TMI Tax Updates - e-Newsletter
September 9, 2024

Case Laws in this Newsletter:

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

Articles

1. Professional Services provided to BWSSB are not exempt from GST

   By: Bimal jain

2. TIME LIMITATION FOR ISSUANCE OF SHOW CAUSE NOTICE UNDER CUSTOMS ACT, 1962

   By: DR.MARIAPPAN GOVINDARAJAN

3. Tax Invoices, E-way bills, and Goods Receipts are not sufficient proof to avail ITC

   By: Bimal jain

News

1. Advisory for Biometric-Based Aadhaar Authentication and Document Verification for GST Registration Applicants of Bihar, Delhi, Karnataka and Punjab

Notifications

Companies Law

1. G.S.R. 543 (E) - dated 6-9-2024 - Co. Law

National Financial Reporting Authority (Manner of Appointment and other Terms and Conditions of Service of Chairperson and Members) Amendment Rules, 2024 - Salary and allowances - Option to The Chairperson and full time member to draw salary

Customs

2. 42/2024 - dated 6-9-2024 - Cus

Seeks to rescind Notification No. 26/2011-Customs, dated 01.03.2011 - This notification was exempting the work of art imported for exhibition in a public museum or national institution

SEBI

3. SEBI/LAD-NRO/GN/2024/203 - dated 4-9-2024 - SEBI

Securities and Exchange Board of India (Foreign Venture Capital Investors) (Amendment) Regulations, 2024

Highlights / Catch Notes

GST

• Taxpayer's plea rejected over non-submission of vehicle movement details like lorry receipts to claim Input Tax Credit benefit.

  Case-Laws - HC : Petitioner challenged order blocking Input Tax Credit (ITC) balance due to failure to produce mandatory vehicle movement details like lorry receipt and trip sheet as required u/s 16(2)(b) of CGST Act. Court held petitioner was obligated to furnish such particulars to avail ITC benefit. Since petitioner failed to do so, impugned assessment order was rightly passed. Petitioner has alternate remedy of appeal before Appellate Authority instead of directly approaching High Court through writ petition. Hence, petition dismissed.
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• High Court Restores Tax Registration: Petitioner Must File Returns and Settle Dues to Continue Business Operations.

  Case-Laws - HC : The High Court set aside the order cancelling the petitioner's registration under the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017, subject to the condition that the petitioner files returns for the entire period of default and pays the requisite amount of tax, interest, fine, and penalty, if not already paid. The cancellation was due to the petitioner's failure to comply with statutory provisions by not filing returns, but the Court noted that suspension/revocation would be counterproductive and against revenue interests as it would prevent the petitioner from carrying on business and raising invoices, ultimately impacting tax recovery. The Court took a pragmatic view, considering that the respondents did not allege dubious processes to evade tax.
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• Tax demand quashed for violating natural justice; fresh chance to contest.

  Case-Laws - HC : The High Court set aside an assessment order due to lack of reasonable opportunity for the petitioner to contest the tax demand on merits. The show cause notice and other communications were uploaded on the GST portal's "View Additional Notices and Orders" tab but not communicated through other modes, violating principles of natural justice. The court ordered the petitioner to remit 10% of the disputed tax demand within two weeks and permitted submission of a reply to the show cause notice, providing an opportunity to contest the demand. The petition was disposed of on this condition.
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• GST refund claim stuck due to technical glitch, Court intervenes for speedy resolution.

  Case-Laws - HC : Petitioner approached the Court seeking direction to respondent authorities to decide application for GST refund for December 2017 and January 2018, which was denied due to technical issues in GSTN portal. Court directed respondents to consider petitioner's representation within four weeks, providing opportunity of hearing, and place findings on record. Matter adjourned to specified date, with permission for direct service on respondents.
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• Registration cancelled without reasons, violating natural justice. Delayed appeal dismissed.

  Case-Laws - HC : Order cancelling petitioner's registration violated principles of natural justice as it was passed mechanically without application of mind and without assigning reasons. Appeal against cancellation dismissed on ground of delay. Reasons are essential for judicial and administrative orders. Doctrine of merger inapplicable due to circumstances. Referring to precedent, order without reasons fails Article 14 test of reasonableness. Impugned cancellation order quashed for lack of reasons, allowing the petition.
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• Review Applications Limited to Correcting Obvious Errors; Mere Disagreement Isn't Grounds for Reconsideration.

  Case-Laws - HC : A review application is maintainable on (i) discovery of new and important evidence which could not be produced earlier despite due diligence, (ii) mistake or error apparent on the face of record, or (iii) any other sufficient reason. The Supreme Court held that review cannot be done unless a material error manifestly apparent on the face of the order would result in miscarriage of justice. Review proceedings are strictly confined to the ambit of Order 47 Rule 1 CPC. A party cannot repeat old arguments under the guise of a review petition. The power of review is distinct from appellate power to correct errors. In the present case, the HC found no error apparent on the record to warrant interference with its earlier order holding that the respondent is entitled to receive original non-relied documents u/s 67(3) of CGST Act and Rule 27 of Central Excise Rules 2017. Consequently, the review petition was dismissed.
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• Exporter entitled to IGST refund after deducting higher duty drawback claimed under Column A, if rates equal in Columns A & B.

  Case-Laws - HC : The court held that if the rate of duty drawback under Column A and Column B is the same, then the refund of IGST has to be ordered even if the party selects Column A, as selecting Column A does not result in any double benefit. In the present case, the petitioner had voluntarily selected Column A and claimed higher duty drawback. The court directed the respondents to grant refund of IGST paid on exported goods after deducting the differential amount of duty drawback, along with 7% interest from the date of the shipping bill till the date of actual refund. The petition was allowed.
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• Pre-deposited amount for appeal refundable after revised lower assessment except balance tax liability.

  Case-Laws - HC : Petitioner pre-deposited Rs. 6,25,000/- as condition for filing appeal u/s 51 of TNVAT Act against Assessment Order dated 21.10.2010. After revised Assessment Order on 24.07.2015 substantially dropping demand, petitioner entitled to refund of pre-deposited amount except Rs. 3,902/- appropriated towards balance tax liability. Though petitioner wrongly transitioned amount, issue revenue neutral as Commercial Tax Department bound to refund pre-deposited amount pursuant to revised order. Impugned orders quashed, petition allowed.
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• Seller Must Refund Rs. 2,06,100 Plus Interest for Not Passing GST Rate Cut on Eclat Serum; No Penalty Due to Timing.

  Case-Laws - CCI : The respondent, engaged in selling medicines with GSTIN 24AFKPG7000FIZZ, failed to pass on the benefit of GST rate reduction from 28% to 18% on the product "Eclat Serum 30gm" (HSN 33049910) to the recipients, effective from 15.11.2017 as per Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. This contravened Section 171(1) of the CGST Act, 2017. The profiteered amount is determined as Rs. 2,06,100/- u/r 133(1) of the CGST Rules 2017. The respondent is required to pass on the profiteered amount of Rs. 2,06,100/- along with 18% interest from the date of collection till payment, as per Rule 133(3)(b). Although the respondent committed an offence u/s 171(3A) by denying the rate reduction benefit, penalty cannot be imposed retrospectively as Section 171(3A) was inserted effective 01.01.2020.
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Income Tax

• Jurisdictional notice invalid; Faceless scheme mandatory for income tax re-assessment.

  Case-Laws - HC : The High Court held that the notice issued by the Jurisdictional Assessing Officer (JAO) u/s 148 was invalid as the provisions of Section 151A mandate that such notice must be issued by a Faceless Assessing Officer (FAO). The Revenue failed to comply with the Scheme notified by the Central Government pursuant to Section 151A(2), which governs the conduct of proceedings u/ss 148A and 148. Relying on the Hexaware case, the court concluded that the invalid issuance of notice vitiated the entire proceedings initiated against the assessee.
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• Tax Assessment Case Transferred from Coimbatore to Kolkata Due to Evidence of Lottery Activities and Tax Evasion.

  Case-Laws - HC : The case pertains to the transfer of assessment proceedings u/s 127 from Coimbatore to the Central Circle in Kolkata. The respondents seized incriminating materials during a search at the petitioner's place of business in Kolkata, indicating involvement in lottery business and tax evasion within Kolkata's jurisdiction. Despite the petitioner's registered office being in Coimbatore, the respondents transferred the case to Kolkata as the seized materials directly linked the petitioner to business activities there. The petitioner objected, citing difficulties like age, litigation costs, and document availability in Coimbatore. However, the court held that since the incriminating evidence was found in Kolkata relating to the petitioner's business there, it was appropriate to transfer the case to the Kolkata Circle for assessment, irrespective of the registered office location. Section 127 empowers such transfers based on the circumstances. Transferring to Coimbatore would be impractical without access to relevant materials. No prejudice was caused as only a jurisdictional transfer occurred without any adverse assessment orders. The court dismissed the writ petition, upholding the notification transferring the case to Kolkata.
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• Insolvency Plan Approval Extinguishes Pre-Plan Debts, Halting Reassessment Proceedings for 2016-17 Claims.

  Case-Laws - HC : The High Court held that once a resolution plan is approved u/s 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), only the debts specified in the resolution plan remain payable. All dues not included in the resolution plan stand extinguished, and no proceedings can be initiated or continued regarding any claim for such dues. The impugned reassessment proceedings pertaining to the assessment year 2016-17 relate to the period prior to the approval of the resolution plan and thus cannot be continued or initiated after the plan's approval. The resolution plan was approved on May 6, 2020, and any attempt to reassess the petitioner-assessee for the assessment year 2016-17 would directly conflict with the law declared in Ghanshyam Mishra, prohibiting the continuation of existing proceedings and initiation of new proceedings related to operations prior to the Corporate Insolvency Resolution Process (CIRP) after the resolution plan's approval. Consequently, the reassessment proceedings, predating the CIRP and relating to the period before the resolution plan's approval, stand extinguished. The petitioner-assessee has begun on a clean slate under new ownership and management after completing the CIRP, and the writ petition was quashed.
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• Reassessment invalid if no notice issued under Sec 143(2) despite Sec 292BB.

  Case-Laws - HC : Section 143(2) is a mandatory requirement, and failure to comply with it renders the reassessment proceedings invalid. The High Court has consistently held that Section 143(2) must be mandatorily complied with in reassessment actions. Section 292BB cannot cure the complete absence of notice u/s 143(2) as it only applies to defects in the manner of service, not the absence of notice itself. Consequently, the reassessment action is liable to be quashed due to the failure to comply with the mandatory requirement of issuing notice u/s 143(2).
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• IT Assessment Order Disregarding Objections to DRP Quashed by High Court.

  Case-Laws - HC : The High Court ruled on the validity of an order passed u/s 144C(3) read with Section 144B. The petitioner had filed objections to the Draft Assessment Order before the Dispute Resolution Panel (DRP). Considering the objections filed before the DRP and the observations made in the Open Silicon Research case, the court held that the Assessment Order passed disregarding the objections requires interference. The Assessing Officer (AO) ought to have waited for the DRP's directions. The court allowed the petition, setting aside the order, with a direction to the AO to follow the DRP's directions and proceed accordingly, while the DRP would issue necessary directions considering the petitioner's objections.
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• Supreme Court: No Penalty for Disallowance Based on Estimation if Income Details Are Accurate and Not Concealed.

  Case-Laws - AT : Penalty proceedings u/s 271(1)(c) involved an addition based on estimation by the Assessing Officer, which was later re-estimated by the CIT(A) to disallow 10% of the expenditure while adjudicating the quantum appeal. It was not disputed that the assessee had furnished details regarding expenditure and income in the return of income. The disallowance by the revenue was due to the fact that the claim was not acceptable to them. The Hon'ble Supreme Court in CIT v. UP State Bridge Corporation Ltd held that where the assessee had furnished certain details regarding expenditure and income in the return, which were not found inaccurate, nor could be viewed as concealment of income, merely because the claim was not accepted or was not acceptable by the revenue, that by itself would not attract penalty u/s 271(1)(c). The ITAT held that no penalty can be levied in a case where the disallowance of expenditure is estimated and was inclined to delete the penalty levied by the Assessing Officer, deciding in favor of the assessee.
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• Stamp duty value exceeds consideration paid for property, difference treated as income.

  Case-Laws - AT : Immovable property purchased, stamp duty value higher than consideration paid. Assessee's request to refer matter to Valuation Officer ignored. Held: As property registered with area of 783.4 sq ft, assessee cannot claim different area. Stamp duty value of Rs. 2,00,17,500 exceeds consideration of Rs. 1.70 crores, hence difference treated as income u/s 56(2)(vii). No infirmity in CIT(A)'s order, appeal dismissed. Stamp duty value considered full value of consideration for Section 56(2)(vii) purposes.
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• Tax Tribunal Upholds Fair Market Value Adjustment for Share Premium Assessment u/s 56(2)(viib.

  Case-Laws - AT : Section 56(2)(viib) deals with the consideration received by a company for issue of shares at a premium. The assessee company issued equity shares at a premium, which was questioned by the tax authorities. The key points are: The assessee is entitled to modify the net asset value (NAV) to determine the fair market value (FMV) of shares, as per the Explanation to Section 56(2)(viib). The assessee produced a valuation report and market valuation of its subsidiary to substantiate the FMV. Reworking the subsidiary's value using methods like discounted cash flow (DCF) is permissible if the valuation is correctly established. The tax authorities erred in not allowing modification of NAV components. The assessee's approach to determine FMV based on the subsidiary's valuation is in line with Section 56(2)(viib). The ITAT allowed the assessee's appeal on this issue.
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• Tax Penalty Dismissed: Tribunal Rules COVID-19 Restrictions Justify Non-Compliance with Documentary Evidence Requirements.

  Case-Laws - AT : Penalty levied u/s 272A(1)(d) for non-compliance with documentary evidence requirements was challenged by the assessee, citing COVID-19 restrictions as a reasonable cause. The Tribunal held that in the prevailing pandemic situation, it was unreasonable for tax authorities to expect strict compliance from the assessee. The failure to furnish information/documents during the reassessment proceedings was attributable to the subsistence of COVID-19, which prevented effective compliance. Demanding documentary evidence to prove the reasonable cause of COVID-19 restrictions suggested non-application of mind by the authorities. The Tribunal relied on the Supreme Court's recognition of COVID-19 restrictions and held that the pandemic situation, along with the apex court's order, formed a reasonable cause u/s 273B, exculpating the assessee from penalty u/s 272A(1)(d). Consequently, the penalty order was set aside as unwarranted.
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• Tax Tribunal Supports Reassessment Due to Insufficient Inquiry into Penny Stock Transactions by Assessing Officer.

  Case-Laws - AT : The assessee dealt with a penny stock, and the Assessing Officer (AO) failed to conduct proper inquiry during reassessment proceedings. The Principal Commissioner of Income Tax (PCIT) rightly invoked Section 263, as the AO did not ask for the demat account or make necessary inquiries regarding the penny stock transaction. Explanation 2 to Section 263 is applicable. The PCIT correctly set aside the reassessment order and directed the AO to pass a fresh order after examining the facts, as the AO merely accepted the assessee's contentions without thorough investigation. Once reassessment was initiated on grounds of dealing in manipulated penny stocks to generate bogus long-term capital gains/losses, the AO was obligated to conduct a detailed inquiry to unravel the truth behind the transaction. However, the AO made a superficial inquiry, necessitating the PCIT's intervention. The Appellate Tribunal dismissed the assessee's appeal.
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• Dispute Over Silt Costs: Capital vs. Revenue Expenditure; ITAT Upholds Revenue Classification for Recurring Silt Use.

  Case-Laws - AT : The key issue relates to the classification of the cost of silt as capital or revenue expenditure. The Assessing Officer (AO) treated it as capital expenditure and disallowed it, while the assessee claimed it as revenue expenditure. The assessee's contention is that the cost of filling pits with silt, a byproduct of stone extraction, is a recurring activity and hence a revenue expenditure. The CIT(A) agreed that the assessee utilized existing silt without purchasing new material, making it a revenue expenditure. The assessee valued the stock as per accepted trade practices and accounting standards, without any mala fide intention. Relying on relevant judicial precedents, the ITAT allowed the assessee's grounds, treating the cost of silt as revenue expenditure.
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• Assessing Officer Must Provide Concrete Evidence for Tax Disallowances and Additions Under Income Tax Act.

  Case-Laws - AT : Key legal principles and decisions related to various disallowances and additions made by the Assessing Officer (AO) under different sections of the Income Tax Act. The critical points covered are: Cessation of liability u/s 41(1): The onus is on the AO to provide concrete evidence for cessation or remission of liability. Non-payment over time or time-barred debts do not automatically constitute cessation. Clear and specific evidence is required. Disallowance u/s 37(1): Disallowances should be made only when there is clear evidence that the expenditure is not for business purposes. Ad hoc disallowances without substantial evidence are arbitrary and unjustified. Assessee's documentation and audited financial statements demonstrating genuineness of expenses should be considered. Disallowance of personal expenses: Disallowances cannot be based on assumptions or lack of evidence of personal use. Assessee's demonstration of business purpose and tax auditor's acceptance should be considered. Interest disallowance u/s 36(1)(iii): The principle of fungibility of funds should be applied. If the assessee had sufficient interest-free funds to cover the loan, interest deduction should be allowed for loans advanced for commercial expediency. Disallowance u/s 14A read with Rule 8D.
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• Reassessment Void: Notice Against Non-Resident Invalid Due to Lack of Approval and Time-Barred Issuance Under Tax Law.

  Case-Laws - AT : The reassessment proceedings were initiated against a non-resident individual deriving income from other sources after three years had elapsed. The sanction of the Specified Authority was not obtained as per the prevalent law. Information was received regarding possible infringement of section 56(2)(vii) related to transactions of immovable property. The Tribunal held that the sanction of the Specified Authority was mandatory and not obtained in conformity with the law. Additionally, the notice u/s 148 was time-barred as per section 149 since it was issued after three years, and the amount alleged to have escaped assessment was less than Rs. 50 lakh. Consequently, the notice issued u/s 148 was void ab initio and bad in law, and the decision was in favor of the assessee.
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• Tax Penalties Upheld for Undisclosed Income and Unexplained Deposits; Deleted for Protective Additions and Property Purchases.

  Case-Laws - AT : This case deals with the levy of penalties u/ss 271AAA and 271(1)(c) of the Income Tax Act in relation to various additions made to the assessee's income based on seized documents during a search operation. The key points are: Penalty u/s 271AAA upheld for undisclosed consideration from land sale based on seized documents mentioning assessee's name and transaction details. Assessee failed to rebut the evidence. Penalty upheld for undisclosed capital gains from land sale confirmed by appellate authorities based on seized material. Penalty u/s 271AAA deleted for additions made on a protective basis, following judicial precedents. Penalties u/ss 271AAA and 271(1)(c) are mutually exclusive for the same assessment year. Penalty u/s 271(1)(c) upheld for unexplained bank deposits as assessee failed to provide explanations, and additions were confirmed by appellate authorities in quantum proceedings. Penalty u/s 271(1)(c) deleted for additions based solely on seized documents without corroborative evidence regarding the purchase of property by the assessee and their father. Mere entries in seized material were insufficient. Penalty u/s 271(1)(c) upheld for unexplained bank deposits in the assessee's brother's account, as the assessee could not provide a plaus.
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• Educational society's exemption restored; surplus profits allowed if linked to education.

  Case-Laws - AT : Assessee society's activities allowed as eligible for deduction u/s 10(23C)(vi) for previous assessment years. AO denied exemption u/s 11, alleging profits from publication business and advances to sister concern/universities. Supreme Court in New Noble Educational Society case held that disproportionate surpluses/profits should not be given weight if incidental to main educational activities. Matter remanded to AO to re-examine issue after giving opportunity of hearing to assessee, who shall furnish evidence proving activities are not commercial in nature and interlinked with imparting education. Assessee can file requisite documents.
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• Tribunal's Directions Limit Assessment Officer; Uncontested Issues Quashed, Staff Welfare and Guarantee Liabilities Upheld.

  Case-Laws - AT : The assessment officer (AO) was bound by the issues and directions given by the Tribunal. The AO could not raise issues that had already attained finality. If the Department was aggrieved by the Tribunal's order, they should have filed an appeal before the High Court, which the Revenue did not do specifically on these three issues. Even otherwise, the Revenue had opportunities to raise grounds before the Tribunal against the CIT(A)'s order but failed to do so. Therefore, in the impugned assessment proceedings pursuant to the Tribunal's order, these three issues could not have been raised. The additions are quashed as they are beyond the scope of the present assessment proceedings. Regarding provision for staff welfare expenses, it was held that the provision was worked out on a scientific basis by the accrual method and represents an ascertained liability, so no adjustment could be made in the book profit. The CIT(A)'s observation is confirmed, and a similar issue was decided in favor of the assessee's group concern. The provision for loss on guarantee is a contractual liability based on agreement, and the company had to account for the accrued liability. The Revenue did not file an appeal against this issue, and it had attained finality, decided in favor of the assessee. The interest u/s 234B is consequential, and since most additions have been deleted, the A.
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• Forex rate change impacts material cost, commission expenses rise; reasonable explanations given.

  Case-Laws - AT : Increase in cost of materials consumed due to higher exchange rate for purchases compared to previous year. Adequate explanation provided by assessee regarding increase in ratio of material cost to revenue, overall profitability improvement, and forex rate change details. Ad-hoc addition without examining assessee's submissions cannot be made. Commission expenses increased, assessee provided reasons. Ad-hoc disallowance without finding defects in submissions impermissible. Disallowance u/s 40(a)(ia) incorrect as commission paid to residents, not non-residents. Assessee offered 30% disallowance for non-deduction in return. CIT(A)'s order deleting additions upheld by ITAT.
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Customs

• Duty drawback recovery notice against deceased exporter set aside due to jurisdictional defect.

  Case-Laws - HC : Recovery of drawback benefit availed along with applicable interest and penalty was demanded through a notice issued against a deceased exporter. The issuance of notice to a deceased person is invalid as it suffers from a fundamental jurisdictional error. The requirement of issuing notice to the right person is a condition precedent for valid proceedings. Since the show cause notice and subsequent order were issued against a deceased person without bringing the legal heirs on record, the order confirming the demand of duty drawback and penalty, as well as the subsequent recovery notice, are liable to be set aside due to the jurisdictional defect in the initiation of proceedings against a deceased individual.
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• Imports allowed upon duty payment despite notification delay.

  Case-Laws - HC : The High Court directed the respondents to consider the petitioners' plea for provisional release of imported secondhand highly specialized equipment - digital multifunction print, copying & scanning machines, subject to payment/deposit of enhanced duty amount. The bills of lading for the imports were dated before the impugned notification dated 20.05.2024. The court ordered the customs to quantify the enhanced duty within one week, and upon petitioners' payment, release the goods within three weeks thereafter. The order aims to facilitate the release of imported goods while ensuring compliance with applicable duty regulations.
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• Bed sheet import classification dispute: Tribunal rules for "Printed Quilts" over "Woven Fabrics.

  Case-Laws - AT : The case involves classification of imported goods, specifically bed sheets declared as made of 100% polyester. The revenue authority classified the consignment as "Polyester Woven Fabrics" under CTH 5407, while the appellant classified it under CTH 6304. The Tribunal examined previous cases and held that the appropriate classification is "Polyester woven printed quilts" under CTH 6304, as contended by the appellant, based on the common parlance usage and size of the material as bed sheets. Considering the factual details and relevant case laws, the Tribunal opined that the goods should be classified under CTH 6304 instead of CTH 54.07, as held by the revenue authority. Consequently, the appeal was allowed.
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• Goods Correctly Classified; Mis-declaration Charges Fail; Penalties Dropped; Demand Limited to Normal Period.

  Case-Laws - AT : The appellant had furnished all relevant documents, including inspection certificates, test certificates containing composition of alloys, and invoices, along with the Bills of Entry. The correct classification of goods was arrived at by DRI based on these submitted documents. The goods were not mis-declared, and the declarations in the Bills of Entry were as per the invoices. Even in the statement recorded by DRI, it was stated that the same goods were procured indigenously, and Indian manufacturers also classified them under the same heading as declared in the Bills of Entry, which was not controverted by the department. Therefore, the charge of mis-declaration and suppression of facts fails. Since the onus of assessment was on the department and the appellant had submitted the necessary documents, they cannot be held responsible for suggesting a certain classification heading in the Bill of Entry. The demand has to be restricted to the normal period, and the penalty needs to be set aside. The impugned order is modified accordingly.
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• Criminal Proceedings Begin After Final Report, Not FIR; Immunity Granted to Company, Proceedings Halted for Abuse of Process.

  Case-Laws - SC : Legal principles governing the initiation of criminal proceedings and the implications of settlement or immunity orders on such proceedings. It clarifies that mere registration of an FIR does not constitute initiation of proceedings; cognizance is taken only after a final report u/s 173(2) of CrPC. The court discusses a precedent where continuation of prosecution was deemed inconsistent with the intent of a settlement scheme. It further examines the impact of an immunity order granted to the appellant company, concluding that pursuing proceedings would amount to abuse of process since the basis of allegations was non-existent. Consequently, the impugned order taking cognizance against the appellant company is set aside, and the appeal is allowed.
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IBC

• Amendment to Add New Defendant Partially Granted; Enforcement of Security Interest Denied Due to IBC Restrictions.

  Case-Laws - HC : The application sought amendment of the plaint to implead a new defendant, which was contested on grounds of the bar u/s 14 of the Insolvency and Bankruptcy Code (IBC) and that the amendment fundamentally changes the nature of the suit. The court held that amendments at the pre-trial stage are liberally allowed if necessary for determining the real controversy between parties, unless it changes the nature of the suit or the amended claim would be barred by limitation or statutory provisions. The bar u/s 14(1)(a) IBC prohibits institution or continuation of suits against the corporate debtor once moratorium is ordered, while Section 14(1)(c) bars actions to enforce security interest. The proposed amendment to enforce security interest cannot be allowed, but the court refrained from delving into merits of the claim regarding validity of the subsequent development agreement. The application was partly allowed.
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• Resolution Plan Approved: Creditor Committee's Decision Binding on All, Limited Judicial Review of Commercial Judgment.

  Case-Laws - AT : The summary focuses on the approval of a resolution plan by the Committee of Creditors (CoC) and the limited scope of judicial review by the adjudicating authority. The key points are: The decision of the CoC to approve a resolution plan with the requisite majority (66% vote share) is a collective business decision and is sacrosanct and binding on all stakeholders, irrespective of the composition of the CoC. The commercial wisdom of the CoC cannot be fettered. The adjudicating authority has limited jurisdiction in approving the resolution plan and cannot evaluate the merits or rationale underlying the CoC's commercial decision. Merely because there is a reduction in the claim of any creditor does not make the resolution plan violative of the law. Any clause in the resolution plan requiring creditors to take a haircut cannot be construed as violative of the relevant section. The adjudicating authority did not err in approving the resolution plan, and the appellate tribunal dismissed the appeal, finding no transgression causing serious miscarriage of justice.
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• Loan Dispute: Appeal Allowed as Funds Transfer Lacked Proof of Loan Agreement Under IBC Section 7 for Family Companies.

  Case-Laws - AT : The Corporate Debtor denied the existence of a loan agreement with 12% interest, as claimed by the Financial Creditor in the Section 7 application. To qualify as a Financial Debt u/s 5(8) of the IBC, the transaction must involve disbursal for time value of money. The Supreme Court in Anuj Jain vs. Axis Bank held that transactions u/s 5(8) clauses must contain the essential element of the principal clause or features traceable to it. In this case, the transfer of funds by the Financial Creditor to the Corporate Debtor was between family companies, not a loan or disbursal for time value of money. The Adjudicating Authority erred in admitting the Section 7 application without examining the nature of the transaction and the disputed loan letter. The essential element of disbursal for time value of money was not proved, so the debt cannot be treated as a Financial Debt. However, since the Corporate Debtor admitted owing Rs. 1,22,50,000 and handed over a draft, the Financial Creditor is allowed to retain the amount, despite offering to return it. The appeal is allowed.
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• Tribunal Approves Restructuring: Clears Debts, Cancels Shares, Exempts Taxes for Bidder's Acquisition.

  Case-Laws - Tri : The tribunal granted relief regarding the capital structure, extinguishing liabilities towards financial and operational creditors, legal proceedings, and taxation matters. Key directives include cancellation of existing equity/preference shares, issuance of new shares to the bidder, extinguishment of unpaid interest/claims of financial creditors, settlement of operational creditor dues from liquidation proceeds, cessation of liabilities/litigation prior to transfer date, and exemption from taxes/levies arising from the acquisition. The income tax authorities were directed to allow representation for past assessments without burdening the corporate debtor/bidder, and tax-neutral adjustment of balancing debit/credit in reserves.
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PMLA

• Bail Granted in Delhi Excise Case: Court Upholds Liberty Over Statutory Bar.

  Case-Laws - SC : Bail granted to co-accused in Delhi Excise policy scam case, accused allegedly acted as middleman and involved in irregularities. Court held fundamental rights under Article 21 cannot be arbitrarily subjugated to statutory bar. Accused lodged in jail for considerable period, little possibility of trial reaching finality soon. Liberty under Article 21 not abrogated even for special statutes with twin bail bar. Bail being rule, jail exception principle upheld. Keeping undertrial for long duration defeats principle, especially when maximum sentence is 7 years. Petitioner directed to be released on bail of Rs. 10 lakh, not to tamper evidence or influence witnesses.
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• Court Upholds Broad Definition of Money Laundering, Allows Continued Investigation Despite Quashed FIRs.

  Case-Laws - HC : The High Court dismissed the writ petition challenging the Enforcement Case Information Report (ECIR) filed by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), 2002. The court held that the definition of 'money laundering' u/s 3 of the PMLA is wide and expansive, covering not only direct involvement but also assistance or being a party to the process connected with proceeds of crime. Even if some FIRs are quashed or closed, the investigation under the same ECIR can continue as per Explanation II to Section 44. The ED, as an investigating agency, can proceed with the investigation initiated through the ECIR filed in 2022, despite the closure of certain FIRs. The court found no merit in the writ petition and dismissed it.
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Service Tax

• Cricket Service Tax Demands Dropped; Exemptions Granted for Charitable Sports Promotions, Assessee's Appeal Allowed.

  Case-Laws - AT : Key issues regarding invocation of time limitation for raising demand, levy of penalty, exemption from service tax for bundled services related to the game of cricket, and dropping of demands raised under various service categories like business auxiliary service, event management service, mandap keeper service, and renting of immovable property service. It discusses the rationale for not invoking extended period of limitation, exemption from service tax for services rendered by a charitable institution promoting sports, and reasons for dropping demands under different service categories. The adjudicating authority's order is set aside, demands are dropped, and the assessee's appeal is allowed, considering the services are not taxable under the respective categories.
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Central Excise

• Tribunal Finds No Basis for Duty Demand on HSD and SKO; Discrepancies Resolved, Appeal Allowed.

  Case-Laws - AT : The CESTAT examined the duty liability on HSD and SKO lying in pipelines, where there were variations between the batch quantities initially communicated by the appellant to the department and the actual quantity on which the Haldia Refinery subsequently paid the duty. The Tribunal observed that the computation table submitted by the appellant tallied with the batch numbers and quantities declared to the department. Although there was an apparent confusion regarding the pipeline being referred to as Haldia-Barauni instead of Barauni-Kanpur, the pipeline continues from Haldia to Barauni and then onwards to Kanpur/Lucknow. The Tribunal held that the typographical omission cannot be ignored, and the duty payment supported by challans must be duly noted. Since the batch numbers and quantities matched the appellant's claim and were verified, there was no justification for upholding the demand of Rs. 3,68,40,813/- confirmed by the adjudicating authority. The department's correspondence also confirmed the duty payment made by the Haldia Refinery. Consequently, the Tribunal set aside the impugned order and allowed the appeal.
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• Appellant's PCB Process Deemed Manufacture: Duty Liability Confirmed, Demand Limited to Normal Period; Penalties Dismissed.

  Case-Laws - AT : The case pertains to the determination of whether the process undertaken by the appellant, a job worker, amounts to manufacture and the consequent duty liability. It was held that the process of populating PCBs by the appellant constituted manufacture as it transformed the raw materials into a new and distinct product. Regarding duty liability, it was ruled that the appellant, being the job worker, was rightly demanded duty since the conditions for clearance on a principal-to-principal basis were not satisfied. However, the demand was limited to the normal period due to the delay in issuing the show cause notice. The appellant's claim of exemption or duty payment by the raw material suppliers was remanded for verification of supporting documents. Penalties were set aside, and the matter was remanded for re-quantification of demand based on the observations made.
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Case Laws:

• GST

• 2024 (9) TMI 395
  Violation of principles of natural justice - lack of reasons - appellate authority instead of dismissing the appeal for default had proceeded to adjudicate the appeal on merits - HELD THAT:- On 20th December, 2023 the appellant did not appear at the time of hearing of the appeal. The appellate authority, however, instead of dismissing the appeal for default had proceeded to adjudicate the appeal on merits while recording his satisfaction that the order passed by the proper officer is correct and complete. Unfortunately while doing so he had failed to give reasons. He had also not dealt with any of the grounds as set forth in the appeal filed by the petitioners. In absence of reasons it becomes extremely difficult to understand the basis of the satisfaction of the appellate authority in concluding that the order passed by the proper officer is correct. Failure to give reasons goes against the principle of natural justice and vitiates the very order itself. The order passed by the appellate authority on 25th January, 2024 cannot be sustained and the same is accordingly set aside. The matter is remanded back to the appellate authority for readjudication on merits - Petition disposed off by way of remand.

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• 2024 (9) TMI 394
  Challenge to SCN and the adjudication order - Central authorities had previously, in respect of the self same tax period and subject matter, initiated a proceeding by issuing a show cause- cum- demand notice dated 30th September 2022 and that the petitioners have duly participated in the said proceeding - HELD THAT:- Taking note of the provisions of Section 6(2)(b) of the said Act and since a show cause-cumdemand notice has already been issued on 30th September 2022 in respect of the period from March 2019 to May 2019 by the Central authorities and since, the show cause notice issued by the State authorities on 27th December 2023 in Form GST DRC 01 is covering the same subject matter though partially, and the show cause notice dated 27th December 2023 and the order dated 27th April 2024 having been issued in a composite manner, the show cause notice dated 27th December 2023, inter alia, including the order dated 27th April 2024 and the demand made in Form GST DRC 07 of even dated by the State authorities under the said Act, cannot be sustained and the same are hereby set aside and quashed. Petition disposed off.

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• 2024 (9) TMI 393
  Challenge to order and consequential attachment over the Credit Ledge balance of ITC being blocked - petitioner failed to produce the Vehicle movement details, such as Lorry receipt, TRIP sheet etc, which is mandatory, in terms of Section 16(2)(b) of the CGST Act - HELD THAT:- Upon perusal of the materials, it is clear that in terms of Section 16(2)(b) of the CGST Act, every tax payer, who intends to avail the benefit of Input Tax Credit (ITC), are supposed to furnish the particulars such as Vehicle movement details, Lorry Receipt and TRIP Sheet along with proper explanation. However, in the case on hand, since the petitioner failed to furnish those particulars, the impugned assessment order came to be passed by the respondent. As rightly pointed out by the learned Government Advocate, if at all the petitioner had any grievance over the impugned order, the petitioner has an alternate and efficacious remedy of filing an appeal before the Appellate Authority, however, instead of doing so, the petitioner has rushed before this Court challenging the same, by way of filing the present Writ Petition, which, this Court is not inclined to interfere with. Petition dismissed.

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• 2024 (9) TMI 392
  Cancellation of registration of the petitioner under the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017 - Failure to comply with the statutory provisions - HELD THAT:- It is found that the registration of the petitioner had been cancelled on the ground of non-filing of returns. It is not the case of the respondents that the petitioner had been adopting dubious process to evade tax. Taking note of the fact that the suspension/revocation of license would be counterproductive and works against the interest of the revenue since, the petitioner in such a case would not be able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax, the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business. The order dated 24th August, 2022 cancelling the registration of the petitioner set aside subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax and interest and fine and penalty, if not already paid - petition disposed off.

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• 2024 (9) TMI 391
  Challenge to assessment order - late filing of GSTR 3B - HELD THAT:- In the light of the amendment to Section 62(2) of the CGST Act, 2017, which amendment has also been carried out in the TNGST Act, 2017, the Court is inclined to conclude that the delay in filing the GSTR 3B Return on 02.07.2023 is liable to be condoned as a consequence of which the impugned assessment order passed under Section 62(1) dated 22.05.2023 is to be deemed to have been withdrawn. Petition allowed.

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• 2024 (9) TMI 390
  Writ Petitions have been filed by the petitioner for the assessment years 2021-22 and 2022-23 - petitioner failed to respond to notices, resulting in tax liability - petitioner has also failed to notice the notices that preceded the impugned orders - HELD THAT:- This Court is of the view that the petitioner may have a case on merits and therefore, discretion is partly exercised in favour of the petitioner by setting aside the impugned orders and remitting the cases back to the respondent to pass fresh orders on merits, subject to the petitioner depositing 25% of disputed tax to the credit of the respondent from its Electronic Cash Register within a period of 30 days from the date of receipt of this order. The impugned orders, which stand quashed, shall be treated as addendum to the respective show cause notices that preceded the respective impugned orders. Petition disposed off.

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• 2024 (9) TMI 389
  Deduction of GST at the rate of 18% for the contract which was entrusted to them in the year 2009 and completed before the year 2015 - seeking to withdraw the present writ petition with a liberty to approach the appropriate authorities for refund of the GST which has been illegally deducted - HELD THAT:- The present writ petition stands disposed of as withdrawn with the aforesaid liberty. In case, the petitioner makes any representation for refund of the GST deducted, the authorities are directed to dispose of the same strictly in accordance with law as expeditiously as possible preferably within a period of eight weeks from the date of the said representation.

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• 2024 (9) TMI 388
  Breach of principles of natural justice - Service of SCN - impugned order and communications preceding such order were uploaded in the View Additional Notices and Orders tab on the GST portal - HELD THAT:- On examining the impugned assessment order, it is recorded therein that no reply was received and that each defect dealt with therein is confirmed on that account. In these circumstances, the interest of justice warrants that an opportunity be provided to the petitioner to contest the tax demand on merits, albeit by putting the petitioner on terms. The impugned order dated 30.12.2023 is set aside and the matter is remanded for reconsideration subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2024 (9) TMI 387
  Violation of principles of natural justice - petitioner was not provided a reasonable opportunity to contest the tax demand on merits - SCN and order were uploaded on the GST portal and not communicated to the petitioner through any other mode - HELD THAT:- The confirmed tax proposal pertains to mismatch between the petitioner s GSTR 3B returns and the GSTR 1 statement. Penalty of 100% has been imposed without hearing the petitioner because the petitioner did not respond to the show cause. In view of the petitioner s assertion that he was unaware of proceedings, the interest of justice warrants that the petitioner be provided a reasonable opportunity to contest the tax demand by putting the petitioner on terms. On instructions, learned counsel for the petitioner agrees to remit an additional 5% of the disputed tax demand as a condition for remand. The impugned order dated 14.07.2023 is set aside on condition that the petitioner remits 5% of the disputed tax demand in addition to the 10% remitted earlier. Such remittance shall be made within two weeks from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (9) TMI 386
  Challenge to assessment order - order assailed on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits - SCN and other communications were uploaded on the View Additional Notices and Orders tab on the GST portal and not communicated to the petitioner through any other mode - principles of natural justice - HELD THAT:- On examining the impugned order, it is evident that the tax proposal was confirmed because the petitioner did not reply to the show cause notice. It is also clear that such proposal relates solely to the GSTR 3B returns of the petitioner and the amounts specified therein towards RCM. In these facts and circumstances, the interest of justice warrants that the petitioner be provided an opportunity to contest the tax demand on merits by putting the petitioner on terms. The impugned order dated 25.10.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this 3/6 order. Within the said period, the petitioner is also permitted to submit a reply to the show cause notice. Petition disposed off.

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• 2024 (9) TMI 385
  Claim for GST refund - petitioner has approached this Court as the respondents authorities did not decide the application filed by the petitioner for refund for the months of December 2017 and January 2018, which was denied due to technical problems in the GSTN portal of the respondent - HELD THAT:- The respondents authorities are directed to consider the representation made by the petitioner within a period of four weeks from today and place the findings and conclusion arrived at, after giving an opportunity of hearing to the petitioner, on record of this petition. Stand over to 28th February 2024. Direct service for respondents Nos.1, 2 and 3 is permitted. Direct service for respondent No.4, through E-mail, is permitted.

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• 2024 (9) TMI 381
  Cancellation of petitioner s GST registration with retrospective effect - impugned SCN is not intelligible as it does not specify the reason for cancelling the petitioner s GST registration - violation of principles of natural justice - HELD THAT:- In view of the undisputed fact that the impugned SCN does not mention any intelligible reason for proposing to cancel the petitioner s GST registration, it is considered apposite to set aside the impugned order as having been passed in violation of the principles of natural justice. The only reason stated in the impugned order for cancelling the petitioner s GST registration is that it appeared that the petitioner obtained the registration by fake documents a reason which did not find any mention in the impugned SCN. The impugned SCN and the impugned order are set aside. The petitioner s GST registration is directed to be restored forthwith. Petition disposed off.

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• 2024 (9) TMI 380
  Violation of principles of natural justice - order cancelling the registration of the petitioner has been passed mechanically without application of mind and without assigning any reason - appeal preferred by the petitioner dismissed on the ground of delay - HELD THAT:- Admittedly from the perusal of the order dated 23.07.2022. it transpires that no reason has been assigned for cancellation of the registration of the petitioner - The reasons are heart and soul of any judicial and administrative order. In absence of the same the order cannot be justified in the eye of law. Further since the appeal of the petitioner was dismissed on the ground of delay, this Court finds that the doctrine of merger will have no application considering the facts and circumstances of the present case. In M/S CHANDRA SAIN, SHARDA NAGAR, LUCKNOW THRU. ITS PROPRIETOR MR. CHANDRA SAIN VERSUS U.O.I. THRU. SECY. MINISTRY OF FINANCE, NEW DELHI AND 5 OTHERS [ 2022 (9) TMI 1047 - ALLAHABAD HIGH COURT] this Court has held In the present case from the perusal of the order dated 13.02.2020, clearly there is no reason ascribed to take such a harsh action of cancellation of registration. In view of the order being without any application of mind, the same does not satisfy the test of Article 14 of the Constitution of India, as such, the impugned order dated 13.02.2020 (Annexure - 2) is set aside. The order dated 23.07.2022 passed by the Assistant Commissioner, respondent no.4 is hereby quashed - Petition allowed.

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• 2024 (9) TMI 379
  Seeking review of final order - scope in a review petition - error apparent on the face of record or not - Order XLVII of the CPC - HELD THAT:- A review application would be maintainable on (i) discovery of new and important matters or evidence which, after exercise of due diligence, were not within the knowledge of the applicant or could not be produced by him when the decree was passed or the order made; (ii) on account of some mistake or error apparent on the face of the record; or (iii) for any other sufficient reason. In COL. AVTAR SINGH SEKHON VERSUS UNION OF INDIA [ 1980 (7) TMI 269 - SUPREME COURT] , the Apex Court observed that a review of an earlier order cannot be done unless the court is satisfied that the material error which is manifest on the face of the order, would result in miscarriage of justice or undermine its soundness. It is well settled that review proceedings have to be strictly confined to the ambit and scope of Order 47 Rule 1 CPC. Under the garb of filing a review petition, a party cannot be permitted to repeat old and overruled arguments for reopening the conclusions arrived at in a judgment. The power of review is not to be confused with the appellate power which enables the Superior Court to correct errors committed by a subordinate Court. Considering the facts of the present case and limited scope while entertaining Review, it is quite apparent that this court while allowing the Writ Petition of Respondent No. 1 has passed the order holding that the Respondent No. 1 herein is entitled to receive original non-relied document in view of Section 67(3) of CGST Act and Rule 27 of the Central Excise Rules 2017 - This court finds that there is no error apparent on the face of the record in the order impugned so as to warrant interference and the directions which have been given in the impugned order dated 20.05.2024 are maintained for it being just and proper. The review petition fails and is, accordingly, dismissed.

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• 2024 (9) TMI 378
  Refund of IGST - goods exported out of India - Zero Rated Supplies - claiming higher rate of duty drawback on IGST refund eligibility - HELD THAT:- The issue involved in the present Petition is no longer res integra and is covered by various judgements referred to by the parties. These judgements have been passed on facts which are almost identical to the facts in the present case. These judgements have considered the statutory provisions like Section 16 (3) (b) of the IGST Act, Section 54 of the CGST Act and Rule 96 of the CGST Rules. These judgements have also considered the various notifications and circulars referred to hereinabove. After considering these statutory provisions, notifications and circulars, these judgements have passed orders based on the factual scenario in each case. In Sunlight Cable Industries (Supra), Gujarat Nippon International Pvt.Ltd. (BHC) [ 2023 (7) TMI 160 - BOMBAY HIGH COURT ], M/S. JAYSONS EXPORTS VERSUS UNION OF INDIA [ 2022 (10) TMI 1259 - GUJARAT HIGH COURT] , Awadkrupa Plastomech Pvt.Ltd. [ 2020 (12) TMI 1116 - GUJARAT HIGH COURT ], Gujarat Nippon International Pvt.Ltd. [ 2022 (5) TMI 1138 - DELHI HIGH COURT ] and in TMA International Pvt. Ltd. [ 2019 (12) TMI 1268 - DELHI HIGH COURT ], the Courts have held that, if the rate of drawback under column A and column B is the same, then, in such a situation, refund of IGST has to be ordered even if the party selects column A , as, because the rates are identical, by selecting column A the party does not get any double benefit. In the present case, the Petitioner has selected Column A and claimed drawback at a higher rate on its own volition. It is not the case of the Petitioner that it had selected column A and claimed drawback at a higher rate due to some mistake. The Petitioner will be entitled to refund of IGST after deducting the differential amount of duty drawback - Respondents are directed to grant refund of IGST paid on the goods exported by the Petitioner after deducting the differential amount of duty drawback, within 12 weeks of the date of this order, along with interest at the rate of 7% p.a. on such refund from the date of the shipping bill till the date of actual refund - Petition allowed.

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• 2024 (9) TMI 377
  Transition of amount that was to be deposited by the petitioner as a condition under the provisions of the Tamil Nadu Value Added Tax (TNVAT) Act, 2006 against the Assessment Order dated 21.10.2010 passed by the Assessing Officer for the Assessment Year 2006-2007 - HELD THAT:- As a condition for entertaining the appeal under Section 51 of the TNVAT Act, 2006, an amount of Rs. 6,25,000/- was pre-deposited. There is no dispute that the petitioner was indeed entitled to refund of amount pre-deposited pursuant to the order of the Appellate Deputy Commissioner dated 18.10.2013 pursuant to which, a fresh revised Assessment Order was also passed on 24.07.2015. At best, the respondents could have appropriated the balance tax liability due of Rs. 3,902.00/- from and out of the amount pre-deposited under Section 51 of the TNVAT Act, 2006, while filing appeal against the Assessment Order dated 21.10.2010. Although the petitioner may have wrongly followed the procedure by transitioning the amount, the issue is revenue neutral as admittedly the Commercial Tax Department was duty bound to refund the amount that was pre-deposited as condition for filing appeal before the Appellate Deputy Commissioner against the Assessment Order dated 21.10.2010 pursuant to the revised Assessment Order dated 24.07.2015 dropping the demand substantially. The impugned order dated 26.10.2021 passed by the first respondent affirming the order dated 22.10.2020 of the second respondent is quashed with consequential relief - Petition allowed.

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• 2024 (9) TMI 376
  Profiteering - supply of the goods Eclat Serum 30gm (HSN 33049910) - reduction in the rate of GST from 28% to 18% w.e.f. 15.11.2017, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017 - failure to reduce the prices commensurately, in terms of Section 171 of the CGST Act, 2017 - Penalty. Whether there was any reduction in the GST rate and whether the benefit of rate reduction was passed on or not to the recipients as provided under Section 171 of the CGST Act, 2017? HELD THAT:- The Commission finds that the Respondent having GSTIN 24AFKPG7000FIZZ is engaged in selling of medicines. It is also revealed that there has been a reduction in the rate of tax from 28% to 18% w.e.f. 15.11.2017, on the impugned goods being supplied by the Respondent, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017. Therefore, the Respondent is liable to pass on the benefit of tax reduction to his customers in terms of Section 171 (1) of the above Act. It is also apparent that the DGAP has carried out the present investigation w.e.f. 15.11.2017 to 31.07.2023, however, the same was restricted to 08.07.2019 as he had discontinued the product Eclat Serum 30gm in 2019 and there was no sale of the product after 08.07.2019. However, the Respondent did not reduce the selling price of the products mentioned above when the GST rate was reduced from 28% to 18% w.e.f. 15.11.2017 and hence, the benefit of reduction in GST rate was not passed on to the recipients by way of commensurate reduction in the prices, in terms of Section 171 of the CGST Act, 2017 and therefore, he has contravened the provisions of Section 171 of the CGST Act, 2017. Accordingly, the profiteered amount is determined as Rs. 2,06,100/- as per the provisions of Rule 133 (1) of the CGST Rules 2017 - the Respondent is required to pass on the profiteered amount of Rs. 2,06,100/- along with the interest to be calculated @ 18% from the date when the above amount was collected by him from the recipients till the above amount is passed on/paid in terms of Rule 133 (3) (b) of the CGST Rules, 2017. The Respondent has denied benefit of rate reduction to his customers/recipients in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) of the above Act. However, perusal of the provisions of Section 171 (3A), under which liability for penalty arises for the above violation, shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 15.11.2017 to 08.07.2019 when the Respondent had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondent retrospectively for the said period.

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• Income Tax

• 2024 (9) TMI 375
  Assessment order provided without quoting Document Identification Number ( DIN ) - scope of CBDT Circular No.19/2019 dated 14 August 2019 - HELD THAT:- The Court in Ashok Commercial Enterprises [ 2023 (9) TMI 335 - BOMBAY HIGH COURT] considering the purport of the circular dated 14 August 2019 (supra) and more particularly paragraph 4 thereof, held that the assessment order would be required to be held to be invalid, as the same was issued without a DIN. From the decision it appears that the CBDT who had issued the circular in question which had fell for consideration and called for interpretation, was not a party to the proceedings. There was no occasion for the Court to consider the stand of the CBDT and it is only Assistant Commissioner of Income Taxation who was the only respondent. Prima-facie one of us (G.S. Kulkarni, J.) is of the opinion that the placement of the word order in paragraph 1 finds place after the word notice and before the word summons and whether would include the assessment order , is one of the questions which would arise for consideration and in the context of the view taken in the case of Ashok Commercial Enterprises [supra] Also another reason being that there is a specific exception made in paragraph 3 of the circular for a deviation/exception from the provision of the DIN as contemplated in paragraph 1 of the circular, and in these circumstances, as to whether paragraph 4 excludes the contents of paragraph 3 and would straightway relate to paragraph 1 being the contention of the assessee would be an issue. To examine such contention in the context of the applicability of the said decision of the Division Bench, in our opinion, CBDT is required to be added as necessary party to the present proceedings, so that all contentions on such issue can be addressed before the Court and gone into and not necessarily confined to our aforesaid prima-facie observations. We grant leave to the petitioner to amend the petition to implead the CBDT as a party respondent and notice be issued to the CBDT. Amendment be carried out by 6 September, 2024. Re-verification is dispensed with. Notice to the added respondent is made returnable on 24 September, 2024. Permission to the petitioner to serve the CBDT by private service by all permissible modes and place on record affidavit of service. Reply affidavit, if any, be filed by the CBDT on the aforesaid issues before the returnable date. Stand over to 24 September, 2024. Till the adjourned date of hearing, it is in the interest of justice that the petitioner be protected. Hence, the impugned assessment order and the proceedings thereunder of demand and penalty shall remain stayed.

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• 2024 (9) TMI 374
  Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - HELD THAT:- As decided in latest case recent decision of this Court in Nainraj Enterprises Pvt. Ltd. [ 2024 (7) TMI 511 - BOMBAY HIGH COURT ] relying on Hexaware Technology Ltd. [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] provisions of Section 151A of the IT Act had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A of the IT Act.

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• 2024 (9) TMI 373
  Faceless assessment of income escaping assessment - validity of notice issues by jurisdictional Assessing Officer ( JAO ) and not by a Faceless Assessing Officer ( FAO ), as is required by the provisions of Section 151A - HELD THAT:- In the present case, it is apparent that the Respondent-Revenue has not complied with the Scheme notified by the Central Government pursuant to Section 151A (2) of the Act. The Scheme has also been tabled before the Parliament and is in the character of subordinate legislation, which governs the conduct of proceedings under Section 148A as well as Section 148 of the Act. In view of the explicit declaration of the law in Hexaware [ 2024 (5) TMI 302 - BOMBAY HIGH COURT] the grievance of the Petitioner-Assessee insofar as it relates to an invalid issuance of a notice is sustainable and consequently, the very manner in which the proceedings have been initiated, vitiates the proceedings. Decided in favour of assessee.

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• 2024 (9) TMI 372
  Transfer u/s 127 - transfer of the case from Coimbatore to Central Circle, Kolkata - whether the respondents have sufficient material for transfer of the case from Coimbatore to Central Circle, Kolkata? - whether the respondents have provided an opportunity for filing a reply and for personal hearing? - HELD THAT:- The petitioner expressed their personal difficulties citing the age factor, costs of litigation as well as they are having the registered office at Coimbatore and the availability of documents at Coimbatore, etc. Therefore, they made an objection for transferring the case to Central Circle, Kolkata. Petitioner is having their registered office at Coimbatore, but, they have a place of business directly or indirectly at Kolkata. Therefore, these are all the facts that have been known upon search and seizure conducted on 12.10.2023 by the Kolkata Circle. Only the Kolkata Office Circle had seized some incriminating materials, which were directly linking the involvement of the petitioner into the business of Lotteries, which was carried out within the jurisdiction of Kolkata Office Circle. Therefore, they have requested the Coimbatore Office Circle to transfer the cases to Kolkata. Thereafter, the show cause notice was issued and a reply was also filed. Taking into consideration of all these aspects, the Notification dated 17.05.2024 was issued. As all the materials have been collected in Kolkata Office, the respondents, taking into consideration of the reply filed by the petitioner, have decided to transfer the petitioners case to Central Circle, Kolkata. Of course, in the present case, since the incriminating materials were found by the Kolkata Office against the petitioner, connected with the search conducted with regard to Lottery business, it was closely linked with the assessment of the petitioner. No material to show that the respondents failed either to provide an opportunity or sufficient materials to transfer the case from Coimbatore to Central Circle, Kolkata. Even if it is so, it will not alter in anyway the final decisions to transfer the cases to Calcutta Circle and it would not affect in any manner. Accordingly, Issue Nos. 1 and 2 answered. This Court is of the opinion that if any search was conducted based on the place of business of an Assessee, though the Registered Office is situated at Coimbatore, it will be appropriate to make the assessment through the Circle, where the incriminating materials have been seized based on the place of business of the Assessee, irrespective of situation of registered office. This is what happened in the present case - Section 127 also empowers under the circumstances of these nature, for transfer of cases from one place to other place. If the contention of the petitioner is accepted and allowed, the Coimbatore jurisdictional Officer will be directed to proceed with the assessment and it will be difficult for those officers to complete the assessment, since they neither have any material nor have any place of business within their jurisdiction. Hence, it would be appropriate to transfer the cases in the present matter, since the Kolkata Circle Officer have traced out and seized some incriminating material with regard to the involvement of the petitioner in the Lottery business for the evasion of taxes within their jurisdiction. Therefore, the respondent has rightly transferred the cases from Coimbatore jurisdiction to Kolkatta jurisdiction. Hence, not find any reasons to interfere with the notification dated 17.05.2024. In such case, the present writ petition is liable to be dismissed. No prejudice would be caused due to the present notification because no adverse order was passed except the transfer of the petitioner s case by the respondents from Coimbatore to Central Circle, Kolkata, and no show cause notice was issued for the purpose of making any assessment, whereby to affect the petitioners interest.

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• 2024 (9) TMI 371
  Validity of reassessment proceedings after the approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Once a resolution plan is duly approved u/s 31 (1) of the IBC, the debts as provided for in the resolution plan alone shall remain payable and such position shall be binding on, among others, the Central Government and various authorities, including tax authorities. All dues which are not part of the resolution plan would stand extinguished and no person would be entitled to initiate or continue any proceedings in respect of any claim for any such due. No proceedings in respect of any dues relating to the period prior to the approval of the resolution plan can be continued or initiated. Impugned Proceedings and their continuation against the Petitioner-Assessee are wholly misconceived and untenable. The Impugned Proceedings are essentially reassessment proceedings, and that too of AY 2016-17. Evidently, such proceedings pertain to the period prior to the approval of the resolution plan. The outcome of such proceedings, particularly if adverse to the Petitioner-Assessee, would clearly be in relation to tax claims for the period prior to the approval of the resolution plan. The resolution plan came to be approved on May 6, 2020. Any attempt to re-agitate the assessment for AY 2016-17, evidently and squarely, constitutes pursuit of claims for the period prior to even the initiation of the CIRP. The conduct of such proceedings would be directly in conflict with the law declared in Ghanshyam Mishra, which makes it clear that continuation of existing proceedings and initiation of new proceedings that relate to operations prior to the CIRP are totally prohibited after the approval of the resolution plan. Consequently, nothing in the Impugned Proceedings can legitimately survive. Evidently and admittedly, the reassessment proceedings pre-date the CIRP. They would relate to the period prior to the approval of the resolution plan of the Petitioner-Assessee, and therefore stand extinguished. This is why the Supreme Court has clearly ruled that initiation and continuation of proceedings relating to the period prior to the approval of the resolution plan cannot be indulged in. Upon completion of the CIRP, the Petitioner-Assessee has completely changed hands and has begun on a clean slate under new ownership and management. WP Quashed.

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• 2024 (9) TMI 370
  Assessment u/s 153A - Addition made by AO without reference to any seized material - HELD THAT:- Tribunal, as relying on decision on Continental Warehousing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT ] held that the AO cannot make additions without incriminating material found during a search. The Court noted that the issue was also covered by the Supreme Court s decision in Abhisar Buildwell case [ 2023 (4) TMI 1056 - SUPREME COURT ] The questions of law as raised by the revenue would no longer need consideration. It is however clarified that the completed/unaudited assessments can be reopened by the Assessing Officer in exercise of powers u/s 147/148 of the Act, subject to fulfillment of conditions as envisaged under the said provisions and as may be permissible in law. All contentions of parties in that regard are expressly kept open. Decided against revenue.

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• 2024 (9) TMI 369
  Validity of reassessment proceedings - non issuing notice u/s 143(2) - mandatory application to proceedings - HELD THAT:- The mandatory imperatives of Section 143 (2) and its applicability to reassessment action was one which had been duly considered by this Court in a host of judgments and those consistently taking the position that Section 143 (2) was to be mandatorily complied with. Curable defect u/s 292BB or not? - 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. Failure to comply with Section 143 (2) was conceded. The reassessment action would thus be liable to be quashed on this short ground alone.

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• 2024 (9) TMI 368
  Validity of Order u/s 144C (3) r.w.s.144B - petitioner had filed its objections to the Draft Assessment Order before the Dispute Resolution Panel (DRP) - HELD THAT:- Taking note that the objections have been filed before the DRP and in light of the observations made in the case of Open Silicon Research (P) Ltd [ 2023 (8) TMI 825 - KARNATAKA HIGH COURT] referred to here in above, it is clear that the Assessment Order passed disregarding the objections filed, requires to be interfered with. AO ought to have waited till directions are passed by DRP. Taking note that objections have been filed before the DRP, it would meet the ends of justice by allowing the petition by setting aside the order at Annexure- A dated 20.11.2023 with a further direction that the AO must follow the directions of DRP and proceed thereafter, while DRP would issue necessary directions taking note of the objections filed by the petitioner filed, copy of which is enclosed at Annexure- G - WP Allowed.

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• 2024 (9) TMI 367
  Nature of expenses - Disallowing the amount paid for the purpose of feasibility report u/s. 37 - new asset has been created with enduring benefit ot not? - HELD THAT:- As no new capital asset of enduring nature has been brought into existence and the assessee has incurred the expenditure for Techno Economic Feasibility Report study for setting up of a new Port which is in the same line of business of the assessee. Since, facts and circumstances are identical and similar to the case of Tamilnadu Magnesite Ltd [ 2018 (6) TMI 1236 - MADRAS HIGH COURT] by judiciously following the decision of the Hon ble Madras High Court we have no hesitation to delete the addition made by the Revenue Authorities and allow Ground raised by the assessee.

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• 2024 (9) TMI 366
  Penalty proceedings u/s 271(1)(c) - addition is based on estimation by the AO which was later again estimated by CIT(A) to disallow 10 percentage of expenditure while adjudicating the quantum appeal - HELD THAT:- It is also not disputed that assessee has furnished details regarding expenditure as well as income in the return of income. The disallowance by the revenue is due to the fact that it was not acceptable to the revenue. Hon ble Supreme Court in the case of CIT v. UP State Bridge corporation Ltd [ 2018 (8) TMI 766 - SC ORDER] held that where assessee had furnished certain details regarding expenditure as well as in in return, which were not found inaccurate, nor could be viewed as concealment of income on part of assessee, merely because said claim was not accepted or was not acceptable by the revenue, that by itself would not attract penalty under section 271(1)(c) of the Act. We are of the view that no penalty can be levied in the case where the disallowance expenditure is estimated and therefore, we are inclined to delete the penalty levied by the Assessing Officer. Decided in favour of assessee.

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• 2024 (9) TMI 365
  Deduction under the provisions of section 80P(2)(d) - interest income was earned on deposits made with a Cooperative Banks - HELD THAT:- On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. This issue was considered by the Hon ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] wherein after referring to the decision of Totgar s Co-operative Sale Society Ltd [ 2010 (2) TMI 3 - SUPREME COURT] held that the ratio of decision of the Hon ble Supreme Court is not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. The interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks qualify for deduction under the provisions of section 80P(2)(d) - grounds of appeal raised by the appellant society stand allowed. Appeal filed by the appellant is allowed.

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• 2024 (9) TMI 364
  Addition u/s 56(2)(vii) - difference in value of property - whether the stamp duty value should be taken as full value of consideration? - assessee request to refer the matter to Valuation Officer (DVO) for a fair valuation ignored - HELD THAT:- As immovable property was registered with Sub-Registrar Andheri (West), Mumbai and if the carpet area mentioned in the agreement was incorrect then nothing prevented the assessee to get it corrected from the Sub-Registrar, Andheri (West), Mumbai. Assessee has paid stamp duty and registration charges on an area of 783.4 sq ft therefore, it cannot be said that the assessee has not purchased the said immovable property having 783.4 sq ft of area. The question is not whether certain area was usable or not usable, the question for our adjudication is whether the stamp duty value should be taken as full value of consideration for the purpose of Section 56(2)(vii) and as per provision of Section 56(2)(vii) of the Act any immovable property purchased for a consideration which is less than stamp duty value of the property the stamp duty value of such property as exceeds such consideration shall be taken for consideration. In the instant case, the value of the property adopted by the revenue authorities for stamp duty valuation is Rs. 2,00,17,500/- whereas the consideration value of the property mentioned in sale deed is Rs. 1.70 crores, therefore, as per the provision of Section 56(2)(vii) being the difference in value of property is the income of the assessee. We, therefore, do not find any error or infirmity in the findings of the ld. CIT(A). Appeal of the assessee is accordingly dismissed.

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• 2024 (9) TMI 363
  Revision order u/s 263 on a deceased person - Revenue has not proceeded against the Legal Heir of the assessee - HELD THAT:- The law is well settled by various authoritative judicial pronouncements that any proceedings initiated and order passed against a dead person would be nullity. Revenue could not controvert the fact that what is stated by the Legal Heir of the assessee, is not correct. Therefore, as per law laid down in the case of ITO vs Durlabhbhai Kanubhai Rajpara [ 2019 (10) TMI 933 - SC ORDER] hold that the order is nonest in the eyes of law. Hence, same is quashed being illegal. Grounds raised by the assessee are accordingly, allowed.

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• 2024 (9) TMI 362
  Additions made u/s 56(2)(viib) - consideration received by way of allegedly excess share premium on issue of equity shares by the assessee-company - HELD THAT:- The modification in the value of shares in subsidiary company appears rational in the context of the case. The law provides for an alternative option to the assessee to substantiate the FMV in the manner as may be considered expedient. Both AO and the CIT(A) thus have proceeded on misconception that while determining the FMV as per NAV, the book value cannot at all be substituted even on some rational basis. As noted, in view of Explanation to Section 56(2)(viib), the assessee is entitled to suitably modify the NAV as long as the NAV is capable of being substituted by some proof or competent evidence. Assessee has produced the valuation report as well as the market valuation of Hotel Residence AG Switzerland in German currency. The valuation of shares of subsidiary company to determine the FMV of the holding company, i.e., the assessee company for the purposes of issuance of shares at premium thus is in accord with the deeming provision. CIT(A), as noted earlier, has proceeded on misconception of law and facts and erroneously proceeded on the assumption that while determining the FMV as per NAV method, the component of different assets held by the assessee company cannot be modified. This approach is contrary to the Explanation (a)(ii) of Section 56(2)(viib) of the Act. The method adopted for reworking of the subsidiary company by applying the DCF method or any known method is permissible as long as the assessee is able to establish the correctness of the valuation in the light of the valuation report furnished. Assessee, is free to adopt the FMV of the asset held by the subsidiary company and rework the value of investments held in the subsidiary company. Such approach do not run contrary to the object and purpose of Section 56(2)(viib). Appeal of the assessee is allowed.

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• 2024 (9) TMI 361
  Delay in filing of the appeal before the First Appellate Authority - as submitted that the notices and the orders were received only on email of Ex-Accountant and there was no direct physical communication to the assessee from the department. As the Ex-Accountant did not inform the assessee in time, this led to delay in filing of the appeal - HELD THAT:- JCIT(A) did not consider the fact that majority part of the delay was covered by the Covid pandemic period. The Hon ble Supreme Court in the case of Cognizance for Extension of Limitation [ 2022 (1) TMI 385 - SC ORDER] has ordered that period from 15.03.2020 to 28.02.2022 shall be excluded for the purposes of limitation under any general or special law in respect of all judicial or quasi-judicial proceedings. In view of this judgment, JCIT(A) is directed to exclude the period from 15.03.2020 to 28.02.2022 from the period of delay on the part of the assessee. Considering the fact that the matter was not adjudicated on the merits, we deem it proper to set aside the matter to the file of the Ld. CIT(A) for re-consideration. He may take a lenient view in the delay caused by the assessee in filing of the appeal before him after excluding the period from 15.03.2020 to 28.02.2022 as discussed above. He may also decide the matter on the merits of the case after allowing the assessee a reasonable opportunity of being heard. The assessee is directed to make compliance before the Ld. CIT(A) and not to seek any adjournment without any pressing reason. Appeal of the assessee is allowed for statistical purposes.

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• 2024 (9) TMI 360
  Revision u/s 263 - non examination of share application - as argued examination of the issues under limited scrutiny, completed assessment without making any adverse findings against the assessee - HELD THAT:- There is no reference to the fact that the case is under limited scrutiny. Further, as rightly pointed out by the D.R., the issue of non examination of share application emanates from the second issue identified for examination. There is no whisper in the order as to whether the same was investigated. This is a clear case of no enquiry, as envisaged in the revisionary order passed under section 263 by the learned PCIT. Consequently, we hold that the usurpation of jurisdiction under section 263 of the Act by the learned PCIT is justified. Accordingly, the grounds raised by the assessee in its appeal are dismissed.

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• 2024 (9) TMI 359
  Unexplained Investment in Immovable property u/s 69 - Addition on the basis of audio recording - as per assessee AO made the same addition in the hands of the vendor also towards suppressed consideration - CIT(A) allowed the appeal stating that there is no conclusive evidence brought on record by the AO that the vendor has received on-money in the alleged transaction, and the addition made is merely based upon the assumption and presumption - HELD THAT:- CIT(A) while passing the order in vendor s case, relied on the cross-examination wherein the parties to the transaction have denied the exchange of on-money. Since, the matter is concurrent to that extent and the learned D.R. failed to demolish the binding precedent of the finality in case of seller, we find no compelling reason to differ from the decision taken in the case of the vendor, who is a party of the alleged transaction. Consequently, addition made by the AO and confirmed by the learned CIT(A) deleted - Decided in favour of assessee. Estimation of profit @ 8% based on seized material - CIT(A) reduced the profit rate to 5% - HELD THAT:- It is well-settled that in the case of sales, the Revenue has to make an honest and fair estimate of the income by applying the profit rate declared in the preceding years. Considering that the assessee is engaged in the business of trading in Kirana items, we are of the opinion that the profit at the rate of 4% shall meet justice. Therefore, we reduce the net profit rate to 4%. Whether the additional income declared by the assessee of Rs. 75 lakh covers the addition based on 4% net profit estimated on the turnover? - HELD THAT:-We find that the learned CIT(A) has recorded that the assessee offered Rs. 75 lakh as additional income, which duly covers the profit @ 4% on the total turnover and hence needs to be telescoped. Hence no separate addition is warranted and the entire addition of net profit as modified is deleted. In effect, the returned income is directed to be modified in the light of the above discussions.

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• 2024 (9) TMI 358
  Penalty levied u/s 272A(1)(d) - non-compliance with documentary evidences, which the appellant assessee failed - restriction to prevailing COVID-19 situation/restriction in the country - HELD THAT:- Coming to present case, when the whole world was in the grip of devastating pandemic, it is not only astonishing but hard to believe that the tax authorities holding quasi-judicial position were unaware of then prevailing COVID-19 situation/restriction in the country. In such a global life threating situation it could never be said that the appellant was frivolously sleeping over his duty in the garb of COVID-19 Pandemic. In the extant appeal, the appellants failure to furnish information/documents during the course of pendency of re-assessment proceedings prima-facie in our considered view is attributable to subsistence of COVID-19 which utterly prevented the assessee from complying with such notices effectively. Revenue s action in mulcting the penalty by asking the assessee to prove the reasonable cause [COVID- 19] with documentary evidence capable of suggesting non-application of mind by the tax authorities. The prevailing COVID-19 restriction/situation in view of Hon ble Apex Court decision [ 2022 (1) TMI 385 - SC ORDER] requires no provement. The COVID-19 restriction r.w. Hon ble apex court order (supra) de-facto in our considered view is sufficient to form a reasonable cause for the purpose of section 273B of the Act so as to exculpate the assessee s non-compliance from attracting any penalty u/s 272A(1)(d) of the Act. We set-aside the impugned order and delete the penalty as unwarranted. The solitary ground thus stands allowed.

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• 2024 (9) TMI 357
  Capital gain computation - Disallowance of expenses of transfer and cost of acquisition - treatment to deduction towards indexed cost of acquisition and expenses of transfer - HELD THAT:- CIT (A) having noticed the fact that the cost of construction of the assessee is supported by valuation report submitted by the registered valuer but ignored the said valuation report and considered the average rate of Rs. 380 per sft by taking into taking the rate adopted by the assessee and the rate considered by the AO. Neither the AO is justified in adopting adhoc rate of Rs. 250 per sft nor the learned CIT (A) is correct in taking average rate of 380 per sft without there being any supporting evidences. Assessee justified the cost of construction of Rs. 500/- along with valuation report. Therefore, in my considered view when the appellant is able to establish/substantiate the indexed cost of construction with necessary evidences including the valuation report, the AO and the learned CIT (A) ought to have accepted the cost of construction as claimed by the assessee. Thus, set aside the order of the learned CIT (A) on this issue and direct the AO to adopt the cost of construction as claimed by the assessee. Expenses of transfer being the amount paid to Shri K. Murari Raj - The appellant claimed that Shri K Murari Raj was tenant and was not ready to vacate the house. Unless the tenant vacates the house, the appellant cannot sell the property and hand over the property possession to the buyer. Therefore, the appellant has paid Rs. 6.00 lakhs compensation to Shri K. Murari Raj by way of 2 DDs on 17.04.2015 before the date of registration. Although the appellant could not furnish the relevant evidences to prove that Shri K. Murari Raj was tenant of the property but going by the circumstantial evidences i.e. DD paid to Shri Murari Raj on 17.4.2015 which is almost one month prior to the date of transfer of property on 27.5.2015, the claim of the assessee towards expenses of transfer appears to be reasonable and bonafide. Therefore, out of Rs. 6.00 lakhs towards expenses of transfer considered by the assessee, sum of Rs. 3.00 lakhs appears to be reasonable and allowable. Thus, we direct the AO to allow expenses of transfer being the amount paid to Shri Murari Raj for Rs. 3.00 lakhs out of Rs. 6 lakhs claimed by the assessee and recomputed the capital gain from transfer of property. Apeal filed by the assessee is partly allowed.

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• 2024 (9) TMI 356
  Disallowance of general expenses - HELD THAT:- After excluding these expenses directly attributable to Phase-1, the CIT(A) had apportioned the remaining general expenses between Phars-1 Phase-2 in the ratio of cost allocation. Accordingly, the addition only was upheld by the Ld. CIT(A). Revenue has not pointed out any defect in the finding of the CIT(A) in respect of expenses pertaining to Phase-I and in the allocation of balance expense as made by the Ld. CIT(A). We, therefore, do not find anything wrong with the order of the Ld. CIT(A) on this issue. Accordingly, the disallowance on account of general expenses as restricted by the CIT(A) is upheld and the ground taken by the Revenue is dismissed. Addition towards cost of construction of unsold flats pertaining to Phase1 and addition being profit margin of flats sold - HELD THAT:- Additions had been made on wrong presumption of the accounting standards. The Percentage Completion method doesn t stipulate that all the flats will be deemed to be sold on completion of the project and that revenue will be deemed to be realized without actual sale of the flats. Therefore, the addition in respect of cost of construction of 149 unsold flats is found to be based on total wrong presumption. The addition in respect of profit margin of booked flats is also not found correct. CIT(A) has correctly appreciated the principles of Accounting Standards and the methodology adopted by the assessee to recognize its revenue and has rightly allowed the relief in respect of both the additions. It was held in the case of CIT v Shivalik Buildwell P Ltd [ 2012 (10) TMI 1019 - GUJARAT HIGH COURT] that in case of developer of project, profit would arise only on transfer of title of property and the receipt of advance or booking amount cannot be treated as trading receipt of year under consideration. As rightly held by Ld. CIT(A), the guidelines of AS-7 didn t trigger recognition of revenue for booked flats, as the advance received was less than 10%. Hence, the addition was rightly deleted by Ld. CIT(A). Addition in respect of cost of construction of 149 unsold flats was also without any basis. The cost of construction as already incurred by the assessee cannot be disallowed on an arbitrary basis. The books of accounts of the assessee were audited and the Auditor had certified that the assessee was correctly following the Percentage Completion Method to recognize its revenue. No discrepancy or any infraction in the accounting system of the assessee was pointed out by the Auditor or any other authority. Since, the accounting of income in this case was in accordance with the guidelines of ICAI, we do not find any basis for the additions as made by the AO. Decided against revenue.

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• 2024 (9) TMI 355
  TP Adjustment - adjustment of custom duty - HELD THAT:- The assessee has not filed any data, analysis to establish the distinctive features of the foreign spare parts with that of Indian local spares available in India. During the course of hearing, the Bench has raised the query from the assessee s counsel as to whether any adjustment on this count has ever been allowed to the assessee in the previous or in future assessment year. In response to the query of the Bench, the assessee filed submissions on 28th August, 2024 and candidly accepted that the claim of the assessee for custom duty adjustment in manufacturing segment was not allowed by the AO as well as appellate authorities in respect of previous years. Assessee has also pointed out that from A.Y. 2016-17 onwards, the assessee is not making any adjustment on this custom duty aspect in its TP documentation. Therefore, considering the judgment of Sony India Pvt. Ltd. 2008 (9) TMI 420 - ITAT DELHI-H] as relied upon by the TPO, we dismiss this ground of appeal of the assessee. Adjustment of base cost in manufacturing segment is also rejected by the TPO affirmed by DRP and followed by AO - The assessee has candidly accepted that no such adjustment has been allowed to the assessee in previous years by the assessing authorities or by the appellate authorities and the assessee himself has stopped claiming this adjustment from A.Y. 2016-17 onwards in its TP documentation. Therefore, we do not find any infirmity in the order of DRP / AO hence, this contention of the assessee is also de void of any merits. Additional ground in relation to the grant of proportionate adjustment - We observed that from the order of TPO for A.Y. 2013-14 adjusted margin has been provided to the assessee for that year. It is settled law that each year under the Income Tax Act is a separate assessment year and principle of res judicata are not applicable to the income tax proceedings. However, there has to be consistency in the approach of Revenue and if some claim is accepted in previous year and there is no change in facts and circumstances of the case then it is to be applied for the subsequent year also. - no such material / evidences has been placed before us on the basis of which we can conclude that the facts and circumstances of the impugned year are akin to the subsequent year i.e. A.Y. 2013-14. Therefore, in the interest of justice, we remit this issue to the file of TPO for deciding afresh in accordance with law. Applicability of TNMM method v/s RPM method applied by the assessee for its trading segment transactions - We are of the view that this issue would also require fresh consideration at the end of TPO and in case the facts of the impugned year are akin to the facts of the A.Y. 2013-14 then applying the consistency principle, the TPO will decide the matter. During the course of hearing, the Bench has also raised a query as to whether the assessee has incurred expenses on advertising and packing of the material purchased for trading purposes. In response to the query of Bench, the assessee submitted that the appellant has incurred sales promotion and advertisement cost under the head other expenses however, the value of these expenses is minimal amounting to Rs. 2,67,396/- only. We direct the TPO to give benefit of this fact to the assessee. Non granting working capital adjustment for manufacturing and trading segment - DRP in its order has principally accepted that Rule 10B provides reasonable accurate adjustment to eliminate the material effects of difference on the price cost or profits. However, failure of assessee to demonstrate the effect of working capital adjustment with appropriate data has forced the DRP to reject the claim of assessee. It is settled position of law that if there is huge difference in working capital of the comparables with that to tested party. Suitable adjustment is required to be made. However, since the assessee failed to provide any analytical approach before the lower authorities assessee could not get any relief. Before us the counsel of assessee strongly contended that assessee can prove with TP documentation and other material that there was huge difference in the working capital of the comparables and tested party. Therefore, in the interest of justice we remit this issue to the file of TPO for examining a fresh. We also direct assessee to provide all the necessary details / material in support of his contention. Payments made to the headquarters in lieu of services received from the AE - As observed that the argument of the ld. DR that the assessee has failed to obtain any benefit via rendering of these services by AE is not justifiable because it is settled position of law that for claiming of an expense, the incurring of expense as well as genuineness of expenses is to be seen nor the fruits ripped by the businessman on incurring of business expenses. It is equally settled position of law that the AO / TPO would not sit in the arm chair of a businessman as held in the case of S.A. Builder[ 2006 (12) TMI 82 - SUPREME COURT] - Therefore, this disallowance is not permissible hence, we allow the same. Disallowance of provision for warranty - We restore this issue to the file of TPO to examine as to whether the assessee has reversed these charges in subsequent year and has offered the same for taxation and then the TPO will decide the issue, in accordance with law.

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• 2024 (9) TMI 354
  Revision u/s 263 - Share dealt with by the assessee was a penny stock and the AO was to make inquiry which he failed to do so - HELD THAT:- PCIT rightly invoked provisions of section 263 on the ground that the AO while accepting the returned income during the course of re-assessment proceedings has not asked for demat account, and had not made proper inquiries as were required to be made. As keeping in view the decision of Suman Poddar [ 2019 (11) TMI 1237 - SC ORDER] and other decisions as are listed in the revisionary order passed by ld. PCIT u/s. 263 and directions were rightly issued by ld. PCIT to the AO to make proper inquiry. Explanation 2 to Section 263 is clearly applicable. PCIT rightly set aside the reassessment order passed by the AO, and rightly directed the AO to pass a fresh reassessment order after examining the facts of the case. Once the assessment was reopened u/s. 147 on the ground that the assessee has dealt with penny stock and the inquiries have revealed that the said shares of said company were manipulated to generate bogus long term capital gains/los. It was all the more incumbent on the Assessing Officer to have made detailed inquiry into the matter to unravel the truth and see what is behind the smoke screen, but the Assessing Officer has merely accepted the contentions of the assessee based upon contract notes and the bank statement submitted by the assessee. Thus, the Assessing Officer has made a superficial inquiry and has not made proper inquiry as required in the facts and circumstances of the case. PCIT rightly set aside the reassessment order passed by the AO with the directions to the Assessing Officer to pass fresh order in accordance with law after duly examining the facts of the case as discussed by ld. PCIT in its revisionary order, and after giving reasonable opportunity of being heard to the assessee. Appeal of the assessee is dismissed.

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• 2024 (9) TMI 353
  Difference of valuation of stock - cost of silt constitutes capital or revenue expenditure - AO proceeded to value the silt arbitrarily at market rate by determining it to be capital expenditure and disallowed the same - Case of the revenue is that the cost of silt which was filled in the pit which was dug in earlier years was not claimed by the assessee as revenue expenditure in earlier years hence, it is capital in nature as filling of pit dug is capital expenditure and does not in any way increase the earning capacity of the concern. Whether the cost of silt would be capital expenditure or revenue expenditure? - HELD THAT:- As per the business model of the assessee, whenever stone is extracted from the mines, the pits will be formed and pits will be filled with the silt. This is recurring action, therefore, the expenditure involved in this work comes under revenue expenditure and does not give any benefit to the assessee in the capital field and hence it becomes purely revenue in nature because once the stone is extracted and resultantly, it is filled with the existing silt, there cannot be any further action required. CIT(A) admits that assessee had not bought any new material to fill up the pits but had only utilized the existing silt which were already available with the assessee. Having held so, it is very clear that there was silt already available due to digging out of materials, which was only utilized for filling up the dug pits. Hence, the same would constitute the revenue expenditure. There is absolutely no malafide intention for the assessee to claim a capital expenditure to be a revenue expenditure. Effectively assessee is only trying to value the stock with raw materials left over having saleable value and raw materials not having saleable value, which is in accordance with the accepted trade practice of valuation of stock. The same is also in accordance with Accounting Standard-2 for valuation of inventories issued by Institute of Chartered Accountants of India. As relying on DALMIA CEMENT (BHARAT) LIMITED [ 1995 (5) TMI 22 - DELHI HIGH COURT] , M/S. MODERN TERRY TOWELS LTD., [ 2012 (8) TMI 776 - BOMBAY HIGH COURT] and M/S. DHAMPUR SUGAR MILLS PVT. LTD. [ 2015 (3) TMI 106 - ALLAHABAD HIGH COURT] grounds raised by the assessee are here by allowed.

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• 2024 (9) TMI 352
  Levy of penalty u/s 271(1)(C) - denial of long-term capital loss c/f - Applicability of section 115QA and section 10(34A) - HELD THAT:- Provisions of section 115QA of the Act per se cannot be made applicable to the facts of the instant case, the provisions of section 10(34A) also consequentially would not have any application. Hence, the very basis of denial of carry forward long-term capital loss per se made by the AO is legally incorrect. Since the assessee had not challenged the same in the quantum proceedings, the penalty u/s 271(1)(c) of the Act stood levied on the assessee. As we have already held that the denial of long-term capital loss per se is not sustainable in the eyes of law, there cannot be any alleged furnishing of inaccurate particulars thereon. In any event, this is only question of interpretation of law of the relevant provisions of the Act as all the details for determination of long-term capital loss either for its acceptance or denial are already available on record before the AO in the income tax computation sheet itself. Hence, it cannot be construed as furnishing of inaccurate particulars of income by the assessee. At best, it could be construed only as an incorrect claim. Hence, no penalty could be levied on an incorrect claim. Reliance in this regard is placed on the decision of Reliance Petro Products Private Limited [ 2010 (3) TMI 80 - SUPREME COURT] and Price Waterhouse Coopers (P) Ltd. [ 2012 (9) TMI 775 - SUPREME COURT] We direct the ld AO to delete the penalty levied u/s 271(1)(c). Decided in favour of assessee.

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• 2024 (9) TMI 351
  Levy of penalty u/s 271(1)( c) - Defective notice u/s 274 - non striking of irrelevant part - whether non-striking off of the irrelevant portion in the penalty notice by not specifically mentioning the offence committed by the assessee, would become fatal to the penalty proceedings? - HELD THAT:- This issue is no longer res integra in view in the case of Mohd. Farhan A Shaikh vs DCIT [ 2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] In the instant case, on perusal of the penalty notice placed on record, it is evident that the ld. AO had not struck off the irrelevant portion thereon mentioning the specific offence committed by the assessee. The ratio laid down in the aforesaid decision of Hon ble High Court squarely applies to the facts of the instant case before us. Similar view was taken by the Hon ble Jurisdictional High Court in the case of PCIT Vs. Sahara India Life Insurance Co. Ltd [ 2019 (8) TMI 409 - DELHI HIGH COURT] - We direct the ld. AO to delete the penalty levied u/s 271(1)(c) - Appeal of the assessee is allowed.

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• 2024 (9) TMI 350
  Rectification u/s 154 - addition u/s 36(1)(va) - delay in deposit of EPF ESI - HELD THAT:- We are of the considered view that the quarrel is not much in respect of the merits of the addition but whether the AO can exercise powers u/s 154 of the Act drawing support from the subsequent judgment of the Hon ble Supreme Court when, at the time of framing the assessment order, there were judgments galore in favour of the assessee. The question of relying on any judgment in favour of the revenue to invoke powers u/s 154 of the Act has not manifested from order u/s 154. Thus, both the lower authorities erred in rectifying the assessment order on the basis of case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] . As contended that once the issue is decided by the Hon ble Supreme Court against an assessee, the action on the part of AO in invoking section 154 of the Act rectifying the mistake in wrongly granting the benefit to assessee in the original assessment order could always be withdrawn. The assessee submitted that the law laid down in N.C. Budharaja Co. case [ 1993 (9) TMI 6 - SUPREME COURT] was prospective in nature, therefore, the same would not apply to this case because, on the date when AO granted relief to assessee, the issue in relation to claiming of investment allowance on drilling activity was a debatable one. The Tribunal allowed assessee s appeal on the ground that in N. C. Budharaja Co. (supra) was not available on the date of rectification, i.e., on 19/10/1992, therefore, the same could not be made a basis for withdrawing the investment allowance. Hon ble High Court held that as on the date, when the assessee claimed the benefit of investment allowance, i.e., on 31/3/1989, the issue in regard to its claim was debatable one as there was cleavage of judicial opinion between several High Courts. On the date of rectification i.e., on 19/10/1992, the decision in N. C. Budharaja Co. (supra) was not rendered by the Supreme Court, therefore, invocation of provisions of section 154 was not justified. Appeal of the assessee is allowed.

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• 2024 (9) TMI 349
  TP Adjustment - comparable selection - functional dissimilarity - HELD THAT:- Most of the operational revenue of ACL, Hughes, HCL, Uniinfo and Seven-3 are from service activity, however in the case of the assessee the total revenue is from trading activity. Therefore we are of considered opinion that ACL, Hughes, HCL, Uniinfo and Seven-3 are functionally dissimilar and are not comparable to the assessee. Hence, we deem it just and proper to exclude these five companies from the list of comparable. Accordingly , we direct the Ld. AO to exclude these five companies from the list of comparable for the purpose of working of profit level indicator( PLI ). Suitability of the entity S.K.Communications - The major receipts of S.K.Communications are from sub-contract work, however in the case of the assessee the total revenue is from trading activity. Therefore we are of considered opinion that S.K.Communications is functionally dissimilar and is not comparable to the assessee. Suitability of the entity Arya - Receipt from the trading activity of Arya is 97.45% of the total revenue from operations, resulting only nominal receipt from services. As the major receipts are from trading activity, the contention of the Ld. AR in this regards is not acceptable and there submission for exclusion of Arya from the list of comparable is dismissed. Suitability of the entity Cineom - Receipt from the trading activity of Cineom is 82.80% of the total revenue from operations, resulting into only 17.20% from other activity. As the major receipts are from trading activity, the contention of the Ld. AR in this regards is not acceptable and there submission for exclusion of Cineom from the list of comparable is dismissed. Inclusion of Globe, which was rejected by the revenue authority due the reason that, company data was not available - AR submitted that, the annual report of Globe is now available on the public domain - If the comparable is functionally same as that of tested party then same cannot be rejected. Hence we direct the Ld. AO to verify the comparability of Globe after providing an opportunity of being heard to the assessee. Accordingly, we allow this ground of the assessee for statistical purpose.

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• 2024 (9) TMI 348
  Cessation of liability u/s 41(1) - Several trade payables had been outstanding for more than three years - HELDTHAT:- Principles regarding cessation of liability u/s 41(1) of the Act, which held that the onus is on the AO to prove the cessation or remission of liability with concrete evidence, liabilities shown in the balance sheet are considered existing until there is evidence to the contrary, simply non-payment over a period or debts becoming time-barred do not automatically constitute cessation of liability and there must be clear and specific evidence of cessation or remission for liabilities to be considered as ceased u/s 41(1). Thus, we conclude that the addition as cessation of liability u/s 41(1) was unjustified. The AO did not provide sufficient evidence to establish that the liabilities had ceased during the year under consideration. The liabilities were duly reflected in the assessee s audited balance-sheet and the CIT(A) s reliance on judicial precedents was appropriate and well- founded. Accordingly, we uphold the Ld.CIT(A) s decision to delete the addition - Revenue s this ground is dismissed. Disallowance u/s 37(1) on account of 10% of Trade Payables - HELD THAT:- AO s decision to disallow 10% of the sundry creditors was primarily due to the lack of supporting documentation and the inability to verify the genuineness of these creditors. The assessee had provided sample ledger accounts, audited financial statements, and details for subsequent years to demonstrate the genuineness of the creditors. The Ld.CIT(A) observed that the statutory and tax audits had not raised any adverse remarks regarding these liabilities, thus supporting the assessee s claim. The Ld.CIT(A) noted that the AO did not furnish specific evidence to support the claim that the expenses were not incurred for business purposes. The AO s approach of making an ad hoc disallowance of 10% without concrete evidence was deemed arbitrary and unjustified. CIT(A) also highlighted the inconsistency in the AO s actions, where similar liabilities were treated differently under Sections 41(1) and 37(1) of the Act. This contradictory approach further undermined the AO s position. The Ld.CIT(A) further emphasized the need for judicial consistency and adherence to established legal principles. Disallowances u/s 37(1) of the Act should be made only when there is clear evidence that the expenditure is not for business purposes. Disallowance u/s 37(1) was unjustified and arbitrary - CIT(A) correctly identified that the AO failed to provide substantial evidence to support the disallowance. The assessee s documentation, including audited financial statements and ledger accounts, sufficiently demonstrated the genuineness of the expenses. AO s approach lacked the required substantiation, leading to an erroneous addition. Therefore, we uphold the CIT(A) s decision to delete the disallowance u/s 37(1) -Revenue s ground is dismissed. Disallowance of personal expenses - AO observed that the expenses claimed under Gift Articles and Entertainment Expenses were inherently personal - payments for these expenses were made in cash, raising further doubts about their authenticity and business necessity - CIT(A) deleted addition - HELD THAT:- Upon reviewing the Ld.CIT(A) s detailed findings and conclusions, we agree that the disallowance was not substantiated with adequate evidence by the AO. The AO s decision was based on assumptions rather than concrete proof of personal use. The assessee demonstrated that the expenses were incurred for business purposes, and the tax auditor s acceptance further supported this claim. Therefore, we uphold the CIT(A) s decision to delete the disallowance u/s 37(1) of the Act. The Revenue s this ground is dismissed. Disallowance Interest on Loan to Subsidiary - AO, after concluding that the borrowed funds were not being used exclusively for business purposes, disallowed proportionate interest u/s 36(1)(iii) - HELD THAT:- The concept of the fungibility of funds is crucial in tax assessments, particularly in cases involving the disallowance of interest under Section 36(1)(iii) of the Act. When funds are considered fungible, it means that money from various sources, whether interest-bearing or interest-free, is interchangeable and indistinguishable once it is deposited into a common pool, such as a company s bank account. The doctrine that funds are fungible has been supported by various judicial precedents including those relied on by the assessee. Thus, we find that the Ld.CIT(A) erred in upholding the disallowance u/s 36(1)(iii) of the Act. The assessee has successfully demonstrated that it had sufficient interest-free funds to cover the loan to the subsidiary, and the loan was advanced for commercial expediency, thus qualifying for interest deduction u/s 36(1)(iii) of the Act. Accordingly, we overturn the Ld.CIT(A) s decision and directs the deletion of the disallowance - Decided in favour of assessee. Disallowance u/s 14A read with Rule 8D - assessee argued that the AO did not correctly apply the provisions of Rule 8D of IT Rules, particularly in relation to the interest disallowance - HELD THAT:- We conclude that the disallowance under Section 14A read with Rule 8D of IT Rules was not warranted for the assessment year in question in absence of exempt income. Accordingly, we overturn the Ld.CIT(A) s decision and directs that the disallowance u/s 14A read with Rule 8D of IT rules be deleted in full. The appeal on these grounds is allowed in favour of the assessee, reaffirming the principle that disallowance under Section 14A of the Act is inapplicable in the absence of exempt income. The appeal of the assessee on these grounds is allowed. Disallowance of 10% of the trade payables - HELD THAT:- We concur with the Ld.CIT(A) that the assessee had provided comprehensive documentation to substantiate the trade payables in question. This included ledger accounts, confirmation letters from the creditors, and sample invoices. We note that these documents are standard and credible forms of evidence in substantiating business transactions. We agree with the Ld.CIT(A) s finding that the AO s disallowance of 10% of the trade payables was arbitrary and lacked a rational basis. The AO s reliance on assumptions and the non-response to notices under Section 133(6) of the Act, and without considering the extensive evidence provided by the assessee, is deemed improper. We emphasize that disallowances must be based on concrete evidence and not on mere conjecture or ad-hoc estimations. We also uphold the findings of the Ld.CIT(A) in concluding that the AO erred in including the amount relating to The Bengal Mills Stores Supply Co., which had already been added to the assessee s income in a previous assessment year. We agree that including this amount in the current disallowance would result in double taxation, which is against the principles of natural justice. We acknowledge the unique circumstances surrounding the trade payable to Shivam Water Treaters Pvt. Ltd., which was under NCLT proceedings. We find that the Ld.CIT(A) rightly considered these circumstances in accepting the legitimacy of the trade payable despite the absence of certain confirmations - Similar disallowances made in previous years were not upheld on appeal, reinforcing the importance of judicial consistency. CIT(A) has correctly deleted the addition - Decided in favour of assessee.

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• 2024 (9) TMI 347
  Validity of reassessment proceedings beyond period of three years - assessee is a non-resident individual, and derives income from other sources - case where three years have elapsed - sanction of the Specified Authority is not in conformity with the law prevalent - information was received from the office of DIT(I CI), Mumbai regarding the data received from the office of the Sub- Registrar of sales and purchases for the year under consideration in respect of transactions of immovable property where there were instances of a possible infringement, inter-alia, of section 56(2)(vii) HELD THAT:- We find that while considering the similar issue and similar submissions the Hon ble Jurisdictional High Court in Siemens Financial Services (P.) Ltd. [ 2023 (9) TMI 552 - BOMBAY HIGH COURT ] held that TOLA would not affect the scope of section 151 and sanction of Specified Authority was to be obtained in accordance with the law existing when the sanction was obtained. It was further held that where the AO issued a reopening notice beyond the period of three years, approval was required to be taken as per provisions of amended section 151 from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. We find no merits in the reliance placed by the Revenue on the provisions of TOLA. As, in the present case, the period of three years has elapsed from the end of the relevant assessment year and the order dated 23/05/2022 was passed under section 148A(d) of the Act after obtaining the approval of the Principal CIT-1, Mumbai we are of the considered view that the Revenue has not followed the mandatory provisions of the Act while initiating the reassessment proceedings and sanction of the Specified Authority is not in conformity with the law prevalent at the time of grant of sanction. Also no u/s 148 shall be issued after the expiry of three years but not more than ten years, unless the AO is in the position of documents or evidence which reveal that income amounting to Rs. 50 lakh or more chargeable to tax has escaped assessment. As noted above in the present case, the income which is alleged to have escaped assessment is less than Rs. 50 lakh Thus, in the present case, it is discernible that the notice under section 148 of the Act was issued not only in contravention of the provisions of section 151 as the sanction of the concerned Specified Authority was not obtained, but the same is also time-barred as per the provisions of section 149 of the Act as the same was issued after three years and the amount alleged to have escaped assessment is only Rs. 43,32,000, i.e. less than Rs. 50 lakh. Accordingly, we are of the considered view that the notice issued under section 148 of the Act is void ab initio and bad in law - Decided in favour of assessee.

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• 2024 (9) TMI 346
  Levy of penalty u/s 271AAA - seized documents relating to undisclosed consideration on the sale of land as observed that the relevant seized material (Annexure BS-24) was seized from the premises of the assessee himself and contains details of various unaccounted transaction - HELD THAT:- Though the paper was found in the premises of the assessee, and the name of the assessee is also mentioned in that page, the assessee never contended that the contents in the seized material were prepared by some other person. If that be so, the onus was on the assessee to give details of such other person once the signed material has been found from the premises of the assessee. Accordingly, the AO after looking into the facts and circumstances of the case had confirmed the addition in the hands of the assessee on account of undisclosed consideration on sale of land. The assessee at any stage of proceedings, has not challenged the rate of sale consideration of such land, as mentioned in the seized documents. Assessee has also not disputed the fact that the documents were recovered from his premises and the said documents also clearly mentioned the name of the assessee. Accordingly, looking into the instant facts, we are of the considered view that the additions have not been made by the AO based on dumped documents. Further, the additions made by the AO have also been confirmed by the Ld. CIT(A) and subsequently by the Hon ble High Court. Accordingly, looking into the instant facts we are of the considered view that Ld. CIT(A) has not erred in facts and in law in confirming levy of penalty under Section 271AAA of the Act. Levy of penalty with respect to protective addition made in the hands of undisclosed capital gain - HELD THAT:- In the case of Mohd. Khasim [ 2014 (10) TMI 140 - ITAT BANGALORE ] the ITAT held that where Revenue itself was not sure as to whether alleged capital gains was to be assessed in the hands of assessee and such addition was made on protective basis, penalty under Section 158BFA could not be levied on the assessee. In the case of CIT vs. Sanatan Seva Mandal [ 2012 (8) TMI 1235 - GUJARAT HIGH COURT ] the High Court held that where pursuant to search proceedings, certain addition was made to assessee s income on protective basis and in case of one K on substantive basis, in view of fact that substantive additions were already subjected to penalty, no penalty could be levied in respect of said additions protectively made against the assessee. Accordingly, additions have been made in the hands of the assessee on protective basis , we are of the considered view that Ld. CIT(A) has erred in confirming levy of penalty under Section 271AAA of the Act on additions made in the hands of the assessee on protective basis. Levy of penalty u/s 271AAA with regards to undisclosed capital gain on sale of land - In this case, we observe that the Ld. CIT(A), after taking into consideration the seized material found during the course of search, confirmed the quantum additions in the hands of the assessee. Such quantum additions amounting to Rs. 1.48 crores towards unaccounted sale consideration was later confirmed by order of Hon ble Gujarat High Court. Accordingly, in our considered view, looking into the instant facts, AO and Ld. CIT(A), after analysis of the seized documents on record have come to the conclusion that the assessee had earned undisclosed capital gain on sale of land. The aforesaid additions were also later confirmed by the Hon ble Gujarat High Court in [ 2018 (10) TMI 1657 - GUJARAT HIGH COURT ]. Accordingly, in view of the above facts, we find no infirmity in the order of CIT(A) while confirming levy of penalty under Section 271AAA of the Act in the hands of the assessee. Penalty u/s 271(1)(c) - We observe that in the case of Dr. Naman A. Shastri [ 2015 (11) TMI 109 - ITAT AHMEDABAD ] ITAT held that provisions of sections 271AAA and 271(1)(c) are mutually exclusive and, thus, once penalty is initiated under section 271AAA for specified previous year , there cannot be any occasion to impose penalty under Section 271(1)(c). Addition based on seized material - HELD THAT:- In this case, the entire addition has been made by the AO only on the basis of seized material in an ex-parte order passed u/s 144 of the Act and from the contents of the order it is observed that the AO had no concrete proof / corroborative evidences to establish that the assessee, alongwith his father had in fact purchased the property in question. No notices were issued to the so-called sellers of such property to confirm whether any sale of such property had been made to the assessee and his father, no land revenue records were called for to establish that the assessee and his father had in fact purchased the property, there was no sale deed / purchase deed to establish that the assessee and his father had purchased the property in question and the entire additions in these facts were only made on the basis of entries made in seized documents, without any corroborative evidence to support the factum of purchase of such property. Accordingly, in our considered view, this is a fit case where levy of penalty under Section 271(1)(c) of the Act is liable to be deleted. Levy of penalty u/s 271(1)(c) with respect to addition of unexplained deposit in bank - The additions were confirmed by the assessee in the absence of any information regarding source of such cash deposits coming from the assessee and subsequently, the additions were later confirmed by the appellate authorities in quantum proceedings. We also observe that this is an abated assessment year and therefore, the additions in quantum proceedings are not restricted to only the material found during the course of search proceedings. Accordingly, in quantum proceedings have also confirmed the additions in the case of the assessee, we accordingly uphold the levy of penalty u/s 271(1)(c) with respect to addition of unexplained deposit in bank in the hands of the assessee. Additions with respect to unexplained bank deposits / credit entries in the hands of the assessee s brother - HELD THAT:- As noted by us earlier, this is a case of abated assessment year and during the course of assessment proceedings the assessee was unable to provide any explanation with regard to excess deposits in his bank account. In absence of any explanation provide by assessee, a sum as added as unexplained income in the hands of the assessee and in quantum appeal against the aforesaid addition, the Appellate Authorities also subsequently confirmed these additions in the hands of the assessee. Since the assessee was not able to provide any plausible explanation regarding the excess cash deposits in his bank account, there was no infirmity on the part of CIT(A) in confirming levy of penalty u/s 271(1)(c) of the Act in the hands of the assessee.

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• 2024 (9) TMI 345
  Denial of exemption u/s 11 - activities of the assessee society allowed as eligible for deduction u/s 10(23C)(vi) - Charitable activity or not? - as per AO assessee society was making profits from its publication business, and was also getting back the advances/finance made to its sister concern/ other State Universities - HELD THAT:- As in the case of New Noble Educational Society [ 2022 (10) TMI 855 - SUPREME COURT] held that if the surplus or profits are generated in the hands of the assessee applicant in imparting of education or related activities disproportionately, weight ought not to be given to surpluses or profits, provided they are incidental to the main activities of the assessee. Admittedly, the case of the assessee is that the assessee is having approval under section 10(23C) of the Act and for A.Ys. 2009-10 to 2013-14 and 2016-17. The assessment orders were passed by the Assessing Officer keeping the activities of the assessee society as eligible for deduction under Section 10(23C)(vi) of the Act. In the light of the above, we deem it appropriate to remand back the matter to the file of Assessing Officer with a direction to re-examine the issue denovo after affording opportunity of hearing to the assessee. Needless to say that the assessee shall furnish all the details / evidence / documents to prove that the activities of the assessee are not in commercial in nature and are interlinked with the imparting of education. The assessee shall be at liberty to file documents, if any, as required for proving its case.

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• 2024 (9) TMI 344
  Addition u/s. 41(1) - amount related to the Sundry creditors balance written off - double taxation of the same amount - HELD THAT:- Addition made by CPC has resulted in double taxation of the same amount. We notice that the assessee has credited the above said amount in the P L Account and hence, the net profit disclosed by the assessee would consist of the above said amount. Assessee has computed its total income by adopting the net profit disclosed in the profit and loss account and hence the total income has already included the above said income. Hence, there is no requirement of making addition of aforesaid amount u/s. 41(1) again. Hence the addition made by CPC has resulted in double taxation of same item of income, which is not permitted under the Act. Accordingly, the said addition is liable to be deleted. CIT(A) has given much emphasis on the abstract information given in the return of income and he did not recognize the fact that the net profit disclosed and consequently, the total income computed by the assessee has already included the above said amount. Accordingly, we set aside the order passed by CIT(A) on this issue and direct the AO to delete the addition made u/s. 41(1) of the Act by CPC. Assessee appeal allowed.

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• 2024 (9) TMI 343
  Denial of registration/approval u/s.80G (5) - application was furnished after the due date - Scope of amendments and circulars regarding the timeline for filing Form 10AB - HELD THAT:- Considering the judgment of Sri Nrisimha Priya Charitable Trust [ 2024 (4) TMI 499 - MADRAS HIGH COURT ] observation of the CIT(Exemption), Bhopal, based on which, the application filed by the assessee society for registration u/s. 80G(5) of the Act had been rejected, cannot be approved. At the same time, concession has been provided by the aforesaid CBDT Circular No.7/2024 dated 25.04.2024, as per which liberty had been provided to any trust, institution or fund where the Principal Commissioner or Commissioner had already passed an order rejecting the application filed by the assessee society in Form 10AB to furnish fresh application in Form 10AB within the extended time period, i.e. till 30.06.2024. As the aforesaid CBDT Circular No. 07/2024 dated 25.04.2024 allows the assessee society in a case where its application for registration under clause (iii) of the 1st proviso to sub section (5) of Section 80G of the Act had already been rejected by the Pr. CIT, inter alia, for the reason that the same was filed beyond the due date , to file a fresh application within the extended time period, i.e. till 30.06.2024, therefore, the assessee society in the present case before us remains at a liberty to approach the CIT(Exemption), Bhopal in the aforementioned manner, i.e. by filing a fresh application in Form 10AB, which the latter as per the aforesaid CBDT Circular No.7/2024 (supra) shall treat as a valid application - Assessee appeal allowed.

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• 2024 (9) TMI 342
  Deduction u/s 80P(2)(a)(i)/80P(2)(d) - interest income earned on investments made out of surplus funds made with Cooperative banks, Cooperative Societies and Nationalised banks - HELD THAT:- We find this issue is no more res integra by virtue of catena of decisions passed by the Coordinate Benches of this Tribunal. In the present case, we find that admittedly the interest income was earned from the investments out of surplus funds made with cooperative banks/socieites, the cooperative bank is also a specie of cooperative society, therefore, the interest income earned by the cooperative society from the cooperative banks qualifies for deduction u/s.80(P)(2)(d). Such interest also qualifies for exemption u/s.80P(2)(a)(i) as held in the case of Nashik Road Nagari Sahkari Patsanstha Limited [ 2021 (12) TMI 1259 - ITAT PUNE ] Therefore, we affirm the impugned order directing the AO to allow the claim of exemption u/s.80P(2)(a)(i)/80P(2)(d) on the interest income earned on investments made out of surplus funds made with Cooperative banks, Cooperative Societies and Nationalised banks. Appeal filed by the Revenue is dismissed.

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• 2024 (9) TMI 341
  Nature of expenses - Payment of lease rent - AO has considered the type of lease as finance lease - HELD THAT:- In this regard, there are several conflicting decisions from the various Court. The issue under consideration is elaborately dealt by the Co-ordinate Bench of ITAT, Delhi in the case of M/s Minda Corporation Limited [ 2015 (8) TMI 168 - ITAT DELHI ] wherein held disallowance is not justified uphelding the assessee s claim of allowability of lease rentals paid as lessee of the Trucks as a revenue expenditure under section 37(1) of the Act, even though the lease was categorized as finance lease. Appeal filed by the assessee is allowed.

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• 2024 (9) TMI 340
  Validity of reopening of assessment - Addition u/s.115JB of the Act in respect of provision for deferred tax, Addition u/s.115JB in respect of provision for diminution in the value of investments and Addition u/s.115JB in respect of provision for bad doubtful debt - HELD THAT:- AO was strictly circumscribed on the issues and the directions given by the Tribunal. The AO could not be raked up the issues which already had attained finality. If the Department was aggrieved by the order of the Tribunal then they should have filed appeal before the Hon ble Bombay High Court, which on these three issues Revenue did not specifically prefer any appeal even if the order of the Tribunal was legally unsustainable according to revenue that post amendment such provision were to be disallowed. Even otherwise also, the Revenue had chances to raise the grounds before the Tribunal against the CIT (A) s order passed in relation to the order u/s.147 r.w.s. 143(3), however, the Revenue did not prefer any appeal before the Tribunal. Thus, how in the impugned assessment proceedings which is in pursuance of order of the Tribunal passed u/s.143(3) r.w.s. 147 r.w.s. 254 of the Act, these three issues coild not have been raised. Thus, on these three issues, the order of the AO is quashed as the additions are beyond the scope of the present assessment proceedings. We are not going into the merits of the addition, but we are deleting the additions on the reason that these are beyond the scope of present assessment proceedings. Provision for staff welfare expenses - The said issue has already been decided in the first round of proceedings where it was held that the provision had been worked out on scientific basis by accrual method and represents provision for meeting ascertained liabilities, and therefore, no adjustment could be made in the book profit. There is no rebuttal that the provision has been made on the basis of accrual method and therefore it cannot be held that it is an unascertained liability. The observation and the finding of the CIT(A) as noted above is thus confirmed. Further, similar issue has been decided by the Tribunal in assessee s group concerns in the case of Tata Motors Finance Limited, where in it was held that provision for staff welfare is an ascertained liability and the same cannot be added while computing book profits. Thus this issue is decided in favour of the assessee. Provision for loss on guarantee - This issue again has been considered in the first round of assessment proceedings wherein it was held that the provision for loss on guarantee is a contractual liability and is on the basis of the agreement and the company had to account for the accrued liability. Against this no appeal was filed by the Revenue before the Tribunal and this issue had attained finality. Thus, this issue is again decided in favour of the assessee. Interest u/s.234B - This issue is consequential and moreover we have deleted most of the additions, and therefore, the AO while giving effect to this order ensure that there would be no liability on interest u/s.234B.

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• 2024 (9) TMI 339
  Rejection of application u/s 80G (5) - delay filing application in Form No. 10AB - trust university has made application for final registration on 28.03.2023 where as it was required to make on or before 30.09.2022 as it has already commenced 06.03.2004 activities on 06-03-2022 - HELD THAT:- Assessee / Applicant Trust had filed application for grant of final approval u/s 80G(5) of the Act within a period of six months from date of grant of provisional registration and as noted by us in the preceding paragraph, the assessee could have filed application for grant of approval on or before 30.09.2023 which stands further extended to 30.06.2024 vide Circular No. 7/2024 dated 25.04.2024 then, in our considered view, the application for grant of final registration under Section 80G(5) of the Act could not be denied only on the ground that the same was not filed before 30-09-2023. The matter is restored to file of Ld. CIT(E) de-novo consideration after giving due opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes.

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• 2024 (9) TMI 338
  Increase in cost of material consumed - increase in the cost of purchase and materials as compared to earlier year - HELD THAT:- Increase in ratio of cost of material consumed, viz-a-viz, revenue has been stated to be on account of higher exchange rate, on which the assessee has purchased goods as compared to earlier years. For instance, average exchange rate of INR/USD prevailing during the earlier year, i.e., AY 2015-16 was INR 61 per USD. Materials amounting to Rs. USD 1000 were purchased with a total cost of Rs. 61,000/-. During the relevant assessment year 2016-17, the average exchange rate increased to Rs. 65.50 per USD, i.e., the cost of material amounting to USD 1000 was Rs. 65,500/-. This has to increase of 7% of actual increase. This fact has not been disputed at all and has been explained before the AO and CIT(A). It has also been further stated that overall profitability of the assessee has improved from (-) 3.45% to (-) 2.49% in this year. Once, the assessee has submitted the details of increase for manufacturing and other expenses, statements showing change in the forex rate, details of increase in ratio of expense, revenue in comparison with the preceding year and details on gross profit and net profit for the last three years, then without any such defect, addition cannot be made. Accordingly, we do not find any reason to deviate from the finding of the CIT(A) and the same is upheld. Consequently, ground no. 1 raised by the Revenue was dismissed. Disallowance on account of commission expenses - AO has made addition simply on the ground that there is 73% increase in commission expenses paid to the selling agents/dealers as against increase in revenue of 39.72%, accordingly, he has treated 33% of the commissions as excessive - HELD THAT:- We are unable to appreciate the approach of the AO who made ad-hoc disallowance of commission simply on the basis that the increase in commission does not correspond with the increase of revenue. At least, he should have brought something on record to reject the explanation of the assessee as incorporated above. If the assessee has given the reason, as to why commission expenses are increased, then such an ad-hoc disallowance without finding any defect in such submissions, such ad-hoc disallowance cannot be made. Thus, the aforesaid finding of the CIT(A) without any proper adverse materials on record to show that the commission expenses incurred by the assessee were not genuine, such an addition cannot be sustained. Accordingly, order of learned CIT(A) deleting the addition is upheld. Ground no. 2 is dismissed. Disallowance u/s 40(a)(ia) - AO has made the disallowance assuming that payments have been made to the non-resident foreign exchange - assessee has already offered disallowance of 30% for non-deduction of tax in the return of income - HELD THAT:- Once the commission has been paid to the resident payees which AO himself has misconstrued as if payment made to non- resident, apart from that, once the fact that the assessee has already made a disallowance of 30% in the computation of income, there was no reason for making any disallowance. Accordingly, order of learned CIT(A) is upheld. Ground raised by the Revenue is dismissed.

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• 2024 (9) TMI 337
  Addition u/s 69A - unexplained jewellery found during the course of search - assessees submitted that the contentions regarding the jewellery belonging to joint family consisting of families of three brothers - HELD THAT:- Assessee was able to explain the jewellery to the extent of 9,522 gms by way of purchase bills and mode of payments thereon. It is not the case of the Revenue that assessee has made payments in cash for purchase of jewellery out of undisclosed sources of income. Further assessees explanation that they have converted diamonds partly to gold jewellery is a plausible explanation which cannot be brushed aside as it is the usual custom and practice of the household ladies to do so. Considering the overall family status and community of the assessees holding of jewellery of 9,522 gms which is also supported by purchase bills stands clearly explained. As could be seen from the above table there is excess diamonds to the extent of 188 carats (valued at Rs. -47,00,000/-) and there is a deficit in gold jewellery to the extent of 830 gms (valued at Rs. 27,39,000/-) and this could be for the reason that the assessee converted diamonds partly to jewellery which is a plausible explanation. If this explanation is accepted and set off the excess diamond against deficit in gold is considered, there is no addition that would be warranted u/s 69A - we allow ground no.1 of grounds of appeal of the assessee.

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• Customs

• 2024 (9) TMI 336
  Criminal conspiracy - wrongful gain - Non-payment of Countervailing Duty (CVD) on Maximum Retail Price - Immunity granted by the Settlement Commission - HELD THAT:- A perusal of the scheme of the CrPC 1973 allows to infer that mere registration of FIR cannot be interpreted to mean that it constitutes the initiation of such proceedings. A registration of FIR necessitates an investigation by a competent officer as per the detailed process outlined in Sections 155 to 176. It is only after a Final Report (or as referred in the common parlance, a Challan or a Chargesheet) is submitted as per the compliance of Section 173(2) of CrPC 1973, cognizance for the offence(s) concerned is taken. However, undoubtedly, the Court is not bound by the said report. In HIRA LAL HARI LAL BHAGWATI VERSUS CBI., NEW DELHI [ 2003 (5) TMI 63 - SUPREME COURT] , even though the subject matter of the dispute pertained to Kar Vivad Samadhan Scheme, 1998 (hereinafter referred to as KVSS 1998 ), the observations of this Court came to the rescue of the Assessee-Company therein. As per the said factual matrix, the case of the Assessee-Company therein was settled under the KVSS 1998 on 10.02.1999 by the Designated Authority and as per the terms of the settlement, the Assessee-Company therein withdrew the appeal before this Court on 16.03.1999 and a certificate for full and final settlement was issued on 19.07.1999. Despite that, on 06.01.1999, a case was registered as against the Appellant therein in capacity as the office bearer of the Assessee-Company. It was held by this Court that continuation of such a prosecution would be inconsistent with the intent and provisions of the law. The Appellant therein was also obliged to withdraw the appeal before this Court, which might have had also impacted the merits of the criminal proceedings as against them. Furthermore, the Appellant-Company had successfully claimed immunity from prosecution under the CA 1962, CE Act 1944, and IPC 1860 vide Order dated 21.08.2007. In such a circumstance, there was no fiscal liability on the Appellant-Company, and accordingly, the Order dated 01.08.2010 passed by learned Special Judge, taking cognizance against the Appellant-Company, ought not to have sustained. As the very basis of the allegation of offence against the Appellant-Company was found to be nonexistent, it would have amounted to misuse rather abuse of the process of law. The proceedings against the Appellant-Company are quashed by setting aside the Impugned Order - Appeal allowed.

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• 2024 (9) TMI 335
  Classification of imported goods - rotors, stator, down case, top case and down rod etc. imported together - whether the goods merits classification under heading 8414 or under 8503? - HELD THAT:- It is opined that the Customs, Excise and Service Tax Appellate Tribunal has not committed any error in law or fact. The Civil Appeal is dismissed.

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• 2024 (9) TMI 334
  Recovery of drawback benefit availed along with applicable interest and penalty - demand notice issued against deceased person - Effect of the death of the exporter on recovery proceedings - HELD THAT:- Section 75(1) of the Act stipulates that if the sale proceeds in respect of the goods of which duty drawback has been allowed are not received by or on behalf of the exporter in India within the time stipulated under Foreign Exchange Management Act, 1999, such drawback shall be deemed never to have been allowed and the Central Government may by Rule made under Sub Section (2) specify the procedure for the recovery of adjustment of the amount of such drawback. The issuance of notice is sine qua none before affecting the recovery of erroneously availed drawback. The requirement of issuing notice in the name of a right person and not a dead person is not merely a procedural requirement but is a condition precedent to the notice being valid in law. Such notice was issued in the name of the exporter on 28.09.2018, after his death. The notice therefore suffers from fundamental jurisdictional error as it was issued in the name of a dead person and the proceedings initiated consequent to such notice were also proposed in the case of a dead person. No steps were taken to bring the legal heirs of the deceased/exporter on record at the time of issuance of the Demand cum Show Cause Notice. The issue of the validity of a notice issued against a dead person is no longer res integra. Since the Show Cause Notice dated 28.09.2018 was issued against a dead person and the Order-in-Original has been passed against the dead person without bringing on record his legal representatives, therefore, the Order-in-Original confirming the demand of duty drawback amounting to Rs. 22,62,352/- and penalty of Rs. 1,00,000/- and the subsequent notice of recovery are liable to be set aside. The Since the Show Cause Notice dated 28.09.2018 was issued against a dead person and the Order-in-Original has been passed against the dead person without bringing on record his legal representatives, therefore, the Order-in-Original confirming the demand of duty drawback amounting to Rs. 22,62,352/- and penalty of Rs. 1,00,000/- and the subsequent notice of recovery are liable to be set aside. Petition allowed.

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• 2024 (9) TMI 333
  Seeking direction to release various models of Secondhand Highly Specialized Equipment - Digital Multifunction Print, Copying Scanning Machines, imported by the petitioners - whether the petitioners are entitled to the release of the various models of Secondhand Highly Specialized Equipment - Digital Multifunction Print, Copying Scanning Machines, imported by the petitioners prior to the N/N.13/2024-25, dated 20.05.2024? HELD THAT:- In the present cases, the bill of ladings dated 29.04.2024, 19.04.2024, 18.04.2024, 17.04.2024, 22.04.2024 and 15.04.2024 are much before the date of impugned Notification dated 20.05.2024. Therefore, the learned counsel for the petitioners would submit that the said Notification will not be applicable to the petitioners who had already initiated the process of import and the bills of lading were raised. There shall be a direction to the respondents to consider the plea of the petitioners to release the goods by way of provisional release on condition that, the petitioners shall pay/deposit the enhanced duty amount. On receipt of such enhanced duty amount paid by the petitioners, the goods in question shall be released within a period of three (3) weeks thereafter - For payment of such duty, quantification shall be made by the Customs forthwith within one (1) week from the date of receipt of a copy of this order. On receipt of such quantifications, the payment shall be immediately made by the petitioners and on receipt of the payment in entirety, the goods shall be released as indicated above at the outer limit of three (3) weeks.

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• 2024 (9) TMI 332
  Classification of imported goods - Bed sheet declared as made of 100% Polyester - Revenue is of the view that the said consignment contains Polyester Woven Fabrics and the same is classifiable under CTH 5407 whereas the Appellant had classified the goods under CTH 6304 - mis-declaration of goods - HELD THAT:- The appropriate classification of the said goods is Polyester woven printed quilts and the imported goods have been presented by the appellants as Polyester woven Quilt Cover . If the same are detached then it will look like bed sheet, which is not the correct view of the Revenue and in similar set of facts, this Tribunal has examined the issue in the case of M/S. ANNAPURNA INDUSTRIES, M/S. CF INC, M/S. SIDHANT CLASSIC, M/S. SIDHANT CLASSIC, COMMR. OF CUSTOMS, KOLKATA (PORT) , SHREE RAM COTSPIN PVT. LTD., M/S. KTC NIRYAT CO. PVT. LTD. AND M/S. V.K. TRADING CO. PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS (PORT) , KOLKATA, M/S. THAKUR TEXTILE AND COMMISSIONER OF CUSTOMS (PREV.) , KOLKATA [ 2017 (8) TMI 1350 - CESTAT KOLKATA] and held the goods in question are to be classified as Polyester woven printed quilts. Therefore, the goods imported by the appellants are only Polyster Quilt Cover . Going by the factual details above, particularly keeping in view the common parlance usage of the material as bed sheets which can be deduced from their size and the decided case laws, it is opined that the goods are classifiable under CTA 6304 as contended by the appellant and not under CTA 54.07 as has been held by the Revenue. Thus, particularly keeping in view the common parlance usage of the material as bed sheets which can be deduced from their size and the decided case laws the goods are classifiable under CTA 6304 as contended by the appellant and not under CTA 54.07 as has been held by the Revenue. Appeal allowed.

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• 2024 (9) TMI 331
  Mis-declaration and suppression of facts or not - invocation of extended period of limitation - Whether mis-declaration and suppression of facts is involved in this case? - HELD THAT:- The obligation was on the part of the department to assess the imported goods. The Appellant had along with the Bills of Entry and invoices, furnished copies of inspection certificate as well. They had produced test certificate containing the composition of various alloys and the relevant invoice at the time of filing the Bills of Entry. In fact, the correct classification of the goods was arrived at by DRI on a perusal of the said documents submitted at the time of import. The goods were not mis-declared and the declaration in the Bills of Entry were as per invoice. Even in his statement reordered by DRI, Mr. M Jayaramachandar had stated that they used to procure the same goods indigenously and the Indian manufacturers also classified the same only under CTH 7211 as had been declared by them in the Bills of Entry. This has not been controverted by the Department. This being so the charge of mis-declaration and suppression of fact, fails. Since the onus of assessment was on the department and the Appellant had submitted the necessary documents to facilitate the same, they cannot be held responsible for suggesting a certain classification heading in the Bill of Entry. As held by the Hon ble Supreme Court in NORTHERN PLASTIC LTD. VERSUS COLLECTOR OF CUSTOMS CENTRAL EXCISE [ 1998 (7) TMI 91 - SUPREME COURT] that mere claiming the benefit of exemption or a particular classification under the bill of entry does not amount to mis-declaration or suppression of facts. The demand has hence to be restricted to the normal period and the penalty needs to be set aside. The impugned order is modified on the said terms - Appeal disposed off.

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• Insolvency & Bankruptcy

• 2024 (9) TMI 330
  Application for amendment of the plaint under order I Rule 10 and order VI Rule 17 of the Code of Civil Procedure, 1908 to implead Ajmera Luxe Realty Pvt. Ltd. (R7) as a party Defendant No. 7 - plaintiff avers that the proposed amendment neither changes the nature of the Suit nor the cause of action is altered - HELD THAT:- The overarching principles, which govern the decision to permit a party to amend the pleadings are that, the proposed amendment is necessary for the determination of the real question in controversy between the parties, and the potentiality of prejudice and injustice which is likely to be caused to the other side in the event the amendment is allowed. All the amendments which are necessary for the determination of real question in controversy between the parties are required to be allowed. Whether the proposed amendment has the propensity to fundamentally change the nature and character of the suit and whether a fresh suit on the amended claim would be barred by limitation or any other statutory provision, are the others considerations which weigh with the Court in considering the prayer for amendment. Ordinarily the amendments at a pre-trial stage, where the interdict contained in the proviso to Order VI Rule 17 of the Code has no application, are liberally allowed. In the case at hand, the suit is at a pre-trial nay at a nascent stage. The prayer for amendment of the plaint is contested on two counts. One, the bar under section 14 of IBC to the institution and continuation of the suit or proceedings or initiating of an action to enforce the security interest. Two, that the proposed amendment fundamentally changes the nature and character of the suit. The import of the bar envisaged by clauses (a) and (c) of sub section 14 (1) of IBC deserves to be appreciated. From the text of section 14 (1) (1) (a) it becomes evident that the institution of the suits or continuation of pending suits or proceedings against corporate debtor, is barred once the adjudicating authority orders the moratorium upon admission of insolvency resolution Petition. The bar contained in clause (c) of sub section (1) of section 14 is, however, against the action to foreclose, recover or enforce any security interest created by the corporate debtor. It is trite law that, at the stage of considering the prayer for amendment in the pleadings, the merits of the case, sought to be incorporated by way of amendment, are not required to be delved into. Yet, by way of abundant caution, it is clarified that this Court may not be construed to have delved into the merits of the claim of the plaintiff that it is entitled to seek a declaration as to the validity of the subsequent development agreement by the Society (D6) in favour of Ajmera Luxe (R7). The proposed amendment to the extent it partakes the character of enforcement the security interest created by Meeti (D1) in favour of the plaintiff, cannot be allowed - Application allowed in part.

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• 2024 (9) TMI 329
  Approval of Resolution Plan - allegation is that the RP had failed in his duty to examine and scrutinize the resolution plans submitted by the PRAs and fell short of his statutory obligations to ensure that the interests of all stakeholders are protected before placing the same before the CoC for its approval - failure on the part of CoC to apply its commercial wisdom in a proper manner - error on the part of Adjudicating Authority in approving the resolution plan of the SRA or not. HELD THAT:- The democratic principles of a determinative role of majority opinion in the decision making process of CoC is well established. When the resolution plan has been approved by the CoC with requisite majority and after holding due deliberations, the decision becomes a collective business decision. There are no hesitation in holding that in facts of the present case, when the CoC stood properly constituted and it approved the resolution plan after holding due deliberations and with prescribed requisite majority, there is no foundational basis to agree with the bald assertion made by the Appellant that the principles of corporate democracy has not been upheld. Regardless of the composition of CoC, the IBC places the CoC in control of the insolvency resolution process. For this purpose it has provided for different threshold levels of voting percentages for CoC to take decisions. As regards approval of resolution plan is concerned, the IBC provides for 66% vote share and once this threshold is met, the decision of the CoC, irrespective of whether it is a single-member or multi-member, the decision of the CoC becomes sacrosanct and binding on all stakeholders. The decision of the CoC on the validity of a resolution plan is essentially a business decision and hence should be left to the CoC so long as it musters more than 66% vote share. There can be no fetters on the commercial wisdom of the CoC. The Adjudicating Authority has limited jurisdiction in the approval of the resolution plan. It is not for the Adjudicating Authority to evaluate on merits the rationale underlying only commercial decision of the CoC. When the CoC has approved a Resolution Plan by requisite voting share after considering its feasibility and viability, such decision of CoC cannot be interfered in the exercise of judicial review either by the Adjudicating Authority or by this Tribunal in the exercise of its appellate powers. The scope of judicial review being strictly circumscribed within the boundaries of Section 30(2) of the IBC for the Adjudicating Authority and this discipline having been emphasised time and again by the Hon ble Supreme Court in several judgments, the powers of the Adjudicating Authority dealing with the resolution plan does not extend to examining the correctness or otherwise of the commercial wisdom exercised by the CoC. Merely because there is a reduction in the claim of any creditor does not make the resolution plan fall foul of law. Any clause in the resolution plan which requires creditors to take a hair-cut cannot be construed as being violative of Section 30(2) of the IBC. Under such circumstances there is nothing to show that there has been transgression of the bounds of rules and regulations which have caused any serious miscarriage of justice to the Appellants. The Adjudicating Authority did not err in approving the resolution plan - the impugned order does not warrant any interference - Appeal dismissed.

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• 2024 (9) TMI 328
  Admission of Section 7 Application filed by the Financial Creditor, Respondent - transaction between the Parties was a financial transaction or not - nature of debt - HELD THAT:- The present is the case where Corporate Debtor has not denied the debt but has categorically denied Letter under which loan is claimed to have been given with 12% interest. It is well settled that there has to be a transaction within a meaning of Section 5(8) of the IBC to treat a debt as a Financial Debt. The Hon ble Supreme Court in ANUJ JAIN VERSUS AXIS BANK LIMITED AND ORS. [ 2020 (2) TMI 1259 - SUPREME COURT ], has held that transaction stated in Clauses (a) to (i) of Section 5(8) would be falling within the ambit of Financial Debt only carrying the essential element stated in the principal Clause or at least has the feature which could be traced to such element in the principal Clause. The element of disbursal for time value of money is one essential condition which need to be proved for proving the debt as a Financial Debt - In the present case, the Financial Creditor came up with the case that Letter dated 20.09.2010 contains terms and conditions of the loan which letter was relied and filed along with Section 7 Application. The letter was impeached by Corporate Debtor before the Adjudicating Authority. Adjudicating Authority has also directed Financial Creditor to bring the proof of service of letter. The sequence of the event and transaction between the Parties clearly proves that transfer of the amount by Financial Creditor to the Appellant were transferred by one Family Company to another Family Company and was not by way of loan nor any disbursal for any time value of money has been proved from any material on the record. Essential elements i.e., disbursal for time value of money having not been proved, in the facts of the present case, we are satisfied that Adjudicating Authority committed an error in admitting Section 7 Application without adverting to the real nature of transaction between the Parties and without adverting to the Letter dated 20.09.2010 which was the very basis of the case of the Financial Creditor. There was no disbursal for time value of money and the Corporate Debtor having admitted the amount of Rs.1,22,50,000/- as debt, which debt having not been proved to be a Financial Debt, we are satisfied that Adjudicating Authority erred in committing an error in admitting Section 7 Application, however, in the ends of justice, where the amount by Draft has been handed over to the Financial Creditor by the Corporate Debtor the amount is allowed to be retained by Financial Creditor, although Counsel for the Financial Creditor during hearing has expressed his willingness to return the Draft. Appeal allowed.

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• 2024 (9) TMI 327
  Seeking to initiate Corporate Insolvency Resolution Professional Process - Petitioner is Operational Creditor or not - Existence of debt and dispute or not - HELD THAT:- This Adjudicating Authority is of the considered opinion that there is no reason to deny the petition filed under section 9 of the IBC, 2016 by the Operational Creditor to initiate CIRP against the Corporate Debtor, since the existence of a debt and a default in the payment of debt is clearly established. Therefore, the instant Company Petition bearing CP (IB) No. 149/2023 is admitted against the Corporate Debtor and moratorium is declared in terms of Section 14 of the Code - Petition admitted. Prayer to Tribunal to pass directions under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the Parties in the present dispute to arbitration - contention of the Applicant is that since the claims of BCCI arise out of a purported Agreement and the said Agreement consists of a valid Arbitration clause under Section 19 of the Agreement the same ought to be referred to Arbitration by this Adjudicating Authority - HELD THAT:- The Adjudicating Authority has to either reject or Admit the Application and cannot postulate a third option. In this matter, the application U/s 9 of the IBC has been admitted by the Order passed today, therefore, the application for referring the matter for Arbitration is not maintainable - application dismissed.

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• 2024 (9) TMI 326
  Seeking an order for initiation of the Insolvency Resolution Process against Personal Guarantor - Whether the present petition for initiation of Insolvency Resolution Process against the Personal Guarantor at the behest of the financial creditor deserves admission or rejection? - HELD THAT:- Admittedly, this Tribunal on 05.01.2022 appointed a Resolution Professional and directed him to file his report in terms of Section 99 of IBC, within 10 days from the date of the said order. Subsequently, the Resolution Professional filed his report, inter-alia, recommending for admission of the Petition. Pursuant thereto this Tribunal ordered the resolution professional to furnish a copy of the said report to the personal guarantor and granted opportunity to the personal guarantor to file his objections if any, to the report. In response, the Personal Guarantor filed his objections contending, inter-alia, that the report as filed by the Resolution Professional does not satisfy the requirements envisaged under Section 99 of IBC, besides that the Resolution Professional failed even to verify whether the financial creditor had filed any document evidencing compliance of sub section 4 (b) of Section 95 IBC. The Postal Slip issued by the Postal Authorities for the cover purportedly containing the Demand Notice, discloses that the same was tendered at the post office on 18.10.2021 for despatch to the addressee. The Postal Consignment Track Report at page 66 of the Company Petition, discloses that the above postal consignment has been returned to the addressee with an endorsement dated 20.10.2021 left without instructions and the returned cover has been delivered to the addressee on 22.10.2021 itself. Thus, the Postal Consignment Track Report clearly falsifies the contention of the Financial Creditor that second Demand Notice dated 16.10.2021 has been served on the Personal Guarantor. Here it is also pertinent to note that even while it is the case of the Financial Creditor that the property bearing the address to which the purported Demand Notice has been sent was taken delivery by the Creditor, through the proceedings initiated under section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) much prior to sending the demand notice dated 16.10.2021, strangely, the Financial Creditor chose to send the Demand Notice dated 16.10.2021in the name of the personal guarantor to the very same address, which has been returned with an endorsement that no such addressee . Thus, the creditor herein reduced the compliance of an important statutory requirement in to a mockery. The present application is thoroughly misconceived, devoid of merit, besides contrary to the provisions of the I B Code, 2016. Therefore, the same is liable to be rejected - Petition dismissed.

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• 2024 (9) TMI 324
  Application filed by the Applicant Under Section 60(5) (c) of the Insolvency and Bankruptcy Rules, 2016 read with Rule 11 of NCLT Rules, 2016 - Capital Structure Related/Share Issuance/ ROC - Financial Creditors - Operational Creditors - Legal/ Litigations - Taxation. Capital Structure Related/Share Issuance/ ROC Related - HELD THAT:- A direction may be issued that on the Transfer Date, the entire existing Equity Shares and Preference Shares issued by the Corporate Debtor (held by the erstwhile Promoters Group as well as Captive Customers) shall stand cancelled without any further act or deed (Capital Reduction) - A direction may be issued that on the Transfer Date, the Corporate Debtor may issue new shares worth INR 10,00,000/- (Indian Rupees Ten Lacs only) (100,000 equity shares @ Rs. 10 each (Rupee Ten each) which will be issued and allotted to Innopark (India) Private Limited and its nominees - Post the infusion of Rs. 10,00,000 (Indian Rupees Ten Lacs only) towards Equity Shares allotment, a direction may be issued that, the Bidder may be permitted to structure the balance amount of INR 1,36,44,000/- (Indian Rupees One Crore Thirty-Six Lacs Forty-Four Thousand only) by way of Optionally Convertible Debentures/Non-Convertibles Debentures/Secured Term Loan or such other instrument as may be decided from time to time, with terms and conditions as mutually agreed between the Bidder and the Corporate Debtor. Financial Creditors - HELD THAT:- All accrued or unpaid interest, including penal interest, claim, fee, commissions, charges etc. in relation to the financial debt of the Corporate Debtor, arising for any period until the Transfer Date shall stand permanently extinguished and the Corporate Debtor or the Bidder shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto - Other than amount received by the Liquidator from the Bidder which is distributable under Section 53 of IBC, all other dues including claims or demands made by or liabilities or obligations owed or payable to (including any demand for any loss or damages, principal, interest, compound interest, penal interest, liquidated damages, notional or crystalized mark to mark losses on derivatives, including claims under existing outstanding Bank Guarantees or Corporate Guarantees (whether claimed or not) or claims under existing outstanding Letter of Credits and other charges already accrued accruing or in connection with any third party claims), any actual or potential financial creditors of the Corporate Debtor or in connection with any debt of the Corporate Debtor (including those arising out of any contractual liability such as corporate guarantee, pledge, shortfall undertaking or similar instruments issued by Corporate Debtor to secure loans taken by its subsidiaries or associate company or any other person, and any transaction in derivatives), whether admitted or not, due or contingent, asserted or un-asserted, crystalized or un-crystalized, known or unknown, disputed or undisputed, present or future, whether or not set out in the audited financial statements, or the list of stakeholders, in relation to any period prior to the Transfer Date, shall, on and from the Transfer Date, stand permanently extinguished by virtue of the order of the Adjudicating Authority and the Corporate Debtor or the Bidder shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. Operational Creditors - HELD THAT:- The requests regarding settlement of liabilities towards Operational Creditors/Statutory Dues upon distribution of proceeds under Section 53 of the IBC, extinguishment of demands, interest, and penalty charges up to the Transfer Date, and waiver of past, present, or future claims related to operational creditors, intercorporate loans, and non-convertible debentures, granted. Legal/Litigations - HELD THAT:- The Bidder hereby reiterate that from the Transfer Date, all the liabilities, litigations, proceedings of whatever nature in relation to liabilities or obligations owed or payable to any creditor of the Corporate Debtor, including those relating to direct or indirect taxation, or of any other nature, in respect of the issues, claims, etc., pertaining to the period prior to the Transfer Date shall cease and the Corporate Debtor and Bidder, shall not be prosecuted or liable for any civil or any other consequence including penalty arising from any such offence. Further no action shall be taken against any property of the Corporate Debtor and/or the Bidder in relation to an offence committed prior to the Transfer Date, upon change in control of the Corporate Debtor in favour of the Bidder. Taxation - HELD THAT:- A direction be issued that the Corporate Debtor and the Bidder shall not be liable for from all Taxes, levies, fees, transfer charges, transfer premiums, surcharges, interests, penal charges and any such other levies, that arise from or relate to the Acquisition, since payment of these amounts may make the Acquisition unviable. Income tax authorities to allow representation of the case/appeal for the different financial years, without any additional burden on the Corporate Debtor and/or Bidder, for the income tax notices/ demands/ penalties/ assessments/ adjustments of the accumulated losses (including but not limited to additions/ adjustments under Transfer Pricing under the Income Tax Act, 1961) up to the Transfer Date, where the Corporate Debtor failed to represent the case effectively. Such representation/ appeal should not be treated as time barred - On and from the Transfer Date, any debit or credit, being the balancing figure, shall be adjusted by the Corporate Debtor in the capital/other reserve at its sole discretion and the same shall be deemed to be in compliance with the applicable accounting standards without any tax implications on the Corporate Debtor upon such adjustment. Petition allowed in part.

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• 2024 (9) TMI 323
  Seeking initiation of Corporate Insolvency Resolution Process (CIRP), granting moratorium and appointment of Interim Resolution Professional as prescribed under the Code and Rules - Petitioner defaulted in the payment of alleged debt. Whether the petitioner ceases to be a financial service provider after Cancellation of Registration (COR) by RBI with direction to dispose of the financial assets and bring it below 50% of the total assets within three years from the date of cancellation of COR so that petitioner can come out from the Principal Business Criteria (PBC) stipulated for NBFCs? HELD THAT:- The applicant was having a valid NBFC license and thus was a financial service provider, on the date of lending by financial creditors as well as on the date of default by the applicant. These two dates are very important as cause of actions for filing this application arose on these two dates i.e creation of debt and in turn default in paying that debt (debt and default). From these facts, a conclusion is drawn that applicant beyond doubt was a financial service provider on the dates when cause of actions arose for filing this application, and therefore is barred for filing section 10 application. It is found that (1) the Corporate Debtor s Certificate of Registration had been cancelled in view of its failure to achieve NOF and CRA and not because of change of its activity (2) Reserve Bank of India has categorically clarified that the Company will continue to be governed by the relevant provisions of the Reserve Bank of India Act, 1954 and various directions/ instructions issued by Reserve Bank of India from time to time even after cancellation of Certificate of Registration and (3) RBI had directed the applicant for disposal of financial assets and bring them below 50% within a period of three years from the date of cancellation of COR. It is found that beyond doubt the petitioner was FSP as on the date of credit facilities sanctioned by the financial creditors and also on the date of default by petitioner and even as on date also its activities continue to be the same and still it is regulated by RBI - there are merit in the submission of SBI that instead of recovering the said debt, the Petitioner has written off its debts only with a sole intention to be outside the purview of Section 277 of the Code. The respondent is a Financial Service Provider and thus, stands excluded from definition of Corporate Person as defined in Section 3(7) of IBC, 2016 and therefore, Chapter II of I B Code, is not applicable to the present petition for initiation of Corporate Insolvency Resolution Process, consequently, the Petition is not maintainable at the behest of the applicant. Petition dismissed.

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• 2024 (9) TMI 322
  Seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor - present petition is barred by section 10A of IBC or not - Existence of debt and default or not - HELD THAT:- Upon perusal of records, this Bench is of the considered opinion that there is no dispute regarding the fact that the Corporate Debtor owes debt to the Financial Creditor and has defaulted in the payment of Financial debt of more than Rs. 1 Crore (as per Section 4 of the IBC). Hence, the debt due and default is established. From evidence and material on record, it is also held that the application is filed by properly authorized person. Therefore, this Company Petition is liable to be admitted. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

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• PMLA

• 2024 (9) TMI 321
  Money Laundering - Rejection of Bail of Vijay Nair who is a co-accused in Delhi Excise policy scam - allegation is that the petitioner acted as a middleman and was involved in irregularities in framing and implementing the Delhi Excise policy - fundamental rights guaranteed under Article 21 - HELD THAT:- In a recent judgment of this Court, in Prem Prakash v. Union of India through the Directorate of Enforcement [ 2024 (8) TMI 1412 - SUPREME COURT ], the Court reiterated that fundamental right enshrined under Article 21 cannot be arbitrarily subjugated to the statutory bar in Section 45 of the Act. Here the accused is lodged in jail for a considerable period and there is little possibility of trial reaching finality in the near future. The liberty guaranteed under Article 21 of the Constitution does not get abrogated even for special statutes where the threshold twin bar is provided and such statutes, cannot carve out an exception to the principle of bail being the rule and jail being the exception. The cardinal principle of bail being the rule and jail being the exception will be entirely defeated if the petitioner is kept in custody as an under-trial for such a long duration. This is particularly glaring since in the event of conviction, the maximum sentence prescribed is only 7 years for the offence of money laundering. The petitioner is directed to be released forthwith on bail in connection with the ECIR No. HIU-II/14/2022 dated 22.08.2022 registered by the Directorate of Enforcement on furnishing bail bonds in the sum of Rs. 10,00,000/- in each of the cases - the petitioner shall not make any attempt to tamper with the evidence or influence the witnesses - petition allowed.

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• 2024 (9) TMI 320
  Money Laundering - Proceeds of crime - Invocation of extraordinary writ jurisdiction under Article 226 and jurisdiction of Superintendence under Article 227 of the Constitution of India - Quashing of ECIR based on quashed/closed FIRs - HELD THAT:- It is evident that Section 3 of PMLA 2002 Act defines the offence of money laundering and it is not narrowly focused. The proceeds of crime is a pivotal ingredient constituting the offence of money laundering. Section 3 of the 2002 Act has been explained elaborately in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT] . It is evident that the definition of the offence of money laundering is wide and expansive. It makes liable not only the person who directly or indirectly indulges with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property, but even the person who knowingly assists or knowingly is a party or is actually involved in any process or activity connected shall also be liable. Explanation (i) further explains the position. Explanation (ii) to Section 3 of the 2002 Act provides that the process or activity connected with the proceeds of crime is a continuing activity and it continues till the time a person is directly or indirectly enjoying the proceeds of crime. While defining the expression proceeds of crime , it has been provided that any property derived or obtained directly or indirectly by any person as a result of criminal activity relating to the said property shall constitute the proceeds of crime. Where the property is taken or held outside the country, then the property equivalent in value held within the country or abroad shall be included in such proceeds. In the explanation attached to the definition, it has been added that if the property is directly or indirectly derived or obtained as a result of any criminal activity related to the scheduled offence, the same shall also be included in the proceeds of crime. According to Explanation II to Section 44 of the 2002 Act, any subsequent complaint should be incorporated into the pending complaint for further investigation to gather additional evidence against any accused, as reflected in the statutory language. The legislative intent in cases involving multiple FIRs is thus quite clear. Consequently, it can be concluded that even if all FIRs except one have been resolved through compromise or other means, the investigation under the same ECIR will continue. Though, the ECIR is not an FIR, however, the ED is an Investigating Agency that has been constituted to investigate the various offences including the offence of money laundering. In these circumstances, after the filing of ECIR in the year 2022, the ED continued to investigate. This Bench does not find substance in the present writ petition and hence, the same is dismissed.

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• Service Tax

• 2024 (9) TMI 319
  CENVAT Credit - input services - mobilization advance availed and debited w.e.f. July, 2012 of Rs. 91,01,452/-, paid during the year 2010-11 - interest - penalty - extended period of limitation - HELD THAT:- From the statutory provisions, it is evident that the scope of definition of input service as enumerated under Rule 2(l) of Cenvat Credit Rules, 2004, does not cover the services specified under Commercial or Industrial Construction services, construction of Complex services and Works Contract services so far as the same are used for construction of a building or a civil structure or a part thereof for the period upto 30.06.2012. Further, it is noted that from 01.07.2012 onwards, the scope of input service definition excludes the service portion in the execution of a works contract and construction services, including service listed under clause (b) of section 66E of the Finance Act in so far as they are used for construction or execution of works contract of a building or a civil structure or a part thereof. In view of the statutory provisions, it is opined that the Commissioner was correct in holding that any service tax paid by the service providers on such mobilization advance received towards rendition of such construction services, would not qualify to be eligible as Cenvat credit, as the services so received are not eligible input services in terms of the provisions of Rule 2(l) of Cenvat Credit Rules, 2004. The question of taxability on mobilization advances has been well settled and in the case of M/S GJF CONSTRUCTION CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, HYDERABAD [ 2018 (8) TMI 323 - CESTAT HYDERABAD] and in the case of THERMAX INSTRUMENTATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2015 (12) TMI 1222 - CESTAT MUMBAI] , the Tribunal held that mobilization advance received by the assessee is not chargeable to service tax, if it is in the nature of an advance. In view of the same, the appellant was not entitled to take credit of service tax paid on such mobilisation advances. Consequently, the demand confirmed in the impugned order upheld. Confirmation of interest under Rule 14 of the Cenvat Credit Rules, 2004 - HELD THAT:- There was no service tax liability on such mobilisation advances. Therefore, the credit taken on such tax paid was not admissible - The word taken as used in Rule 14 is considered on a different footing from the word availed . In view of the submissions made that the appellant had balance of Cenvat Credit higher than Rs. 91,01,452/-, it is held that no interest is liable to be paid. Extended period of limitation - Penalty u/s 77 and 78 of the Finance Act, 1994 - HELD THAT:- The appellant was registered with the Revenue department and was paying Service Tax on various outputs services. The appellant was filing returns regularly. It is also on record that the appellant had cooperated with the Department and had submitted all information/documents were furnished during audit - the Courts have consistently held that in such a situation, the facts are deemed to be in the knowledge of the Department, and the intent to evade has to be positive act to be established by the department - there is no justification for invoking the extended period to impose penalty under Section 78. There is also no justification for imposing penalty under section 77 of the Finance Act. Appeal allowed in part.

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• 2024 (9) TMI 318
  Levy of service tax - re-imbursement of port charges during provisioning of CHA service - commission under Business Auxiliary Service. CHA Service - amount received as forklift expenses and various other charges is reimbursable - HELD THAT:- It is settled that other than service charge of service of CHA any reimbursable expenses incurred on behalf of the clients is not liable to service tax - As held by Hon ble Supreme Court in the case of IUNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] and various other judgments relied upon by the appellant. Hence the demand on such reimbursable expenses is set-aside. Demand of service tax on Business Auxiliary Service (commission) - HELD THAT:- The learned consultant is agreed upon that demand of Rs. 31,859/- for the period 01.10.2003 to 31.03.2004 is not sustainable as the same is covered under general exemption N/N. 13/2003-ST dated 20.06.2003. Therefore, this demand of Rs. 31,859/- is set-aside and the remaining demand on Commission is upheld. The impugned order stand modified to the above extent - Appeal allowed in part.

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• 2024 (9) TMI 317
  Invocation of time limitation for raising demand - Levy of penalty - Exemption from service tax - bundled services or not - game of cricket - Dropping of the demands by the ld. adjudicating authority - demand raised under the category of business auxiliary service - Dropping of the demand under the category of event management service - Dropping of demand under the category of mandap keeper service - Dropping of demand under renting of immovable property service . Invocation of time limitation for raising demand - Levy of penalty - HELD THAT:- The demand has been raised in the notice on the basis of Annual Report for the year 2008-09 to 2013-14 which is published every year and the Ledger A/c maintained by them. When the demand is raised on the basis of the books of accounts maintained by the appellant, extended period cannot be invoked. This view has been held in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR, COMMISSIONERATE VERSUS M/S. HINDUSTAN CABLES LIMITED. [ 2022 (6) TMI 709 - CALCUTTA HIGH COURT ] wherein the Hon ble Calcutta High Court has held that when Show Cause Notice issued is on the basis of book of accounts maintained by the assessee and not discovery of new facts by Department, extended period of limitation cannot be invoked. The demands confirmed in the impugned order for the extended period of limitation is not sustainable. No penalty is imposable as suppression of fact with intention to evade the tax is not established in this case. Exemption from service tax - bundled services or not - game of cricket - HELD THAT:- All the services rendered by the appellant are naturally bundled together with the game of cricket. In the present case, it is observed that promoting the game of cricket is the primary objective of the cricket association/JSCA and all the services rendered are in association with promoting the game of cricket. When matches are not played, all the services become irrelevant and JSCA earns money only when these services are provided during the course of cricket matches. Accordingly, JSCA has rendered bundled services in connection with promoting the game of cricket. Since services rendered in connection with promotion of sporting events is exempted from the levy of Service Tax prior to 30.06.2012, no service tax is payable by the JSCA, being a charitable institution engaged in the activity of promoting the game of cricket. For the period after 01.07.2012, vide Mega Exemption Notification No 25/2012-S.T. dated 20.06.2012, exempts all the services rendered by JSCA in connection with sports from the levy of service tax. Accordingly, JSCA are not liable to pay Service Tax for the services rendered by them in connection with promotion of sports. Dropping of the demands by the ld. adjudicating authority - demand raised under the category of business auxiliary service - HELD THAT:- The amount received are not taxable under the category of Business Auxiliary Services as the said subsidies are not received for providing any service for the promotion, marketing or sale of any product or service for the client . The said subsidies were merely in the nature of grants-in-aid by the BCCI for promotion of the game of cricket in the State of Jharkhand. The services rendered in connection with promotion of sports is not liable to service tax prior to 30.06.2012. For the period under the Negative List regime also, in terms of Clause 10(b) of the Mega Exemption Notification No 25/2012-S.T. dated 20.06.2012, w.e.f. 01.07.2012 any service provided by a recognized sports body to another is exempted from levy of service tax - the ld. adjudicating authority has rightly dropped the demand raised in the Notice under this category. Dropping of the demand under the category of event management service - HELD THAT:- It is observed that the subsidies received from BCCI are in the nature of grants in aid for providing any service in relation to management of any event as an event manager . Accordingly, the ld. adjudicating authority has rightly dropped the demand raised under the category of event management service. Dropping of demand under the category of mandap keeper service - HELD THAT:- JSCA had leased corporate boxes, hospitality boxes, etc., to corporate houses for viewing international matches for a specified period (not for all matches). This amount collected is in the nature of entry fee booked in advance to privileged buyers and hence, the said activity could not be treated as a service under the category of mandap keeper service . JSCA also submits that there is no exclusive letting out of the said corporate boxes, hospitality lounges, etc.; in the instant case, JSCA is neither a mandap keeper nor are the corporate boxes mandaps . Accordingly, the ld. adjudicating authority has rightly dropped the demand under this category. Dropping of demand under renting of immovable property service - HELD THAT:- The service rendered in this regard by JSCA is not liable to service tax prior to 30.06.2012. W.e.f. 01.07.2012, under the category of declared services , the ground rent received for playing cricket, which is not in furtherance of business, is not taxable. In respect of the other services wherein demands were dropped by the ld. adjudicating authority, there are no infirmity in the dropping of the demand by the ld. adjudicating authority. All the said demands have been rightly dropped by the ld. adjudicating authority and thus, upheld - the demands confirmed by the ld. adjudicating authority in the impugned order set aside - Since the demand itself is set aside, the question of demanding interest and imposing penalties does not arise. Appeal of assessee allowed.

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• 2024 (9) TMI 316
  Refund of CENVAT Credit - part rejection on account that the address mentioned in the invoices were not the registered address of the appellants - whether the amount of refund claim of CENVAT credit, rejected in the impugned order dated 08.03.2019 is eligible to be considered as refundable in terms of Rule 5 of the CENVAT Credit Rules, 2004, or not? Denial of CENVAT Credit on the ground that such credit was not availed during the disputed quarter, but in subsequent period - HELD THAT:- It is found that the provisions of Rule 9(11) of the CCR, 2004, in fact provide for submission of revised return to correct a mistake or omission within a prescribed period. It no where deals with taking of CENVAT credit, which is governed under the Rule 3 of the CCR, 2004. Further, it is a settled position of law that those grounds which did not find mention in the show cause notice as well, then the department cannot travel beyond the show cause notice. In the case of ASSISTANT COMMISSIONER, COMMERCIAL TAX DEPARTMENT, WORKS CONTRACT LEASING, KOTA VERSUS M/S SHUKLA BROTHERS [ 2010 (4) TMI 139 - SUPREME COURT] , the Hon ble Supreme Court have held that the concept of reasoned judgement has become an indispensable part of basic rule of law and it is mandatory requirement for procedural law and that the reasoning for a decision should be recorded therein. Denial of CENVAT Credit - denial on the ground that the address mentioned in the invoices were not the registered address of the appellants - HELD THAT:- The Co-ordinate Bench of the Tribunal in the case of GE INDIA EXPORTS (P) LTD. VERSUS COMMISSIONER OF C. EX. S.T., HYDERABAD-II [ 2017 (1) TMI 613 - CESTAT HYDERABAD] have held that CENVAT credit cannot be denied on the ground of invoices having been issued on unregistered premises of the appellants. In the present case, the CENVAT credit has been taken by the same assessee-appellant and therefore the ground of difference in the address/registered address appearing in the invoices, on which the impugned order had rejected the CENVAT credit is not proper and justified. The impugned order is modified to the extent of allowing the appeal filed by the appellants in respect of refund of Rs.7,83,480/-being found as eligible CENVAT credit amount to be sanctioned to the appellants.

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• Central Excise

• 2024 (9) TMI 384
  Denial of credit of input and input services used for generation of the electricity - definition of factory in section 2 (e) of the Act is read with rules 2(k)(iii) and rule 3 in Cenvat Credit Rules, 2004 - HELD THAT:- Both units of respondent correspond or come within the meaning of factory given in the Act. Input includes all goods used for generation of, inter alia, electricity for captive use. Apart from surplus electricity sold to Gridco, electricity that was surplus in the generating unit was transmitted to the other unit for use in manufacture of the dutiable goods. Hence, it cannot be said that the transmitted electricity was not captively used. The Tribunal, by impugned final order relied on final order made in M/S. SHREE CEMENT LTD. VERSUS C.C.E. JAIPUR-II [ 2017 (6) TMI 502 - CESTAT NEW DELHI] where it was held that Considering that the electricity has been used in the manufacture of dutiable final products and also the fact that all units belong to the appellant the denial of credit is not justifiable in the present case. Thus, no substantial question of law arises regarding use of the electricity manufactured in one unit of respondent but transmitted for use by another for use in manufacture of dutiable goods, to obtain cenvat credit. Appeal dismissed.

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• 2024 (9) TMI 383
  CENVAT Credit - Towers and parts of accessories of towers falling under Chapter 73 of the Central Excise Tariff Act, 1985 - denial on the ground that towers were not capital goods as defined under Rule 2 (A) of the said Rules - Jurisdiction - denial also on the ground that BSNL, Eastern Telecom Region and BSNL Eastern Telecom Project provide IUC service and undertook various project related jobs for all the BSNL branches of Eastern India. Denial on the ground that towers were not capital goods as defined under Rule 2 (A) of the said Rules - HELD THAT:- The Tribunal after going through the factual position found that adjudicating authority has given a clear finding that towers and parts and accessories of towers were goods on which Central Excise Duty has been paid by considering them as excisable goods. Further a provider of all output service is eligible for availing credit on duty of excise and service tax paid on capital goods, input and input service, towers and parts and accessories of towers. In addition, providing of output service, the other factual findings referred to by the adjudicating authority was re-examined and the learned tribunal affirmed the view taken by the Commissioner and held that the Commissioner had rightly dropped the demand in the show-cause. Denial also on the ground that BSNL, Eastern Telecom Region and BSNL Eastern Telecom Project provide IUC service and undertook various project related jobs for all the BSNL branches of Eastern India - HELD THAT:- The issue was taken up for consideration and the tribunal examined the facts and agreed with a view taken by the Commissioner for dropping the proposal in the show-cause notice not stopping with that the tribunal went further to examine the facts and that the assessee had satisfied the so-called contentions for availing the credit and, therefore, held that the CENVAT credit cannot be denied on account of procedural lapse, if any. Thus, it is found that the matter being entirely factual and no question of law much less substantial question of law arises for consideration in this appeal. Appeal dismissed.

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• 2024 (9) TMI 382
  CENVAT Credit - non-maintenance of separate accounts of inputs and input services used for manufacturing of exempted goods and rendering of exempted service for the period 1st April 2009 to 31st March 2013 - HELD THAT:- The impugned order is woefully inadequate in not having examined the facts in the notice for veracity in the light of submissions of the noticee. Furthermore, as has been pointed out by Learned Chartered Accountant, it has been held by the Tribunal in M/S. ACCURA VALVES PVT. LTD. VERSUS CCGST CE, NASHIK [ 2018 (12) TMI 428 - CESTAT MUMBAI ], as also in EATON FLUID POWER LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, PUNE-I [ 2023 (12) TMI 172 - CESTAT MUMBAI ] , that payment of amount as prescribed in rule 6(3) cannot be forced upon an assessee. It is now settled law that reversal of credit proportionate to that borne by the value of exempted goods and/or exempted service to value of total goods and/or exempted services suffices for CENVAT Credit Rules, 2004. The adjudicating authority had failed to take note of the facts to which the settled law were be applicable. The impugned order is set aside - matter remanded back to the original authority for a fresh decision based on submissions of the appellant and the law as settled. Appeal allowed by way of remand.

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• 2024 (9) TMI 315
  100% refund of the excise duty on the goods manufactured in terms of N/N. 56/2002-CE dated 14.11.2002 - seeking fixation of special rates - time limitation - HELD THAT:- While, in case of limitation prescribed by a statute, the time prescribed in the statute, including for condonation of delay up to a particular period is required to be respected unless an extraordinary and an exception case is made out for exercise of writ jurisdiction to direct an authority to entertain an application even beyond time. That apart, having regard to the object of granting the area-based exemptions to the industrial units located in specified areas and also having regard to the fact that the entitlement of the petitioner to refund as per the excise notification of 19 of 2008 read with notification No. 34 of 2008 is not disputed, a liberal approach in the matter of condonation of delay is called for. Ordinarily, the petitioner, with a view to taking benefit of exemptions under the amending notifications of 2008, should have made applications seeking fixation of special rates as was provided in the amending notifications immediately after the judgment of Supreme Court in VVF Ltd s case [ 2020 (4) TMI 885 - SC ORDER ]. For two years, it could not do so because of pandemic and up to September 2022, he was entitled to apply for as provided under the notifications itself. There is also a provision for condonation of delay in the notifications for a period of one month. Once the respondents do not dispute the eligibility of the petitioner to claim refund of excise duty in terms of amending notifications of 2008, it would be travesty of justice if the claim of the petitioner is thrown out on the technical ground of delay - this is a fit case for exercise of extraordinary writ jurisdiction under Article 226 of the Constitution and direct the respondent No. 2 to treat the applications filed by the petitioner in time and decide the same on merits. The Judgment in Greatship (India) Ltd [ 2022 (9) TMI 896 - SUPREME COURT ] does not deal with the issue in the manner as dealt with in this case. Had respondent No. 2 decided the matter on merits or had there been a dispute of fact with regard to the computation of limitation, we would have definitely relegated the petitioner to the alternative remedy provided under the Statute. In the instant case, the Commissioner has failed to take note of a clear directive of the Supreme Court to exclude the period of limitation between 15.03.2020 to 28.02.2022 while computing the limitation provided for filing of any appeal or application before any Court or authority under the statute. The Commissioner also failed to take note of the fact that the petitioner had filed refund appellations in the year 2011 and 2012 itself and made the applications on 27.12.2022 only seeking determination of refund of excise duty in terms of excise notifications of 2008 which were upheld by the Supreme Court in VVF Ltd. s case. The impugned order dated 02.02.2023 passed by respondent No. 2 is quashed. Respondent No. 2 is directed to treat the applications dated 27.12.2022 filed by the petitioner in time and pass fresh orders on merits - petition allowed.

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• 2024 (9) TMI 314
  Applicability of amendment to Rule 6 of the CENVAT Credit Rules, 2004 vide Finance Act, 2010 effective from 08/05/10 to 07/11/10, for the period from January 2009 to December 2009 - restriction to the period from 10/09/04 to 31/03/08 - failure to maintain separate accounts in respect of goods used in the manufacture of exempted and dutiable goods. HELD THAT:- The issue answered by the Bench in COMMISSIONER OF CENTRAL EXCISE, SALEM VERSUS M/S. BURN STANDARD CO., LIMITED [ 2013 (2) TMI 35 - MADRAS HIGH COURT] and the factual matrix upon which those questions have been posited, is identical. In this case as well, the Revenue has not disputed the fact that proper reversal of credit was attributable to the DBM and hence, the question of a further demand does not really arise. Thus, there is no necessity for any further enquiry. As the order of this Court in above case, is stated to have attained finality, applying the ratio of the same, the substantial questions of law are answered in favour of the assessee and order of the CESTAT dated 20.03.2012 is confirmed - petition dismissed.

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• 2024 (9) TMI 313
  Maintainability of review petition - appropriate forum - Section 35L of the Central Excise Act, 1944 and Order 47 Rule 1 of CPC - HELD THAT:- In the light of Section 35L of the Central Excise Act of 1944, the petitioner statutory right is only before the Supreme Court. Even assuming for the sake of argument that Order 47 Rule 1 is applicable, the review is not maintainable in the light of the judgment passed by this Court in NENJING M. MARAK; SMT. PEJE CH. SANGMA; SHRI NENGJIN CH. SANGMA VERSUS GARO HILLS AUTONOMOUS DISTRICT COUNCIL (GHADC) ; CHIEF EXECUTIVE MEMBER (CEM) ; EXECUTIVE MEMBER (EM) ; SMT. KINTI CH. SANGMA, MEGHALAYA [ 2024 (3) TMI 1348 - MEGHALAYA HIGH COURT] where it was held that The Review Applicant in the guise of the Review Petition wants this Bench to rewrite its Judgment, which is not possible under review jurisdiction. As already stated above review is not an appeal in disguise and there is no error apparent on the face of the record. Therefore, the Division Bench rightly confirmed the order of the learned Single Judge, which does not warrant any review. Review Petition is dismissed.

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• 2024 (9) TMI 312
  Valuation of goods cleared to sister concerned - alleged short payment of duty - HELD THAT:- The Tribunal in the case of BAJAJ TEMPO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2004 (7) TMI 145 - CESTAT, MUMBAI] has observed considering the fact that the net amount of differential duty payable by the appellants has been paid and the credit of the same has been taken at the recipient factory of the appellants only to the extent of such payment, we find no justification to sustain the demands confirmed against the appellants in the impugned orders passed by the lower authorities. Reliance has also been placed on the Hon ble High Court of Gujarat in the case of COMMR. OF C. EX. CUS., VADODARA-II VERSUS INDEOS ABS LIMITED [ 2010 (3) TMI 656 - GUJARAT HIGH COURT] where it was held that The grievance was that the aspect of undervaluation has not been considered by the Tribunal at all. Grievance would have merited acceptance if the ultimate exercise would have benefited the Revenue by collection of duty in the coffers of the exchequer. In the facts of the present case, admittedly no such benefit accrues to the exchequer. In the circumstances, if the Tribunal has chosen not to determine an academic issue, it is not possible to state that any legal infirmity exists in the impugned order of the Tribunal. In the instant case also, the situation is identical. There are no merit in the impugned order - The same is set aside and appeal allowed.

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• 2024 (9) TMI 311
  Process amounting to manufacture or not - SCN and Order-in-Original without alleging and proving manufacture, devoting efforts and giving finding in respect of classification, is perverse particularly when such a contention is admittedly raised by the appellants in their reply to notice - burden to prove of manufacture not been discharged by the Revenue - cum duty benefit. Whether a different goods emerged after carrying out the said activity? - HELD THAT:- The SCN and the impugned Order-In-Original is in this regard is vague and confirmation of demand based on assumption and presumption and without adjudicating on above aspect is perverse and not tenable. Since, the root cause of this case is demand of Excuse duty assuming that the activity under taken by the appellant are manufacture, however, the adjudicating authority has not properly examined the overall activity of the appellant, process and whether a different goods emerged after carrying out the said activity. Therefore, without proper examination of the process and the emergence of distinct commodity the demand of Excise duty considering the activities as manufacture cannot be sustainable. Therefore, on the aspects of manufacture the matter needs to be re-examined by adjudicating authority. CENVAT Credit - denial on the ground that the invoices on which the Cenvat credit was claimed bear endorsement - HELD THAT:- In many cases it has been decided that merely because the invoices are endorsed Cenvat credit cannot be denied, when the duty payment and receipt of raw material and use in the manufacture is established. These aspects are not under dispute in the present case except the charge that the invoices are endorsed. Therefore, the appellant are entitled for the Cenvat credit subject to verification of the document - the denial of Cenvat credit merely on the ground that the invoices are endorsed is not sustainable. Cum duty benefit - adjudicating authority has denied this benefit on the ground that the appellant had a mala fide intention - HELD THAT:- This contention of the adjudicating authority cannot be agreed upon for the reason that statutory provision under the Act cannot be flouted on the ground that the assessee has mala fide intention or bona fide intention. Even if it is established that the assessee has a mala fide intention, the statutory provision cannot be kept aside and matter cannot be decided on the whims of the authority. For example while confirming the demand, if it is established the assessee is eligible for SSI exemption or any beneficial notification, irrespective whether there is mala fide intention the said benefits provided in the statute cannot ignored. Therefore, merely on the contention that the appellant had a mala fide intention cum duty benefit cannot be denied - the appellant is eligible for cum duty benefit. The appeals are allowed by way of remand to the adjudicating authority.

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• 2024 (9) TMI 310
  Benefit of N/N. 2/95-CE dated 04.01.1995 - manufacturing of goods, which were cleared in DTA, out of indigenous or imported raw material - deemed export effected by the noticee is at par with the physical export in terms of Para 9.9(b) of the said Exim Policy 1997-2002 or not - appellant argued right from beginning that the goods in question is manufactured out of indigenous raw material. HELD THAT:- This Tribunal in the first round of litigation remanded the matter to the Adjudicating Authority reported at PRIME POLY WEAVE LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SURAT-I [ 2005 (7) TMI 404 - CESTAT, MUMBAI] where the Tribunal has held that we would remand the question of shortages accounting thereof consequent duties, if any, and penalties in this case also open in the now being ordered for both sides de novo proceedings. Since there was no evidence that the subject goods were manufactured out of imported goods, the matter was remanded with a specific direction to the Adjudicating Authority to establish that the goods were manufactured out of indigenous raw material and/ or imported raw material. The Adjudicating Authority in denovo adjudication, without having any evidence on record to this aspect came to the conclusion that the goods were manufacture out of indigenous as well as imported raw materials. On going through the show cause notice wherein the allegation of manufacture of subject goods out of indigenous and imported raw material is bald and on assumption and the same is not based on any evidence. Therefore, despite remand the matter to establish this fact, the Adjudicating Authority has decided the source of raw material only on the assumptions. Therefore, in these peculiar facts, the benefit of doubt clearly goes in favour of the appellant. Accordingly, in the absence of any evidence that the imported raw material was used in the subject goods, the appellant cannot be denied of exemption Notification No. 13/98-CE in respect of DTA clearances. The impugned order is set aside - appeal allowed.

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• 2024 (9) TMI 309
  Manufacture of plastic items on job work basis - availability of exemption under Notification No.67/95-CE - demand of interest and penalty - revenue neutrality. HELD THAT:- As per exemption Notification No.67/95-CE, only those goods which are produced in the factory and used in the manufacture of finished goods which are cleared on payment of duty are exempt from duty. The goods which are finished goods by one person can be capital goods for another person. However, the same do not change the nature of the goods being finished goods that being so appellants claim to the benefit of exemption under Notification No.67/95-CE cannot be upheld - there are no merits in the submissions made on this account. The decisions relied upon by the appellant are distinguishable from the facts of the present case, in case of the M/s Zenith Machine Tools Pvt. Ltd. [ 2010 (4) TMI 481 - CESTAT, BANGALORE] relied by the appellant the issue was in respect of clearance of the capital goods, not the finished goods produced in the factory of the manufacturer. The only issue in respect of the return of the said goods on which Cenvat credit has been taken within 180 days after job-work. There are no infirmity in the impugned order - appeal dismissed.

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• 2024 (9) TMI 308
  Duty liability on HSD and SKO lying in pipelines - variations in batch quantities that was initially communicated by the appellant to the department and the actual quantity on which the Haldia Refinery subsequently paid the duty - HELD THAT:- It is seen from the impugned order, that the learned adjudicating authority had confirmed the demand relating to 12268 K.L. of HSD, essentially because the computation submitted, referred to HB viz. Haldia-Barauni Pipeline while as per the learned adjudicating authority it should have been Barauni-Kanpur Pipeline. However, perusal of the said computation table, tallies with the batch no. and quantity as declared by the appellant to the department. It is also a fact that the pipeline continues from Haldia to Barauni and then onwards from Barauni to Kanpur/Lucknow. There being no separate pipeline perhaps the apparent confusion before the learned adjudicating authority leading to the presumption and restricting the meaning for the pipeline as Haldia-Barauni. For the typographical omission, the payment of duty duly supported by the challans cannot be ignored and will have to be taken due note of. As the batch numbers and quantity match with the appellant s claim and stand verified there are no justification for upholding the demand of Rs.3,68,40,813/- as confirmed by the learned adjudicating authority. It is also noted that the correspondence exchanged within the department by way of verification process and letters issued by them dated 11.04.2014, 26.05.2014, 04.08.2014 and 06.08.2014 confirm the duty payment being made by the Haldia Refinery. Thus, in view of the fact that the total demand as aforesaid stands duly paid along with interest, we find no justification in sustaining the aforesaid order. The impugned order is set aside and the appeal is allowed.

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• 2024 (9) TMI 307
  100% EOU - process amounting to manufacture or not - processes undertaken by the appellant on job work basis - duty liability is on the appellant who is a job-worker or the suppliers of raw materials - time limitation - invocation of proviso to Section 11A of CEA. HELD THAT:- The process of populating the PCBs by the appellant as a job worker is not in dispute. As long as there is transformation of a product into a new product marketable and commercially known comes into existence, manufacture takes place. In the instance case, there is no dispute that the appellant receives raw materials and converts them into a populated PCB which is recognised as entirely a different product and returns the same to the supplier of the raw materials - In the instance case, the tests stand satisfied and the goods manufactured by the appellant amounts to manufacture. Who is liable to pay duty? - Whether the supplier of raw materials or the job-worker (appellant)? - HELD THAT:- Admittedly, none of these conditions have been satisfied and therefore, the Commissioner considering the clearances made were on principal-to-principal basis has rightly demanded duty from the job worker. Whether non-compliance of these conditions is only procedural as claimed by the appellant needs to be examined. The Supreme Court of India in the case of Commissioner of C. Ex., New Delhi vs. Hari Chand Shri Gopal [ 2010 (11) TMI 13 - SUPREME COURT ] observed that The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption. In Novopan Indian Ltd. [ 1994 (9) TMI 67 - SUPREME COURT ], this Court held that a person, invoking an exception or exemption provisions, to relieve him of tax liability must establish clearly that he is covered by the said provisions and, in case of doubt or ambiguity, the benefit of it must go to the State. Time Limitation - HELD THAT:- Having known that the appellant was clearing the PPCBs without payment of duty in 2009 itself, the delay of issuing notice after 3 years cannot be justified to invoke suppression on the part of the appellant. Hence, the demand cannot be sustained beyond the normal period for the show-cause notice dated 07.03.2013, Since all other show-cause notices are for the normal period only. The appellant has produced a similar document for the relevant periods which have not been considered by the Commissioner in the impugned orders but only on the ground that required procedures are not being followed. However, the fact remains that even if the appellant is liable to pay duty there cannot be duty liability on the appellant in the event the supplier of raw materials has cleared the goods either on payment of duty or under various exemptions as claimed by the appellant. Since, documents have been produced to substantiate their claim these documents need to be verified and to that extent the duty liability on the appellant gets reduced. Therefore, the matter needs to be remanded for verification of the documents produced by the appellant for substantiating their claim that either the goods are exempted or they have cleared on payment of duty. The penalties under Section 11AC and Rule 25 are set aside - Appeal are remanded for re-quantification of demand based on our observations - appeal disposed off by way of remand.

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• 2024 (9) TMI 306
  Valuation of Excise Duty - inclusion of freight charges in the assessable value - demand raised invoking Rule 7 of Central Excise Valuation Rules, 2000 - HELD THAT:- The facts bring out that the transportation is arranged by the customer and the freight charges are also paid by the customer to the consignment agent - The very same issue was decided by the Tribunal in the appellant s own case for a different period in [ 2017 (1) TMI 1407 - CESTAT, CHENNAI ], the Tribunal has set aside the demand. Following the said decision, the Tribunal subsequently in the appellant s own case [ 2017 (7) TMI 557 - CESTAT CHENNAI ] had set aside the demand for the period December 2007 to December 2013 for other units of the appellant. Thus, there are no grounds to take a different view. Following the decision in the appellant s own case, it is found that the demand cannot sustain. The impugned orders are set aside - appeal allowed.

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• 2024 (9) TMI 305
  Refund claim - Time Limitation - interpretation of Clause (ec) of explanation of Section 11B of CEA - Cenvat Credit on insurance premium. HELD THAT:- A plain reading would indicate that while there will be no limitation if duty has paid under protest as long as the matter is pending before any Appellate Fora, Court etc., but once they decide the matter and the refund becomes eligible to the appellant as a consequence of said judgment then the date of that judgment itself becomes the starting point for deciding the limitation of one year under Section 11B. In this case, the order of the Commissioner (Appeals) of 31.03.2010 itself was the relevant date when the decision went in favour of the appellant and no further appeal was filed by the appellant and they could have taken the credit in their books of account as there was no provision for cash refund under existing law. Apparently, the appellants did not file for any refund or re-credit before the proper authority after the passing of the order by the Commissioner (Appeals). While the general provision of non applicability of limitation would not be applicable in such cases where payment has been made under protest but after insertion of Clause (ec), irrespective of whether payment of duty was under protest or otherwise, the refund claim arising out of such orders passed by Appellate Authority has to be made within one year of such order. Even reliance under Section 142(3) of CGST Act, 2017 is not correct as such cases where the refunds were otherwise permissible under existing law can only be covered under said provision. In this case, it was clearly a time barred case within existing law prior to appointed date itself. The Commissioner (Appeals) order rejecting the appeal filed by the appellants on the reasons and the cited legal provisions, does not suffer from any infirmity in the facts of the case and is sustainable. There is a clear default of limitation in filing of refund application by appellant and hence not eligible to get the said refund under Section 11B of Central Excise Act. Appeal dismissed.

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• CST, VAT & Sales Tax

• 2024 (9) TMI 304
  Challenge to orders passed by the Sales Tax Tribunal, Haryana - inter-state sale - issuance of Form F for stock transfer of goods from Faridabad - HELD THAT:- In the present case, the petitioner entered into an agreement with the Bihar Government to supply energy food. However, learned counsel for the respondents submitted that the petitioner firm manufactures energy food at Faridabad factory and also at branches in a case of necessity, transfers energy Food at places of its requirement, if the same is not met by the local branch. The petitioner firm has transferred energy Food of specific formulation of its branches at Patna, Madras and Kanpur in pursuance of a prior contract and orders for supply from branch were already contracted and orders for supply from branch were already in hand and goods were supplied as per agreement. It has been held by the Supreme Court in M/s Bharat Electric Limited vs Union of India [ 1996 (4) TMI 419 - SUPREME COURT ] that interstate sales Tax is leviable in the state where goods are manufactured for specific purpose and also from where movement of goods takes place. In the ordinary course, the present case ought to have been transferred to the Central Sales Tax Appellate Authority, however, this Court finds that a corporate guarantee has been furnished by M/s Hindustan Level Limited for and on behalf of the petitioner in terms of the directions issued on 30.05.2005, wherein this Court directed that the guarantor shall be bound by the terms of both the affidavits which have been filed by and on behalf of the petitioner. Petition dismissed.

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• Indian Laws

• 2024 (9) TMI 303
  Levy of penalty - Specific performance of the agreement for sale - appellant claims possession of suit schedule property as part performance under the agreement of sale - appellant argued that the deficit stamp duty should alone be collected at the time of the passing of the judgment and decree, and the levy of penalty is illegal and erroneous - HELD THAT:- In the present case, the appellant wanted the suit agreement to be admitted in evidence at the interlocutory stage. The suit was filed on 12.08.2015. On 14.08.2015, the case was posted before the court, and the counsel for the appellant in the trial court agreed to pay proper/sufficient stamp duty and penalty on the certified copy of the agreement to sale. In other words, the appellant invited the court to decide under Section 34(1) of the Act - when the trial court imposed ten times penalty on the deficit stamp duty, the appellant argued in the High Court that he would pay the stamp duty when the decree of specific performance was granted. In our considered view, the case of appellant is covered by Section 34 of the Act, and rightly ten-times penalty is imposed. Further, the appellant having invited the court, cannot now express the willingness to exercise the option under Section 37(2) of the Act. On the contrary, Section 37(1) of the Act would apply in the present case. The High Court, through the impugned order, while relying on the ratio in GANGAPPA AND ORS. VERSUS FAKKIRAPPA [ 2018 (12) TMI 2000 - SUPREME COURT] and Digambar Warty and others v. District Registrar, Bangalore Urban District and another [ 2012 (12) TMI 1245 - KARNATAKA HIGH COURT] , has rightly rejected the prayer of the appellant. There are no ground warranting interference in the order impugned - appeal dismissed.

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