TMI Tax Updates - e-Newsletter
August 29, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Refund of unutilized ITC accumulated - Place / location of supply - Export of services or not - OIDAR - supply of service was to be made to M/s. Emirates Defence Industries Co. which was not located in India. Also the place of supply of service was agreed to be outside India, as also the payment of such services was being received by the petitioner/supplier of service in convertible foreign exchange - Benefit of Zero rated supply allowed - Refund to be granted - HC
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GST:
Seeking release of seized currency - Power u/s 67(2) of GST Act to seize unaccounted money - applying the principle of purposive interpretation, the power u/s 67 of the Act cannot be read to extend to enable seizure of assets on the ground that the same are not accounted for. - Money directed to be returned back - HC
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Income Tax:
Penalty u/s 271(1)(b) - Manner of service of notice - there is no mentioning of reasons by the A.O. in the assessment order as to why the Notice has to be served through affixture and the A.O. has not mentioned anything regarding efforts of ‘due and reasonable diligence to serve the notice’ on the assessee as required under rule 17 of order V of the CPC, thus the Service of Notice by way of affixture on the Assessee cannot be construed as sufficient Service of Notice. - AT
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Income Tax:
Income deemed to accrue or arise in India - fees for technical services - the assessee is making available RCITP all reports, analysis, tests, tables, plans, drawings or other documents in any form including electronic or printed form for the use of RCITP which enables RCITP to apply and use all these deliverables for its business purposes - Taxable u/A 12 of India-Singapore DTAA - AT
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Income Tax:
Penalty u/s 271(1)(c) - Assessee preferred a claim which was not acceptable to the Revenue - threat of penalty cannot become a gag and/or haunt an assessee for making a claim which may be erroneous or wrong, when it is made during the course of the assessment proceedings - AT
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Income Tax:
Revision u/s 263 - case of “no enquiry” - Regarding introduction of Explanation 2 to section 263, as claimed by Ld. PCIT in his order, we only need to submit that the said Explanation does not give unfettered power to the PCIT to assume revisional-jurisdiction to revise every order of the AO to re-examine the issues already examined during assessment-proceeding. - AT
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Income Tax:
Royality u/s 9 - Addition in respect of license fee for live and non-live transmission qua Sony Pictures Networks India Pvt.Ltd. - In the absence of any corresponding change into DTAA in terms, ratio laid down in New Skies Satellite BV (Supra) the amended provision of section 9 of the Act, would have no application. - AT
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Income Tax:
Reopening of assessment - Assumption of jurisdiction by the A.O for disturbing a concluded assessment of an assessee based on a “change of opinion” is not permitted under law - Re-Assessment order quashed - AT
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Income Tax:
Rectification of mistake u/s 154 - period of limitation - the original assessment u/s 143(3) is dated 21.11.2011 - the order u/s 154 has been passed on 29.06.2017, which is clearly beyond the period of four years specified and therefore, the 154 order passed by the AO is beyond the period of the limitation provided. Accordingly, same is invalid in law and thus it is quashed. - AT
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Customs:
Levy of penalty on CHA u/s 114(i) and 114AA of the Customs Act, 1962 - acts of omission and commission in relation to the attempted illegal export of Red Sanders - So, penalty is imposable for his acts of omission or commission, may be deliberate or negligent. His conduct aided and facilitated the illegal attempted export of Red Sanders wood pillars and tops. - The penalty upheld at Rs.1,00,000/- is reduced to Rs.50,000/- - AT
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Customs:
Valuation of import of ceramic tiles - Reliance placed in NIDB data on contemporaneous imports - There is no evidence put forward by the department as to the reason for doubting the transaction value. - The department has failed to establish the grounds to reject the transaction value. - AT
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Customs:
Levy of IGST on import of goods - classification pumps and pump filters imported for for ‘washing machines’ and ‘dishwashers’ - essential onus devolving on customs authorities for re-classification has not been discharged in the impugned proceedings. - the declared classification of the imported goods prevails. - AT
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Customs:
Denial of request of conversion of free shipping bills into drawback shipping bills - Appellant should have been granted opportunity to establish that claim in terms of proviso to Section 149. The impugned order rejecting the request made is hit by the violation of principles of natural justice. - Matter restored back - AT
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Indian Laws:
Dishonour of Cheque - insufficiency of funds - As there are specific allegations against the respondent no.1 in the complaint and he was admittedly a partner in the partnership firm when the rent deed was executed, he is liable to face prosecution. Powers under Section 482 of the Code can be exercised by the High Court in case when it comes across unimpeachable and incontrovertible evidence to indicate that the partner of the firm did not have any concern with the issuance of cheques. - SC
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Indian Laws:
Scope of arbitral award - The principle of interpretation of contracts adopted by the Division Bench of the High Court that when two constructions are possible, then courts must prefer the one which gives effect and voice to all clauses, does not have absolute application. The said interpretation is subject to the jurisdiction which a court is called upon to exercise. While exercising jurisdiction under Section 37 of the Act, the Court is concerned about the jurisdiction that the Section 34 Court exercised while considering the challenge to the Arbitral Award. - SC
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Service Tax:
Supply of tangible goods for use - Lease of Vehicle / Charter of Vessels - during the charter period of vessels the right of possession of vessels and effective control have been transferred to service recipient, therefore the service does not fall under the “Supply of Tangible Goods Service”. - AT
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Service Tax:
Nature of transaction - Service or sale - Classification of service - unlike in a warehouse, the goods (LPG) stored in the ‘bullet’ storage facility installed at the customers premises is not under the control of the appellant and the whole responsibility of the stored LPG is with the customer. Hence, they are not covered under the category of Storage and Warehousing Services as defined under Section 65(102) of the Finance Act, 1994. - AT
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Service Tax:
GTA - Benefit of exemption / RCM - despite there are numbers of limited and private limited companies as service recipients, the Learned Commissioner (Appeals) has assumed that the majority these customers maybe proprietor and accordingly exemption was denied. - The finding given by the learned commissioner (Appeals) is cryptic and cannot be agreed upon - AT
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Central Excise:
Rejection of refund claim - appellant has not opted for provisional assessment - the refund claim cannot be rejected merely because an assessee had not opted for provisional assessment when there is excess payment of duty - the rejection of refund-claim alleging that the appellant has not opted for provisional assessment is not justified. - AT
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Central Excise:
Reversal of CENVAT Credit - manufacture of dutiable as well as exempted goods - in a case where assessee avails the Cenvat credit on common input service and the same is used for exempted as well as dutiable goods and even at a later stage the assessee reverse the proportionate credit with payment of interest, if there is any delay in reversal of such credit the demand of 10%/6%/5% shall not sustain. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (8) TMI 1264
Refund of unutilized ITC accumulated - Place / location of supply - services rendered by the petitioner of providing Satellite derived 3D model services - export of services or Online Information Database Access or Retrieval services as defined under Section 2(17) of the IGST Act?. Nature of the agreement entered by the petitioner with M/s, Emirates Defence Industries Co. PJSC - HELD THAT:- As seen from the contents of the Agreement, the Agreement describes the petitioner to be engaged in the business of providing Satellite derived 3D model services and has considered skill, knowledge and experience in the field to perform such services and on such representation, the Emirates Defence Industries Co. PJSC had agreed to engage the petitioner to provide the services as defined in the Agreement to EDIC and any of its Affiliates designated by Emirates Defence Industries Co. PJSC. As clearly seen from Schedule-I of the agreement defining the Scope of services as also the Delivery Schedule and Deliverables and the Fee Clauses namely the Fees and Expenses and Payment Schedule , which we have extracted in the foregoing paragraphs, it is clear that supply of service was to be made to M/s. Emirates Defence Industries Co. which was not located in India. Also the place of supply of service was agreed to be outside India, as also the payment of such services was being received by the petitioner/supplier of service in convertible foreign exchange - petitioner certainly qualified the requirement of Section 2(6) that it was dealing in export of services in relation to the Agreement in question. Whether the impugned order is correct when it categories the service offered by the petitioner to be online information and database access or retrieval services (OIDAR) within the meaning of Section 2(17) of the IGST Act? - HELD THAT:- In the present case, there is clearly an agreement of the petitioner with a party, which is a foreign party, whose location is outside the Indian territory. The agreement is clearly for a specialised work of providing 3D city models of Abudhabi, AL Ain, AL Dhafra. These are not works which would be freely available on the internet and / or are materials of the nature Section 2(17) would contemplate. Also undoubtedly the consideration as received by the petitioner for providing of such service is received in convertible foreign exchange, although through the foreign recipients / representative M/s. Bayanat LLP, as it is not the case of the department that such amounts as received by the petitioner are not under the Agreement in question. In fact the invoices clearly refer to the payment in US dollars to be when the contract of the petitioner with Emirates. There is no material to disbelieve the case of the petitioner for any reason whatsoever that the recipient of the service is not a foreign recipient - the petitioner is correct in its contention that merely because the petitioner has secured data from different source so as to create the services to be supplied to Emirates, it would not amount to the petitioner falling within the definition of Section 2(17). The appellate authority is not correct in its conclusion that in the context of Section 13 of the IGST Act, the place of supply in the present case be deemed to be located in taxable territory - Petition allowed.
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2023 (8) TMI 1263
Seeking release of seized currency - whether Section 67(2) of the CGST Act empower any such seizure? - HELD THAT:- The aforesaid question is covered in favour of the petitioner by the recent decision in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West Anr. [ 2023 (8) TMI 929 - DELHI HIGH COURT] , where it was held that 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 present petition is disposed of by directing the respondent to remit the amount seized to the petitioner s bank account within a period of two weeks from today along with accrued interest.
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2023 (8) TMI 1262
Cancellation of registration of petitioner - appeal dismissed as being beyond the prescribed period of limitation - HELD THAT:- In the present case from the perusal of the order dated 07.01.2023, clearly there is no reason ascribed to take such a harsh action of cancellation of registration. In view of the order being without any application of mind, the same does not satisfy the test of Article 14 of the Constitution of India, as such, the impugned order dated 07.01.2023 (Annexure - 2) is set aside. The petition is accordingly allowed.
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2023 (8) TMI 1222
Transitional Provisions as contained in Section 140 of the Central Goods Services Act, 2017 - eligibility for benefit of the Input Tax Credit on any services prior to the appointed date by the Input Service Distributor - HELD THAT:- There can hardly be any lis and/or a contrary assertion on the part of the revenue, against the provisions of sub-section (7) of Section 140, in denying input tax credit, to the bonafide Input Service Distributors when such provision as also the Act itself recognizes such benefit, being part of the transitional arrangement created under Section 140 of the CGST Act. Thus, the Revenue is required to take a holistic view of such impasse, as also, considering the provisions of the CGST Act it needs to take a stand which would not defeat the substantive provisions of the Act, which permits the benefit of the credit to be taken by the assessee under Section 140(7) read with other provisions of the Act - The cases of assessee s on that count can certainly be considered, which would be by a scrutiny on a case-to-case basis, and accordingly whether in a given case, the benefit of credit is available or not would certainly be decided, as the provision itself would envisage. The situation as canvassed by the petitioners is quite anomalous inasmuch as although the Act has Pan-India effect, as also the electronic portal is supposed to operate uniformly throughout the country, issues are stated to have arisen, in respect of input service distributors in Maharashtra and in Goa only - it is left to the wisdom of the revenue to take an appropriate call on the proceedings, before proceeding further to hear the parties so as to decide these proceedings on merits, as ordered by the Supreme Court. Application disposed off.
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Income Tax
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2023 (8) TMI 1265
Deduction u/s 80P(2)(a)(i) - eligibility of exemption of income received by the assessee from cooperative banks/banks - HELD THAT:- We hold that the assessee is eligible for 80P(2)(d) deduction in respect of interest earned from co-operative banks based on the view taken in UNIVERSITY OF AGRICULTURAL EMPLOYEES HOUSE BUILDING CO-OP SOCIETY LTD. [ 2023 (5) TMI 1244 - ITAT BANGALORE] It is directed that any interest earned by the assessee from commercial banks may be considered under the head Income from other sources by granting benefit available to the assessee u/s. 57 of the Act. We direct the Ld.AO to follow the directions therein and to compute the deduction in the hands of the assessee in accordance with law.
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2023 (8) TMI 1261
Validity of Assessment Order passed u/s 143(3) r.w.s. 144B - statutory period of limitation - HELD THAT:- As per the decision of the Hon'ble Supreme Court in Glaxo Smith Kline Consumer Health Care Limited case [ 2020 (5) TMI 149 - SUPREME COURT] a writ petition beyond the statutory period of limitation is liable to be dismissed. The Hon'ble Supreme Court held that the High Courts cannot entertain writ petitions where orders are challenged beyond the statutory period of limitation for filing appeal before the Appellate Authority. Thus the impugned Assessment Order passed u/s 143(3) r.w.s. 144B is liable to be quashed - Decided in favour of assessee.
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2023 (8) TMI 1260
Validity of assessment Order passed u/s 144C - Order of NFAC - non transfer pricing issues which are regular corporate issues are concerned, the respondents were required to comply with the requirements of Section 144B(1) (xvi)(b) - HELD THAT:- As the procedure that is contemplated under the provisions of Section 144B(1) has not been complied with. These procedures are intended to safeguard the interest of the Income Tax Assessees so that they are not put to any prejudice. As evident that under Sub clause (xvi) to Sub section (1) to Section 144B as it stood in case any variation prejudicial to the interest of the assessee, National Faceless Assessment Centre is required to serve a notice calling upon the assessee to Show Cause as to why the proposed variation should not be made. As impugned order has been passed over looking as safeguard prescribed under the above provision, the Court is inclined to quash the Impugned Order and remit the case back to the respondents to pass a fresh order within a period of sixty (60) days from the date of receipt of a copy of this order. The petitioner shall be heard in accordance with the procedure prescribed in force. The respondents are directed to enable the portal to facilitate the petitioner to file a reply within a period of thirty (30) days from the date of receipt of a copy of this order.
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2023 (8) TMI 1259
Assessment u/s 153A - unabated assessment year reopened/ reassessed - HELD THAT:- As mentioned elsewhere a search and seizure operation was conducted on 14.11.2011 and, therefore, the impugned assessment year is unabated assessment year and, therefore, such unabated assessment can be reopened/ reassessed only on the basis of some incriminating material found at the time of search as held in the case of Abhisar Buildwell Private Limited [ 2023 (4) TMI 1056 - SUPREME COURT] since the impugned assessment is devoid of any incriminating material found at the time of search the assessment order deserves to be quashed. Since the assessment order has been quashed we do not find any merit in any claim of the assessee and we also do not find it necessary to dwell into the merits of the claim.
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2023 (8) TMI 1258
Penalty u/s 271(1)(b) - Manner of service of notice - assessee has not complied with the notices issued by the A.O. u/s 148/142(1) - HELD THAT:- In the instance case, the first notice has been admittedly not served and the notice was returned with remark No such person is residing in this address . A.O. considering the fact that the case of the assessee is going to be time barred by limitation and has to be completed before 31st January, 2014 opted for issuing notice u/s 142(1) of the Act by way of substitute service of Affixture on 14/01/2104 for compliance of the same on 24/01/2014 and on the very same day i.e. on 24/01/2014 the A.O. passed the assessment order u/s 144/147. Apart from the same, there is no mentioning of reasons by the A.O. in the assessment order as to why the Notice has to be served through affixture and the A.O. has not mentioned anything regarding efforts of due and reasonable diligence to serve the notice on the assessee as required under rule 17 of order V of the CPC, thus the Service of Notice by way of affixture on the Assessee cannot be construed as sufficient Service of Notice. Therefore, in our considered opinion, the A.O. has committed an error in initiating penalty proceedings - Grounds of Appeal of the assessee are allowed.
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2023 (8) TMI 1257
Income deemed to accrue or arise in India - fees for technical services - Treating the services provided by the assessee to Reliance Corporation IT Park Limited and the payment received as Fees for Technical Services u/A 12 of India Singapore DTAA - HELD THAT:- As could be seen from Virtue of clause 2.9 the assessee who is the principal designer assigns and transfer to RCITP all right title and interest in all deliverables from the moment of creation and the principal designer the assessee grants RCITP a perpetual irrevocable non-exclusive royalty-free fully paid-up right and license to use copy, modify and prepare derivative works of the principal designer intellectual property rights incorporated in the deliverables for the use of the deliverables by the RCITP and its affiliates and third parties engaged by RCITP in connection with the business operations of the RCITP and its affiliates. This clearly shows that the assessee is making available RCITP all reports, analysis, tests, tables, plans, drawings or other documents in any form including electronic or printed form for the use of RCITP which enables RCITP to apply and use all these deliverables for its business purposes which specifies the conditions of sub clause (b) and (c ) of clause (4) of Article 12 of Indo Singapore DTAA. Thus, the payments received by the assessee from RCITP are fees for technical services falls under sub clause (4) of Article 12 of Indo Singapore DTAA. Lower authorities have rightly treated the amounts received by the assessee from RCITP as fees for technical services under Article 12 (4) of Indo Singapore DTAA and was rightly brought to tax at 10%. Decided against assessee.
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2023 (8) TMI 1256
Penalty u/s 271(1)(c) - AO treated amount shown under the head decrease in value of investment as capital loss , declined to allow the same and added it back to the income of the assessee - HELD THAT:- Hon'ble Delhi High Court in the case of CIT vs. DCM Limited [ 2013 (9) TMI 760 - DELHI HIGH COURT ] wherein held that law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible; that when such a claim is made during the course of regular or scrutiny assessment, liberal view is required to be taken as necessarily the claim is bound to be carefully scrutinized both on facts and in law; that full probe and appraisal is natural and normal; that threat of penalty cannot become a gag and/or haunt an assessee for making a claim which may be erroneous or wrong, when it is made during the course of the assessment proceedings; that normally, penalty proceedings in such cases should not be initiated unless there are valid or good grounds to show that factual concealment has been made or inaccurate particulars on facts were provided in the computation. Law does not bar or prohibit a person from making a claim, when he knows the matter is going to be examined by the AO. In the case of CIT vs Reliance Petroproducts Pvt Ltd [ 2010 (3) TMI 80 - SUPREME COURT ] held that when the assessee preferred a claim, it was up to the authorities to accept its claim in the Return or not, but merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty u/s 271(1)(c) - As further held that if the contention of the Revenue is accepted, then in case of every return where the claim made is not accepted by the AO for any reason, the assessee will invite penalty u/s 271(1)(c) of the Act and that is clearly not the intendment of the Legislature. On a consideration of the material before us, we are of the considered opinion that the above decisions are applicable to the facts of the case on hand. Merely because the assessee preferred a claim which was not acceptable to the Revenue, the assessee cannot be visited with the proceedings u/s 271(1)(c) unless and until the twin requirements u/s 271(1)(c) are satisfied. Decided in favour of assessee.
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2023 (8) TMI 1255
Revision u/s 263 - case of no enquiry as understood by Ld. PCIT - Assessee claimed deduction of interest expenditure against interest income chargeable under the head Income from Business but the same was not allowable since the assessee had taken loan in personal capacity and not for business and PCIT noted that the AO has not verified this point and passed assessment-order - HELD THAT:- On a careful consideration of various documents placed there is no dispute or rebuttal by revenue. Clearly, therefore, it is discernible that the Ld. AO has considered those replies / submissions and thereafter taken a plausible view. Further, the action of AO in accepting the replies / submissions of assessee does not lack bonafides and cannot be said to be faulty. Thus, everything hinges on the point as to whether the assessment-order can be said to be erroneous-cum-prejudicial to the interest of revenue merely for the reason that the AO has not discussed those issues in the assessment-order or in other words not written his assessment-order as a perfectionist. In our considered view, the writing of assessment-order is a task of AO and the same is neither controlled nor helped by the assessee. In fact, the assessee has no hand or mind in writing the assessment-order. Being so, we are afraid to accept the pleading of Ld. DR that the assessment-order could be said to be erroneous-cum-prejudicial for that reason. Regarding introduction of Explanation 2 to section 263, as claimed by Ld. PCIT in his order, we only need to submit that the said Explanation does not give unfettered power to the PCIT to assume revisional-jurisdiction to revise every order of the AO to re-examine the issues already examined during assessment-proceeding. As judicially interpreted in several decisions that the intention of legislature behind introduction of Explanation 2 could not have been to enable the PCIT to find fault with each and every assessment-order in unlimited terms since such an interpretation would lead to unending litigation and there would not be any point of finality of assessment-proceeding done by Ld. AO. Thus we are persuaded to hold that the facts of the present case do not warrant application of section 263. Decided in favour of assessee.
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2023 (8) TMI 1254
Deduction u/s 80IA - AO considered Cargo Services rendered by the assessee company to be not covered for the benefit of Section 80IA - assessee had claimed that maintaining, managing, operating, upgrading, modernizing and developing the cargo terminal at the IGI Airport falls in the definition of infrastructural facility u/s 80IA - CIT(A) has deleted the disallowance - HELD THAT:- As decided in assessee own case [ 2018 (11) TMI 1322 - ITAT DELHI] appellant has satisfied all the conditions to claim deduction under section 80IA. Addition of miscellaneous expenditure - revenue argued assessee had failed to produce bills and vouchers still Ld. CIT(A) has deleted the addition - HELD THAT:- The order of Ld. CIT(A) indicates that like AO he has also gone on the general observations however he was correct in holding that if an expenditure is to be disallowed then the same needs to be examined ascertaining if the same is wholly and exclusively in the course of business. There being no finding on that aspect with regard to disallowance of expenses, other than miscellaneous expense which certainly required production of bills and vouchers, to examine the head under which they can be considered for being allowed, having been incurred wholly and exclusively in the course of business. As no specific bills and vouchers were filed, at any stage, the miscellaneous expenses was wrongly deleted by Ld. CIT(A) and to that extend the ground no. 2 of the Revenue is allowed partly
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2023 (8) TMI 1253
Royality u/s 9 - Addition in respect of license fee for live and non-live transmission qua Sony Pictures Networks India Pvt.Ltd. - whether live transmission of sports events in the modern era is not merely a process of streaming event from the venue to the television set of the viewer? - As per the AO, there is a value addition in live transmission likely there are studios having hosts speaking vernacular languages, interviewing experts and celebrity guests and playing short bites of replay of important moments in the game/match even as the game continues - HELD THAT:- In the light of binding precedents in New Skies Satellite BV [ 2016 (2) TMI 415 - DELHI HIGH COURT] we are of the considered view that the AO was not justified in making the impugned addition. The Revenue has not pointed out that corresponding amendment has been made in DTAA. In the absence of any corresponding change into DTAA in terms, ratio laid down in New Skies Satellite BV (Supra) the amended provision of section 9 of the Act, would have no application. The AO is therefore, directed to delete the addition. Ground Nos. 1 to 4 raised by the assessee is allowed. Treatment of tournament fees and reimbursement of dinner tickets as Royalty - HELD THAT:- DRP had directed the AO to spell out the reasons for treating the amount in question as Royalty . The AO failed to spell out the reasons in final assessment order. He has simply repeated the findings of draft order. Therefore, in the absence of clear finding on the part of the AO as to how this amount should be treated as Royalty . The findings cannot be sustained. We therefore, direct the AO to delete this addition. Ground No.5 raised by the assessee is thus, allowed. Non-granting credit of tax withheld at source - HELD THAT:- Considering the submissions made by assessee, we hereby, direct the AO to verify the factum of withholding of tax at source amounting and grant credit in accordance with law. Ground No.6 raised by the assessee is thus, allowed.
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2023 (8) TMI 1252
Reopening of assessment - Change of opinion - undisclosed income as LTCG on the sale transaction of the property [plot] - reasons to believe - HELD THAT:- AO had remained ignorant of the fact that his predecessor had already framed the assessment in the case of the assessee vide his order passed u/s. 143(3). Apart from that, the fact that LTCG on the transaction of sale of the property under consideration had duly been disclosed by the assessee in his return of income filed in response to the notice u/s. 148 and the same was considered by his predecessor while framing the original assessment vide order u/s. 143(3), was also completely lost sight of by the A.O. at the stage of reopening the concluded assessment of the assessee. As there can be no escape from the fact that the concluded assessment of the assessee had been reopened not only based on misconceived facts but has as its foundation facts that had not only been considered, deliberated upon, and formed the basis of the original assessment framed by the A.O vide his order passed u/s 143(3) of the Act, dated 31/03/2016. Thus the reopening of the assessee s case has to fail for the very reason that the same is not based on any new material that had come to the notice of the A.O after the culmination of the original assessment by him vide his order passed u/s 143(3) of the Act, but is a clear case of assumption of jurisdiction u/s 147 of the Act based on a mere Change of opinion. As an assumption of jurisdiction by the A.O for disturbing a concluded assessment of an assessee based on a change of opinion is not permitted under law, we, thus, are unable to subscribe to the jurisdiction assumed by the A.O in the present case u/s 147 of the Act. Decided in favour of assessee.
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2023 (8) TMI 1251
Disallowance u/s 14A - on finding that no exempt income has been earned, ld. CIT (A) deleted the addition as relying on case of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the aforesaid decisions referred to by the ld. CIT (A). Hence, we affirm the order of ld. CIT (A) on this issue. Deduction for provision of post-retirement medical benefits - HELD THAT:- As the appellant's claim of deduction towards provision for post-retirement medical benefits in respect of its serving and retired employees is albeit a provision in its books of account and not incurred during the relevant PY, yet this provision is based upon the actuarial certificate as prescribed in the relevant Accounting Standard (AS 15) of ICAI, required to be followed mandatorily in accordance with the accrual system of accounting as prescribed by the Companies Act. Accordingly, in view of the above as well as in due deference to the decision of Bharat Earth Movers [ 2000 (8) TMI 4 - SUPREME COURT] . the disallowance made on this issue in the impugned order is deleted correctly. Decided in favour of assessee.
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2023 (8) TMI 1250
Disallowance u/s 14A - AO recorded the dissatisfaction on the claim of the assessee of incurring no expenses for earning exempted income and accordingly invoked Rule 8D of the Income-tax Rules, 1962 (the Rules) and made disallowance - HELD THAT:- Once the AO records the dissatisfaction as to the claim of the assessee made in books of accounts, there is no discretion with the AO and he has to invoke Rule 8D for determining disallowance. However if the disallowance computed under rule 8D(2)(iii) exceeds the total expenses in the nature of administrative expenses claimed in the profit and loss account, then disallowance should be restricted to that amount only as disallowance cannot be made more than the expenditure claimed against composite activities of earning exempt and taxable income. In the case of the head administrative expenses administrative expenses, the assessee has claimed amount of rupees 2139.99 lakhs which being more than the disallowance under Rule 8d(2)(iii) of ₹14,58,76,907/- and therefore we do not find any absurdity in disallowance which has been computed invoking rule 8D of rules. As before us, assessee has now admitted to have incurred some expenses toward earning of the exempted income but no such disallowance has been computed by the assessee while filing return of income. In view of the fresh claim of disallowance u/s 14A for earning exempted income, we feel it appropriate to restore the issue of disallowance u/s 14A back to the file of the AO for examining the correctness of the claim of the assessee and deciding the issue in dispute in accordance with law. Ground of appeal of the assessee is accordingly allowed for statistical purposes.
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2023 (8) TMI 1249
Rectification of mistake u/s 154 - period of limitation - HELD THAT:- As following the decision of Sakseria Cotton Mills Ltd [ 1979 (2) TMI 17 - BOMBAY HIGH COURT] we hold that in the case limitation for expiry of 4 years for the purpose of section 154(7) of the Act has to be reckoned from the original assessment u/s 143(3) of the Act which is dated 21.11.2011 whereas the order u/s 154 has been passed on 29.06.2017, which is clearly beyond the period of four years specified and therefore, the 154 order passed by the AO is beyond the period of the limitation provided. Accordingly, same is invalid in law and thus it is quashed. The grounds of appeal of the assessee are accordingly allowed.
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2023 (8) TMI 1221
Conversion of the Partnership Firms into Companies - Capital gain on revaluation of land made in the hands of the Partners - Difference between the costs of lands and revalued amounts credited to the Appellant's capital account in the partnership firm - HELD THAT:- In the instant case, the shares of the respective shareholders in the respondent-company were defined under the erstwhile Partnership deed. The only change that has taken place on the respondent being transformed into a company was that the shares of the partners were reflected in the form of share certificates. Beyond that, there was no physical distribution of assets in the form of dividing them into parts, or allocation of the same to the respective partners or even distributing the monetary value thereof. The Hon ble Gujarat High Court in the case of DCIT Vs. R.L. Kalathia Co. [ 2016 (1) TMI 581 - GUJARAT HIGH COURT] held that Sale of business of assessee-firm as a going concern to company for consideration of paid up share capital does not amount to transfer liable to tax as capital gains. Thus addition made on account of capital gain on revaluation of land made in the hands of the Partners are not sustainable in law and the Grounds raised by the Revenue are devoid of merits. Therefore the appeals filed by the Revenue are hereby dismissed.
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2023 (8) TMI 1220
Ex-parte order - Miscellaneous application seeking to recall the order [ 2020 (9) TMI 1297 - ITAT PUNE] passed by the Tribunal - AR submitted that the assessee could not attend the proceedings before the Tribunal because notices of hearing were sent by the Tribunal on the old address, despite the assessee furnishing its new address in the revised Form No. 36, and hence were not served on the assessee - HELD THAT:- Rule 24 of the Income-tax Appellate Tribunal, Rules, 1963 provides that where the appeal has been disposed of ex parte for the default of the appellant and later on the assessee satisfies the Tribunal that there was sufficient cause for his non-appearance, the Tribunal shall make an order setting aside the ex parte order and restoring the appeal. The assessee has filed the extant miscellaneous application giving reasons as to why the assessee could not participate in the proceedings before the Tribunal on the scheduled date. We are satisfied that the assessee was prevented from attending the hearing by a reasonable cause. As such, the impugned order is recalled. Registry is directed to fix the appeal for hearing on 14-08-2023, as announced in the open court on conclusion of the hearing. AR has waived the right to service of notice for such date. Miscellaneous application is allowed.
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Customs
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2023 (8) TMI 1248
Rejection of request for conversion of shipping bills from one scheme to another i.e. from drawback of DEPB Scheme - applicability of time limitation for such conversion or not - HELD THAT:- The authorities below have rejected the request of the appellant for conversion of shipping bill from duty drawback to DEPB by relying upon the Circular No. 04/2004 dated 16.01.2004 which stands substituted by another Circular No. 36/2010 dated 23.09.2010 which allows the conversion of shipping bill from one scheme to another. Further, it is found that in this Circular itself, it is provided that in both drawback scheme and DEPB scheme, the level of examination is the same which shows that the request of the appellant should have been allowed by the authorities below, but both the authorities have rejected the request without considering the Circular No. 36/2010 dated 23.09.2010. The request for conversion was made within six months from the date of export whereas under Circular No. 36/2010 conversion is allowed if the request for the same is filed within three months from the date of let export order. The said condition of prescribed time limit of three months has been set-aside by various courts including the Jurisdictional High Court of Punjab and Haryana in the case of COMMISSIONER, CUSTOMS ICD, GRFL VERSUS MRS. BECTOS FOOD SPECIALITIES LTD. [ 2023 (3) TMI 78 - PUNJAB AND HARYANA HIGH COURT] . The impugned order is not sustainable in law and the same is set-aside - Appeal allowed.
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2023 (8) TMI 1247
Valuation of imported goods - old and used worn clothing, completely fumigated - restricted item or not - enhancement of value - confiscation - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI] , wherein this Tribunal has held that At any event all the importers had agreed during the personal hearing conducted by the then Commissioner of Customs (I), that the impugned goods were either old and used garments other than rags or they were not mutilated as per the norms laid down in this regard. It is on this agreement for the nature/description of goods, that we have to proceed further in this case. As regards the margin of profit, a market survey was done whose salient features are as follows in the impugned order. Against the confirmed duties and the penalties the Redemption Fine imposed by the Adjudicating Authority, the Respondent has not filed any appeals. The redemption fine and penalty imposed on the respondents by the adjudicating authority is sufficient to meet the end of justice. Therefore, the redemption fine and penalty confirmed by the adjudicating authority are upheld - appeals filed by the Revenue are dismissed.
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2023 (8) TMI 1246
Levy of penalty on CHA u/s 114(i) and 114AA of the Customs Act, 1962 - acts of omission and commission in relation to the attempted illegal export of Red Sanders - prohibited goods or not - HELD THAT:- It is on record that the appellant filed the impugned shipping bill without knowing and verifying the credentials of the exporter or the consignment - appellant, by accepting documents from a third party without verifying the genuineness of the exporter or the goods being exported, has facilitated the unsuccessful attempt of export of prohibited goods. Whether the above acts or omissions have been done intentionally or otherwise would not materially alter his position as an abettor in rendering these goods liable for confiscation. It is not correct position of law to say that penalty cannot be imposed under the provisions of Section 114 of the Customs Act when penalties are imposed / imposable for contravention of the Custom House Agents Licensing Regulations (CHALR). For contravention of the CHALR, the licence of the CHA may be suspended or revoked apart from forfeiture of the security deposit. However, it does not mean that penalty is not imposable under Section 114 of the Customs Act where the CHA has abetted or facilitated an illegal export or import contravening various provisions of the Customs Act, 1962. The Hon ble High Court of Judicature at Madras in the case of M/S. SANCO TRANS LTD VERSUS THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CUSTOMS (SEAPORT-EXPORT) [ 2017 (4) TMI 583 - MADRAS HIGH COURT ] has held that the custodian is responsible for all aspects of a transaction and provisions of Section 114 of the Customs Act, 1962 will stand automatically attracted in the event of violations by way of omission or commission of acts stated therein. The appellant has acted or omitted to do an act, resulting in rendering the exported goods liable for confiscation, thus attracting the provisions of Section 114 (i) of the Customs Act, 1962. So, penalty is imposable for his acts of omission or commission, may be deliberate or negligent. His conduct aided and facilitated the illegal attempted export of Red Sanders wood pillars and tops. The penalty upheld at Rs.1,00,000/- is reduced to Rs.50,000/- - Appeal allowed in part.
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2023 (8) TMI 1245
Valuation of import of ceramic tiles - enhancement of value - rejection of declared value - reliance placed in NIDB data on contemporaneous imports - HELD THAT:- Rule 10A provides for situations in which the transaction value declared value can be rejected. It says that if the proper Officer has reasons to doubt the truth or accuracy of the value declared by importer, he can proceed to re-determine the value of the goods after rejecting the transaction value. In the present case, there is no evidence put forward by the department as to the reason for doubting the transaction value. In para 5 of the order in original it is merely stated that as per the letter received from the Director of Valuation, Mumbai dated 19.03.2008 the provisional assessment is finalized by taking the NIDB data into consideration - The department has failed to establish the grounds to reject the transaction value. The enhancement of value of imported goods without giving proper reasons to reject the transaction value cannot be sustained - Appeal allowed.
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2023 (8) TMI 1244
Jurisdiction - Levy of IGST on import of goods - classification pumps and pump filters imported for for washing machines and dishwashers - extent of intervention permissible to officer of customs under the authority of Customs Act, 1962 for re-determination of rate of duty in a levy empowered by section 3(7) of Customs Tariff Act, 1975 - discharge of onus - HELD THAT:- The appellant was placed on notice of recovery under section 28 of Customs Act, 1962 on the ground that the classification claimed by them did not quite fit the bill as the pumps were not to be used exclusively for handling water and that the classification claimed by them for the purpose of section 12 of Customs Act, 1962 was for parts which called for levy of integrated tax at 18%. There was, however, no proposal for reclassification of the impugned goods under the appropriate sub-heading in chapter 84 of First Schedule to Customs Tariff Act, 1975 thus demonstrating unacceptable inconsistency. In ORTHO CLINICAL DIAGNOSTICS INDIA PVT LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI [ 2022 (9) TMI 1109 - CESTAT MUMBAI] , the Tribunal had examined the extent and scope of empowerment as well as prejudicial effect on exchequer insofar as levy under section 3(7) of Customs Tariff Act, 1975 is concerned and it was held that Instead of deliberating on the validity, and appropriateness, of a tariff item in the First Schedule to Customs Tariff Act, 1975 other than that claimed in the bills of entry after due notice to the importer, the adjudicating authority adopted a process of elimination of the enumeration of descriptions in the Schedules to the integrated tax rate notification, and ignoring the scheme of its presentation, with the erroneous assumption of jurisdiction to place goods within the ambit of the residuary entry in Schedule III of the integrated tax rate notification. Thus, essential onus devolving on customs authorities for re-classification has not been discharged in the impugned proceedings. Consequently, and respectfully following the order of the Tribunal in Ortho Clinical Diagnostics Pvt Ltd, the impugned order is set aside to allow the appeal. Appeal allowed.
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2023 (8) TMI 1243
Violation of principles of natural justice - Denial of request of conversion of free shipping bills into drawback shipping bills - request rejected without affording any opportunity for hearing to the appellant - HELD THAT:- Proviso to Section 149 of CA, clearly provides that conversion of the shipping bill subsequent to exportation of the goods can be permitted on the basis of documents that were in existence at the time of exportation of the goods - From the impugned order it is evident that the Commissioner has been guided by the delay in filing the request under section 149 to reject the same. Section 149 do not provide for any time limit for making the request for conversion. In a similar case of M/S. AUTOTECH INDUSTRIES (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS CHENNAI IV COMMISSIONERATE [ 2021 (11) TMI 518 - CESTAT CHENNAI] tribunal while permitting the conversion has negated all the grounds stated by Commissioner in his order for not allowing the conversion and it was held that there is unreasonable delay in filing the request for amendment of Shipping Bills from the year 2000 to 2011 and the order of rejection in respect of these Shipping Bills is just and proper. The impugned order cannot be agreed upon, which has been made without even hearing the appellant or without affording any opportunity of hearing to the appellant. Appellant should have been granted opportunity to establish that claim in terms of proviso to Section 149. The impugned order rejecting the request made is hit by the violation of principles of natural justice. The impugned order set aside - impugned order rejecting the request made is hit by the violation of principles of natural justice - matter remanded back to Commissioner for re-consideration of this request made under Section 149 after affording proper opportunity to the appellant for presenting their case.
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2023 (8) TMI 1242
Recovery of amount claimed as exemption in terms of N/N. 12/2012-CE dated 17th March 2012 - import of iron ore fines - appropriateness of classification against tariff item 2601 11 50 of schedule to Central Excise Tariff Act, 1985 for assessment to additional duty of customs under section 3(1) of Customs Tariff Act, 1975 on the imports - HELD THAT:- The Tribunal had settled the classification on the facts and physical properties peculiar to iron ore fines imported by the appellant therein and which is identical to the goods impugned in this appeal. Any bolstering that the adjudicating authority considered necessary to support his finding on facts were not only not directly in relation to the controversy over the rival classifications but also not pertaining to imported goods as presented for assessment. Moreover, it is seen from the order of the Tribunal that relevance of these cases laws had not been pressed in arguments countering the challenge mounted in M/S AMBA RIVER COKE LTD. VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS (PREVENTIVE) , MUMBAI [ 2022 (6) TMI 217 - CESTAT MUMBAI] ; had those been urged but not considered, appropriate recourse should have been had to section 129B(2) of Customs Act, 1962. In the absence of such, the plea of non-consideration of judicial decisions as justification at this stage for discard of the decision of the Tribunal in re Amba River Coke Ltd is not tenable. Revenue has not been able to substantiate its plea for urging a contrary stand on classification of the impugned goods or to entertain any impediment in following judicial precedent that has determined classification of goods impugned in the appeal. With the classification, as originally declared, being affirmed, the proceedings against the individual also does not sustain - Appeal allowed.
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PMLA
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2023 (8) TMI 1241
Seeking grant of Bail - Money Laundering - Company had lured the public to invest in its schemes with the promise of good returns, but the Company did not fulfill its promise and did not return even the invested amounts - HELD THAT:- Prima facie it appears that the applicant has been implicated in the present case merely on the basis of suspicion. It is a settled principle of law that however strong a suspicion may be, it cannot take place of a proof beyond reasonable doubt. This fact is also relevant that the E.D. had registered the ECIR on 29.06.2019 and statement of applicant was recorded under Section 50 PMLA on 22.10.2019, 23.10.2019 and 20.03.2020, but he was not taken into custody. The applicant remained in custody in connection with the scheduled offences since 26.02.2021, and although the applicant was named as accused in supplementary compliant filed on 30.01.2022, the E.D. did not seek his custody even during that period - The E.D. took the applicant into custody on 21.07.2022, only after he was granted bail by the Hon ble Supreme Court on 13.07.2022, after having spent about one and a half years in custody and the investigation of the case already stood completed long ago and there was no need for his custodial interrogation. The trial is likely to take many years to conclude because many of the named accused persons have not appeared yet or they have not been arrested yet and 11 witnesses are to be examined by the Prosecution and documents running into 5,000 pages have to be proved - The applicant is said to be one of the key decision makers for purchase of property by GIPL, alongwith Vijender Singh and Vijender Singh has already been granted bail and, therefore, the applicant is also entitled to be released on bail on the ground of parity. The applicant is also entitled to be released on bail. Accordingly, the bail application stands allowed.
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2023 (8) TMI 1240
Money Laundering - proceeds of crime - huge fund diversion from the Company, which is managed by the Directors, to its subsidiaries and related entities and made investments - HELD THAT:- In the instant case, the statements made by the petitioners under Section 50 of PMLA indicate the possible commission of offence under Section 3 of PMLA. The charge sheet has also not been filed in the instant ase. Above all, in view of the statements made by the petitioners indicating their nexus with the first accused Company, there was a possibility that they could be involved in the management of the company, which possibility requires to be established through the proceeds of a full fledged trial. The scope of the powers of the Court to quash the complaint under Section 482 Cr.P.C. has been time and again dealt by the Hon'ble Supreme Court, in a catena of decisions, by holding that such powers requires to be exercised in the rarest of rare cases, the exceptions to which have been repeatedly pointed out. In the case of STATE OF HARYANA VERSUS BHAJAN LAL [ 1990 (11) TMI 386 - SUPREME COURT] , some of the exceptions for quashing the complaint under Section 482 Cr.P.C. held that Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. In a recent decision of the Hon'ble Supreme Court in ANOOP BARTARIA ETC. VERSUS DY. DIRECTOR ENFORCEMENT DIRECTORATE ANR. [ 2023 (5) TMI 102 - SUPREME COURT] , the dictum in Bhajan Lal's case was followed and by pointing out that the case involved therein, did not fall under any of the exceptions pointed out in Bhajan Lal's case and in view of the material to show prima facie involvement of the accused for the offence of money laudering, the Supreme Court had refused to quash the complaint. Thus, the material on record does make out a prima facie case to implicate the petitioners for the offence of money laundering, as contemplated under PMLA - there are no reason to entertain the prayer sought for in the present petition. Petition dismissed.
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2023 (8) TMI 1239
Seeking grant of bail - Money Laundering - proceeds of crime - diversion of funds - disproportionate assets more than 14 crores - HELD THAT:- Prevention of Money Laundering Act provides for a two pronged approach, one dealing with the proceed of crime and the other dealing with the persons guilty of the offence of money laundering. In the present case, as per the respondent/ED, the applicant is found to be an accessory to money-laundering and unless the twin conditions prescribed under Section 45(1) of PMLA is fulfilled, applicant is not entitled to bail. In GORAV KATHURIA VERSUS UNION OF INDIA AND OTHERS [ 2016 (6) TMI 309 - PUNJAB HARYANA HIGH COURT] , the Division Bench of Punjab and Haryana High Court, considered the applicability of the twin conditions/limitation imposed vide Section 45(1) on grant of bail in all the cases of PMLA. After considering the Prevention of Money Laundering (Amendment) Bill, 2011 and the amendment incorporated in 2013 in Section 45(1) in respect of limitation in grant of bail to a person accused of schedule offences earlier falling under part B of the schedule but now existing in part A thereof, held the reference to the offences under Part A of the Schedule in the context of Section 45(1) has to be necessarily read down to apply only to those persons who are arrested under Section 19 of PMLA on accusation of money laundering, who are accused of commission of scheduled offences which were listed under the Part A of the schedule existing prior to 2013 amendment. The constitutional validity of Section 45(1) of PMLA, 2002 was challenged before the Hon'ble Supreme Court in the case of NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR. [ 2017 (11) TMI 1336 - SUPREME COURT] . The Hon'ble Supreme Court after detailed discussion about the statutory history of Section 45 of PMLA and adverting to various judgments cited by the respective parties and considering the similar provisions under Section 37 of NDPS Act and Section 20(8) of the TADA has struck down the pre-trial bail provisions under Section 45 imposing twin stringent conditions under Section 45(1) for the offence classified thereunder after holding that it is manifestly arbitrary, discriminatory, invalid and violative of Articles 14 and 21 of the Constitution. Time and again it has been held that personal liberty of an individual is a sacrosanct right and pretrial detention cannot be taken as a punitive measure. However, a balance is required to be maintained between the interest of an individual and the interest of the society at large. In the instant case, the applicant had been enlarged on bail under the predicate offences. Though the investigation for predicated offence and investigation under the PML Act are different and distinct, but in the present case also the charge sheet had been filed - The applicant is divested of all his powers and does not hold any post now, he has remained under custody for more than four months. As evident from the charge sheet, the investigating agency has already collected all the documentary evidence and recorded the statement of material witnesses, under such circumstances there is no possibility of tampering with the evidence or influencing the witnesses. The only apprehension of ED is with regard to co-operation in the pending FIR registered in various states, wherein he is named as a co-accused, for that stringent conditions may be imposed. It is deemed appropriate to allow this application and the applicant herein enlarged on bail subject to the conditions imposed - bail application allowed.
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Service Tax
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2023 (8) TMI 1238
Exempt service or not - repatriation of export proceeds - Revenue appears to have assumed that the assessee did not receive the full amount in convertible foreign exchange with a period of six months from the date of provision of service or within such extended time as approved by the RBI - Rule 6(8) of the CENVAT Credit Rules, 2004 - HELD THAT:- The Ld. Commissioner, having afforded an opportunity to the appellant for production of documents in support, has however observed that the certificate of the chartered accountant furnished by the appellant was dated 16.09.2020, from where he has entertained a doubt that whether it was possible to conduct a thorough verification of all the invoices, ledger, etc., pertaining to three financial years in a matter of few hours. When there is a doubt, then it is always open for the authority to seek clarification / explanation from the appellant in order to arrive at a proper finding instead of suspecting such document. It is not as though there was a serious error for which reason the certificate of the chartered accountant was not considered. Coming to a conclusion based on assumptions and presumptions is not proper. It will be in the interests of justice that the matter be restored to the file of the original authority for de novo adjudication. The authority shall therefore follow the principles of natural justice by affording reasonable opportunities to the appellant to produce necessary documents and evidence in support of their stand and the appellant shall also co- operate with the adjudicating authority without seeking unnecessary adjournments. Appeal allowed by way of remand.
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2023 (8) TMI 1237
Interpretation of statute - Supply of tangible goods for use - exclusion clause in tax entry Section 65(105)(zzzzj) of the Finance Act, 1994 - Liability of service tax on appellant - Vehicles and vessels chartered by them to M/s Essar Steel India Ltd., Arkay Holdings Ltd. and Arkay Sea Logistics Ltd. - revenue s case is that appellant have right of possession and effective control of the vessels/vehicles - HELD THAT:- Wherever transaction involves transfer of possession and effective control of the goods, then it is a sale and the activity will not be subjected to Service Tax; and where possession and effective control has not been transferred, then, the transaction will be covered in the category of service of supply of tangible goods for use . Thus, the subject transactions are to be verified with the relevant contracts/ agreements, then only it can be determined whether there is a service or a sale . The clause 10 of the Charter states that the vessel shall during the charter period be in full possession and at the absolute control for all purposes of the charterers and under their complete control in every respect. The charterers shall maintain the vessel. In view of it is clear that during the charter period of vessels the right of possession of vessels and effective control have been transferred to service recipient, therefore the service does not fall under the Supply of Tangible Goods Service . On examining the scope of transfer of right to use, the Hon ble Karnataka High Court in THE GREAT EASTERN SHIPPING CO. LTD. VERSUS STATE OF KARNATAKA OTHERS [ 2019 (12) TMI 225 - SUPREME COURT] held that when the vessel during the charter period was for all purposes at the disposal of the charterer and under their control in every respect including maintenance, spare parts, efficient operation, fulfilment of legal obligations etc., the same should be considered as transfer of right to use. On careful consideration of the terms of the above Bareboat Charter agreement and Agreement with M/s Essar Steel India Ltd. (M/s ESIL), in the present case, vessels/vehicles were transferred to the customers with right of possession and effective control of such vessels/vehicles - In the present matter on the disputed transaction appellant has discharged the VAT liability considering the same as deemed sale under the provisions of Gujarat Value Added Tax Act, 2003 , hence no service tax can be demanded on the said transaction. In the present case also since the appellant have admittedly paid the VAT to the state VAT department, following the above observation of the Apex Court, the transaction is not liable to service tax under the category of Supply of tangible goods for use service. The impugned orders are not sustainable, accordingly the impugned orders are set aside - Appeal allowed.
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2023 (8) TMI 1236
Nature of transaction - Service or sale - Classification of service - Storing and Warehousing service or erection, commissioning and maintenance etc. - appellant supplied, installed, commissioned and undertaken maintenance of the bullets which was designed to store LPG meeting BIS standards - interest - penalty - HELD THAT:- The issue of classification has reached finality in the appellants own case [ 2018 (6) TMI 198 - CESTAT CHENNAI ]as no appeal has been filed against the orders passed by this Tribunal for the earlier period on the same subject. The issues relating to Storage and warehousing service was clarified vide Letter F. No. B11/1/2002-TRU dated 1.8.2002 - None of these activities (as mentioned in the letter) are seen to be provided by the appellant to the customers, further unlike in a warehouse, the goods (LPG) stored in the bullet storage facility installed at the customers premises is not under the control of the appellant and the whole responsibility of the stored LPG is with the customer. Hence, they are not covered under the category of Storage and Warehousing Services as defined under Section 65(102) of the Finance Act, 1994. The legal issue has also reached a finality on merits. It is not deemed necessary to examine the issue raised by Revenue of whether deemed sale is involved or not and whether payment of VAT was necessary, at this stage. Since the issue is decided on merits in the appellants favour the other issues like payment of interest, penalty etc. do not survive. Appeal allowed.
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2023 (8) TMI 1235
Demand of Service Tax - value of material/spare parts sold by the Appellant during servicing of motor vehicles - Appellant has already deposited under the provisions of Uttar Pradesh Value Added Tax, 2008 on the value of such materials sold by them during servicing of motor vehicles - reverse charge mechanism - HELD THAT:- The issue is no more res integra as the same stands settled by the order of another Division Bench of this in the case of M/S. SAMTECH INDUSTRIES AND OTHERS VERSUS CCE. KANPUR AND OTHERS [ 2014 (4) TMI 995 - CESTAT NEW DELHI] , wherein the assessee was providing the service of repairing transformer and was using consumables like transformer oil and also component parts being coil etc., the Tribunal held, in view of the fact that it is not disputed that in respect of the supply of goods, used for providing of service of repair, Sales Tax/VAT is paid, which fact is evident from the invoice on record. It was also observed that when the value of goods used is shown separately in the invoice and on the same Sales Tax/VAT has been paid, the supply of the goods would have to be treated as sale and the transaction which are sale cannot be a part of the service transaction. Accordingly, Service Tax is chargeable only on the services/labour charges and the value of the goods thereunder would not be includible in the assessable value. The demand of service tax against the Appellant for the cost of the goods supplied during repair/service does not appear to be sustainable. Accordingly, the demand, interest and the penalties imposed are set aside. Penalties under section 78 A of the Act upon Shri Devendra Pal Singh and Shri P. C. Suman, both directors of the Appellant company - HELD THAT:- On facts and under the circumstances of the case, ingredients to impose penalty under section 78 A of the Act does not exist. We therefore, propose to drop the penalty imposed under section 78 A on Shri Devendra Pal Singh and Shri P. C. Suman - penalty dropped. Appeal allowed.
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2023 (8) TMI 1234
Eligibility for Exemption N/N. 30/2012-ST - Service classifiable under goods transport agency service - payment received as consideration of service for which TDS was deducted and reflected in 26AS - HELD THAT:- From the notification, it can be seen that in case of service provided by a goods transport agency service in respect of transport goods by road, 100 % Service Tax liability is on a person receiving the service subject to condition that the said service recipient falls under the category of clause A(ii)(a)to(f) of para 1of the Notification. On the claim of the appellant that in case of GTA the service recipient is liable to pay the Service Tax in terms of the above Notification, the Learned Commissioner (Appeals) has held that in absence of any documentary evidences, the benefit of exemption cannot be extended to the Appellant on the basis of presumption. Thus, despite there are numbers of limited and private limited companies as service recipients, the Learned Commissioner (Appeals) has assumed that the majority these customers maybe proprietor and accordingly exemption was denied. The finding given by the learned commissioner (Appeals) is cryptic and cannot be agreed upon -Firstly, by name itself it appears that most of the service recipients are limited and private limited companies and also the partnership firm. At least in that cases the Service Tax could not have been demanded from the appellant. Moreover, in respect of others merely by name it cannot be ascertained whether the service recipient are covered under clause A(ii)(a)to(f) of notification. It was incumbent on the Learned Commissioner (Appeals) to verify the actual status of the service recipients from the records. In this position, the whole matter needs to be reconsidered by the Adjudicating authority. Appeal allowed by way of remand.
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Central Excise
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2023 (8) TMI 1233
Rejection of refund claim - appellant has not opted for provisional assessment - document required to justify the payment of excess excise duty have not been produced - Chartered Accountant Certificate produced by the appellant cannot be accepted. Refund-claim rejected on the ground that the appellant has not opted for provisional assessment - HELD THAT:- It is seen that the appellant had made an application to the Department dated 06.05.2011 seeking provisional assessment - The issue is no more res integra. In the case of SSAVITA OIL TECHNOLOGIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, VAPI [ 2023 (7) TMI 1061 - CESTAT AHMEDABAD] , the Tribunal held that the refund claim cannot be rejected merely because an assessee had not opted for provisional assessment when there is excess payment of duty - the rejection of refund-claim alleging that the appellant has not opted for provisional assessment is not justified. Rejection on the ground that appellant has not produced the comparative documents to justify the payment of excess excise duty - HELD THAT:- The Department has called for the details of price/sale invoices of the sales made by the unrelated dealer to the ultimate customers. In fact, the price at which the dealers have sold the cars to the end users is of no consequence for considering whether higher amount of duty has been paid. The excess payment of duty has happened while making the clearances by the appellant to the related parties / dealers (NMIPL/RIPL). So to check whether there is excess payment of duty sale price of the related parties to the unrelated dealer has to be looked into and not the sale price of the unrelated dealer to the end customer. It is seen from the records that the Department has called for invoice issued by dealers to end customers to verify whether there is excess payment of duty - the allegation in the Show Cause Notice that the appellant has not furnished documents with regard to the sale price to end customers so as to verify whether the excess excise duty is paid is totally erroneous. Principles of unjust enrichment - HELD THAT:- The original authority as well as the first appellate authority has confined their discussions to the draft circular alone without recording any finding as to the issue of unjust enrichment. The Commissioner (Appeals) has referred to the decision in the case of M/S. ADISON AND CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2017 (5) TMI 50 - SC ORDER] . However, there is no finding recorded as to whether the incidence of duty has been passed on by the appellant to the end customer. The authorities below have not analysed the issue in the correct legal prospective for which the matter requires to be remanded to the adjudicating authority. In the result, the impugned order is set-aside. The matter is remanded to the adjudicating authority who shall consider the observations of this order and process the refund-claim denovo - Appeal allowed by way of remand.
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2023 (8) TMI 1232
Reversal of CENVAT Credit - manufacture of dutiable as well as exempted goods - common services (input services) attributed to both dutiable and exempted goods - proportionate credit for final exempt product reversed - once the appellant have reversed the proportionate Cenvat credit on common input service attributed to the exempted final product, whether, the appellant are liable for payment of 10%/6%/5% of the value of such exempted goods? HELD THAT:- This issue is no longer res-Integra as even though the reversal was made on proportionate input service attributed to the exempted goods at a latest stage along with interest the situation became as if no Cenvat credit was availed. Consequently, the demand of 10%/6%/5% cannot be sustained. In the case of PI INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT-II [ 2023 (6) TMI 455 - CESTAT AHMEDABAD] this Tribunal has held that if the assessee reverse the Cenvat credit in respect of common input service used in the manufacture of exempted goods the demand equal to 10%/5% will not sustain. In view of the catena of judgments and many more judgments cited by the Learned Counsel, the issue is no longer res-Integra as in a case where assessee avails the Cenvat credit on common input service and the same is used for exempted as well as dutiable goods and even at a later stage the assessee reverse the proportionate credit with payment of interest, if there is any delay in reversal of such credit the demand of 10%/6%/5% shall not sustain. Thus, the appellant are not liable for payment of an amount equal to 10%/6%/5% of the value of the exempted goods. Hence the same is set aside. However, the reversal of the proportionate credit along with interest paid by the appellant is correct and the same is maintained. Appeal allowed.
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2023 (8) TMI 1231
CENVAT Credit - steel items used in the manufacture of support structures for capital goods - denial of credit based on Explanation 2 as amended vide Notification No.16/2009-CE (NT), dated 7-7-2009 - period 2005-06 to August 2008 - HELD THAT:- At that relevant time, Explanation 2 to Rule 2(k) of the CENVAT Credit Rules, 2004 provided that inputs include goods used in the manufacture of capital goods, which are further used in the factory of manufacturer. The aforesaid Rule 2(k) was amended vide the Notification No.16/2009-CE(NT) w.e.f. 07.07.2009. Explanation 2 to Rule 2(k) provides that inputs include goods used in the manufacture of capital goods which are further used in the factory of manufacturer, but shall not include cement, angles, channels, CTD bar or TMT bar and other items used for construction of company, shed, building or laying of foundation or making of structures for support of capital goods. From the perusal of the circulars dated 2-4-2012 and 18-5-2012, it comes out that these circulars have been issued in the changed context of the definition of [Rule] 2(k) of Cenvat Credit Rules, 2004 and both circulars have no concern for the period in issue. Thus, the reliance placed by the Revenue in this regard has no substance. The Madras High Court in THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. INDIA CEMENTS LIMITED OTHERS [ 2011 (8) TMI 399 - MADRAS HIGH COURT] noticed VANDANA GLOBAL LTD. VERSUS CCE [ 2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] but relied upon the Apex Court judgment in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS LTD. [ 2010 (7) TMI 12 - SUPREME COURT] , wherein the Apex Court has considered an issue of steel plates and MS channels used in the fabrication of chimney for diesel generating set and after considering it, the Apex Court allowed the Cenvat credit on MS Rod, sheets, MS Channel, MS Plate, etc., used for fabrication of structures to support various machines/capital goods. The facts of the present case are squarely covered by the above mentioned judgements of the Hon ble High Courts - the impugned order cannot be sustained and is accordingly set aside - Appeal allowed.
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2023 (8) TMI 1230
Maintainability of appeal - monetary limit involved in the appeal - Area Based exemption - failure to fulfill the mandatory condition of starting Commercial production on or before 31.03.2010 - recovery of Central Excise duty alongwith interest and penalty - HELD THAT:- The appeal memo, show cause notice and all the documents it is quite evident that the total amount of demand in the said show cause notice is only Rs.20,311/-. Ideally this appeal should be dismissed as per the litigation policy, the threshold monetary limit for filing the appeal by revenue is Rs. 50 lakhs. As per F.No.390/Misc/116/2017-JC dated 22 August, 2019 revenue authorities have been directed to not file appeals before the amount (50 lakhs) and all appeals that had been filed in past were to be withdrawn. In this appeal also revenue do not dispute the invoice No.01 dated 30 March, 2010 but only say that being for an amount was only for purported clearance of goods availed at Rs.1,101/- Even a single clearance would made by the respondent would have justified the start of production by the respondent. There are no merits in this appeal which could have been dismissed for the amount involved being less than prescribed threshold limit under litigation policy - Appeal filed by the revenue is dismissed.
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CST, VAT & Sales Tax
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2023 (8) TMI 1229
Validity of notices issued - specific case of the petitioner is that the petitioner is a service provider and has obtained service tax registration from Sales Tax Department under the Finance Act, 1994, as early as in the year 2005 - HELD THAT:- The respondent /Assessing officer in his reply to the petitioner's representation, vide letter bearing Ref.No.1135/2017/A4, dated 15.03.2018, has stated that the copy of the order has not been received by the Commercial Tax Officer, (Enforcement wing) Group III, Coimbatore and the Enforcement Division of Coimbatore also has not received the copy of the order. Although the respondent /jurisdictional Assistant Commissioner, has stated that the order of this Court was not received vide communication dated 15.03.2018, the fact remains that the Enforcement Wing had sent summons to the petitioner on 31.01.2018. Thus, there is no truth in the aforesaid communication. The impugned orders have been passed, based on the notices dated 02.06.2016, which have already been quashed by this court while passing the aforesaid order dated 07.10.2016 in W.P.No.35694 to 35702 of 2016. Therefore, the impugned orders are liable to be quashed. The impugned orders are quashed and the case is remitted back to the Commercial Tax Officer (Enforcement wing) Group III, Coimbatore to pass a speaking order on the petitioner's representation - Petition allowed by way of remand.
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Indian Laws
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2023 (8) TMI 1228
Dishonour of Cheque - insufficiency of funds - whether the order passed by the High Court quashing the summoning order and the proceedings against the respondent no.1 was justified? - HELD THAT:- It is not in dispute that the premises owned by the appellants was taken on rent by the respondent no.3 firm. Though Partnership Deed has not been placed on record before this Court, however, from para 42 of the impugned order of the High Court it is evident that the partnership firm consisted of three partners, namely, Mark Alexander Davidson and Sachhidanand Kanchan and the third one was not impleaded in any complaints as accused. To discharge the liability towards the payment of rent, various cheques were issued to the appellants. The cheques, when presented to the Bank, were dishonoured on account of insufficiency of funds. The High Court had accepted the argument raised by the respondent no.1 and quashed the summoning order as well as the complaints against him, accepting the plea that he had retired from the partnership firm for which a Retirement Deed was already executed on 01.04.2018 - The fact remains that, a public notice regarding retirement by the respondent no.1 from the firm was issued on 09.02.2022 i.e., much after the complaints had been filed and the summoning order had been issued by the trial Court on 05.02.2020. Even the quashing petitions were filed by the respondent no.1 in October 2021. The public notice was issued few days before the High Court decided the quashing petition on 14.03.2022. It is not the case set up by the respondent no.1 that in the Partnership Deed it is mentioned that he was a sleeping partner in the firm. It is well settled that the final judgment of the trial Court will depend on the evidence adduced before it. As there are specific allegations against the respondent no.1 in the complaint and he was admittedly a partner in the partnership firm when the rent deed was executed, he is liable to face prosecution. Powers under Section 482 of the Code can be exercised by the High Court in case when it comes across unimpeachable and incontrovertible evidence to indicate that the partner of the firm did not have any concern with the issuance of cheques. The case in hand is not of that kind. The impugned order passed by the High Court quashing the summoning order and the complaints against the respondent no.1 are set aside - Appeal allowed.
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2023 (8) TMI 1227
Scope of arbitral award - Rejection of claims set aside - legality of the order passed by the Division Bench of the High Court while exercising jurisdiction under Section 37 of the Act - HELD THAT:- The scope of jurisdiction under Section 34 and Section 37 of the Act is not akin to normal appellate jurisdiction. It is well-settled that courts ought not to interfere with the arbitral award in a casual and cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle courts to reverse the findings of the Arbitral Tribunal. In the present case, the Arbitral Tribunal interpreted the contractual clauses and rejected the Respondent s claims pertaining to Disputes. The findings were affirmed by the Single Judge of the High Court in a challenge under Section 34 of the Act, who concluded that the interpretation of the Arbitral Tribunal was clearly a possible view, that was reasonable and fair-minded in approach. The principle of interpretation of contracts adopted by the Division Bench of the High Court that when two constructions are possible, then courts must prefer the one which gives effect and voice to all clauses, does not have absolute application. The said interpretation is subject to the jurisdiction which a court is called upon to exercise. While exercising jurisdiction under Section 37 of the Act, the Court is concerned about the jurisdiction that the Section 34 Court exercised while considering the challenge to the Arbitral Award. The Division Bench of the High Court committed an error in setting aside the concurrent findings of the Arbitral Tribunal and the Single Judge of the High Court. The Award of the Arbitral Tribunal and the decision of the Single Judge of the High Court under Section 34 of the Act cannot be termed as perverse or patently illegal as concluded by the Division Bench of the High Court. The decision of the Arbitral Tribunal is a plausible view, and the Single Judge refrained from interfering with it under Section 34 of the Act - the Division Bench should not have interfered with these orders. Appeal allowed.
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2023 (8) TMI 1226
Award rendered by the Arbitrator in favor of the appellant set aside - rejection of its counterclaim - relevant date from which the escalation claim was calculable - HELD THAT:- The impugned judgment, on the face of the record, in this Court s opinion, is plainly erroneous. It is far too well established that the scope of interference by a court in the context of a challenge to an arbitration award is narrow. In the case of an appeal by a party is aggrieved by rejection of its objections, the Appellate Court s review power (especially to substitute its findings in the facts and the interpretation of contract and interpretation of law) are far narrower. This court has in line of authorities previously held that such jurisdiction should be invoked rarely and in cases where it is apparent that the Arbitrator had misconducted the proceedings in terms of Section 30 of the Arbitration Act. In the present case, this court is persuaded to hold that the High Court in proceeding to interpret the terms of the contract and applying them to the fact situation in the present case substituted its findings hereby entering the zone which was not permitted to it in regard to upsetting the award as far as it found in favor of the appellant contractor and also in allowing the counterclaim of ONGC. For these reasons, the impugned order is hereby set aside. Appeal allowed.
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2023 (8) TMI 1225
Dishonour of Cheque - failure to consider that no liability arose in order to attract the impugned proceeding under Section 138 of the Negotiable Instruments Act - HELD THAT:- In the present case, the cheque was issued towards the complainant s professional fees and the petitioner has admitted paying a sum of only Rs. 10,000/-. - the petitioner has not been able to rebut the presumption under Section 139 as admittedly professional fees was due to the complainant for discharge of his professional duty. The cheque was issued towards that liability of professional fees. Thus, considering the materials on record and in view of the discussions made, the judgment under revision being in accordance with law, needs no interference by this court - Revision application dismissed.
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2023 (8) TMI 1224
Dishonour of Cheque - prayer for compounding of offence - HELD THAT:- Having taken note of the fact that the entire amount of compensation, as awarded by the learned Trial Court, i.e., Rs.8,00,000/-, has been received by the complainant and he has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accusedpetitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ], wherein the Hon ble Apex Court has held in view of the non-obstante clause, the compounding of offences under the Negotiable Instruments Act, 1881 is controlled by Section 147 and the scheme contemplated by Section 320 of the Code of Criminal Procedure (hereinafter CrPC ) will not be applicable in the strict sense since the latter is meant for the specified offences under the Indian Penal Code, 1860. In K. SUBRAMANIAN VERSUS R. RAJATHI REP. BY P.O.A.P. KALIAPPAN [ 2009 (11) TMI 1013 - SUPREME COURT ], it has been held by the Hon ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has already paid the entire amount of compensation to the complainant, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon ble Apex Court - here, the parties are permitted to get the matter compounded in light of the compromise arrived inter se them. Therefore, taking into consideration the law laid down by the Hon ble Apex Court and the financial condition of the petitioner, as he is a poor person, since the competent Courts can reduce the compounding fee with regard to the specific facts and circumstances of the case, the petitioner is directed to deposit token compounding fee of Rs.5000/- only with the H.P. State Legal Services Authority, Shimla, H.P., within four weeks from today. Petition disposed off.
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2023 (8) TMI 1223
Refusal ot register the document - Correctness of valuation made in a decree - Section 47(A) of the Registration Act - petition was resisted by the appellants contending that the decree relates to a property which belongs to the Government and therefore, the same cannot be registered in view of Section 22(A) of the Registration Act, 1908 - HELD THAT:- The decree granted by the Court which is sought to be registered is nothing but an agreement of sale subject to certain conditions. As provided under Section 54 of the Transfer of Property Act, such a decree does not create an interest in immovable property. Very reading of Sub-Section 1 of Section 22-A of the Act, would reveal that what prohibited is the registration of an instrument relating to transfer of immovable properties by way of Sale, Gift, Mortgage, Exchange or Lease. Therefore, an agreement of sale which does not create interest in immovable property would not come within the ambit of Section 22-A - the submissions of the learned Senior Counsel cannot be agreed upon on this question. Place of registration - HELD THAT:- The office of the third respondent within whose jurisdiction the Court had passed the decree is situate, will also be a proper office. Moreover, since the very decree is only an agreement of sale which does not affect immovable property, it will not come within the ambit of Section 28. Therefore, registration can be done either at the office of the Sub-Registrar in whose Sub-District, the original decree or order was made or at any other place as desired by the parties to that document - the objections of the learned Additional Advocate General also cannot be sustained on this issue also. Pendency of the writ appeal - HELD THAT:- As rightly pointed out by the learned Senior Counsel for the first respondent, the writ appeal has been filed challenging a direction issued by the writ Court to grant patta to the petitioner in W.P(MD)No.12425 of 2008. The defendant in the suit along with others had in fact, made a claim over the property. Therefore, pendency of that writ appeal cannot be a ground to refuse registration. The writ appeal fails and it is accordingly, dismissed.
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