TMI Tax Updates - e-Newsletter
September 14, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Validity of summons issued during investigation proceedings - Seeking desealing of the premises in question to enable the petitioner to run the business - The petitioner is duty bound to cooperate in the proceedings for investigation and no case is made out for quashing of the summons. - In order to facilitate both the process of desealing of the premises as well as continuance of the investigation, let the petitioner appear before the GST authority on stipulated date - HC
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Income Tax:
Assessee in default - TDS u/s 201(1) - TDS u/s 195 - in order to treat the payer as an assessee-in-default, it is of utmost importance that income so paid or credited to the account of payee is capable of being brought within the purview of tax net and such assessment can be lawfully made on the payee. The ITAT also came to the conclusion that assessment should be lawfully made by AO on the payee/recipient. Since that has not been done, the order of AO under Section 201(1) read with Section 201(1A) of the Act was unsustainable. - HC
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Income Tax:
Validity of reopening of assessment - High Court quashed the notice on the ground that, (a) that approval for issuance of notice under Section 148A(d) of the Act has not been properly obtained and hence the order passed thereunder and consequent notice issued under Section 148 of the Act have to be quashed and set aside. The sanction ought to have been granted under Section 151(ii) and not under Section 151(i) of the Act. - (b) The notice to reopen has also been issued on the basis of change of opinion which is not permissible - HC
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Income Tax:
Revision u/s 263 - correct head of income - while we see no reason to interfere with the order of the Commissioner under Section 263 of the Income Tax Act to the extent it remands the matter to the assessing authority for determining the nature of the income - whether business income or income from other sources - we set aside those findings of the Commissioner in Annexure E order that decides the issue on merits and leaves, no scope for an enquiry by the assessing authority - HC
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Income Tax:
Reopening of assessment u/s 147 - non filing of reply/returns - the petitioner was unable to access the internet facility - this is a fit case for exercising discretion under Article 226 of the Constitution of India in favour of the petitioner by quashing the impugned Assessment Order and to remit the case back to the respondents to allow the petitioner to upload the returns in response to the notice u/s 148. - HC
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Income Tax:
Validity of the order of the CIT(A) - Non admission of additional evidence - It is indeed the sacrosanct obligation of the first appellate authority to have ensured that any effective opportunity is granted to the assessee for presenting its case and all evidences are taken into account while determining the issue. The powers of the CIT(A) are not fettered or circumscribed by Rule 46A for admission of additional evidences. In view of mandate of provisions of Section 250(4) of the Act also, the situation existing in the case as narrated above, clearly warranted admission of additional evidences by the CIT(A). - AT
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Income Tax:
Addition u/s 68 - large cash withdrawal by the assessee immediately before the search and seizure operation - during search and seizure operation, the cash amount was found and seized on 22.01.2018 and immediately before preceding month of December, 2017 there were withdrawals as cash by the assessee, which is much higher than the cash amount seized during the course of search. Therefore, no addition could have been made - AT
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Income Tax:
Disallowance of proportionate interest u/s. 36(1)((iii) - loan taken for construction of building for the year under consideration on which the assets were not put to use in terms of proviso to section 36(1)(iii) - Assessee has treated it as revenue expenditure in the impugned AY which is not correct as per section 36(1)(iii) & the proviso is very clear. - Since the interest expenditure should be capitalised disallowance confirmed- AT
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Income Tax:
Additional income disclosed during the course of survey - To be taxed @ 60% u/s. 115BBE or not - the AO and the Ld.CIT(A) are erred in assessing additional income declared towards excess stock found during the course of survey u/s. 69B r.w.s. 115BBE of the Act - AO directed to assess the income under the head ‘income from business & profession’ as declared by the assessee. - AT
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Income Tax:
Additions against unsecured loan received - Loan takenfrom NBFCs - it can be seen that they have followed all the RBI guidelines and prudential norms issued by RBI as certified by the auditors in the notes to accounts. It is to be appreciated that the status is “Active-Compliant” and not just Active which means that the Companies have filled the latest Form INC- 22A which was introduced to track down inactive companies or companies with dummy address. - CIT(A) rightly deleted the additions - AT
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Income Tax:
Ex-parte order by CIT(E) - Effective service of notice u/s 282 - The impugned order of the ld.CIT(E) is, therefore, not sustainable in the eyes of law. The same is hereby set aside with a direction to the ld.CIT(E) to decide the appeal of the assessee afresh after giving proper and adequate opportunity to the assessee to present its case. - AT
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Income Tax:
Unexplained cash payment and cash receipts - Scope of third party evidence - Storing of assessee’s telephone number in other person’s phone cannot be made the basis for making additions particularly, even after taking backup of the i-phone, no sms/communication was found which remotely indicate that the assessee had transactions with the Param Properties, as written in these documents. - AT
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Customs:
kerosene oil or not - Mixed Mineral Hydrocarbon Oil - The test report from the Mumbai Laboratory as well as the re-testing report from CRCL, New Delhi clearly indicate the samples to contain more than 70% Mineral Hydrocarbon Oil having characteristics of Base Oil. In view of these two consistent reports it is clear that the goods imported were neither restricted nor prohibited. - HC
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Customs:
Levy of penalty u/s 114 (iii) of Customs Act on the former Assistant Commissioner of customs - Abetting in export of overvalued goods in order to avail inadmissible benefit under DEPB scheme - - the allegations of Revenue are unfounded in view of the facts placed by the appellant that full value of shipping bills have been realized by the exporter in due course. - Penalty set aside - AT
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Customs:
Time limit for amending shipping bills - In the present case, it is found that the application for amendment to shipping bills was submitted to Customs Commissionerate on 04.02.2022, prior to the introduction of these regulations. Thus, there was no specific time limit prescribed for submissions of the application for amendment under Section 149 ibid - AT
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IBC:
Initiation of CIRP - Dues towards stock exchange - Financial debts / Financial Service Provider - Validity of order of NCLT admitting the application of the Ex-Directors of the Corporate Debtors, for default in repayment of Loan - Section 7 Application filed by Corporate Debtors were not maintainable. - The order of NCLT set aside - AT
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IBC:
CIRP - Belated claim pertaining to arbitral Award - The appellant is a commercial entity. That they were litigating against the Corporate Debtor is an undoubted fact. We believe that the appellant ought to have been vigilant enough in the aforesaid circumstances to find out whether the Corporate Debtor was undergoing CIRP. The appellant has been deficient on this aspect. The result, of course, is that the appellant to an extent has been left high and dry. - SC
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Service Tax:
SVLDRS - determination of amount due and payable - Considering / Factoring the amount paid by the petitioner towards interest prior to the issuance of SCN - There are no merits in the stand of the Department that the amount was not been paid under protest and was not a pre-deposit. The provisions is clear. The provision clearly allows the amount paid as pre-deposit to be adjusted. - HC
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Service Tax:
Levy of penalty u/s 78 of FA - Since the elements of fraud, mis-statement or suppression of facts etc. with an intent to evade service tax are not present in the matter therefore, the penalty under Section 78 of the Finance Act, 1994 is not imposable in this case. - AT
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Central Excise:
Reversal of cenvat credit wrongly availed - Extended period of limitation - the wordings of Rule 16 of Central Excise Rules, 2002 does give room for interpretation and there has been no positive act of suppression that has been brought out on behalf of the appellant - the demand shall be limited to the normal period. - AT
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Central Excise:
Denial of Benefit of area based exemption - the commercial production could not be commenced before 31.03.2010 - the electricity consumption as per the electricity authorities was nil prior to April, 2010 and we find it hard to believe that the production could have taken place without any electricity at all. The appellant claimed that it had a diesel generator set for a few days, but was unable to provide any evidence to support its claim. - AT
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Central Excise:
Refund of amount pre-deposited as demand - Any amount which the respondent had deposited during investigation or at any time including at the time of filing the appeal was merely a deposit under section 35F and not duties of excise under section 11B. Revenue was obliged to refund the same u/s 35F along with applicable interest u/s 35FF - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (9) TMI 559
Seeking grant of Regular Bail - evasion of GST - non-existent, bogus and non-operational firms - creation of bogus firms to claim fraudulent ITC and refunds without conducting any actual business - HELD THAT:- Keeping in view the custody period, on the basis of parity of petitioner vis-a-vis coaccused so far as grant of bail is concerned and though the investigation is complete conclusion of trial is likely to take time, the petitioner is granted bail subject to his furnishing bail bonds to the satisfaction of the Chief Judicial Magistrate/ Duty Magistrate concerned. The petition is allowed.
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2023 (9) TMI 558
Withdrawal of the impugned communication - Jurisdiction - attachment of properties - State Tax Officer would be the proper officer to exercise jurisdiction under Section 83 of the MGST Act so as to issue the impugned communication or not - HELD THAT:- As the impugned communication itself is being withdrawn, an intimation of withdrawal of such communication be immediately sent to the Officer-In-Charge of the Central Depository Services (India) Ltd. Petitioner shall also inform of the withdrawal of the impugned communication to the CDS (India) Ltd. alongwith a copy of this order. In view of withdrawal of Exhibit A , further adjudication of the petition is not called for. Writ Petition is accordingly disposed of in view of the statement as made by Mr.Takke, learned AGP.
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2023 (9) TMI 557
Validity of summons issued during investigation proceedings - Seeking desealing of the premises in question to enable the petitioner to run the business - HELD THAT:- The petitioner is duty bound to cooperate in the proceedings for investigation and no case is made out for quashing of the summons. That apart, seeing as the petitioner has not appeared pursuant to summons dated 31.05.2023 to either tender information or to cooperate in the continuing investigation, this Court is unable to quash the summons, which has been issued directing appearance of the petitioner. In any event, the summons required the petitioner to appear on 27.05.2023 and has hence does not survive as on date. In order to facilitate both the process of desealing of the premises as well as continuance of the investigation, let the petitioner appear before R3 on 28.06.2023 at 10.30 a.m. without expecting any further notice in this regard along with a written request for desealing of the premises in question and all materials in support of its contentions. Petition dismissed.
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Income Tax
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2023 (9) TMI 556
Revision u/s 263 - revisional power of the first respondent, while an appeal is pending - principle of doctrine of merger - HELD THAT:- We are unable to accept the contention of the petitioner that the first respondent does not have the power to pass Ext P5 order because the appeal is pending consideration before the CIT(Appeals). Going by the law referred to above, the first respondent has the revisional power to interfere with assessment order as provided under Sec. 263 of the Act, till the disposal of the appeal. Furthermore, I do not find any prejudice being caused to the petitioner because, if at all the petitioner is aggrieved by the order that is to be passed by the AO in compliance with the direction in Ext P5 order, the petitioner can very well challenge the said order also in an appeal, notwithstanding the pendency of the appeal filed against Ext P1 order. Resultantly, we dismiss the writ petition, reserving the right of the petitioner to challenge the order, if so advised, proposed to be passed by Assessing Officer pursuant to Ext P5 order, in accordance with law, notwithstanding the challenge against Ext P1 order.
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2023 (9) TMI 555
TDS u/s 201(1) - TDS u/s 195 - assessment order in the hands of the non-resident payee - payment for purchase of subscription as taxable as per the provisions of Article 7 read with Article 5 of the India Singapore Double Taxation Avoidance Agreement ( DTAA ) - AO held that the impugned subscription fees liable to be taxed as royalty within the meaning of Section 9(1)(vi) of the Act as well as Article 12(3) under the DTAA - ITAT held that the order passed under Section 201(1) within time in case of resident prayer had become invalid just because subsequently there was no assessment made in the hands of the non-resident payee within 6 years - HELD THAT:- Considering the provisions of Section 201 of the Act, one thing, therefore, is certain, in order to treat the payer as an assessee-in-default, it is of utmost importance that income so paid or credited to the account of payee is capable of being brought within the purview of tax net and such assessment can be lawfully made on the payee. The ITAT also came to the conclusion that assessment should be lawfully made by AO on the payee/recipient. Since that has not been done, the order of AO under Section 201(1) read with Section 201(1A) of the Act was unsustainable. We are unable to fault this conclusion arrived at by the ITAT.
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2023 (9) TMI 554
Determination of profit attributable to the PE of the Assessee in India - Income from royalty under the head income from Alten Suite - Whether determination of booking fee received by the assessee is taxable as business income and not under the head Royalty? - HELD THAT:- As the proposed questions 2.1 to 2.3 are covered by the decision as titled The Commissioner of Income Tax-International Taxation-1 v. Amadeus IT Group[ 2023 (5) TMI 1249 - DELHI HIGH COURT] Having regard to the said order, no substantial question of law arises insofar as the aforementioned proposed questions are concerned.
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2023 (9) TMI 553
Reopening of assessment u/s 147 - notice time barred - availability of alternative efficacious remedy - as submitted the impugned notice under Section 148 of the Act is well within the prescribed period of limitation as contemplated under Section 149(1)(b) of the Act, as the impugned notice is required to be issued within six years in the matter of re-assessment as provided for under Section 149 (1)(b) - HELD THAT:- The period of six years has expired on 31-03-2019 i.e. the date on which the notice was issued, therefore, it is incorrect to say that the impugned notice is time barred. It is a well settled law that in the wake of availability of alternative efficacious remedy, writ jurisdiction under Article 226 of the Constitution of India may not be exercised. The extraordinary Constitutional Jurisdiction under Article 226 of the Constitution of India Primarily and Initially is an extraordinary jurisdiction and not a regular jurisdiction. It may be exercised sparingly. This Court is of the firm view that if remedy for Statutory Appeal is provided for, the delinquent is expected to avail the same as jurisdiction of the appellate Court neither can be substituted nor eclipsed invoking extraordinary constitutional jurisdiction. We agree with respondent that in view of Section 149(1)(b) of the Act, the impugned notice issued on 31-03-2019 was well within the prescribed period of limitation. Now at this stage, Shri Modi submits that petitioner may be relegated to avail the said remedy with a prayer that period of limitation since has expired, therefore, the appeal may be directed to be heard and decided without insisting on the question of limitation. Consequently, we dispose of this Writ Petition with following directions:- (1) that petitioner/ assessee if so advised, may appeal before the CIT Appeals within 30 days from the date of uploading of this order on the website of this Court; (2) the appellate Court without insisting on the question of limitation shall decide the appeal on its merits addressing the question raised on facts and in law as well as application for interim protection if filed. (3) for the period of 30 days, the interim protection granted by this Court on 17-03-2020 shall remain in force.
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2023 (9) TMI 552
Validity of reopening of assessment - orders in terms of Section 148A(d) - approval granted by the PCIT is not in accordance with section 151(ii) - notice beyond 3 years - difference between a power to review and the power to reassess reasons to believe or suspect - HELD THAT:- Assessing Officer shall pass orders in terms of Section 148A(b) in respect of each of the assessee and after following the procedure as required under Section 148 of the Act. Even judgment in Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] does not anywhere indicate the notices that could be issued for eternity like in this case, on 31st July 2022, would be sanctioned by the authority other than sanctioning authority defined under the Act. We have to also note that the instructions dated 11th May 2022, on which respondents have relied upon, has no applicability to the facts of this case. These instructions expressly provides that it applies only to the issue of reassessment notice issued by the Assessing Officer during the period beginning 1st April 2020 and ending with 30th June 2021 within the time extended under TOLA and various notifications issued thereunder. Since the impugned notice in this case is dated 31st July 2022, certainly the instructions no. 1 of 2022 dated 11th May 2022 shall have no applicability at all. This court in Godrej Industries Limited [ 2015 (8) TMI 668 - BOMBAY HIGH COURT] has held that an assessment can be reopened under section 147 and 148 of the Act only on the jurisdictional preconditions being satisfied strictly. This Court held that sanction of a superior officer to the reasons recorded in terms of section 151 should be obtained before issuing the notice under section 148 of the Act and all jurisdictional requirements are required to be satisfied cumulatively and even if one of the numerous jurisdictional requirements necessary for issuing the notice under section 148 of the Act are not satisfied, the reopening of an assessment would fail. Hence, in the present facts also since the approval of the specified authority in terms of section 151(ii) of the Act is a jurisdictional requirement and in the absence of complying with this requirement, the reopening of assessment would fail. The Calcutta High Court in K K Agarwal and Sons HUF v. ITO ( 2022 (12) TMI 1170 - CALCUTTA HIGH COURT] while dealing with the reopening of the assessment for AY 2016-17 held that the approval granted by the PCIT is not in accordance with section 151(ii) of the Act and such approval is not sustainable in law. Hence, the Court held that the show cause notice under section 148A(b) and all subsequent proceedings were not sustainable in law and were quashed. Change of opinion - If the concept of change of opinion is removed as contended on behalf of the Revenue, then in the garb of reopening the assessment, review would take place. The concept of change of opinion is an in-built test to check abuse of power by the Assessing Officer. The Assessing Officer does not have any power to review his own assessment when during the original assessment petitioner provided all the relevant information which was considered by him before passing the assessment order under section 143(3). Petitioner had debited an amount on account of software consumables in the profit and loss account and a detailed break-up of the said expenses were submitted before the Assessing Officer during the course of assessment proceedings. It is settled law that proceedings under section 148 cannot be initiated to review the earlier stand adopted by the Assessing Officer. AO cannot initiate reassessment proceedings to have a relook at the documents that were filed and considered by him in the original assessment proceedings as the power to reassess cannot be exercised to review an assessment. In petitioner s case the AO having allowed the amount of software consumables as a revenue expenditure now seeks to treat the same as capital expenditure which is a clear change of opinion. Various judicial precedents have held that reassessment proceedings initiated on the basis of a mere change of opinion are invalid and without jurisdiction. As decided in M/S. KELVINATOR OF INDIA LIMITED [ 2010 (1) TMI 11 - SUPREME COURT] Assessing Officer has no power to review but has only the power to reassess. The concept of change of opinion must be treated as an in-built test to check abuse of power by the Assessing Officer/ We allow the petition for the following reasons: (a) that approval for issuance of notice under Section 148A(d) of the Act has not been properly obtained and hence the order passed thereunder and consequent notice issued under Section 148 of the Act have to be quashed and set aside. The sanction ought to have been granted under Section 151(ii) and not under Section 151(i) of the Act. (b) The notice to reopen has also been issued on the basis of change of opinion which is not permissible Assessee appeal allowed.
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2023 (9) TMI 551
Revision u/s 263 - correct head of income - assessment of interest income - business income as against the head of income from other sources - whether the Principal Commissioner of Income Tax was justified in rendering findings on the merits of the claim for interest expenses while setting aside the assessment order and remanding the matter for fresh consideration of the said issue by the assessing authority? - HELD THAT:- As already noticed, the Principal Commissioner was of the view that the interest earned by the appellant, through lending the deposited amounts to its partners, could not be treated as the business income of the appellant but had rather to be assessed under the head of income from other sources and consequently no expenses could be set off against the said income earned by the appellant. However, on the Principal Commissioner deciding to remand the matter to the assessing authority for verification of the causal link between the expenses incurred by the appellant and the income earned by it by way of interest, he ought not to have rendered a finding that the appellant was not entitled to claim set off of the expenses against the said income. The effect of Annexure E order of the Principal Commissioner is to effectively preclude the assessing authority from enquiring into whether or not there was a causal link between the incurring of the expenditure and the earning of interest income that was assessed in the hands of the appellant during the year in question. In our view, this ought not to have been done, especially when, in the ultimate analysis, what the Principal Commissioner did, in the exercise of its powers under Section 263 of the Income Tax Act, was to set aside the assessment order on this issue and remand it to the assessing authority for a de novo consideration on merits. In the result, while we see no reason to interfere with the order of the Commissioner under Section 263 of the Income Tax Act to the extent it remands the matter to the assessing authority for determining the nature of the income - whether business income or income from other sources - we set aside those findings of the Commissioner in Annexure E order that decides the issue on merits and leaves, no scope for an enquiry by the assessing authority as regards the causal link, if any, between the incurring of expenditure and the earning of the interest income during the previous year in question. We are of the view that the assessing authority must determine the issue afresh based on the directions of the Principal Commissioner in Annexure E order but untrammeled by those findings in the said order that we have set aside in this judgment.
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2023 (9) TMI 550
Revision u/s 263 - A.O. has erred in granting deduction of expenditures claimed u/s. 57(iii) - HELD THAT:- Contention of the authority is that the AO s order was erroneous and prejudicial to the interest of Revenue was wrong. As observed that the assessment of the assessee was taken under Limited scrutiny under CASS for verifying the following CASS reasons Large Deduction Claimed u/s. 57, Higher Turnover Reported in Service Tax Return as Compared to ITR . Notice was issued under section 143(2) of the Act in which a specific query was put forth regarding the claim of Section 57 of the Act. Even otherwise the Tribunal observed that in the immediate preceding year, similar claim of interest deduction was allowed to the assessee under Section 36(1)(iii) of the Act. In light of this, the Tribunal reversed the order of the CIT under Section 263 of the Act. No substantial question of law arises for consideration.
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2023 (9) TMI 549
Reopening of assessment u/s 147 - notice was manually served to the petitioner - non filing of reply/returns - petitioner submitted that due to non-use of the e-mail facility, the password was forgotten and therefore, the petitioner was in continuous communication with the Department to reset the password to enable the petitioner to file a reply and after several rounds of communication with the Web Manager, the password was successfully reset only after time, the impugned Assessment Order came to be passed - HELD THAT:- The case of the petitioner appears to be genuine inasmuch as the petitioner was unable to access the internet facility for uploading the reply/returns. Consequently, the petitioner also could not participate in any of the proceedings, which preceded the impugned Assessment Order dated 26.03.2022. Considering the fact that the password was reset only on 07.04.2022 and considering the fact that the impugned Assessment Order came to be passed on 26.03.2022, this is a fit case for exercising discretion under Article 226 of the Constitution of India in favour of the petitioner by quashing the impugned Assessment Order and to remit the case back to the respondents to allow the petitioner to upload the returns in response to the notice u/s 148. Respondents shall comply with the procedure in terms of the decision of G.K.N.Driveshafts (India) Ltd [ 2002 (11) TMI 7 - SUPREME COURT] and thereafter dispose the objections if any of the petitioner for reopening the assessment for the Assessment Year 2014-2015 and to proceed accordingly.
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2023 (9) TMI 548
TDS u/s 195 - expenses intercompany fee and commissions attributable to Non-Resident entities - Non admission of additional evidence - CIT(A) confirmed the action of the AO and refused to admit additional evidences filed by the assessee in the form of no PE certificate from certain entities, Tax Residency Certificate (TRC) etc. on the ground that no formal application has been moved under Rule 46A explaining the reasons why such evidences were not submitted in the course of assessment proceedings - counsel contended that the additional evidences placed before CIT(A) goes to the root of the matter and would demonstrate the absence of obligation for deduction of withholding tax contemplated u/s 195 - HELD THAT:- In the present circumstances, evidences obtained from external sources which have a critical bearing on the outcome of the subject matter ought to have been admitted to reinforce the overriding cause of substantial justice vis-a-vis technical considerations. The breach of sacrosanct principles of natural justice is fundamental and goes to the root of process of framing assessment. Needless to say that the spirit of Rule 46A of IT Rules enabling the assessee to place additional evidences before the CIT(A) are founded on the doctrine of legitimate expectation and principles of natural justice. It is indeed the sacrosanct obligation of the first appellate authority to have ensured that any effective opportunity is granted to the assessee for presenting its case and all evidences are taken into account while determining the issue. The powers of the CIT(A) are not fettered or circumscribed by Rule 46A for admission of additional evidences. In view of mandate of provisions of Section 250(4) of the Act also, the situation existing in the case as narrated above, clearly warranted admission of additional evidences by the CIT(A). We are thus convinced on the fallacy in the action of the CIT(A). The order of the CIT(A) on the subject matter of appeal is thus set aside and restored to the file of the Assessing Officer for de novo adjudication in accordance with law, after making or causing proper inquiry as may be deemed expedient and after taking into account of such evidences as may be placed before him by the assessee - Appeal of the assessee is allowed for statistical purposes.
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2023 (9) TMI 547
Revision u/s 263 - Deduction u/s 80P(2)(d) - allowability of interest earned by the assessee from cooperative banks - assessee herein Co-operative Society providing credit facilities by way of loans and advances to its members - HELD THAT:- Hon'ble Karnataka High Court in Totagars Cooperative Sales Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] held that for the purpose of section 80P(2)(d) a Co-operative Bank should be considered by a Co-operative Society and interest earned by Co-operative Society from Cooperative Bank would necessarily be deductible under section 80P(1) Cordinate Bench of Rajkot Tribunal in Surendarnagar District Co-operative Milk Producer Union Ltd. [ 2019 (9) TMI 978 - ITAT RAJKOT] held the assessee co-operative society could not claim benefit under section 80P(2)(d) in respect of interest earned by it from deposits made with nationalized/private banks, however, the said benefit was available in respect of interest earned and on deposits made with co-operative bank. Thus, order passed by AO is not erroneous, though it may be prejudicial to the interest of the Revenue. Therefore, the twin conditions that the assessment order is erroneous and so far as prejudicial to the interest of revenue, as prescribed under section 263 is not fulfilled in the present case. PCIT erred in holding that the order passed by A.O. as erroneous and prejudicial to the interest of the Revenue on account of allowability of interest earned by the assessee from cooperative banks, coupled with the fact when the Ld. Assessing Officer had made due enquiries on this issue, during the course of original assessment proceedings .Appeal filed by the Assessee is hereby allowed.
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2023 (9) TMI 546
Addition u/s 68 - large cash withdrawal by the assessee immediately before the search and seizure operation - CIT(A) out of total cash seized during the course of search allowed part relief keeping in view amount of cash withdrawals by the assessee - HELD THAT:- When the assessee has huge cash withdrawals immediately before the date of search and in the second part of his statement, recorded during the course of search, replying to question no.24, he categorically stated that the cash withdrawals from the bank as well as from contract cash was available with him and out of said cash amount, there was renovation work was going on in his factory building at Madanpur Road. In our considered opinion, during search and seizure operation, the cash amount was found and seized on 22.01.2018 and immediately before preceding month of December, 2017 there were withdrawals as cash by the assessee, which is much higher than the cash amount seized during the course of search. Therefore, no addition could have been made in the hands of the assessee u/s 68 of the Act. Accordingly, sole grievance of the assessee is allowed and AO is directed to delete the addition. Appeal of assessee is allowed.
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2023 (9) TMI 545
Addition u/s 68 - receipt of bogus share capital and share premium - onus on the assessee to furnish the explanation in support of the said cash credits by establishing the identity, creditworthiness and genuineness of the shareholders and transactions not proved - HELD THAT:- AO has squirely failed in substantiating that how the onus cast upon the assessee was not discharges u/s 68 of the act. AO further erred by neither making any specific comments nor have demonstrated the reasons for adverse conclusions about the share subscribers which could be supported with the documents or borne out from the records. AO also misplaced in her observations by not distinguishing that how the facts of the present case are different on which binding judgments in the case of Lovely Exports [ 2008 (1) TMI 575 - SC ORDER] and Venkteshwar Ispat [ 2009 (5) TMI 290 - CHHATTISGARH HIGH COURT] relied upon by the assessee, are not applicable. Under such facts and circumstances we concur with the decision of the order of Ld CIT(A) having no infirmity, in absence of any divergent argument advanced by the revenue apart from the contentions raised and considered herein above, or without any cogent material or decision having different binding consequence on the instant case, we do not have any distinct opinion other than that of the opinion of Ld CIT(A), thus, we order to sustain the same. Resultantly grounds raised in the present appeal by revenue are dismissed.
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2023 (9) TMI 544
Disallowance of proportionate interest u/s. 36(1)((iii) - loan taken for construction of building for the year under consideration on which the assets were not put to use in terms of proviso to section 36(1)(iii) as per the calculations submitted by the assessee at the time of assessment - HELD THAT:- The calculation of interest to be capitalized - details of lease commencement date as per rental invoice have been given. On examination of the same, the lease commencement dates are different, it clearly shows that different units were put to use on different dates which are less than/more than 180 days in a year. Earlier, the assessee itself capitalized the interest in the previous AY for the units which were not completed and/or not put to use. Assessee has treated it as revenue expenditure in the impugned AY which is not correct as per section 36(1)(iii) the proviso is very clear. On going through the facts of the case, the assessee has not satisfied the conditions laid down in proviso of section 36(1)(iii). Accordingly, we find merit in the submission of the ld. DR regarding disallowance of interest claimed as revenue expenditure should be capitalized. In view of the above, ground Nos.1.1 1.2 are rejected. Assessee has claimed that if interest is capitalized, then the assessee is eligible for depreciation on such capitalized portion of interest - We note that 2,35,579 sq.ft. was leased out on different dates as per column 04 of lease commencement and as per col.no.5 of PB page No. 26 , the assessee has raised invoice for rent on different dates, accordingly the assets were put to use for the business of assessee during the year as the date mentioned therein out of 2,35,579sq. ft. the 15075 sq. ft were leased out on 11.07.2017 as per the letter dated 01.09.2023. Therefore the assessee is eligible for depreciation as per section 32(1) r.w.s. 43(1) of the Act. We direct the AO to grant depreciation on interest capitalized as per law and for subsequent years also.We allow ground No.1.3 in the above terms. Disallowance u/s. 14A even when there is no exempt income received by the assessee - We have gone through the financial statements of the assessee at Note No.21, the assessee has not shown any exempt income in the form of dividend or any other exempt income. It is not in dispute that the assessee has paid interest during the year. AR also relied on the various judgments including the judgment of Hon ble jurisdictional High Court in the case of Sterling Developers Pvt. Ltd. [ 2021 (3) TMI 1422 - KARNATAKA HIGH COURT] where it is held that when there is no exempt income, no disallowance can be made. During the year the assessee has not reported any exempt income from the investments made. There is also amendment made by the Finance Act, 2022 w.e.f. 1.4.2022 is not from retrospective effect as decided by the Hon ble Delhi High Court in the case of Era Infrastructure (India) Ltd.[ 2022 (7) TMI 1093 - DELHI HIGH COURT]
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2023 (9) TMI 543
TP Adjustment - comparable selection - functional difference between the assessee and comparable selected - HELD THAT:- HSIL Ltd.- We find it difficult that for non-availability of segmental information in the financial statement (standalone), this entity needs to be eliminated from the list of comparables. The approach of the learned DRP is reasonable and correct and a very pragmatic one. By this approach, learned DRP segregated the margins of packing division and culled out the margins of sanitary products. Functional comparability - As submission of learned AR that the annual report shows that HSIL Ltd., is manufacturing 3.8 million pieces sanitaryware and 3 million pieces of faucets and, therefore, significant amount of material that goes into faucet manufacturing. We are not prepared to agree with this approach. With reference to the figures, learned AR took us to Note 25 in the significant accounting policies, where clay, soda ash, cullets, quartz/feldspar and others are mentioned, to say that the assessee does not deal with cullets and quartz/feldspar. Firstly, cullets and quartz/feldspar are useful only in packing division and we are not considering it now. There is no material to show that the other material that is used has nothing to do with the sanitaryware production. Even if some fraction of it is used, ultimately, the learned DRP while referring to the consolidated financial results held that the segmental results reported therein are agreeing with the figures in the financial statement (standalone) and reflect reliable financial performance of the divisions. When the functions are broadly agreeing with each other, it is not possible to count the differences in the description of the products and to eliminate the entity. Though the terms used are generic in nature giving an impression that the company is engaged in diversified activities, the core activity of both the entities is dealing in tiles and sanitaryware. One shall not lose sight of the fact that information contained in the websites of any entity and sometimes in the annual report would be intended to give a very attractive picture of such company and its areas of activity will be mentioned in usually general and wide spread terms to attract the customers and the same cannot be given much weight. In these circumstances, we agree with the findings of the learned DRP and decline to exclude HSIL Ltd., from the list of comparables. Cera Sanitaryware Ltd. - Unlike in the case of HSIL Ltd., in this case, the consumption of raw material suggests the proportions of different activities of this entity, but without any clue about the proportionate revenues. In the case of HSIL Ltd., learned DRP was able to draw figures of sale and profit in respect of sanitaryware division and packing division, but it is not so in this case. Considering this aspect vis- -vis the financials of the company, we are of the considered opinion that in the absence of such information, it would not be safe to compare the assessee with this entity to draw the correct margins. We, therefore, direct the learned Assessing Officer/learned TPO to exclude this company from the list of comparables. Murudeswar Ceramics - DRP found in its directions that segmental details in respect of Murudeswar Ceramics are available and, therefore, vitrified tiles segments is comparable to the assessee. Learned DRP accordingly directed the learned TPO to adopt the vitrified segmental results of the company for the purpose of comparable analysis and margin computation - As Grievance of the assessee now is that this particular direction is not carried out by the learned Assessing Officer/learned TPO to its logical conclusion and, therefore, a direction need be given to the learned Assessing Officer/learned TPO to carry out such direction - DRP reports no objection. Recording the same, we direct the learned Assessing Officer/learned TPO to give effect to the directions of learned DRP on this aspect. Aggregation of transactions - submission on behalf of the Revenue that since the adoption of TNMM as MAM by the assessee and the aggregation of the transactions, both international as well as specified domestics are not disputed by the learned TPO and assessee cannot have any grievance with regard to aggregation of transactions - On a consideration of the material as a whole, we are of the considered opinion that the learned TPO will give an opportunity to the assessee on this aspect and take a view according to law. For this purpose, this issue is restored to the file of the learned Assessing Officer/learned TPO. Ground is accordingly treated as allowed for statistical purposes. Appeal therefore, stands partly allowed for statistical purposes.
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2023 (9) TMI 542
Additional income disclosed during the course of survey - To be taxed @ 60% u/s. 115BBE or not - in course of survey excess stock was found when compared to book stock - assessee has offered additional income towards excess stock found during the course of survey and also paid necessary taxes by offering income under the head income from business profession - AO assessed excess stock found during the course of survey u/s. 69B of the Act, as unexplained investment on the ground that the assessee could not explain source for excess stock found during the course of survey - HELD THAT:- We find that the excess stock found during the course of survey was mixed with regular stock in trade employed by the assessee in his business. The stock was not separately identified so as to assess it under the head unexplained investment . The assessee is having only one source of income i.e. income from trading in gold jewellery and silver articles. The entire stock found during the course of survey was available for trade at the business premise of the assessee and it was part and parcel of the regular business stock. Once, it is considered as regular business stock, then, obviously the source for acquisition of said stock is out of business income earned for the relevant assessment year, because, it is a general practice in business that whatever excess income earned is kept in the form of stock and debtors. Since, the excess stock found during the course of survey was not separately identified and was mixed with regular business income, the assessee has rightly offered additional income declared during the course of survey under the head income from business profession , and this position is supported by the decision of the Rajasthan High Court in the case of CIT v. Bajargan Traders [ 2017 (11) TMI 388 - RAJASTHAN HIGH COURT] Thus we are of the considered view that the AO and the Ld.CIT(A) are erred in assessing additional income declared towards excess stock found during the course of survey u/s. 69B r.w.s. 115BBE of the Act, and thus, we direct the AO to assess the income under the head income from business profession as declared by the assessee. Additional income offered towards purported marriage expenses of the assessee s son - The assessee has explained source for marriage expenses and stated that such expenditure has been incurred out of business income earned for the impugned assessment year. AO never disputed the fact that the assessee does not have any other source of income except income from business profession. Once it is accepted the fact that the assessee does not have any other source of income, then obvious conclusion is that said expenditure is incurred out of business income of the assessee. Since, the assessee has already offered additional income of Rs. 25 lakhs towards marriage expenses under the head income from business profession , in our considered view, the AO ought not have assessed said income as unexplained investment u/s. 69B - CIT(A) without considering the relevant facts simply upheld the additions made by the AO and thus, we reversed the findings of the Ld.CIT(A) and direct the AO to assess income under the head income from business profession as declared by the assessee. Assessee appeal allowed.
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2023 (9) TMI 541
Revision u/s 263 - delayed payment - assessee had entered into an agreement with Director of Town Country Planning Haryana whereby it was supposed to make the payments of external development charges (EDC). Such charges were not deposited with the Town Country Planning within the due date stipulated in the agreement but rather payment was delayed - In the opinion of ld. Pr. CIT, this expenditure ought to have been disallowed to the assessee by the ld. Assessing Officer on the ground that it is penal in nature - HELD THAT:- We are of the view that Explanation appended to Section 37 of the Income Tax Act contemplates that if any expenditure is being incurred by an assessee on an item, which is prohibited by law, then, such expenditure will not be allowed as a deduction to the assessee. The payment herein was not for infringement of any law. Thus according to us, it is a compensatory payment, which does not fall in the category of any penalty. CIT has misconstrued the nature of this interest payment as a penalty and termed the assessment order as erroneous, which has caused prejudice to the interest of revenue by not charging of tax on this amount. Since we have held that it is not in the nature of penalty, rather a compensatory in nature, therefore, the deduction of this amount deserves to be allowed to the assessee and the AO has allowed it. AO has not committed any error and his order cannot be termed as erroneous, which has caused prejudice to the interest of revenue. Thus we allow this appeal of the assessee and quash the 263 order impugned herein. Appeal of assessee allowed.
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2023 (9) TMI 540
Addition made for surplus for both funds of students - As submitted both the schools are run by the Trust only but the appellant has not taken into account surplus of both these schools into account while consolidating the total accounts of the Trust - HELD THAT:- During the course of assessment proceedings the AO made the addition by observing that the assessee society neither had taken the income/ the expenditure of the funds nor did it take the surplus so generated of both funds while computing the surplus of the society in consolidation. Thus a sum being surplus of both funds was not taken into account while consolidating the total accounts. In first appeal, the CIT(A) has confirmed the addition made by the AO. The Bench has noted the submission of the ld. AR of the assessee and found that the submission made by assessee is appropriate as surplus fund can never by utilized at the discretion of the Management as it is controlled by the Head of the Institution for the welfare of students only. We concur with the submissions of assessee and thus the Ground No. 4 of the assessee is allowed. Disallowance of corpus donation - HELD THAT:- It is noted that assessee during the course of hearing produced the certificates from the donors who confirmed the above payments made to the assessee trust. Taking into consideration confirmation by the donors for above payments, we allow the Ground No. 5 of the assessee. Disallowance of small amount for purchase of Invertor for the use of students of school - HELD THAT:- At the time of hearing, the ld. AR placed details of payment for purchase of Invertor for the welfare of the students of the school. Hence, looking to the fairness of the assessee with regard to payment to the party M/s.Kiran Battery Co. Ajmer, we allow the Ground No.6 of the assessee.
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2023 (9) TMI 539
Ex-parte order by CIT(E) - Effective service of notice u/s 282 - rejecting the application of the assessee for registration u/s 12AB - As submitted no notice of date of hearing was served by the ld.CIT(E), either through physical mode or through e-mail etc and notice of date of hearing was allegedly uploaded on Income Tax Portal and the assessee was not aware of uploading - HELD THAT:- Merely uploading of information about the date of hearing on the Income Tax Portal is not an effective service of notice as per the provisions of Section 282 of the Income Tax Act. The impugned order of the ld.CIT(E) is, therefore, not sustainable in the eyes of law. The same is hereby set aside with a direction to the ld.CIT(E) to decide the appeal of the assessee afresh after giving proper and adequate opportunity to the assessee to present its case. The ld. CIT (E) will serve notice of hearing through physical mode as well as through electronic mode upon the assessee. Assessee appeal is treated as allowed for statistical purposes.
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2023 (9) TMI 538
Addition on account of share capital/ share premium being unexplained u/s 68 - identity, creditworthiness of investors and genuineness of the transactions - HELD THAT:- In the instant case before us also, the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides all the investors have also furnished complete details/evidences before the AO which proved the identity, creditworthiness of investors and genuineness of the transactions. Thus we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition by allowing the appeal of the assessee.
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2023 (9) TMI 537
Unsecured loan received from 19 parties - certain Pvt. Ltd. companies from whom assessee has taken loan - HELD THAT:- We note that all lenders are assessed to tax. The ITR of lenders are accepted by Department u/s 143(1) of the Act and even the interest income offered by them is subjected to tax which is duly paid and hence no adverse view is called for. The loans are taken through banking channels and interest is paid to all the lenders and on which TDS is deducted. There is no finding of cash deposit in bank account of the lenders. The Confirmation of all lenders were filed during assessment proceedings and no further enquiry were deemed necessary by the Assessing Officer. Out of the 19 parties, 13 parties are directors or their relatives or sister concern from whom the assessee had also taken loan in the past which was always accepted during scrutiny assessment of earlier years. AO has made addition u/s 68 because he has doubted the creditworthiness of the certain Pvt. Ltd. companies from whom assessee has taken loans. However, it is submitted that the said companies are NBFCs and hence their purpose of the business itself is granting of loans and hence the creditworthiness is proved even if the NBFCs may be having lower income. This is because the basic criteria for NBFCs is to have minimum net worth of Rs. 2 crore, which is fulfilled and the source of these credits is already certified while making an application to RBI while forming NBFCs and the Companies have obtained the certificate of registration after fulfilling requirement of Section 45- IA of the RBI Act, 1934. On perusal of the Audit Report of these companies, it can be seen that they have followed all the RBI guidelines and prudential norms issued by RBI as certified by the auditors in the notes to accounts. It is to be appreciated that the status is Active-Compliant and not just Active which means that the Companies have filled the latest Form INC- 22A which was introduced to track down inactive companies or companies with dummy address. Thus, the status of NBFC being Active Compliant very much proves the existence of address of party. It is submitted that all the loans are repaid through account payee cheques in subsequent years. The Chart of Repayment in subsequent years is filed by assessee - In fact, in the subsequent year also, i.e., AY 2013-14, there was scrutiny assessment and bank statements were filed before the assessing officer and the repayment of loan were also reflected in the Tax Audit Report and the Revenue has accepted the repayment of loan. Thus, when the Assessing Officer has not disputed the repayment of loan in subsequent assessment years, no addition should be made of loan taken during the year - Decided in favour of assessee. Disallowance of general expenses claimed - disallowance of travelling expenses restricted from 20% to 10%, by CIT(A) and disallowance from 20% to 10% made on account of vehicle and telephonic expenses - HELD THAT:- Assessee incurred the expenses on account of cooly cartage, repairs, travelling and general expenses during the year. The proper entries for the various expenses have been recorded in the books of accounts which are supported by bills/vouchers. Wherever the vouchers are not available, there is a proper system of authorization for incurring the expenses and internal vouchers are prepared and approved. So, all the expenses are supported by necessary evidence. Out of the total expenditure incurred on account of the above items only expenditure of Rs. 11,70,654/- have been incurred in cash which are also supported by bills or internal vouchers. The expenses are very reasonable as compared to last year and looking to the turnover of the assessee. However, the disallowance of 20% was made in case of travelling expenses which was reduced by the ld. CIT(A) to 10% only. In A.Y. 2010-11 also even in scrutiny assessment, no disallowance of expenses was made in regard to all the above items of expenses. Considering this factual position, we note that ld CIT(A) has passed a reasoned and speaking order. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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2023 (9) TMI 536
Unexplained cash payment and cash receipts - several incriminating documents and evidences were seized from the premises of M/s Param Properties[third party] which contain entries pertaining to and information contained therein related to assessee - AO held that to tax the amount reflecting in the seized documents, in hands of the assessee on substantive basis, which is based on a sound footing is proper - CIT(A) deleted the addition - HELD THAT:- As documents were found from the 3 rd party premises, these are not in the hand writing of the assessee and these are not signed by the assessee and moreover the party from whom documents were found, did not identify, the name of the assessee, the AO is not justified in relating these documents or the transactions written on these documents to the assessee. The complete name of the assessee is also not written on these papers and there are other names also written on these papers. Thus, ld CIT(A) noted that these facts clearly shows that these documents are dumb documents as far as the assessee is concerned and relying upon these documents for making additions in the hands of the assessee is not justified. The assessee's case is covered on this issue by the binding judgments of Hon'ble Supreme Court t in the case of CBI vs. V.C Shukla [ 1998 (3) TMI 675 - SUPREME COURT] and common Common cause Vs. UOI [ 2017 (1) TMI 1164 - SUPREME COURT] Additions made by the AO are not found sustainable and deserved to be deleted. Moreover the AO stated that in the backup of i-phone taken from mobile phone of Shri Agam Vadecha, Phone Number of the assessee were in his mobile. Storing of assessee s telephone number in other person s phone cannot be made the basis for making additions particularly, even after taking backup of the i-phone, no sms/communication was found which remotely indicate that the assessee had transactions with the Param Properties, as written in these documents. As there is no Cheque entry tallying with any of the bank account of the assessee and there is no such reference in the assessment order by the AO, CIT(A) correctly deleted the addition - Decided against revenue.
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2023 (9) TMI 511
Revision u/s 263 - Effect of consequent assessment order giving effect to the revision order, once the Section 263 proceedings were set aside by itself - HELD THAT:- As in the present appeal, the subject matter is the assessment order passed in consonance with the directions issued by the PCIT, Surat, in exercise of powers under Section 263 of the Act. That order of the Principal CIT, Surat, has already been set aside by the ITAT. That being so, the order under Revision being quashed has become final and the consequential order of assessment dated 28.06.2019 would not stand. Pendency of an appeal against the revisional proceedings would not be a ground for this appeal to be kept pending. Though the assessee had brought it to the notice of the AO to keep the proceedings in abeyance, the AO proceeded to finalize the assessment. Revenue, did not, before the ITAT also make a request to keep the appeal pending or in abeyance on the ground that this Court was seized of an appeal against the revision proceedings. In absence of this, the Tribunal could not be faulted in holding that once the Section 263 proceedings were set aside by itself, the consequent assessment order giving effect to the revision order is void ab initio. If the Revenue were to succeed in the pending appeal before this Court, AO will have to undertake a fresh exercise in light of the directions therein. On this ground too, no useful purpose can be served to entertain this appeal on the count of the other appeal pending. No substantial question of law.
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Customs
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2023 (9) TMI 535
Refusal on the part of the Directorate of Revenue Intelligence to permit re-testing in a manner contrary to Circular 30/2017-Customs - kerosene oil or not - petitioner was of the view that what was imported was Mixed Mineral Hydrocarbon Oil, and made a request for re-testing of the samples - no such testing carried out - Confiscation of the goods imported by the petitioner - levy of penalty - HELD THAT:- The show cause notice issued to the petitioner on 22.03.2022 is entirely based on the report of the Vadodara Laboratory that states that the samples met the requirements of Kerosene as per IS:1459-1974. The show cause notice in clear terms states that the goods seized were containers of kerosene oil under the Bill of Entry dated 11.09.2021 and this was by virtue of mis-declaring the same as Mixed Mineral Hydrocarbon Oil. After the test report from the Vadodara Laboratory was received, a request for re-testing was made by the petitioner on 30.09.2021. This request was not accepted and the show cause notice came to be issued on 22.03.2022 - in the reply to the show cause notice, a clear stand was taken by the petitioner that the specific tests required to be done as per directions of the Senior Intelligence Officer were not undertaken by the Vadodara Laboratory. This aspect is clear on perusing the Test Memo dated 16.09.2021 and the test report of the Vadodara Laboratory. The Joint Commissioner of Customs in his order dated 21.06.2022 has not considered this relevant aspect and without dealing with the specific stand of the petitioner has proceeded to accept the test reports of the Vadodara Laboratory. From the test report dated 03.04.2023 received from the Mumbai Laboratory as well as the re-testing report dated 19.05.2023 received from CRCL, New Delhi, we find that the entire basis for issuance of the show cause notice that was issued in view of the report of the Vadodara Laboratory indicating import of kerosene oil would not now survive. It is not in dispute that the report received from the Vadodara Laboratory is categorical in its finding that the samples met the requirement of kerosene. The subsequent testing and re-testing reports bely the initial report obtained from the Vadodara Laboratory - the show cause notice in its present form cannot survive since the testing and re-testing of the samples has been undertaken in accordance with Circular 30/2017-Customs as issued by the Central Board of Excise and Customs on 18.07.2017. Consequentially, the impugned order passed by the Joint Commissioner of Customs dated 21.06.2022 is liable to be set aside on this short ground. The test report from the Mumbai Laboratory as well as the re-testing report from CRCL, New Delhi clearly indicate the samples to contain more than 70% Mineral Hydrocarbon Oil having characteristics of Base Oil. In view of these two consistent reports it is clear that the goods imported were neither restricted nor prohibited. In this factual backdrop when the show cause notice now does not survive, the confiscation of the goods under Section 111(d) and (m) would not be now sustainable. The goods in question are thus liable to be released. Appeal allowed.
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2023 (9) TMI 534
Seeking grant of anticipatory bail - Proclaimed offender or not - smuggling of contraband goods of foreign origin like gold, reputed foreign brand cigarettes and saffron - proclamation issued requiring the applicant to appear before the Court - proclamation published or not - HELD THAT:- The Court issuing the proclamation has not made any statement in writing as provided in Sub-section (3) of Section 82 Cr.P.C. to the effect that the proclamation was duly published in the manner specified in clause (i) of sub-section (2) - When the proclamation has not even been published as per the law, the occasion for the applicant being declared a proclaimed offender under Sub-section (4) of Section 82 Cr.P.C has not yet arisen. It is the rule deducible from the application of law to the facts and circumstances of a case which constitutes its ratio decidendi and not some conclusion based upon facts, more particularly when the facts are not even remotely similar. As the applicant has not been declared to be a proclaimed offender as yet and the bar created by the principle of law laid down by the Hon ble Supreme Court in Lavesh [ 2012 (8) TMI 1190 - SUPREME COURT ] does not apply to the present case, the preliminary objection raised by the learned Counsel for the respondent is rejected. Sanatan Pandey [ 2021 (11) TMI 590 - SUPREME COURT ] was decided after taking into the facts of the case and present case also proceeded to be examined on the merits of the application. In view the fact that the alleged recovery was made on 19.12.2019 but the F.I.R has been lodged on 10.08.2022 and there is no explanation for the delay in lodging the F.I.R.; that the substantive offence allegedly committed by the applicant is non-cognizable, bailable and carries a maximum punishment of imprisonment upto 3 years; that although the C.B.I. has alleged commission of offences under the Prevention of Corruption Act, 1988, the applicant is not a public servant; that the applicant has no other criminal history and that a co-accused person Ajeet Kumar has already been granted bail and without making any observations which may affect the outcome of the case, the aforesaid facts are sufficient for making out a case for granting anticipatory bail to the applicant. The anticipatory bail application of the applicants is allowed. In the event of arrest / appearance of applicant- Khalid Anwar Alias Anwar Khalid before the learned Trial Court in the aforesaid case crime, he shall be released on bail on his furnishing personal bond and two solvent sureties, each in the like amount, to the satisfaction of Officer/Court concerned on the fulfilment of conditions imposed.
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2023 (9) TMI 533
Valuation of imported goods - goods declared as raw silk yarn in hanks - undervalued goods - enhancement of the value based on contemporaneous imports - rejection of transaction value - proper reasons for rejection not given - HELD THAT:- There are no proper reasons given by the department to reject the transaction value. In para 15 of the Order in Original, the original authority has discussed the various provisions relating to transaction value without giving reasons for rejecting the transaction value. Further, it is seen that in para 21 of Order in Original that the value has been enhanced on the basis of a Bill of Entry dated 25.11.2010 which is an import directly from Uzbekistan - In the present case, the appellant has imported the goods from Dubai, UAE, though the country of origin is Uzbekistan. It is also not brought out in evidence as to the comparison of the various parameters with regard to quality, quantity of the goods imported. The appellant has furnished data with regard to various Bills of Entry for imports made from Uzbekistan for the period from 12.4.2010 to 30.11.2010. In present case, merely because the value declared for the goods in a single Bill of Entry dated 25.11.2010 is 28 USD, the department has rejected the transaction value. It is not established that the commercial parameters as to quality, quantity, manufacturer are similar. The Tribunal in the case of M/S. SREE RAJENDRA TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , CHENNAI AND COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. KAVERI SILKS JUTE PVT. LTD., M/S. SREE RAJENDRA TEXTILES [ 2017 (6) TMI 988 - CESTAT CHENNAI] had occasion to consider a similar issue and observed that the transaction value cannot be rejected without cogent reasons. Thus, the demand of duty, confiscation, imposition of redemption fine and penalty imposed cannot sustain and requires to be set aside - appeal allowed.
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2023 (9) TMI 532
Enhancement and rejection of declared value - Flower Lights, LED Lights etc. imported from China - Section 17 (5) of the Customs Act, 1962 - HELD THAT:- The respondent cleared the goods after paying the duty of enhanced value under protest. Therefore, the Adjudicating Authority was required to pass an order under Section 17 (5) of the Act within 15 days - Admittedly, as no speaking order has been passed under Section 17 (5) of the Act, therefore, the enhancement of declared value is not sustainable. There are no infirmity in the impugned order and the same is sustained - The appeal filed by the Revenue is dismissed.
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2023 (9) TMI 531
Levy of penalty u/s 114 (iii) of Customs Act on the former Assistant Commissioner of customs - Abetting in export of overvalued goods in order to avail inadmissible benefit under DEPB scheme - rejection of declared FOB value for exported goods and re-determination of the same - denial of cross-examination - HELD THAT:- there is no case of connivance made out against this appellant - the allegations of Revenue are unfounded in view of the facts placed by the appellant that full value of shipping bills have been realized by the exporter in due course. In this view of the matter, the penalty against this appellant is not warranted. Accordingly, the impugned order is set aside so far as this appellant is concerned - appeal is allowed.
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2023 (9) TMI 530
Time limit for amending shipping bills - amendment in shipping bills sought for in the post export shipping bills - Benefit of Merchandise Export from India Scheme (MEIS) on the exportation of goods - HELD THAT:- On reading of the provisions of Section 149 ibid, it is clear that at the time of export there was no such time limit prescribed therein for amendment to the documents etc. However, by amendment brought with effect from 01.08.2019, the said section 149 ibid provided for prescribing the form and manner, time limit, restrictions and conditions subject to which the amendment could be allowed. In the present case, it is found that the application for amendment to shipping bills was submitted to Customs Commissionerate on 04.02.2022, prior to the introduction of these regulations. Thus, there was no specific time limit prescribed for submissions of the application for amendment under Section 149 ibid. The issue arising out of the present dispute is no more res integra in view of the judgment by the Hon ble Gujarat High Court in the case of THE PRINCIPAL COMMISSIONER OF CUSTOMS, MUNDRA VERSUS M/S LYKIS LIMITED [ 2021 (2) TMI 261 - GUJARAT HIGH COURT] . In the said order, it has been held that time limit cannot be prescribed for conversion from Drawback scheme to DFIA scheme. There are no merits in the impugned communication dated 03.03.2022, wherein the request of appellant for conversion of shipping bill was denied by the Department. Accordingly, by setting aside the communication, appeal is allowed in favour of the appellant with direction to the Department to consider the application dated 04.02.2022 for necessary amendment in the shipping bills.
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Corporate Laws
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2023 (9) TMI 529
Imposition of stamp duty and registration fee - change of name of a company with the approval of Registrar of Companies, would amount to transfer of assets of the company or not - HELD THAT:- This Court find that the Division Bench has held that mere acquiring of equity share capital of Company does not amount to transfer, assignment or parting with the possession or any other rights of the allottee Company, neither with the plot in question nor structure in existence thereon. Acquiring of equity share capital of the allottee Company by the petitioner also does not contravene the conditions contained in Clause 2(xi) of the conveyance deed. Reliance placed in the case of JSTI Transformers [ 2022 (4) TMI 1480 - HIMACHAL PARDESH HIGH COURT ] where reliance was placed in Reckitt Benckiser (India) Private Limited [ 2020 (9) TMI 80 - HIMACHAL PRADESH HIGH COURT] , where it was held that Section 13(3) provides that as and when there is any change in the name of the company under sub-Section 3, the Registrar shall enter the new name in the Register of the Company and issue fresh certificate of registration with new name. Section 13(2) made it crystal clear that no new company was ever created as a result of the change of its name and it is the case of mere addition of word private to its name. Relying upon aforesaid instructions/clarification dated 16.2.2012 issued by the respondent- State, this Court held that respondents erroneously concluded that there is transfer of assets and property by the Company. Undisputedly, in the case at hand, change in the name with the approval of Registrar of Companies came to be effected by Department of Industries, as such, respondents Nos. 1 and 2 had no option but to change the name of petitioner No.1 in the revenue records. Approval for change of name by Registrar of Companies under Ss. 21 and 23 of the 1956 Act corresponding to S.13 of the 2013 Act does not mean transaction or sale as such no stamp duty is chargeable. In the instant case, respondents Nos. 1 and 2 have failed to appreciate that change in name with approval of Registrar of Companies and issuance of Certificate of Incorporation by Registrar of Companies under Companies Act, 2013 does not mean transfer of land under S.118 of the Act. In the case at hand, change in the name of company from MWIL to MWIPL is mere change by addition of word private . Moreover, number of shareholding in MWIL and MWIPL remained the same and that cannot be said to attract stamp duty and registration fee. Petition allowed.
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2023 (9) TMI 528
Petition for winding up of company - umbrella guarantee - Recovery against the Guarantor of the loan for default in payment by the company - whether the defence raised by the Respondent in the Company Petition was genuine and whether there was a serious dispute about the debt? - HELD THAT:- In the case of NEELKANTH DEVANSH DEVELOPERS PRIVATE LIMITED VERSUS URBAN INFRASTRUCTURE VENTURE CAPITAL LIMITED [ 2016 (5) TMI 884 - BOMBAY HIGH COURT] , a Division Bench of this Court while dealing with Company Appeal wherein the order of learned Single Judge in Company petitions was challenged and it was held that This Court therefore while exercising its appellate jurisdiction under Clause 15 of the Letters Patent Act is not expected to interfere with the order passed by the learned Single Judge, unless it comes to the conclusion that the finding is perverse or is based on material which is not part of the record. Future some relevant dates are material for the purpose of considering the dispute raised before this Court. The Respondent Company was incorporated under the Companies Act, 1956 somewhere in January 1998. There was some joint venture agreement executed between the Directors of the Respondent with that of the Appellant. The memorandum refers to a meeting dated 19.12.1997 concerning joint venture agreement. It thus shows that the Respondent Company was in existence prior to the joint venture agreement between its Directors and the Appellant somewhere in December, 1997 - It is a matter of record that the Appellant initially refused to produce the annexures on the precise ground that such enclosure is a confidential document and that same is not required for the purpose of deciding the petition. The question remains as to how in the enclosure to the bank guarantee dated 20.12.2004 reference to advance/loan of ₹6 crores of the Respondent by the branch of the same bank at Mumbai appears. Admittedly, on 20.12.2004, there was no sanction letter issued by the Mumbai branch of the said bank offering loan of ₹6 crores to the Respondent. Thus, the annexure wherein reference to the Respondent appears as on 20.12.2004 and in connection with loan of ₹6 crores appears to be seriously doubtful. The same aspect has been considered by the learned Single Judge in the impugned judgment. We do not consider that such observations of the learned Single Judge are in any way arbitrary or perverse. So-called admissions on the part of Respondent regarding the bank guarantee - HELD THAT:- Upon considering such documents as referred by Mr Rao containing admissions on the part of Respondent, it is also found that though there is some reference to the guarantee issued by the Appellant for the said loan, it does not specifically refer to the guarantee dated 20.12.2004. The Appellant approached the Court with a specific case that the loan issued in favour of Respondent was secured by a bank guarantee dated 20.12.2004 and therefore, it was incumbent upon them to satisfy this Court that such bank guarantee in fact refers to the loan issued in favour of Respondent on 10.01.2005. Thus, the defence raised by the Respondent cannot be considered as moonshine defence and there appears to be substantial defence raised with regard to claim of the Appellant for recovery of the amount of more than ₹2 crores which the Mumbai branch allegedly recovered from the Appellant on the basis of bank guarantee dated 20.12.2004 - Though Respondent raised other aspects with regard to malicious attempt on the part of Appellant, collusion between the Appellant and the bank, such aspects were not raised before the learned Single Judge and further, such aspects were not considered and decided in the impugned order - such aspects raised on behalf of Respondent in this appeal cannot be considered. The Appeal stands rejected.
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Insolvency & Bankruptcy
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2023 (9) TMI 527
Initiation of CIRP - Dues towards stock exchange - Financial debts / Financial Service Provider - Validity of order of NCLT admitting the application of the Ex-Directors of the Corporate Debtors, for default in repayment of Loan - Prayer for clarification that a Trading Member of the Applicant registered as a Stock Broker with the SEBI being a Financial Service Provider is not a corporate person and is not amenable to proceedings under the Code - Corporate Debtor is a Stock Broker, registered with the SEBI and is a Trading Member of the NSE - corporate person or not - HELD THAT:- The SEBI is Financial Sector Regulator. The Stock Brokers and Sub- Brokers under the SEBI (Stock-Brokers and Sub-Brokers) Regulations, 1992 are required to be compulsorily registered under Section 3. Regulation contains details of obligation and responsibilities of the Stock Brokers. Schedule-II Regulation, 1992 provides for Code of Conduct for Stock Brokers . The Stock Brokers under heading B Duty to the Investor includes Investment Advice in publicly accessible media. The Stock Brokers, who are covered by the Regulation 1992 are subject to various obligation and duties towards Investors and from the nature of activities as contained in the Memorandum of Association of both the Corporate Debtors, they clearly fall within the definition of Financial Service Provider . It is noticed that SEBI and NSE have a mechanism for disposal of complaints by Investor - The NSE has also brought on record the Circulars issued by Securities and Exchange Board of India dated November 6, 2020 on the subject Investor Grievance Redressal Mechanism, which indicates that SEBI has its own mechanism for redressal of grievances, which arose regarding service-related complaint. In fact, a complaint was filed by Vipul H Raja against the Corporate Debtor as noted above for the very same amount, which was considered and rejected by complaint mechanism. The Financial Creditor Respondent No.1 without being deterred by the said rejection has filed Section 7 Application, which was wholly incompatible. Section 5(8)(g) has to be read harmoniously with Section 7 and Section 5(7) and 5(8). Section 5(8)(g) cannot be read in any manner that financial service providers are also covered under Section 5(8)(g). The Adjudicating Authority misconstrued the provisions of the Code and on finding that debt is payable by the Corporate Debtor, admitted Section 7 Application. The order of the Adjudicating Authority against the Corporate Debtor namely - Simandhar Broking Ltd., who being the Financial Service Provider was an entity against whom no proceedings under Section 7 could have been initiated. Initiation of Section 7 proceedings was itself nonmaintainable and Adjudicating Authority ought to have rejected the Application. Both the Corporate Debtors, i.e. Simandhar Broking Ltd. and M/s. Astitva Capital Market Private Limited being registered Broker with SEBI and Trading Member of the NSE are providing services, which are financial services within the meaning of definition of Section 3(16) of the Code and by virtue of Section 3(7) read with Section 3(8) and Section 227 of the Code, Section 7 Application filed by Corporate Debtors were not maintainable. The orders passed by Adjudicating Authority in both the Appeal(s) deserve to be set-aside. Appeal allowed.
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2023 (9) TMI 516
CIRP - Belated claim pertaining to arbitral Award - appellant s claim pertaining to an arbitral award, which is in appeal under Section 37 of IBC - to be included at a belated stage i.e. after the resolution plan has been approved by the COC or not - HELD THAT:- It is undisputed that the process followed by respondent no. 1 was not flawed in any manner, except to the extent of whether an endeavour should have been made by respondent no. 1 to locate the liabilities pertaining to the said award from the records of the Corporate Debtor The appellant is a commercial entity. That they were litigating against the Corporate Debtor is an undoubted fact. We believe that the appellant ought to have been vigilant enough in the aforesaid circumstances to find out whether the Corporate Debtor was undergoing CIRP. The appellant has been deficient on this aspect. The result, of course, is that the appellant to an extent has been left high and dry. Whether the delay in the filing of claim by the appellant ought to have been condoned by respondent no. 1? - HELD THAT:- Section 15 of the IBC and Regulation 6 of the IBBI Regulations mandate a public announcement of the CIRP through newspapers. This would constitute deemed knowledge on the appellant. In any case, their plea of not being aware of newspaper pronouncements is not one which should be available to a commercial party - the mere fact that the Adjudicating Authority has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon. Thus, it is concluded that the NCLAT s impugned judgment cannot be faulted to reopen the chapter at the behest of the appellant - appeal dismissed.
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Service Tax
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2023 (9) TMI 526
Liability of interest - this Court by way of an interim measure stayed the judgment of Delhi High Court - HELD THAT:- The interim measure and direction issued by this Court on 27.09.2016 in the special leave petitions filed by the Department was to enable the Department to proceed with the adjudication but protecting the Assessees from coercive steps being taken during the process of adjudication provided the Assessees co-operated with the said process. However, this Court in the said order also categorically stated in case the respondent(s) succeed they shall be entitled to refund with interest . The aforesaid direction is related to the proceedings pending before this Court inasmuch as the success or otherwise of the Assessee was relatable to the proceedings before this Court and not to any subsequent adjudication which was started by the Department as against the Assessees - In that view of the matter, it is found that order dated 27.09.2016 is in conformity with final order dated 01.09.2016 passed by the Division Bench of the High Court, which was ultimately affirmed by the final order of this Court dated 23.01.2019. The Department is liable to pay interest @ 6% per annum on the aforesaid sum of Rs. 67,44,19,167/- and 6,50,00,000/- respectively from 01.10.2016, till the date of realisation - Application allowed.
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2023 (9) TMI 525
SVLDRS - determination of amount due and payable - Considering / Factoring the amount paid by the petitioner towards interest prior to the issuance of SCN - Sabka Vishwas (Legacy and Dispute Resolution) Scheme 2019 - Calling upon to pay amount due and payable by the petitioner - HELD THAT:- The provisions of the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 in terms of Finance Act, 2019 is clear under Section 124(2). The relief calculated under Sub-Section (1) shall be subject to the condition that the amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant - the proviso merely states that if any amount in excess has been paid as pre-deposit before filing an application, a declaration will not be entitled to refund. There is no scope for any confusion. The provisions of the Sub- Section (2) makes it clear that any amount that is paid as pre-deposit at any stage of appellate proceedings under an indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the final settlement. In this case admittedly, the tax that was proposed to be demanded from the petitioner was Rs. 16,52,721/- in Show Cause Notice No.93/2019 dated 02.12.2019. Prior to issuance of Show Cause Notice No.93/2019 dated 02.12.2019, the petitioner has already deposited a sum of Rs. 7,28,247/- on 12.04.2019 towards duty of Rs. 4,37,933/- and Rs. 2,90,314/- towards interest on 09.04.2019. Thus, the amount of Rs. 7,28,247/- paid by the petitioner has to be adjusted the amount due under the Scheme from the petitioner. The concession that has been given to the petitioner under the Scheme is Rs. 9,24,474/- from the amount proposed in the aforesaid Show Cause Notice No.93/2019 dated 02.12.2019 from Rs. 1652721/- proposed in the Show Cause Notice dated 02.12.2019 - amount that was pre-deposited by the petitioner is equivalent to the amount that was payable by the petitioner. Therefore, the amount ought to have been adjusted towards the amount payable by the petitioner under the SVLDRS Scheme, 2019. There are no merits in the stand of the Department that the amount was not been paid under protest and was not a pre-deposit. The provisions is clear. The provision clearly allows the amount paid as pre-deposit to be adjusted. There is no merits in contention of Department. The amount paid towards duty and the interest that was proposed to be adjusted in the Show Cause Notice No.93/2019 dated 02.12.2019 has to treated as amount pre-deposited. Therefore, it has to be allowed to adjusted. Petition allowed.
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2023 (9) TMI 524
Classification of services - Mining Services or Business Auxiliary Service? - service of segregation of magnesite - HELD THAT:- The impugned order had found that the activity is equally classifiable under both the services and as per section 65A of the Finance act 1994, the activity under the sub-clauses which occurs first among the sub-clauses is preferable. The learned Commissioner (Appeals) has hence chosen to accept the classification of the service as Business Auxiliary Service as in the Order in Original and rejected the appeal. The activity of collection, cleaning, segregation and stacking of blasted raw magnesite is provided in relation to mining. The activities undertaken by the appellant are a part of the mining operations and are more appropriately classified as a Mining Service . Mining activity has been made taxable by legislation with effect from 1.6.2007 only. Prior to this date, such activities, being part of mining operations, were not subjected to service tax. The period of demand in this case is from 6.10.2006 to 11.6.2007, therefore, no service tax is leviable on such activities for a major part of the impugned period. Thus, the activity of collection, cleaning, segregation and stacking of blasted raw magnesite is classifiable under the category Mining Services classifiable under section 65(105)(zzzy) of the Finance Act, 1994 and the demand is restricted to the period from 01/06/2007 onwards. Thus, duty and interest may be worked out accordingly - Since duty was payable only from 01/06/2007 late fee and penalties are set aside - appeal disposed off.
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2023 (9) TMI 523
Liability to pay Service Tax as a sub-contractor - main contractor discharged the liabilities on the full contract value - invocation of extended period of limitation - HELD THAT:- The fact is not under dispute that on this issue of taxability on the sub-contractor, there were various conflicting judgments and finally the issue has been resolved by the larger bench in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [ 2019 (6) TMI 518 - CESTAT NEW DELHI] , where it was held that It is not possible to accept the contention of the learned Counsel for the Respondent that a sub-contractor is not required to discharge Service Tax liability if the main contractor has discharged liability on the work assigned to the sub-contractor. Extended period of limitation - HELD THAT:- Considering, the above facts this Tribunal in the various Judgments held that no mala fide intention can be alleged against the assessee, accordingly, held that demand for the extended period will not be sustainable - in the present case, the demand being beyond the normal period of limitation would not sustain on the ground of time bar alone. The impugned order set aside only on the ground of time bar - appeal allowed.
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2023 (9) TMI 522
Levy of service tax - computer to computer linkage charges - Stock Broking Company - HELD THAT:- This very issue in the appellant s own case has been decided in their favour in EDELWEISS FINANCIAL ADVISORS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD [ 2022 (12) TMI 975 - CESTAT AHMEDABAD] where it was held that In the light of decision of this Tribunal in M/S ANAGRAM STOCK BROKING LTD VERSUS COMMISSIONER OF SERVICE TAX, AHMEDABAD [ 2018 (10) TMI 641 - CESTAT AHMEDABAD] it was held in the case that the allegation of the department that the demat charges collected by the brokers are banking and financial service, hence taxable, also devoid of merit in as much such charges are collected by the Appellant and paid to the depository participants viz. CDSL/NSDL who are authorised to levy such charges under the Depositories Act, 1996. From the above decision in the appellant s own case, the issue in the present case is no longer res-integra. Hence, no further discussion is warranted to decide this appeal. The impugned order is set aside. Appeals are allowed.
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2023 (9) TMI 521
Invocation of extended period of limitation - levy of penalty u/s 78 of FA - Suppression of facts or not - Construction Service (Painting) declared correctly or not - correct availment of benefit of N/N. 1/2006-ST or not - HELD THAT:- The appellant has regularly been filing ST-3 returns - the appellant have regularly being declaring their service activity correctly in the return. They have also been claiming the benefit of Notification No. 1/2006-ST dated 01.03.2006. The amount of taxable value for the service tax has also been declared by them correctly after availing abatement as per Notification No. 1/2006-ST. From the scanned copies of ST-3 returns, it can be seen that the appellant have correctly classified the taxable service mentioning Construction Service (Painting) . They have also declared abatement under Notification No. 1/2006-ST. - there is no element of the misrepresentation or suppression of facts with an intent to evade payment of service tax and therefore the demand of service tax under the extended time proviso under Section 73(1) of Finance Act, 1994, set aside. Penalty u/s 78 of FA - HELD THAT:- Since the elements of fraud, mis-statement or suppression of facts etc. with an intent to evade service tax are not present in the matter therefore, the penalty under Section 78 of the Finance Act, 1994 is not imposable in this case. Accordingly, the penalty imposed in the impugned order-in-original under Section 78 of the Finance Act, 1994 against the appellant is set-aside. The demand for the extended time proviso under Section 73 of the Finance Act, 1994 set aside - The demand for the normal period is confirmed. The appeal is partly allowed.
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2023 (9) TMI 520
Classification of services - maintenance and repair service and health and fitness service or club and association services - construction of club houses in all the properties and to provide access to the club houses - HELD THAT:- This Tribunal in M/S RAHEJA UNIVERSAL PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [ 2017 (7) TMI 247 - CESTAT MUMBAI] has already held that RUPL is not liable to be levied with service tax under the category of management, maintenance and repair service in respect of the deposits that RUPL collects from the purchasers of the units in accordance with Maharashtra Ownership of Flats Act, 1963. Further, it was also held that RUPL has paid service tax under the category of club or association service and, therefore, the said service was not required to be classified under health and fitness service. There is no merit in the grounds raised by Revenue - further, RUPL has correctly classified services under club and association service and without interfering with the service tax paid by them in respect of the said activities, the impugned order set aside. Appeal allowed.
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2023 (9) TMI 519
Levy of service tax - works contract service - Commercial and Industrial Construction Services - list of constructions undertaken - annual income derived from the financial year 2004-05 to 2007-08 - extended period of limitation - HELD THAT:- The activity undertaken by the appellant is a service along with supply of material. The merit classification of the service is as Works Contract Service , which is taxable from 01.06.2007 as held by the decision of the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ], wherein the Hon ble Apex Court held that Works contract were not chargeable to service tax prior to 1.6.2007. As the activity undertaken by the appellant is under Works Contract Service , no demand has been made by the appellant under the category of Commercial and Industrial Construction Services . The impugned demand confirmed against the appellant set aside - appeal allowed.
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Central Excise
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2023 (9) TMI 518
Reversal of cenvat credit wrongly availed - Extended period of limitation - demand with interest and penalty - appellant debited the excess credit availed amounting to Rs.2,20,756/- but did not pay the interest due on the same - whether duty for the second clearance should be made in terms of the first part of Rule 16(2) as demanded by the Revenue or as per the later part of Rule 16(2) as prayed for by the appellant - HELD THAT:- It is found from a plain reading of Rule 16(2) that if the first part of Rule 16(2) is applicable the second part will not apply. The phrase in any other case will not cover a case where no process of manufacture has taken place. The facts of clearance involved in the present case is also the same. Goods which were initially cleared for home consumption and later found unfit for use were brought back to the factory and were then cleared as scrap without putting them to any further process amounting to manufacture. As no process was involved the first part of Rule 16(2) would come into play and the goods were to be cleared after paying an amount of duty equal to the CENVAT credit taken. The appellant has stated that the lower authority had failed to see that there was no intention to evade payment of duty and the appellant had cleared the goods as rejected metal containers on payment of duty on the transaction value. Hence section 11AC of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002 could not have been invoked - the wordings of Rule 16 of Central Excise Rules, 2002 does give room for interpretation and there has been no positive act of suppression that has been brought out on behalf of the appellant - the demand shall be limited to the normal period. The impugned order upheld on merits - no grounds have been made for invocation of extended time limit - the imposition of penalty under sec. 11AC of the Central Excise Act, 1944 and sec. 25 of the Central Excise Rules, 2002 does not arise - appeal disposed off.
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2023 (9) TMI 517
Recovery of CENVAT credit taken on capital goods installed / laid in the Marine Terminal Facility (MTF) area - denial on account of no interlinking of the manufacturing process of the factory and jetty (MTF) - HELD THAT:- In the appellant s own case M/S. CHEMPLAST SANMAR LTD. VERSUS COMMISSIONER, GST AND CENTRAL EXCISE, PUDUCHERRY [ 2018 (4) TMI 1224 - CESTAT CHENNAI] , the very same issue was considered and it was held that the appellant have put up jetty and connected facilities in the sea near Karaikal Port only to facilitate the receipt and transfer of their essential raw materials ethylene to bring it to the factory for further manufacture. Apparently, such handling and receipt of essential raw materials is to be considered as part of integral manufacturing process. The demand cannot sustain and requires to be set aside - Appeal allowed.
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2023 (9) TMI 515
Benefit of area based exemption under N/N. 50/2003-CE dated 10.06.2003 - denial of benefit on the ground that the commercial production could not be commenced before 31.03.2010 - HELD THAT:- The invoice dated 31.03.2010 issued by the appellant for aluminium sections does not appear to be correct or pertain to products manufactured by it. Further, the industrial furnace acquired for manufacturing aluminium ingots from scrap itself was purchased by invoice dated 26.03.2010 and it crossed into the State of Uttarakhand on 29.03.2010 - It is found unthinkable that such an industrial furnace with accessories would have reached the factory on the same date and would have been installed, commissioned, tested, trials completed and commercial production also completed and the first invoice for commercially produced goods could have been raised on 31.03.2010 i.e. within two days. There are strong force in the argument of the learned Authorized Representative for the Revenue that under this invoice dated 31.03.2010 aluminium sections were sold which are extrusion products and there was no equipment for extrusion in the factory - In the absence of any contrary evidence Revenue s contention is accepted that it was impossible for appellant to have produced 430 kg. of sections by consuming 136 kg. of aluminium scrap. Therefore, on the facts of the case it is not convincing that any commercial production was commenced on or before 31.03.2010. It needs to be pointed out that the electricity consumption as per the electricity authorities was nil prior to April, 2010 and we find it hard to believe that the production could have taken place without any electricity at all. The appellant claimed that it had a diesel generator set for a few days, but was unable to provide any evidence to support its claim. The impugned order is correct and proper and calls for no interference - the impugned order is upheld and the appeal is dismissed.
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2023 (9) TMI 514
CENVAT Credit - input gone in manufacturing process destroyed due to electricity failure which has been cleared as scrap by the appellant on payment of duty - HELD THAT:- The said issue has been dealt by the various decisions of this Tribunal and this Tribunal has held that when the input has been issued for manufacture and during the course of manufacture, if input destroyed, the cenvat credit cannot be denied. Reliance can be placed in COMMR. OF C. EX., CHANDIGARH VS. CHANDIGARH PETRO FOAM (P) LTD. [ 2009 (1) TMI 942 - PUNJAB AND HARYANA HIGH COURT] where it was held that Modvat/Cenvat credit is not deniable on inputs destroyed in fire accident when the fact that inputs were actually issued and thereafter destroyed in fire accident has been admitted by the department. Thus, the cenvat credit on input, which has been destroyed due to power outage, cannot be denied to the appellant - impugned order set aside - appeal allowed.
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2023 (9) TMI 513
Refund of amount pre-deposited as demand - question of unjust enrichment as envisaged under section 11B of CEA was not examined by the lower authorities - HELD THAT:- Any amount which the respondent had deposited during investigation or at any time including at the time of filing the appeal was merely a deposit under section 35F and not duties of excise under section 11B. Revenue was obliged to refund the same under section 35F along with applicable interest under section 35FF and it had not done so. Therefore, the respondent applied for refund citing section 11B. Section 11B is irrelevant to this case including the provisions of unjust enrichment in it. The impugned order is correct and needs to be sustained - appeal is dismissed.
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CST, VAT & Sales Tax
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2023 (9) TMI 512
Levy of tax - freight charged separately from the buyer would fall part of the sale price or not - activity of transportation is an activity of service or not - freight charges collected separately as the carrier of the goods - Appellate Authority can exercise the power under Section 47 of the VAT Act, while taking Suo Moto Revision of the Appellate order under Section 3A of the VAT Act while passing the impugned order or not - HELD THAT:- Few substantial questions of law No.1, 2 3 were answered by Orissa High Court in the case of M/s Utkal Moulders [ 2021 (4) TMI 84 - ORISSA HIGH COURT ], where it was held that the freight shown in the sale bill separately is part of the sale price. It is held that the Petitioner is entitled to claim deduction of the freight charges from the taxable sales turnover. Other substantial questions of law are squarely covered and answered in the decision of Goldie Glass Industries [ 2017 (8) TMI 1451 - MADHYA PRADESH HIGH COURT ] where it was held that Section 3A was inserted in the Statute to provide for appointment of Appellate Authority by the State Government not below the rank of Deputy Commissioner of Commercial Tax. It is further clear from Sections 46 and 47 that from the order of Dy. Commissioner of Commercial Tax (Appeal), no further appeal or revision lies. In other words, the order passed by the Dy. Commissioner of Commercial Tax (Appeal) is final and is not amenable to suo-motu revisional powers conferred by Section 47 of the Act. All the five substantial questions of law are answered in favour of the petitioner/assessee - petition disposed off.
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Indian Laws
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2023 (9) TMI 510
Seeking grant of anticipatory bail - HELD THAT:- Although a counter affidavit has been filed, nothing has come to light which may persuade this Court to take a view, different from the view taken while passing the aforesaid order, nor the learned A.G.A. has pointed out violation of any of the conditions of interim anticipatory bail committed by the applicant. Application allowed.
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