymes help in plant growth regulation are present but in only small traces i.e. 0.26% and 0.53% prior to 03.07.2010. For the period after 03.07.2010, even the traces are absent - the impugned goods cannot be classified as plant growth regulator just because small trace of 6-BA and 4-CPA are present. Invocation of extended period of limitation - HELD THAT:- The appellants have stated that they have submitted their items and given all the details to the Department in 2006 itself and as such, no intent to evade payment of duty by way of suppression, concealment, mis-representation etc. can be alleged and, therefore, the extended period cannot be invoked - the contentions of the appellants are agreed upon, however, as it is held that the appellant s submissions are acceptable on merits, the issue of classification will not alter the position of the case in any manner. Appeal allowed - decided in favor of appellant.

  ---

• 2022 (8) TMI 102
  Refund claim - Violation of principles of natural justice or not - absence of any proof regarding non-subsummation of the impugned amount by the party - invocation of time limitation under section 11B of Central Excise Act, 1944 - HELD THAT:- There is no denial to the fact that the amount, the refund whereof has been filed way back in the year 2018 was the amount deposited in the year 2016 during an investigation about proposed duty demand for the clearances made by the appellant in the period 2009-2011. The question of passing of the burden of an amount 5 years prior the amount was deposited is not at all possible. There was no need for the Reviewing Authority to take altogether different ground that too the one which is apparently not sustainable. The issue regarding application of principles of unjust enrichment to refund of pre-deposit is no more res integra. There are also very many judgments of various Courts, which have also reiterated the same principles that in case any amount is deposited during the pendency of adjudication proceedings or investigation, the said amount would be in the nature of deposit under protest and, therefore, the principles of unjust enrichment would not apply. In view of the catena of decisions, available on this issue, this Court answers the substantial question of law against the Revenue and in favour of the assessee. Invocation of time bar of section 11 (B) of Central Excise Act, 1994 - HELD THAT:- It is observed that amount, the refund whereof was claimed, is an amount which was deposited by the appellant during the stage of investigation when impugned demand was proposed. Once the said proposal has failed to attain finality i.e. when the duty demand has been set aside, the aforesaid was not the deposit with reference to duty but was deposit under protest. Since it is not the amount of duty Section 11 (B) of CEA, 1944 and the time bar therein cannot be invoked - thus, the entire amount of Rs.6,27,728/- is to be refunded to the appellant alongwith interest as already been ordered by Commissioner (Appeals) in order dated 16.07.2019. Otherwise also it is observed that the Reviewing Authority has not challenged the findings as far as the non-applicability of section 11 B of Central Excise Act, 1944 and the time bar therein is concerned. The Commissioner (Appeals) has allowed this appeal by way of remand in terms of section 35 A, Commissioner (Appeals) has the power, after making proper inquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or other appealed against. The provision is abundantly clear that no power of remand has been vested by the statute in Commissioner (Appeals). Seen from this aspect also the order of Commissioner (Appeals) is not sustainable - appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2022 (8) TMI 101
  Classification of goods - rate of tax - laminated, insulated and toughened glass - whether liable to tax @ 10% as glass and not @ 16% as all the goods made of glasses? - HELD THAT:- With respect to laminated glass, there can be no dispute that the assessing authority had taxed both laminated as also insulated glass manufactured by the assessee @ 16% treating those commodities to be covered by the Notification entry All goods and wares made of glass under Notification No. 1273 dated 25.4.2001. Against that assessment order, the assessee had preferred first appeal that came to be partly allowed vide order dated 28.2.2006. The commodity laminated glass was held to be excluded from the above noted notification entry. Accordingly, it was taxed @10% as an unclassified commodity. That decision of the first appeal authority attained finality inasmuch as the revenue never challenged the same. There is no discussion in respect of any commodity that may be known as toughened glass. Insofar as the present taxing entry is concerned, similar language has been employed by the legislature as was employed by earlier Notification dated 20.5.1976. Therefore, the interpretation made by this Court in M/s Hindustan Safety Glass Works, Allahabad [ 1998 (8) TMI 546 - ALLAHABAD HIGH COURT ] would apply to the facts of the present case as well. It may be noted, under Notification No. 1273 dated 25.4.2001 only difference that has arisen is with respect to earlier existing notification entry hurricane lantern chimneys . It has been replaced with all kinds of chimneys . However with respect to exclusion of plain glass-panes from the scope of taxing entry pertaining to all goods and wares made of glass, there is no change. Nothing contrary has been shown as may allow the Court to take a different view other than expressed in M/s Hindustan Safety Glass Works, Allahabad - Revision dismissed.

  ---

• 2022 (8) TMI 100
  Classification of Toffees - toffee and candy manufactured and sold by the dealer are liable to be taxed in schedule-V of U.P. Value Added Tax Act or in the category of sweetmeat and sugar product as mentioned in schedule-IIA at serial no.137? - HELD THAT:- While the Tribunal has specifically considered the sugar content in the product manufactured and sold by the assessee and the manufacturing process to reach the conclusion that the products were toffee manufactured by the assessee, in no situation, in the field of tax regime and laws, two persons can be treated differently for the purposes of rate of tax. One commodity has to be charged to tax at one rate. The revenue having chosen to tax the same or similar commodity at the lesser rate in case of other dealers whether manufacturer or trader, it cannot be permitted to take a different view as that may introduce uncertainty and arbitrariness in tax regime, which is never permissible. In view of the stand taken by the revenue, in case of another manufacturer - M/s Perfetti Van Melle India Pvt. Ltd. of the commodity and distributor - M/s United Traders and also in absence of material brought on record to take any different view, revision filed by the revenue on similar question of law has been dismissed. For the same facts and on the same reasoning, the present revision is also dismissed.

  ---

• 2022 (8) TMI 99
  Classification of goods - toffee - to be covered under the Entry No. 137 Schedule II Part A and liable to tax @ 4% as against the claim of the revenue that the said commodity was taxable as an unclassified commodity @ 12.5%? - HELD THAT:- The Tribunal has specifically found, the assessee had purchased toffee from M/s Perfetti Van Melle India Pvt. Ltd., G.T. Road, Ghaziabad. Then, as to the sugar content, relying on an order passed by the Commissioner of Commercial Tax, under Section 59 of the Act, it was held any commodity having sugar content more than 70% would qualify as a sugar product under Entry No. 137 Schedule II Part A of the Act. An issue was involved pertaining to classification of two products i.e. Chlormint with Herbasol and Happydent White . The revenue challenged the said order of the Tribunal in THE COMMISSIONER COMMERCIAL TAX U.P. LUCKNOW VERSUS PERFATY WANMELE INDIA PVT. LTD. [ 2018 (2) TMI 1816 - ALLAHABAD HIGH COURT] . Initially, it did not raise any challenge to the finding pertaining to taxability of toffees . It confined the revision to classification of Chlormint with Herbasol and Happydent White - it is difficult to accept this conduct of the State to now challenge the rate of tax on toffee in the case of the present dealer, who is an agent of the manufacturer - M/s Perfetti Van Melle India Pvt. Ltd. The commodity being the same and the assessee being not the manufacture, a different view may never arise - one for the manufacturer and the other for the trader. Adjudication having been made once and the revenue with open eyes having not pressed the issue of taxability of toffees beyond the level of Tribunal , though it carried the remaining dispute arising from the same order up to the Supreme Court, it cannot be permitted to adopt dual standards while dealing with the case of a trader. One commodity may be taxed at one rate, at the same point in time. Revenue has no discretion in the matter. No material has been shown to exist that may warrant a different view to be taken either on facts law - revision dismissed.

  ---