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TMI Tax Updates - e-Newsletter August 7, 2023 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Cancellation of GST registration - while issuing show cause notice for cancellation of Registration, necessary documents were not supplied and the notice is cryptic. It is also clear that while passing the impugned order for cancellation of Registration, the respondent authority has not assigned any reason and thus, the order passed by the respondent authority is not tenable at law. - GST registration directed to be restored - HC Visit to Get Source GST: Seeking release of conveyance and the goods - It is evident that it is after issuing MOV 1 and 2, the first respondent had issued the show cause notice in GST MOV-10 u/s 130, directing the petitioner to show cause why the proceedings should not be initiated against him u/s 130 of the GST Act. - No case made out to entertain the writ petition - WP dismissed - HC Visit to Get Source GST: Enhancement in the rate of GST - There shall be a direction to the first respondent to pass appropriate orders for making suitable budget allocation for reimbursing the petitioner and other contractors the GST for the difference in GST rate on account of increase in the rate. The differential amount of GST on account of increase rate of tax with effect from 18.07.2022 shall be paid. - HC Visit to Get Source Income Tax: Income accrued in India - fees for technical service (FTS) - Payment for certification of Diamonds - Mere rendering of services cannot be roped into FTS unless the person utilising the services is able to make use of the technical knowledge etc. Simple rendering of services as in the present case is not sufficient to qualify as FTS. - HC Visit to Get Source Income Tax: Penalty u/s 271(1)(c) - addition on account of the ALV of vacant commercial/self-occupied assets - The issue involved was debatable at the relevant point in time, which took a different turn only when this court delivered its judgment in Ansal Housing Finance & Leasing Co. Ltd. [2012 (11) TMI 323 - DELHI HIGH COURT] - No penalty - HC Visit to Get Source Income Tax: Deduction u/s 80IC - interest received on a fixed deposit - Insofar as Appellant is concerned that the AO could not have, in such circumstances, treated the interest accrued on fixed deposit as business income, is a submission which has merit. However, that said, this would not impact the tax burden insofar as the appellant/assessee is concerned; what would change, perhaps, would only be the head under which such income is made amenable to tax. - Petition dismissed - HC Visit to Get Source Income Tax: Correct head of income - receivables / debtors found during the course of survey u/s 133A - business income or deemed income u/s 69 - Applicability of higher rate of tax u/s 115BBE - the same has been rightly offered to tax under the head “business income” - Liable to normal provision of tax - AT Visit to Get Source Income Tax: Tax on the income received from the international voyage of vessel - The stand of the Revenue that the assessee has not paid the taxes in Singapore appears to be incorrect and in fact it was not just a costal run but a part of an international voyage and therefore, Article 8 and Article 23 of India-Singapore DTAA is applicable in the present case. - AT Visit to Get Source Income Tax: Disallowance of claim of ‘surrender right fee’ - allowable business expenditure or not? - the assessee was not able to get necessary approvals and clause 3.4 provided that upon termination of the agreement as a result of failure to receipt approvals all advances granted by buyer to seller have to be returned in 30 days. - The amount to settle for an agreement allowed as expenditure - AT Visit to Get Source Income Tax: Revision u/s 263 - MAT - tax credit u/s. 115JAA allowed - The inclusion of tax credit for AYs. 2008-09 and 2009-10, available since 26.6.2020, would decrease, but not eliminate, this shortfall. That would not though make the assessment for the current year as erroneous. Rather, as apparent and admitted, it is the assessment for those years that could be said to be so. And as we shall see, erroneous to the prejudice of the assessee, and not the Revenue. - AT Visit to Get Source Income Tax: Addition on account of valuation of stock - AO has no power to scrutinize the return submitted by the assessee to the commercial tax department which has been accepted. AO did not have any jurisdiction to go beyond the value of the closing stock declared by the assessee and accepted by the Commercial Tax Department. - AT Visit to Get Source Income Tax: Characterization of receipts - correct head of income - Surrender proceeds of the ULIP - the above mentioned policy will come under the purview of ‘capital asset’ as per section 2(14) of the Act for which the A.O. is directed to tax the accretion on surrender of the said policy under the head ‘income from capital gains’ and not as ‘income from other sources’ - AT Visit to Get Source Income Tax: Condonation of delay - delay of almost 318 days - There is no culpable negligence or mala fide on the part of the assessee in delayed filing of the present appeal and he does not stand to benefit by resorting to such delay. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay of 318 days in filing the present appeal. - AT Visit to Get Source Customs: Rebate claim - Export of goods through merchant exporter - rejection on the ground of unjust enrichment - The Appellate Authority had also accepted that in claims of rebate, the concept of unjust enrichment was foreign. There was, therefore, no reason why the rebate claims of the petitioner should not have been processed in accordance with the rule position and such claims be granted. - HC Visit to Get Source Customs: Method of Valuation for payment of Counter Vailing Duty (CVD) - Section 4 or 4A of CEA? - The department has not doubted that the import is for sale to the RGKUT. This being so, the sale is not to an ultimate consumer and is only to institutional consumer. The view taken by the Commissioner (Appeals) that the assessment has to be made under normal transaction value under Section 4 is indeed legal and proper. - AT Visit to Get Source Customs: Undervaluation of imported goods - rejection of declared value - If any condition of the contract is contravened, it is for the contracting parties to settle among themselves and raising a doubt about the validity of the contract is not proper in the absence of any evidence that such a contract is entered into with any ulterior motive affecting the price. - AT Visit to Get Source Customs: Revocation of their Customs Broker Licence - allowing others to use its password / logins and allowing to misuse of IEC of another person, to smuggle huge value of cigarettes - The violation of the CBLR, 2013 though stands established, the revocation of Customs Broker Licence is too harsh a punishment - CB was was out of business for more than six and a half years - order of revocation of the Customs Broker Licence set aside - AT Visit to Get Source Indian Laws: Dishonour of Cheque - order passed by the Appellate Court suspending the sentence imposed by the trial Court under Section 138 of the Negotiable Instruments Act,1881(NI Act) without making any order for payment of compensation in terms Section 148 of the NI Act - respondent is willing to deposit 25% of the compensation awarded by the trial Court - The offer is accepted - HC Visit to Get Source Indian Laws: Dishonour of Cheque - insufficient funds - meeting the standard of “preponderance of probability”, and not mere possibility - Summary judgements under Order 37 should not be granted where serious conflict as to the matter of fact where any difficulty on issues as to law arises, the Court should not reject the defence of the defendant merely because of its inherent implausibility or its inconsistency. - HC Visit to Get Source IBC: CIRP - company under liquidation - Fraudulent transaction - Sale Deed executed by the Corporate Debtor in favour of the Respondent, with regard to the immovable property - It is settled position of law that there is a presumption that a ‘Registered Document’ is validly executed. The burden of proof, thus would be on the person who leads the evidence to rebut the presumption. In the instant case, this ‘Tribunal’ does not find any documentary evidence on record to establish that the said ‘Transaction’ is a ‘Fraudulent’ one. - AT Visit to Get Source Service Tax: Classification of services - The respondent’s role is to execute the conduct of exams by providing necessary manpower, expertise, infrastructure etc. as stipulated in the said agreement - the learned Commissioner has rightly extended the benefit of Notification No.14/2004-ST dt. 10.09.2004 as the services rendered by the respondent relates to educational services. - AT Visit to Get Source Service Tax: Liability of service tax - reverse charge mechanism - overseas banks has deducted certain bank charges from the export realization of the appellant’s export - Even assuming that the appellant have received any service, it is only from the Indian bank therefore, as per the forward charge mechanism, the Indian bank is liable to pay the service tax. Accordingly, under any circumstances in the given transaction the appellant is not liable to pay the service tax. - AT Visit to Get Source Service Tax: Exemption from payment of service tax - export of service - business auxiliary service (BAS) - It is evident that not only had the appellant rendered ‘export of service’, be it under the 2005 Rules or under the 2012 Rules, but the extended period of limitation also could not have been invoked in the facts and circumstances of the case - AT Visit to Get Source Central Excise: Refund of accumulated CENVAT credit - Closure of factory - it is opined that the refund can not be allowed - AT Visit to Get Source VAT: Levy of VAT - Deemed sale - ATM Management Services - the transaction is a pure service transaction not entailing any transfer of property of goods or effective control of the goods to the recipient. The various terms of the Agreements with the Banks discloses that the only intent of the contract is only provision of ATM management service for which the petitioners deploys ATMs and other assets at various sites across India - No VAT liability - HC Visit to Get Source Articles Refund application cannot be rejected without giving proper reason Sugar Manufacturing Co-operatives may now get their old IT demands dropped by filing applications u/s 154 and u/s 155(19) GST ON ONLINE GAMING: WHATS ON MAXIMUM MARGINAL RATE OF TAX UNDER INCOME TAX ACT, 1961 Supply of question paper along with printing services to educational institution is exempted from GST Notifications DGFT 26/2023 - dated 4-8-2023 - FTP Amendment in Import Policy of Items under HSN 8471 of Chapter 84 of Schedule-I (Import Policy) of ITC (HS), 2022 - Amendments to Notification No. 23/2023 dated 03.08.2023 GST 38/2023 - dated 4-8-2023 - CGST Central Goods and Services Tax (Second Amendment) Rules, 2023. 37/2023 - dated 4-8-2023 - CGST Special Procedure to be followed by the Electronic commerce operator who is required to collect tax at source u/s 52 Central Goods and Services Tax Act, 2017 in respect of supply of goods through it 36/2023 - dated 4-8-2023 - CGST Special Procedure to be followed by the Electronic commerce operator as required to collect tax at source u/s 52 in respect of goods supplied through it by the person paying tax u/s 10 GST - States (10/2023) FD 16 CSL 2023 - dated 28-7-2023 - Karnataka SGST Seeks to amend Notification (26/2018) No. FD 48 CSL 2017, dated the 31st December, 2018 (09/2023) FD 16 CSL 2023 - dated 28-7-2023 - Karnataka SGST Seeks to amend Notification (01/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 (08/2023) FD 16 CSL 2023 - dated 28-7-2023 - Karnataka SGST Seeks to amend Notification (13/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 (07/2023) FD 16 CSL 2023 - dated 28-7-2023 - Karnataka SGST Seeks to amend Notification (12/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 (06/2023) FD 16 CSL 2023 - dated 28-7-2023 - Karnataka SGST Seeks to amend Notification (11/2017) No. FD 48 CSL 2017, dated the 29th June, 2017 S.R.O. No. 816/2023 - dated 27-7-2023 - Kerala SGST Seeks to amend Notification No. 62/2017/TAXES. dated 30th June, 2017 Circulars / Instructions / Orders SEBI - SEBI/HO/AFD/PoD/CIR/P/2023/137 - dated 4-8-2023 Validity period of approval granted by SEBI to Alternative Investment Funds (AIFs) and Venture Capital Funds (VCFs) for overseas investment SEBI - SEBI/HO/AFD/PoD1/P/CIR/2023/130 - dated 31-7-2023 Master Circular for Alternative Investment Funds (AIFs) DGFT - 26/2023 - dated 4-8-2023 Implementation of the Track and Trace system for export of Pharmaceuticals and drug consignments along with maintaining the Parent-Child relationship in the levels of packaging and their movement in supply chain - Extension of date of implementation News Advisory on E-Invoice - Services Offered by the Four New IRPs Commerce Secretary advocates innovative approach to diversify exports, calls for greater collaboration between India and Latin American & Caribbean countries Union Finance Minister Nirmala Sitharaman chairs review meeting of Regional Rural Banks from Southern Region, in Chennai Case Laws: GST 2023 (8) TMI 309 Release of seized cash - alleged evasion of tax due - it was held by Kerala High Court that This appeal is allowed by directing the first respondent to forthwith release to the appellant the cash seized from the premises, against a receipt to be obtained from him. HELD THAT:- There are no reason to interfere with the judgment and order impugned in this petition. SLP dismissed. 2023 (8) TMI 308 Validity of SCN - proper reason for cancellation of GST registration not given - it was alleged, in one liner that Registration has been obtained by means of fraud, willful misstatement or suppression of facts - HELD THAT:- Such show cause notice is without any basis and there is no reason assigned in arriving at the conclusion for cancellation of Registration. It seems that before the order for cancellation of Registration, the respondent authority has not taken into consideration the reply dated 17.08.2022 given by the petitioner to the respondent authority. It transpires that on the same day i.e. on 17.08.2022, the order for cancellation of Registration came to be passed. The request for an opportunity of being heard in person was not accorded to the petitioner, though asked for. The issue involved in the present petition is no more res-integra in view of the the decision rendered by the Co-ordinate Bench of this Court in the case of OM TRADING VERSUS STATE OF GUJARAT [ 2023 (6) TMI 1054 - GUJARAT HIGH COURT ] wherein the Co-ordinate Bench of this Court has quashed and set aside the impugned order. In the present case on hand, it is clear that while issuing show cause notice for cancellation of Registration, necessary documents were not supplied and the notice is cryptic. It is also clear that while passing the impugned order for cancellation of Registration, the respondent authority has not assigned any reason and thus, the order passed by the respondent authority is not tenable at law. The show cause notice dated 04.08.2022 as well as the order dated 17.08.2022, are hereby quashed and set aside - petition allowed. 2023 (8) TMI 307 Seeking release of conveyance and the goods - proceedings to be carried under Section 130 of the CGST Act, or under Section 129 of the CGST Act - HELD THAT:- A reading of the post amended Section 130 of CGST Act, extracted above, undoubtedly demonstrates that if a person contravenes any of the provisions of the Act, with an intend to evade payment of tax, then such goods or conveyance are liable to be confiscated and the person is liable to pay damages - Clause (l) of Ext. P11 circular stipulates that where the proper officer is of the opinion that the movement of the goods is being effected to evade payment of tax, he may directly invoke Section 130 of the CGST Act, by issuing notice, proposing to confiscate the goods and conveyance, in Form GST MOV-10. On an appreciation of the pleadings and materials on record, it is evident that it is after issuing MOV 1 and 2, the first respondent had issued Ext. P9 show cause notice in GST MOV-10 under Section 130, directing the petitioner to show cause why the proceedings should not be initiated against him under Section 130 of the GST Act. The petitioner submitted Ext. P10 reply to the said notice. On going through Exts. P9 to P12, it is found that there are no extra ordinary circumstances made out, to entertain the writ petition by exercising the plenary powers of this Court under Article 226 of the Constitution of India, and set aside Ext. 12 order. It would be up to the petitioner to invoke his statutory remedies as provided under the GST Acts. The writ petition is dismissed. 2023 (8) TMI 306 Seeking grant of Regular Bail - availing ITC in relation to alleged Firms - Section 132 of the Central Goods and Services Tax Act, 2017 and Punjab Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017 - HELD THAT:- Concededly in the instant case, the maximum sentence specified under Section 132 of the C.G.S.T. Act is up to five years of rigorous imprisonment and the petitioner having already undergone custody for a period of two years, five months and twenty one days (as on 17.05.2023), would be entitled to bail. Furthermore, one of the co-accused in the instant Complaint Case No. COMA/1519/2021 dated 04.02.2021 has already laid challenge to the provisions of Section 69 and 132 of the C.G.S.T. Act by way of filing a writ petition bearing CWP No. 7147 of 2021 titled as ANKUR GARG VERSUS UNION OF INDIA AND OTHERS [ 2021 (3) TMI 1427 - PUNJAB AND HARYANA HIGH COURT] wherein trial qua the petitioner therein was ordered to be stayed vide order dated 26.03.2021 passed by a Division Bench of this Court. Thus, trial in the case is likely to take some time to conclude and no useful purpose would be served by keeping the petitioner behind bars for indefinite period. It is observed that the State/ Prosecuting Agency/ State police shall be at liberty to observe the behaviour of the petitioner during bail period, and in case it feels that the petitioner is indulging in influencing any of the witnesses or tampering with the prosecution evidence in any manner or otherwise causing interference with the progress of trial, it shall be open for the State/Prosecuting Agency/State police to move the trial Court for cancellation of bail, which shall be decided by the trial Court on merits. The petitioner is ordered to be released on regular bail subject to his furnishing bail/surety bonds to the satisfaction of the trial Court/Illaqa Magistrate/Duty Magistrate concerned. However, the concerned Station House Officer shall be informed about the release of petitioner and the petitioner shall inform the concerned Station House Officer about his address at which he intends to reside during the pendency of case/trial and any change in the address shall be communicated to the concerned Station House Officer, forthwith - Petition allowed. 2023 (8) TMI 305 Enhancement in the rate of GST - Government has however not acted upon pursuant to the changes in the rate of GST - HELD THAT:- The case of the petitioner appears to be genuine, as the petitioner cannot be mulct with higher rate of tax for the work/supply of work to the respondent/Department, GST being an indirect tax, the incidence of tax has to be borne by the recipient. There shall be a direction to the first respondent to pass appropriate orders for making suitable budget allocation for reimbursing the petitioner and other contractors the GST for the difference in GST rate on account of increase in the rate. The differential amount of GST on account of increase rate of tax with effect from 18.07.2022 shall be paid. This exercise shall be carried out by the respondents particularly the first respondent within a period of 45 days from the date of receipt of a copy of this order. Petition allowed. 2023 (8) TMI 304 Condonation of delay in filing appeal - appeal filed beyond the condonable period of 30 days - cancellation of GST registration - HELD THAT:- Already a detailed order was passed by this Court in the case of TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR [ 2022 (2) TMI 933 - MADRAS HIGH COURT ]. The issue was examined. It was concluded that no useful purpose will be served by keeping the assessee outside the purview of the GST regime without reviving their GST registration, as the assessee will continue to carry on business. By not revoking the cancellation of the GST registration, the Government will loose the revenue. It is informed that the order of this Court in the above said case has not been appealed and has been accepted by the State Government. This Court is inclined to allow this writ petition at the stage of admission. Consequently, the delay in filing the appeal stands condoned - The Appellate Commissioner namely the first respondent is directed to pass appropriate orders on merits and in accordance with law, within a period of 30 days from the date of receipt of a copy of this order. 2023 (8) TMI 303 Refund claim - export of goods - amount not refunded to the petitioner as the petitioner closed the previous account and had opened the new account with IDBI Bank - HELD THAT:- By a communication dated 20.12.2022, it has been informed to the petitioner that the third respondent has been addressed to redress the matter and transfer the IGST refund to the new account and the issue may be followed up with the third respondent - there is no dispute that the petitioner is entitled for refund on the exports made by the petitioner. However, the amount has not been refunded to the petitioner as the petitioner closed the previous account and had opened the new account with IDBI Bank. Considering the fact that the exports have made as early as 05.08.2021, the third respondent is directed to credit the sanctioned IGST refund to the petitioner's new account in IDBI Account No.0196651100000286 - petition disposed off. 2023 (8) TMI 302 Attachment of accounts and personal assets of petitioner - Section 74 of the GST Act - HELD THAT:- There is no merit in the challenge to the impugned order passed under Section 74 of the GST Act, 2017. An option has been given to the petitioner to pay the tax, interest and 50% of the penalty, within a period of 30 days from the date of communication of the orders dated 24.03.2023 pursuant to Assessment Orders dated 20.03.2023. The petitioner has not been exercised the option within the stipulated time. Therefore, the petitioner has to challenge the assessment order dated 20.03.2023 under Section 107 of the GST Act. There is no merits in the present writ petition. Considering the fact that the petitioner had filed these writ petitions before expiry of the extended period of limitation for filing an appeal against the Assessment order dated 20.03.2023, the petitioner is given a liberty to file a statutory appeal within a period of 15 days from the date of receipt of a copy of this order, subject to compliance of other requirement of the provisions of the GST Act, 2017. Petition dismissed. 2023 (8) TMI 301 Maintainability of petition - petitioner has already deposited 10% of the demanded tax amount before the first appellate authority - no second appellate forum - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of fifteen days from today, the rest of the demand shall remain stayed during the pendency of the writ petition. Application disposed off. 2023 (8) TMI 300 Refund of excess GST - change of GST rate on works contract from 12% to 18% w.e.f. 18.07.2022 - petitioner submits that petitioner may be permitted to submit fresh representation before respondents No.2 3 and in turn, they may be directed to consider and decide the same within specified time - HELD THAT:- This writ petition stands disposed of permitting petitioner to submit fresh representation before respondent No.2 3, raising grievance as raised in this writ petition. On petitioner's submitting representation, respondents No.2 3 shall consider and decide the same at the earliest preferably within an outer limit of 60 days from the date of receipt of this order. 2023 (8) TMI 299 Profiteering - projects other than project Crescent Bay - benefit of ITC not passed on - contravention of provision of Section 171 of the CGST Act, 2017 - HELD THAT:- This Commission has carefully considered the Report of the DGAP and the other material placed on record and finds that the DGAP, in SHRI BHARAT KASHYAP AND DIRECTOR GENERAL OF ANTI-PROFITEERING, CENTRAL BOARD OF INDIRECT TAXES CUSTOMES VERSUS M/S L T PAREL PROJECT LLP AND M/S OMKAR REALTORS DEVELOPERS PVT. LTD [ 2022 (7) TMI 1441 - NATIONAL ANTI-PROFITEERING AUTHORITY] , has investigated the matter pertaining to the other projects executed by the Respondent in terms of Section 171 of the CGST Act, 2017 and the Rules made there under so as to determine whether there has been any profiteering by the Respondent and found that no other project has been executed by the Respondent except the project Crescent Bay , profiteering in respect of which has already been determined by the NAA vide its order dated 29.07.2022. The above fact has also been corroborated from the website of the Maharashtra RERA as well as the reply of the Commissioner State Tax Maharashtra as per the report of the DGAP. This Commission finds that the provisions of Section 171 of the CGST Act, 2017 are not attracted in the case of the other projects of the Respondent and therefore the proceedings are accordingly dropped against him. Income Tax 2023 (8) TMI 298 Taxation on Foreign Currency Convertible Bonds - interpretation of Section 47 (xa) which was introduced through an amendment from the Finance Act, 2008 with effect from 01.10.2008 - determinative time for valuation - whether date of acquisition of the bonds by the assessee was the determinative time for its valuation and not the date of acquisition of the underlying shares? - HELD THAT:- Having considered the submission as well as the judgment of the Punjab and Haryana High Court in SHRI NAVEEN BHATIA [ 2015 (10) TMI 402 - PUNJAB HARYANA HIGH COURT] (which seems to have been rendered in the context of situation existing prior to introduction of Section 47 (xa) ) as well as the provisions of the concerned scheme i.e. Foreign Currency Exchangeable Bond Scheme, 2008 dated 10.08.2008 {introduced prior to the insertion of Section 47 (xa)} this Court is of the opinion that the bonds in question did not answer the description of the 2008 Scheme, but rather were in conformity with the earlier scheme relating to the issue of FECB (a scheme introduced in 1993). The distinction between the two schemes is that one relates to issuance of Exchange Convertible Bonds, whereas the other relates to Foreign Currency Exchangeable Bonds. Having regard to the significance to this distinction, this Court is of the opinion that there is no infirmity with the reasoning of the Bombay High Court [ 2019 (4) TMI 106 - BOMBAY HIGH COURT] . 2023 (8) TMI 297 Penalty u/s 271D - non comply with the provisions of Section 269SS - As decided by HC [ 2012 (9) TMI 845 - DELHI HIGH COURT] ITAT was correct in law in holding that there was a reasonable cause due to which, assessee failed to comply with the provisions of Section 269SS and it was not correct to state that the Tribunal based its decision on the only ground that Section 269SS cannot be applied to the assessee whose business itself was the collection of deposits - As submitted by Revenue/Appellant(s) and Assessee/Respondent(s) that in these appeals the relied upon judgments were orders impugned in[ 2023 (7) TMI 1053 - SC ORDER] and connected matters has dismissed those civil appeals. In the circumstances, appropriate orders may be made in these appeals also. HELD THAT:- Having regard to the aforesaid submissions and having regard to the fact that C.A [supra] were dismissed by this Court these appeals also stand dismissed. 2023 (8) TMI 296 Income accrued in India - Benefit of DTAA between India and USA - rightful owner of the remittances - fees for technical service (FTS) - Payment for certification of Diamonds - concurrent findings of fact by the authorities is that there is a take in window where articles are delivered but the service agreement is between the assessee and GIA USA - substantial question of law - HELD THAT:- Apparently reading the orders under challenge would indicate that based on factual appreciation especially the condition in the customer service agreement, the bank invoice and the Bank remittance advice a finding of fact has been arrived at that the assessee s case was protected under the India-USA DTAA and that mere rendering of services cannot be roped into FTS unless the person utilising the services is able to make use of the technical knowledge etc. Simple rendering of services as in the present case is not sufficient to qualify as FTS . For the reasons as aforesaid no substantial questions of law is framed. 2023 (8) TMI 295 TDS u/s 195 - disallowance u/s 40(a)(i) - non-deduction of TDS on expenditure being the commission paid to agent overseas - assessee s case that the commission paid to overseas agents was not chargeable to tax under the Act, therefore, it had no obligation to deduct TDS - ITAT allowed assessee appeal - HELD THAT:- It is trite law that a foreign resident who does not carry on any business operations in the taxable territories in India, and has no permanent establishment or business connection, is not liable to pay tax under the Act in respect of any amount remitted by resident assessee. In the present case, there is no material on record to even remotely suggest that the non-resident, who had been paid the export commission had any permanent establishment in India; had carried on any business within the taxable territory in India; or had any business connection in India rendering them liable to pay tax under the Act. There is also no allegation that the payments made were not bona fide expenses. No substantial question of law arises - Decided against revenue. 2023 (8) TMI 294 Reopening of assessment u/s 147 - allegation against the petitioner is that it has received foreign remittances from an Indian company as petitioner is a tax resident of USA - Revenue s case that the remittance is in the nature of consultancy services, and hence, is taxable u/s 9(1)(vii) - In an e-mail request for accommodation was reiterated and an opportunity was sought for being granted hearing in the matter - HELD THAT:- Revenue cannot accept that a request for personal hearing was made much prior to the date when the impugned order was passed. The AO, clearly, did not pay any heed to it. There is no dispute about the fact that the petitioner has not filed a Return of Income (ROI) for the AY in issue. As to whether such an obligation is cast on the petitioner, in the facts and circumstances obtaining in the instant case, is a matter which also needs to be inquired into by the AO. The provisions of Section 139 and Section 115A would have to be interpreted by the AO. That said, what the AO may also have to rule on is that even if ROI was not filed, will that, by itself, lead to a conclusion that remittances received by the petitioner were income chargeable to tax which had escaped assessment under the Act. For the foregoing reasons, we are of the view that the best way forward would be to set aside the impugned order passed u/s 148A(d) and consequent notice issued under Section 148 of the Act, with liberty to the AO to pass a fresh order after giving due opportunity to the petitioner. 2023 (8) TMI 293 Penalty u/s 271(1)(c) - addition on account of the ALV of vacant commercial/self-occupied assets - Assessee argument was that since it was a debatable issue, and, hence, the plausible view, penalty could not have been levied u/s 271(1)(c) - tribunal sustained the view taken by the CIT(A) that penalty ought not to be imposed - HELD THAT:- It is not in dispute that the penalty notice did not indicate, clearly, as to which limb of Section 271(1)(c) was triggered for initiation of penalty proceedings against the respondent/assessee. It is possible, in a given case, that both limbs are attracted; however, even that aspect was not made clear in the notice issued by the AO u/s 271(1)(c) of the Act. [ See Pr Commissioner of Income Tax-3 v Ms. Minu Bakshi [ 2022 (7) TMI 1307 - DELHI HIGH COURT] ]. We are also aligned to the view that the issue involved was debatable at the relevant point in time, which took a different turn only when this court delivered its judgment in Ansal Housing Finance Leasing Co. Ltd. [ 2012 (11) TMI 323 - DELHI HIGH COURT] Decided in favour of assessee. 2023 (8) TMI 292 Deduction u/s 80IC - interest received on a fixed deposit, created pursuant to an order of the court to secure payment of entry tax - Tribunal has ruled against the appellant/assessee by holding that such income cannot be categorized on derived from an eligible business - HELD THAT:- According to us, the interest accrued on fixed deposits, furnished to secure payment of liability towards entry tax, cannot, by any stretch of imagination, be construed as income derived from eligible business i.e., profit and gains derived by an undertaking or an enterprise which is relatable to manufacturing or production of articles. It is not income qua which deduction u/s 80IC can be claimed by the appellant/assessee. Insofar as Appellant is concerned that the AO could not have, in such circumstances, treated the interest accrued on fixed deposit as business income, is a submission which has merit. However, that said, this would not impact the tax burden insofar as the appellant/assessee is concerned; what would change, perhaps, would only be the head under which such income is made amenable to tax. We are not inclined to interfere with the impugned order passed by the Tribunal. 2023 (8) TMI 291 CIT (A) passing ex-parte order without providing adequate opportunity of being heard to the Appellant - Denial of principles of natural justice - TP Adjustment - HELD THAT:- It is obvious that the Ld. CIT(A) has not passed ex-parte order on merits of the case. An affidavit sworn by the authorised signatory of the company has been brought on record by the assessee deposing therein that notice(s) sent to the email of the employee who left the company did not reach the concerned officials of the assessee and that non-compliance was not deliberate. We are therefore of the view that in the interest of justice and fair play, it would be expedient to restore the matter back to the file of the CIT(A) for denovo adjudication on merits after allowing reasonable opportunity of hearing to both the parties - Appeal of the assessee is treated as allowed for statistical purposes. 2023 (8) TMI 290 Maintainability of appeal against Penalty u/s 270A - Scope of orders appealable before the CIT(Appeals) u/s 246A - penalty levied for not reporting/ misreporting of income - CIT(A) dismissed appeal filed by the assessee as he held that the same did not fall within the realm of the orders which were appealable before him - HELD THAT:- As stated by the Ld. AR and, rightly so, penalty imposed u/s. 270A clearly falls within the realm of orders appealable before the CIT(Appeals) u/s. 246A. We, say so, for the reason that as per Clause (q) to sub-section (1) of Section 246A an order imposing penalty under Chapter XXI of the Act finds place in the orders which are appealable before the CIT(Appeals). Thus on the basis of the aforesaid clear mandate of law, we are of the considered view that as an order imposing penalty u/s. 270A which in turn finds place in Chapter XXI of the Act, is in clear and unequivocal terms an order appealable before the CIT(A), therefore, a view to the contrary taken by the CIT(Appeals) in the present case before us cannot be sustained and is liable to be vacated. Also, on a careful perusal of the order of the CIT(Appeals), it transpires that he had while concluding as hereinabove wrongly referred to provisions of Section 246(1) which we may herein observe are no more applicable after 01.06.2000. We restore the matter to the file of the CIT(Appeals) with a direction to re-adjudicate the same afresh - Assessee appeal allowed for statistical purposes. 2023 (8) TMI 289 Correct head of income - receivables / debtors found during the course of survey u/s 133A - business income or deemed income u/s 69 - Applicability of higher rate of tax u/s 115BBE - HELD THAT:- As it is a case where there are unrecorded sales made by the assessee during the current financial year and receivables arising out of such unrecorded sales have been offered to tax as additional business income by the assessee. The source of such unrecorded receivables is thus the unrecorded sales which have been explained by the assessee and thus, the necessary nexus with the business of the assessee has been established. The name of the person, the amount receivables, date, etc has been duly recorded in the diary, thus, the statement of the assessee duly stand corroborated by the contents of the diary so found during the course of survey. No doubts, these transactions were not recorded at the time of survey thus qualify as unrecorded transactions satisfying one of the essential conditions, at the same time, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions, thus, it cannot be said that these are unexplained transactions thus, doesn t satisfy the second condition for invoking the deeming provisions of section 69 of the Act. Income surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69 of the Act and the same has been rightly offered to tax under the head business income and as a necessary corollary, in absence of deeming provisions, the question of application of section 115BBE doesn t arise for consideration. Decided in favour of assessee. 2023 (8) TMI 288 Addition u/s 68 - unsecured loans received - loan creditor not paid Short Term Capital Gain on sale of land - whereabouts of loan creditor [Smt. Hansaben M. Patel] is not known and she is treated as an absconded assessee, thus A.O. treating the above loan from her as not genuine - CIT(A) deleted the addition - HELD THAT:- As sale of the lands and execution of sale deeds by Smt. Hansaben M. Patel was not doubted by the Revenue, but as her whereabouts are not known, thereby the loan transactions to various parties is doubted by the Revenue. Since the respondent-assessees herein provided Copies of the Ledger account, confirmation, Bank Details, PAN and Income Tax Return of Smt. Hansaben M. Patel and contra entry and Bank Statements of Smt. Hansaben M. Patel, etc. After considering the above details we are of the considered view the assessee has discharged its initial onus cast upon him u/s. 68 of the Act and the Revenue failed to disprove the above transaction as bogus. It is the case of the assessee that the unsecured loan availed was repaid in the next financial year to the creditor namely Smt. Hansaben M. Patel through cheque payments and the bank statement also filed before the Lower Authorities. Therefore we are of the considered opinion, the provisions of section 68 does not attract in the above transaction and thereby we uphold the order passed by CIT(A) deleting the addition made u/s. 68 of the unsecured loans availed from Smt. Hansaben M. Patel. Decided against revenue. 2023 (8) TMI 287 Revision u/s 263 - Profit earned from the sale of land as assessable under the head Capital Gains OR Business income - deduction u/s 54EC allowed to the assessee resulting in Nil capital gain being charged to tax - HELD THAT:- The factum of conversion of land from agricultural land into non-agricultural land cannot be alone picked up for determining the intention of the assessee. PCIT having done exactly the same by picking out only one factor relating to the land sold, his inference that the land sold by way of adventure in the nature of business, we hold, is not appropriate. The other facts noted by the PCIT for arriving at his finding of the transaction of sale of land being in the nature of adventure in trade we find are entirely irrelevant and do not have any bearing on the finding. We fail to understand how the fact that the firms in which assessee was a partner indulged in real estate transactions can lead to the inference that the assessee in his individual capacity was also intended indulging in such business. For that matter the assessee s affidavit in proceedings before the Civil Court stating that he and his son were involved in real estate business also is of no relevance and consequence since the entire affidavit is not reproduced in the order and until it is read in entirety the import of it cannot be gathered. PCIT s reference to the contents of the affidavit can only be treated as his inference from the same and the affidavit could very well be also read to have been stated by the assessee in the context of the fact that he was indulging in real estate business in partnership. Therefore, we hold that there is no basis with the Ld. PCIT to hold that the facts relating to the transaction in sale of land were indicative of the same being in the nature of adventure in the nature of trade and the AO having accepted assessee s claim of returning capital gains on the same was an error on his part. In the absence of any finding of error in the order of the AO allowing the assessee s claim of gains earned from sale of land as being in the nature of capital gains, the order passed by the ld. PCIT u/s 263 of the Act is liable to be set aside. Decided in favour of assessee. 2023 (8) TMI 286 Rectification Petition u/s. 154 - Rejection of claim of exemption u/s 11 in absence of relevant Form No.10B. - AO rejected the petition filed by the assessee on the ground that there was no apparent mistake in the order passed by the AO u/s. 143(1)(a) - HELD THAT:- In the present case, there is no dispute with regard to the fact that the assessee did not file Form No.10B along with return of income and even before the AO, processed the return of income u/s. 143(1). But, fact remains that the assessee has filed said Form No.10B and filed Rectification Petition u/s. 154. In our considered view, when the assessee is entitled for exemption u/s. 11 AO ought to have entertained Rectification Petition filed by the assessee when the assessee has filed relevant Form No.10B specifying the amount of income accumulated for specified purpose, for which, income has been accumulated. CIT(A) without appreciating the fact simply rejected the appeal filed by the assessee. Therefore, we are of the considered view that the issue needs to go back to the file of the AO, and thus, we set aside the order of the Ld.CIT(A) and restored the issue back to the file of the AO and direct the AO to re-consider the issue in light of relevant Form No.10B filed by the assessee. Appeal filed by the assessee is allowed for statistical purposes. 2023 (8) TMI 285 Tax on the income received from the international voyage of vessel - contention of Ld. A.R. that the benefit under Article 8 as well as Article 7 of India Singapore Treaty (DTAA) is applicable in the present case - HELD THAT:- The said treaty is applicable in the present case as the assessee has already paid taxes for the said voyage for the period 28.09.2016 to 27.10.2016 while it is on international traffic / foreign run which includes the voyage from one Indian Port to another Indian Port. The stand of the Revenue that the assessee has not paid the taxes in Singapore appears to be incorrect and in fact it was not just a costal run but a part of an international voyage and therefore, Article 8 and Article 23 of India-Singapore DTAA is applicable in the present case. The decision in case of Taurus Shipping Services [ 2015 (12) TMI 401 - GUJARAT HIGH COURT] is squarely applicable in the present case wherein it is held that the benefit of India Singapore Tax Treaty is applicable in assessee beneficiary s case and is covered under Article 8 of India Singapore Tax Treaty and profit attributable to M/s. Jaldhi Overseas Pte. Ltd. is taxable only in Singapore and not in India. In fact, in the present assessee s beneficiaries case the assessee has paid the taxes with the Singapore Revenue Authorities and it is on a better footing than in case of Taurus Shipping Services. Thus, the appeal filed by the assessee is allowed. 2023 (8) TMI 284 Addition of employee benefit expense, finance cost, administration expenses and depreciation - treating such expenditure as capital work-in-progress - As submitted Appellant had started/commenced its business during the year under consideration - whether the claim of expenditure is allowable as revenue or the same required to be capitalized either as a part of capital work in progress or as part of work in progress of construction of project? - HELD THAT:- The basis taken by the AO in presuming that business of the assessee has not commenced, the assessee has shown Nil income from business and profession and has already shown income from other sources - when the construction of project has started and this fact has not been disputed by the authorities below then the impugned expenditure if not allowable as revenue expenditure then the same required to be treated as capital work in progress. Since, CIT(A) himself noted that the impugned expenses relates to project then the same should have been included as project work-in-progress as the sole activity of assessee during relevant period was construction of only project - AO is directed to allow the impugned expenditure as project work in progress. 2023 (8) TMI 283 Disallowance of claim of surrender right fee - allowable business expenditure or not? - AO has held the expenditure claimed by the assessee is not allowable as that there is no obligation on the part of assessee to pay an amount and secondly the payment is prohibited by law as sharing of profits on sale of agricultural land is prohibited by law - CIT(A) has deleted the addition - HELD THAT:- As agreement entered between the appellant and Tricone Projects India Ltd. (TPI) wherein the appellant had agreed to make available 175 acres of land at Village - Assessee had transferred 150 acres and further 32.01 acres of land on two different dates - However, the remaining land as per the agreement could not be aggregated and there was other issue involving necessary permissions with regard to land which assessee was not able to get. The assessee then sent a proposal to TPI to take possession of the original title deeds of 2.5 acres of land which assessee had aggregated for transfer to TPI of which sale deed could not be executed in favour of the TPI for the reasons of non-compliance of the terms of agreement. TPI accepted the proposal of assessee - This 2.5 acres land was subsequently, sold by assessee. Thus it was not a single transaction of sale and purchase of land with TPI but the assessee was into a long term association with TPI starting from Feb, 2006. It is also established that the assessee was handicapped in fulfilling the commitment towards TPI and at the same time was handicapped with regard to 2.5 acre land of which the original sale deeds were lying with TPI. Thus there was justification on the part of assessee, to have made a proposal to the TPI in response to which TPI had replied on 15.06.2012. Thus, CIT(A) was not in error to allow the payment as one u/s 37 having commercial expediency. Further TPI has shown the amount receipt from assessee as revenue from renunciation from development rights. There is no substance in the observation of AO of diversion of sharing of profits with TPI as admittedly the amount was paid to TPI prior to the sale of 2.5 acre lands to Smt. Naina Lal Kidvai on 16.07.2012. DR has relied the various provisions of the agreement to contend that there was no obligation under the agreement to make disputed payment as contractual liability but same is also meted out from the fact that clause 2.2 of the agreement provided right to TPI to terminate the agreement, in case, the assessee was not able to get necessary approvals and clause 3.4 provided that upon termination of the agreement as a result of failure to receipt approvals all advances granted by buyer to seller have to be returned in 30 days. AO has considered clause 5.2 to rebut the argument that there was a charge created in favour of TPI without appreciating that this clause was to remedy the situation where parties believed that for all good reasons beyond the control of parties the approvals were not received and parties had to settle their account. This very much allowed parties to settle for an agreement which concluded with the letter dated 15.06.2012 by which TPI accepted the offer of Assessee to be compensated in lieu of release of sale deeds of 2.5 Acre land held by TPI. Decided against revenue. 2023 (8) TMI 282 Revision u/s 263 - MAT tax credit u/s. 115JAA allowed - as per CIT if the tax credit for these years had been allowed by the AO, determined by him for AYs 2013-2014 and 2014-2015 respectively, no tax credit would be available for being allowed to the assessee for the current year - HELD THAT:- All the facts and figures, duly tabulated from the record by the Pr. CIT in his order, are undisputed. The AO has only allowed the tax credit as available on record. AO cannot presume utilization of tax credit for these two earlier years, i.e., where the same has not been actually allowed, and proceed on that basis. That is, he could not take cognizance of sums that had not crystallized upon passing of the requisite orders. That would be, plainly, presumptuous . Tax liability, unless admitted, it may be appreciated, is only as determined by following the due process of law. On the contrary, it is the non-allowance of the tax credit, exigible on the basis of record, that would make the assessment as liable to be questioned in its respect. True, the ld. Pr. CIT stating that no credit would be available if the AO had allowed the tax credit for AYs. 2013-2014 and 2014-2015 is arithmetically correct, as the combined credit liable to be utilized for these years is Rs. 40.74 crore, as against the available credit of Rs. 26.15 cr. The inclusion of tax credit for AYs. 2008-09 and 2009-10, available since 26.6.2020, would decrease, but not eliminate, this shortfall. That would not though make the assessment for the current year as erroneous. Rather, as apparent and admitted, it is the assessment for those years that could be said to be so. And as we shall see, erroneous to the prejudice of the assessee, and not the Revenue. As giving appeal effect for these two years would result in the assessee s tax liability for these years, as for the earlier years, being determined on the basis of tax under the MAT regime, rather than under the normal provisions of the Act, only in which, latter, case does the occasion to allow tax credit arise. That apart, the entire book-profit would be eligible to be allowed as credit for the subsequent years, including AY 2017-18. That is, rather than being a case of allowance of tax credit for AYs. 2013-14 2014-15, the said two years as the earlier years, would yield refund to the assessee. This explains the non-giving of appeal-effect for these years by the Revenue . In sum, the tax credit being allowed for AYs. 2013-14 2014-15, as the ld. Pr. CIT requires, without it being actually allowed by passing the relevant orders, apart from being hypothetical and presumptuous, would be without observing the due process of law, only whereby can tax liability under law arise, and be given cognizance to. Besides, it would be inconsistent with the law as clarified by the Hon ble jurisdictional High Court in Cochin International Airport [ 2017 (8) TMI 1190 - KERALA HIGH COURT ] as indeed the assessment for the earlier years. Assessee appeal allowed. 2023 (8) TMI 281 Deduction u/s 80P - assessee, a cooperative society, registered as a Primary Agricultural Credit Society (PACS) under the Kerala Co-operative Societies Act, 1969 - huge cash deposits with other banks during demonetization period - HELD THAT:- A nominal member, i.e., category C or D member, has no voting rights or participation rights in the profits, so that they are not members in the real sense. This explains the Revenue s stand. We further observe that the restriction regarding the area of operation by the first proviso to sec. 2(oa) of the Kerala Act, as Aryanad Panchayath, District Trivandrum, in the instant case, is not applicable to societies or banks in existence at the commencement of the Kerala Co-operative Societies (Amendment) Act, 1999, as the assessee. The assessee-society is thus entitled to service any member of the public at large, giving it the character of a public entity, at par with a cooperative bank.The second proviso to sec. 2(oa) (renumbered as s. 2(oaa) by the Kerala Cooperative (Amendment) Act, 2013), as substituted by the Amendment Act of 1999, clearly provides that in the event of the principal object/s being not fulfilled, the PACS shall loose all its characteristics of being one such, except for staff strength. The same, however, did not find favour in Mavilayi SCB Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] since followed in AnnasahebPatilMathadi Ltd. [ 2023 (5) TMI 372 - SC ORDER] inasmuch as a category C or D member is only in terms of the Kerala Act. Section 2(l) defines a member as inclusive of a nominal or associate member, separately defined u/s. 2(m) to mean a member who possesses only such privileges and rights, and is subject to such liabilities, as specified in the bye-laws. There was thus no parallel with the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995, which had no provision for such members, so that the appellant-society in The Citizen Co-operative Society Ltd [ 2017 (8) TMI 536 - SUPREME COURT] was acting illegally, even as held by the Hon'ble Apex Court in that case. A society as the assessee, in accepting deposit from a nominal member, or extending loan thereto, thus, does not act illegally, but only intra vires the Kerala Act. The assessee-society is, accordingly, an eligible entity u/s. 80P, notwithstanding that it may not be a PACS in terms of s. 2(oaa) of the Kerala Act, or indeed sec. 5(cciv) of the BRA. Head of income under which it s income for the year is to be split, i.e., between the business income (s.28) and income from other sources (s.56) - In our humble view though, sec. 80P(4) makes sec. 80P inapplicable to co-operative banks, i.e., other than the two excepted categories (of PACS or PCARDB), and sec. 80P(d) clearly provides exemption only where both the lender (depositor) and the borrower (depositee) is a co-operative society. This is as in that case income is derived from an eligible source, with the funds continuing to remain in a closed circuit, as explained in Bangalore Club [ 2013 (1) TMI 343 - SUPREME COURT] A co-operative bank, on the other hand, is a public entity, and the money deposited with it on being further advanced to it s customers, goes in the public domain, rupturing this circuit. A cooperative society, it may be noted, is, as indeed in the instant case, assessable as an Association of Persons . We may at this stage also advert to Totgar s Co-operative Sale Society Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] with a view to state its ratio, applicability of which would, in a given case, determine if the interest income is an operational income or arises qua surplus funds, assessable u/s. 56. And, that is, interest on surplus funds, i.e., not required for the time being for it s operational activities, and which is largely and essentially a question of fact, would stand to be assessed as income from other sources, as opposed to operational income, which may, where specified, be exempt u/s. 80-P. Continuing further, being in the nature of a passive income, is predominantly liable to be assessed u/s. 56, though the same, i.e., the head of income under which interest or dividend income is assessable, is by itself of little consequence or irrelevant for the purposes of s. 80- P(2)(d). Finally, we may consider the import of the factual observation, not rebutted at any stage, of the assessee undertaking chit fund scheme/s, and which is in the nature of banking. The same, in our view, is only a manner of providing credit facilities to it s members. The foreman commission earned by the assessee in the bargain would be the income of such business. Accordingly, nothing, in our view, turns on the assessee running a chit fund scheme/s. The assessee, a PACS, to which BRA is not applicable, the question of it being registered with, or having sought RBI approval, does not arise. That, to our mind, would not detract from the assessee s income, to the extent it so qualifies, being exempt under the Act. Any violation of any law, even if inadvertently, would not by itself impinge adversely on the status of such income under the Act, i.e., tax-exempt or otherwise. We, accordingly, hold the following incomes arising to the appellant-society as deductible u/s. 80P(1) - (a) income attributable to the appellant-society from the activity specified in s. 80P(2)(a)(i), i.e., of providing credit to its members, real or nominal, i.e., other than from non-members ; (b) interest income, net of expenditure attributable thereto, on deposits with a cooperative society or cooperative bank, shall, where and to the extent, not falling within the activity specified u/s. 80P(2)(a)(i), is deductible w.r.t. s. 80P(2)(d); (c) any income, not falling under the clause (a) and (b), shall be exempt to the extent of Rs. 50,000 w.r.t. sec. 80P(2)(c)(ii). Assessee appeal allowed. 2023 (8) TMI 280 Addition on account of valuation of stock - assessee being resident corporate assessee is stated to be engaged in trading of cloth and job work - AO alleged that the assessee reflected low value of closing stock - acceptability of closing stock declared by the assessee and accepted by the Commercial Tax Department - HELD THAT:- As assessee has maintained proper books of accounts and the same are subjected to Tax Audit. No infirmity has been pointed out by Ld. AO in the physical stock as maintained by the assessee. The assessee has valued the stock on the basis of net realizable value. The assessee s submissions were that there was damage to the stock due to heavy rains and floods. It could also be seen that the assessee is registered with commercial tax department and filing its sales tax returns. Apparently, the trading results have been accepted by commercial department and there is no adverse material on record, in this regard. In such a case, shortage of stock as mathematically computed by AO could not be upheld. The decision of CIT vs. Anandha Metal Corp [ 2004 (7) TMI 49 - MADRAS HIGH COURT] supports the case of the assessee wherein it was held that unless the competent authority under the Sales Tax Act differs with the closing stock of the assessee, the return accepted by the Commercial Tax Department is binding on the income-tax authorities. AO has no power to scrutinize the return submitted by the assessee to the commercial tax department which has been accepted. AO did not have any jurisdiction to go beyond the value of the closing stock declared by the assessee and accepted by the Commercial Tax Department. We find that similar fact exists in the present case. Therefore, following the same, we delete the impugned addition - Decided in favour of assessee. 2023 (8) TMI 279 Disallowance under transport segment and sanitization segment - Addition of repairs and maintenance expenses - As per AO no TDS has been deducted on balance expenses - HELD THAT:- It is true that during the course of assessment proceedings itself the assessee has explained that repairs and maintenance expenses were incurred by it on its own vehicles and not on hired vehicles. Explanation of the assessee was supported by bills/vouchers. It is true that the Assessing Officer has neither pointed out any defect nor any infirmity in the explanation of the assessee. Considering the fact that addition has been made on adhoc basis, the same deserves to be deleted. We, therefore, direct the Assessing Officer to delete the impugned disallowance. 2023 (8) TMI 278 Revision u/s 263 - As per CIT Marked To Market ( MTM ) loss claimed by the assessee and allowed vide assessment order passed u/s 143(3) is of capital nature and therefore should not be allowed as it directly relates to capital expenses - PCIT further alleged that the assessee itself claims MTM loss but does not offer any MTM gains - HELD THAT:- We find that the MTM loss on cross currency interest rate swap claimed in the financial year ending 31/03/2015 was reversed in the financial year ending 31/03/2016. From the computation of income for the assessment year 2016-17, the submission of the assessee is duly corroborated that there is no claim of MTM loss and therefore the assessee has offered to tax the said amount in its return of income for the assessment year 2016-17. PCIT rejected this submission of the assessee merely on the basis that the assessee did not submit these details before the AO during the assessment proceedings and therefore, it cannot be said that the assessment was completed after verifying assessee s books of accounts for the subsequent year. It is pertinent to note that the question as to the year in which deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different. Assessee is a company, and therefore tax is leviable at a uniform rate. It is trite law that in order to invoke section 263, the assessment order must be erroneous and also prejudicial to revenue, and if one of the limbs is absent, i.e., if the order of the AO is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue, recourse cannot be had to section 263 of the Act. Since the MTM loss was duly reversed in the subsequent year and has been offered to tax, therefore, there is no prejudice to the Revenue. Therefore, the impugned revisionary proceedings invoked under section 263 of the Act cannot be upheld and thus, are set aside. Decided in favour of assessee. 2023 (8) TMI 277 Addition u/s 68 - bogus share capital - HELD THAT:- As assessee had failed to prove either before the A.O. or before the CIT(A) regarding the genuineness of transaction relating to fresh share capital of Rs. 5,00,000/-. Apart from the same, there is no material before us to show that the transaction relating to fresh share capital are genuine. Thus, we find no error or infirmity the order of the CIT(A), accordingly, the grounds of Appeal of the assessee are dismissed. 2023 (8) TMI 276 Characterization of receipts - correct head of income - Surrender proceeds of the ULIP - income from other sources OR Capital gain - addition made on accretion in value of the policy received on surrender and disallowance of long term capital gain by not treating the unit linked market plus policy of LIC as capital asset within the meaning of section 2(14) of the Act - HELD THAT:- It is relevant to consider clause (c) of section 2(14) of the Act which has defined capital asset and has included any unit linked insurance policy to which exemption under clause 10D of section 10 does not apply on account of applicability of the fourth and fifth proviso thereof. In the present case, in hand, the assessee has paid a premium more than the limit specified under the fourth proviso to section 10(10D) of the Act. This has been further emphasized by amendment to section 2(14)(c) of the Act vide Act No. 13 of 2021 which has specifically stated the investment in unit linked insurance policy as capital asset . From the above observation, we find merit in the submission of the assessee and we hereby hold that the above mentioned policy will come under the purview of capital asset as per section 2(14) of the Act for which the A.O. is directed to tax the accretion on surrender of the said policy under the head income from capital gains and not as income from other sources . Decided in favour of assessee. 2023 (8) TMI 275 Validity of reopening of assessment - as argued AO did not have territorial jurisdiction to frame the assessment and further that the notice issued u/s 143(2) of the Act was time-barred - curable defect u/s 292BB or not? - HELD THAT:- The notice in this case has been shown to be signed on 30.09.2015, however, the same was emailed to the assessee on 03.11.2015. The notice was set in motion only on 03.11.2015, in our humble view, signing of the notice would not constitute as issuance of notice. The date of issuance of notice would be when it is set in motion for delivery to the assessee. So far as the contention of issue of notice u/s 143(2) of the Act within the prescribed period in relation to the reassessment proceedings u/s 147/148 was not mandatory, we find that the issue has been settled by the various High Courts holding that even in the case of reassessment proceedings u/s 147/148 the issuance of notice within the specified period u/s 143(2) is mandatory and that the AO cannot assume jurisdiction u/s 143(3) of the Act without issuance of notice u/s 143(2) of the Act and this defect cannot be cured by taking recourse to the deeming fiction provided u/s 292BB of the Act. Since the Assessing Officer did not issue notice u/s 143(2) of the Act within the specified time period, therefore, the Assessing Officer could not have assumed jurisdiction to frame the assessment u/s 143(3) of the Act and, therefore, the impugned assessment order is bad in law - Decided in favour of assessee. 2023 (8) TMI 274 Condonation of delay - delay of almost 318 days - assessee contended that the notice was not issued on the mail id mentioned in the form no. 35 filed by the assessee and thus, the assessee could not represent their case before the ld. CIT(A)/NFAC and the fact that the order has been passed has came to the knowledge only when the ld. AO issued notice for levy of penalty - HELD THAT:- Assessee in his affidavit detailed the reasons for the delay and the same is supported by the affidavit of this Chartered Accountant made out a clear case that there was sufficient cause which being beyond his control, prevented him from filing the present appeal in time before the Tribunal. We find that there is no culpable negligence or mala fide on the part of the assessee in delayed filing of the present appeal and he does not stand to benefit by resorting to such delay. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay of 318 days in filing the present appeal. CIT(A) (NFAC) decided the appeal without providing reasonable opportunity of being heard - fixation notices u/s 250, referred to in appeal order appear to were never received either by the Assessee or his earlier A/R, which could have been mailed to some other unknown mailing address not of the Assessee or his earlier A/R. - HELD THAT:- The assessee is deprived off the justice before the ld. CIT(A) even though the ld. CIT(A) has given the finding on the merits based on the facts available before him. But since, the assessee has not received an opportunity of being heard before the ld. CIT(A) on account non receipt of the notice on the mail id given in the appeal memo. The Bench noted from the entire episode that the assessee is deprived off to get the justice from the judicial authorities below because of technical latches which should not be done. Hence, the Bench in the interest of equity and justice restores the appeal of the assessee to the file of the ld. CIT(A) for a fresh adjudication. 2023 (8) TMI 273 Addition u/s 68 - unexplained cash credits shown as share capital/share premium received - Discarding the 3rd party confirmation - as per DR assessee failed to prove the identity of share applicants, genuineness of transactions and creditworthiness of the share applicants to invest in Assessee Company - HELD THAT:- AO has not brought any material on record to dislodge the sanctity of documents submitted that after the filing of the documents the burden casted upon the assessee, stood discharge and the burden is on revenue to refute the documentary evidences filed by assessee with cogent material. It is not a case of share application money or a case where there is any information of investigation wing vis- -vis generation of share application money/long term capital gain etc. It is settled position of law that no 3rd party would come forward with false evidence to oblige an assessee. Reference can be made to the judgment of Sheo Narian Duli Chand [ 1968 (9) TMI 32 - ALLAHABAD HIGH COURT] wherein it was held that there is no presumption that a witness appearing for an assessee come forward to give false evidence to oblige an assessee. Similarly provisions of section 277A (For third party) provides that if any person willfully helps another person for falsification of books of accounts then such person would be punishable with imprisonment and fine. Therefore discarding the 3rd party confirmation without bringing any material on record is arbitrary. Further, non service of summons by inspector or the presumption that investor companies are not in existence, without refuting the documentary evidences, alone cannot be a ground to make addition under section 68 - Decided against revenue. 2023 (8) TMI 272 Rectification u/s 154 - Computation of Tax - assessment of trust - denying exemption u/s 11 and computed the income of the assessee u/s 115BBE - AO added certain unaccounted capitation fee alleged to have been received - A.R. submitted that during the search, no unaccounted investment or sum of money or any other article or thing or bullion etc. was found. In the assessment order also, there was no discussion of any amount being added u/s 68, 69, 69A, 69B, 69C 69D - HELD THAT:- The reading of the assessment order passed u/s 143(3) r.w.s. 153A/153D of the Act shows that the assessee has collected unaccounted capitation fees which was brought to tax and the same is taxed at the higher rate as per provisions of section 115BBE of the Act. In our opinion, there is no infirmity in the action of the AO on this issue and even if there is a mistake, it is debatable and the remedy lies with the assessee elsewhere and not by way of proceedings u/s 154 of the Act. Also brought to our notice at the time of haring that the assessee has filed appeal against the assessment order passed u/s 143(3) r.w.s. 153A/153D before the ld. CIT(A) and the same are pending before the ld. CIT(A). Being so, if the assessee has any grievance, it can agitate it before the first appellate authority and the first appellate authority shall not be influenced by our findings on this issue in this appeal and he shall take independent view on this subject on merit in accordance with law while disposing the appeal before him for all these assessment years. This ground of appeals of the assessee is dismissed in all appeals. Depreciation claim - When the income of the assessee is assessed as business income by rejecting the exemption claimed by assessee u/s 11 and the assessee is entitled for all usual deductions under the provisions of the Act while computing the income of the assessee under the head business , more so deduction u/s 30 to 38 of the Act to be granted and not the gross income to be taxed. When the exemption u/s 11 of the Act is rejected, the income of the assessee has to be computed in normal commercial manner. Even if there is no claim of deduction towards depreciation, the same to be granted as this is the mandatory deduction to be granted u/s 32 if the assessee owns and puts the assets to use. Accordingly, we direct the AO to grant the allowable deduction towards depreciation to the assessee. Ordered accordingly. This ground of appeals of the assessee is allowed in all appeals. Denial of exemption u/s. 11 - AO held that exemption u/s 11 cannot be granted because the issue of cancellation of registration is still pending before PCIT and also on the ground that the exemption is denied as per fresh findings of the second search carried out on 10.10.2019 - HELD THAT:- The assessee is claiming exemption u/s 11 of the Act by filing application u/s 154 of the Act. In our opinion, this is debatable issue and the AO has given reasons in the assessment order passed u/s 143(3) r.w.s. 153A/153D of the Act. This issue cannot be dealt under proceedings u/s 154 of the Act as it is very much debatable. However, we make it clear that the ld. CIT(A) while disposing the appeals before him against the order passed u/s 143(3) r.w.s. 153A/153D of the Act, he should take independent view of the matter without influencing by our this finding herein. Ordered accordingly. This ground of appeals of the assessee is dismissed in all appeals. Appeals of the assessee are partly allowed. 2023 (8) TMI 271 Admissibility of additional ground at this belated stage - Period of limitation u/s 153 for issue assessment order u/s 143(3) r.w.s. 144C(1) - Rectifiable mistake u/s 292BB - HELD THAT:- No merit in the Revenue s instant technical objections as this tribunal s Special Bench decision in All Cargo Global Logistics Ltd. [ 2012 (7) TMI 222 - ITAT MUMBAI(SB) ] after considering hon ble apex court s landmark judgment in National Thermal Power Co. Ltd. [ 1996 (12) TMI 7 - SUPREME COURT ] holds that we could very well entertain such a pure legal question going to root of the matter in order to determine correct tax liability of an assessee provided all the relevant facts are already on record. These Revenue s technical objection stand declined accordingly. Validity of assessment for want of a valid reference u/s. 92CA - assessment jurisdiction - as argued ACIT, Circle-10(1) herein was not competent to make sec.92CA reference itself to the TPO - Period statutory limitation u/s. 153(4) - HELD THAT:- Once the competent authority i.e., CIT- 10, Mumbai had already passed sec.127(2) order transferring the assessee s assessment jurisdiction from ACIT, Circle-10(1), Mumbai to DCIT, Circle-1, Pune from 22.11.2011 itself, the former authority was hardly left with any jurisdiction to proceed further i.e., on 24.11.2011 and, therefore, all subsequent proceedings in furtherance thereto, are void and not sustainable in the eyes of law. We find no merit in Revenue s arguments. We make it clear that the question as to whether the assessment jurisdiction stood transferred from ACIT, Circle-10(1), Mumbai as on 22.11.2011 is no more res integra once detailed discussion in [ 2012 (11) TMI 287 - BOMBAY HIGH COURT ] has decided the same in assessee s favour and against the department. This is indeed coupled with the fact that assessee has further succeeded in the preceding assessment year 2008- 2009 thereby getting the corresponding assessment quashed at the CIT(A)'s level. Faced with the situation, we conclude that the Assessing Officer at Mumbai had no authority at all to make sec.92CA reference to the TPO which renders the entire subsequent proceedings as void ab initio and not sustainable in law. We further wish to make it clear that sec.292BB quoted at the Revenue s behest nowhere deals with such an instance of apparent lack of jurisdiction in clauses (a) to (c) thereof. The impugned assessment herein dated 30.05.2013 indeed deserves to be quashed as not only based on an invalid sec.92CA reference but also framed beyond the statutory limitation u/s. 153(4) of the Act which is extendable by twelve months therefore. Decided against revenue. Customs 2023 (8) TMI 270 Rebate claim - rejection on the ground of unjust enrichment - duty of excise paid by the manufacturer has been passed on to the merchant exporter or not - HELD THAT:- In the instant case, the respondent had exported goods through merchant exporter M/s. Syngenta India Limited. However, without any material on record and despite this clear observation, the department introduced the concept of unjust enrichment to reject the rebate claims of the petitioner. Even the Tribunal, invoking Sec. 35(B) of the Act, unnecessarily relegated the petitioner to the revisional authority when the only principal question that was decided and as a matter of principle within the parameters of Rule 18, the Appellate Authority had also accepted that in claims of rebate, the concept of unjust enrichment was foreign. There was, therefore, no reason why the rebate claims of the petitioner should not have been processed in accordance with the rule position and such claims be granted. The respondents are directed to uphold the rebate claims sanctioned by the Assistant Commissioner, Central Excise Customs Service Tax, Division-II, Ahmedabad, vide its order dated 21.06.2017 - Petition allowed. 2023 (8) TMI 269 Rejection of request of the petitioner to return the car bearing No.TN 04-AV-1374 and cash Rs. 1,24.000/- dated 26.11.2022 seized from the petitioner and two others - car used for smuggling or not - petitioner submits that the petitioner is willing to execute any bond or any other securities that may be required to release the car. HELD THAT:- The Court is inclined to give partial relief to the petitioner by ordering release of the petitioner's car viz., Maruti Suzuki Vitara Brezza bearing Registration No.TN 04-AV-1374 to the petitioner, subject to the conditions imposed - petitioner shall furnish a bank guarantee for a sum of Rs. 1,00,000/- as security to the second respondent and renewed from time to time - further security in the form of bond in favour of the second respondent shall be executed undertaking to pay fine and penalty that may be imposed on the petitioner after adjudication of the proceedings under the the Customs Act, 1962. Petition disposed off. 2023 (8) TMI 268 Import and use of brass scrap correctly or not - Compliance with the N/N. 52/2003-Cus, read with the provisions of import-export and the SION Norms or not - clarification by the Circular 1029/17/2016-CX dated 10 May, 2016 - HELD THAT:- As can be seen from the order of Commissioner (Appeals), he has in principle allowed the benefit on all the issues however remanded the matter for verification of the fact, if the brass scrap imported by the appellants was in the nature of brass scrap containing impurities like iron, steel, rubber, plastic, etc., or not. He is of the opinion that benefit of segregation can be allowed only if the imported scrap contained impurities like iron, rubber, plastic, steel etc. Prima facie from the clarification dated 10.05.2016 reproduced above, it is seen that even the revenue is of the belief that honey grade scrap also contains iron, steel ,etc., as impurities. It is seen that this circular dated 10.05.2016 was not produced before the original or first appellate authority and consequently there is no examination of this circular. It is seen that the circular has been issued after the date of passing of the impugned order. The original Adjudicating Authority will examine the applicability of this circular dated 10.05.2016, and any other circular issued on the subject to the remand directions given in the impugned order and decide the issue a fresh - while doing so it shall be free to decide the nature of product imported by documentary evidence or otherwise on the basis of materials already on record - impugned order modified. 2023 (8) TMI 267 Refund of SAD - Rejection of refund on the ground that the timber logs imported by the appellant was subsequently subject to process like sawing and cutting - HELD THAT:- It is an admitted fact that import was made by the appellant by paying the due amount of customs duty and special additional duty. Refund application was submitted only after disposal of considerable part of the goods imported by the appellant with sufficient evidence regarding payment of local tax. The dispute in the present appeal is settled by this Tribunal also in the matter of M/S ARAVIND TRADERS VERSUS COMMISSIONER OF CUSTOMS-COCHIN-CUS [ 2021 (7) TMI 100 - CESTAT BANGALORE ]. The appellant is entitled for the refund of Rs. 2,17,556/- rejected by Adjudication Authority on the ground that said amount related to quantity of 111.54 CBM sold after processing. Thus appellant is entitled for the refund of Rs. 2,17,556/- with interest in accordance with law. Appeal allowed in part. 2023 (8) TMI 266 Method of Valuation for payment of Counter Vailing Duty (CVD) - Section 4 or 4A of CEA? - MRP/RSP was affixed on each package - Educational Institution can be considered as a service industry or not - HELD THAT:- The imports having been made in 2012, the new Legal Metrology Act and Packaged Commodities Rules 2011 would apply - From the Rules, it is clear that only when the package is intended for retail sale the provisions of the Chapter for affixing MRP and other details would apply. Further, the definition of institutional consumer has also undergone change. Instead of the words service industry the words used in the new definition of institutional consumer is service institution . The department has not doubted that the import is for sale to the RGKUT. This being so, the sale is not to an ultimate consumer and is only to institutional consumer. The view taken by the Commissioner (Appeals) that the assessment has to be made under normal transaction value under Section 4 is indeed legal and proper. There are no grounds to interfere with the impugned order. The impugned order is sustained - appeal dismissed. 2023 (8) TMI 265 Undervaluation of imported goods - rejection of declared value - enhancement of value as per Section 14 of the Customs Act, 1962 read with Customs (Determination of Value of Imported Goods) Rules, 2007 or not - demand based on Contemporaneous imports - under valuation proved with clinching evidence or not - mis-description of the goods, as to quantity of the goods or change of country of origin or manipulation of invoices in the Bill of Entry or not - Confiscation - penalty - HELD THAT:- It is appropriate to refer to the Hon ble Supreme Court‟s analysis of the statutory provisions relating to valuation under the Customs Act, 1962 in the case of CENTURY METAL RECYCLING PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 2019 (5) TMI 1152 - SUPREME COURT ] where it was held that Declared valuation can be rejected based upon the evidence which qualifies and meets the criteria of certain reasons . Besides the opinion formed must be reasonable. Reference to foreign journals for the price quoted in exchanges etc., to find out the correct international price of concerned goods would be relevant but reliance can be placed on such material only when the adjudicating authority had conducted enquiries and ascertained details with reference to the goods imported which are identical or similar and certain reasons exists and justifies detailed investigation. On perusal of the order of the lower adjudicating authority, it is clear that reliance is placed on the values of imports effected in certain Bills of Entry during the relevant time mainly depending upon general description of the goods and the country of origin. Crucial commercial details of these consignments on which reliance is placed to determine contemporaneous prices as to the type, quality, quantity imported whether under any contract or whether any advance paid or whether the supply from the manufacturer or trader or whether the import is from any stock lot, etc., are not ascertainable - There was no discussion by the original adjudicating authority as to how the values of contemporaneous imports of identical / similar goods have been arrived at. Further, the respondent has intimated the clearances of same commodity by other importers nearly at or around the same price during the relevant period during the adjudication proceedings. The impugned goods in all these appeals are imported in terms of various contracts entered into with the suppliers abroad. If any condition of the contract is contravened, it is for the contracting parties to settle among themselves and raising a doubt about the validity of the contract is not proper in the absence of any evidence that such a contract is entered into with any ulterior motive affecting the price. Further, revenue has discredited the contract prices as the respondent has not reportedly imported the entire contracted quantities. From the Show Cause Notice, the Order-in-Original and records, contract numbers and the quantity contracted for import are only mentioned. Actual total quantity imported and how much is the shortfall and how it is to affect the transaction prices declared is not forthcoming. The Ld. Authorised Representative and Ld. Advocate have referred to many judicial decisions as detailed in the above paragraphs. But, the facts obtaining in these appeals are clearly distinguishable. There is nothing illegal or improper in suspecting the declared values of imported silk by the appellant. But, under valuation has not been conclusively proved by the Revenue. There are no cogent grounds to allow these appeals - the order of lower appellate authority is not required to be interfered with - there is no need to discuss about confiscability of the impugned goods - appeals filed by Revenue are dismissed. 2023 (8) TMI 264 Revocation of their Customs Broker Licence - forfeiture of security deposit - imposition of penalty - alleged that the appellant had colluded with unscrupulous persons and had failed to discharge their obligations as a customs Broker as envisaged under the CBLR, 2013 - HELD THAT:- There is no doubt that Mrs. R. Premavathy, who was the authorized signatory of the appellant, has admitted that her job was only to disclose the password for filing the Bill-of-Entry online for a monthly remuneration of twenty thousand rupees. The entire business was being transacted by Mr. I. Durai Murugan of M/s. India Exim Services, representing the appellant M/s. Sameer Logistics Pvt. Ltd. The impugned goods were found to be imported on behalf of M/s. Jeppiar Furnace and Steels Pvt. Ltd., Chennai by Mr. S. Murugan of M/s. Sri Lakshmi Impex, Madurai on fabricated documents. The appellant, by allowing Mr. I. Durai Murugan of M/s. India Exim Services, has thus clearly contravened the provisions of various Regulations of the CBLR, 2013. The appellant, through Mr. I. Durai Murugan, have facilitated imports by persons other than the IEC holder, by misusing the IEC of M/s. Jeppiar Furnace and Steels Pvt. Ltd. and knowingly issued KK Form thereby enabling to hand over the imported goods to the transporter arranged by Mr. S. Murugan, when the Bill-of-Entry was filed in the name of M/s. Jeppiar Furnace and Steels Pvt. Ltd. Investigations have proved the culpability of Mr. S. Murugan of M/s. Sri Lakshmi Impex and how the conspiracy to smuggle huge value of cigarettes was carried out with the connivance of Mr. I. Durai Murugan representing the appellant. Though the imported goods were examined and seized in March 2016, the CHA Licence was suspended by the Commissioner of Customs on 31.01.2017 i.e., more than nine months after the initial detection of smuggling, vide Order of Suspension dated 31.01.2017. The suspension was continued vide another Order dated 23.03.2017. The Show Cause Notice, proposing revocation of licence, was issued on 07.04.2017 and the Inquiry Report was submitted on 07.07.2017 and thereafter, the order of revocation of licence was passed by the Commissioner of Customs vide his Order dated 05.10.2017 - all the time-limits prescribed under the CBLR, 2013 have been complied with by the Department. It is not the case of the appellant that his licence was suspended soon after the seizure of the contraband. Completing investigations and sending a report has taken around nine months and the appellant was allowed to continue to carry on with his business till his licence was suspended only on 31.01.2017. Contravention of some of the provisions of the Customs Brokers Licensing Regulations - HELD THAT:- The appellant had undertaken the clearance work in good faith and the imported item declared as LMS Bundle Scrap was on the basis of various documents namely, invoice, packing list, Bill-of-Lading, Pre Shipment Inspection Certificate, High Sea Sales Agreement, etc.; that there was no delay in discharge of their duties as a Customs Broker and in maintaining up-to-date records of clearance documents. Thus, the appellant has not contravened the provisions of Regulations 11(m) and 11(k) of the CBLR, 2013. The violation of the CBLR, 2013 though stands established, the revocation of Customs Broker Licence is too harsh a punishment and hence, the revocation is set aside considering the fact that the appellant s Customs Broker Licence was suspended and so, was out of business for more than six and a half years. The forfeiture of security deposit as well as the penalty of Rs.50,000/- imposed by the adjudicating authority on the appellant upheld - the order of revocation and direct the Commissioner of Customs to restore the Customs Broker Licence set aside - The appeal is partly allowed. Corporate Laws 2023 (8) TMI 263 Oppression and mismanagement - plea of the Appellant is that in the absence of holding any Shares, in the Applicant s company, the 2nd Respondent, cannot be a Party, to a Petition, under Section 241 to 244 of the Companies Act, 2013, as she is neither a Member of the Appellant Company nor she is so authorized to do so by the Deceased - HELD THAT:- It must be exhibited that the conduct of Majority Shareholders, was Oppressive to Minority, as Members, and this requires that the events are to be considered as part and parcel of sequential narration. The Hon ble Supreme Court of India, in the decision SHANTI PRASAD JAIN VERSUS KALINGA TUBES LTD. [ 1965 (1) TMI 17 - SUPREME COURT] , had held that the Law, has not defined Oppression and it is left to the Court, to decide on facts of each case, whether there is such Oppression, requiring action. A Succession Certificate, can be granted, not only in respect of the Debt, but also in regard to the Shares, in a Company. Where a Succession Certificate, was granted in respect of Shares, in a Company, the Company, cannot insist upon production of Probate or Letters of Administration. The 4th Respondent / 2nd Respondent / 2nd Petitioner, seeking Equitable Reliefs, under Section 241 of the Companies Act, 2013, on account of Oppression of their Rights, as Shareholders, and a Systematic Exclusion, from knowing / participating in the Management and the Affairs of the Appellant / 3rd Respondent / 1st Respondent Company. Further, the Petition, arose, in respect of the Family run Appellant / 3rd Respondent Company, in which, the 3rd and 4th Respondents / 1st and 2nd Respondents Family Wing, were specifically excluded from the Management, and Rights of the Shareholders, were denied. Appeal dismissed. 2023 (8) TMI 262 Professional Misconduct - Failure to maintain Audit File and to co-operate with NFRA - Misuse of Emphasis of Matters for issuing a modified audit opinion - Erroneous Application of Financial Reporting Framework by the Company - Failure to report the company's non-compliance with the provision of AS 5 and the Framework (issued 2000) - Deferred Tax Assets: failure to report non-compliance with AS 22 - Failure to report or address errors in Cash Flow Statement - Significant Accounting Policies not as per applicable accounting standards - Penalties and sanctions. Failure to maintain Audit File and to co-operate with NFRA - HELD THAT:- Absence of audit documentation or failure to submit the Audit File to NFRA, is a clear evidence that the auditor failed to obtain reasonable assurance about whether the financial statements as a whole were free from material misstatement and that the auditor's opinion issued through the Independent Audit Report dated 20.05.2015 was without any basis and unreliable and hence, invalid. Accordingly, serious view is taken that of the failure of the EP to respond to NFRA's repeated communications and conclude that the EP by not responding to the proceedings undertaken by NFRA, has violated Section 132 (4) of the Act, 2013, which is a 'professional or other misconduct' in terms of Section 132 (4) (c) of the Act, 2013, read with Clause (2) of Part III of Schedule I of the Chartered Accountants Act, 1949. Misuse of Emphasis of Matters for issuing a modified audit opinion - HELD THAT:- It is clear that the EP misused the Emphasis of Matter part of the Audit Report to include matters that should have been evaluated separately and considered for effecting modification to the audit opinion under para 6 of SA 705 Para 6 of SA 705 clearly states that auditor should modify the opinion when he concludes that the financial statements are not free from material misstatements or if he is not able to obtain sufficient appropriate audit evidence for the same. Resorting to EoM para in the matters detailed is a clear violation of provisions of SA 706. Erroneous Application of Financial Reporting Framework by the Company - HELD THAT:- The Company was required under Section 211 of the Companies Act, 1956 to prepare Financial Statements in the form provided in part 1 of the Revised Schedule VI to the Companies Act, 1956 - The EP failed to report these-non- compliances in the Auditor's Report. Failure to report the company's non-compliance with the provision of AS 5 and the Framework (issued 2000) - HELD THAT:- In Note 30 to the Financial Statements, the company has only disclosed the adjustment relating to waiver of balances and its accounting treatment. However, it has not disclosed the terms of concessions, revised loans balances, repayment period, and rate of interest of One Time Settlement with the lenders. As per para 25 of the Framework, qualitative characteristics of Financial Statements are the attributes that make the information provided in financial statements useful to users. Two of the qualitative characteristics are 'understandability' and 'relevance' given in para 26 and 27 of the Framework. In view of these requirements, the company should have disclosed the important terms of One Time Settlement with lenders, which it did not do. The EP has not pointed out the error in his audit report. This indicates lack of professionalism on his part and his failure to report the company's non-compliance with AS 5 is proved. Deferred Tax Assets: failure to report non-compliance with AS 22 - HELD THAT:- The company had been in loss for the current reporting period FY 2013-15 and the previous reporting period FY 2012-13. Moreover, it is not clear from the financial statements whether the conditions for the recognition of deferred tax assets were met. EP should have exercised professional scepticism and challenged the management's judgement of recognising the deferred tax assets in the absence of virtual certainty of profits and concrete evidence of sufficient taxable income to realise the same. The EP has therefore failed to report non-compliance with the provisions of AS 22 regarding deferred tax assets as there is no comment in the Auditor's report. Failure to report or address errors in Cash Flow Statement - HELD THAT:- The company has used Indirect Method to arrive at cash flows from operating activities in the Cash Flow Statements, whereby net profit or loss is to be adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows - In this case, Net Profit before Tax is derived after considering the non-cash income relating to waiver of interest and leased rental charges by the lenders. However, these items being non-cash items should have been adjusted to arrive at 'Cash flow from Operating Activities'. Since the same has not been done, the Cash Flow from Operating Activities has been inflated - Further, waiver of principal amount of Rs 9.74 crores is shown as Increase/(Decrease) in other reserves in the Cash Flow Statement. Since waiver of principal amount is a non-cash transaction, it should have been excluded from Cash Flow Statement as per para 40 of AS 3 As this has not been reported by EP, the failure to report and address the errors in cash flow statement stands established. Significant Accounting Policies not as per applicable accounting standards - HELD THAT:- Employee Benefit Expense of financial statements states that the provision for gratuity fund and leave encashment is made on ad hoc basis and not as per the actuarial valuation as required by AS 15. In contrast, in note 2(i) in Significant Accounting Policies, it is stated that the estimated liability for the employee benefits is determined in accordance with the requirements of AS 15 and liability for gratuity is determined and charged to Profit and Loss account based on valuation by independent actuary. The EP did not report these contradictory disclosures and non-adherence of provisions of AS 15, which shows lack of due diligence on his part. Penalties and sanctions - HELD THAT:- In view of the fact that the EP has not only shown blatant disregard to the Standards on Auditing in conducting audit of a company that affects public interest, but has also shown scant regard to the legal process undertaken by NFRA under Section 132 (4) of the Companies Act, 2013 we take a serious view of his professional misconduct, which assumes further importance in light of the fact that he had long association with the company being its statutory auditor for five financial years from FY 2012-13 to FY 2017-18. As per information available in Annual Report for FY 2013-15, EP was paid Rs 12,20,000 (which included audit fees of Rs 8,00,000 and limited reviews of Rs 4,00,000 and Rs.20,000 for other services). Considering that the professional misconducts by the EP have been proved and considering the nature of the violations and principles of proportionality, we, in exercise of powers under Section 132(4)(c) of the Companies Act, 2013, order: i. Imposition of a monetary penalty of Rs.5,00,000 (Rupees Five Lakhs) on the EP, CAT. Raghavendra, proprietor of M/s T. Raghavendra Associates. ii. Debarment of CAT. Raghavendra, proprietor of M/s T. Raghavendra Associates, for ten years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate. 2023 (8) TMI 261 Professional Misconduct - Acceptance of audit engagement without valid authorization and without complying with ethical requirements; and issuing an audit report in violation of the Act - Failure to comply with Standards on Auditing (SAs) - Non-Compliance with SA 210 Agreeing the Terms of Audit Engagements - Non-Compliance with SA 230 Audit Documentation - Non-Compliance with SA 700, Forming an Opinion and Reporting on Financial Statements - Non-Compliance with other SAs - Penalty and sanctions. Acceptance of audit engagement without valid authorization and without complying with ethical requirements; and issuing an audit report in violation of the Act - HELD THAT:- The absence of due diligence and display of gross negligence by the EP run afoul of the provisions of the Chartered Accountants Act, 1949 and resulted in professional misconduct as conceived under Section 22, Clause 9 of Schedule I of the Chartered Accountants Act, 1949. The acceptance of an invalid appointment letter for the Statutory Audit of the Branch, the conduct of the audit based on an invalid appointment, presenting convoluted logic and baseless reading of the law to justify the actions show the absence of professional skepticism and gross negligence on the EP's part. Therefore, the charges stand proven. Failure to comply with Standards on Auditing (SAs) - HELD THAT:- The Branch Auditors accepted the Statutory Branch Audit assigned by the Company and issued the Independent Branch Auditors' Report stating therein that it was conducted in accordance with the SAs specified under the Act. Since these branch audit reports are clearly referred to by Company's Statutory Auditor (CAS) in its report to the members of the Company, here is examined the extent of compliance with the applicable SAs by the Branch Auditor notwithstanding the violation of ethical standards, the Chartered Accountants Act, 1949 and of the Companies Act 2013 in accepting an invalid appointment as the Branch Auditor. The principles and procedures laid down in the SAs including professional skepticism, audit documentation, sufficiency and appropriateness of audit evidence, audit planning, materiality, engagement risk, nature, timing and extent of evidence-gathering procedures and reporting are all applicable in the branch audit as well, being an audit of historical financial information. Non-Compliance with SA 210 Agreeing the Terms of Audit Engagements - HELD THAT:- The EP accepted the appointment letter issued by DHFL and issued the audit report without complying with the requirements of SA 210. Between 2015-16 and 2016-17, there was a significant change in the circumstances relating to the branch audit. In 2015-16 the AGM decided to have a separate branch auditor and company's auditor, while in subsequent years there was only one auditor (CAS) to audit the Company and all its branches. This calls for the application of para 13 of SA 210 as well. EP's negligence of the provisions of SA 210 resulted not only in accepting an illegal appointment and non-compliance with SA 210 but also in the absence of professional scepticism and professional judgment in understanding the objective and scope of the audit, thereby violating SA 200 also. Therefore, the charges stand proven. Non-Compliance with SA 230 Audit Documentation - HELD THAT:- The EP did not follow the requirements of SA 230 and that the audit documentation does not give evidence of the nature, timing and extent of audit procedures performed, results of those audit procedures and conclusions reached during the. Hence the charges regarding non-compliance with SA 230 stand proven. Non-Compliance with SA 700, Forming an Opinion and Reporting on Financial Statements - HELD THAT:- SA 700 is applicable in this audit and as per the SA 700, the EP is required to evaluate the effect of the misstatements and decide to appropriately modify the opinion. However, despite noting the absence of required information the EP did not document how this deficiency was immaterial and had not resulted in a misstatement - Nowhere in the audit file has it been documented how these deficiencies were resolved while reaching the conclusion that all documents were properly obtained by the EP and how its impact was considered by the EP in the audit opinion. There is also no determination of materiality thresholds in the audit file. In the absence of documented conclusions, determination of materiality and assessment of the risk of misstatements and the test of controls and based on the above contradictory evidence available, we observe that the unmodified opinion issued by the EP does not comply with SA 700. Hence, the charges stand proven. Non-Compliance with other SAs - HELD THAT:- Non-compliance with para 6, 7, 8, 9 10 of SA 300 as the EP failed in establishing an overall audit strategy and development of audit plan etc. in accordance with SA 300 - Non-compliance with para 5, 6 11 of SA 315 and para 1, 5 6 of SA 330 as the audit file lacks any documentation regarding the performance of risk assessment procedures for material misstatements at the financial statement level and assertion level and response to such risks etc. - Non-compliance with para 10, 11 14 of SA 320 for determining materiality, performance materiality and documentation thereof - Non-compliance with para 5, 6, 8, 14 15 of SA 450 in the absence of the evaluation of identified misstatements and uncorrected misstatements - Non-compliance with para 6 9 of SA 500 in not designing and performing audit procedures to obtain sufficient appropriate audit evidence and not evaluating the reliability of information produced by the company - Non-compliance with para 6 of SA 520 relating to the design and performance of analytical procedures - Non-compliance with para 4, 6, 7, 8 9 of SA 530 relating to the determination of sample design, sample size and required audit procedures. Penalty and sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The law lays down a minimum punishment for such misconduct - The EP in the present case was required to ensure compliance with SAs to achieve the necessary audit quality and lend credibility to the reports issued to facilitate the Company's Auditor to form their opinion on the Financial Statements. As detailed in this order starting from the acceptance of the Audit to the conduct and conclusion of the audit, there were substantial deficiencies in the Audit and abdication of responsibility on the part of EP, CA Mathew Samuel, which establishes the professional misconduct. Despite being a qualified professional, it is found that the EP, CA Mathew Samuel has not adhered to the Standards of Audit. On the contrary, the EP has tried to cover up the deficiencies by resorting to arguments not supported by law or evidence. Considering the fact that professional misconducts have been proved and considering the nature of violations and principles of proportionality and keeping in mind the deterrence, proportionality, signalling value of the sanctions and time required for improvement in knowledge gaps we, in the exercise of powers under Section 132(4)( c) of the Companies Act, 2013, proceed to order the following sanctions: i. Imposition of a monetary penalty of Rs.100,000/- upon CA Mathew Samuel; ii. CA Mathew Samuel is debarred for one year from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate. 2023 (8) TMI 260 Professional Misconduct - Acceptance of audit engagement without valid authorization and without complying with ethical requirements; and issuing an audit report in violation of the Act - Failure to comply with Standards on Auditing (SAs) - Non-Compliance with SA 210 Agreeing the Terms of Audit Engagements - Non-Compliance with SA 230 Audit Documentation - Non-Compliance with SA 700, Forming an Opinion and Reporting on Financial Statements - Non-Compliance with other SAs. Acceptance of audit engagement without valid authorization and without complying with ethical requirements; and issuing an audit report in violation of the Act - HELD THAT:- It is found that the absence of due diligence and display of gross negligence by the EP run afoul of the provisions of the Chartered Accountants Act, 1949 and resulted in professional misconduct as conceived under Section 22, Clause 9 of Schedule I of the Chartered Accountants Act, 1949. The acceptance of an invalid appointment letter for the Statutory Audit of the branches, the conduct of the audit based on an invalid appointment, presenting convoluted logic and baseless reading of the law to justify the actions show the absence of professional skepticism and gross negligence on the EP's part. Therefore, the charges stands proven. Failure to comply with Standards on Auditing (SAs) - HELD THAT:- Since these branch audit reports are clearly referred to by Company's Statutory Auditor (CAS) in its report to the members of the Company, we examine here the extent of compliance with the applicable SAs by the Branch Auditor notwithstanding the violation of ethical standards, the Chartered Accountants Act, 1949 and of the Companies Act in accepting an invalid appointment of the Branch Auditor. The principles and procedures laid down in the SAs including professional skepticism, audit documentation, sufficiency and appropriateness of audit evidence, audit planning, materiality, engagement risk, nature, timing and extent of evidence-gathering procedures and reporting are all applicable in the branch audit as well, being an audit of historical financial information. Non-Compliance with SA 210 Agreeing the Terms of Audit Engagements - HELD THAT:- The EP accepted the appointment letter issued by DHFL and issued the audit report without complying with the requirements of SA 210. Between 2015-16 and 2016-17, there was a significant change in the circumstances relating to the branch audit. In 2015-16 the AGM decided to have a separate branch auditor and company's auditor, while in subsequent years there was only one auditor (CAS) to audit the Company and all its branches - EP's negligence of the provisions of SA 210 resulted not only in accepting an illegal appointment and non-compliance with SA 210 but also in the absence of professional skepticism and professional judgment in understanding the objective and scope of the audit, thereby violating SA 200 also. Non-Compliance with SA 230 Audit Documentation - HELD THAT:- Even the additional documentation submitted to NFRA was deficient in terms of the nature, timing and extent of the audit procedures performed, who prepared and reviewed the audit working papers (WPs) and the timing of the audit procedures. For example, the majority of the additional documents submitted (purportedly from the EP's previous year's audit file), only have the sign and stamp of the Audit Firm. It carries no indication of any audit procedure being performed in respect of the financial year in question i.e. 2017-18. Similarly, the working papers on verification of cash balances, submitted with additional documentation, did not contain the details such as (a) whether it pertained to a surprise verification, (b) whether the verified cash tallied with the recorded cash, ( c) whether any evaluation was done regarding the controls over cash, (d) who were the responsible persons who verified the cash, (e) who reviewed the WP and what was the time of verification and (f) any cross-references to the related WPs where such details are available. The EP did not follow the requirements of SA 230 and that the audit documentation does not give evidence of the nature, timing and extent of audit procedures performed, results of those audit procedures and conclusions reached during the. Hence the charges in para 24 above regarding non-compliance with SA 230 stand proven. Non-Compliance with SA 700, Forming an Opinion and Reporting on Financial Statements - HELD THAT:- SA 700 is applicable in this audit and as per the SA 700, the EP is required to evaluate the effect of the misstatements and decide to appropriately modify the opinion. Determination of materiality is therefore important in an audit - in the absence of materiality levels documented in the audit file, there is no justification for the final noting of EP that unadjusted misstatements, including disclosure misstatements, are immaterial, based on the materiality level . In the absence of documented conclusions, insufficient audit documentation, determination of materiality and assessment of the risk of misstatements and the test of controls we observe that the audit opinion issued by the EP does not comply with SA 700. Penalty and sanctions - HELD THAT:- Section 132(4) of the Companies Act, 2013 provides for penalties in a case where professional misconduct is proved. The law lays down a minimum punishment for such misconduct. Considering the fact that professional misconducts have been proved and considering the nature of violations and principles of proportionality and keeping in mind the deterrence, proportionality, signalling value of the sanctions and time required for improvement in knowledge gaps we, in the exercise of powers under Section 132(4)(c) of the Companies Act, 2013, proceed to order the following sanctions: i. Imposition of a monetary penalty of Rs.100,000 (One Lakh) upon CA Harish Kumar T K; ii. CA Harish Kumar T K is debarred for one year from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate. Insolvency & Bankruptcy 2023 (8) TMI 259 Fraudulent transaction - Sale Deed executed by the Corporate Debtor in favour of the Respondent, with regard to the immovable property - evidence existed to establish that the sale deed was Fraudulent Transaction or not - HELD THAT:- Having regard to the facts and circumstances of the case and the Recitals in the Sale Deed dated 11/08/2008, this Tribunal is of the considered view that merely because the Sale Agreement is dated 15/05/1989 and the Sale Deed is executed on 11/08/2008, it cannot be a ground for establishing that the said transaction is a Fraudulent one. Now, we address to the contention of the Learned Counsel for the Appellant that there is no documentary proof to establish that Rs. 50,00,000/- was indeed transferred to the Corporate Debtor by the Respondent. Apart from the fact that the Financials of the Respondent Company record that the said Consideration was paid on its behalf by M/s Shivalika Leasing and Finance Limited , this Tribunal is conscious of the fact that the amount has been paid by Cheque. This Tribunal finds it a fit case to place reliance on the Judgment of the Principal Bench of NCLAT in the matter of JAGDISH KUMAR PARULKAR, LIQUIDATOR FOR KAPIL STEELS LTD. VERSUS M/S INDORE STEEL ALLOYS PRIVATE LIMITED, SUBHASH KUMAR JAISWAL, MANISH MALVIYA, M/S RUPENDRA JAISWAL KUMAR, MADHYA PRADESH INDUSTRIAL DEVELOPMENT CORPORATION LIMITED [ 2023 (3) TMI 1388 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI] in which this Tribunal had addressed in detail, regarding the role of Liquidator and observed The negligence on the part of the Corporate Debtor not to have executed the lease deed cannot be overlooked and cannot be allowed to become a ruse for fraudulent transaction. Mere possibility of a potential collusion without material on record is not sufficient to persuade, this Bench to record any finding on preferential or fraudulent transaction. It is settled position of law that there is a presumption that a Registered Document is validly executed. The burden of proof, thus would be on the person who leads the evidence to rebut the presumption. In the instant case, this Tribunal does not find any documentary evidence on record to establish that the said Transaction is a Fraudulent one. Appeal dismissed. 2023 (8) TMI 258 Challenge to approval of Resolution Plan - approval of the plan challenged on the ground that claim admitted of the Appellant was Rs.27,91,64,187/- whereas in the plan only an amount of Rs. 58,58,444/- has been allocated - HELD THAT:- Similar issues were answered by this Tribunal in DEPARTMENT OF STATE TAX, THROUGH THE DY. COMMISSIONER OF STATE TAX VERSUS ZICOM SAAS PVT. LTD. ANR. [ 2023 (2) TMI 1170 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it was held that The Appellant having been treated as Operational Creditor allocation of amount in the Resolution Plan cannot be said to be in violation of Section 30 (2)(b). We thus are of the view that no ground has been made to interfere with the Impugned Order. The issues raised in the present Appeal are fully covered by the judgment of this Tribunal in Department of State Tax, Through the Dy. Commissioner of State Tax vs. Zicom Saas Pvt. Ltd. Anr. - appeal dismissed. Service Tax 2023 (8) TMI 257 Time limit for service of notice - Applicability of Section-73(4), Chapter-V of the Finance Act, 1994 - whether decision of the Commissioner of Income Tax (CIT), affirmed by the CESTAT is sustainable as it held section 73 (4) in chapter V of Finance Act 1994 to be applicable? - HELD THAT:- Sub-section (1) of section 73 provides, the authority may within 18 months from the relevant date serve notice on the person chargeable with service tax, which has not, inter alia, been paid. The proviso gives reasons that may extend the period to 5 years for notice under it being issued. The finding on fact is no notice was issued to petitioner (assessee) under sub-section (1) of section 73. However, sub-section (4) in section 73 includes reason of contravention of any of the provisions in the chapter. Regarding this, demand-cum-show cause notice dated 17th November, 2009 stood issued on petitioner, invoking the proviso to sub-section (1) in section 73. In the circumstances, by operation of sub-section (4) in section 73, provision in sub-section (3) of said section became inapplicable to petitioner. This is more so because under sub-section (1) of section 78, the requirement is for the person fixed with the liability of penalty to be that he has been served notice under proviso to sub-section (1) of section 73. The show cause notice dated 17th November, 2009 is such notice. Sub-section (1) in section 73 provides for issuance of two separate notices for distinct purposes. The first is the notice under sub-section (1), which cannot be issued on prior payment of tax and the other, under the proviso. The question in the affirmative and in favour of revenue - Appeal dismissed. 2023 (8) TMI 256 Extended period of limitation - suppression of facts or not - SCN was beyond the period of limitation under Section 73 of the Finance Act, 1994 or not - HELD THAT:- The question of limitation is not just a question of law but a mixed question of fact and law. Admittedly, in this case, the petitioner has not been filed the returns as is contemplated under Rule 7 of the Service Tax Rules, 1994. Therefore, it is not open for the petitioner to allege that the Department is not entitled to invoke proviso to Section 73 of the Finance Act, 1994, as there is a suppression of facts. Therefore, there is no case made out for interfering with the impugned Order-in-Original No.2/23(ST) dated 31.01.2023 passed by the respondent based on a Show Cause Notice dated 26.04.2021 invoking extended period of limitation under Section 73 of the Finance Act, 1994 - Petition dismissed. 2023 (8) TMI 254 Refund of service tax paid - invoice/bill issued by KINFRA is produced for the claim of refund under Section 104 of the Finance Act, 2017 or not - the documentary evidence to establish that cenvat credit has not been availed is satisfied or not - appellant paid upfront amount on long term lease with Service Tax to KINFRA, who in turn paid the service tax to the Government - service was exempt by insertion of Section 104 in Chapter V of Finance Act 1994 with retrospective effect. HELD THAT:- The appellants filed refund claims which arose as a consequence of introduction of Section 104 of the Finance Act w.e.f. 31.03.2017. Further Notification No. 41/2016 dated 22.09.2016 has exempted taxable service provided by the State Government Industrial Development Corporation/Undertakings to the industrial units by way of granting long term lease of industrial plots from so much of service tax leviable thereon under 66B of the Finance Act, 1994 as is leviable on the one time upfront amount payable for such lease. Vide Section 104(1) exemption is provided for such services for the period from 01.06.2007 to 21.09.2016 and it has also provided that the refund claim should be filed within 6(six months) from the date on which the Finance Act, 2017 receives the assent of the President. In this case, it is found that the appellant has filed refund claims in time. The reasons why the refund claims have been rejected by the original authority and upheld by the first appellate authority is that the appellants did not produce the documents namely invoices/bill evidencing that they have paid service tax through KINFRA and non availment of Cenvat credit - The invoices produced by the appellants during the pendency of the appeals clearly show that they have paid the service tax to KINFRA, who in turn paid the same to the Government. Further, they have submitted a certificate from a Chartered Accountant to the effect that Cenvat credit has not been availed and that it has not been passed on to others. The appellants have now produced sufficient documents to prove that they have paid the service tax and have not availed or passed on the Cenvat credit, there are no justification in the rejection of refund claim - appeal allowed. 2023 (8) TMI 253 Nature of activity - Rendering of service or not - banking and other financial services or not - HELD THAT:- The case of the appellant appears to be that Service Tax is payable on bill discounting under banking and other financial services (BFS) only when the service is rendered by a banking company or financial institution including a non-banking financial company. They would thus contend that they are only a body corporate and not liable to pay Service Tax as they cannot be classified under the category of banking company or financial institutions. From the reply to the Show Cause Notice and the contentions, it is found that the appellant has not denied the fact of giving bill discounting facility to some of its customers, but had denied liability only on the ground that they are not a banking company or a financial institution. From the definition of BFS, it is found that sub-clause (ix) covers even bill discounting facility and as such, the appellant being a limited company, is also covered under the said definition - the definition makes it clear that such bill discounting facility could be offered not only by a banking company or a financial institution, but also a body corporate. There are no justifiable reasons to interfere with the impugned order and hence, the appeal is dismissed. 2023 (8) TMI 252 Levy of service tax - Non-payment of service tax - non-registration with the Department for the services - appellant is a State discharging / performing sovereign duty - Renting of Immovable Property - Management, Maintenance or Repair (MMR) - Business Auxiliary Service (BAS) - Technical Inspection and Certification Agency (TIC) - Extended period of limitation. Whether the appellant is a State discharging / performing sovereign duty and hence, not amenable to Service Tax? - HELD THAT:- Article 12 of the Constitution defines the term State only for the purposes of Part III of the Constitution, which deals with fundamental rights. Therefore, this definition will not, apparently, apply to other provisions of the Constitution or indeed, the provisions of statutes. This is clear when we refer to Article 289 in Part XII of the Constitution, which deals with Finance, Property, Contracts and Suits, including taxation. Article 289 (2) permits the Union to tax the States in respect of a trade or business of any kind carried on by or on behalf of such States. Therefore, the fact whether a particular assessee is a State or not within the meaning of Article 12 has no bearing on whether Service Tax could be levied on that assessee. The Hon ble Apex Court had an occasion to consider Sovereign in the context of the Industrial Disputes Act, 1947, in the case of AGRICULTURAL PRODUCE MARKET COMMITTEE VERSUS ASHOK HARIKUNI [ 2000 (9) TMI 930 - SUPREME COURT] has held that Hence even if some of the functionaries under the State Act could be said to be performing sovereign functions of the State Government that by itself would not make the dominant object to be sovereign in nature or take the aforesaid Act out of the purview of the Central Act. Thus the issue decided against appellant. Renting of immovable property service - HELD THAT:- There is a clear finding by the adjudicating authority that the appellant had in fact received rental income, which was also reflected in their P L Account and therefore, the fact of rental receipt stands proved - The appellant has placed reliance on the decision of the Hon ble Delhi High Court in the case of HOME SOLUTION RETAIL INDIA LTD. VERSUS UOI ORS. [ 2009 (4) TMI 14 - DELHI HIGH COURT] , wherein, it has been held that Section 65(105)(zzzz) does not in terms entail that the renting out of immovable property for use in the course or furtherance of business of commerce would by itself constitute a taxable service and be exigible to service tax under the said Act. But the very same Hon ble Delhi High Court in the subsequent / second HOME SOLUTIONS RETAILS (INDIA) LTD. VERSUS UNION OF INDIA ORS [ 2011 (9) TMI 46 - DELHI HIGH COURT] has set aside the above decision and it was held that the decision in the first Home Solution case does not lay down the law correctly inasmuch as in the said decision, it has been categorically laid down that even if a building/land is let out for commercial or business purposes, there is no value addition. Being of this view, we overrule the said decision. In view of the above 3-Judge Bench decision in M/s. Home Solutions Retails (India) Ltd. the appellant cannot escape the Service Tax liability and hence, the impugned order, to this extent, is in order. The grounds-of-appeal insofar as this ground is concerned are dismissed. Management, maintenance or repair service - HELD THAT:- It is a well-known fact that the appellant has its own account department, duly supported by accountants / chartered accountants and statutory auditors and hence, they cannot plead ignorance of law and/or procedures prescribed thereunder. Every procedure is applicable to all litigants irrespective of their status. But however, in the interest of justice, it is deemed appropriate to remit this issue to the file of the adjudicating authority for fresh consideration. The appellant, if so advised, can file the supporting documents before the lower authority. Business Auxiliary Service - Revenue has not specifically pointed out as to which limb of the categories of business auxiliary service covers scope of the alleged services rendered by the appellant - HELD THAT:- Unless a specific charge/service is alleged, put across in the Show Cause Notice and the scope of the services alleged to have been rendered by the appellant stands examined in the context of such service, mere allegation alone is not sufficient to fasten with tax liability. Hence, to this extent, the impugned order cannot sustain and the impugned order is set aside to this extent. Consequently, the grounds-of-appeal relating to this issue stand allowed. Technical Inspection and Certification Agency (TIC) - HELD THAT:- Even if it is accepted that the above service is not rendered to outsiders, but nevertheless, the appellant has collected service charges by deducting from the total consideration being paid to the contractors. That means, the said service was rendered to the contractors, for which payment is also made. The income so generated is thus shown as income under the category of Quality Control inspection testing fees in Schedule-4 to their P L Account. In any case, it is not the case of the appellant that such contractors were not on their rolls and that what was paid to them was only salary. If it is their view that it is not taxable, then why the service charges were deducted from payments and under which provision did they do so has not been explained anywhere by the appellant - The finding and the consequential demand on this issue in the impugned order is sustained. The grounds-of-appeal on this issue are therefore not entertained. Extended period of limitation - HELD THAT:- It is a clear case of suppression of facts, collecting / deducting Service Tax but withholding the same without remitting to the appropriate Government account, the same has also established the intent to evade payment of tax - the extended period of limitation has been rightly invoked and hence, to this extent also, the impugned order is correct. Consequently, the grounds-of-appeal relating to this issue lack merit and they are dismissed. Appeal disposed off. 2023 (8) TMI 251 Classification of services - Management or Business consultant service or not - conducting examinations for selection of candidates for admission to various courses and other evaluating examinations - benefit of exemption N/N. 14/2004 ST dt.10.9.2004 - HELD THAT:- Tribunal in the Respondent s own case for the earlier period i.e. from December 2007 to March 2012 M/S. MERIT TRAC SERVICES PVT LTD VERSUS C.C.E C.S.T. -BANGALORE SERVICE TAX-I [ 2019 (3) TMI 520 - CESTAT BANGALORE] interpreting the same agreements referring to the same judgements held that the allegation of the department that the services rendered by the respondent fall under the category of Management or Business consultant service cannot be sustained as the services rendered by the respondent to the Universities do not fit into the definition of Management or Business consultant service. There are no reason not to follow the said precedent and also no sound argument advanced by the Revenue to set aside the analysis of facts and conclusion recorded by the Ld. Adjudicating authority in applying the principles of law laid down by the Tribunal in the series of case laws referred by him in the impugned Order. The Department s argument is that the respondent has rendered assistance in carrying out the examinations under the said agreement but in fact the exams are conducted by the university itself; hence the services fall within the scope of Management or Business Consultant Services - but the stand of the department is devoid of merit. A careful reading of the scope of the service mentioned in the said agreement, referred to and analysed by the learned Commissioner in the impugned Order, clearly indicates that the respondents being experts in the field, approached by the Universities to carry out the exams for the university, to identify the talented candidates for enrolment and other purposes to various courses and the methodology/procedure for the execution of the said objective narrated in the form of agreement. The respondent s role is to execute the conduct of exams by providing necessary manpower, expertise, infrastructure etc. as stipulated in the said agreement - Further, the learned Commissioner has rightly extended the benefit of Notification No.14/2004-ST dt. 10.09.2004 as the services rendered by the respondent relates to educational services. The judgments cited by the learned AR in the case of M/S PIEM HOTELS LTD, THE INDIAN HOTELS COMPANY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, COMMISSIONER OF SERVICE TAX [ 2016 (4) TMI 290 - CESTAT MUMBAI] and KARNATAKA UDYOG MITRA VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE [ 2015 (5) TMI 534 - CESTAT NEW DELHI] are not relevant and applicable to the facts of the case in hand. The impugned order is upheld and the appeal filed by the Revenue being devoid of merit, is accordingly rejected. 2023 (8) TMI 250 Classification of services - to be classified under Commercial or Industrial Construction Service or not - service of construction of a new building or a civil structure or a part there of as it turnkey project of construction during the period from 21.06.2007 to 31.07.2009 - inclusion of value of free supplied material or provided by a client/ service receiver in the value of taxable service or not. Commercial or Industrial Construction Service for the period 21.07.2007 to 31.07.2009 - HELD THAT:- With effect from 01.06.2007, a particular nature of the construction service was brought under works contract service for which certain conditions are required such as execution of project with material and the assessee paid VAT under works contract. During hearing, on the direction of this bench the appellant have submitted sample copies of the purchase order issued by the service recipient M/s. Torrent Pharmaceuticals Ltd. - From the purchase orders in clause 8 (b) it clearly reveals that the construction service was provided by the appellant along with material. The appellant has submitted VAT return to claim that they have discharged the VAT on the works contract service. From the VAT return it is clear that the appellant have discharged the VAT on their works contract service. Therefore, both criteria that the execution of the work with material and on such construction service the appellant have discharged the VAT is satisfied, this clarifies that the service is Works contract Service. The appellant have admittedly paid the service tax on the works contract service for the relevant period of this case, therefore in our considered view, the construction service provided by the appellant is correctly classifiable under works contract service. Hence, the demand under Commercial or Industrial Construction Service is not sustainable. Whether the cost of material supplied free by the service recipient is includible in the gross value of works contract service? - HELD THAT:- The issue is no longer res- integra as the same has been decided by the Hon ble Supreme Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] held that The value of the goods/materials cannot be added for the purpose of aforesaid notification dated September 10, 2004, as amended by notification dated March 01, 2005 - this second issue also stands settled in favour of the appellant. The demand in the present case is not sustainable. Hence, the impugned order is set aside. Appeal is allowed. 2023 (8) TMI 249 Classification of services - Manpower Recruitment or Supply Agency Services - failure to obtain Service Tax registration and making periodical payment of Service Tax - HELD THAT:- In the definition of Manpower Recruitment or Supply Agency Services, it is clear that only in case where an assessee provides the manpower to the service recipient and the service recipient himself get the required job done from such manpower, under his supervision and the service charge paid by the service recipient on the basis of number of manpower, man hours to the service provider, then only such activity can be categorized under Manpower Recruitment or Supply Agency Services - From the invoice it can be seen that the job under taken by the appellant is sorting, shifting and cleaning of container s materials and the charges for the same was claimed 1 rupee per kg basis. This clearly shows that the service recipient is not concern about the number of manpower deputed for the job, whereas the service recipient has assigned the job to the appellant only in respect of sorting, shifting and cleaning of container s materials. The control of the manpower in this fact is obviously with the appellant and not with the service recipient. In this fact it is clear that the appellant have not provided the services of Manpower Supply or Recruitment Agency Services , this fact of the case is not under dispute as on this basis only the Adjudicating Authority has dropped the proceeding initiated in the show cause notice. This issue has come up time and again before this Tribunal. This Tribunal in the case of RITESH ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2009 (10) TMI 182 - CESTAT, BANGALORE] has held that as per the master circular dated 23.8.2007 would be appropriate in the case where services of manpower recruitment and supply agency had been temporarily taken by the business or the industrial association for supplying of manpower and may/may not be for execution of a specific work. Therefore, the reliance placed by the adj. authority on the said circular would not carry the case of the revenue any further. Thus impugned order set aside. The appellant have not provided the Manpower Recruitment or Supply Agency Services . Therefore, the demand made under the said category is not sustainable - Appeal allowed. 2023 (8) TMI 248 Liability of service tax on appellant or not - reverse charge mechanism - banking and other financial services - overseas banks has deducted certain bank charges from the export realization of the appellant s export of goods while remitting the export proceeds to the Indian bank of the appellant - HELD THAT:- The service tax was demanded on the bank charges deducted by the foreign bank while remitting the export proceeds of the appellant to Indian Bank. The Indian Bank has deducted the same amount from the total proceed while remitting it to the appellant. Thus, the Indian bank has merely recovered the amount as reimbursement of the service charges borne by them. Therefore, in this transaction the service provider is the foreign bank and the service recipient is Indian Bank located in India as the recipient of service from the foreign bank is actual liable to pay service tax under reverse charge mechanism, in terms of Rules 2 (d) (1) (iv) of Service Tax Rules, 1984. Even assuming that the appellant have received any service, it is only from the Indian bank therefore, as per the forward charge mechanism, the Indian bank is liable to pay the service tax. Accordingly, under any circumstances in the given transaction the appellant is not liable to pay the service tax. Reliance placed in the decision of this Tribunal in the appellant s own case [ 2022 (12) TMI 1146 - CESTAT AHMEDABAD ] wherein it was held that when the assessee is not directly making the payment to the Foreign Banker towards any service provided by the said Foreign Banker to the Indian Bank, the assessee is not liable to pay service tax. With this settled position, we hold that any bank charges paid by Indian Bank to the Foreign Banks even though in connection with import and export of the goods and the same was debited to the appellant, the service tax liability does not lie on the appellant. The issue is no longer res- integra and in the identical facts and transaction the assessee is not held to be liable for payment of service tax - the impugned orders are not sustainable - Appeal allowed. 2023 (8) TMI 247 Recovery of the service tax - collection of P T charges from customers but non-discharge of service tax on the same - inclusion of such expenses in the assessable value or not - Banking and Other Financial Services - HELD THAT:- The issue of includability of reimbursable expenses namely P T charges is no more res-integra as the Hon ble Apex Court has examined the same issue in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT ] stating that the reimbursable expenses could be included in the gross taxable value post 2015. There are no merit in the impugned orders. Consequently, the same are set aside and the appeals are allowed 2023 (8) TMI 246 Exemption from payment of service tax - export of service - business auxiliary service (BAS) - applicability of POPOS Rules - period of dispute from 01.07.2012 to 31.03.2015 - extended period of limitation - HELD THAT:- The issue stands decided in favour of the appellant by a larger bench of the Tribunal in M/S. ARCELOR MITTAL STAINLESS (I) P. LTD (NOW KNOWN AS M/S. ARCELOR MITTAL DISTRIBUTION SOLUTIONS INDIA PRIVATE LIMITED) VERSUS COMMISSIONER SERVICE TAX MUMBAI-II [ 2023 (8) TMI 107 - CESTAT MUMBAI] . The factual position before the larger bench was that a prospective customer in India was approached by Arcelor India and the request was forwarded by Arcelor India to the foreign entity which ultimately supplied the goods to the Indian customers. For the service provided by Arcelor India to the foreign entity i.e. Arcelor France, Arcelor India received commission in convertible foreign currency. The department believed that service tax was leviable on this commission received by Arcelor India since the services were performed and consumed in India and they would not qualify as export of service. This contention was repelled by the larger bench and it was observed that though the goods were being supplied to customers in India, the actual recipient of BAS provided by Arcelor India is Arcelor France. Thus, irrespective of whether the 2005 Export Rules or the 2012 Rules are applicable, the appellant would render export of service which was not taxable till 01.10.2014, whereafter it became taxable as the appellant became an intermediary. Extended period of limitation - HELD THAT:- In the present case, the appellant, as is seen from the impugned order, had filed ST-3 Returns for the period from July 2012 to September 2014 and had shown the whole commission earned during the relevant period. The order also takes notice of the fact that the appellant had by a letter dated 31.07.2012 revealed to the department that it was providing services to the foreign entity for the products sold in India and that it had received commission payment for such services. It also needs to be noted that these facts had been brought to the notice of the department on 31.07.2012, but the show cause notice was issued to the appellant only on 03.09.2014 - the extended period of limitation could not have been invoked. It is, therefore, evident that not only had the appellant rendered export of service , be it under the 2005 Rules or under the 2012 Rules, but the extended period of limitation also could not have been invoked in the facts and circumstances of the case. - the impugned order dated 22.02.2017 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside - appeal allowed. Central Excise 2023 (8) TMI 245 Recovery of Cenvat credit wrongly availed by the Appellant - DFT copy of invoices recd. from Telco-Pimpri, which was submitted earlier by their letter dated 16.11.2000 - Credit availed without invoice - Credit availed on other than DFT copy of invoice - Modvat availed on the basis of Certificate A - Misc. Discrepancies - penalty. DFT copy of invoices recd. from Telco-Pimpri, which was submitted earlier by their letter dated 16.11.2000 of Rs.15,31,074/- - HELD THAT:- The impugned order is beyond the remand direction as well as the scope of the previous Order-in-Original, which merely denied the credit for non-submission of letter, which has been provided by the Appellant before Denovo adjudication. Regarding eligibility of this credit, it is observed that the Duplicate copy of invoice produced by the Appellant clearly indicate the receipt of the goods into the factory - the appellant has rightly availed the credit. Subsequently, they have cleared the inputs to HV Axles Ltd as such on reversal of the same credit availed at the time of its receipt - there is no infirmity in the initial availment of the credit and its subsequent clearance as such on reversal of the credit availed. Accordingly, the denial of credit of Rs 15,31,074/- is not sustainable. Credit availed without invoice of Rs.19,91,913/- - Credit availed on other than DFT copy of invoice of Rs.5,33,208/- HELD THAT:- The denial credit on this ground is beyond the remand direction as well as the scope of the previous Order-in-Original, which merely denied the credit for nonsubmission of letter, which has been provided before the denovo adjudication - Once the remand direction clearly stated that during the relevant period there was no requirement to produce the original copies for defacement, the insistence on the production of the same or denial the credit on the basis that the Appellant did not produce DFT copy of the invoice, for availing the credit is legally not tenable. Even legally, there was no requirement during the relevant period to avail credit only on the DFT copy of the invoice, as evident from the provisions of amended Section 52A of the Central Excise Rules, 1944, w.e.f. 01.04.2000. Rule 57AC or Rule 57AE also never provided for such a requirement. Rather, even preamendment, Rule 57G(6) always allowed the assessees to avail credit on the basis of original copy of the invoice if there is no dispute about the receipt of goods in the factory. Inasmuch as there is no dispute on the duty paid character and receipt of goods in the factory, the credit cannot be denied on this count. During the material period there was no requirement of submitting the Transporter's copy to avail the credit. Since that requirement has been done away with in the Rule, the credit can be availed on the basis of any other valid document such as original copy or Triplicate copy also. Accordingly, the denial of credit on this count in the impugned order is not sustainable. Modvat availed on the basis of Certificate A of Rs.89,641/- - denial on the ground that the said credit was availed on the basis of Certificate A issued by the jurisdictional superintendent certifying the payment for Rs. 89,641/- as differential duty on certain invoices produced - HELD THAT:- The credit on this count has been held to be admissible as per the remand order of Tribunal, Kolkata. The Appelant stated that the judgment of the Hon ble Supreme Court in the case of COMMISSIONER OF C. EX., MADRAS VERSUS HOME ASHOK LEYLAND LTD. [ 2007 (3) TMI 257 - SUPREME COURT] is squarely applicable to them - It is observed that Certificate A issued by the Superintendent certifying the additional duty payment is a valid document to allow the credit. The decision cited by the Appellant squarely applicable in this case. By following the decision cited, and the Tribunal s direction in the earlier order, the credit cannot be denied on this count. Misc. Discrepancies of Rs.1775/- - HELD THAT:- There is no specific finding on this count in the impugned order for denying this credit. Accordingly, the credit of Rs 1775/- allowed. Penalty - HELD THAT:- Since, the credit has been taken correctly, no penalty imposable on the Appellant. The appeal filed by the Appellant is allowed. 2023 (8) TMI 244 Benefit of N/N. 30/2004-CE dated 09-07-2004 (Sr. No. 9) denied - appellant though availed the Cenvat Credit on the common inputs however at the time of clearance of the goods they have reversed 5% of the value of the goods in terms of Rule 6(3)(i) of Cenvat Credit Rules 2004 - denial on the ground that the appellant have availed the Cenvat Credit on receipt of the common inputs - HELD THAT:- The facts is not under dispute that the appellant though availed the Cenvat Credit initially but at the time of clearance of goods under Notification No. 30/14-CE they reversed 5% in terms of Rule 6 (3)(i) of Cenvat Credit Rules, 2004. Payment of an amount of 5% in terms of sub-rule (3D) shall be deemed to be Cenvat Credit not taken for the purpose of an exemption Notification where in any exemption is granted on the condition that no Cenvat Credit of inputs and input services shall be taken. In terms of the above sub-rule (3D) in an exemption, if there is a condition of non-availment of Cenvat Credit but even if the Cenvat Credit is availed on the common input and input services by reversing the credit as per the Rule 6(3) the condition of the Notification shall stand complied with - the reversal of 5% of the value of exempted goods in terms of 6(3)(i) of Cenvat Credit Rules, 2004 is one of the mechanisms to expunge the Cenvat Credit availed by the assessee therefore even after taking the credit if the assessee reverse an amount, as provided in Rule 6(3) it will amount to non availment of Cenvat Credit. This issue has been considered by this Tribunal in the case of Spentex Industries Ltd [ 2016 (9) TMI 282 - CESTAT NEW DELHI ] wherein even for the period before the insertion of Rule 6(3D) of Cenvat Credit Rules, 2004, it was held that when the assessee reverse 6% of the value of the exempted goods in terms of Rule 6(3)(i) the condition of the Notification No. 30/04-CE stands complied with and demand shall not be sustainable. Thus, it is clear that the appellant by reversing 5% of the value of exempted goods in terms of Rule 6(3)(i) fulfilled the condition of Notification No. 30/2004-CE. Therefore, the appellant are legally entitle for exemption Notification No. 30/2004-CE, and the demand is not sustainable. Appeal allowed. 2023 (8) TMI 243 Refund of accumulated CENVAT credit - Closure of factory - HELD THAT:- The Honourable High Court of Bombay in the case of Gauri Plasticulture Pvt. Ltd. [ 2019 (6) TMI 820 - BOMBAY HIGH COURT] had occasion to consider the very same issue. The decision of the Honourable High Court of Karnataka in the case of Union of India Vs Slovak India Trading Co. Pvt. Ltd. (Karnataka) [ 2006 (7) TMI 9 - KARNATAKA HIGH COURT] was referred to by the Honourable High Court. It was observed that the Division Bench of the Honourable High Court of Karnataka in the said case took a view that there is no express prohibition in Rule 5 to refund the unutilised CENVAT credit. The revenue filed an appeal against such decision before the Honourable Apex court, and on the basis of the representation made by ASG who appeared on behalf of the Union of India that in similar decisions passed by the Tribunal, the revenue had not filed any appeal, the Honourable Apex Court had dismissed the appeal filed by the revenue. Thus there was no declaration of law under Article 141 of the Constitution of India in the said case. After adverting to various decisions on the point the Hon ble High Court of Bombay held that the refund cannot be granted. The facts being identical following the above decision, it is opined that the refund can not be allowed - appeal dismissed. CST, VAT & Sales Tax 2023 (8) TMI 255 Levy of VAT - ATM Management Services provided by the petitioner to various Banks across the State of Karnataka on which the petitioner has already paid Service Tax - Karnataka Value Added Tax Act, 2005 (KVAT Act) - HELD THAT:- The impugned orders, levies and demands are illegal, arbitrary and without jurisdiction or authority of law and the same deserve to be quashed. The undisputed material on record, in particular the agreements also make it unmistakeably clear that it is nowhere evident that the ATMs and equipment at any stage are transferred/delivered to the banks and neither does the possession get transferred to the bank. The petitioners all through out the tenure of the agreement continues to provide ATM Management services to the banks deploying/using the ATMs and equipment. Delivery/transfer is sine qua non to attract levy of VAT. However, no delivery but only deployment takes places. The petitioners not only has the possession but is also in effective control of the ATMs and equipment. If it was neither in possession or in effective control over the ATMs and equipment, the petitioners would have been unable to provide the aforesaid services. The impugned orders have erroneously held the petitioners transaction to be one of deemed sale. A deemed sale or delivery on hire purchase would arise only when goods are either delivered physically or on the grant of effective control and possession therein to the recipient. In the present case, the transaction is a pure service transaction not entailing any transfer of property of goods or effective control of the goods to the recipient. The various terms of the Agreements with the Banks discloses that the only intent of the contract is only provision of ATM management service for which the petitioners deploys ATMs and other assets at various sites across India. The petitioners uses the ATMs and other assets merely as a means for providing ATM management services to banks. The levies and demands are illegal, arbitrary and without jurisdiction or authority of law and the same deserve to be quashed - petition allowed. Indian Laws 2023 (8) TMI 242 Dishonour of Cheque - order passed by the Appellate Court suspending the sentence imposed by the trial Court under Section 138 of the Negotiable Instruments Act,1881(NI Act) without making any order for payment of compensation in terms Section 148 of the NI Act - condonation of delay of 118 days in filing the appeal. Condonation of delay - HELD THAT:- The cheque was issued by the respondent/accused to the applicant/complainant for an amount of Rs.7,00,000/- which came to be dishonoured. The complaint under Section 138 of the NI Act was preferred before the trial Court. The trial Court directed payment of compensation of Rs.7,00,000/- and in default to suffer simple imprisonment for a period of 7 months. There was a delay of 118 days in preferring the appeal. The Appellate Court, in paragraph 3 of the order dated 22.5.2023 recorded that the cause of the respondent/accused for condoning the delay is supported by the medical certificate which shows that the respondent/accused was advised three months rest from 15.10.2022 to 15.01.2023 - there are no reason to interfere with the view taken by the Appellate Court in condoning the delay of 118 days in preferring the appeal on behalf of the respondent/accused. The Order dated 22.5.2023 is sustained. The learned counsel for the respondent/accused, though initially tried to defend the order dated 9.6.2023, on instructions of the respondent/accused who is personally present in Court, submitted that respondent is willing to deposit 25% of the compensation awarded by the trial Court. Mr. Karpe, on instructions, further submits that such payment of Rs.1,75,000/- shall be directly made over to the applicant. The statement is accepted. It is made clear that such payment is subject to the outcome of the appeal and in case the Appeal succeeds, the amount so deposited shall be refunded by the applicant. The amount to be paid by the respondent to the applicant within a period of 60 days from today. Even the applicant in this application has prayed that respondent be directed to deposit 25% of the compensation awarded by the trial Court. The Revision is partly allowed. 2023 (8) TMI 241 Dishonour of Cheque - insufficient funds - whether the alleged amount of default, has already been paid by the petitioner prior to receiving the copy of summons in the present case? - HELD THAT:- It is clear from the materials on record that the payment towards the petitioner s liability was not within the notice period - In this case, it is clear that the payment was not made within the statutory period. So the proceedings under Section 138 N.I. Act is prima facie maintainable. In the present case as seen from the order dated 18.03.2009 the Magistrate took evidence on affidavit along with documents under Section 200 Cr.P.C. and considered the case to be suitable for issuing process under Section 202 Cr.P.C. on examination of the documents and the evidence of the complainant on affidavit and being satisfied as to the sufficiency of grounds for proceeding under Section 202 Cr.P.C. - the proceeding is under Section 138 N.I. Act. The strict compliance of the provision under Section 202 Cr.P.C. in such cases has been dispensed with by the Hon ble Supreme Court. By the order under revision the learned Magistrate has issued a warrant of arrest against the petitioner. Payment of the due amount has been made. Keeping with the view of the Hon ble Supreme Court in re-expeditious trial of the cases under Section 138 N.I. Act the present revision is disposed of by directing the learned Magistrate to refer this case for mediation to the Secretary of the respective District Legal Services Authority - in the interest of justice and as payment of the cheque amount has already been made by the petitioner, the order under revision issuing warrant of arrest against the petitioner is liable to be set aside. Revision application allowed. 2023 (8) TMI 240 Dishonour of Cheque - insufficient funds - meeting the standard of preponderance of probability , and not mere possibility - petitioner submits that there is no real defence available to the defendants to dispute the claim of the plaintiff and thus this is a fit case for passing a summary judgment and decree against the defendants - HELD THAT:- Order 37 Rule 2 of the Code of Civil Procedure which is similar to those of Chapter XIIIA of the Original Side Rules of this Court. Leave to defend the suit brought under Order 37, Rule 2 of the Code of Civil Procedure,1908 is declined where the Court is of the opinion that the grant of leave will merely enable the defendant to prolong the litigation by raising untenable and frivolous defences. The test is to see whether the defence raises a real issue and not a sham one, in the sense that the facts alleged by the defendant to establish their case would be a good or even a plausible defence on those facts. If there is a triable issue in the sense that there is a fair dispute to be tried as to the meaning of a document on which the claim is based on uncertainty as to the amount actually due or where the alleged facts are of such nature as to entitle the defendant to interrogate the plaintiff to crossexamine his witnesses should not be denied. Summary judgements under Order 37 should not be granted where serious conflict as to the matter of fact where any difficulty on issues as to law arises, the Court should not reject the defence of the defendant merely because of its inherent implausibility or its inconsistency. In the present case, this Court finds that the defendant had set up his defence in the written statement and also disclosed the documents in support of his defence. This Court is of the view that the defendant may be given a chance to prove his defence only if the defendant secures the claim of the plaintiff by depositing the amount with the Registrar of this Court. Application disposed off.
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