TMI Tax Updates - e-Newsletter
September 21, 2023

Case Laws in this Newsletter:

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

Articles

1. AUTHORITY’S PANORIA IS NOT SUFFICIENT TO ISSUE ‘LOOKOUT CIRCULAR’ CURTAILING INDIVIDUAL LIBERTY

   By: DR.MARIAPPAN GOVINDARAJAN

2. Vague SCN may be non-maintainable… but can be practically handled better

   By: Vivek Jalan

3. GST Registration for E-commerce sellers

   By: Sparsh wadhwa

4. FILING OF APPEAL BEFORE GST APPELLATE TRIBUNAL

   By: DR.MARIAPPAN GOVINDARAJAN

5. Marketing and support services provided in India on direction of the foreign Company is export of service

   By: Bimal jain

News

1. Advisory: Geocoding Functionality for the Additional Place of Business

2. CCI approves acquisition of additional unit holding in Highways Infrastructure Trust by 2452991 Ontario Limited and acquisition of equity stake in Highway Concessions One Private Limited by 2743298 Ontario Limited

3. CCI approves certain shareholding in TVS Credit Services Limited by PI Opportunities Fund-I Scheme-II along with certain Individuals

4. CCI approves acquisition of approximately 24.16% of total equity shareholding in Quality Care India Limited by Centella Mauritius Holdings Limited

5. CCI approves acquisition of 72.49% stake (approx.) in Quality Care India by BCP Asia II

6. Fourth Infrastructure Working Group Meeting to be held in Khajuraho, Madhya Pradesh on 21st-22nd September, 2023

7. Amendments to Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 and Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.

Notifications

GST - States

1. S.O. 385 - dated 24-7-2023 - Jammu & Kashmir SGST

Amnesty to GSTR-10 non-filers

2. S.O. 384 - dated 24-7-2023 - Jammu & Kashmir SGST

Rationalisation of late fee for GSTR-9 and Amnesty to GSTR-9 non-filers

3. S.O. 383 - dated 24-7-2023 - Jammu & Kashmir SGST

Amnesty scheme for deemed withdrawal of assessment orders issued under Section 62

4. ERTS(T) 65/2017/Pt.III/Vol.I/557 - dated 4-8-2023 - Meghalaya SGST

Electronic commerce operator as required to collect tax at source u/s 52 notified as the class of persons who shall follow the special procedure

5. ERTS(T)65/2017/Pt.III/Vol.I/555 - dated 31-7-2023 - Meghalaya SGST

Seeks to notify “Account Aggregator” as the systems with which information may be shared by the common portal under section 158A of the Meghalaya Goods and Services Tax Act, 2017

6. 10/2023-State Tax (Rate) - dated 9-8-2023 - Tripura SGST

Amendment in Notification No. 26/2018-State Tax (Rate), dated the 31st December, 2018

7. 09/2023-State Tax (Rate) - dated 9-8-2023 - Tripura SGST

Amendment in Notification No. 01/2017-State Tax (Rate), dated the 29th June, 2017

8. 08/2023-State Tax (Rate) - dated 9-8-2023 - Tripura SGST

Amendment in Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017

9. 07/2023-State Tax (Rate) - dated 9-8-2023 - Tripura SGST

Amendment in Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017

10. 06/2023-State Tax (Rate) - dated 9-8-2023 - Tripura SGST

Amendment in Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017

IBC

11. IBBI/2023-24/GN/REG104 - dated 18-9-2023 - IBC

Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2023

Income Tax

12. 78/2023 - dated 19-9-2023 - IT

Exemption from specified income U/s 10(46) – Notifies ‘Uttar Pradesh Expressways Industrial Development Authority’

SEZ

13. S.O. 4122 (E) - dated 18-9-2023 - SEZ

Central Government de-notifies an area of 1.8687 hectares of the Special Economic Zone, thereby making the total area of the Special Economic Zone as 17.5866 hectares at Village Attipra, Taluk and District Thiruvananthapuram in the state of Kerala

Circulars / Instructions / Orders

DGFT

1. 31/2023 - dated 20-9-2023

De-listing of agencies authorized to issue Certificates of Origin- (Non Preferential) from Appendix 2E of FTP, 2023

Customs

2. Public Notice No. 76 /2023 - dated 5-9-2023

Amnesty Scheme for One Time Settlement of Default in Export Obligation by Advance and EPCG Authorisation Holders.

Highlights / Catch Notes

GST

• Court Orders Refund of ITC on Capital Goods for Textile Industry Due to Inverted Duty Structure.

  Case-Laws - HC : Refund u/s 54 - Rejection of Input Tax Credit (ITC) on capital goods due to inverted duty tax structure - business of textile manufacturing of fabrics - calculation / determination of refund amount - In view of the CBIC circular, the respondent authorities are directed to sanction the refund as per the refund application - HC
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• Court Reinstates Petitioner's GST Registration; Authority Must Provide Adverse Materials for Response Before Making Decisions.

  Case-Laws - HC : Cancellation of GST registration of petitioner - the competent authority was only required to form the formalities and the authority concerned or the competent authority could not have taken an independent decision. Therefore, the impugned order is set aside. - The petitioner is directed to appear before the GST authority - The adverse materials collected against the petitioner must be given to him for adverting the same by him - HC
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• Section 16(4) of CGST Act 2017 on ITC Restrictions Upheld as Constitutional, Complies with Fundamental Rights.

  Case-Laws - HC : Restriction availing on Input Tax Credit (ITC) - Constitutional validity of Section 16(4) of the Central Goods and Services Tax Act (CGST Act) 2017 - Sub-section (4) of Section 16 of the CGST/ BGST Act are constitutionally valid and are not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India. The said provision is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India. - HC
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• Court Orders Tax, Police, and Cyber Units to Probe Misuse of GST Registration; 12-Month Deadline Set for Investigation.

  Case-Laws - HC : GST registration obtained by the third person mis-using the facility - The respondents from the Tax Department and the respondents from the Law Enforcing Department namely the Police and the Cyber Crime shall investigate and to go to the root of the alleged wrongful registration obtained in the name of the petitioner and complete the investigation within a period of 12 months from the date of receipt of a copy of this order - HC
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• Petitioner's GST Registration Revoked and Restored After Tax Payment; Must Pay Late Fee Per Notification No. II(2)/CTR/351(a-3)/2023.

  Case-Laws - HC : Cancellation of GST registration revoked - petitioner also paid the tax due - Petitioner directed to make payment of late fee and other dues - GST registration to be restored subject to compliance of N/N. II(2)/CTR/351(a-3)/2023 - HC
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Income Tax

• Section 194C Misapplied: TDS on Packing Material Purchase Annulled as Payments Not Work Contract Related.

  Case-Laws - AT : TDS u/s 194C - purchase of packing material - Since, the assessee has discharged the burden that all these payments made by the assessee is not for any work contract the provision of section 194C of the Act is wrongly invoked by the lower authorities and therefore, the levy TDS made by the ld. AO is quashed - AT
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• ITAT Upholds Educational Trust's Registration u/s 10(23C)(vi) Despite Nominal Profit Objection by Tax Commissioner.

  Case-Laws - HC : Grant registration / certificate to the assessee trust u/s 10(23C)(vi) - carrying educational activities - The Profit and Loss account of the trust also clearly established that the trust is engaged in the educational activities and the nominal profit that it earned was not a ground on which the CIT(E) would have disregarded the application. - ITAT rightly allowed the appeal of the assessee - HC
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• Court Questions AO's Authority in Credit Card Business Decisions; Emphasizes Commercial Expediency in Transfer Pricing.

  Case-Laws - HC : TP Adjustment - According to the TPO because the credit card business was much more advance in other countries a higher weightage should have been given to other countries than it was given to India. - We wonder when did an AO become a businessman. How much to invest, what weightage is to be given etc., in our view, is a measure of commercial expediency. - HC
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• Court Clarifies DTVSV Act: Section 9(a)(ii) Excludes Only Prosecution Pending for Tax Arrears at Declaration Filing.

  Case-Laws - HC : Validity of rejection of the declarations filed by petitioner under the DTVSV Act - U/s 9(a)(ii) of DTVSV Act, the only exclusion visualised is a pendency of prosecution in respect of tax arrear relatable to an assessment year as on the date of filing the declaration and not pendency of a prosecution in respect of an assessment year on any issue. - HC
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• High Court Upholds Additions u/s 68 Due to Unproven Credit Source Despite Creditor Identity Being Established.

  Case-Laws - HC : Additions u/s 68 - Unsecured loans - The source of such credit was not proved before the authority. Hence, though the identity of the creditor was proved, neither was the creditworthiness of the creditor nor the genuineness of the transaction established. - Additions confirmed - HC
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• Section 153C of Income Tax Act: Rigorous Assessment Process for Third-Party Searches Explained.

  Case-Laws - HC : Assessment u/s 153C - Assessment based on search on third party - The construction of Section 153 A and 153 C is consciously different and is seen to apply different yardsticks to an entity searched and a third party, such yardstick being more exacting in the case of the former. The process of assessment is demanding and an assessee, once in receipt of a notice, is bound by the stringent procedure under the Act, till finalisation of the process. - HC
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• Penalty u/s 271(1)(c) Dropped: AO Accepts 75% of Expenses, No Evidence of Clandestine Business Found.

  Case-Laws - AT : Levy of penalty u/s. 271 (1)(c) - Allegation of engaged in business of providing accommodation entries - if the AO was of the opinion that the assessee is engaged in a clandestine business then he ought not to have allowed 75% of the expenses and instead should have disallowed the entire expenditure. The action of the AO shows that he was satisfied with the genuineness of 75% of the expense - No penalty - AT
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• Educational Institution Wins Tax Exemption Case: Corpus Donations Not Capitation Fees, Sections 11 & 12 Applied.

  Case-Laws - AT : Exemption u/s. 11 & 12 - Capitation Fees - Providing Education services - Being a school not the professional institutions - assessee has collected ‘corpus donations’ - the observation of the AO in light of above said Act that the assessee has violated the Tamil Nadu Education Institutions (Prohibition of Collection of Capitation Fee) Act, 1992, and not entitled for exemption u/s. 11 of the Act, is totally absurd and devoid of merits. - AT
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• Assessment Reopening for LLP Conversion: Only Year of Succession and Prior Year Assessable u/s 170(2).

  Case-Laws - AT : Reopening of assessment u/s 147 - Conversion of company into LLP - notice in hands of Successor company, i.e. in the hands of assessee LLP - On carefully considering the provisions of section 170(2), years which can be assessed for the income of the predecessor can be the year of succession (upto the date of succession) and the immediately preceding previous year and no other years can be assessed in the hands of the successor. - AT
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• Assessment Invalid: Improper Approval Procedure u/s 153D Renders Section 153C Assessment Flawed.

  Case-Laws - AT : Assessment u/s 153C - Proper procedure of approval u/s 153D not followed - Mechanical approval - the approval process should indicate that proper procedure and the officer has applied his mind as per the procedures laid down by the legislature and as per the provisions. The claim made in affidavit is only afterthought. Therefore, the assessment made u/s. 144 r.w.s. 143(3)/153C of the Act is also bad in law. - AT
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• Section 40(a)(ia) Disallowance Inapplicable When Taxpayer Deducts Tax at a Lower Rate Than Prescribed by the Income Tax Act.

  Case-Laws - AT : Disallowance u/s 40(a)(ia) - TDS were deducted at lesser rate on the interest - disallowance cannot be made where the assessee has deducted tax at a rate which is lesser than what is provided under the Act. - AT
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• Assessment Responsibility Shifts to Successor Company Post-Merger; No Investigation into Pre-Merger Actions Allowed, Says Tribunal.

  Case-Laws - AT : Assessment against non existent company [company merged] - assessment in the hands of the successor - Whatever action has done in the past by their share applicants cannot be investigated in the hands of the assessee after amalgamation. Therefore, we are of the view that in view of the National Company Law Tribunal’s decision on the amalgamation petition, no inquiry could be made in the hands of both these assessees qua the antecedents of merged companies. - AT
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• Assessing Officer's Expense Disallowance Upheld by DRP Lacks Specificity; Appellant's Deduction Rejection Lacks Valid Basis.

  Case-Laws - AT : Ad- hoc disallowance of expenses - Without pointing out any specific expenses, which according to the authorities below were not allowable as deduction, an ad-hoc disallowance was made by the AO and sustained by the DRP. The claim of deduction of expenses made by the Appellant could not have been dislodged by the authorities below without any basis. - AT
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• Court Rules Against Tax Dept: Bulk Discounts to HHPL Valid, No Suppression of Income Found.

  Case-Laws - AT : Undisclosed sales or suppressed income - Genuineness of heavy discount given to certain parties - Addition relating to lower price charged from HHPL as compared from the other parties - any prudent businessman will give heavy discount to a party who has made bulk purchase which is almost ranging from 80%-98%. The department cannot force the assessee that it should have not give discount or should have sold on a higher profit. Decided against revenue. - AT
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Customs

• CESTAT Remands Case for Further Review to Verify Invoice Authenticity u/s 123, Customs Act 1962.

  Case-Laws - HC : Applicability of Section 123 of the Customs Act, 1962 - shifting the burden of proof of licit import of subject goods - the CESTAT ought to have satisfied itself with regard to authenticity of Invoices before pronouncing judgment on the appeal. - Matter restored back - HC
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Indian Laws

• Dishonored Cheque Complaint Valid u/s 138 Without Money Lender License; Sections 138 and 3 Operate Independently.

  Case-Laws - HC : Dishonour of Cheque - money lending business - It is acceptable proposition of law that section 3 of Punjab Registration of Money Lenders Act, 1938 does not limit operation of section 138 of the Act and both are independent and mutually exclusive to each other. If a person advances a loan even without having a valid money lending licence or certificate he can institute and prosecute complaint under section 138 of the Act on basis of cheques and he has to satisfy only the mandatory requirements of section 138 of the Act. - HC
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IBC

• NCLT's Dismissal Overturned: Balance Sheets Acknowledge Debt u/s 18 Limitation Act, Reviving Insolvency Claim.

  Case-Laws - AT : CIRP - Application filed u/s 7 of IBC dismissed on the ground of time limitation - After perusing the relevant balance sheets and director’s report, it is satisfied that balance sheets contain an acknowledgement of debt and the mere fact that details of litigation emanating from the loan and subsequent events are mentioned in the notes to the account and the director’s report does not denude the value of the balance sheets for purposes of Section 18 of the Limitation Act. - NCLT wongly dismissed the application - AT
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• Tribunal Dismisses Section 9 Petition: Settlement Agreement Anti-Dated, Unstamped, Unregistered; Claims Not Operational Debt Under Insolvency Laws.

  Case-Laws - AT : Dismissal of Section 9 Petition on the ground that the ‘Settlement Agreement’ was anti-dated, unstamped and unregistered - Operational creditors - Even if the Settlement Agreement is taken into consideration, this ‘Tribunal’ is of the earnest view that the claims arising under the ‘MOU’ lost the character of ‘Operational Debt’ and became a debt simpliciter. - AT
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Service Tax

• Service Tax Recovery Case u/s 73A: Order Against Appellants Overturned Due to Lack of Evidence of Charges or Payment.

  Case-Laws - AT : Recovery of service tax collected but not deposited the same to the exchequer - Section 73A of FA - there is a categorical certificate given by M/s PACL indicating that the appellants have not charged any service tax and have not paid any amount representing as service tax to the appellants - the impugned order cannot be sustained and is liable to be set aside. - AT
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• Diocese's Service Tax Liability: Recognized as Religious Body; Liable Only from July 1, 2012, Under Finance Act 1994.

  Case-Laws - AT : Liability of appellant to pay service tax or not - Merely because the Diocese is registered under the Societies Registration Act, 1860, it cannot be said that it automatically means that the Diocese is not a religious body - Revenue has failed to establish that the Diocese is not a religious body and will be covered by the definition under section 65(90a) of the Finance Act 1994 - appellant will be subject to levy under service tax for renting of immovable property only from 01/07/2012 and not before that date - AT
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• DG Sets Rental: Classified as Deemed Sale, No Service Tax Due Under Article 366 (29A) of Indian Constitution.

  Case-Laws - AT : Classification of services - Supply of Tangible Goods service or not - supply of DG Sets on rental basis for a non temporary period - Transfer of right to use or not - in a case where supply of goods has been treated as deemed sale under article 366 (29A) of Constitution of India. Accordingly, it was held that on such transaction no service tax is payable. - AT
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Central Excise

• CENVAT Credit Demand Invalidated: Original Show Cause Notice Exceeded, Demand Set Aside for Free-of-Charge Exports.

  Case-Laws - AT : Scope of SCN - CENVAT Credit - goods exported on FOC basis where no sale proceeds were received - the entire demand is bad in law at the impugned order has travelled beyond the show cause notice which cannot be done - Demand set aside - AT
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• Adjudicating Authority Denies Exemption to 100% EOU, Cites Incorrect Duty Basis Under Notification No. 21/2002-CUS.

  Case-Laws - AT : 100% EOU - The Adjudicating Authority has denied the exemption Notification No. 21/2002-CUS on the ground that the raw material imported by the appellant was under “Nil” Rate of duty in terms of notification No. 52/2003-CUS(EOU). Thus, the Adjudicating Authority has gone on all together irrelevant fact. Here the duty ability has to be decided in respect of the goods manufactured by the appellant, which is nothing to do with the duty ability of imported raw material of the appellant. - AT
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• Exemption in Motor Vehicle Ownership Transfer: Appellant Wins Case on Chassis Sale with M/s VIPL Despite Corporate Group Ties.

  Case-Laws - AT : Exemption in respect of motor vehicles subject to certain conditions - transfer of ownership versus related party transactions - merely because the appellant and M/s VIPL belong to a common group of companies, the transaction between them cannot be considered other than sale or purchase of the chassis and the Ownership of chassis not transferred after sale of the same by VIPL to Appellant. - the appellants succeed both on merit as well as on limitation - AT
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Case Laws:

• GST

• 2023 (9) TMI 905
  Refund u/s 54 - Rejection of Input Tax Credit (ITC) on capital goods due to inverted duty tax structure - business of textile manufacturing of fabrics - restriction imposed by Notification No 5/2017 was removed by another Notification 20/2018 dated 26.07.2018 or not - rejection of refund on the ground that it is impermissible under the law to split the refund claim for a particular month in two parts and further on the ground that refund of reversed ITC on capital goods cannot be claimed as refund. HELD THAT:- Notification No.5/2017 dated 28.06.2017 provided that no refund of unutilised tax credit shall be allowed where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on the output supplies of such goods which included woven fabrics manufactured by the petitioner company. However, by Notification No.20/2018 dated 26.07.2018 it was provided that Notification No.5/2017 would not be applicable to the items stated therein. Circular No. 56/2018 dated 24.08.2018 clarified that Notification No.20/2018 would be effective from first day of August 2018 to keep the accounting simple and refund of ITC for the month of July i.e. on purchases made on or before 31.07.2018 would lapse. Hence, as per the working of Rule 89(5) of the CGST Rules, 2017 the petitioners were entitled to refund of Rs.22,78,798/- as per Notification No.20/2018 - the petitioners also reversed ITC of Rs.10,12,188/- with regard to wrongly claimed credit on capital goods in the month of August, 2018 in Form GSTR-3B. Accordingly, the refund claim of the petitioners was automatically reduced by Rs. 8,06,852/-. Accordingly, the petitioners were allowed to file refund application for Rs.14,71,946/- by GST Portal on 21.06.2019. The reasons given by the respondent authorities that refund application filed is not as per the calculation made in Rule 89(5) of the CGST Rules is also not correct since as per the calculation made under Rule 89(5) which provides for maximum refund amount, the petitioners are entitled to refund of Rs.22,78,798/- on the total turnover of inverted duty tax structure which is not in dispute and accordingly, the petitioners were entitled to refund of Rs. 8,06,852/- which the petitioners could not claim in view of the fact that GST Portal did not permit the petitioners to file refund application in view of the reversal of the wrongly claimed credit on capital goods. The respondent authorities ought to have taken into consideration that the petitioners were eligible for balance amount of refund of Rs. 8,06,852/- which could not have been denied on hyper-technical ground as stated in the impugned orders. Reasoning given by respondent no.3 for rejecting the legitimate claim of the petitioner company that reversal of ITC on capital goods in Form GSTR-3B amounting to Rs.10,12,189/- is binding on the petitioner company and therefore, the petitioner company is not eligible for claim of refund as per Circular No.94/2019 dated 28.03.2019 cannot be accepted. Circular No.94/2019 permited a one time measure for availing refund of ITC on account of inverted duty tax structure as per Notification No.20/2018 read with Circular No.56/2018 as the assessees were not able to claim refund of the accumulated ITC to the extent to which they were eligbile - Therefore, it was clarified by Circular No. 94/2019 that when the assessee was not eligible to claim the refund then ITC is required to be claimed under the category any other instead of under the category refund of unutilized ITC on account of accumulation due to inverted tax structure in FORM GST RFD-01A for the same tax period in which said reversal has been made. The impugned order are hereby quashed and set aside. The respondent authorities are directed to sanction the refund of Rs. 8,06,852/- as per the refund application filed by the petitioners on 08.08.2019 within a period of six weeks from the date of receipt of a copy of this order along with applicable rate of interest in accordance with law - petition disposed off.

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• 2023 (9) TMI 904
  Cancellation of GST registration of petitioner - issuance of Invoices/Bills to other dealers without supplying goods or providing any services in violation of the GST Act and Rules - such misuse by the purchasing dealers for availment of the declaration of the input tax credit or refund of tax - petitioner did not make use of the opportunity of hearing and not produced any documents - HELD THAT:- There is no denial of fact that the DGGI, Kochi Zonal Unit has already taken the decision for cancelling the GST registration of the petitioner - the competent authority was only required to form the formalities and the authority concerned or the competent authority could not have taken an independent decision. Therefore, the impugned order is set aside. However, the said order is not revived further for a period of one month. The petitioner is directed to appear before the Superintendent of Central Tax Central Excise, Ottapalam Range, Mettupalayam Street, Palakkad on 18.09.2023 with relevant records in his possession to dispute the allegation contained in the Show cause notice. The adverse materials collected against the petitioner must be given to him for adverting the same by him - Petition disposed off.

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• 2023 (9) TMI 903
  Maintainability of petition - availability of alternative, efficacious, statutory remedy of appeal - Condonation of delay of two years in filing the appeal - HELD THAT:- Upon hearing learned counsel for the parties and bearing in mind the concept of justice, equity and good conscience besides bona fides of the petitioner, the delay caused due to pendency of the writ petition should not come in the way of the petitioner in agitating the order of assessment before the appellate forum. Appeal disposed off with the order that in case, appeal is filed within 30 days under Section 107 of GST Act, the Appellate Authority shall not insist on the question of limitation and address the issues raised by the petitioner on facts and in law as well as alleged irregularities in the matter of framing of impugned assessment.

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• 2023 (9) TMI 902
  Restriction availing on Input Tax Credit (ITC) - Constitutional validity of Section 16(4) of the Central Goods and Services Tax Act (CGST Act) and Section 16(4) of the Bihar Goods and Services Tax Act, 2017 - Denial of entitlement of Input Tax Credit (ITC) for delayed filing of return - HELD THAT:- There is no gainsaying that language of Section 16(4) of the CGST/BGST Act, is plain and unambiguous with clear stipulation that a registered person cannot avail the benefit of ITC in respect of any invoice or debit note for supply of goods or services or both after due date of furnishing the return under Section 39 of the CGST/BGST Act for the month of September following the end of financial year to which such invoice or invoices of such debit note pertain or furnishing of the relevant annual return, whichever is earlier. It is in that background that the petitioners have elected to question the constitutional validity of Section 16(4) of the CGST/BGST Act itself being violative of Articles 14 and 300A of the constitution of India. Whether ITC per se is a vested right, the denial of which by operation of sub-section (4) of Section 16 of the CGST/ BGST Act would amount to infringement of the constitutional right under Article 300-A of the Constitution, is one of the primordial questions which requires consideration by this Court in the wake of the nature of challenge put by the petitioners to the validity of the aforesaid provision. Right to property under Article 300-A of the Constitution of India has been held to be a human right as also a constitutional right which cannot be taken away except in accordance with law. This legal proposition is unexceptionable. Dealing with the expression deprive of his right of property under Article 300-A of the Constitution of India the Supreme Court in case of JILUBHAI NANBHAI KHACHAR VERSUS STATE OF GUJARAT [ 1994 (7) TMI 347 - SUPREME COURT ] has noted that the property in legal sense means an aggregate of rights which are guaranteed and protected by law. It extends to every species of valuable right and interest, more particularly, ownership and exclusive right to a thing, the right to dispose of the thing in every legal way, to possess it, to use it, and to exclude everyone else from interfering with it. The dominion or indefinite right of use or disposition which one may lawfully exercise over particular things or subjects is called property . Whether or not, the language of Section 16 of the CGST/BGST Act suffers from any ambiguity? - HELD THAT:- ITC is not unconditional and a registered person becomes entitled to ITC only if the requisite conditions stipulated therein are fulfilled and the restrictions contemplated under sub-section (2) of Section 16 do not apply. One of the conditions to make a registered person entitled to take ITC is prescribed under sub-section (4) of Section 16. The right of a registered person to take ITC under sub-section (1) of Section 16 of the Act becomes a vested right only if the conditions to take it are fulfilled, free of restrictions prescribed under sub-section (2) thereof. Submissions have been advanced on behalf of the petitioners that sub-section (4) of Section 16 imposes unreasonable and disproportionate restriction on the right to freedom of trade and profession guaranteed under Article 19(1)(g) of the Constitution and is, therefore, violative of Article 302 of the Constitution and is in teeth of Article 13 of the Constitution. This argument is founded on the ground of absence of any rationale behind fixation of a cut-off-date for filing of return - there are no merit in the submissions so advanced, which deserves to be outrightly rejected. Thus, sub-section (4) of Section 16 of the CGST/ BGST Act are constitutionally valid and are not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India. The said provision is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India. There are no merit in these writ-applications, which are accordingly dismissed.

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• 2023 (9) TMI 901
  Closure of business of respondent and GST registration given to petitioner - GST registration obtained by the third person mis-using the facility - unauthorised transaction - passing on illegal credits using the GST registration obtained in the name of the petitioner - HELD THAT:- This writ petition is disposed by directing the sixth respondent to investigate along with respondent nos.1 to 4 and to give a report as to whether indeed the GST registration was obtained by the petitioner or by any of the nominee of the petitioner or by a third person or a stranger. The penalty imposed in the impugned order will stand affirmed against the petitioner, in case the investigation culminates in a finding against the petitioner. The respondents from the Tax Department and the respondents from the Law Enforcing Department namely the Police and the Cyber Crime shall investigate and to go to the root of the alleged wrongful registration obtained in the name of the petitioner and complete the investigation within a period of 12 months from the date of receipt of a copy of this order - Petition disposed off.

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• 2023 (9) TMI 900
  Seeking release of cash and original documents - power under Section 67(2) of the CGST Act of search and seizure - HELD THAT:- In so far as the power under Section 67(2) of the CGST Act, to seize cash on the ground that it is unaccounted cash is concerned, the said issue is covered in favour of the petitioner by the recent decision of this Court in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West Anr. [ 2023 (8) TMI 929 - DELHI HIGH COURT] - the currency seized is required to be released to the petitioner. In so far as the petitioner s prayer for adjustment of Rs.11,41,750/- against future liability is concerned, it is not disputed that the petitioner had deposited it voluntarily. The respondents have not accepted that the said amount is refundable to the petitioner. Mr Singh, learned counsel appearing for the respondents submits that apparently, no steps were taken by the respondents in regard to the tax deposited as the present petition was pending - it is apposite to clarify that the respondents are not precluded from taking any steps in regard to the said duty so deposited. The petitioner is also not precluded from filing an appropriate application for refund of the said amount, if otherwise due. It is clarified that the period spent by the parties during the pendency of the present petition, that is, from the date this petition was instituted till date, shall be excluded from the period of limitation, as may be applicable to proceedings that may be instituted by either of the parties. The petition is allowed.

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• 2023 (9) TMI 899
  Cancellation of GST registration revoked - petitioner also paid the tax due - G.O.Ms.No.38, Commercial Taxes and Registration (B1), dated 05.04.2023 - HELD THAT:- N/N. II(2)/CTR/351(a-3)/2023 seeks to give benefit to persons like the petitioner - This Court in M/S. SRI SENTHIL ANDAVAR AGENCIES, REP BY ITS PROPRIETOR VERSUS THE STATE TAX OFFICER (ST), (INT), CIW-1, VELLORE [ 2023 (8) TMI 1035 - MADRAS HIGH COURT ] held that the Court is inclined to set aside the impugned assessment orders which are deemed to have been withdrawn, subject to the condition that the petitioner shall complies with the conditions of the aforesaid Notification, which contemplates payment of interest due under Sub- Section (1) of Section 50 of the said Act and the late fee payable under Section 47 of the said Act. The petitioner shall pay the aforesaid amount within a period of two weeks from the date of receipt of copy of this order. The impugned orders are passed under Section 62 of the TNGST Act, 2017 shall be deemed to have been withdrawn provided petitioner complies with the condition. The petitioner shall pay requisite late fee for filing the return, if any, and the interest on the late payment of GST. The respondents may intimate the amount to be paid by the petitioner and for the petitioner to comply with the same. Petition disposed off.

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• Income Tax

• 2023 (9) TMI 910
  Validity of reopening of assessment - allegation of issuing of statutory notice under Section 142(1) - whether curable defect u/s 292BB? - HELD THAT:- In absence of notice u/s 143(2) of the Act, the assessment framed u/s 143(2) r.w.s 147 of the Act is liable to be held as invalid and thus no addition on the foundation of such invalid assessment can be sustained. According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself. Since the facts on record are clear that no notice under Section 143(2) of the Act was ever issued by the Department, this is not curable defect u/s 292BB. Thus reassessment order passed u/s147 r.w.s 143(3) was bad in law since the required notice under Section 143(2) of the Act not issued by the Assessing Officer which is prerequisite and mandatory under the provisions of Income Tax Act, however the assessment have been completed without issuing of the impugned notice. Decided in favour of assessee.

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• 2023 (9) TMI 909
  TDS u/s 194C - non deduction of TDS on payment made for purchase of packing material - Demand u/s 201(1) plus demand u/s 201(1A) against the assessee - HELD THAT:- The provision of section 194C of the Act is applicable to work and not for purchase made which are liable for VAT. Based on the evidences so produced and argument advanced before us we are of the considered view that all are purchases of material with some specifications supported by the levy of the value added tax on material and therefore, the same is no for any work contract. Since, the assessee has discharged the burden that all these payments made by the assessee is not for any work contract the provision of section 194C of the Act is wrongly invoked by the lower authorities and therefore, the levy TDS made by the ld. AO is quashed - Decided in favour of assessee.

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• 2023 (9) TMI 908
  Delayed payment of employees contribution of PF ESIC - same has been paid beyond the due date prescribed under the relevant Act - HELD THAT:- As payment shown at Sl. No.13 to 24 on account of depositing the employees contribution of ESIC fund on 17th of every month of 2017, which is prior to the due date for depositing the ESIC fund dated 12th of every month of 2017 for part amount. This fact is further corroborated from the challan verification form available at page 93 to 115 of the paper book. When the deduction otherwise available to the assessee on account of deposit of employees contribution of ESIC the same is liable to be allowed as there is no estoppel against the statute. In these circumstances, we partly set aside the impugned order passed by the Ld. CIT(A) to the extent of amount of Rs. 19,09,265/- deposited by the assessee on account of employees contribution of ESIC well before the due date prescribed under the relevant Act being not sustainable in the eyes of law. The remaining amount has been rightly disallowed by the AO/Ld. CIT(A) on account of late deposit of employees contribution of PF beyond the due date prescribed under the Act in accordance with the law laid down by the Hon ble Supreme Court in case of Checkmate Services Pvt. Ltd. ( 2022 (10) TMI 617 - SUPREME COURT ). So the AO shall allow the deduction claimed by the assessee qua deposit of employees contribution of ESIC well within the due date prescribed under the relevant Act after due verification as claimed under the audit report (supra). The remaining amount has been rightly disallowed by the AO/Ld. CIT(A) - Decided partly in favour of assessee.

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• 2023 (9) TMI 907
  Validity of order passed u/s 92CA - Time limit for passing order - period of limitation - HELD THAT:- As the time limit for passing the order under Section 92CA(3) of the Act, computed as per the judgement of Hon ble Madras High Court in the case of Pfizer Healthcare India Private Limited [ 2021 (2) TMI 1152 - MADRAS HIGH COURT] expired on 31/10/2019. Since the order u/s 92CA(3) of the Act has been passed 01/11/2019, i.e., after the expiry of the period of limitation, the same is set aside as being barred by limitation. Eligible Assessee u/s 144C(15) - As per the order, dated 01/11/2019 passed by TPO u/s 92CA(3) of the Act is barred by limitation Appellant, therefore, does not qualify as an Eligible Assessee under Section 144C(15)(b)(i) of the Act. Thus, the Assessing Officer could not have assumed jurisdiction to invoke provisions of Section 144C(1) of the Act for passing the Draft Assessment Order, dated 08/11/2019. As a result, the time limit available to the Assessing Officer under Section 153 of the Act for passing the assessment order expired on 31/12/2019 even if the benefit of extended period of 12 months is granted on account of a valid reference having been made under Section 92CA of the Act. The Final Assessment Order has been passed in present case on 31/03/2021 and therefore, the same is barred by limitation. Assessee appeal allowed.

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• 2023 (9) TMI 906
  Delayed deposit of employees contribution to Provident Fund ( PF ) and Labour Welfare Fund ( LWF ) - AO noticed that contribution received from Employees towards PF and any other welfare fund was deposited by the assessee beyond the prescribed due dates - HELD THAT:- Part of delayed deposits need to be disallowed invoking the provisions of Section 36(1)(va) as relying on CHECKMATE SERVICES P. LTD. [ 2022 (10) TMI 617 - SUPREME COURT] For balance addition it is the contention of the assessee that it is the aggregate amount of deposits for various months. The amounts due for various months was deposited by the assessee within the due date specified under the PF regulations in each of the month but however due to the technical glitches on EPFO Portal, the deposits for the respective months could not be processed and got reversed which was beyond the control of the assessee. We however find that the documents evidencing the payment on due dates in the form of challans, bank statements, correspondence with PF authorities were not furnished by the assessee before the lower authorities and therefore there is no finding of the lower authorities on the aforesaid contentions by the AO. AO had on the basis of the final date of payment as reported in the Tax Audit Report proceeded to disallow the payment and made the additions. We further find that CBDT vide Circular No.261 dated 8th Aug 1979 has held that if a cheque or draft tendered in payment of Government dues and accepted under the provisions of rule is honoured on presentation, the payment is deemed to have been made on the date on which it was handed over to the Government bankers. We restore the issue back to the file of AO to decide the issue afresh after considering the submissions of the assessee. If after examination of the additional evidences and the assessee s submissions, the assessee s contentions of the initial deposits being made before the due date prescribed by PF authorities and contention of the payment being reversed on account of the glitches at the end of the EPFO is found correct, then the AO shall delete such additions. Denial of the credit of buy back tax [BTT] deposited by the assessee and consequent levy of interest on such BBT - contention of AR that though the assessee has deposited the BBT amount but the credit was for the same has not been granted to the assessee and consequent interest on such BBT has also been charged to the assessee - HELD THAT:- We find that the assessee has made an application u/s 115QA vide dated Sep 29, 2017 for necessary rectification but it is the contention of the assessee that the issue has not yet been resolved by the AO. Considering the aforesaid factual position, we direct the AO to process the aforesaid application on the issue at the earliest and decide the issue in accordance with law. The assessee is also directed to promptly furnish the necessary details called for by the AO to process the application. Thus the ground of assessee is allowed for statistical purposes. Addition made on account of interest of refund of income tax - double taxation - as submitted that the same amount of interest has been taxed twice once in A.Y. 2018-19 on accrual basis and once in A.Y. 2021-22 on receipt basis. He submitted that assessee had also filed rectification application on the issue before the AO but the same is yet to be disposed by the AO - HELD THAT:- Considering the aforesaid submissions of Learned AR, we are of the view that the income offered in the year under consideration on accrual basis be not considered as income as the same income has been offered to tax in the year 2021-22 and has also been received by the assessee in that year and taxed in that year. We, therefore, direct the AO to delete the addition of interest on refund being taxed twice. Thus the ground of assessee is allowed. Non granting credit of self assessment tax - contention of the assessee that assessee had paid self assessment tax but its credit has not been granted while computing the tax payable and for which assessee has also made necessary application before AO which is yet to be disposed of by AO - HELD THAT:- Before us, Revenue has not pointed to any factual fallacy in the contentions of the Learned AR. Considering the submissions of the Learned AR, we hereby direct the AO to expeditiously process the request of rectification application filed by the assessee and pass necessary order in accordance with law. Thus the ground of assessee is allowed for statistical purposes.

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• 2023 (9) TMI 898
  Prohibition of Benami Property Transactions - provisional attachment order - HELD THAT:- It is not in dispute that the issues raised in these special leave petitions are covered by the judgment of this Court in Union of India Anr. Vs. M/s. Ganpati Dealcom Pvt. Ltd.. [ 2022 (8) TMI 1047 - SUPREME COURT] In the circumstances, the special leave petitions stand dismissed.

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• 2023 (9) TMI 897
  Grant registration / certificate to the assessee trust u/s 10(23C)(vi) [Erroneously mentioned as u/s. 10(23C)(vii)] - CIT(E) found that it cannot be said that the trust was predominantly engaged in carrying educational activities - tribunal granted registration - HELD THAT:- As on reproduction of the trust deed, it found that the trust carried out all activities so as to spread and impart education among people and to comment and develop institutions, hostels, kindergarten, aanganwadi etc. As far as the other purposes of the trust in running other activities is concerned, it was found that though it was the sole object of the institution to provide education, the ancillary activities such as promotion of cultural and social activities were co-related to the main activity of education. Perusal of the order of the Tribunal would indicate that the Tribunal found that the fees received from the students and transportation etc. were for reimbursing expenses for such purposes. The Profit and Loss account of the trust also clearly established that the trust is engaged in the educational activities and the nominal profit that it earned was not a ground on which the CIT(E) would have disregarded the application. Having perused the order of the Tribunal, we find no reason to interfere. No substantial question of law is involved.

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• 2023 (9) TMI 896
  TP Adjustment - adjustment on account of purchase of intangibles - Tribunal stating that TPO has not rejected the valuation of assessee on the basis of any objective reasoning - HELD THAT:- Among the various intangibles one head was trade-mark. The cost of acquiring the trade-mark was capitalized by the assessee and depreciation was claimed by computing taxable income. The value attributed to trade-mark was only Rs. 46.57 lacs approximately out of the total consideration of Rs. 28.51 Crores. The assessee has also submitted valuation reports of independent valuer. On the remaining intangibles assessee capitalized the same but did not claim any depreciation or claim it as any revenue expenditure. But notwithstanding that TPO has given an opinion that the weightage that the assessee gave to different territories for which the credit card business was acquired from the HSBC was not correct. Assessee had given higher weightage to India territory as credit card penetration was low in comparison to other countries which showed that there was more scope to increase the business in India. According to the TPO because the credit card business was much more advance in other countries a higher weightage should have been given to other countries than it was given to India. We wonder when did an AO become a businessman. How much to invest, what weightage is to be given etc., in our view, is a measure of commercial expediency. The expression commercial expediency, as held in S.A. Builders Ltd. v. Commissioner of Income-tax (Appeals) and Another [ 2006 (12) TMI 82 - SUPREME COURT] is an expression of wide import and include such expression as a prudent businessman incurred for the purpose of business and agreed with the view taken in Dalmia Cement (B) Ltd. [ 2001 (9) TMI 48 - DELHI HIGH COURT] that the revenue cannot justifiably claim to put itself in the arm chair of the businessman or the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize his profit. The income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. No wrong in the conclusion arrived at by the ITAT.

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• 2023 (9) TMI 895
  Deduction u/s 80IB(10) - claim denied as there were separate approvals for each plots and therefore, the condition of approval of a housing project is not satisfied - HELD THAT:- A.O. did not bear in mind the specific provisions laid down in the Act which leave no room to doubt that in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. After having regard to the facts of the case, relevant provisions of the Act and the decision of the jurisdiction High Court in the case of B.M. and Brothers [ 2013 (10) TMI 290 - GUJARAT HIGH COURT] on the issue, in my considered opinion, the assessee was eligible to avail claim of deduction u/s. 80IB (10) of the Act on the profits earned from the project under consideration. Accordingly, this ground of appeal is allowed.

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• 2023 (9) TMI 894
  Validity of rejection of the declarations filed by petitioner under the DTVSV Act - prosecution u/s. 276C(2) of the Income Tax Act - whether the provisions of DTVSV Act shall apply to petitioner? - HELD THAT:- Petitioner s case would come under sub-clause (ii) of Section 9(a) which says provisions of the DTVSV Act would not apply in respect of tax arrear relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration. Therefore, the prosecution must be in respect of tax arrear relating to an assessment year. As held in Macrotech [ 2021 (3) TMI 1089 - BOMBAY HIGH COURT ] the intention of the legislature was that the provisions of DTVSV Act shall not, in view of Section 9(a)(ii), apply in the case of a declarant in whose case a prosecution has been instituted in respect of tax arrear relating to an assessment year on or before the date of filing of declaration. The prosecution has to be in respect of tax arrear which naturally is relatable to an assessment year. In Macrotech (Supra) also the facts were that the prosecution had been initiated against petitioner therein under Section 276C(2)of the Act because of the delayed payment of the balance amount of the self assessment tax. The Court held that such delayed payment cannot be construed to be a tax arrear within the meaning of Section 2(1)(o) of the Act. Therefore, such a prosecution cannot be said to be in respect of tax arrear and hence, petitioner in that case was declared to be entitled to file a declaration under the DTVSV Act. As permissible under Office Memorandum [F. No.404/72/93-ITCC] dated 31st July 2017, petitioner had even deposited 20% of the demand and hence, is not an assessee in default. Later, Mr. Sridharan stated that the entire amount has been paid. We must also note that under Section 9(a)(ii) of DTVSV Act, the only exclusion visualised is a pendency of prosecution in respect of tax arrear relatable to an assessment year as on the date of filing the declaration and not pendency of a prosecution in respect of an assessment year on any issue. In the petition before us also prosecution has been instituted against petitioner under Section 276C(2) of the Act. Therefore, in our view, Macrotech (Supra) will squarely apply to the facts and circumstances of this case. The declaration of petitioner filed on 31st January 2021 for Assessment Years 2010-2011 and 2011-2012 would have to be decided by respondent no. 1 in conformity with the provisions of DTVSV Act.

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• 2023 (9) TMI 893
  GP estimation - addition being the difference between gross profit shown by the assessee and computed @4% of sales as per the trading results declared by the assessee - CIT(A) restricting the G.P@2% - HELD THAT:- Based on the estimated gross profit for the group and looking to the subsequent assessment orders passed by the AO for the later assessment years, the Tribunal confirmed the order of the CIT(A). The concurrent findings of the authorities therefore do not involve any substantial question of law and the appeal is held to be without any merit.

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• 2023 (9) TMI 892
  Revision u/s 263 - CIT observed that, excess depreciation claimed on windmill @80% as prescribed under IT Act instead of the rate of 15.33% for a continuous plant as per companies Act for the purpose of calculation of book profit u/s 115JB - ITAT held that assessment order was not erroneous and prejudicial to the interests of the Revenue - HELD THAT:- As decided by ITAT [ 2022 (8) TMI 618 - ITAT AHMEDABAD] relying case of HAL Offshore Ltd [ 2019 (9) TMI 896 - ITAT DELHI] held that where depreciation provided in profit and loss account is at same rate as provided for purpose of profit and loss account being laid before Annual General meeting (AGM), no addition could be made to assessee s income on ground that while calculating total income as per section 115JB, assessee had adopted rate of depreciation as per Income-tax Act instead of Companies Act in profit and loss account. As in the case of Deccan Tools Industries (P.) Ltd [ 2014 (11) TMI 49 - ANDHRA PRADESH HIGH COURT] held that where for purpose of section 115J, assessee claimed depreciation at rates provided under Income-tax Rules, action of AO in redrawing profit and loss account and adopting rates prescribed under Companies Act, was totally unauthorized. We are of the considered view that in the instant facts, PCIT erred in facts and law in holding that the assessment order was erroneous and prejudicial to the interests of the revenue. Addition u/s 40A - On applicability of Sec. 40A(2) (b), a specific query was raised by the Assessing Officer and when answered, the Assessing Officer had accepted payments. Therefore, exercise of revisional jurisdiction was not warranted.bTribunal has observed that once the Assessing Officer had passed an order after carrying out the verification such cannot be held to be erroneous and prejudicial to the revenue. In the case of Shreeji Prints (P) Ltd. [ 2021 (9) TMI 108 - SUPREME COURT] confirmed the view of the High Court which had held that since the Assessing Officer had made inquiries and accepted the genuineness a plausible view so taken could not be held to be erroneous and prejudicial to the revenue. Decided against revenue.

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• 2023 (9) TMI 891
  Additions u/s 68 - Unsecured loans returned having not been proved with substantiating evidence - HELD THAT:- As the creditor s bank statement was produced which disclosed a credit of the very same amount just prior to the alleged loan. The source of such credit was not proved before the authority. Hence, though the identity of the creditor was proved, neither was the creditworthiness of the creditor nor the genuineness of the transaction established. In the case of Mr. Alam also, though the identity of the creditor is established, proof of source of income and the genuineness of the transaction is wanting. We find no reason to interfere with the orders of the Tribunal and we find no questions of law arising from the order. The factual aspects have been dealt with elaborately and concurrently by the AO, the first Appellate Authority and the Tribunal. There is no perversity on the analysis of evidence produced and the same is also not in contravention of the binding precedents. In fact, the binding precedents support the order of the Tribunal affirming those of the lower authorities.

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• 2023 (9) TMI 890
  Assessment u/s 153C - Assessment based on search on third party - recording of satisfaction by AO that the books of accounts/documents/assets, seized or requisitioned have a bearing on the determination of total income of the other person, he is mandated to issue a notice for the entirety of the block of 6 assessment years and there is no discretion that has accorded to him in this regard. HELD THAT:- Section 153A provides for assessment in the case of the searched/requisitioned entity, whereas 153C deals with the assessment of income of any other person in respect of whom valuable assets were found in the course of the search. Both the provisions commence with a non-obstante clause, notwithstanding the provisions of Sections 139, 147, 148, 149, 151 and 153 and relate to a period of 6 assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition made and operates simultaneously with both Sections 153A and 153C. In addition, in the case of such other person, since satisfaction has to be recorded by two Assessing Officers (of the searched entity as well as third party) and there may be some elapse in time for the transfer of records from the first officer to the second, Section 153C(2) provides for the framing of the assessment for an additional year, ie., the year of search as well, in certain demarcated situations. Since that situation does not arise in the present case, I desist from elaborating further in this regard. With the amendment of the provisions in 2017 by Finance Act, 2017, with effect from 01.04.2017, the Department was also entitled to extend the block period for a further period of 4 years in addition to the 6 years originally provided, though for the 4 years brought within the ambit of the block period, an additional condition has been imposed, being the availability of material revealing that income that has escaped assessment exceeds 50 lakhs or more. The scheme of a block assessment includes both assessment as well as reassessment and is a scheme different and distinct from all the other modes of assessment as well as re-assessment already available under the Act including reassessment under Section 147. The premise of this scheme of assessment is a search/requisition, although the scope of assessment extends to total income . This view finds support from the recent judgment of the Hon ble Supreme Court in Principal Commissioner of Income Tax, Central -3 V.Abhisar Buildwell P. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] confirming the decision in Commissioner of Income Tax V. Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] Assessments made either under Section 153A or 153C can be sustained only if those assessments are based upon incriminating materials found in the course of search indicating concealed assets/taxable income that have escaped assessment. The scheme of assessment under Sections 153 A and 153C is available to the Department in addition to all other methods of assessment, revision and reassessment and each scheme has its distinct set of conditions and stipulations, that must be strictly adhered to. Department has argued that the issuance of notice for all 6 years preceding the previous year, relevant to the assessment year in which the search takes place is mandatory, irrespective of whether the satisfaction note reveals the seizure of any incriminating material in the case of the assessee concerned - There is a vital distinction between the object, intention as well as the express language of Sections 153A and 153C. Section 153A addresses the searched entity and the procedure set out is evidently a notch higher for this reason. There is no discretion or condition precedent under Section 153A to the issuance of notice save the conduct of a search under Section 132 or making of a requisition under Section 132A. Upon the occurrence of one of the aforesaid events, it is incumbent upon the officer to issue notice under Section 153A to the searched entity in line with the procedure stipulated. Notice under Section 153C would have to be issued only upon the concurrent satisfaction of both conditions as aforesaid. To this extent, there is, in my considered opinion, a clear and marked distinction between the provisions of Section 153A and 153C. The contention of the revenue that a mandate is cast upon the Assessing Officer of the third party to issue notice under Section 153C for all the years comprising the block, mechanically and automatically, is thus rejected. To clarify, it is only where the satisfaction note recorded by the receiving Assessing Officer, i.e., the Assessing Officer of the third party reflects a clear finding that the incriminating material received has a bearing on determination of total income of the third party for 6 assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made, that such notice would have to be issued for all the years. It thus flows from the provision that the receiving assessing officer must apply his mind to the materials received and ascertain precisely the specific year to which the incriminating material relates. It is only when this determination/ascertainment is complete that the flood gates of an assessment would open qua those particular years. The issuance of a notice cannot be an automated function unconnected to this exercise of analysis and ascertainment by an assessing officer. The construction of Section 153 A and 153 C is consciously different and is seen to apply different yardsticks to an entity searched and a third party, such yardstick being more exacting in the case of the former. The process of assessment is demanding and an assessee, once in receipt of a notice, is bound by the stringent procedure under the Act, till finalisation of the process. As on date, when the matters are being heard, the assessments have been allowed to be proceeded with till completion of assessment, which gives the Court the benefit of not just the satisfaction note but the show cause notices as well as the orders of assessment. These records reveal the variation between the satisfaction note and the assessment order in terms of the records seized, making it evident that there has been an omission on the part of the officer who has recorded satisfaction to refer to the small note books in relation to AYs 2016-17 and 2017-18. The legal issue is hence decided in favour of the petitioners, and would have to be applied to determine the validity or otherwise of each of the orders of assessment passed in the case of each of the petitioners. This Court is not in possession of all satisfaction notes. In some cases, the assessing authority has recorded satisfaction by way of a consolidated note, whereas in some others, this Court is given to understand that the satisfaction notes are individual relating to a specific year.

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• 2023 (9) TMI 889
  Levy of penalty u/s. 271 (1)(c) - While scrutinizing return of income the AO accepted the commission received on providing accommodation entries but disallowed 25% of the expenses claimed by the assessee for want of evidences - HELD THAT:- AO has initiated the penalty proceedings for concealment of income and while levying the penalty the AO has levied it for furnishing the inaccurate particulars of income. This shows that the AO was not certain under which limb of section 271 (1)(c) the penalty was levied. Secondly if the AO was of the opinion that the assessee is engaged in a clandestine business then he ought not to have allowed 75% of the expenses and instead should have disallowed the entire expenditure. The action of the AO shows that he was satisfied with the genuineness of 75% of the expenses and levied the penalty on the balance amount disallowed. We are of the considered view that the captioned cases are not fit for levy of penalty u/s. 271 (1)(c) therefore, the AO is directed to delete the impugned penalty. Appeals of the assessee are allowed.

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• 2023 (9) TMI 888
  Revision u/s 263 - show-cause notice issued dated 21.12.2020 were not responded by the assessee, therefore PCIT has no material in hand to deliberate upon the issue and to consider the contentions of the assessee - HELD THAT:- Since, the assessee was non-compliant before Learned PCIT and no addition was made or directed to be made by the Learned PCIT, the matter was only restored back to the files of AO which was the only option available with the PCIT, so as to comply with the principles of natural justice. Assessee was provided with the adequate opportunity to explain its case or to comment upon on the reasons recorded for revisionary proceedings wherein the issues were raised by the PCIT so as to establish that the order of AO was not erroneous so far as it is prejudicial to the interest of Revenue in view of Explanation-2 of Section 263 of the Income Tax Act but assessee chooses not to rebut on the same. Under such a scenario since the issue raised in the order under Section 263 of the Act were restored back to the file of AO and the assessee has the opportunity to explain its case and liberty to submit necessary evidence/information before the AO there was no prejudiced caused to the assessee. We, therefore, are of the considered opinion that there was no infirmity in the order of PCIT which calls for any interference. Appeal filed by the assessee is dismissed.

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• 2023 (9) TMI 887
  Rectification u/s 154 - Justification of expenditure w.r.t. head office expenses u/s 37(1) vis-a-vis the receipts of the assessee - HELD THAT:- On perusal of the order of the Ld. CIT(A), we find that he has given a clear finding that the sum represents the allowable expense of the assessee and not its alleged undeclared income . This finding of the Ld. CIT(A) remained uncontroverted before us. We concur with the findings of the Ld. CIT(A). Further, the issue of allowability of the said expense was the subject matter of consideration in quantum appeal and therefore the Ld. CIT(A) has rightly not considered it in rectificatory proceeding. For the reasons set out above we do not find any substance in the appeal of the Revenue which we reject.

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• 2023 (9) TMI 886
  Exemption u/s. 11 12 - assessee has collected corpus donations - violations noticed during the course of survey - as per DR assessee is collecting donations in lieu of admissions of students to schools run by the assessee in violation of said legislation which prohibits collection of Capitation Fees - HELD THAT:- As going by the amount of donations received by the assessee from parents of students, it cannot be said that said donations are Capitation Fees in violation of the provisions of the Tamil Nadu Education Institutions (Prohibition of Collection of Capitation Fee) Act, 1992. In any event, the Tamil Nadu Education Institutions (Prohibition of Collection of Capitation Fee) Act, 1992, is not applicable to schools run by the assessee, which is evident from the law itself, because, said enactment is applicable only to professional institutions offering degrees and diplomas. Therefore, the observation of the AO in light of above said Act that the assessee has violated the Tamil Nadu Education Institutions (Prohibition of Collection of Capitation Fee) Act, 1992, and not entitled for exemption u/s. 11 of the Act, is totally absurd and devoid of merits. Allegation of the AO that the assessee has collected excess fess over and above fees prescribed under the provisions of the Tamil Nadu Schools (Regulation of Collection of Fee) Act, 2009 , is also negated by the assessee by filing relevant details. From the details furnished by the assessee, we find that the AO has computed excess fees by taking into number of students and fees fixed as per said Act without excluding certain Miscellaneous Fees collected by the assessee, which is not at all in nature of tuition fees prescribed under said Act. Therefore, we are of the considered view that the AO has made mere allegations of collecting excess fees in contravention of provisions of the Tamil Nadu Schools (Regulation of Collection of Fee) Act, 2009. Therefore, we are of the considered view that the AO is erred in rejecting exemption u/s. 11 of the Act, to the assessee society, on the basis of above observation. Generating income from incidental activities - assessee did not maintain separate books of accounts for incidental activities as required u/s. 11(4A) - We do not find any merit in the allegation of the AO for simple reason that the AO himself in his assessment order, has computed income and expenditure from various incidental activities and reproduced in tabular form of his assessment order. From the above, it is undoubtedly clear that there are books of accounts for incidental activities. In any event, maintenance of separate books of accounts for incidental activities gets fully diluted in the era of software accounting, where, segmental accounting entries are posted, which can be easily segregated to ascertain separate income and expenditure from each activity. Further, the AO himself has culled out data from books of accounts maintained by the assessee for each activity and computed income and expenditure separately. From the above, it is clear that there are books of accounts for incidental activities and from said books of accounts, income and expenditure from each activity can be computed. Therefore, we are of the considered view that the reasons given by the AO in light of incidental activities carried out by the assessee for rejection of exemption u/s. 11 of the Act, is devoid of merits. AO is erred in denying the benefit of exemption u/s. 11 of the Act, to the assessee Society on the ground that the assessee Society is collecting Capitation Fees in lieu of admissions and also not maintaining separate books of accounts for incidental activities - Decided in favour of assessee.

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• 2023 (9) TMI 885
  Reopening of assessment u/s 147 - Conversion of company into LLP - notice in hands of Successor company, i.e. in the hands of assessee LLP - AO Jurisdiction to assess the income of the predecessor company - new proceedings in the name of the successor LLP after the date of conversion / registration - DR submitted that although the company ceased to exist, the Ld. AO had rightly issued the notice to the successor LLP only - HELD THAT:- The situation that arises is that the successor LLP can be assessed for the income of the predecessor company for A.Y. 2016-17 (upto 22.03.2016 being date of succession) and a year preceding to the year of succession which is A.Y. 2015-16 in the case at hand. It was stated that that there is no other year, which can be assessed in the hands of successor for the income of the predecessor, and there is no other section which was brought over notice in the Act too, which permits any other year for assessing income of the predecessor. On carefully considering the provisions of section 170(2), years which can be assessed for the income of the predecessor can be the year of succession (upto the date of succession) and the immediately preceding previous year and no other years can be assessed in the hands of the successor. Therefore, in the present case at hand, we are of the view that the Ld. AO could not have acquired jurisdiction to assess the income of the predecessor company for the years prior to A.Y. 2015-16. We hold that the Ld. AO lacks jurisdiction in reopening and assessing the case of the predecessor company for A.Y. 2009-10 in the hands of assessee LLP. We quash the reassessment order passed by the Ld. AO for A.Y. 2009-10 and therefore, ground no. 1 of the appeal of the assessee is allowed.

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• 2023 (9) TMI 884
  Assessment u/s 153C - Proper procedure of approval not followed - Mechanical approval - whether the approval obtained by the Assessing Officer u/s. 153D is proper and approval granted by the Addl. CIT is as per provisions of section 153D? - HELD THAT:- It is fact on record that AO has passed draft Assessment Order making huge additions and such huge additions were approved without there being any application of mind. Further, the basis of addition was also not shared with the assessee. The facts in this appeal are squarely covered by the decision of the Coordinate Bench of the Tribunal in the case of Arch Pharmalabs Ltd[ 2021 (4) TMI 533 - ITAT MUMBAI] . We are inclined to decide the issue in favour of the assessee that approval granted u/s. 153D is not as per law. Even Ld. DR submitted based on the affidavit filed by the JCIT that the Range Head guides the Assessing Officer till final approval is granted. However, in our view, the approval process should indicate that proper procedure and the officer has applied his mind as per the procedures laid down by the legislature and as per the provisions. The claim made in affidavit is only afterthought. Therefore, the assessment made u/s. 144 r.w.s. 143(3)/153C of the Act is also bad in law. Accordingly, additional grounds filed by the assessee are allowed.

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• 2023 (9) TMI 883
  Assessment u/s 153A - nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded - HELD THAT:- AO was neither in possession of books of accounts nor other documents or evidence, at the time of reassessment which shows any escapement of amount reflected in the assets head. Admittedly, the term Asset was defined under Explanation 2, which include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. In the present case, the assessee has purchased 5000 shares on 27.10.2009 and 14.12.2009 of M/s. Astha Tradelink Private Limited for Rs.400/- each. Thereafter, those 5000 shares were converted into 1,90,000/- shares of M/s. Twenty First Century Private Limited and the assessee sold part of the shares in A.Y. 2011-12 relevant to A.Y. 2012-13 and earned capital gains of Rs. 5,96,11,906/-. Thus, during the assessment year, the column Asset does not show either the investment in the immovable property being land or building or both, shares and securities, loans and advances . In the absence of any asset being in possession of the assessee, the Assessing Officer shall not have issued the notice to the assessee for making the addition u/s 153A of the Act . In view of the above, the addition made in the hands of the assessee is liable to be deleted. There is one more reason to come to the conclusion that the Assessing Officer should have made more efforts to bring on record some tangible material besides the statement of the assessee namely, A. Mahesh Reddy to show that the assessee has agreed to pay the profit during the assessment year under consideration and would be ready to forego the claim made by the assessee at assessment stage during the course of original assessment proceedings. The statement given by the assessee or the director of M/s. Twenty First Century Securities Limited, does not bind the assessee unless it is duly supported by the cogent incriminating material and we find merit in the arguments of the ld.AR who had relied on the decision of CIT vs. Shri Ramdas Motor Transport Limited [ 2014 (11) TMI 513 - ANDHRA PRADESH HIGH COURT] and also the decisions Best Infrastructure (India) Pvt. Ltd., [ 2017 (8) TMI 250 - DELHI HIGH COURT] and CIT Vs. Harjeev Aggarwal [ 2016 (3) TMI 329 - DELHI HIGH COURT] - Decided in favour of assessee.

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• 2023 (9) TMI 882
  Disallowance by invoking provisions of section 36(1)(iii) - notional interest @12% on unsecured loans advanced free of interest - HELD THAT:- As observe that the money advanced by the assessee during the year was Rs. 2,62,60,730/- comprised of three parties out of whom Rs. 1,79,24,200/- is opening balance which was advanced/transferred from Tulsi Damodaran to Chakresh Commoscals Pvt Ltd as is apparent from the schedule no. 5 annexed to balance sheet titled Current Assets, Loans Advances . We observe that Rs. 1,72,24,200 represented opening balance and during the year it was transferred to Chakresh Commosales Pvt. Ltd. We have also examined the copies of accounts in respect of loans advanced and find that these advances were given at the fag end of the year. After having perused the facts before us, we find that these loans were not given out of borrowed funds and therefore the addition made by the AO as well as its confirmation by the Ld. CIT(A) cannot be sustained. So accordingly we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Accordingly ground no. 2 is allowed. Disallowance u/s 40(a)(ia) - TDS were deducted at lesser rate on the interest - CIT(A) dismissed the appeal of the assessee by observing that the assessee has failed to give a certificate of the auditor stating that the payee also offered same for taxation and also rejecting the contentions of the assessee that assessee has deducted tax at the lesser amount than provided under the Act whereas the disallowance can only be made where the assessee has failed to deduct tax at source - HELD THAT:- After hearing the rival parties and perusing the material on record, we find that in this case the assessee has deducted tax at lesser rate and it is the case of short deduction of tax. Thus the reliance made by the assessee on the decision of Ansal Landmark Township Pvt. Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] is relevant - disallowance cannot be made where the assessee has deducted tax at a rate which is lesser than what is provided under the Act. Accordingly we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Assessee appeal allowed.

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• 2023 (9) TMI 881
  Assessment u/s 153A - Addition u/s 68 - share application money as unexplained one - Whether the share capital and share premium money received by the assessee during the year is required to be treated as their unexplained credit and deserves to be added under section 68? - HELD THAT:- Inspite of search the Department was unable to lay its hands on any incriminating material. AO though tried to pass the assessment order as a regular assessment order but what he has referred is the statement of Shri Mukesh Banka only. Thereafter his observations are peripheral in nature demonstrating the credential of the share applicant companies. The two statements recorded much prior to the search by Investigating Agencies of the Income Tax Department in some other proceedings cannot be used against the assessee without giving them opportunity to cross examination. We can make reference to the decision of the Hon ble Supreme Court in the case of Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT ] as observed the statements, which are being used as a foundation for making any addition could not be used unless the assessee is being provided opportunity to cross examine. In these cases, the ld. Assessing Officer even not recorded the statements himself, these were recorded by some Investigating Agencies in some other proceedings in the past. This can be, at the most, information for initiating the assessment machinery in motion, but they cannot be considered conclusive in a search assessment proceeding under section 153A. Therefore, the additions in the assessments under section 153A are not sustainable. Assessment against non existent company [company merged] - assessment in the hands of the successor - Two companies have merged and the National Company Law Tribunal has amalgamated all these companies w.e.f. 01.04.2017. The assessee has demonstrated that in this year neither Bakshiram Uderam Holdings Pvt. Limited has raised any share capital money nor Narsingh Ispat Udyog Pvt. Limited. Whatever action has done in the past by their share applicants cannot be investigated in the hands of the assessee after amalgamation. Therefore, we are of the view that in view of the National Company Law Tribunal s decision on the amalgamation petition, no inquiry could be made in the hands of both these assessees qua the antecedents of merged companies. On the second-fold also, additions are not sustainable.

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• 2023 (9) TMI 880
  Additions made to the fixed assets during the relevant previous year - Appellant contends that all the details of assets purchased along with copies of major invoices were furnished during the assessment proceedings - HELD THAT:- Appellant had furnished invoices pertaining to some of additions made to the fixed assets during the relevant previous year which are placed. We are of the view that in case the Appellant is able to produce the original of the photocopied invoices placed for verification before the Assessing Officer, then the Appellant should be permitted to claim depreciation in respect of the same. Accordingly, we direct the Appellant to produce the originals of the aforesaid invoices/documents for verification before the Assessing Officer. Subject to verification as aforesaid, the Assessing Officer shall allow depreciation claimed by the Appellant in respect of the same as per law. Disallowance of deduction in respect of commission payments - Addition made as Appellant had failed to provide confirmations, supporting bills vouchers, and had failed to provide details regarding the nature of the services provided by parties receiving the commission - HELD THAT:- Appellant has furnished complete details of the dealers (i.e. name, address PAN), amount of commission paid and tax deducted at source along with Letter, filed before the Assessing Officer during the assessment proceedings. Confirmations in respect of 56 major dealers pertaining to commission were also filed with the Assessing Officer. The commission expenses claimed by the Appellant were only 0.085% of the total sales. The Appellant had furnished complete details relating to the commission payments made to the dealers. AO failed to carry out any independent inquiry, even on sample basis, before denying the deduction for entire commission expenses claimed as deduction by the Appellant. It is not the case of the Revenue that the commission payments were made to related parties or group concerns. Thus, we allow deduction for commission expenses as claimed by the Appellant and delete the addition. Ad- hoc disallowance of expenses claimed by the Appellant under different account heads - HELD THAT:- As during the assessment proceedings, the Appellant had explained the nature of business and submitted that the details/documents called for by the Assessing Officer were voluminous in nature and, therefore, had furnished the relevant details and produced supporting documents (included expenses register and expense bills) on sample basis. We find that the authorities below failed to point out any specific defect in the details/documents furnished by the Appellant. No further clarification or specific information/documents were called for by the authorities below. Without pointing out any specific expenses, which according to the authorities below were not allowable as deduction, an ad-hoc disallowance was made by the AO and sustained by the DRP. The claim of deduction of expenses made by the Appellant could not have been dislodged by the authorities below without any basis. Thus we hold that the authorities below erred in making ad-hoc disallowance of expenses. Decided in favour of assessee.

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• 2023 (9) TMI 879
  Undisclosed sales or suppressed income - Addition relating to lower price charged from HHPL as compared from the other parties - Assessee Company is engaged in manufacturing of thermoware products - As per AO assessee sold goods to HHPL at discount of 16.53% as compared to the price at which goods have been sold to others - contention of the assessee was that discounted sales was due to the fact that while making the sales to HHPL, assessee did not have to incur transportation cost, sales promotional activities or marketing of the product or any sales promotion expenses - HELD THAT:- From the above, it can be seen that from A.Y. 2015-16, sales made to HHPL have been increased from 92% to practically 100%. In fact, in 2017-18 and 2018-19, only sales made arte to the employees at a discounted price. Once there was no MOU till A.Y. 2013-14, almost 80% of the sales were made to HHPL and when MOU was entered into, assessee became contract manufacturer for HHPL and the sales to HHPL have increased. In A.Y. 2013-14, ld. AO observed that there is no agreement between assessee and HHPL, whereas in A.Y. 2014-15, when onwards there is an agreement, AO is stating that it is an afterthought and he has rejected MOU on the ground that it is not on some stamp or legal document, which is not the requirement of the law. Nothing has been pointed out by the department that any MOU or agreement between the parties needs to be on some stamp paper which needs to be registered with any authority. Thus, this reason of the ld. AO is out rightly rejected. Here it is not a case where provision of 40A (2)(b) is applicable, because it is not a case where assessee has incurred any expenses, in respect of which payment has been made to any person specified in clause (b) of sub-section 2 of 40A. Here it is a case of sales made on a discounted price to one particular party which is a bulk sale. If assessee has stated the reasons and circumstances as to why bulk sale has been made to HHPL and later on HHPL was the only buyer of the assessee; and the assessee was running into heavy losses because of unabsorbed depreciation and brought forward losses and even matter was referred to BIFR, then on these circumstances if the assessee has sold at a discounted price, we fail to understand why such discounted sale price is doubted. If the assessee to survive its business had decided to be a contract manufacturer of HHPL in subsequent years and in this year had made major supply to HHPL on a thin profit margin and in order to save various costs like transportation cost, advertisement and sales promotion cost etc. which is there in the case of sales made to the third parties, we do not find any reason to compare the sale price with the other parties to hold that assessee has to charge same price with the party who is major purchaser of the goods, when there is no deeming provision to tax the sale price or any kind of statutory SAAR provision. Also any prudent businessman will give heavy discount to a party who has made bulk purchase which is almost ranging from 80%-98%. The department cannot force the assessee that it should have not give discount or should have sold on a higher profit. Decided against revenue. Disallowance u/s. 14A - HELD THAT:- Admittedly, CIT(A) has restricted the disallowance to the exempt of income which issue now is covered by the following decisions of Ajit Ramakant Phatarpeka [ 2020 (11) TMI 70 - BOMBAY HIGH COURT ] and PV HSBC Invest Direct (India) Ltd. [ 2019 (2) TMI 731 - BOMBAY HIGH COURT ]

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• 2023 (9) TMI 878
  Reopening of assessment u/s 147 - AO recorded the reasons solely on the basis of some information received from the ITO Ludhiana - non independent application of mind by AO - HELD THAT:- As some information from another AO is the basis on which the AO formed his satisfaction that some of the income the assessee has escaped assessment. Thus, the contention of the assessee is correct that the AO without making any independent enquiry but on his own has started proceedings u/s 148 of the Act merely on the basis of some information received from some other Income Tax Officer. This makes initiation of proceedings is bad in law. As evident from the order of the Assessing Officer, he did not make any comment on the contents of the reply of the assessee and solely passed his order on the basis of the report of the Income Tax Officer, Ward-2(2), Ludhiana and proceeded to make the impugned addition. Assessee has submitted that all the purchases are fully vouched , payments have been made through account payee cheque and the details have been duly submitted and no fault/defect was pointed out by the AO. Assessee has reiterated that the accounts of the assessee company are duly audited. The closing stock as reflected in the balance sheet has been duly accepted. Appeal of the assessee stands allowed.

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• 2023 (9) TMI 877
  Capital gain computation - Valuation of Capital Asset as made by valuation officer - property under consideration is in dispute - property was jointly owned by the assessee and his relative - assessee submitted that the title of the property was not clear and marketable, and hence the property has been sold below the Jantri rate - HELD THAT:- We observe that in the instant facts, evidently the DVO did not take into consideration the fact that the title of the property was under dispute and the matter was pending before a civil suit at the time when the assessee and his relative jointly sold the property. Further, we observe that the counsel for the assessee has placed evidence on record before us that the civil suit with respect to the title of properties is still going on even today as on the date of hearing before. We further observe in the case of Whiterose Holdings India Pvt. Ltd. [ 2019 (5) TMI 1506 - ITAT MUMBAI] has held that where in respect of a certain property there are disputes and litigations going on and the property is in the possession of the tenant, the property cannot be valued on the basis of development method by considering that developmental potential and built up area in the nearby locality. ITAT Hyderabad in the case of D. Anitha [ 2015 (4) TMI 723 - ITAT HYDERABAD] held that where property held by the assessee was encumbered and thus the assessee was not the absolute owner of the property, while computing the capital gains arising from transfer of such property, value of property taken for the purpose of payment of stamp duty could not be adopted as sale consideration by applying provisions of section 50C of the Act. Therefore, in the light of the facts of the instant case where apparently the DVO has not considered the on-going dispute as to the title of property at the time of sale of property and in the light of observations made by Hyderabad Tribunal on this aspect, in the interest of justice, the matter is being restored to the file of ld. CIT(A) to take appropriate steps for determining the sale consideration as per law taking into consideration the fact that market value of adjacent properties cannot be taken as the benchmark to determine the sale consideration of a property, the title of which itself is under dispute. Accordingly, the matter is being restored to the file of ld. CIT(A) with the above observations.

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• Customs

• 2023 (9) TMI 876
  Applicability of Section 123 of the Customs Act, 1962 - shifting the burden of proof of licit import of subject goods on the Appellant when the gold bullion was seized under Section 132 of Income Tax Act, 1962 - goods were not seized by the proper officer of Customs under Section 110 Customs Act, 1962 on the belief that the goods were of smuggled nature - production of invoices or not - authenticity of the invoices - HELD THAT:- The appellant had submitted documents to show the source from where he had purchased the gold. The CESTAT has held that the Invoices were produced while replying to the show-cause notice. Therefore, the Department could not investigate the authenticity of the Invoices. Admittedly, the invoices were available before passing the Order-in-Original. The Customs Department has all the authorized to summon and investigate into the matter. CESTAT is the last fact finding authority. Therefore, the CESTAT ought to have satisfied itself with regard to authenticity of Invoices before pronouncing judgment on the appeal. In that view of the matter, it is deemed appropriate to remit the matter to the file of CESTAT with a direction to record its satisfaction with regard to the authenticity of invoices by calling for Report from the Additional Commissioner of Customs, if required and thereafter consider the appeal on its merits. Appeal on remand.

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• 2023 (9) TMI 875
  Appellant is manufacturer or not - use of factory of loan licensee - benefit of N/N. 50/2017-cus dated 30.7.2017 - benefit denied solely because the (duty-free) goods imported were used in the factory of loan licensee, i.e. M/s Tuton Pharma, Ahmedabad, and not the appellant s own factory - suppression of facts or not - invocation of extended period of limitation under Section 28 of the Customs Act, 1962 - HELD THAT:- The matter stand largely covered by the decision in the case of M/S FDC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELAPUR [ 2016 (12) TMI 1270 - CESTAT MUMBAI ] which is in relation to job-work under Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 only and it was held that even though the factory is of the loan licensee but use is on behalf the appellant therefore there is no violation of condition of the Customs Rules, 1996. So far as the decision cited by learned AR are concerned, in COMMISSIONER OF CENTRAL EXCISE, GOA VERSUS M/S. COSME FARMA LABORATORIES LTD. [ 2015 (4) TMI 355 - SUPREME COURT] , the question was different and the dispute related to whether the manufacturer or principal who is owner and manufacturer in the given facts and circumstances of the matter - Further, in the case of CCE, BELAPUR VERSUS FERRING PHARMACEUTICALS PVT. LTD. [ 2017 (11) TMI 1510 - CESTAT MUMBAI ], the single Member Bench in the facts of the case, held that loan licensee to be treated as manufacturer and further in the facts of the issue the cancellation of registration as manufacturer was required, and does not match with the present case. Appeal allowed.

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• Insolvency & Bankruptcy

• 2023 (9) TMI 874
  Application filed u/s 7 of IBC dismissed - dismissal on the ground of time limitation - whether limitation for filing Section 7 Application had already come to an end when Section 7 Application was filed by the Appellant on 01.10.2021? - HELD THAT:- The law is well settled that for finding out acknowledgement within the meaning of Section 18 of the Limitation Act, balance sheets can be looked into. Hon ble Supreme Court in ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS BISHAL JAISWAL ANR. [ 2021 (4) TMI 753 - SUPREME COURT ] has examined the question in reference to Section 18 of the Limitation Act and held that it depends on the facts of each case as to whether an entry made in a balance sheet made in accordance with law, qua any particular creditor is unequivocal or has been entered into with caveats. Whether the notes to the account or the Director s Report/Statement as relied by Learned Counsel for the Respondent are sufficient to hold that there is no acknowledgement in the balance sheet of the debt? - HELD THAT:- The acknowledgement of debt in the balance sheets from 1998-99 is continuous. Notes to the account and the Director s Report/Statement at best can be treated to be account of litigation emanating from such date - it is noticed that in the notes to the account and the Director s Statement/Report, it has been categorically mentioned that Company failed to repay the loan. In the Financial Year 2020-21, there is reiteration of credit facility availed by the Company from the IDBI - When the Company Petition was dismissed with the observation as observed, there is a failure to see that how the Respondent can contend that claim of the Appellant is limited to only Rs. 250 Lakhs. After perusing the relevant balance sheets and director s report, it is satisfied that balance sheets contain an acknowledgement of debt and the mere fact that details of litigation emanating from the loan and subsequent events are mentioned in the notes to the account and the director s report does not denude the value of the balance sheets for purposes of Section 18 of the Limitation Act. Reference made to Judgment of this Tribunal in ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VERSUS UNIWORTH TEXTILES LIMITED [ 2023 (7) TMI 484 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] where this Tribunal had occasion to consider the balance sheets for purposes of finding out acknowledgement under Section 18 of the Limitation Act. This Tribunal also looked into the Director s Report - This Tribunal ultimately accepted the acknowledgment in the balance sheets to extend the benefit of Section 18 of the Limitation Act and allowed the Appeal and set aside the order of the Adjudicating Authority dismissing Section 7 Application. The Adjudicating Authority committed error in rejecting Section 7 Application filed by the Appellant as barred by time. The Application filed by the Appellant was not barred by time there being continuous acknowledgment in their respective balance sheets of the Corporate Debtor which acknowledgment was within the meaning of Section 18 of the Limitation Act extending the period of limitation by fresh period of limitation by each acknowledgment - Appeal allowed.

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• 2023 (9) TMI 873
  Dismissal of Section 9 Petition on the ground that the Settlement Agreement was anti-dated, unstamped and unregistered - Operational creditors - correctness of Petition filed in respect of claims arising under the Settlement Agreement - HELD THAT:- The very document which the Appellant is relying upon establishes that the initial amount of Rs.50 lakhs was to be paid prior to 31.03.2018, and that the balance amount of Rs.4 Crores was to be paid in tranches, whereas it is not in dispute that the agreement is dated 01.11.2018 which is subsequent to the amount of Rs.50 lakhs, and to be paid on or before 31.03.2018. Therefore, this document substantiate that the Settlement Agreement is anti-dated, apart from being unstamped and unregistered. The amount in Part IV of Form-5 mentioned as Default is Rs.8,46,32,553/- as on 31.01.2021 whereas the amount in the Settlement Agreement appears to have been reduced to around Rs.4 Crores. Admittedly, criminal cases were filed against the Corporate Debtor prior to the issuance of Section 8 Demand Notice under Section 138 read with Section 141 of Negotiable Instruments Act, 1881. The Petition filed in respect of claims arising under the aforementioned Settlement Agreement [even if disputed herein] does not come within the definition of Operational Debt ]. Time and again, the Hon ble Apex Court in a catena of Judgments held that the IBC is not a recovery mechanism . Even if the Settlement Agreement is taken into consideration, this Tribunal is of the earnest view that the claims arising under the MOU lost the character of Operational Debt and became a debt simpliciter. In respect of in the definition of Operational Debt cannot be interpreted widely so as to include any agreement between the parties which does not specifically pertain to the supply of goods or services. Keeping in view, the spirit of the Code, this Tribunal is of the considered view that at best, the claims are contractual claims for which appropriate Civil Proceedings may lie. Appeal dismissed.

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• Service Tax

• 2023 (9) TMI 872
  Service tax collected but not deposited the same to the exchequer - Section 73A of FA - time limitation - HELD THAT:- Ongoing through the provisions of Section 73A that sub-clause 2 is applicable in the instant case. To attract this clause, the noticee should have collected any amount, which is not required to be collected, in any manner as representing service tax - In the instant case, it is not the case of the Department that the appellants have issued invoices/ bills which indicate that service tax has been collected by the appellants from their customers. This fact is very much accepted by the learned Adjudicating Authority in the impugned order; the Certificate issued by M/s PACL indicates that the appellants have not charged any service tax to the customers. It is not clear from the case records whether the Department has challenged the certificate issued by M/s PACL. The allegation is sought to be established on the basis of loose calculation sheets. The facts of the case and the case records indicate that the appellants have not collected any amount representing as service tax from their customers i.e. M/s PACL. In addition to the above, there is a categorical certificate given by M/s PACL indicating that the appellants have not charged any service tax and have not paid any amount representing as service tax to the appellants - the impugned order cannot be sustained and is liable to be set aside. Time Limitation - HELD THAT:- The appellants have a strong case on merits, the issue of time bar is of no consequence. Appeal allowed - decided in favor of appellant.

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• 2023 (9) TMI 871
  Liability of appellant to pay service tax or not - appellant is registered under the Societies Registration Act, 1860 and is under the direct control of the Bishop of Tanjore - Public Charitable and Educational Society can also be a religious body or not - religious body eligible to be exempt from tax till 01/07/2012 when the negative list-based levy came into force or Public Charitable and Educational Society and not a religious body as claimed by Revenue and come under the levy in terms of sec. 65(90a) of the Finance Act, 1994 from 01/06/2007? - extended period of limitation. HELD THAT:- From the statement and the objects and purpose of the Diocese as seen from the Memorandum of Association it is clear that it includes religious activity apart from other activities like charity, social service, etc. These activities are primarily for members of the Catholic community while members of other communities are not excluded. The income of the society is exempted under section 11 of the Income Tax Act 1961. The Hon ble Supreme Court examined the definition of religious denomination in the landmark judgment of THE COMMISSIONER, HINDU RELIGIOUS ENDOWMENTS, MADRAS VERSUS SRI LAKSHMINDRA THIRTHA SWAMIAR OF SRI SHIRUR MUTT. [ 1954 (4) TMI 29 - SUPREME COURT ]. It was held that a denomination is a collection of individuals, classed together under the same name; now almost always specifically, specially a religious sect or body having a common faith and organisation and designated by a distinctive name. The definition of a religious body has to be broader than that of a religious denomination . A religious denomination is a subgroup within a religion. Religious body can be a part of a religion or a religious denomination and established with the objective of propagating religion and primarily serving the members of its community. Religions are generally propagated and administered with the help of organizations within its domain that are closely integrated with society. These organisations are understood in common parlance to be religious bodies as distinct from religion per se or a religious denomination. Hence, they are recognised by the public and societal institutions as a religious body. The onus of proof of fulfilment of condition subject to which an exemption may be admissible lies on the assessee or upon a party claiming benefit under a notification, but in the case of subjecting an activity to levy under a taxing statute, the onus is on Revenue. Merely because the Diocese is registered under the Societies Registration Act, 1860, it cannot be said that it automatically means that the Diocese is not a religious body - Revenue has failed to establish that the Diocese is not a religious body and will be covered by the definition under section 65(90a) of the Finance Act 1994 - appellant will be subject to levy under service tax for renting of immovable property only from 01/07/2012 and not before that date. The appellant also agrees that they are liable to pay service tax from 01/07/2012. Extended period of limitation - HELD THAT:- The owners were under the bonafide belief that the said activity would not attract service tax liability. In a case where the constitutional validity of the levy is yet to be decided the dispute is interpretational in nature - the appellant agreed upon hence invocation of extended period is not justified. The demand and interest are hence to be restricted to the normal period and the penalties are to be set aside - appeal allowed in part.

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• 2023 (9) TMI 870
  Levy of Service Tax - overhauling charges received for Repair and Maintenance service which is in the nature of works contract - liquidated damages - extended period of limitation - suppression of facts or not. Levy of service tax - overhauling charges - Repair and Maintenance service which is in the nature of works contract - services rendered to Ministry of Defence - activity of re-engineering of sub-assembly of battle tanks - period April 2010 to August 2014 - HELD THAT:- For the period prior to 01.07.2012, we find that the reliance placed by the appellant on the decision in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] is apt since works contract is involved and that portion of supply of goods has been undeniably subjected to VAT - For the period subsequent to 01.07.2012, the original authority has apparently accepted (vide paragraph 18.2 of the Order-in-Original) the apportionment of supply and service value since the valuation of works contract service is required to be done by adopting the Service Tax (Determination of Value) Rules, 2006. He finds that the apportionment has been adopted at 22% for the service portion for the period post September 2014 and hence, has proceeded to hold the same apportionment for the period from 01.07.2012 to 2014-15 (up to 31.08.2014) - thus, the repair and maintenance service, as provided by the appellant in the case on hand, to HVF, Avadi is not amenable to Service Tax under the said category and consequently, the demand to this extent cannot sustain - demand on repair and maintenance / overhauling charges for the period from April 2010 to August 2014 is set aside. Levy of Service tax - liquidated damages collected due to delayed supplies by job workers - period July 2012 to March 2015 and April 2015 to March 2016 - HELD THAT:- Reliance placed on orders of various Benches of the CESTAT wherein the said issue has been settled in favour of the taxpayer - reliance can be placed in M/S NEYVELI LIGNITE CORPORATION LIMITED VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, CHENNAI WITH M/S NLC INDIA LIMITED VERSUS COMMISSIONER OF GST AND CENTRAL EXCISE, TRICHY [ 2021 (7) TMI 1090 - CESTAT CHENNAI] and M/S. STEEL AUTHORITY OF INDIA LTD., SALEM VERSUS COMMISSIONER OF GST CENTRAL EXCISE, SALEM [ 2021 (7) TMI 1092 - CESTAT CHENNAI] - also, vide Circular No. 214/1/2023 Service Tax dated 28.02.2023, apparently, the Board has accepted the views of the CESTAT and thereby clarified that the Board has decided not to pursue the Civil Appeals filed against those orders before the Hon ble Supreme Court. Hence, the demand on this cannot sustain - demand on liquidated damages for the periods from July 2012 to March 2015 and April 2015 to March 2016 is set aside. Extended period of limitation - suppression of facts or not - HELD THAT:- The issue was mired in litigation and interpretation of law; the undisputed fact is also that the appellant is a public sector undertaking and hence, there is no scope to allege suppression with an intention to evade tax. Therefore, the invoking of extended period of limitation is without any justification - invocation of extended period of limitation is held to be not in order. The impugned order is set aside and the appeals are allowed.

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• 2023 (9) TMI 869
  Refund/rebate of the Service Tax paid on input services - refund rejected on the ground of non-jurisdiction and non-submission of documents - HELD THAT:- This is a case where the original authority has decided the matter afresh based on the directions given by a co-ordinate Bench of the Tribunal in E-SHAKTI COM PVT. LTD. VERSUS CST [ 2016 (10) TMI 1384 - CESTAT CHENNAI ] and M/S. ESHAKTI. COM PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI-II [ 2016 (11) TMI 1746 - CESTAT CHENNAI ], directing him to examine such evidence and pleadings, if any, both on facts and law as well as apply proper law and pass a reasonable and speaking order. The Tribunal being the final fact-finding authority, the direction to apply proper law would entail the original authority examining the refund claim in the light of the proper Notification which is brought to his notice by the appellant during the remand proceedings. Prima facie, the Revenue is questioning the eligibility of the appellant-assessee for refund / rebate under Notification No. 41/2012 ibid. Further, as per the Revenue s grounds of appeal, the assessee had in fact made a claim under Notification No. 41/2012 which was rejected in the said order, which later on came to be appealed against and set aside by this Bench vide above Orders. It is deemed appropriate to set aside the impugned order and remit the matters back to the file of the Commissioner (Appeals) and the Commissioner (Appeals) shall pass a fresh order on the eligibility of the appellant in terms of Notification No. 41/2012-S.T. dated 29.06.2012 alone and thereafter, pass a speaking order in accordance with law. Appeal allowed by way of remand.

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• 2023 (9) TMI 868
  Classification of services - Supply of Tangible Goods service or not - supply of DG Sets on rental basis for a non temporary period - Transfer of right to use or not - extended period of limitation - HELD THAT:- Merely because the appellant have provided the operator and undertaken the repair and maintenance, the status that the right to use, possession and effective control has been transferred to the client is not affected. The providing of operator and repair and maintenance is undertaken by the appellant only because of their technical expertise. However the use of the generator set accordingly to the requirement of the client is completely the prerogative of the client. Therefore, in the given arrangement of supply of DG Set to the client, the right to use, possession and effective control has been clearly transferred to the client. From the definition of Supply of Tangible Goods Service it is clear that merely supply of tangible goods will not fall under the category of taxable service but the most important aspect is that the right of possession and effective control of any equipment given on rent should not be transferred - In the present case, since the right of possession and effective control has been transferred, as can be seen from the agreement, the supply of DG Set shall not fall under the definition of Supply of Tangible Goods Service . The most important aspect which is the deciding factor that whether supply of tangible goods will attract service tax or otherwise is that whether such arrangement of supply of tangible goods attracts VAT under the State VAT Act or otherwise. In the present case, admittedly the appellant are registered with the Gujarat VAT department and discharging VAT on the same supply of DG Set to their client. From the clarification by Circular No. 334/1/2008-TRU dated 29.02.2008 with regard to taxability of Supply of Tangible Goods , it is unambiguous that when on supply of tangible goods, the sales tax is payable or paid the same transaction will not be subject to payment of service tax, for the reason that as per Article 366 (29A) of Constitution of India, the supply of tangible goods is considered as deemed sale and any sale transaction will not be a domain of service - The identical issue has been considered by this Tribunal in the case of QUIPPO ENERGY PVT LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [ 2022 (12) TMI 1440 - CESTAT AHMEDABAD ] wherein it was held that Supply of tangible goods for use and leviable to VAT/sales tax as deemed sale of goods, is not covered under the scope of the proposed service. Whether a transaction involves transfer of possession and control is a question of facts and is to be decided based on the terms of the contract and other material facts. This could be ascertainable from the fact whether or not VAT is payable or paid. The similar issue has also been considered by this Tribunal in Mumbai Bench and passed the following decision in the case of M/S. UFO MOVIEZ INDIA LTD. VERSUS COMMISSIONER OF SERVICE TAX-VI, MUMBAI [ 2017 (9) TMI 507 - CESTAT MUMBAI ] where it was held that there is no suppression of fact on appellant s part. It is also observed that the appellant obtained DDQ (Determination of Disputed Question) dt. 26.6.2008 from Commissioner of Sales Tax, who held that lease rental is liable for VAT. The appellant accordingly was discharging the VAT liability even before the taxability on Supply of Tangible goods for use . The above decision has been upheld by the Hon ble Supreme Court as reported at COMMISSIONER OF SERVICE TAX-V, MUMBAI VERSUS UFO MOVIEZ INDIA LTD. [ 2022 (7) TMI 1064 - SUPREME COURT] , wherein the Hon ble Apex Court held In the facts of the present case as it is not disputed that the respondent had regularly paid amount towards VAT liability in respect of the subject goods during the relevant period, the question of claiming service tax thereon does not arise. From the above decisions it can be seen that in a case where supply of goods has been treated as deemed sale under article 366 (29A) of Constitution of India. Accordingly, it was held that on such transaction no service tax is payable. The supply of DG Set to the client of the appellant is not liable to service tax - Appeal allowed.

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• Central Excise

• 2023 (9) TMI 867
  Reversal of CENVAT Credit - appellant engaged in activity of trading of coal - in the guise of removal of inputs as such, the appellant was engaged in rendering of services namely, Trading of Goods , which service was exempt as per the explanation to Rule 2(e) of the Cenvat credit Rules, 2004 - non-maintenance of separate records for taxable and exempt services - HELD THAT:- The case law relied upon by the appellant are not relevant to the facts of this case as in those cases, the case of the revenue was that the appellant is clearing input as such, therefore the issue arose whether in that circumstances, the appellant was required to reverse proportionate cenvat credit on input services or not, whereas in the case in hand, the case of the revenue is that the appellant is providing exempted service namely trading activity, in that circumstances, whether the appellant is required to reverse proportionate cenvat credit with regard to input and input services used in providing final exempted service or not? Therefore, the case law relied upon by the appellant are distinguishable from the facts and circumstances of the case, as the appellant has already revered proportionate cenvat credit for providing the exempted service namely trading activity. In that circumstances, proportionate reversal of cenvat credit on inputs cleared as such and proportionate cenvat credit attributable to exmepted service has already been reversed by the appellant the same is sufficient to meet the ends of justice. The appellant is required to reverse proportionate cenvat credit on inputs cleared as such and proportionate input services used for providing trading activities i.e. trading of coal, therefore, there is no requirement of payment of 6%/10% of the value of trading activity provided by the appellant - the demand on account of non-maintenance of separate account for input or input services for final exempted service does not arise and the reversal of cenvat credit on input and proportionate credit on input service is sufficient to meet the ends of justice. Appeal disposed off.

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• 2023 (9) TMI 866
  CENVAT Credit - goods exported on FOC basis where no sale proceeds were received during the period from 13.04.2015 to 23.03.2017 - goods exported free of cost, being sent for promotional purposes - scope of SCN - HELD THAT:- The appellant has exported the goods on FOC basis without receipt of foreign currency. Further, there is no condition under Rule 19 of Central Excise Rules, 2002 read with Notification 42/2002-CE (N.T.) dated 26.06.2001 mandating receipt of foreign currency in case of FOC exports by an exporter - at the time of export no objection was raised by the department neither at the time of export nor at the time of submission of document with Central Excise department that receipt of sale proceedings in foreign currency is required for FOC exports. Further, perusal of form A.R.E.1 shows that the export goods were having no commercial value and the value was declared for customs excise purpose only and no sale proceeds were realized against the exports. Further, in the invoices also it is clearly mentioned that the impugned goods are for export, free of cost being sent for promotional purposes as trade sample on no returnable basis. The impugned order relying upon the RBI Master Circular No. 14/2012-13 dated. 02.07.2012 is not justified because there is no allegation regarding the same in the show cause notice which is the foundation upon which the department has to build its case. Therefore, the entire demand is bad in law at the impugned order has travelled beyond the show cause notice which cannot be done in view of the decision of the Supreme Court in the case of CCOMMISSIONER OF C. EX., BANGALORE VERSUS BRINDAVAN BEVERAGES (P) LTD. [ 2007 (6) TMI 4 - SUPREME COURT] . The impugned order is not sustainable in law - Appeal allowed.

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• 2023 (9) TMI 865
  100% EOU - Goods supplied to Bharat Oman Refineries Ltd. Mumbai for setting up crude petroleum refinery for the purpose of calculating Excise Duty which is equivalent to 50% of all Customs Duty in terms of Notification No. 23/2003-CE dated 31.03.2003 - applicability of N/N. 21/2002-CUS Sr. No. 228 - HELD THAT:- It is a settled law that for the purpose of calculation of Excise duty in respect of goods manufactured by 100% EOU, all the Customs duty leviable on the similar goods if imported shall apply. As per Notification No. 23/2003-CE the 100% EOU is required to pay 50% of all the customs duty. While taking the customs duty exemption notification of customs if any applicable on the like goods also need to be considered. In the present case, the appellant s case is that they have supplied the goods for setting up crude petroleum refinery of M/s Bharat Oman Refineries Ltd., Mumbai. On going through the Notification No. 21/2002-CUS Sr. No. 228 the exemption entry does not bear any condition except the condition that the goods is specified under the list 17 of Notification are eligible for exemption if the same is meant for crude petroleum refinery. If this fact is satisfied than the appellant is eligible for concessional rate of 2.5% of basic customs duty (10-5 as per Notification 21/2002-CUS 50% as per Notification No. 23/2003-CE = 2.5%). The Adjudicating Authority has denied the exemption Notification No. 21/2002-CUS on the ground that the raw material imported by the appellant was under Nil Rate of duty in terms of notification No. 52/2003-CUS(EOU). Thus, the Adjudicating Authority has gone on all together irrelevant fact. Here the duty ability has to be decided in respect of the goods manufactured by the appellant, which is nothing to do with the duty ability of imported raw material of the appellant. Therefore, the entire finding of the Adjudicating Authority is on wrong interpretation of the Notification in the present case. The finished goods manufactured by the appellant, EOU is not attracting nil rate of duty. Therefore, the Adjudicating Authority s finding is absurd and not relevant in the present case. The matters needs to be reconsidered by the Adjudicating Authority by consideration the exemption Notification No. 21/2002-CUS in its correct spirit only after satisfaction that the goods in question i.e. Steel Pipes were supplied for the purpose of setting up of crude petroleum refinery by their buyer M/s. Bharat Oman Refineries Ltd. Mumbai - Appeal allowed by way of remand.

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• 2023 (9) TMI 864
  Benefit of exemption under Sl. No.39 of the Notification No. 6/2006-CE dated 01.03.2006 and Sl. No. 276 of the Notification No. 12/2012-CE dated 17.03.2012 denied - - 2545 numbers of motor vehicles manufactured for transport of more than 12 persons falling under Chapter heading 8702 of CETA, 1985 but failed to pay duty - extended period of limitation. Denial of exemption on the ground that clause (a) of the condition No.9 or 27 for availing benefit of said exemptions during the relevant period is not complied with inasmuch as the ownership of the chassis remains vested in the chassis manufacturer viz. VIPL. HELD THAT:- There are no merit in the observation in analyzing/examining the issue whether ownership of the chassis after sale and delivery of possession continues to remain with VIPL thereby the clause (a) of the condition 9 of Sl. No. 39 of Notification No. 6/2006-CE and condition 27 of sr. no 276 of Notification No. 12/2012-CE 17.3.2012, as the case may be, is satisfied or otherwise. The term ownership has not been defined under Central Excise Act,1944 or the Rules made thereunder. Ownership is a legal concept. Applying the concept of ownership to the present case, it is found that the appellant and M/s VIPL are independent legal entities as both are incorporated under the Indian Companies Act,1956. The chassis manufactured by M/s VIPL sold to the appellant on payment of applicable VAT and excise duty. There is no condition appended to such sale which would indicate the transfer of title, possession etc. is incomplete. The appellant after receipt of the chassis undertake the activity of bodybuilding and dispose of the buses to their customers. In these circumstances, merely because the appellant and M/s VIPL belong to a common group of companies, the transaction between them cannot be considered other than sale or purchase of the chassis and the Ownership of chassis not transferred after sale of the same by VIPL to Appellant. The reference to concept of related person under Section 4 of the Central Excise Act, 1944, in analysing, the condition of the Notification whether ownership of the chassis is continued to be vested on chassis manufacturer by the learned Commissioner in the impugned order is out of context, in as much as, the question is not for determination of the value of the chassis sold; hence, reliance placed on the meaning of interconnected undertaking under Section 4 of the Central Excise Act, 1944 is also irrelevant. Further, the clause 1.7 of the Chassis Supply Agreement and Master Agreement dated 01.04.2001 providing license to manufacture entire range of products of AB Volvo like trucks, buses, construction equipment etc. to M/s VIPL does not establish the case that the ownership of chassis after being sold by M/s VIPL to the appellant continued to vest on the chassis manufacturer i.e. M/s VIPL - on merit the Appellants are eligible to the benefit exemption Notifications 06/2006-CE dt. 01.3.2006 and 12/2012-CE dt. 17.03.2012. Extended period of limitation - HELD THAT:- The allegations of suppression of the fact of bodybuilding on the supplied chassis by M/s VIPL and availing benefit of exemption Notifications have not been established. Consequently, invoking of extended period is also not justified. Since, the issue on merit i.e. admissibility of exemption notification has been decided in favour of the assessee, the entitlement of CENVAT Credit on duty paid inputs becomes academic and hence not deliberated. Thus, the appellants succeed both on merit as well as on limitation - appeal allowed.

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• 2023 (9) TMI 863
  Exemption benefit on captive consumption under N/N. 67/95-CE dt. 16.03.1995 - control panels were cleared for home consumption on payment of duty and also were cleared without payment of duty by availing exemption under Notification No.6/2006-CE dt. 01.03.2006 - HELD THAT:- The issue stands decided in appellant own case M/S. ALSTOM T D (INDIA) LTD. SCHNEIDER ELECTRIC INFRASTRUCTURE LTD. APPELLANT VERSUS COMMISSIONER OF GST CENTRAL EXCISE CHENNAI [ 2019 (3) TMI 2034 - CESTAT CHENNAI ] where it was held that The issue stands decided in M/S. AREVA T AND D INDIA LTD. VERSUS CCE ST, LTU, CHENNAI [ 2018 (2) TMI 209 - CESTAT CHENNAI] where it was held that the eligibility of the appellant-assessee for exemption under Notification No. 67/1995 cannot be disputed. They have followed the provisions and complied with the provisions of Rule 6 and all the connected requirements of the Notification No. 67/1995. The demand cannot sustain and requires to be set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (9) TMI 862
  Cancellation of C-Forms issued with retrospective effect or not - requirement of assessment u/s under Section 17 of the HVAT Act - HELD THAT:- The question whether C-Forms issued by the authorities can be cancelled retrospectively is no longer res integra. The same is covered by various decisions including the decisions of this Court in JAIN MANUFACTURING (INDIA) PVT. LTD. VERSUS THE COMMISSIONER VALUE ADDED TAX ANR. [ 2016 (6) TMI 304 - DELHI HIGH COURT ] where it was held that the order passed by the DT T cancelling the C Form issued to the Petitioner in the present case with effect from 27th November 2015 is hereby set aside. The Petitioner will continue to treat the said C-Form issued to it as having been validly issued. The DT T shall, not later than ten days from today, make the necessary corrections on its website to indicate the validation of the above C-Form. The respondents concurs that the question raised by the petitioner is covered by the aforesaid decision. The present petition is allowed and the C-Forms issued by the Sales Tax Department to the purchasing dealer (Ghanshyam Industries, TIN No. 07106917681) cannot be cancelled. The concerned authorities shall act accordingly.

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• 2023 (9) TMI 861
  Recovery of arrears of tax for the Assessment Year 2004--2005 and 2005-2006 - assessment completed on 01.02.2012 for the Assessment Year 2004-2005 and on 10.02.2012 for the Assessment Year 2005-2006 and now revised order passed - HELD THAT:- The issue as to whether the amount has been properly re-quantified in the rectification proceedings is a matter, which has to be only determined by the Officers in the hierarchy under the provision of the TNGST Act, 1959. The question of filing the second rectification application under Section 55(4) of the TNGST Act also cannot be countenanced - The revised Assessment Orders passed on 19.03.2012 are appealable orders under the provisions of the TNGST Act, 1959. Considering the above, pursuant to the direction of this Court dated 24.02.2023, the petitioner has paid a sum of Rs 15,37,823/-. This Court is inclined to dispose this writ petition giving liberty to the petitioner to challenge the revised Assessment Orders dated 19.03.2012 for the respective Assessment Years by filing an appeal, within a period of thirty (30) days from the date of receipt of a copy of this order - Petition disposed off.

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• 2023 (9) TMI 860
  Maintainability of petition - availability of alternative remedy - Section 65 of the Gujarat Value Added Tax Act, 1969 - HELD THAT:- In view of the provisions of Sub-section 2 of Section 65 of the Gujarat Value Added Tax Act, 1969, the petitioners have efficacious alternative remedy to canvass its grievances before the Tribunal. Hence, it is opined that the petitioners, if relegated to the Tribunal for adjudication of its grievances, the ends of justice would be met with. It is observed that as and when the petitioners approach to the Tribunal by way of an appeal, the issue of pre-deposit of the amount is left open and if any application for waiver of the condition of pre-deposit is made by the petitioners, the Tribunal shall decide the same in accordance with law. The petition is disposed of.

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• Indian Laws

• 2023 (9) TMI 859
  Dishonour of Cheque - money lending business - whether a person can be debarred from filing and prosecuting complaint under section 138 of the Act if he is doing business of money lending without holding a valid licence and whether there is apparent conflict between section 3 of Punjab Registration of Money Lenders Act, 1938 and section 138 of the Act? HELD THAT:- The Delhi Court in DHANJIT SINGH NANDA VERSUS STATE ANR. [ 2009 (2) TMI 852 - DELHI HIGH COURT] rejected the argument that the complainant is debarred from recovering loan amount as he is not a registered money lender. This court in Guddo Devi @ Guddi V Bhupender Kumar [ 2020 (2) TMI 676 - DELHI HIGH COURT] observed that there is no material to conclude that the respondent was carrying on the business of advancing loans. Merely because the respondent had lent money to three or four persons, did not lead to the inference that the respondent had been carrying out the activity of money lending as a business. It is acceptable proposition of law that section 3 of Punjab Registration of Money Lenders Act, 1938 does not limit operation of section 138 of the Act and both are independent and mutually exclusive to each other. If a person advances a loan even without having a valid money lending licence or certificate he can institute and prosecute complaint under section 138 of the Act on basis of cheques and he has to satisfy only the mandatory requirements of section 138 of the Act. The trial court dismissed the complaints at pre-trial stage without giving an opportunity to the petitioner to lead evidence. The IN RE : EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881. [ 2021 (4) TMI 702 - SUPREME COURT] as argued and cited by the counsel for the petitioner has held that Section 258 of Cr. P.C. is not applicable to a summons case instituted on a complaint and as such section 258 Cr. P.C does not have any role to play in respect of the complaints filed under Section 138 of the Act. The trial court is not vested with inherent power either to review or recall the order of issuance of process. Petition allowed.

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