TMI Tax Updates - e-Newsletter
August 22, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Jurisdiction of proper officer to seize u/s 67 - Seizure of unaccounted assets - The purpose of the Act is not to proceed against unaccounted wealth. The provision of Section 67 of the Act is also not to seize assets for recovering tax. Thus, applying the principle of purposive interpretation, the power under Section 67 of the Act cannot be read to extend to enable seizure of assets on the ground that the same are not accounted for. - HC
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GST:
Classification of goods - HSN Code - billing of Foam Cup Pads, as finished products, which is supplied to manufacture brassier (ladies bra) by manufacturers - the 'Foam cup pad' made of polyurethane, glue and fabric, is to be classified under heading 39262091 and is liable to GST @ 18%. - AAR
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GST:
Valuation - inclusion of reimbursement of expenses - pure agent or not - Supply of supervision services - All the work including cost of material and its supervision is being done by the applicant. The GST charged on the cost of material and supervision charge is tenable. In case materials have to be provided by the applicant including supervision charge, the GST shall be charged under single invoice raised by the applicant. - AAR
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Income Tax:
Doctrine of mutuality - Interest earned on the bank deposits by clubs - Deposit of surplus funds by the appellant Clubs by way of bank deposits in various banks - the interest income earned on fixed deposits made in the banks by the appellant Clubs has to be treated like any other income from other sources within the meaning of Section 2(24) of Income Tax Act, 1961. - SC
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Income Tax:
Corporate Social Responsibility (“CSR”) expenses - deduction claimed u/s 80G - the CSR expenses even though not allowed under section 37 of the Act pursuant to insertion of Explanation-2 to section 37 vide Finance Act, 2014 with effect from 01/04/2015. However, the said expenditure is allowable u/s 80G - AT
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Income Tax:
Rectification u/s 154 - the two Hon’ble High Courts have expressed the different views regarding the question whether late fee under section 234E can be levied for the period prior to 1.6.2015 - The order passed u/s 200A cannot be rectified on the issue which is a debatable issue. Provisions of section 154 cannot be invoked for debatable issue. - AT
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Income Tax:
Disallowance u/s 14A read with Rule 8D - the AO has not computed any disallowance under Rule 8D(2)(i) and Rule 8D(2)(ii) of the Rules and only under Rule 8D(2)(iii) of the Rules expenditure in relation to income which does not form part of the total income was computed in the present case. - no infirmity in the impugned order upholding the disallowance under section 14A read with Rule 8D(2)(iii). - AT
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Income Tax:
Unexplained investment/unexplained cash credit under section 68 & 69 - no addition is called for on account of baseless allegation of unexplained investment by the assessee u/s. 69 - Accordingly, the main effective grounds of assessee are allowed and AO is directed to delete the addition. - AT
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Income Tax:
Unexplained money u/s 69A or investment u/s 69 - Once an AO finds that an investment has been made, he has to examine the Assessee's explanation as to the source of that investment. It is only in cases where the Assessee is unable to explain the source of the investment made that provisions of Section 69 of the Act can be applied to tax the value of the investment made. - Additions were rightly deleted - AT
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Income Tax:
Levy of penalty u/s. 271B - non completion of audit within reasonable time - Co-operative society - If the appointment of the statutory/tax auditor was done after the due date of completion of audit u/s 44AB and audit was completed within a reasonable time of such appointment, then the penalty u/s 271B cannot be held as justified. - AO directed to verify the facts - AT
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Income Tax:
Rectification of mistake u/s 154 - Debatable issue - it cannot be said that allowance of deduction of sales promotion expenses by the AO resulting in a mistake apparent on record. Therefore, absent mistake apparent on record, the action of the AO fell beyond the scope of Section 154.- AT
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Income Tax:
Assessment u/s 144C - Royalty receipt - income from distribution of software licenses and providing support services - AO has not followed the directions of the DRP and the directions of the Ld. DRP are very clear and AO has not bothered to atleast classify the income earned by the assessee under the head FTS as per the directions of the Ld. DRP and royalty. - Additions deleted - AT
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Income Tax:
Additions u/s 69A - Denial of exemption u/s 11 - Receipt of unaccounted capitation fees in cash - Post search Assessment of trust - Ld. CIT(A) had rightly held that, search operation being leaked cannot be an alibi for making addition in an assessment, as the assessment has to be made based on evidences and not on suspicion and conjectures. - AT
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Customs:
Allowing re-export of the goods which has been detected with some hazardous material - In the instant case, as the goods were hazardous in nature, releasing it in the domestic market or destroying it may harm the environment. Accordingly, the adjudicating authority has allowed the goods to be re-exported on payment of Fine - there is no violation of any of the provisions of Customs Act, 1962,in granting re-export against payment of fine. - Permission for re-export sustained - AT
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Customs:
Imposition of penalty u/s 114AA on Importer and u/s 112 (a) on CHA - the importer took the risk and moved the goods out of the LCS on his own, without listening the advice of the CHA - the CHA cannot be held responsible for the violations committed by the importer, without listening the advice of the CHA - AT
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Indian Laws:
RTI - Seeking various information regarding third parties (Petitioner) from excise department - Benefit of exemption from duty of excise as per Industrial Policy - The order of the First Appellate Authority accepting the RTI application and directing the department to provide the information sustained - HC
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Service Tax:
Declared Service or not - amount deducted by the appellant towards the compensation for not supplying the WHR boiler in time - section 66E(e) of Finance Act 1994 - Held No - AT
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Central Excise:
Valuation - special inspection charges or special testing charges incurred - third party inspection - the appellant is not obliged to get this special testing and special inspection done on the product, it is solely on the requirement of the customer who gets this special testing and inspection done on the product. Therefore, the appellant is not otherwise involved in the said third party inspection. - Demand set aside - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (8) TMI 929
Jurisdiction of proper officer to seize u/s 67 - Seizure of unaccounted assets - interpretation of statute - section 67 of GST Act - Seeking unconditional release of goods - two silver bars - Indian currency - Mobile Phones - legality of search and seizure of residential premises. Power of proper officer to seize the currency and other valuable assets u/s 67 of the Act, even though he has no reason to believe that the same are liable for confiscation - HELD THAT:- It is at once clear that silver bars being movable assets are not securities within the meaning of Clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956. The contention that silver bars are securities , as advanced on behalf of the Revenue, is insubstantial. Although the definition of the term securities is an inclusive definition, the same cannot be read in disregard of Subclauses (i) to (iii) of Clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956 or the scope of that enactment. Plainly, as silver bars do not fall within the definition of securities under Subsection (101) of Section 2 of the Act read with Clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956. Thus, silver bars are included in the term goods as defined under Sub-section (52) of Section 2 of the Act. It would not be apposite to construe the word things under Sub-section (2) of Section 67 of the Act to be mutually exclusive to the term goods . The term goods as used in Sub-section (2) of Section 67, essentially, relates to goods, which are subject matter of supplies that are taxable under the Act. Admittedly, the goods that can be seized under Sub-section (2) of the Act are goods, which the proper officer believes are liable for confiscation. The power of search and seizure are drastic powers and are not required to be construed liberally. Further, it is found that the legislative intent of permitting seizure of books or documents or things in terms of Subsection (2) of Section 67 of the Act is crystal clear and it does not permit seizure of currency or valuable assets, simply, on the ground that the same represent unaccounted wealth. The mischief rule or the Heydon s rule (propounded in the year 1584 in Heydon s case: 76 ER 637) requires a statute to be interpreted in the light of its purpose. The purpose of the Act is not to proceed against unaccounted wealth. The provision of Section 67 of the Act is also not to seize assets for recovering tax. Thus, applying the principle of purposive interpretation, the power under Section 67 of the Act cannot be read to extend to enable seizure of assets on the ground that the same are not accounted for. The notice dated 10.11.2020 proposes to raise a demand for the month of April, 2019 (which is prior to the date of the search). Although, Mr. Singh contended that the said notice is not a notice issued by the Central Authorities but he does not dispute that the said notice does not rely on any of the items seized during the search operations conducted on 28.01.2020. Moreover, in the counter affidavit, it is alleged that the petitioner had filed ineligible / bogus GST Input Tax Credit on the strength of fake / goodless invoices issued by various bogus / non-existent firms - it cannot be accepted that the notice dated 10.11.2020 is not the notice as referred to under Sub-section (3) of Section 67 of the Act. The respondents are directed to forthwith release the currency and other valuable assets seized from the petitioner during the search proceedings conducted on 28.01.2020 - petition allowed.
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2023 (8) TMI 928
Seeking grant of bail - reason to believe or any satisfaction to justify the arrest has been given or not - no notice for recovery of GST issued - violation of principles of natural justice - HELD THAT:- It is a settled law that while granting bail, the court has to keep in mind the nature of accusation, the nature of the evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, the circumstances which are peculiar to the accused, his role and involvement in the offence, his involvement in other cases and reasonable apprehension of the witnesses being tampered with. Taking into account the totality of facts and keeping in mind, the ratio of the Apex Court's judgment in the case of STATE OF RAJASTHAN, JAIPUR VERSUS BALCHAND @ BALIAY [ 1977 (9) TMI 126 - SUPREME COURT ] , Gudikanti Narasimhulu And Ors., v. Public Prosecutor, High Court Of Andhra Pradesh [ 1977 (12) TMI 143 - SUPREME COURT] , RAM GOVIND UPADHYAY VERSUS SUDARSHAN SINGH AND ORS. [ 2002 (3) TMI 945 - SUPREME COURT ] , PRASANTA KUMAR SARKAR VERSUS ASHIS CHATTERJEE AND ORS. [ 2010 (10) TMI 1199 - SUPREME COURT ] and MAHIPAL VERSUS RAJESH KUMAR @ POLIA ANR. [ 2019 (12) TMI 1461 - SUPREME COURT ], the larger interest of the public/State and other circumstances, but without expressing any opinion on the merits, it is held that it is a fit case for grant of bail. Let applicant, Rajnish Jain be released on bail on his furnishing a personal bond and two reliable sureties each in the like amount to the satisfaction of the court concerned subject to the conditions imposed - bail application allowed.
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2023 (8) TMI 927
Classification of goods - HSN Code - billing of Foam Cup Pads, as finished products, which is supplied to manufacture brassier (ladies bra) by manufacturers - to be classified under HSN Code 39269079 or 62129090? - HELD THAT:- Since, the foam pad cup by character is an insulating liner made of polyutherane foam, hence the product in question does not merit classification under Chapter 62 - Accordingly, the product is classified under heading 3926. The applicant has also requested to know whether the 'Foam cup pads' manufactured by them can be classified under HSN 39269079 - HELD THAT:- The description of heading 39269079 pertains to 'Plastic or nylon tipped hammers; insulating liner of nylon'. The product in question possesses the essential character of insulating liner made of polyutherane foam. Since polutherane foam is the basic material used in manufacture of the foam cup pads, the same cannot be considered as insulating liner of nylon to merit classification under heading 39269079. The applicant has also requested to know whether the 'Foam cup pads' manufactured by them can be classified under HSN 39262091 - HELD THAT:- The description of heading 39262091 pertains to Articles of apparel and clothing accessories (including gloves, mittens and mitts), of polyurethane foam. Since, the product is essentially - article of plastics/and articles of other materials of headings 3901 to 3914, articles of apparel and clothing accessories, and made of polyutherane foam. Hence the product will be classified under HSN Code 39262091 on merit. Thus, the 'Foam cup pad' made of polyurethane, glue and fabric, is to be classified under heading 39262091 and is liable to GST @ 18%.
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2023 (8) TMI 926
Valuation - inclusion of reimbursement of expenses - pure agent or not - inclusion of value of material and cost of execution work for installation of lines in the value of supply for determination of taxable value under GST where all such cost are taken as reimbursement while our supply is only supervision charges - inclusion of value of material and cost of execution work for installation of lines in the value of supply for determination of taxable value under GST where all such costs are born by the recipient of service and we charge only supervision charges. HELD THAT:- All the work including cost of material and its supervision is being done by the applicant. The GST charged on the cost of material and supervision charge is tenable. In case materials have to be provided by the applicant including supervision charge the GST shall be charged under single invoice raised by the applicant. The customers of the Applicant purchase the material and arrange installation work and they advise applicant to do only supervision work. Here taxable value of supply for applicant is only supervision work and GST liable to be charged and payable on the transaction value i.e. supervision charge (as charged by applicant on total cost of work/material excluding GST on total taxable value of work/material) collected from customers by the applicant - Further, value of material and cost of execution work for installation of lines will be included in the value of supply for determination of taxable value under GST liable to be charged by the Customers of the Applicant. The GST liable to be charged and payable for the work with material arranged by customers of Applicant and should be collected by the firm/authority/person on the basis of invoice raised for the work/Service done - GST liable to be charged and payable for installation work done by the contractors hired by Customers on the basis of invoice raised for the work/service. All the work including cost of material and its supervision is being done by the applicant. The GST charged on the cost of material and supervision charge is tenable. In case materials have to be provided by the applicant including supervision charge, the GST shall be charged under single invoice raised by the applicant. In other case, if the materials is to be provided by the Consumers/recipients/Contractors hired by Consumers/recipients and they have GST invoice of materials and same is submitted to the applicant after completion of Project. Accordingly, applicant should raise invoice and charge GST for supervision charge only. To avoid double taxation, applicant should not charge GST on the cost of materials, as there is no provision in CGST Act 2017 and rules made thereunder for double taxation.
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2023 (8) TMI 891
Seeking grant of bail - availing and passing off fake ITC - issuance of bogus invoices - HELD THAT:- A perusal of demand papers sent case diary a relives that there are two directors in M/s Sanraj Metals Private Limited namely, Shri Sanjeev Kadiyan and Miss Nivita Jain. Nivita Jain is bedridden due to her medical conditions and she is not looking after any affairs of a said company and her father Shri Rajneesh Jain (applicant herein) is conducting day to day affairs in the garb of Signing Authority for banking. He is also paying salary to another director Sanjeev Kadiyan. Data retrieved from his phone confirms that he is actually running the company. It has also been confirmed that some of companies/firms were created by misusing documents of unsuspecting persons, who denied opening any company. Thus, although, the applicant is neither director or any officer in the said company but, he is running the affairs of the said company and dealing with various persons. It also transpires that Directorate General of G.S.T Intelligence (DGGI) Meerut was probing matter of one Amit Gupta in connection with case No. 2415 of 2022 who was running several companies and receiving fake invoices from non-existent firms. The purpose of applicant was to enrich himself through receiving and issuing fake invoiced which were used for commission of offence. The applicant did not co-operate with the investigation and refused to give his statement and showed himself ill and he was rushed to hospital where he was found stable as per discharge summary dated 19-05-2023 of Manipal Hospital. Due to the acts of the applicant, the appropriate authority authorized his arrest and he was arrested. Investigation is still going on and there is strong possibility that if the applicant is released on bail, he will temper with the evidence and try to influence the witnesses. Considering the gravity of offence involving multiple crime partners and huge amount involved in availing and passing off fake ITC, which is 96 crores, the seriousness of charges is grave in nature and therefore, in the case of the applicant, this Court is not inclined to enlarge the applicant on bail. It is true that co-accused Amit Gupta has been granted bail by the Hon'ble High Court but the offence of the present applicant, although connected with the offence of Amit Gupta, is distinct and separate and therefore no parity can be extended to the applicant. Apart from that, this Court can only granted parity of its own orders and cannot equate its powers with that of the Hon'ble High Court. The bail application of the applicant/accused Rajnish Jain Under Section 132(1)(b) (c), 132(1)(i) CGST Act, DGGI, Meerut is hereby rejected.
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Income Tax
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2023 (8) TMI 925
Doctrine of mutuality - Interest earned on the bank deposits by clubs - Deposit of surplus funds by the appellant Clubs by way of bank deposits in various banks - whether, or not interest earned by the assessee on the surplus funds invested in fixed deposits with the corporate member banks is exempt from levy of income tax, based on the doctrine of mutuality? - High Courts in the impugned judgments have uniformly held that the interest earned on the bank deposits made by the clubs is liable to be taxed in the hands of the clubs and that the principle of mutuality would not apply - Whether the Order of this Court in Cawnpore Club [ 1998 (2) TMI 591 - SC ORDER] is a binding precedent which ought to have been taken note of and considered by a Co-ordinate Bench of this Court while deciding the case of Bangalore Club [ 2013 (1) TMI 343 - SUPREME COURT] ? - HELD THAT:- The Order of this Court in Cawnpore Club cannot be treated as a precedent within the meaning of Article 141 of the Constitution of India as the said order does not declare any law and the appeals filed by the revenue as against Cawnpore Club were disposed of without going into the larger question as to whether Cawnpore Club could be taxed on the interest income earned on fixed deposits made by it in the banks, or whether the principle of mutuality would apply to the said income. The judgment of this Court in Bangalore Club [ 2013 (1) TMI 343 - SUPREME COURT] does not call for reconsideration even when viewed in light of the previous Order of this Court in Cawnpore Club. Consequently, we hold that the principle of mutuality would not apply to interest income earned on fixed deposits made by the appellant Clubs in the banks irrespective whether the banks are corporate members of the club or not. Thus we hold that the judgment in Bangalore Club is not per incuriam although, the earlier Order passed by a Coordinate Bench of this Court in the case of Cawnpore Club is not noticed in Bangalore Club. We also hold that the judgment of the Division Bench of the Karnataka High Court in Canara Bank [ 2008 (7) TMI 239 - KARNATAKA HIGH COURT] must be restricted to apply to the facts of the said case alone and cannot be a precedent for subsequent cases. This is because the judgment of another Division Bench of the said High Court in the case of Bangalore Club was not brought to the notice of the Division Bench, which rendered the judgment in the case of Canara Bank. Further, it is the judgment of the Division Bench of the said High Court in Bangalore Club that has been sustained by a Coordinate Bench of this Court by a detailed reasoning. Thus, the interest income earned on fixed deposits made in the banks by the appellant Clubs has to be treated like any other income from other sources within the meaning of Section 2(24) of Income Tax Act, 1961. Conversely, if any income is earned by the Clubs through its assets and resources, from persons who are not members of the Clubs, such income would also not be covered under the principle of mutuality and would be liable to be taxed under the provisions of the Income Tax Act. Having found that Bangalore Club does not call for reconsideration, we hold that the said judgment which holds the field would squarely apply to these appeals also.
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2023 (8) TMI 924
Nature of expenses - Employee Stock Option Plan ( ESOP ) expenses - assessee submitted that the ESOP expenses are employee compensation costs - AO held that the assessee nowhere has incurred any expenditure so as to claim the same is allowable u/s 37(1) and the assessee has issued shares to the employees at a concessional rate which has increased the capital base of the company and therefore, such expenditure is to be considered as capital expenditure - HELD THAT:- We find that similar contentions of the Revenue were rejected in Biocon Ltd [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] wherein High Court dismissed the appeal filed by the Revenue and upheld the decision of the Special Bench of the Tribunal in Biocon Ltd [ 2013 (8) TMI 629 - ITAT BANGALORE] As in view of the aforesaid findings of the Hon ble Karnataka High Court, we find no infirmity in the impugned order passed by the learned CIT(A) in allowing the claim of deduction of ESOP expenses under section 37(1) of the Act. Decided in favour of assessee. Corporate Social Responsibility ( CSR ) expenses - Deduction claimed u/s 80G when disallowed u/s 37(1) - HELD THAT:- We find that the coordinate benches of the Tribunal have consistently taken the view in favour of the assessee and held that the CSR expenses even though not allowed under section 37 of the Act pursuant to insertion of Explanation-2 to section 37 vide Finance Act, 2014 with effect from 01/04/2015. However, the said expenditure is allowable u/s 80G - no infirmity in the impugned order passed by the learned CIT(A) in allowing the claim of deduction u/s 80G of the Act on CSR expenses incurred by the assessee. Appeal by the Revenue is dismissed.
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2023 (8) TMI 923
Penalty levied u/s 271(1)(b) - failure of the assessee to comply with notices - default committed by the assessee - HELD THAT:- Delhi Tribunal has decided the issue in favour of assessee in part in the case of Smt. Rekha Rani [ 2015 (5) TMI 1100 - ITAT DELHI] by observing that penalty for the first default of non-compliance of notice under section 142(1) of the Act was sufficient enough. Thus direct the AO to delete the penalty and confirm the penalty of ₹ 10,000/-only.
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2023 (8) TMI 922
Rectification u/s 154 - validity of order u/s 200A - Assessee requested the ITO to rectify the levy of fee charged u/s234E - scope of debatable question - HELD THAT:- Rectification application is for correcting the mistakes apparent from records. One cannot take recourse under section 154 in the case of issues which are debatable issues. Hon ble Gujarat High Court in the case of Rajesh Kourani [ 2017 (7) TMI 458 - GUJARAT HIGH COURT ] has stated that they do not concur with the view expressed in the case of Fatehraj Singhvi vs. Union of India [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT ] held that section 234E cannot be levied for the period prior to 1.06.2015. Thus, the two Hon ble High Courts have expressed the different views regarding the question whether late fee under section 234E can be levied for the period prior to 1.6.2015 - this question is a debatable question. The order passed u/s 200A cannot be rectified on the issue which is a debatable issue. Provisions of section 154 cannot be invoked for debatable issue. In this case, levy of late fee under section 234E is a debatable issue as discussed in earlier para. It is not a clear cut mistake apparent from record. Therefore, the order under section 200A cannot be rectified under section 154 of the Act.
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2023 (8) TMI 921
Disallowance u/s 14A read with Rule 8D - assessee did not make any suo-moto disallowance under section 14A read with Rule 8D during the year for earning the dividend income - HELD THAT:- From the financial statement of the assessee, we find that the assessee has debited administrative expenses which includes remuneration to the directors. Accordingly, on the basis of aforesaid facts, AO came to the conclusion that the decision of investment is taken by the directors, so there is nexus of these remuneration expenses with the earning of exempt income since for management of earning exempt income, administration cost is needed. Therefore, it is evident that since after having regard to the accounts of the assessee, AO was not satisfied with the claim of the assessee, disallowance under section 14A read with Rule 8D was computed. We find the action of the AO in computing the disallowance under section 14A read with Rule 8D to be in conformity with the law laid down by Godrej Boyce Manufacturing Company Ltd [ 2017 (5) TMI 403 - SUPREME COURT] Also undisputed that the AO has not computed any disallowance under Rule 8D(2)(i) and Rule 8D(2)(ii) of the Rules and only under Rule 8D(2)(iii) of the Rules expenditure in relation to income which does not form part of the total income was computed in the present case. It is pertinent to note that Rule 8D(2)(iii) of the Rules provides a computation mechanism whereby 0.5% of the average of the value of investment, income from which does not form part of the total income, as appearing in the balance sheet on the first and last day of the previous year is considered as the expenditure for the purpose of section 14A Therefore, no infirmity in the impugned order upholding the disallowance under section 14A read with Rule 8D(2)(iii). Accordingly, the impugned order is upheld and the grounds raised by the assessee are dismissed.Decided Disallowance of long-term capital loss and carry forward of same - HELD THAT:- We find that the investment in Prestige Multi Trade Pvt. Ltd. was continuing from the previous financial year and there is no material available on record to show that the same was disputed by the Revenue. Therefore,we deem it appropriate to grant one more opportunity to the assessee in the interest of justice to produce the material, as required by the lower authorities, to substantiate its claim of long-term capital loss on the sale of investment in Prestige Multi Trade Private Ltd. Accordingly, we restore this issue to the file of the AO for de novo adjudication. Further, the assessee is directed to furnish the documents in support of its aforesaid claim. No order shall be passed without affording reasonable opportunity of being heard to the assessee. Ground raised in assessee s appeal is allowed for statistical purposes. Disallowance of bad debts u/s 36(2) - HELD THAT:- The assessee has also furnished a copy of the ledger of Spanco Telesystems and Solutions Ltd. in its books to show the receipt of payment from the aforesaid entity and sundry balance - It is evident from the record that these details were not furnished before the lower authorities. Accordingly, we deem it appropriate to restore this issue to the file of the AO for de novo adjudication after examining the details as furnished by the assessee. Since the sundry balances written off were disallowed u/s 36(2)(i) the assessee is directed to furnish further details that the said amount was offered as income in previous years. Grounds raised by the assessee are allowed for statistical purposes.
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2023 (8) TMI 920
Unexplained investment/unexplained cash credit under section 68 69 - What's the source of investment in the purchase of property? - Assessee submitted that it was out of credits and repayment of loan given by the assessee to the respective parties during previous financial period - HELD THAT:- AO made addition by invoking provisions of 68 69 simultaneously without specifying as to whether he wants to treat the impugned amount as unexplained investment or as unexplained credit. CIT(A) uphold the addition by treating the same as unexplained investment u/s. 69 of the Act. On the other hand, as we have discussed above in detail, based on uncontroverted documentary evidence filed by the assessee, that the creditworthiness of all four lenders and genuineness of transactions is clearly established by the assessee and there is no iota of doubt in this regard. Therefore, no addition is called for on account of baseless allegation of unexplained investment by the assessee u/s. 69 - Accordingly, the main effective grounds of assessee are allowed and AO is directed to delete the addition. Appeal of the assessee is allowed.
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2023 (8) TMI 919
Unexplained cash deposits in bank - sale proceeds of trading receipts undertaken by the Assessee and sustaining addition claim to be agriculture receipt - Agriculture receipt treated as Sham receipt of agriculture produce - HELD THAT:- The assessee had produced some confirmation certificates for getting commission in cash for property bills were also furnished. When the A.O. verified the bills produced by the assessee from M/s Agra Alu Trading Company they have specifically denied making any payment to the assessee. The said information has also been confronted with the assessee. The assessee once again filed letter claimed to have been issued by M/s Agra Alu Trading Company that these transactions are genuine. The A.O. again verified the genuineness of two confirmations, but from the enquiry report of ITO, Nasik it was gathered again through an independent confirmation from the party that the bills produced by the assessee was bifurcated by misusing the letter head of M/s Agra Alu Trading Company. Thus, the A.O. treated the cash deposits in the bank account as unexplained correctly. As per Section 156(1) of UP Zameendari Abolition Reforms Act, no Bhoomadar' or Asami shall let for any period whatsoever any land comprising in his holding. When there is specific bar that no land can be given on rent the assessee cannot have agriculture receipt. Thus, in our opinion, the order of the assessment in making the addition as unexplained by the A.O. which was confirmed by the CIT(A) is in order which requires no interference. Apart from the same, it is the specific ground of the assessee that no opportunity of cross-examination was given to the assessee on whose testimony the addition has been made. It is found from the record that at no point of time, the assessee sought for permission for cross- examination and on the other hand, the statement made by the parties have been confronted with the assessee and found that the assessee has fabricated the documents and produced before the A.O. Therefore, in our opinion, the grounds of Appeal of the assessee are devoid of merit. Accordingly, the Grounds of appeal of the assessee are rejected.
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2023 (8) TMI 918
Condonation of delay in filing appeal before ld. CIT(A) - eligible reasons for delay - HELD THAT:- Hon ble Supreme Court in the case of N. Balakrishnan v M Krishna Murthy [ 1998 (9) TMI 602 - SUPREME COURT ] and H.L Malhotra Com. [ 2020 (12) TMI 1083 - DELHI HIGH COURT ] as relied by the ld. counsel, held that if there is sufficient cause explaining the delay then the same should be condone as the assessee never benefited by the delayed filing of appeal. In the present case the assessee wanted to depend on particular consultant whereas the revenue justifying the denial of condonation by suggesting that the assessee should have engaged other counsel or consultant. The revenue is not entitled to suggest the assessee to manage his tax litigation it is choice of assessee that how he wants to proceed before the tax authorities. CIT(A) has not disputed or doubted factum of illness of Shri S.M Mathur who undergone bypass surgery during relevant time period. Therefore the delay in filing appeal before ld. CIT(A) is condoned and ground no. 1 of assessee is allowed. Since the ld. CIT(A) has dismissed appeals in limine denying condonation of delay with expressing any adjudication on merits therefore both the appeals are restored to the file of ld. CIT(A) for adjudication of first appeal on merits
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2023 (8) TMI 917
Unexplained money u/s 69A - Unexplained investment u/s 69 - seized document found during search from third party relied upon - credit of said amount not disclosed by the assessee in its books of accounts - burden of proving receipt of cash -presumption u/s. 292C - HELD THAT:- Presumption u/s 292C (1)(i) cannot be drawn against the assessee on the basis of the document found in the possession of third party i.e. Shri Naresh Gupta who was a deed writer in the present case. Addition made by the Assessing Officer as unexplained money u/s . 69A of the Act, which applies to a situation when assessee is found to be the owner any money bullion etc. not recorded in the books of accounts of assessee. As per facts gathered and alleged by the Assessing Officer we note that the main contention of the Assessing Officer based on unsigned ATS is that the credit of cash payment was not found to be recorded in the books of accounts of assessee which attracts the provision of section 69 of the Act. As first and foremost condition for invoking sec. 69 of the Act is that the Assessing Officer must come to a conclusion that an Assessee had, in fact, made an investment. Once an AO finds that an investment has been made, he has to examine the Assessee's explanation as to the source of that investment. It is only in cases where the Assessee is unable to explain the source of the investment made that provisions of Section 69 of the Act can be applied to tax the value of the investment made. CIT(A) was right in holding that no addition can be made and sustained only on the basis of unsigned unexecuted draft agreement to sale found from the premises of third party i.e. deed writer without any other collaborative evidence supporting the factum of receipt of cash by the assessee under the alleged document. We are unable to see any ambiguity, perversity or any other valid reason to interfere with the findings recorded by the ld. CIT(A) and thus we uphold the same. Accordingly, grounds of revenue being devoid of merits are dismissed.
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2023 (8) TMI 916
Levy of penalty u/s. 271B - non completion of audit within reasonable time - HELD THAT:- As admitted fact that the Audit certificate was issued by the Tax Auditor on 20.02.2013, which was after the due date of completion of the audit u/s 44AB, which was contented by the assessee as beyond its control, and rightly so, we find merit in the submission of the assessee, however in the submissions of the assessee there was no whisper pertaining to delayed appointment of the Auditor, which could be the key fact or event justify the contention of the assessee that there was nothing on the part of assessee which makes assessee responsible for the delay. It is therefore necessary to verify when the statutory auditors and tax auditor were appointed by the regulatory authority i.e. registrar of cooperative society, thus, we are of the considered opinion that order of penalty levied by the Ld.AO u/s. 271B of the Act and confirmed by the Ld.CIT(A) is liable to be set aside with a direction to verify that the appointment of the statutory/tax auditor was done after the due date of completion of audit u/s 44AB of the Act, and if same is the case and audit was completed within a reasonable time of such appointment, then the penalty u/s 271B cannot be held as justified. We, therefore, set aside the order of the Ld.CIT(A) and restore the issue to the files of AO to verify the documents. Disallowance u/s 80P - Interest on the bank deposit - HELD THAT:- As issue involved in the present appeal regarding allowability of assessee s claim pertaining to sec.80P(2)(a)(i) of the Act, on the interest on the bank deposit remain the same as were there [ 2022 (8) TMI 597 - ITAT RAIPUR] as relied upon by the assessee, therefore, we respectfully following the same, direct the AO to allow the assessee s claim for deduction u/s. 80P(2)(a)(i).
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2023 (8) TMI 915
Penalty levied u/s 271(1)(c) - application for condonation of delay rejected - assessee filed appeal after delay of 25 months - disallowance of exemption u/s 11(1)(d) and disallowance of expenses - as per assessee they were not served penalty order and/ or that came to know about the impugned penalty order only on 13.05.2021 - HELD THAT:- We find that assessee has filed copy of screenshot of the inbox of email of omconsultancy1963@yahoo.com, on careful perusal of such screenshot, we find that it shows only mail received from surat.ito.exem@incometax.gov.in is about the show cause notice and there is no mail regarding order under section 271(1)(c) - CIT(A) has neither verified the facts pleaded by the assessee in his application of condonation of delay nor sought comment of assessing officer nor he verified the fact from e-mail of assessing officer, whether the impugned order was sent on registered e-mail or not. Thus, in absence of contrary evidence, we do not find any justification in rejecting the application for condonation of delay and in dismissing the appeal unadmitted. We further find that merit in the submission of assessee that assessee-trust were contesting all the proceedings in quantum assessment and ultimately succeeded. Therefore, there was no justification in dismissing the application of condonation of delay when the assessee has filed affidavit of one of the trustee deposing on oath that they never came to know about passing the impugned penalty order prior to 13.05.2021. We find one more reason that assessee ultimately succeeded in quantum assessment, much before filing appeal in penalty proceedings. In such peculiar situation the order of Ld. CIT(A) in dismissing the application for condonation of delay is set aside. As to merit of the case, we find that in appeal for quantum assessment, the addition on account of disallowance for exemption under section 11 as well as disallowance of expenses was deleted and the appeal of assessee was allowed by this Tribunal in [ 2020 (4) TMI 576 - ITAT SURAT] therefore, the impugned penalty under section 271(1)(c) would not survive. Decided in favour of assessee.
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2023 (8) TMI 914
Denial of exemption u/s 11 and 12 - assessee has filed form no. 10B belatedly and not filed the same along with filing of the return of income - mandatory v/s procedural requirement - HELD THAT:- As in a recent decision in Social Security Scheme of GICEA [ 2022 (12) TMI 1172 - GUJARAT HIGH COURT] in the matter of exemption provisions contained in section 11/12 of the Act, requiring filing of Form 10B alongwith return of income for claiming exemption, held the requirement of furnishing of report to be a mandatory requirement while that of filing the report alongwith return of income to be a procedural requirement CIT(A) has not appreciated the case of the assessee in the right perspective in the light of various judgments cited by the assessee where it has been held that non-filing of requisite form alongwith return of income is a technical issue, which is curable, and if the assessee has complied with the provisions of the Act in the course of assessment proceedings by curing the defect by filing the audit report, and thereby satisfying substantial compliance, the Revenue cannot ignore the report so filed and reject technically the claim of benefit of exemption under section 11 of the Act, which the assessee was claiming continuously for past so many years, which fact was not disputed by the Department. Appeal of the assessee is allowed.
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2023 (8) TMI 913
Rectification of mistake u/s 154 - addition of sales promotion expenses - Debatable issue - HELD THAT:- On perusal of column Broad Nature of Expenses of the table forming part of Paragraph 4 of the Rectification Order (reproduced hereinabove), it was not apparent the all the sales promotion expenses were incurred on freebies. To the contrary, the broad nature of expenses given in the table suggested that the sales promotion expenses were not in the nature of freebies such as Market Research Fee , Off Supplies Puch (Sales Promotion) , Printing Reproduct (Sales Promotion) , and Documentation Books (Promotional Expenses) . The balance expenses could have included expenses on freebies. This was a matter of investigation as it was not apparent that the sales promotion expenses was incurred on freebies. Thus, the issue of allowance of sales promotion expenses (including freebies) in the hands of the Appellant was debatable and required investigation and arguments on facts and in law. Thus, it cannot be said that allowance of deduction of sales promotion expenses by the AO resulting in a mistake apparent on record. Therefore, absent mistake apparent on record, the action of the AO fell beyond the scope of Section 154. Accordingly, order passed by the AO u/s 154 is quashed. Appeal of assessee allowed.
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2023 (8) TMI 912
Assessment u/s 144C - Royalty receipt - income from distribution of software licenses and providing support services - India-Sweden Tax Treaty - Whether case of the assessee falls under FTS? - assessee submits that the support services provided by it do not make available any technology or technical skills to third party distributors and / or end users. In view of this, the services provided by IAR do not fall within the ambit of FTS under the Article 12 of the India-Sweden Tax Treaty - HELD THAT:- Assessee has received certain funds by supplying software through intermediaries in India and the various Companies are listed of the AO. Assessee has received the receipts as categorized by the DRP as per which assessee has received income from sale of software licence, hardware, support services to those parties who are intended to purchase the latest software from IAR and certain freight charges. Which are part and parcel of the total services rendered by the assessee during the current Assessment Year. Without going into merits of the findings of the DRP, we observe that DRP has come to the conclusion on their own analysis that the case of the assessee falls under FTS. We observe that while passing the final Assessment Order AO has not followed the directions of the DRP and passed his own Assessment Order by merely reproducing his analysis in draft Assessment Order. Final Assessment Order passed by the AO is not as per section 144C(13) - AO has filed a note in support of his final Assessment Order in which he has made submissions that the order passed by him is analyzing the various issue which are without prejudice views which Ld. DRP has not rejected. He is of the view that the final Assessment Order passed by him is as per section 144C(13). AO has not followed the directions of the DRP and the directions of the Ld. DRP are very clear and AO has not bothered to atleast classify the income earned by the assessee under the head FTS as per the directions of the Ld. DRP and royalty. He proceeded to complete the final Assessment Order based on his own analysis made by him in draft Assessment Order which is clearly a violation of not following the directions of the higher authorities and also the provisions of section 144C(13). At the time of hearing, DR heavily relied on the decision of the ITAT Bangalore in the case of Yokogawa India Ltd. [ 2021 (4) TMI 151 - ITAT BANGALORE] in which the bench has remitted the issue back to the file of the AO/TPO to redo the assessment by following the directions of the Ld.DRP. AO and Ld. DRP has taken a divergent view and without going into merits of the issues raised, we are inclined to treat the Assessment Order passed by the AO as bad in law and against the directions specified u/s. 144(13) of the Act. Accordingly, we quash the assessment order passed by the AO and grounds raised by the assessee are allowed in this regard.
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2023 (8) TMI 911
Rejection of books of accounts - estimated net profit @ 15% on Turnover - HELD THAT:- We note that comparable cases and instances discussed by ld CIT(A) in his order state that net profit ratio ranges between 6% to 15% in similar business. However, we note that ld CIT(A) took highest net profit ratio at 15% which is unreasonable. Based on the factual position narrated we are of the view that estimation made by ld CIT(A) is not based on sound reasoning in comparison with the past results as well as comparable cases - Hence, we are of the view that for assessment years 2013-14 and 2014-15, the net profit ratio on turnover should be at 11% and 14% before remuneration and interest to partners, respectively, on turnover, would be fair and reasonable. Therefore, we direct the assessing officer to estimate the net profit on turnover for assessment years 2013-14 and 2014-15, at the rate of 11% and 14%, respectively, before remuneration and interest to partners.
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2023 (8) TMI 910
Levying interest on late payment of TDS u/s. 201(1A) - Assessee is a Third Party Administrator for insurance companies and made payments to various hospitals under cashless scheme on behalf of the insurance companies - Intimation u/s. 154 read with section 200A of the Act charged interest on late payments of TDS u/s. 201(1A) - Ld. Commissioner held that section 194J applies to the payments made by the petitioners to juristic or corporate entities that are providing professional services and the provisions of section 194J are clearly applicable in Third Party Administrator (TPA) cases - HELD THAT:- As all the contentions of the Assessee raised before the ld. Commissioner have been properly considered by the first appellate authority in the impugned order and even otherwise we do not find any reason and/or material to contradict the decision made by the ld. Commissioner on the merits of the issue. Hence, the impugned order does not call for any interference on this count. Decided against assessee.
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2023 (8) TMI 909
Additions u/s 69A - Denial of exemption u/s 11 - Receipt of unaccounted capitation fees in cash - Assessment of trust - AO primarily relied on the statements of third persons as recorded in the search action u/s 132 wherein, according to the AO, they had stated that the assessee received cash from students for admission to medical/dental courses - HELD THAT:- As nothing was brought on record by the Revenue before us, to show that this cash found with Shri Patil represented capitation fees collected from students. The facts placed before us reveal that Shri Patil derived income from several different sources/agriculture etc; and therefore we agree with the findings of the CIT(A) that, the assumption made by the AO that this cash represented capitation fees collected from students was far-fetched and based purely on conjecture surmise. Particularly when, Shri Patil who had been examined twice by the Department viz., in the course of search and in the post search proceedings, had denied collecting capitation fees from students. It is indeed true that a simple denial is not sufficient but at the same time it is also to be seen as to whether the accusation being levelled is supported by material or corraborative evidence found in the course of search. From the facts on record, it is evident that there was no evidence found in the course of search which would show that the assessee had received capitation fees from students. Much ado has been made by the Revenue before us that since the search operation began first at the other group of DY Patil at Navi Mumbai, the assessee society had received prior information about the search operation and for that reason no corraborative evidence or material was gathered in the course of search. Without going into the veracity of this contention, we find that the Ld. CIT(A) had rightly held that, search operation being leaked cannot be an alibi for making addition in an assessment, as the assessment has to be made based on evidences and not on suspicion and conjectures. No reason to interfere with the impugned order of the Ld. CIT(A) deleting the addition made by way of capitation fees - Decided in favour of assessee.
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Customs
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2023 (8) TMI 908
Condonation of delay of thirty one days in filing the appeal - power of Commissioner (Appeals) as per section 128 of the Customs Act, 1962 to condone - HELD THAT:- The Commissioner (Appeals) as per section 128 of the Customs Act, 1962 could have condoned the delay of thirty days. Hon ble Supreme Court held in case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] categorically held The Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days period. In view of the decision of the Hon ble Supreme Court this Commissioner (Appeals) could not have condoned the delay as prayed for by the appellant. The impugned order cannot be faulted with and is upheld - Appeal dismissed.
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2023 (8) TMI 907
Imposition of penalty u/s 114AA on Importer and u/s 112 (a) on CHA - Violation of provisions of the Customs Act, 1962 - allowing re-export of the goods which has been detected with some hazardous material - HELD THAT:- The Bills of Entry were presented before the Customs Officers at Mahadipur LCS for examination. The goods were assessed and customs duties were also paid. However, the consignments were taken out without examination report and out of charge certificate from the concerned officers of the LCS, thus the provisions of Section 47 of the customs Act are violated. It is observed that Suseth Pal and Khalid Biswas are Partner and Employee of the CHA Firm engaged by the importer for the purpose of clearance of the goods, by filing the Bills of Entry and observing the customs formalities of clearance. From the findings recorded in the impugned order, it is held that they have filed the Bills of Entry properly and presented them for examination and assessment. After assessment, customs duty has also been paid. Since the Bills of Entry were not signed and out of charge certificate was not given, they advised the importer not to move the goods out of the LCS in writing vide their letter dated 03.03.2015. However, the importer took the risk and moved the goods out of the LCS on his own, without listening the advice of the CHA - the CHA cannot be held responsible for the violations committed by the importer, without listening the advice of the CHA. Accordingly, the penalty imposed on Shri Suseth Pal, Partner of the CHA Firm and Shri. Khalid Biswas, Employee of the CHA Firm, under Section 112(a) of the Customs Act, 1962 are not sustainable. Penalty imposed on Shri. Biplab Mohanta, Authorized Representative of the importer Uttam and Brothers - HELD THAT:- There is no evidence available on record to establish that he was involved in removing the goods out of the LCS without Out of charge certificate . Shri Uttam Sarkar, in his statement dated 16.042015 categorically stated that due to security reasons they have taken out the said three consignments from the LCS without any examination report and without out of charge order issued by the proper Customs officers at his own risk and responsibility. The findings in the impugned order also indicates that the trucks containing the goods were removed from the LCS without the out of charge certificate, by the importer Uttam Sarkar on his own, by taking the risk associated with such offence on himself. Under these circumstances, an employee of the importing firm cannot be held responsible for the offence wantonly committed by the importer Uttam Sarkar. Accordingly, the penalty imposed on the Authorized Representative Shri. Biplab Mohanta under Section 112(a) of the Customs Act, 1962 is not sustainable. Order for re-exportation granted by the Commissioner - HELD THAT:- The Test Reports indicate that the instant consignment contains hazardous azo dye Benzedrine more than 50ppm which is prohibited for importation by the government of India under Section 6(2) (d) of the Environment (Protection) Act, 1986 (29 of 1986) read with Rule 13 of the Environment (Protection) Rules, 1986. The Azo Dye testing in respect of the readymade garments is done to prevent the use of harmful chemicals in readymade garments, which may cause cancer to human skin, and even to the bladder, ureter and other organs. Therefore, the goods detected with Benzedine more than 50ppm were required to be ordered for destruction. Section 125 of the Customs Act allows the adjudicating Authority to give an option to the importer to redeem the goods on payment of Fine inlieu of confiscation. In the instant case, as the goods were hazardous in nature, releasing it in the domestic market or destroying it may harm the environment. Accordingly, the adjudicating authority has allowed the goods to be re-exported on payment of Fine - there is no violation of any of the provisions of Customs Act, 1962,in granting re-export against payment of fine. Accordingly, the order of the Commissioner allowing re-export of the hazardous goods on payment of Fine is upheld. Penalty has not been imposed on Shri. Uttam Sarkar and Shri. Suseth Pal under Section 114AA of the Customs Act, 1962 - HELD THAT:- In terms of Section 114AA of the Customs Act, 1962, if a person knowingly or intentionally makes, signs or uses, or causes to be made signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods - Section 114AA of the Customs is very specific about purposes for which the penalty under this section is imposable - the findings of the adjudicating Authority agreed upon that the Shri. Uttam Sarkar and Suseth Pal has not intentionally or knowingly made, signed or used any declaration/statement or documents for transaction of business under the Customs Act, 1962 . There is no evidence brought in by the investigation to substantiate the allegation against them for imposition of penalty under section 114AA of Customs Act, 1962. Hence, they are not liable to penalty under Section 114 AA of the Customs Act, 1962. Appeal allowed.
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Insolvency & Bankruptcy
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2023 (8) TMI 906
Application for approval of the resolution plan heard on as many as 35 days - Final orders have not been passed - HELD THAT:- On 7 August 2023, the proceedings were heard for several hours after which they were posted to 29 August 2023 but in the meantime one of the members of the Bench has been transferred to the Bench of the NCLT at Chandigarh. In view of the time lines specified in the Insolvency and Bankruptcy Code, the NCLT should dispose of the application for approval of the resolution plan as expeditiously as possible and in any event within a period of two months from the date of this order and report compliance to this Court - Application disposed off.
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2023 (8) TMI 905
Jurisdiction of the Adjudicating Authority / Tribunal to waive , the Electricity Dues , recoverable from the premises - HELD THAT:- A mere running of the eye over the Judgment, dated 13/12/2022 in Company Appeal (AT) (Ins) No. 1078/2020 (Principal Bench) [ 2023 (1) TMI 290 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] , this Tribunal , comes to an inevitable , irresistible and inescapable conclusion, that this Appellate Tribunal has observed [ 2022 (5) TMI 1365 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] . Following the said Judgment of this Appellate Tribunal , which is squarely applicable to the facts of the instant Company Appeal (AT) (CH) (Ins) No. 62/2022, before the Tribunal, this Tribunal , dismisses the instant Company Appeal (AT) (CH) (Ins) No. 62/2022, but without Costs.
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PMLA
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2023 (8) TMI 904
Seeking release on Bail - money laundering - predicate offence - withdrawal of SLP arising out of the rejection of his prayer for bail - wrong interpretation of Section 45 of the Prevention of Money Laundering Act, 2002 - flight risk - HELD THAT:- It is true that the respondent moved this Court by way of a Special Leave Petition against the refusal of the High Court to grant bail in the predicate offence. But the withdrawal of the said Special Leave Petition need not stand in the way of this Court independently considering the correctness of the impugned judgment. It is true that the interpretation given by the High Court to Section 45 of the PMLA, 2002 is not in tune with the law laid down by this Court. But, it is made clear that the interpretation given by the High Court in the impugned judgment to Section 45 is not correct. The respondent is still in custody in connection with the predicate offence. Therefore, at least as on date, the question of the respondent being a flight risk does not arise. As to what happens to the bail application moved by him in the predicate offence, as and when it comes up for hearing, will at present be a matter of guesswork. In any case, by directing the respondent to surrender his passport, the said apprehension can also be taken care of. It is stated that the passport is already surrendered. The continued incarceration of the respondent, who has now completed nearly half of the penalty that can be imposed, may not be necessary. Therefore, the Special Leave Petition is dismissed.
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Service Tax
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2023 (8) TMI 903
Classification of service - loading and unloading charges - Levy of Service Tax - house rent charges reimbursed by client - incorrect working of service tax - penalties. HELD THAT:- The major demand was admittedly paid by the appellant only a small amount was disputed in the present appeal. Classification of service - loading and unloading charges - classifiable under Manpower Supply Service or under cargo handling service? - HELD THAT:- As per the contract dated 30.07.2010 irrespective that the fact whether the labour provided by the appellant have carried out the loading and unloading or any other work but when as per contract the appellant were supposed to provide the manpower service, the activity clearly qualified as Manpower Recruitment and Supply Agency Service and therefore on this count the demand is clearly sustainable. Levy of service tax - house rent charges reimbursed by client - HELD THAT:- The recipient have arranged such accommodation on behalf of the company and on receiving the sum as reimbursement, As per contract dated 30.07.2010 the appellant were to pay salary/ food/ accommodation to the worker engaged in the work. As per these terms, the appellant themselves have to incur the expenditure for all these items including accommodation of the workers and on the turn key working the appellant is supposed to receive the service charges. Therefore, it cannot be said that the appellant have incurred the expenses on behalf of the service recipient as buyer/agent. Accordingly, the amount of house rent charges cannot be termed as reimbursement of expenses over and above the service charges. Therefore, the demand on this count is also sustainable. Incorrect working of service tax - HELD THAT:- The appellant have referred the letter dated 07.06.2011, though the appellant have given the reconciliation in the said letter. However, both the lower authorities have rejected the same on the ground that no documents were produced in support of their claim of incorrect calculation of service tax liability. In appeal also the appellant have not submitted any documents therefore, demand of service tax of amount of Rs. 73,053/- is also sustainable. Penalty imposed under Section 76, 77 and 78 - HELD THAT:- The appellant have recorded the entire transaction in the books of account. They have worked under the contract, they have admittedly paid the major amount of Rs. 36, 00,875/- along with interest of Rs. 4,23,451/- and the remaining amount involved is on debatable issue, therefore, malafide intention cannot be attributed to the appellant. In these circumstances by invoking Section 80, the penalties under section 76, 77 and 78 are not imposable. It is also found that the appellant have been imposed penalty under section 76 and 78 simultaneously. It is settled legal position by the Hon ble Gujarat High Court in the case of M/S RAVAL TRADING COMPANY VERSUS COMMISSIONER OF SERVICE TAX [ 2016 (2) TMI 172 - GUJARAT HIGH COURT] that the penalty under Section 76 and 78 cannot be imposed simultaneously. Accordingly, the penalty under section 78 is not imposable also on this principle. The appeal is partly allowed.
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2023 (8) TMI 902
Taxability - activity of arranging and conducting out station camps/ programs for school children etc. and organizing and conducting tracking camp, adventure camp, wildlife safari, nature camp etc. and arrangement for food, transportation accommodation etc. for the above programs - appealable order as per section 85 of Finance Act or not - HELD THAT:- The services under question namely arranging and conducting out station camps/ programs tracking camp, adventure camp, wildlife safari, nature camp etc are provided by the Respondent to the school students only which are nothing but outdoor educational activities. Needless to say, that outdoor games and activities are very much part of education curriculum of education, specialization and expertise for all round development of children which is required for their survival and growth in the present era of education. In the present era all the educational institution do not have in house facility to provide extra curriculum of education therefore such institution outsource the same to the person having expertise in the field to get the best possible result on the low possible cost. Therefore, just because of outsourcing such activities cant cease to be educational activity therefore in our considered view all the activities carried out by the respondent is only related to educational activities and not for any activity other than education. The impugned order passed by the learned Commissioner extending the benefit of exemption Notification No. 25/2012- ST dated 20.06.2012 is absolutely correct and legal which does not suffer from any infirmity. From the plain reading of the Sub section (1) of Section 85 it is clear that any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Principal Commissioner of Central Excise or Commissioner of Central Excise may file appeal to Commissioner of Central Excise (Appeals). In the present case the respondent on a very vital issue that whether their activities are taxable or exempted sought clarification from the department, in response the Additional Commissioner vide his letter dated 01.05.2013 given his decision on the taxability of the activities of the respondent. This decision is clearly covered under section 85 (1) in term decision under the said section therefore against the said decision an appeal statutorily lies before the Commissioner (Appeals) - the letter dated 01.05.2013 issued by the Additional Commissioner is clearly an appealable order therefore on this count also revenue appeal does not survive. The order passed by the Commissioner (Appeals) is legal and correct which does not require any interference accordingly the same is upheld - Appeal of Revenue dismissed.
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2023 (8) TMI 901
Chargeability of Interest - provisions made in the books of account of the appellant towards the payment of Royalty and Technical Knowhow fees - HELD THAT:- The facts, as appearing from the Statement-of-Facts and the orders of the lower authorities, indicate that the appellant had short-paid the tax even though the same was apparently on the provision made. Whether the provision made by the appellant on the payments of Royalty and Technical Knowhow is amenable to Service Tax has not been questioned nor it is found that any arguments advanced in this regard. When the assessee, without questioning the taxability, has paid part of the tax, it is incumbent for the assessee to remit the balance tax portion upon being pointed out, with interest in terms of Section 75. Thus, when there is a delay of the payment, then the same has to be remedied with the payment of interest on such belated payments in terms of Section 75 of the Finance Act, 1994. The appellant, admittedly, has not challenged the levy of tax, but only questioned the interest which does not merit consideration - It is found that interest under Section 75 is necessarily linked to the duty payable, such liability arises automatically by operation of law, as held by the Hon ble Apex Court in the case of Commissioner of Central Excise, Pune v. M/s. SKF India Ltd. [ 2009 (7) TMI 6 - SUPREME COURT] , which is also applicable to belated payment of interest even under the Service Tax Act. There are no merit in the appellant s case and therefore, the same is dismissed.
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2023 (8) TMI 900
Declared Service or not - amount deducted by the appellant towards the compensation for not supplying the WHR boiler in time - section 66E(e) of Finance Act 1994 - HELD THAT:- In the present case, it is not the case of the department that the agreement provides for a consideration for an obligation to refrain from an act or for agreeing to tolerate an act or a situation. The demand, therefore, could not have been confirmed in view of decision of the Tribunal in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] and the Circular dated 28.02.2023 - In the said case it was held that The activities, therefore, that are contemplated under Section 66E(e), when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity. The order dated 04.10.17 passed by the Commissioner (Appeals) cannot, therefore, be sustained and is set aside - The appeal is, accordingly, allowed.
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Central Excise
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2023 (8) TMI 899
Incorrect classification - Department was unable to make good its submission - HELD THAT:- Particularly in absence of the requisite evidence, the Tribunal ruled in favour of the respondent where it was held that As regards the duty demand on silver residue which is arising during the processing of the film, as per Chapter Note to Chapter 26, silver waste arising in the processing of cinematographic films stands excluded from Chapter 26 and are properly classifiable under Chapter 71 and during the material period, the silver residue was exempt from excise duty. Therefore, the excise duty demand in respect of silver residue also does not sustain. In view of the finding of fact with reference to the evidence, or want of evidence, as recorded by the Tribunal does not lead to any question of law worth consideration in this appeal. Appeal dismissed.
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2023 (8) TMI 898
Refund claim as per the section 11 B of the Central Excise Act, 1944 - Compounded levy scheme - HELD THAT:- Appellant has opted to carry out his operations in terms of Section 3A of the Central Excise Act, 1944 as inserted by the Finance Act, 1997 read along with the Induction Furnace Capacity Determination Rules, 1997 and Rule 96 ZO of the Central Excise Rules, 1944. The entire proceedings in the matter are in respect of Application for Refund filed by the appellant under Section 11B of the Central Excise Act, 1944 on 06.09.2010. Revenue has throughout treated the application to be made in under Section 11B and even the order dated 19.03.2019 allowed the refund in favour of appellant holding that the refund is to be sanctioned in favour of the appellant as per the section 11 B of the Central Excise Act, 1944 - The present case is not a case for redetermination of duty on the basis of actual production in terms of the Section 3A (4) hence this provision is not applicable for processing the refund application. The Annual Capacity was fixed at 43174.72 MT and the appellant was paying the monthly duty accordingly. After successive round of litigations the capacity as determined by the order dated 21.03.1998 was revised to 32670.848 MT by the order dated 31.12.2010. This refund which has arisen on account of the above revision cannot be said to refund under the provisions of scheme of Section 3A. The order of Commissioner (Appeal) which has been made without taking the note of above facts cannot be upheld. Tribunal has no jurisdiction to prescribe the rate of interest which is prescribed by the Government of India in terms of Notification issue under Section 11BB. The request appellant for interest on the refund will have to be considered only in terms of Section 11BB of the Central Excise Act, 1944 and in the manner as prescribed by the said section. Accordingly the appeal filed by the appellant is to be partly allowed to extent of interest due to them in terms of section 11BB taking the date of filing the application for refund as 06.09.2010. The appeal is partly allowed.
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2023 (8) TMI 897
Condonation of delay in filing appeal - whether the Commissioner (Appeals) was justified in rejecting the appeal of the appellant on the ground of limitation? - HELD THAT:- It is settled law for such technicalities right of appeal - to be heard by a Competent Appellate Authority, as statutorily provided should not be withered away. Commissioner (Appeals) in this case by not allowing the application for condonation of delay has denied the opportunity to the appellant to put his case on merits in appeal filed. There is enough reason to justify the delay of twenty three days ideally such delay should have been condoned and appeal heard on merits. There are no merits in this order of Commissioner (Appeals) dismissing the appeal of the appellant on grounds of limitation after dismissing his application for condonation of delay. The matter needs to be remanded back to Commissioner (Appeals) for decision on merits in appeal that was filed by the appellant before him. Appeal allowed and matter remanded back to Commissioner (Appeals) for decision on merits, to be decided within three months of date of receipt of this order.
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2023 (8) TMI 896
Valuation - special inspection charges or special testing charges incurred by the appellant on the request and on behalf of the customers - recovery from customer will form part of the assessable value transaction value of the excisable goods under section 4 (post 01.07.2000) of the Central Excise Act, 1944 - HELD THAT:- As per the facts of the present case there is no dispute that before carrying out the third party inspection as per the requirement of the customer. The goods have been fully manufactured. The excise duty paid by the appellant is on the transaction value fixed between the appellant and their customers. It is the customer who wants to get a special testing and inspection done through third party agency. As regard this third party inspection the appellant is not obliged to get this special testing and special inspection done on the product, it is solely on the requirement of the customer who gets this special testing and inspection done on the product. Therefore, the appellant is not otherwise involved in the said third party inspection. It is only for the convenience purpose of the customer, the appellant coordinates such third- party inspection for which the payment for such third-party inspection is though initially paid by the appellant but subsequently and finally incurred by the customer. The third- party inspection charges cannot be included in the assessable value/ transaction value of the excisable final product i.e. transformers manufactured by the appellant. This issue has come up for consideration time and again and in various judgment it was held that in the identical fact the third-party inspection charges for special inspection/ testing on behalf of the customer paid by the manufacturer and recovered from the customer is not includible in the assessable/transaction value of the goods on which such special inspection/ testing was conducted. In the present case, the third party inspection charges are not includible in the assessable/transaction value of the goods. Therefore, the demand on this ground confirmed by the Adjudicating authority and affirmed by the Learned Commissioner (Appeal) is not sustainable. The impugned orders are set aside. Appeals are allowed.
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2023 (8) TMI 895
Method of Valuation - Section 4A of Central Excise Act, 1944 or Section 4 of the CEA, 1944 - import of Lead Acid Electric Accumulators/Storage Batteries falling under CET 850710.00 during the period April 2006-2010 - suppression of facts - invocation of extended period of limitation - HELD THAT:- The Appellant has declared the CET of the imported Batteries as 850710.00. Once he declares the CET and the same is not disputed by the Department, it is for the Customs Officials to go through the statutory provisions and correctly assess the CVD payable. At that particular point of time, in respect of all the 39 Bills of Entry, the Customs officials have assessed the Bills of Entry by charging the CVD as per Section 4. There is nothing to suggest that the Appellant has mis-declared either the nomenclature of the goods or the Tariff heading of the goods which would have lead the Customs officials to interpret any erroneous way to charge the CVD under Section 4 instead of under Section 4A. The case law cited by the Learned AR deals with the issue as to how the Battery is required to be assessed at the time of imports. Neither both the sides nor this Bench has any other view. The Batteries are required to be classified under Section 4A only. However, it is seen that in that case the Bench has not gone into the aspect of limitation since there was no pleading by the Appellant on this count. In the present case, the Appellant is not disputing the fact that the Batteries are required to be assessed under Section 4A. He is confining his argument only on account of limitation. There are no suppression on the part of the Appellant which is required to be proved by the Department so as to invoke the extended period - the impugned order is required to be set aside on account of limitation alone. Appeal allowed.
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2023 (8) TMI 894
International Competitive Bidding - Exemption under Notification No. 6/2006-CE dated March 1st, 2006 denied - Appellant appointed as sub-contractor for the projects BHEL required the Appellants to supply boiler components of main equipments of the Mega Power Project while L T required the Appellant to supply Technological Structures and Chutes of Coal Handling Plant of the Mega Power Project - HELD THAT:- The goods have been cleared by the Appellants to the specified Mega Power Projects against International Competitive Biddings and the said facts have duly been recorded in the impugned order and there is no dispute on the said facts. The notifications under which exemptions have been claimed by appellants are subject to condition that the said goods, when imported into India, are exempted from payment of customs duty. In the instant case, since the goods have been supplied for setting up expansion of Mega Power Projects, we find that the Learned Commissioner in his adjudication order has not negated the submissions made by the appellant regarding the availability of the exemptions from customs duty. Had the said goods been imported from outside India, the same would have been eligible for exemption as projects import as available under the aforesaid Notification No. 21/2002. The goods in question are classifiable under Chapter 73 of the Tariff. Under Central Excise Tariff there is no Heading 98.01 which exists in Customs Tariff only. Since the goods manufactured in India cannot be classified under Heading 98.01 of the Central Excise Tariff, denial of the exemption on the ground of non-fulfilment of condition of Project Import Regulation is not sustainable particularly when Condition No. 86 of the Notification No. 21/2002, dated 1-3-2002 is fulfilled by them - it is held that appellants are eligible for exemption under Notification 6/2006-C.E., dated 1-3-2006 and accordingly the impugned order is liable to be set aside. As it is an undisputed fact that the impugned goods were supplied and used for setting up/expansion of the Mega Power Projects through International Competitive Bidding process, therefore the exemption as claimed by the Appellant is admissible to them. Under the circumstances there is no merit in the order of the adjudicating authority challenged herein, which therefore needs to be set aside. The impugned order passed by the Learned Commissioner is therefore dismissed as non-maintainable - The appeal filed by the assessee is allowed.
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CST, VAT & Sales Tax
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2023 (8) TMI 893
Best Judgement assessment - scope of term 'goods' - electrical energy comes within the definition of goods or not - petitioner submits that since the definition of goods specifically excludes electricity, the contention that electrical energy is included under the 1st Schedule to the Act as exempted goods would not make any difference to the situation - HELD THAT:- It is noticed that Ext. P19 notice proceeds on the basis that the goods brought in by the petitioner on 24.3.2008 had been disposed of during the financial year 2008- 09 without disclosing the same to the Department. It is, therefore, presumed that the petitioner had brought in three different windmills and had effected sale of the same which has not been disclosed to the Department. It is on this basis that tax at the rate of 4% on the value of three windmills with cess and interest has been calculated by Ext. P20. The petitioner has produced material to show that what was brought into the State was one windmill in a knocked down condition in three separate vehicles and also to show that the said windmill is still operational and that electrical energy is being generated and supplied to the KSEB. The further contention appears to be that electrical energy being goods included in the 1st Schedule, for which, no tax is payable, the sale of electrical energy also ought to have been disclosed by the petitioner, who is a registered dealer under the KVAT Act, in his returns as turnover which has not been done in the instant case. The remaining question is with regard to the sale, if any, of the windmill as such. From the materials produced by the petitioner, especially Exts. P15, P22 and P24, it is clear that what has been brought into the State of Kerala was one windmill in knocked down condition in three separate vehicles as part of the same bill or invoice. The KSEB is on record stating that one windmill is still functional at Ramakkalmedu and that electrical energy is being generated and supplied to the KSEB from the same. Thus, Ext.P20 order, which does not satisfy the ingredients of Section 25(1) of the KVAT Act is completely unsustainable. Exts. P19, P20 and P26 are, therefore, set aside - petition allowed.
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Indian Laws
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2023 (8) TMI 892
RTI - Seeking various information regarding third parties (Petitioner) from excise department - who has claimed the benefit of exemption - Seeking list of manufacturers or suppliers of the equipments/machineries of plants before the Central Excise Department - Right to Information Act, 2005 - HELD THAT:- This Court is of the opinion that there is no infirmity in the order passed by the First Appellate Authority dated 15.11.2011 in directing the information in respect to the information so sought for in the application dated 01.09.2011 from Clauses 1 (a) to 1 (x) except Clause 1(g). Now coming to the information as regards Clause 1 (g) of the Application, this Court enquired with the learned counsel for the petitioners as to whether the petitioners claimed confidentiality while furnishing the list of manufacturers or suppliers of the equipments/machineries of plants before the Central Excise Department. The learned counsel for the petitioner submitted that he has no instructions in that regard. It is also relevant to take note of that there is no pleading to the effect that confidentiality was claimed at the time of furnishing the information pertaining to the list of manufacturers/suppliers of the equipments/machineries of the plants before the Central Excise Department. Taking into account, it is the further opinion of this Court that the information sought for under Clause 1 (g) of the application dated 01.09.2011 would not come within the ambit of Section 11 of the Right to Information Act, 2005. This Court further finds it relevant to take note of another submission of the learned counsel for the petitioners which pertains to Section 19 (4) of the RTI Act in as much as it is the submission of the learned counsel for the petitioners that the reasonable opportunity had to be given to the third party when an appeal is preferred relating to the information of third party. The said submission though at the first blush looks attractive but the same is misconceived taking into account that the petitioners herein did not claim confidentiality to come within the ambit of Section 11 of RTI Act. This Court does not find any merit in the instant writ petition for which the instant writ petition stands dismissed.
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