TMI Tax Updates - e-Newsletter dated: September 4, 2023 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

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TMI Tax Updates - e-Newsletter September 4, 2023 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Rectification on GSTR Tran-1 whereby transitional credit was wrongly claimed - Input Tax Credit lying unutilized - The Court is inclined to quash the impugned order and remits the case back to the respondents to re-examine the records of the petitioner afresh from the last VAT return for the month of June 2017 under the TNVAT Act, 2006 - HC Visit to Get Source GST: Scope of supply - Land owner - Joint Development Agreement (JDA) - Space / area sharing arrangement - The developer is only providing services to the applicant and not to the prospective purchasers - The applicant is acting as a supplier of works contract service to the prospective purchasers of apartments and hence he is a supplier under Section 7(1) of the CGST Act, 2017 liable to pay tax under Section 9(1) of the CGST Act, 2017. - AAR Visit to Get Source GST: Input Tax Credit - supply or not - Nature of target-based gift/incentive - The applicant’s obligation to issue gold coins and white goods to the dealers/ customers upon achieving the stipulated lifting of the material/ purchase target during the scheme period would not be regarded as “goods disposed of by way of gift” and Input tax credit would not be restricted under the Section 17(5)(h) of the CGST Act, 2017. - Benefit of ITC available - AAR Visit to Get Source GST: Classification of goods - JAC OLIVOL BODY OIL - When the product itself proclaims to ‘apply daily before or after bath all over your body’, it is difficult for us to accept that people ordinarily buys it for treating of an ailment - the item namely JAC OLIVOL BODY OIL is commonly understood as a ‘preparations for the care of skin’ thereby considered to be a cosmetic product used to get soft and smother skin and not considered as a medicament used for the treatment or prevention of any disease or ailment. - Liable to GST - AAR Visit to Get Source GST: Levy of GST - interest on delayed payment of consideration - interest on 60% of the capex payable over and above on the consideration value at the rate linked to SBI MCLR will be a part of value of supply and would be taxed accordingly. - AAR Visit to Get Source GST: Exemption from GST - Services provided by the applicant to the universities in respect of conduct of examination (both pre and post-examination) is exempted from payment of tax under the GST Act - AAR Visit to Get Source GST: Exemption from GST - services of crushing wheat provided by the State Government - The instant supply of services by way of milling of food grains into flour (atta) to Food & Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption - AAR Visit to Get Source Income Tax: Reopening of assessment u/s 147 - assessee has availed cash loan - To test the correctness of the order, it is necessary that the disputed question of facts have to be thoroughly analyzed. There are several stake holders in the entire process which requires deeper probe into the matter and such an exercise cannot be done in exercise of writ jurisdiction. - Petition dismissed - HC Visit to Get Source Income Tax: Prosecution u/s 276C(1) - willful default of payment of tax - There is no doubt that penalty proceeding and prosecution can go simultaneously in the facts and circumstances of the cases, however, in the case in hand, the penalty proceeding has already been set aside in view of the appellate order. - Prosecution proceedings set aside - HC Visit to Get Source Income Tax: Reopening of assessment u/s 147 - reason to believe - Transaction of purchases being made by the petitioner from M/s NSE had been found to be bogus one on the basis of subsequent information, the mere disclosure of the same at the time of original assessment proceedings could not be considered to be disclosure of “true” and “full” facts and, therefore, in our opinion, the assessing officer certainly had jurisdiction to re-open the concluded assessment. - HC Visit to Get Source Income Tax: Initiation of proceedings u/s 201(1) - period of limitation - It would be interesting to note that on the ground that the two foreign companies had filed applications before the AAR as to taxability of such transactions, petitioner had filed an application before DCIT to keep the proceedings u/s 201 in abeyance. Such an action of the petitioner would run counter to its very contention that the proceedings concluded by respondent No. 1 was beyond limitation. - Order u/s 201(1) sustained - HC Visit to Get Source Income Tax: Reopening of assessment - Notice issued after assessee's death - Deceased/assessee had more than one legal heir - assessment order could not have been directed only against one legal heir - Matter remanded back to AO - AO will issue notice to the petitioners, and grant them opportunity to present their defense qua the merits of the case. - HC Visit to Get Source Income Tax: Validity of order passed u/s 147 - not providing any opportunity of hearing - Though this Court is very reluctant to interfere with any order u/s 143(3) or u/s 147 since the same is an appealable order but in this case admittedly the respondent Income Tax Authority has acted contrary to and in noncompliance of statutory provision of law and in view of this admitted legal and factual position, the aforesaid impugned order passed u/s 147 is set aside - HC Visit to Get Source Income Tax: Nature of interest income - Appropriate taxable head of income - Because except its subsidiary, the assessee has not given Bank Guarantee to anybody else, which can establish that it was engaged in the business of providing Bank guarantee. It was just only safeguarding the business interest of a subsidiary and providing them this type of guarantee. The commission income earned on providing such guarantee is taxable under the head “income from other sources”. - AT Visit to Get Source Income Tax: Taxability as Fee for Included Service (FIS) u/A 12 of India-USA DTAA - As per Example 7 of the Memorandum of Understanding to India-USA DTAA, a receipt cannot be treated as FTS merely because the service provider while providing consultancy services has used substantial technical skill and expertise. Because, while providing such services, the American Company is not making available to the Indian Company, any technical expertise, knowledge or skill etc. but is merely transferring commercial information to the Indian Company by utilizing technical skill. - AT Visit to Get Source Income Tax: Addition u/s 68 - assessee has received unsecured loan - as per AO lenders are not capable of providing such loan to assessee - Identity was not disputed by the AO. - The entire transactions took place through banking channel, therefore no justification for making such addition. - AT Visit to Get Source Income Tax: Disallowing set off of short term capital loss on sale of shares scrips against the short term & long term capital gain - ingenuine transaction - merely because there was allegation and investigation was done, the transactions of assessee were through recognised broker of stock exchange cannot be doubted, unless there is allegation against the broker through whom the assessee carried such transaction. - No additions - AT Visit to Get Source Income Tax: MAT computation u/s 115JB - Action of AO including the agriculture income for the purpose of MAT is not correct - Firstly, there was no mistake in the original orders passed by the AO as we have seen above, secondly, there was no notice to the assessee before enhancing the income and thirdly, the AO in his zeal of disposing off the rectification application has failed to appreciate and consider the unambiguous provisions wherein the agriculture income is exempt from the book profits for the purposes of computing the MAT liability. - AT Visit to Get Source Income Tax: Revision u/s 263 - Assessee has shown only an amount from the capital account towards drawings which he is trying to explain the source of investment - AO has completely lost his sight while accepting the explanation given by the assessee towards source of investment which not only made the assessment order erroneous but also is prejudicial to the interest of the Revenue - Revisin order sustained - AT Visit to Get Source Income Tax: Denial of Foreign tax credit - If the finding of lower authority regarding place of effective management is presumed to be correct, in that case, no tax could be charged as the transaction took place off shores and income was generated in USA - Benefit of FTC allowed - AT Visit to Get Source Income Tax: Exemption u/s 11 - Charitable activity u/s 2(15) - Activities of Para-Medical Council are commercial in nature or not - the object of the appellant Council qualified as charitable purpose and covered u/s 2(15) as applied by the appellant and given that there is no dispute on the genuineness of the activities carried on by the assessee Council in furtherance of its object - Benefit of exemption allowed - AT Visit to Get Source Income Tax: Prosecution proceedings for TDS default - allegation that petitioner’s firm had deducted TDS for the financial year 2015-16, Assessment year 2016-17 but failed to deposit the same with the department - on deposit of TDS with interest, penalty was waived - there was no occasion to proceed against the petitioner under section 276(B) of the Income Tax Act. - HC Visit to Get Source Customs: Levy of penalty on the appellants (CHA firm) - Smuggling - Red Sanders - As the SCN fails to bring to fore any express and active collusion in the attempted exports of Red Sander Wood logs on the part of the appellants, noting the various acts of omissions and commissions on the part of the appellants, imposition of a penalty of Rs. 50,000/- u/s 114(i) of the Customs Act, 1962 would meet the ends of justice. - AT Visit to Get Source Customs: Valuation - inclusion of value of technical know how fee or royalty paid - the Importer is permitted to purchase components from other parties also. There is no restriction that the appellant has to procure the raw materials / capital goods only from the foreign supplier. It is very much evident that the Technical Knowhow Fee is not a condition of sale of the imported goods. - Demand cannot sustain - AT Visit to Get Source Customs: Project import - goods cleared before the registration of the contract - The appellant having made an application for the registration of the contract prior to import of goods and sponsorship letter having been issued, the appellant is eligible for the exemption of duty as per the Project Import Regulations - AT Visit to Get Source Customs: Levy of Anti-Dumping Duty - import of PVC Sheeting Flex Banner (in rolls) of Malaysian origin - country of origin - Without checking the authenticity of the certificate of origin issued by Malay Chamber of Commerce, Malaysia. The certificate of origin cannot be discarded and on that basis benefit cannot be denied. - AT Visit to Get Source Indian Laws: Dishonour of Cheque - in view of the evidence adduced on behalf of the complainant to prove the complaint case, the burden of proof which was shifted upon the accused to rebut this presumption of liability of Section 118 and 139 of N.I. Act shifted on the accused but the same has not been discharged at all. - this criminal revision is hereby dismissed - HC Visit to Get Source IBC: CIRP - NCLT admitted the application - whether the CIRP proceedings were fraudulently and maliciously initiated SBI declared the credit amount as NPA - The submission of the Appellant that Financial Creditor is acting malafide in filing the petition has been expressly rejected by the Adjudicating Authority, hence, the submission of the Appellant that said submission was not considered, cannot be accepted - AT Visit to Get Source IBC: CIRP - Admission of application u/s 7 of IBC in an Ex-parte order - non-appearance of corporate debtor - the observations made by the Adjudicating Authority in the impugned order that the Appellant (Corporate Debtor) remained absent on many occasions is patently erroneous and is not borne out from the record.- - NCLT directed to make decision afresh - AT Visit to Get Source IBC: CIRP - Liquidation Proceedings’ against the ‘Corporate Debtor - pendency of ‘Arbitral Proceedings’ - t the ‘Liquidator’ had correctly rejected the ‘Appellant’/’Applicant’s claim by means of the reasons given in the letter dated 29.01.2022, considering the fact that the ‘Liquidation’ was a ‘time bound process’. - AT Visit to Get Source Service Tax: Exemption of service tax - Government Authority - The works carried out by the Appellant would qualify under 'Planning for economic and social development' as defended under 12th Schedule to Article 243W of the Constitution of India. - The Appellant has undertaken works to a 'Government Authority', which are function entrusted to a Municipality under Article 243W of the Constitution of India. Accordingly, the Appellants are eligible for the exemption provided in Notification 25/2012-ST - AT Visit to Get Source Service Tax: Levy of Service tax - Discrepancies between credit balance of subscriber service charges shown in the Trial Balance and the value of taxable services during the financial years as per ST-3 return - While the question of taxability is to be decided according to the principles of law, what was the factual accountancy practice followed must be disclosed with evidence so as to examine the applicability of the principles of law involved to those facts. - Matter restored back - AT Visit to Get Source Service Tax: Valuation - inclusison of re-imbursment of expenses - pure agency services - Rule 5(1) of the valuation Rules - From a perusal of the activity undertaken by the appellant, it is seen that the appellant had only paid the amount / charges on behalf of their clients to respective service providers and their clients reimbursed the charges to the appellant. The said transactions of appellant do not fall under ‘Support Service of Business or commerce’. - AT Visit to Get Source Service Tax: Levy of Service Tax - international inbound roaming charges received by the appellant - Whether, after notifying the POPS Rules, 2012, the FTO is no more to be considered as the service receiver and the person who visits India and beneficiary of the said roaming service becomes the service receiver? - Demand set aside - AT [Majority order] Visit to Get Source Central Excise: Levy of Penalty - suppression of facts or not - Availment of Irregular Credit - Demand based on Audit observations - the appellant immediately reversed the credit as and when it was pointed out by the audit officers and the officers clearly noted that interest and penalty are not to be levied. Inspite of these notices were issued after nearly 2 years after the audit observations and reversal of credit. - No penalty - SCN quashed - AT Visit to Get Source Central Excise: Extended period of limitation - They were under the bonafide belief that the processes undertaken by them did not amount to manufacture and accordingly cleared the goods to the raw material supplier on collection of ‘job charges’ only. Thus there is no evidence available on record to establish that the Appellant has suppressed the information of manufacture of dutiable goods with an intention to evade payment of duty. - AT Visit to Get Source VAT: Taxability - Deemed sale or not - receipts towards royalty and the transfer of the right to use intangible property - the transferee obtained a legal right to use the goods for the period during which he had such legal rights, which had to be to the exclusion of the transferor - the Tribunal has clearly gone wrong in law while dismissing the appeals preferred by the State - Matter restored back to AO - HC Visit to Get Source Articles DETERMINATION OF FAIR VALUE OF UNQUOTED SHARES ITC cannot be availed if supplier has not paid the tax Adjudicating Authority must provide hearing opportunity before passing an adverse order Service Tax is not leviable on School buses as they are not categorised under the definition of ‘Cab’ Notifications Central Excise 29/2023 - dated 1-9-2023 - CE Increase the Special Additional Excise Duty on export of Diesel - Seeks to further amend No. 04/2022-Central Excise, dated the 30th June, 2022. 28/2023 - dated 1-9-2023 - CE SAED - reduce SAED on production of Petroleum Crude and increase Duty on export of ATF - Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022. GST - States 1486-FT - dated 24-8-2023 - West Bengal SGST Seeks to notify special procedure to be followed by a registered person for filing appeal (manual filing of application) against the order passed by the proper officer u/s 73 or 74 of the Act regarding TRAN-1 and TRAN-2 filed pursuant to the directions of the Hon’ble Supreme Court in the case of Union of India v/s Filco Trade Centre Pvt. Ltd., SLP(C) No.32709-32710/2018 1484-F.T - dated 24-8-2023 - West Bengal SGST Seeks to amend notification No. 1899-F.T., dated 31st December, 2018 to incorporate consequential changes made in the new Foreign Trade Policy 2023 regarding supply of Gold etc. by the nominated agencies. 1483-F.T. - dated 24-8-2023 - West Bengal SGST Seeks to amend notification No. 1125-F.T., dated 28th June, 2017 by reducing rate of tax from 18%/12% to 5% for certain goods, such as, Un-fried/Un-cooked snack pellets, Fish soluble paste etc. and making consequential changes in the respective schedules. 1482-F.T. - dated 24-8-2023 - West Bengal SGST Seeks to amend notification No. 1137-F.T. dated 28th June, 2017 to make consequential amendment in Annexure III being the declaration to be given by the provider of GTA services. Income Tax 76/2023 - dated 1-9-2023 - IT Exemption from specified income U/s 10(46) – Notifies ‘Real Estate Regulatory Authorities’ 75/2023 - dated 1-9-2023 - IT Exemption from specified income U/s 10(46) – Notifies ‘E-Governance Society, Department of Food, Civil Supplies and Consumer Affairs, Himachal Pradesh, a body constituted / established by the state Government of Himachal Pradesh 74/2023 - dated 1-9-2023 - IT Exemption from specified income U/s 10(46) – Notifies ‘Rajasthan State Dental Council’ a body constituted by the Government of Rajasthan SEZ S.O. 3842(E) - dated 29-8-2023 - SEZ Notified area of the SEZ - Area of 2.10 hectares denotified at Villages Rachenahalli, Nagavara and Tanisandra, District Bangalore, in the State of Karnataka. News DPIIT holds review meeting for wider adoption of PM GatiShakti National Master Plan in States/UTs Case Laws: GST 2023 (9) TMI 131 Principles of natural justice - SCN not served on petitioner - appealable order - HELD THAT:- Considering the fact that the petitioner has not participated in the proceeding, this Court is of the view that the petitioner can be given one last opportunity to give a reply subject to the petitioner depositing 20% of the disputed tax as confirmed vide impugned order with the respondent within a period of thirty days from the date of receipt of a copy of this order. Subject to such compliance, the respondent shall take up the proceeding and dispose the case afresh on its merits and in accordance with law, within a period of sixty days thereafter. Petition dismissed. 2023 (9) TMI 130 Rectification on GSTR Tran-1 whereby transitional credit was wrongly claimed - Input Tax Credit lying unutilized - Section 140 of Central Goods and Services Tax (CGST) Act, 2017 - HELD THAT:- The petitioner is responsible for the mistake committed by him in filing TRAN-1 on 24.08.2017. However, the fact remains that the aforesaid amount had remained unutilized as per the monthly returns filed by the petitioner for the month of June-17, which was the last return filed under the TNVAT Act, 2006 before the enactment of the respective GST Acts with effect from 01.07.2017. The amount was also not disputed by the respondents when the first return was filed by the petitioner on 24.08.2017. The Hon'ble Supreme Court in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. [ 1999 (8) TMI 920 - SUPREME COURT ], has held that the credit that was validly availed and cannot be denied. The Court is inclined to quash the impugned order and remits the case back to the respondents to re-examine the records of the petitioner afresh from the last VAT return for the month of June 2017 under the TNVAT Act, 2006 - petition allowed. 2023 (9) TMI 129 Seeking provisional release of seized goods - It is the case of the petitioner that the petitioner's business has come to a standstill pursuant to the impugned proceedings and therefore, the petitioner seeks for intervention - HELD THAT:- The Counter Affidavit filed by the respondents seems to indicate that the petitioner has not maintained proper records from the date of purchase made after GST came into force on 01.07.2017. The petitioner has also not produced the documents that would be required for deciding the issue one way or the other. Considering the above, Court is inclined to dispose this writ petition by directing the respondents to issue appropriate notice to the petitioner to furnish such security as may be required to secure the interest of the revenue in accordance with Section 67(6) of the CGST Act read with Rule 140 of the CGST Rules, 2017. Petition disposed off. 2023 (9) TMI 128 Principles of natural justice - non-speaking order - impugned order has been passed without proper discussion - HELD THAT:- A reading of the impugned order makes it clear that the order is non-speaking order in nature. The case is remitted back to the respondent to pass a speaking order on merits and in accordance with law within a period of six weeks from the date of receipt of a copy of this order - Petition allowed by way of remand. 2023 (9) TMI 127 Scope of supply - Applicant being land owner not executing construction work - liability to pay tax in respect of agreements to be entered with customers for sale of apartments (other than affordable) belonging to the Applicant's share before issuance of Completion Certificate in a project under JDA, area sharing model, where construction work is executed by developer and the developer - rate of tax on sale of apartments before issuance of completion certificate - input tax credit. Whether Applicant being land owner not executing construction work, is liable to pay tax in respect of agreements to be entered with customers for sale of apartments (other than affordable) belonging to the Applicant's share before issuance of Completion Certificate in a project under JDA, area sharing model, where construction work is executed by developer developer is liable to pay tax on the portion of apartments to be handed over to the Applicant on or before issuance of Completion Certificate? HELD THAT:- The developer is providing construction services to the applicant and the applicant is providing again the construction services to the prospective customers - It is also pertinent to note that the agreements for supply of constructed apartments with the prospective purchasers are entered by the applicant which is a supply of service as per section 7 of the CGST Act and there is no direct supply of construction services to the prospective purchasers by the developer. The developer is only providing services to the applicant and not to the prospective purchasers - The applicant is acting as a supplier of works contract service to the prospective purchasers of apartments and hence he is a supplier under Section 7(1) of the CGST Act, 2017 liable to pay tax under Section 9(1) of the CGST Act, 2017. Whether the applicant, if liable for tax, what is the applicable rate of tax on sale of apartments before issuance of completion certificate? - HELD THAT:- The question of the applicant to opt for the taxation as an ongoing project in Annexure IV of the Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 3/2019- Central Tax (Rate) dated 29.03.2019 does not arise as he was not registered at the time allowed for filing of such option and the option is only for the registered person. The claim that the developer has opted for such a scheme does not entitle the applicant for that scheme, as the developer is a different person from the applicant - Hence the applicant is liable to pay tax as per entries 3(i) to 3(id) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 3/2019- Central Tax (Rate) dated 29.03.2019 depending on the nature of the apartment, whether it is a residential or commercial apartment; if the apartment is a residential apartment, whether it is affordable category or not and whether the project is a residential real estate project or a real estate project other than residential real estate project. If the applicant is liable to pay tax, whether applicant can claim credit of tax charged by the developer on the portion of apartments belonging to the applicant where developer has opted for payment of tax under old scheme i.e. 18%? - HELD THAT:- From the details provided by the applicant that he shall be further supplying the apartments to his buyers before the issuance of completion certificate or first occupation, whichever is earlier and developer promoter is charging the tax towards the supply of construction of apartments by the developer-promoter to him, the applicant is eligible to claim the input tax credit provided that the applicant pays tax on the supply of apartments which is not less than the amount of tax charged from him on construction of such apartments by the developer-promoter - Since the applicant is liable to tax at an amount which is lower than the amount of tax charged by the developer promoter, the applicant is not eligible to claim the input tax credit on the amount of tax charged by the developer to the applicant. The applicant is eligible to claim input tax credit on the tax charged by the developer for supply of construction services subject to the two conditions: (a) he is a registered dealer on the date the time of supply of construction services falls (b) the amount of tax payable by the applicant for his supply of apartments is more than the amount of tax charged by the developer from the applicant for the supply of construction services. If the applicant is liable for tax, whether the applicant can claim input tax credit on other expenses, other than tax charged by developer for supply of apartments? - HELD THAT:- The input tax credit is not eligible to be claimed on any of the expenses other than the tax charged by the developer for the construction services subject to its eligibility if all other conditions are satisfied. 2023 (9) TMI 126 Input Tax Credit - supply or not - Nature of target-based gift/incentive - applicant s obligation to issue gold coins and white goods to the dealers upon they achieving the stipulated lifting of the material/ purchase target during the scheme period - goods disposed of by way of gift or not - Input Tax Credit - permanent transfer or disposal of business assets where ITC has been availed on such assets - HELD THAT:- From the promotional / incentive schemes, it is clear that the applicant is supplying goods to his dealers as incentive for achieving the targets and the same is part of a scheme which the parties are in knowledge in advance. It is also noted that it is not supply of any quantity of gold/ white goods to any dealer, but a specified quantity determined as per the terms and conditions of the scheme documents - Thus it is seen that achievement of marketing targets set by the applicant, is an inducement from the dealer or in other words non-monetary consideration paid by the dealers for the supply of gold / white goods by the applicant. As per entry 1 of the Schedule I, permanent transfer or disposal of business assets where input tax credit has been availed on such assets would cover the activity of distribution of white goods or gold as incentive and hence would be treated as a supply of such goods as per clause (c) of Section 7(1) of the CGST Act. Whether the input tax credit of the tax paid on the gold coins and white goods are admissible or not? - HELD THAT:- Subject to the charging of tax in the invoices issued by the suppliers of gold coins and white goods, the same is eligible to be claimed as input tax credit and the same has been claimed by the applicant - applicant is issuing these gold coins and white goods so procured as incentives as per the agreement reached between himself and the recipients. It is only issued subject to the fulfilment of certain conditions and stipulations. Gift is something which is given without any conditions and stipulations and hence the same cannot be covered under the scope of gift - Since the goods are not given as gifts this clause is not applicable to the present transaction - the input tax credit so claimed under section 16 does not become unavailable under section 17(5)(h) of the CGST Act. Given that the distribution of gold coins and white goods are treated as supplies and attracts the tax liability on such distribution, the input tax credit is not restricted under any of the provisions of Section 17 more so under section 17(5)(h) of the CGST Act. 2023 (9) TMI 125 Classification of goods - JAC OLIVOL BODY OIL - whether the product falls within the category of medicaments or cosmetics? HELD THAT:- A product cannot be classified as a medicament only for the reason that it is manufactured using ingredients regulated under the Drugs and Cosmetics Act. There must be therapeutic or prophylactic uses of the product and the product must be manufactured primarily to control or cure a disease. In ALPINE INDUSTRIES VERSUS COLLECTOR OF CENTRAL EXCISE, NEW DELHI [ 2003 (1) TMI 103 - SUPREME COURT ] the issue before the Hon ble Apex Court was to decide classification of the product Lip Salve , manufactured in accordance with the defence services specifications and supplied entirely to military personnel. The Hon ble Supreme Court, held the item as a preparation for protection of lips and skin and is not a 'medicament'. In the instant case, the primary use of the product Jac Olivol Body Oil, as it appears from the label representing the product, is to care for skin - the product is described as For soft, smooth, glowing and healthy skin - the product label, as submitted by the applicant in paper copy is not identical with what the authorized advocate sent through e-mail on 28.07.2023. When the product itself proclaims to apply daily before or after bath all over your body , it is difficult for us to accept that people ordinarily buys it for treating of an ailment - the item namely JAC OLIVOL BODY OIL is commonly understood as a preparations for the care of skin thereby considered to be a cosmetic product used to get soft and smother skin and not considered as a medicament used for the treatment or prevention of any disease or ailment. The product JAC OLIVOL BODY OIL intended to be manufactured sold by the applicant would be covered under Heading 3304 of THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT and would be taxed accordingly under the GST Act. 2023 (9) TMI 124 Scope of Advance Ruling application - Exemption under N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 - Composite supply to principal supply of job-work - additional consideration received by the applicant for transporting food grains in the hill areas of Darjeeling - HELD THAT:- In spite of allowing sufficient opportunities of being heard, the applicant is not interested to obtain an advance ruling on the issues raised by him vide application made in FORM GST ARA-01. Moreover, in absence of relevant records which are required to be examined to decide the issue involved in the instant case, this authority is not in a position to give an advance ruling. The application is thus disposed of without pronouncement of any ruling. 2023 (9) TMI 123 Scope of Advance Ruling application - Condonation of delay in filing ITC 01 - availment of ITC of the closing stock lying on 27th July, 2022 - HELD THAT:- Neither the applicant nor his authorised representative could manage to appear on any of the appointed dates - the applicant has been allowed sufficient opportunities of being heard. Based on the facts that the questions on which advance ruling is sought by the applicant are not covered under any of the clauses under sub-section (2) of section 97 of the GST Act and the application has been filed without making payment of requisite fee referred to in sub-section (1) of section 97 of the GST Act read with sub-rule (1) of rule 104 of the Central Goods and Services Tax Rules, 2017 and the West Bengal Goods and Services Tax Rules, 2017, there may not be any reason to accept the application made by the applicant for pronouncement of ruling. Application rejected. 2023 (9) TMI 122 Levy of GST - amount of interest agreed to be paid by KMDA to the applicant due to the delayed payment of the 60% Capex should be considered as a part of the consideration for the project and levied to service tax or not - HELD THAT:- KMDA has agreed to pay interest for delayed payment of consideration against supply of services and such interest will be included in value of supply in terms of clause (d) of sub-section (2) of section 15. The authorised advocate of the applicant, in course of personal hearing, has also expressed that GST will be payable on the interest quantum received as payments by the applicant. In the instant case, interest on 60% of the capex payable over and above on the consideration value at the rate linked to SBI MCLR will be a part of value of supply and would be taxed accordingly. 2023 (9) TMI 121 Exemption from GST - educational institution or not - Supply of pre and post-examination services being provided to the Educational Boards and Universities - Sl. No. 66(b)(iv) of N/N. 12/2017-Central (Rate) dated 28.06.2017 as amended vide N/N. 2/2018 Central Tax (Rate) dated 25.01.2018 - HELD THAT:- Circular No. 151/07/2021-GST dated 17.06.2021 (CBIC-190354/36/2021-TRU Section-CBEC) has been issued for the purpose of clarification regarding GST on supply of various services by Central and State Board (such as National Board of Examination) wherein it has been stated that Central and State Educational Boards are treated as Educational Institution for the limited purpose of providing services by way of conduct of examination to the students. Therefore, NBE is an Educational Institution in so far as it provides services by way of conduct of examination, including any entrance examination, to the students. Whether the activities undertaken by the applicant against agreement/work orders issued to him shall be treated as services relating to conduct of examination or not? - HELD THAT:- The process of conducting examination includes pre-examination works, the examination itself and post-examination works - The said activities can be treated as services relating to conduct of examination. Services provided by the applicant to the universities in respect of conduct of examination (both pre and post-examination) is exempted from payment of tax under the GST Act vide serial number 66 of Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 and West Bengal State Notification No. 1136 F.T. dated 28.06.2017. 2023 (9) TMI 120 Exemption from GST - Valuation of supply of services provided by the applicant Company to the State Government - services of crushing wheat provided by the State Government, into fortified atta which in turn is supplied by the State Government through Public Distribution System - rate of tax applicable on the value of supply - components to be included in calculation of the % of value of goods in the total value of composite supply for the purpose of Notification No. 2/2018- Central Tax (Rate). HELD THAT:- The agreement between the applicant and the State Government for supply of fortified Wholemeal Atta/Atta is found to be executed in terms of G.O. No. 2834-F.S. dated 6th September, 2017. The said Notification provides guidelines for the procedure of empanelment of flour mills/ attachakki to convert wheat into fortified atta/wholemeal atta in pursuance of clauses 36 and 37 of the West Bengal Public Distribution System (Maintenance Control) Order, 2013 and clauses 33 and 34 of the West Bengal Urban Public Distribution System (Maintenance Control) Order, 2013 - the instant composite supply made by the applicant is found to be in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Whether the value of supply of goods in this case exceeds 25 percent of the total value of the supply or not? - HELD THAT:- The contention of the applicant that the provisions of Rule 27(b) will be applicable for the instant case for the purpose of determination of value of supply has duly been considered. Rule 27 of the Central Goods and Services Tax Rules, 2017 and West Bengal Goods and Services Tax Rules, 2017 (collectively referred to as, the GST Rules) prescribes the manner of determination of value of supply where the consideration is not wholly in money - in the instant case, the amount of Rs. 124 may be considered as equivalent to the consideration not in money for the purpose of determination of value of supply under clause (b) of rule 27 of the GST Rules and such amount is admittedly known to the applicant at the time of supply. The total value of supply to be Rs. 260.48 out of which Rs. 136.48 is the cash consideration and Rs. 124 is the non-cash consideration - the value of goods involved in the instant supply stands at Rs. 60/- against total value of supply of Rs. 260.48, thereby the value of goods involved in the instant composite supply stands at 23.03% of the total value of supply i.e., it does not exceed 25% of the value of the composite supply. The instant supply of services by way of milling of food grains into flour (atta) to Food Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, since the supply satisfies all the conditions specified in the said entry. Income Tax 2023 (9) TMI 119 Computation of capital gains u/s 48 - value of the 1/12 undivided share of land that was agreed to be transferred as per the agreement - right conferred on the tranferee - possession as handed over in pursuance to the agreement for sale as contemplated under Section 53A of the TP Act - As deceided by HC matter is remitted to the Assessing Officer for the sole purpose of computation of capital gains under section 48 of the Act, after taking into account the value of 1/12th share in the landed property that was agreed to be sold. HELD THAT:- Since the petitioner has taken the benefit of the tax scheme (Vivad se Vishwas Scheme), he does not press his petition any longer. Special leave petition stands dismissed. 2023 (9) TMI 118 Reopening of assessment u/s 147 - assessee has availed cash loan - unexplained expenditure and the income generated from the application of the loan so taken as unexplained income - HELD THAT:- After setting out the statutory provisions, it is stated that investigation report received from the office of the DDIT (investigation) shows that there are some remarks about potential borrowers/lenders and on verification of the documents, it is seen that there are credible evidence of actual borrowings which are not potential in nature but suggest the fact of actual transaction. After examining and analyzing the information available on record and the data reported in the Insight Portal copy of which was shared with the assessee along with the show cause notice, the assessing officer holds that it is evident that the assessee has availed cash loan to the tune of Rs. 40.70 crores through the finance broker Kaseras from different lenders such as Uma Shankar Kasera and the said amount falls in the ambit of the case where any amount is borrowed only on or any amount thereon is repaid to, any person otherwise then through an account payee cheque drawn from a bank, the amount so borrowed or repaid shall be deemed to be income of the person borrowing and repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be and the income generated from the application of the loan so taken as unexplained income. As it cannot be stated that the order passed under clause (d) of Section 148 is a non- speaking order nor the order to be branded as outcome of non-application of mind. To test the correctness of the order, it is necessary that the disputed question of facts have to be thoroughly analyzed. There are several stake holders in the entire process which requires deeper probe into the matter and such an exercise cannot be done in exercise of writ jurisdiction. Therefore, the learned single bench was fully justified in not entertaining the writ petition and leaving it upon to the appellant to agitate all issues in the reopening proceedings for which notice under Section 148 has been issued on April 07, 2023. Appellant has not made out any case for interference with the order passed by the learned single bench. Accordingly, the appeal fails and the same is dismissed. 2023 (9) TMI 117 Application under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) rejected - Petitioner s application came to be rejected on the ground that there was no appeal pending before any authority as on the date the declaration was filed - HELD THAT:- Under the DTVSV Act, Section 4(1) provides that the declaration referred to in Section 3 shall be filed by the declarant before the designated authority in such form and verified in such manner as may be prescribed . A declarant is defined under Section 2(c) to be a person who files declaration under Section 4. Appellant is defined under Section 2(a)(ii) (since Ms. Sathe relied on this provision) to be a person in whose case an order has been passed by the Assessing Officer, or an order has been passed by the Commissioner (Appeals) or the Income Tax Appellate Tribunal in an appeal, or by the High Court in a writ petition, on or before the specified date, and the time for filing any appeal or special leave petition against such order by that person has not expired as on that date. Ms. Sathe submitted that the word Writ Petition used should be read to include even an appeal . Admittedly in this case, even if we, for a moment, agree to the suggestion made by Ms. Sathe, there is no appeal pending in this Court. Moreover, to a specific query posed by the Court, Ms. Sathe was candid to admit that even SLP has not been preferred in the Apex Court against the order dated 28th January 2020 passed by the High Court. 2023 (9) TMI 116 Validity of Reopening of assessment u/s 147 - notice u/s 148A(b) - shorter period provided to resposd to assessee - bogus purchases - reassessment proceedings have been triggered pursuant to show-cause notices issued under Sections 74 and 132 of the Central Goods and Services Tax Act, 2017 - as contented timeframe granted did not permit the petitioner to file a more exhaustive and detailed reply to the said show-cause notice - HELD THAT:- Respondent cannot but concur that the minimum statutory timeframe provided under the provisions of Section 148A(b) for filing the response is seven (7) days, which, in this case, was clearly not provided to the petitioner. Therefore, we would be entering into an area of uncertainty if we were to accept that in this case, the two (2) days granted to the petitioner via the notice dated 27.03.2023 was sufficient.The statute, as indicated above, provides a specific timeframe and therefore, that leeway would have to be granted to the assessee. Having regard to the fact that the responses to notices form part of the impugned order dated 31.03.2023 passed under Section 148A(d) in our view, the best way forward would be to set aside the said order with liberty to the AO to pass a fresh order. Petitioner has indicated to us that the petitioner would like to file a further reply, accordingly, two (2) weeks are granted to file a comprehensive reply to both notices issued under Section 148A(b) of the Act.AO, upon receipt of the reply, will issue a notice to the petitioner for according personal hearing in the matter. The notice will indicate the date and time of the hearing. AO will, thereafter, proceed to pass a speaking order; a copy of which will be furnished to the petitioner. 16. The writ petition is disposed of, in the aforesaid terms. 2023 (9) TMI 115 Prosecution u/s 276C(1) - willful default of payment of tax - penalty proceeding was also initiated u/s 271(1)(c) - assessee is alleged to have attempted to evade the tax liability by furnishing inaccurate particulars of income leads to concealment of income - HELD THAT:- A criminal prosecution for an offence under a special statute must not be initiated as a matter of course where the prosecution would involve intricate questions of interpretation of the Income Tax Act. The object of launching criminal prosecution for willful default in complying with the provisions of the Income Tax Act is to prevent evasion of tax. See GOPALJI SHAW case [ 1988 (3) TMI 41 - CALCUTTA HIGH COURT] The Hon'ble Supreme Court in G.L. Didwania another [ 1993 (11) TMI 3 - SUPREME COURT] has held that if the appellate tribunal has set aside the order of penalty, how the criminal proceeding can be sustained. Thus once penalty order is set aside, it will be presumed that there is no concealment and quashing of prosecution under Section 276C(1) of the Income Tax Act is automatic. The petitioner cannot be allowed to suffer and to face criminal trial and the same cannot sustain in the eyes of law. There is no doubt that penalty proceeding and prosecution can go simultaneously in the facts and circumstances of the cases, however, in the case in hand, the penalty proceeding has already been set aside in view of the appellate order. The Court finds that in view of the above judgments, the case of the petitioner is fit to be allowed. Further, if the penalty proceeding has been set aside, mens rea is one of the essential ingredient of a criminal offence. Petition allowed. 2023 (9) TMI 114 Reopening of assessment u/s 147 - reason to believe - whether there was true and full disclosure of all material facts on the part of the assessee at the time of filing of the return for relevant assessment year or whether the assessing officer had sufficient reason to believe that there was any escapement of income by reason of omission or failure on the part of the assessee to disclose all material facts? - HELD THAT:- There was omission or failure on the part of the assessee to fully and truly disclose all material facts, the argument as raised by the petitioner was that the transaction of purchase of rice bran etc. from M/s NSE was duly reflected in its books of account which was produced at the time of original proceedings and, therefore, there could not be stated to be any concealment on his part. Though this argument appears to be quite attractive but is not acceptable due to the reason the proprietor of M/s NSE himself accepted that his firm was not involved in any actual business activity at all which prima facie proved that the transactions so reflected in books of account were bogus. Though a feeble argument had been raised to the effect that no opportunity to crossexamine the said Sh. Avinash had been given to the petitioner, however, there is nothing on record to suggest that any specific prayer had been made by the petitioner to allow him to cross-examine Sh. Avinash at the time when the proceedings on impugned notice were conducted Thus transaction of purchases being made by the petitioner from M/s NSE had been found to be bogus one on the basis of subsequent information, the mere disclosure of the same at the time of original assessment proceedings could not be considered to be disclosure of true and full facts and, therefore, in our opinion, the assessing officer certainly had jurisdiction to re-open the concluded assessment. Decided against assessee. 2023 (9) TMI 113 Adverse Assessment Order - notices issued u/s 142(1) were not accessed as the Chartered Accountant who had the password failed to access the same and inform the petitioner about the same on account of confusion due to outbreak of Covid 19 pandemic - HELD THAT:- The notice that were issued under Section 142(1) of the Income Tax Act were during the period when the first wave at its peak and during the period when the second wave had already started. The Impugned Assessment Order has been passed on 26.04.2021 again when the second wave was at its peak. That being the case, the Court is inclined to quash the Impugned Order and the Impugned Demand Notice issued under Section 221(1) of the Income Tax Act and remand the case back to the respondents to pass a fresh order on merits and in accordance with law within a period of eight (8) weeks from the date of receipt of a copy of this order. Petitioner shall cooperate with the respondent by furnishing all the informations called for along with the reply. The impugned order which stands quashed today shall be treated as a Show Cause Notice for the petitioner to respond. 2023 (9) TMI 112 Unexplained expenditure u/s 69C - petitioner had neither filed any reply nor filed any document despite several opportunity being given to the petitioner - HELD THAT:- Prima facie , challenge to the impugned order under Article 226 of the constitution of India is without any merit as the amount that has been paid by the petitioner was neither explained by the petitioner nor the books of accounts filed by the petitioner show it was out of profits earned by the petitioner. Therefore, this writ petition is liable to be dismissed. However, liberty is given to the petitioner to file a statutory appeal within a period of 30 days from the date of receipt of a copy of this order. In case such an appeal is filed, same shall be numbered by the office of the Appellate Commissioner. 2023 (9) TMI 111 Initiation of proceedings u/s 201(1) - period of limitation - Matter was kept in abeyance on the request of assessee himself - what is a reasonable period in the absence of any statutory limitation ? - HELD THAT:- In the instant case, it is seen that following a survey operation under Section 133A of the Act on 30.12.2015, it was detected that petitioner had made two payments to two foreign companies but did not deduct TDS under Section 195 of the Act. It was thereafter that the show cause notice was issued on 20.01.2016. It would be interesting to note that on the ground that the two foreign companies had filed applications before the AAR as to taxability of such transactions, petitioner had filed an application before respondent No. 1 to keep the proceedings under Section 201 of the Act in abeyance. Such an action of the petitioner would run counter to its very contention that the proceedings concluded by respondent No. 1 was beyond limitation. The survey was conducted on 30.12.2015, show cause notice was issued on 20.01.2016 and the proceedings came to be concluded on 14.12.2018 which was within a reasonable time in view of DCIT. We see no infirmity in the view taken by DCIT. We are therefore not inclined to entertain the writ petition. 2023 (9) TMI 110 Reopening of assessment - Notice issued after assessee's death - liability of legal heirs - deceased/assessee had more than one legal heir but assessment against only one - HELD THAT:- A careful perusal of the extract will show that the revenue were aware of the factum of death of Mr Kuldip Kohli, and that the proceeding had been attended by petitioner no. 1, i.e., Mr Darpan Kohli. Since this fact came to the knowledge of revenue, the impugned assessment order, although addressed to the deceased/assessee, adverts to the one of the legal heirs, i.e., Darpan Kohli/petitioner no. 1. Deceased/assessee had more than one legal heir, which includes petitioner nos. 2 and 3. Given this position, Mr Sunil Agarwal cannot but accept that the assessment order could not have been directed only against Darpan Kohli i.e., petitioner no. 1. Therefore, according to us, the best way to forward would be to set-aside the assessment order.It is directed accordingly. AO will issue notice to the petitioners, and grant them opportunity to present their defense qua the merits of the case.The notice will indicate the date and time of the hearing.AO will also permit the petitioners to file written response(s), if opportunity is sought in that regard. 2023 (9) TMI 109 Validity of order passed u/s 147 - violation of Section 144B(6)(vii) by not providing any opportunity of hearing before passing the aforesaid impugned order u/s 147 - HELD THAT:- Respondents on instruction submits that from record it appears that the aforesaid impugned order was passed without compliance of the formalities of providing opportunity of hearing to the petitioner as per Section 144B(6)(vii) of the aforesaid Act. Though this Court is very reluctant to interfere with any order under Section 143(3) or Section 147 of the Act since the same is an appealable order but in this case admittedly the respondent Income Tax Authority has acted contrary to and in noncompliance of statutory provision of law and in view of this admitted legal and factual position, the aforesaid impugned order passed u/s 147 is set aside and the matter is remanded back to the assessing officer concerned to pass fresh order after compliance of the formalities of the aforesaid provision of Section 144B(6)(vii) of the aforesaid Act, within a period of three months from date. 2023 (9) TMI 108 Addition u/s 14A r.w.r. 8D - action of the AO and the CIT(A) in considering the average investment value under Rule 8D(2)(iii) of the Rules - HELD THAT:- We are of the view that only investment yielding non-taxable income has to be considered and not all the investments. This proposition has been held correct in the case of ACB India Ltd., [ 2015 (4) TMI 224 - DELHI HIGH COURT] as held that for the purpose of section 14A, instead of taking into account total investment, the investment attributable to dividend (exempt income) was only required to be adopted and thereafter the disallowance was to be arrived. We hold that while calculating disallowance u/s 14A of the Act, only investment that have generated exempt income should be taken into consideration. See M/S INDIABULLS CAPITAL SERVICES LTD. [ 2019 (10) TMI 30 - SC ORDER] - Decided in favour of assessee. 2023 (9) TMI 107 Income accrued in India - Determination of taxable income under the head IT Services - levy of taxation on the alleged receipt for sale of IT Services as FTS - as per assessee no permanent establishment in India and the services were performed outside India in Finland, thus these receipts in lieu of IT Services are not taxable as FTS in the hands of the assessee - HELD THAT:- As decided in assessee own case [ 2019 (6) TMI 777 - ITAT KOLKATA] Tribunal has recorded the finding that no doubt the assessee has no permanent establishment in India and these services were also rendered outside India but the services has been used in India and, therefore, it is taxable in India. The ITAT as well as DRP has made reference to Article 12(5) of India-Finland DTA in this connection. During the course of hearing, we asked the ld. Counsel for the assessee to show how these services available for everybody and anybody can claim it over the counter. These are specific services for the entities of the assessee only, which are to be used in their respective organisation between different countries. Therefore, as far as the user of the services in India is concerned, their fees paid for such user in India deserve to be taxed in India. DRP has observed that there is no clause to make available in the treaty between India and Finland. According to which, it was not necessary upon the assessee to make the technology available to Indian entity and only then the receipt would be taxable. Without making it available, if the technology has been used, then also, on those receipts, the assessee has to pay taxes. Whether receipt received in the shape of guarantee fees deserves to be taxed in India within the meaning of Article 21 of India- Finland Treaty ? - According to the ld. DRP, the activities of giving of guarantee are only a routine activity. It is an obligation to its subsidiary being the owner of the subsidiary. Hence it is more likely to be a shareholders obligation/service than business activity. The ld. DRP has held that it is not a business activity and we do not find any error in this finding of the ld. DRP. Because except its subsidiary, the assessee has not given Bank Guarantee to anybody else, which can establish that it was engaged in the business of providing Bank guarantee. It was just only safeguarding the business interest of a subsidiary and providing them this type of guarantee. The commission income earned on providing such guarantee is taxable under the head income from other sources . The ld. DRP has rightly dealt with the issue and rightly directed the ld. Assessing Officer to tax it under the head income from other sources as per Article 21. Additional ground of appeal - interest receipts on refund - as under Article 11 of DTA, this interest income ought to have been assessed @ 10%, which has not been considered by the revenue authorities - On due consideration of the record, we find that there is no discussion on this point in the impugned order of the ld. DRP as well as of the ld. Assessing Officer. Therefore, we remit this issue to the file of ld. Assessing Officer for re-adjudication. The ld. Assessing Officer shall take into consideration the order of the ITAT [ 2023 (3) TMI 353 - ITAT KOLKATA] in the assessee s own case. 2023 (9) TMI 106 Taxability as Fee for Included Service (FIS) u/A 12 of India-USA DTAA - services in nature of technical or consultancy - nature and character of identical receipts if it requires withholding of tax? - assessee is a non-resident corporate entity and a tax resident of USA engaged in the business of providing consultancy services to global clients based in the USA or having USA operations - Assessee submitted, non-technical consultancy services are not covered under Article 12(4)(b) of the Tax Treaty - HELD THAT:- As departmental authorities have not brought any material on record to demonstrate that while rendering services, the assessee had made available technical knowledge, expertise, skill, knowhow etc. to Bain India to apply such technology, knowhow etc. independently without the aid and assistance of the assessee. The fact that Bain India is still dependent on the assessee for such services is established from the fact that since the year 2010, the assessee had been providing such services to Bain India on year to year basis. Had assessee made available the technical knowledge, knowhow skill etc. to Bain India, there would not have been any occasion for the assessee to provide such services on year to year basis as the making available or transfer of such technical knowledge, knowhow, skill etc. would have enabled Bain India to apply them on its own without requiring the assessee to continue with providing them. As per Example 7 of the Memorandum of Understanding to India-USA DTAA, a receipt cannot be treated as FTS merely because the service provider while providing consultancy services has used substantial technical skill and expertise. Because, while providing such services, the American Company is not making available to the Indian Company, any technical expertise, knowledge or skill etc. but is merely transferring commercial information to the Indian Company by utilizing technical skill. Thus, no hesitation in holding that the receipts in dispute are not in the nature of FIS under Article 12(4)(b) of India-USA DTAA. We order accordingly. 2023 (9) TMI 105 Estimation of income @8% of gross receipts - as argued AO has not brought any comparable cases in the line of business with such high rate of profit, thus pleaded to estimate the income on gross receipts @2% in view of the principles of natural justice - HELD THAT:- As undisputed notices were issued on the assessee, but the assessee did not respond to the notices issued by the department. Hence, the assessee s case was dismissed ex-parte by the lower authorities. On careful examination of the facts and circumstances of the case and business model of the assessee,we direct the AO to estimate the profit @6% on gross turnover. Assessee ground are partly allowed. Levy of interest u/s 234B - As submitted by the Ld.DR, charging of interest is consequential and interest is mandatory and not discretionary as held by the Hon ble Supreme Court in the case of Anjuman H Ghaswala [ 2001 (10) TMI 4 - SUPREME COURT] and also the decision of CIT Vs. Hindustan Bulk Carriers [ 2002 (12) TMI 10 - SUPREME COURT] Therefore, direct the AO to restrict the charging of interest on the profit estimated @6% on gross turnover. Hence, the ground raised by the assessee is partly allowed. 2023 (9) TMI 104 Addition u/s 68 - assessee has received unsecured loan - as per AO lenders are not capable of providing such loan to assessee - HELD THAT:- AO has not called any of the lenders for recording their statement nor bring any adverse material against the lenders. As during assessment proceedings, assessee has field complete details of lenders including identity of lenders and their creditworthiness and genuineness of such transaction. The loan was received through banking channel. CIT(A) has given a contradictory finding, where he held that addition u/s 68 is unsustainable and AO has not doubted the evidence relating to the loan and not rejected the books of assessee. CIT(A) again held that assessee failed to establish creditworthiness of creditors. Identity was not disputed by the AO. Considering the fact that assessee has discharged his primary onus in furnishing complete details to prove the genuineness of such transactions and AO has not examined the lenders nor brought any adverse material. The entire transactions took place through banking channel, therefore no justification for making such addition. In the result, ground No.1 of appeal raised by assessee is allowed. Characterization of income - addition by treating agricultural income as income from other sources - HELD THAT:- AO has not brought any adverse material on record to substantiate his contention that he is not exclusively undertaking the agricultural activities in the agricultural land under joint ownership. Neither the assessee has fully discharged his onus by filing confirmation from other co-owners that the land jointly owned by them is fully occupied and cultivated for the purpose of agriculture activities by assessee only, nor the assessing officer has brought any adverse material to fully discard the contention of the assessee. Therefore, keeping in view the agriculture income of earlier year accepted by the department, in my view an estimated/ lump sum allowance of Rs. 3.00 lakh as agriculture income would be sufficient to meet the end of justice. Thereby, remaining disallowance of agriculture income of Rs. 146,100/- is upheld.Assessee gets part relief. 2023 (9) TMI 103 Revision u/s 263 - undisclosed bank account - CIT setting aside the assessment with the direction to frame the assessment after making inquires in regard to cash deposits and other credit entries made in the bank account of the assessee - HELD THAT:- We note that that bank account was not disclosed by the assessee in his return of income, however, the said bank account number was disclosed by the assessee during the scrutiny assessment proceedings before the assessing officer. The assessee has explained each entry of said bank account number before the assessing officer. Therefore, during the assessment stage, the assessing officer has examined the said bank account. Besides, the majority of credit entries of substantial amounts appearing in this account which were received from Shri Hanuman S. Purohit, M/s. Pushpak Electronics, M/s. Rajgharana Developers and Shree Arihant developers, were explained to the assessing officer, during the assessment stage. Hence in these circumstances, it can be said that assessing officer conducted adequate enquiry. The view taken by the A.O. was one of the possible views and the assessment order passed by him could not be held to be erroneous and prejudicial to the interests of revenue. C.I.T. on the same set of facts and evidences on record was of the opinion that the A.O. should have rejected the regrouping of debit and credit entries as explained above and he should have taken the stand which the Ld. Pr. C.I.T. hinted in the impugned order u/s 263 of the Act. This is not permissible under law. Decided in favour of assessee. 2023 (9) TMI 102 Disallowing set off of short term capital loss on sale of shares scrips against the short term long term capital gain - ingenuine transaction - assessee managed the loss of sale of share scrips to avoid the payment of tax on capital gain earned on sale of immovable properties - AO doubted the transaction of assessee on the basis of report of Investigation Wing Kolkata - HELD THAT:- No independent investigation was carried out the assessing officer to disprove the fact and evidence brought on record by the assessee - merely because there was allegation and investigation was done, the transactions of assessee were through recognised broker of stock exchange cannot be doubted, unless there is allegation against the broker through whom the assessee carried such transaction. Assessee has furnished complete evidence including contract note of shares, demat details, detail of bank a/c. However, no adverse evidence was brought against such evidence. Nor the AO made adverse comment on such evidences. CIT(A) granted relief to the assessee by taking view that assessee had filed concrete and irrefutable evidences and assessing officer merely rely on the information supplied by the Investigation Wing without making independent enquiry about the facts and genuineness of such shares transaction carried out by the assessee. It was also held by ld CIT(A) that assessing officer in the assessment order held that investigation wing had carried out detailed investigation in case of penny stock but neither the name of broker, who have done such transaction nor the name of companies which are involved such activities are mentioned in the assessment order. Thus find merits in the submissions of assessee that statement of assessee was recorded in the office Assessing Officer and no adverse was extracted in his statement. The assessee invested huge fund of Rs. 1.00 Crore in anticipation to earn good return, but the assessee suffered losses in short span of time, so he immediately sold the scrips of such shares and that transaction carried out by the assessee is genuine and cannot be doubted. Appeal of the Revenue is dismissed. 2023 (9) TMI 101 Rectification of mistake u/s 154 - MAT computation u/s 115JB - inclusion of the agriculture income for the purpose of MAT - refund on account of taxes inadvertently wrongly calculated under MAT - Whether CIT (A) has erred in confirming the orders of AO rejecting the application of the assessee u/s 154 for not acknowledging and allowing refund on account of taxes inadvertently wrongly calculated under MAT and paid under self assessment at the time of filing of income tax return whereas no liability is due under MAT in the orders passed under section 143(3) r.w.s 147 as there was an error in records which is required to be rectified u/s 154 - HELD THAT:- In the instant case, the agriculture income of Rs 23,60,000/- is determined in terms of original assessment order passed u/s 143(3) r/w 147 dated 14/12/2016 and thereafter, in reassessment order passed u/s 143(3) r/w 147 dated 27/09/2019. The said agriculture is exempt under section 10(1) - Therefore, it was incumbent on part of the AO to recompute the tax computation for the purposes of determining the liability under section 115JB by reducing the said agriculture income from the book profits declared by the assessee even though the assessee has not done so in the return of income. We find that the same has effectively been done by the AO by determining NIL tax liability under both the normal provisions as well as MAT provisions while passing original assessment order passed u/s 143(3) r/w 147 dated 14/12/2016 and thereafter, in reassessment order passed u/s 143(3) r/w 147 dated 27/09/2019. Therefore, the assessee was well within its right to claim refund of taxes which was not granted even though the tax liability has been determined at NIL. The action of the AO while disposing off the assessee s application u/s 154 recomputing the book profits by including the agriculture income is therefore clearly not sustainable in eyes of law. Firstly, there was no mistake in the original orders passed by the AO as we have seen above, secondly, there was no notice to the assessee before enhancing the income and thirdly, the AO in his zeal of disposing off the rectification application has failed to appreciate and consider the unambiguous provisions wherein the agriculture income is exempt from the book profits for the purposes of computing the MAT liability. Even the ld CIT(A) has failed to appreciate the said provisions. Therefore, in light of aforesaid discussions, we are of the considered view that matter as far as tax liability of the assessee is concerned, it has been rightly determined originally at NIL under the MAT provisions of section 115JB and there is no basis for invoking the jurisdiction u/s 154. Appeal of the assessee is allowed. 2023 (9) TMI 100 Disallowance of royalty payment to ONGC - Crystallization of liability - correct year of assessment - AO held that since the payment of royalty has accrued in assessment year 2010-11 as per mercantile system of account, it has to be allowed in assessment year 2010-11 and as liability got crystallized by virtue of Government of India letter dated 26th July, 2011, falling in financial year 2011-12 relevant to assessment year 2012-13, therefore, it cannot be allowed in the impugned assessment year - HELD THAT:- FAA endorsed the view of AO by holding that the claim could have been allowed either in assessment year 2010-11 on accrual basis or in assessment year 2012-13, wherein, the liability got crystallized. Thus, it is very much clear that they have not disputed assessee s claim that the cost of royalty has to be allowed. However, the dispute is only with regard to the timing. We direct the Assessing Officer to allow assessee s claim in assessment year 2012-13, wherein, the liability got crystallized. This ground is partly allowed. Disallowance of amortization of facility management fee - As per AO and FAA since the entire facility management fee was paid in assessment year 2010-11 for due diligence process for admissibility of the loan facility and it is not connected to the utilization of the loan, therefore, it cannot be amortized over the tenure of the loan - HELD THAT:- We direct the AO to verify the facts relating to assessment year 2010-11 [ 2023 (1) TMI 1284 - ITAT DELHI] and in case such deferment has been allowed in assessment year 2010-11, then he has to allow it in the impugned assessment year. Or else, he is directed to allow the entire expenditure in assessment year 2010-11. Ground is partly allowed. Disallowance of claim of additional depreciation - HELD THAT:- Tribunal in order [ 2023 (1) TMI 1284 - ITAT DELHI] has held that in view of explanation 5 to section 32(1) AO has to compute additional depreciation irrespective of the fact whether the assessee has claimed it or not. Accordingly, the Tribunal has upheld the decision of the Assessing Officer with regard to allowance of claim of additional depreciation. The aforesaid decision of the Coordinate Bench squarely applies to the facts of the present appeal. Accordingly, we uphold the decision of the departmental authorities on the issue. Ground raised is dismissed. Addition expenses on exploration and development - non-deduction of tax u/s 40(a)(i)/40(a)(ia) - HELD THAT:- As parties have agreed that the issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessment years 2010-11, 2013-14, 2014-15, 2015-16 and 2016-17. Having considered rival submissions, we find, while deciding identical issue in assessee s own case in assessment years 2010-11, 2013-14 and 2014-15, [ 2023 (1) TMI 1284 - ITAT DELHI] the Tribunal has upheld the deletion of similar disallowance made by the Assessing Officer. Exploration and development expenditure - Disallowance on the reasoning that it was claimed purely on estimate basis without any actual evidence - HELD THAT:- We find, while considering identical issue in Revenue s appeal arising in assessment years 2010-11, 2013-14 and 2014-15 [ 2023 (1) TMI 1284 - ITAT DELHI ] the Tribunal has upheld the deletion of disallowance. Identical view was reiterated by the Tribunal while deciding Revenue s Appeal in assessment years 2015-16 and 2016-17 as well in the order referred to above. Addition being part of exploration and development cost in head office expenditure covered u/s 44C for the Rajasthan block - HELD THAT:- The issue is squarely covered by the decisions of the Tribunal in assessment years 2010-11, 2013-14, 2014-15 [[ 2023 (1) TMI 1284 - ITAT DELHI] ] 2015-16 and 2016-17 [ 2023 (6) TMI 1303 - ITAT DELHI] ] We find, while deciding identical issue in assessee s own case in assessment years, noted above, the Tribunal has upheld the decision of learned Commissioner (Appeals) in deleting the disallowance. 2023 (9) TMI 99 Revision u/s 263 - Undisclosed source of investment - PCIT noted that as per Form 26AS, the assessee has made an investment in mutual funds but has not disclosed the same in his balance sheet for the year under consideration - HELD THAT:- A perusal of the submission filed before the Assessing Officer shows that out of the total investment the assessee explained that an amoun is on account of redemption of mutual fund. However, a perusal of the bank statement shows that although the same amounts have been credited in the bank account, however, the assessee has neither shown such investment in the balance sheet under the head investment , nor has withdrawn the same for investment. Assessee has shown only an amount from the capital account towards drawings which he is trying to explain the source of investment - AO has completely lost his sight while accepting the explanation given by the assessee towards source of investment which not only made the assessment order erroneous but also is prejudicial to the interest of the Revenue. Under these circumstances, the order passed by the Pr. CIT cancelling the assessment order passed u/s 143(3), in our opinion, is fully justified. Decided against assessee. 2023 (9) TMI 98 Unexplained cash deposit u/s 69A - as submitted Cash relates to sale of agriculture land and cash is deposited by all the other relevant family members too and further the revenue has not brought on record any evidence or proved that cash deposit relates to some other source - HELD THAT:- The issue was grabbed up such a way that the revenue is claiming that the registered deed is duly showing the consideration Rs. 24,65,000/- related to sale of property. Whereas the assessee deposited cash in the bank account amount to Rs. 90,17,000/-. The addition of interest amount to Rs. 60,996/- was agitated by the assessee before the bench. AR argued that the addition of cash deposit is lack of verification by the revenue authorities, before the appeal and assessment stages. In fact, the said appeal is lack of verification from end of revenue. With consent of both the parties, the matter is remitted back to the AO for further adjudication de novo . Needless to say, the assessee should get a reasonable opportunity of hearing in the setting aside proceeding. 2023 (9) TMI 97 TDS u/s 195 - disallowance u/s 40(a)(i) for want of TDS on certain payments made to its Singapore-associated entity - payment towards general training services to the non-resident - HELD THAT:- We find that similar issue stood decided in assessee s favor for AY 2014-15 [ 2022 (12) TMI 175 - ITAT CHENNAI] wherein held ervices are availed by the assessee for its employees to improve their soft skill in the areas of leadership and general management which is not specific to functions being performed by the employees. This training may improve the skills of the employees but it does not involve transfer of any technology which is made available to the assessee for its future use, thus since there was no transfer of technology but it was a case of rendering the general training services, the make available clause was not satisfied. Admission of additional ground of appeal - assessee seeks application of India-UK Tax Treaty rate for dividend while determining Dividend Distribution Tax (DDT) liability for the assessee - DR opposed admission of additional ground at this stage of proceedings and submitted that the facts of the issue are not available on record - HELD THAT:- As decided there was no bar for appellate authorities to admit new claims. Therefore, we admit the additional ground for both the years and remand the same for adjudication to the file of Ld. AO with a direction to the assessee to substantiate its claim. The cited decision of Total Oil India Private Ltd. ( 2023 (4) TMI 988 - ITAT MUMBAI (SB) ) shall also be considered by Ld. AO. The additional grounds of appeal stands partly allowed for statistical purposes in both the years. 2023 (9) TMI 96 TP Adjustment - ALP determination - Comparable selection - assessee has applied TNMM Method to benchmark the transactions - TPO held that the main activity of the assessee is marketing activity and assessee is getting remunerated for marketing functions with a fixed mark-up - HELD THAT:- Respectfully following the decision of ITAT Pune [ 2023 (1) TMI 1076 - ITAT PUNE] , we uphold the order of the TPO qua nature of the activity. We hereby hold that assessee s main activity is marketing activity. Therefore, comparable engaged in Distribution Activity, as selected by the assessee in TPSR, are not comparable to the functions performed by the assessee. Accordingly, Ground No's.1 to 3 raised by the Revenue are Allowed. CIT(A) s decision that Dynacons Technologies, Integra Telecommunications and JMD Telefilms are comparables to assessee - As observed that the ld.CIT(A) has not adjudicated the issue of comparability of these comparable on merits. Therefore, the said issue is set-aside to the file of ld.CIT(A) for denovo adjudication. The ld.CIT(A) shall give opportunity to the Assessee and Revenue. Accordingly, Ground No.4 is allowed for statistical purpose. 2023 (9) TMI 95 Denial of Foreign tax credit - as per DR where there was company has dual residency, the benefit of Treaty be available. He further submitted that Ld.DRP has given a finding that the assessee could not prove the place of effective management - assessee vehemently argued that the assessee company is a foreign company domiciled in USA and accordingly, its income is taxable in USA as per the US laws - HELD THAT:- We find merit in contention that if the assessee is a company treated as non-resident by the AO then no income sourced outside India would liable to be taxed in India in purview of section 4, section 5 and section 9 of the Income Tax Act. Ld. Counsel for the assessee took us through various clauses of the Treaty under the provision of India US DTAA. It is the say of the assessee that even Notification/Circular issued by CBDT dated 22.06.2018 i.e. Notification 29/2018 the benefit would be available to the assessee. We are unable to affirm the view of Ld.DRP that no foreign tax credit can be granted to the assessee. It is not disputed that the same income has been offered in USA and suffered tax thereon. Therefore, an income that has already suffered tax, if the same suffers tax in other countries that would amount to double taxation which is not the intent of law. If the finding of lower authority regarding place of effective management is presumed to be correct, in that case, no tax could be charged as the transaction took place off shores and income was generated in USA. Therefore, considering the totality of the facts, we hereby direct the AO to allow foreign tax credit to the assessee. Grounds raised by the assessee are hence, allowed. 2023 (9) TMI 94 Reopening of assessment u/s 147 - unexplained cash deposits in the bank a/c - assessee filed his return of income u/s 139(4) and the case was selected for limited scrutiny for verification of the cash deposits during the year - HELD THAT:- We find in the case of KLM Royal Dutch Airlines [ 2007 (1) TMI 138 - DELHI HIGH COURT] has held that once an inquiry has been initiated by the Assessing Officer, it cannot but result in either the return being accepted as having been correctly computed by the concerned assessee, or in an assessment being conducted and concluded thereon by the Assessing Officer. As in the case of Mohindra Mohan Sirkar [ 1977 (6) TMI 18 - CALCUTTA HIGH COURT] has quashed the re-assessment proceedings holding that it is the duty of the A.O to pass an assessment order and held where the Income Tax Officer acted on the returns filed by the assessee, issued notices u/s 143(2) and heard the assessee u/s 143(3), but, without completing the assessment, he took recourse to reopen the assessment under section 147 by issuing notices u/s 148, then, in that case, the Income Tax Officer acted without jurisdiction in issuing the notices. As in the case of Tarajan Tea Co (P) Ltd Trustees of H.E.H. the Nizam Supplemental Family Trust [ 1999 (2) TMI 722 - SUPREME COURT] has held that AO cannot reopen the assessment on the same reasons which were before him at the time of the original proceedings. Since in the instant case the case of the assessee was selected for limited scrutiny to verify the cash deposit by issuance of notice u/s 143(2) and 142(1) and since the assessee has filed the requisite details, therefore, merely because no order was passed u/s 143(3), the Assessing Officer, in our opinion, cannot issue notice u/s 148 by reopening the assessment for escapement of the very same income which was the subject matter of scrutiny proceedings. We accordingly quash the re-assessment proceedings. Decided in favour of assessee. 2023 (9) TMI 93 Exemption u/s 11 - Charitable activity u/s 2(15) - appellant registration u/s 12A as rejected on the ground that the revenue earned by the Council is from commercial activities - HELD THAT:- The Council is established under an Act by the State Government for Para-medical education and to promote, develop and regulate the same for the welfare of the society and the public health, with no intent of any business. It has been noted that the surplus is not distributed and only utilized for the activities and the fees/charges are decided in consultation with the State Government at normal level looking to the welfare of the public. CIT (Exemption) in his order has mentioned that the receipts are from examination fees, registration fees, revaluation fees, inspection fees and counseling fees, which are commercial in nature whereas apparently such receipts are from the key services for education only. In this way the contents are contradictory neither it has been brought on record that they are abnormally high with an intent to earn profit on commercial lines nor the same has been established that how they are not related to education in the instant case. In view of the arguments made by the ld A/R, supra, the surplus cannot lead by itself that the activities are from trade, commerce or business. There can be a revenue surplus in particular year/s which is allowed to be applied in the next year(s) as permitted under the Act. The un-applied amount becomes the income of the assessee after the end of the time-limit. Since, the proviso to section 2(15) is, otherwise, also not applicable as the activities are not in the nature of trade, commerce or business. Thus the object of the appellant Council qualified as charitable purpose and covered u/s 2(15) as applied by the appellant and given that there is no dispute on the genuineness of the activities carried on by the assessee Council in furtherance of its object, the order passed by ld. CIT (E) is hereby set aside and directed to grant the registration to the appellant Council under section 12AA as applied by them. Appeal filed by the assessee is allowed. 2023 (9) TMI 70 Prosecution proceedings for TDS default - Economic Offence - complainant was posted as Deputy Commissioner (TDS) filed the complaint in his official capacity of the alleged offence committed u/s 276B r.w.s. 278B of Income Tax Act, 1961 and the petitioner s firm had deducted TDS for the financial year 2015-16, Assessment year 2016-17 but failed to deposit the same with the department as per the provision of the Income Tax Act - petitioner is partner of the firm and he has also been made accused in the complaint in accordance with section 248B and as alleged has wilfully and deliberately not deposited TDS - HELD THAT:- As the Court finds that there is no denial that the commencement of the operation of the petitioner company is with effect from January, 2016 and when the notice was received by the petitioner, the petitioner has filed reply disclosing that the TDS amount along with interest has already been deposited on 11.5.2016 itself whereas sanction order was passed on 14.02.2018 and the prosecution was launched on 13.04.2018 i.e. after much delay of depositing the said TDS amount along with the interest. It is not a case that the prosecution was filed earlier and thereafter the T.D.S amount was deposited. No penalty proceeding initiated against the petitioner - Court finds that the amount of the TDS along with the interest has already been deposited and after lapse of time the said case was registered and the Court further finds that the assessee has succeeded in proving that there is full and sufficient reasons for his failure before the authority under the Act by way of filing the said reply wherein he has intimated that this amount in question has already been deposited along with the interest and no penalty proceeding is initiated against the petitioner and in the case in hand as the amount has been deposited along with the interest and as such, there was no occasion to proceed against the petitioner under section 276(B) of the Income Tax Act. It is well settled that penalty should serve as a deterrent. In the case in hand, the petitioner has already been deposited the TDS amount along with the interest. In the case of K.C. Builders and Another [ 2004 (1) TMI 7 - SUPREME COURT] the criminal case was held to be not survived in view of the fact that the penalty is struck down and in the case in hand even the penalty proceeding has not been initiated against the petitioner. How the amount is deposited and when sanction and prosecution have been initiated which has already been discussed hereinabove. The Court finds that in such a situation to allow the present proceeding to continue further will amount to abuse of process of law. Accordingly, the entire criminal proceeding including the order taking cognizance dated 02.05.2018 arising out of Economic Offence Complaint Case No. 17 of 2018, pending in the court of learned Special Court, Economic Offence, Ranchi is quashed. Customs 2023 (9) TMI 92 Exemption under N/N. 26/2000-Cus dated 01.03.2000 - import of arecanut - HELD THAT:- There are no records to show that the petitioner was called for to furnish information, which the petitioner has failed to furnish. There is also no suspension of preferential tariff treatment of the imported goods in terms of Section 28DA of the Customs Act, 1962. The Court is therefore inclined to direct the respondents to re-assess the Bill of Entry dated 15.06.2023 provisionally in accordance with the procedure prescribed under Section 28DA of the Customs Act, 1962 and the rules made thereunder and thereafter allow clearance of the imported consignment of arecanut. Petition disposed off. 2023 (9) TMI 91 Levy of penalty on the appellants (CHA firm) under Section 114(1) of the Customs Act 1962 - Smuggling - Red Sanders - facilitating the entry of the offending goods (red sander wood logs) into the port area, for purpose of export to a third country - HELD THAT:- The port authorities post verification of all statutory documents and being satisfied for it being in order issued the DDM permission/permit. Unless proper verification of the statutory documents pertaining to the vehicle, the driver and other details thereof are made, the port authorities do not issue the DDM permit, nor allow the driver or the vehicle driven by him to enter into the dock. Further, it is not only the appellant, but it has also been admitted by their key personnel like Uttam Roy (Supervisor of National Agency), that he did not know of any responsible person of the exporting firm and that their CHA firm was never engaged by the said exporter earlier. However, they did not take any steps to verify the genuineness of the exporting firm by visiting the office premises or even talking to any responsible person - appellant cannot however escape of their responsibility and the special burden cast on them as a CHA, besides being certainly guilty of carelessness, negligence and omissions and commissions that have facilitated the entry of the offending goods (red sander wood logs) into the port area, for purpose of export to a third country. The appellant has rendered himself liable to penal consequences. As the Show Cause Notice fails to bring to fore any express and active collusion in the attempted exports of Red Sander Wood logs on the part of the appellants, noting the various acts of omissions and commissions on the part of the appellants, imposition of a penalty of Rs. 50,000/- under Section 114(i) of the Customs Act, 1962 would meet the ends of justice. Appeal disposed off. 2023 (9) TMI 90 Valuation - inclusion of value of technical know how fee or royalty paid by the Respondent to the foreign collaborator in the assessable value of the imported goods or not - HELD THAT:- On perusal of the agreement, it is seen that the Royalty or Technical Knowhow Fee based on the net sales price of all domestic sales of the licensed articles. Further, the respondent is permitted to purchase components from other parties also. There is no restriction that the appellant has to procure the raw materials / capital goods only from the foreign supplier. It is very much evident that the Technical Knowhow Fee is not a condition of sale of the imported goods. In COMMISSIONER OF CUS. (PORT), CHENNAI VERSUS TOYOTA KIRLOSKAR MOTOR P. LTD. [ 2007 (5) TMI 20 - SUPREME COURT] , it has been categorically need that the Royalty paid by the appellant to their foreign collaborator does not satisfy the twin conditions of Rule 9(1)(c) cannot be included in the assessable value of the imported goods. Moreover, it is also brought forth that the Department has not filed any appeal against the orders passed in the earlier round of valuation which has been accepted. For this reason also, the appeal cannot sustain - the impugned order does not call for any interference. The appeal filed by the Department is dismissed. 2023 (9) TMI 89 Valuation of imported goods - old and used worn clothing, completely fumigated - restricted goods or not - enhancement of value - confiscation - redemption fine - penalty - HELD THAT:- This issue came up before this Tribunal in the case of VENUS TRADERS, RAINBOW INTERNATIONAL, AL-YASEEN ENTERPRISES, GLOBE INTERNATIONAL, KRISHNA EXPORT CORPORATION, PRECISION IMPEX, BMC SPINNERS PVT. LTD., SHIVAM TRADERS, LEELA WOOLEN MILLS, M.U. TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORTS) MUMBAI [ 2018 (11) TMI 625 - CESTAT MUMBAI] , wherein this Tribunal has held that The failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order. Against the confirmed duties and the penalties the Redemption Fine imposed by the Adjudicating Authority, the Respondent has not filed any appeals. The redemption fine and penalty imposed on the respondents by the adjudicating authority is sufficient to meet the end of justice. Therefore, the redemption fine and penalty confirmed by the adjudicating authority are upheld - there are no infirmity in the impugned order and the same are upheld. The appeals filed by the Revenue are dismissed. 2023 (9) TMI 88 Project import - goods cleared before the registration of the contract - appellant aggrieved that they were required to pay the duty on merit rate without considering that the import is under the project scheme - HELD THAT:- The very same issue was considered by the Tribunal in the case of FLANCE PROOF (GEARS) LTD. VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1998 (8) TMI 177 - CEGAT, NEW DELHI] . In the said case, the appellant therein had imported the goods before the registration of the contract and the Tribunal held that the clearance of the goods before registration of the contract does not debar the appellant from availing the benefit of Project Import regulations, 1986. The matter was remanded to the adjudicating authority for considering the claim of the appellant. In the case of DPS (India) Pvt. Ltd. [ 1992 (8) TMI 157 - CEGAT, NEW DELHI] a similar issue came up for consideration. In the said case, the contract was not registered due to delay on the side of customs authorities. The Tribunal held that the goods in question are entitled to the benefit of concessional assessment as under project import. The appellant having made an application for the registration of the contract prior to import of goods and sponsorship letter having been issued, the appellant is eligible for the exemption of duty as per the Project Import Regulations - the impugned order is set aside - Appeal allowed. 2023 (9) TMI 87 Rejection of request made for extension of time limit for re-export - opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- From the perusal of N/N. 158/1995-Cus dated 14.11.1995, it is evident that the goods re-exported in terms of this notification could have been re-exported within six months from the date of re-importation or such extended period not exceeding further six months as Commissioner of Customs may allow. In this case the goods were given out of charge on 10.02.2022, accordingly the goods without any permission could have been re-exported by 9th August, 2022 and within a further period of six months from this date i.e. 09.02.2023 with the permission of the Commissioner. In the present case appellant has produced the goods for exportation by following the shipping bill dated 28.01.2023 and made application seeking extension of date for re-exportation vide his letter dated 03.02.2023. He has given sufficient justification for seeking such extension as the delay occurred on the account of ongoing war between Russia and Ukraine for which certain trade sanctions were imposed on trading with Russia. If this cannot be considered as a reason for granting the extension there could be no other justification for such extension as per notification whereby Commissioner has been authorized to grant extension by further six months. The order of the Commissioner not allowing such contention is without any justification and could not be sustainable. Impugned order set aside - Appeal allowed. 2023 (9) TMI 86 Levy of Anti-Dumping Duty - import of PVC Sheeting Flex Banner (in rolls) of Malaysian origin - certificate of origin showing the goods of Malaysian origin has been proved as fake or not genuine or not - allegations based on bill of lading issued by shipping line - HELD THAT:- In the present case undisputed fact is that the proper authority i.e. Malay Chamber of Commerce Malaysia has issued the certificate of origin. The authenticity of the certificate was not proved to be wrong or there is no case that the certificate of origin is fake - the submission of Learned counsel cannot be agreed upon that in case of any reasonable doubt the procedure prescribed under Rule 9 of Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Government of the Republic of India and Malaysia) Rules 2011 needs to be complied with. From Rule 9 of Rules 2011, it is mandatory that in case of any doubt about the authenticity of the certificate of origin. The Customs Authority of Government of India must request the Issuing Authority i.e. in the present case the Malay Chamber of Commerce Malaysia to check the authenticity of the certificate of origin. It is found that the department, when made an allegation about the country of origin did not follow the procedure prescribed under Rule 9 of Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of the Republic of India and Malaysia) Rules 2011. Therefore, merely on the basis of the bill of lading whereby, it was inferred that the goods were originated from China cannot be accepted. Under the identical scheme of import of goods based on certificate of origin this tribunal in the case of M/S. BDB EXPORTS PVT. LTD., SHRI NIRMAL KUMAR BHURA VERSUS COMMISSIONER OF CUSTOMS (PREV.) , WEST BENGAL, KOLKATA [ 2016 (9) TMI 1087 - CESTAT KOLKATA] has held that Certificates of origin issued by the designated authority under SAPTA cannot be rejected which is the only requirement for the satisfaction of the Customs department under Notification No.105/99-Cus dated 10.08.1999. Thus, without checking the authenticity of the certificate of origin issued by Malay Chamber of Commerce, Malaysia. The certificate of origin cannot be discarded and on that basis benefit cannot be denied. The impugned order is not sustainable. Hence, the same is set aside, appeal is allowed. Insolvency & Bankruptcy 2023 (9) TMI 85 Performance Bank Guarantees - Capital Investment , till date made or not - Claim either for Invocation of Bank Guarantees or claim for Transmission Charges and or damages - scope of moratorium u/s 14 of IBC - HELD THAT:- Undoubtedly, Performance of Bank Guarantee, is excluded from the definition Section of 3 (31) of the I B Code, 2016. Viewed in that perspective, this Tribunal, unhesitatingly holds in a cocksure manner that the Performance Bank Guarantee, does not fall under Moratorium, in terms of Section 14 of the I B Code, 2016 - As far as the present case is concerned, in the various Joint Co-ordination Meetings, it was categorically observed that there was an Adverse Progress, as regards the Construction of Generating Station, by the Corporate Debtor, who was aware of the same. The Transmission Agreement, dated 31.03.2016, entered into between the 1st Respondent / Power Grid Corporation of India Limited and M/s. Lanco Vidarbha Thermal Power Limited (vide Clause 1), unerringly points out that the Bank Guarantee, shall be encashed, by Powergrid, in case of Adverse Progress of Work, under the scope of LVTPL assessed, during the Joint Co-ordination Meeting, etc. As such, it is clear that in the event of Adverse Progress, encashment of Bank Guarantee, is a compulsory one, as per the Transmission Agreement, entered into between the Parties. Thus, bearing in mind of the well settled legal principle that the Bank Guarantee, is neither an Asset nor a Liability of a Company, considering the surrounding facts and circumstances of the case in an integral manner, this Tribunal, especially, keeping in mind, of a primordial fact, that the Invocation of Eleven Performance Bank Guarantees, furnished by the Corporate Debtor to the 1st Respondent / Power Grid Corporation of India Limited, pursuant to the Transmission Agreement dated 31.03.2016, the Connectivity Regulations of the Central Commission and the detailed Procedure, notified thereunder, coupled with the Letters dated 17.12.2020, issued by the 1st Respondent, to the Respondent Nos. 2 to 7, are just valid and legally tenable, which cannot be found fault with. Appeal dismissed. 2023 (9) TMI 84 CIRP - NCLT admitted the application - whether the CIRP proceedings were fraudulently and maliciously initiated SBI declared the credit amount as NPA - Corporate Debtor failed to make repayment of its dues - assignment of debt - Twice Restructuring of the facilities granted by the Financial Creditor - time limitation - HELD THAT:- The Corporate Debtor having committed default, initiation of Section 7 proceeding by Assignee of the State Bank of India cannot be said to be malicious or fraudulent. The State Bank of India has assigned its debt to the Edelweiss Asset Reconstruction Company Ltd on 19.03.2014 and assignee on the strength of assignment has initiated the proceeding under Section 7. The Adjudicating Authority in its order dated 25.04.2023 has also repelled the contention of the Appellant that Financial Creditor has played fraud and the Petitioner is acting malafide in filing the petition. Thus, submission of the Appellant that Financial Creditor is acting malafide in filing the petition has been expressly rejected by the Adjudicating Authority, hence, the submission of the Appellant that said submission was not considered, cannot be accepted - There being debt and default on the part of the Corporate Debtors in these two Appeals, which is not in question, there are no error in the orders of the Adjudicating Authority admitting Section 7 applications. Appeal dismissed. 2023 (9) TMI 83 CIRP - Admission of application u/s 7 of IBC in an Ex-parte order - error in recording the finding that the Corporate Debtor failed to appear before the Adjudicating Authority on multiple occasions despite notice - No proper opportunity to defend was granted - violation of principles of natural justice - HELD THAT:-In the facts given in the earlier part of this order about the manner in which the ex-parte proceedings have been carried out by the Adjudicating Authority against the Corporate Debtor making observation in the impugned order that the Corporate Debtor failed to appear on multiple occasion despite notice. This fact is not borne out from the record because the notice for the first time was issued by the Adjudicating Authority on 11.10.2022 for 07.11.2022 and on 07.11.2022, the case was adjourned to 21.11.2022 in which the Adjudicating Authority was not sure about the service having been effected by the Financial Creditor on the Corporate Debtor, therefore, it asked the Financial Creditor to file an affidavit of service within a week of the Corporate Debtor. However, it is pertinent to mention that both in the order dated 11.10.2022 and 07.11.2022, in the column of appearance, absence of the Corporate Debtor has been mentioned which in fact is a wrong recording of fact of absence. As an abundant caution, the Adjudicating Authority should have passed the order of proceeding against the Respondent ex-parte and should have listed the case for ex-parte hearing but the case was heard on the same day and the order was reserved - the observations made by the Adjudicating Authority in the impugned order that the Appellant (Corporate Debtor) remained absent on many occasions is patently erroneous and is not borne out from the record. Nothing survives for the Respondent to recover in the application filed under Section 7 of the Code therein. The present appeal succeeds and the impugned order is hereby set aside - Appeal allowed. 2023 (9) TMI 82 CIRP - Liquidation Proceedings against the Corporate Debtor - pendency of Arbitral Proceedings - it is the stand of the Appellant pendency of Liquidation Proceedings against the Corporate Debtor cannot legally extinguish claims or disputes between the parties which are pending adjudication before the Arbitration Tribunal or a Court of Law . HELD THAT:- The Learned Counsel refers to the Order dated 18.01.2022 of the Principal Bench of this Tribunal in the matter of M/S TEESTAVALLEY POWER TRANSMISSION LTD. VERSUS M/S ABIR INFRASTRUCTURE PVT. LTD. THROUGH ITS RESOLUTION PROFESSIONAL [ 2022 (1) TMI 1391 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI.] wherein at paragraphs 3 and 4 it is observed if the arbitration proceedings result in any award in favour of the Appellant , it shall be open to the Appellant to take such remedy as permissible under the law and impugned order shall not be come in his way in execution of the Arbitral Award. On going through the Impugned Order dated 25.05.2023 in IA/239/2022 in CP(IB) No.154/BB/2017 passed by the Adjudicating Authority / Tribunal is of the considered view that the Adjudicating Authority / Tribunal based on the facts and circumstances of the instant case and also keeping in mind of the Order in Company Appeal (AT) (Ins) No.28 of 2022 to the effect that if the Arbitration Proceedings result in any award in favour of the Appellant , it shall be open to the Appellant to take such remedy, as permissible under the law and the Impugned Order shall not come in his way in execution of the Arbitral Award came to the conclusion that the Liquidator had correctly rejected the Appellant / Applicant s claim by means of the reasons given in the letter dated 29.01.2022, considering the fact that the Liquidation was a time bound process . Appeal dismissed. Service Tax 2023 (9) TMI 81 Non-payment of service tax - amount paid to the Government or a local authority towards periodical charges for assignment of right to use of natural resource or quarry sand from the allotted mines - point of taxation rules - reverse charge mechanism - HELD THAT:- There are no ground to interfere with the impugned Order where CESTAT held that in order to determine whether levy of services tax is applicable on a particular activity, it is necessary to determine the point of time when such activity is provided or agreed to be provided and since the agreements between the appellant and the State Government regarding grant of mining right were executed prior to April 01, 2016, on which date the transaction in mining of right to use natural resources became taxable, the appellant would not be liable to pay the service tax. Appeal dismissed. 2023 (9) TMI 80 Benefit of Exemption - GTA and commission agent services used for Export of goods - Benefit of N/N. 18/2009-S.T. dated 07.07.2009 - non-compliance with the stipulated condition that original documents reflecting actual payment of commission along with a copy of the contract must be enclosed in terms of paragraph 4 under Col. (4) of Sl. No. 2 of the said Notification - HELD THAT:- When the benefit of an exemption Notification is sought to be availed, the Hon ble Supreme Court has held in the case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] that such exemption Notifications should be construed strictly, that is to say the appellant should strictly adhere to the conditions specified under such exemption Notification. Neither from the pleadings before the lower authorities nor, either in the statement of facts or in the grounds of appeal, do we see any effort being made by the appellant to dislodge the above factual findings of the original authority. There are no merit in the appellant s case - appeal dismissed. 2023 (9) TMI 79 Demand of Service tax - valuation adopted by the appellant in accordance with Rule 2A of the Service Tax (Determination of Value) Rules, 2006 or not - HELD THAT:- The undisputed fact is that the appellant provided works contract; it also discharged VAT at a certain percentage, admittedly as prescribed by the relevant States. In order to ascertain the correctness of the appellant's claim, it appears that even the Chief Commissioner authorised a cost accountant to verify the same - It is found from the record that in the appellant s own case JOHNSON LIFTS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE (ST) CHENNAI-IV [ 2018 (6) TMI 384 - CESTAT CHENNAI] , although for a different period, even the original authority had accepted the value of service portion as 15% only, which the appellant claimed to have followed in the year under challenge. In its decision in the case of SAFETY RETREADING COMPANY (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM, M/S TYRESOLES INDIA PRIVATE LMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE, GOA AND M/S LAXMI TYRES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2017 (1) TMI 1110 - SUPREME COURT] , the Hon ble Apex Court has held The finding of the Appellate Tribunal that it is the entire of the gross value of the service rendered that is liable to service tax, in our considered view, does not lay down the correct proposition of law which, according to us, is that an assessee is liable to pay tax only on the service component which under the State Act has been quantified at 30%. The impugned demand cannot sustain, for which reason the impugned orders deserve to be set aside - Appeal allowed. 2023 (9) TMI 78 Levy of Service Tax - tour operator service - amount charged for the onward/return journey which was not included in the value of tour operator service towards inbound tour - value of outbound tour services rendered - HELD THAT:- It emerges that any person who is engaged in the cumulative activities like planning, scheduling, organising or arranging tours by any mode of transport, is considered to be covered under tour operator service. Apparently, there is nothing in the definition to include a person whose activity is nothing other than mere trading in air tickets. It is an admitted fact on record that insofar as the other activities are concerned, the appellant has admitted and paid applicable Service Tax. It is also an undisputed fact that the appellant is not a member of or agent of IATA and that it is not the case of the Revenue that the appellant had earned any commission from IATA or any other airlines when it sold or traded in air tickets. Moreover, from the definition of tour operator service, the same involves a gamut of activities and there is nothing to suggest that trading in air tickets per se invited Service Tax. The demand of Service Tax on the consideration and for booking of tickets in respect of domestic travel is not a taxable event and hence, to this extent, the direction of the Commissioner (Appeals) cannot sustain - the impugned order set aside, by holding that the appellant is not liable to pay Service Tax on the mark-up or margin earned for booking tickets with regard to domestic travels. Appeal allowed. 2023 (9) TMI 77 Non-filing of ST-3 returns for the relevant period - mismatch in values declared in Form 26AS filed with Income Tax and the values declared in Service Tax Returns for the financial years 2015-16 and 2016-17 - Reverse charge mechanism - HELD THAT:- The appellant has not filed service tax returns for the period from October 2015 to June 2017 and at the same time in para 2 of the show cause notice, it is stated that there was mismatch in the values declared in ST-3 returns and in the Income Tax Returns for financial years 2015-16 and 2016-17 - The contention of Revenue in para 2 is that there was mismatch of the values declared in Income Tax Return and Service Tax Returns and in the same show cause notice, Revenue states that the appellant had not filed any Service Tax Returns for the same period. There was non-application of mind for issue of the said show cause notice dated 27.04.2021. In addition, it is stated in para 4 of the said show cause notice that the appellant had not submitted the required details and not assisted in the investigation and that the details of turnover and bifurcation were not available with Revenue for issue of the said show cause notice and, therefore, Revenue has calculated service tax payable by the appellant under best judgment method. Further, for the period from April 2017 to June 2017, the said show cause notice considers gross taxable value presuming value addition of 25% over the relevant quarter of the earlier financial year, which is also a presumption. The said show cause notice dated 27.04.2021 is not sustainable in law. As a result, the impugned order-in-original is not sustainable - Appeal allowed. 2023 (9) TMI 76 Non-discharge of Service Tax - receiving payments like registration fees, entrance fees, annual subscription and charges for provision of additional facilities like billiards, swimming pool, lawn tennis, accommodation from its members - demand alongwith interest and penalty - HELD THAT:- The Revenue has not adduced any evidence to demonstrate that the appellants have collected the charges for providing any services to the members. They have submitted that only a few members, who are in the category of associated members‟ are only charged. In the facts and circumstances of the case, it is not established with evidence that the appellants are rendering any particular service that is taxable. PCA are registered under the Society Registration Act, the appellants are not liable to pay service tax under the heading Club or Association Service - impugned order cannot be sustained - appeal allowed. 2023 (9) TMI 75 Exemption of service tax - Government Authority as defined under clause 2(s) of the Notification No. 25/2012-ST dated 20.06.2012 or not - works carried out by the Appellant for SBPDCL are specified as a function entrusted to a Municipality under Article 243W of the Constitution of India - period 2014-15 to 2016-17 - Extended period of limitation - HELD THAT:- The Company is subsidiary of Bihar State Power (Holding) Company Limited which holds 100% of shares in the company. Bihar State Power (Holding) Company Limited is charged with the responsibility of promoting a coordinated development of generation, supply and distribution of electricity in the State of Bihar on an efficient and economic basis of management. The administrative set up of Bihar State Power (Holding) Company Limited indicates that it is wholly owned by Government of Bihar - SBPDCL falls within the ambit of the definition of 'Government Authority' as provided under Clause 2(s) of the Notification No. 2/2014-S.T. w.e.f. 30-1-2014 - SBPDCL is a 'Government Authority'. Whether the works carried out by the Appellant for SBPDCL are specified as functions entrusted to a Municipality under Article 243W of the Constitution of India? - HELD THAT:- All the services rendered to the 'Government Authority' are not exempted from payment of service tax. Only those services which are entrusted to a Municipality, if carried out by a service provider then such services alone are exempted from service tax - the services undertaken by the Appellant are related to supply of materials and equipments, erection, testing and commissioning of 11KV line, 11/0 433 KV 63KVA D/S/S LT Line and providing 30 service connection including energy meter on TURNKEY basis to the state tube wells under NABARD Phase VIII and works of similar nature in the State of Bihar. The works carried out by the Appellant would qualify under 'Planning for economic and social development' as defended under 12th Schedule to Article 243W of the Constitution of India. The scope of this Entry is wide enough to cover the tube well energization work undertaken by the Appellant - the activities undertaken by the Appellant are covered within the ambit of the works assigned under Article 243W of the Constitution to be carried out by the Municipalities. Accordingly, the appellant are eligible for the exemption provided under Notification 25/2012-ST dated 20.06.2012. Extended period of limitation - HELD THAT:- It is observed that every nonpayment/ non-levy of duty does not attract extended period. There must be a deliberate default on the part of the Appellant to invoke extended period, which is not there in this case. The conclusion that mere non-payment of duties is not equivalent to collusion or wilful mis-statement or suppression of facts is untenable - the department has not brought in any evidence to substantiate the allegation of suppression of fact with an intention to evade payment of duty. The Appellant has undertaken works to a 'Government Authority', which are function entrusted to a Municipality under Article 243W of the Constitution of India. Accordingly, the Appellants are eligible for the exemption provided in Notification 25/2012-ST dated 20.06.2012 and hence the demand confirmed in the impugned order is not sustainable. Since the duty itself is not sustainable, the question of demanding interest and imposing penalty does not arise - the impugned order on merits as well as on the ground of limitation. Appeal allowed. 2023 (9) TMI 74 Classification of services - Business Auxiliary Service or not - incentive/commission received by the appellant for using CRS developer - HELD THAT:- The said issue has been settled by the Larger Bench of this Tribunal in the case of KAFILA HOSPITALITY TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI [ 2021 (3) TMI 773 - CESTAT NEW DELHI] , which has been followed by this Tribunal in the case of M/S. ASVEEN AIR TRAVELS (P) LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2022 (4) TMI 1035 - CESTAT CHENNAI] , wherein this Tribunal has observed once the IATA agent has discharged his service tax liability in terms of section 67 of the Finance Act or rule 6 (7) of the 1994 Rules, no further service tax could be demanded on the amount paid to or passed on by the IATA agent. The incentive/commission received by the appellant from M/s. Amadeus India Pvt. Ltd. is not liable to tax, in terms of section 65(19) of the Finance Act, 1994 - Appeal allowed - decided in favour of appellant. 2023 (9) TMI 73 Levy of Service tax - amounts received from service receivers towards providing premises on lease and for installation of ATM machine and tower - benefits provided under subsection (1) of Section 26 of SEZ Act, 2005 denied - violation of conditions of N/N. 04/2004-ST dated 31.03.2004 and subsequently conditions specified under N/N. 09/2009-ST dated 03.03.2009 and afterwards conditions of N/N. 17/2011-ST dated 01.03.2011. HELD THAT:- During the entire proceedings including hearing, Revenue could not place on record as to which are the conditions that are prescribed by the Central Government under sub-section (2) of Section 26 of SEZ Act, 2005. Further, it is noted that the said Notifications such as 04/2004, 09/2009 and 17/2011 are providing exemptions to the units under SEZ. Here the question is which provision requires the appellant who is a developer of SEZ to pay service tax. The conditions under the said notifications either decide entitlement of the units for exemption, but the provisions under said Section 26 provide that the units are exempted from levy of service tax when they receive services. So, clear interpretation provides that when the present appellant has provided services only to the units under SEZ, the said services were covered by the provisions of sub-section (1) of Section 26 of SEZ Act, 2005. Revenue could not place on record any conditions prescribed under sub-section (2) of Section 26 ibid - the issue is covered by the provisions of sub-section (1) of Section 26 ibid. Therefore, Revenue does not have authority of law to collect service tax on services provided by SEZ developer to units in SEZ. The impugned order is not in accordance with the provisions of law - Appeal allowed. 2023 (9) TMI 72 Levy of Service tax - Discrepancies between credit balance of subscriber service charges shown in the Trial Balance and the value of taxable services during the financial years 2004 2005, 2005 2006 and 2006 2007 as noticed in the ST-3 Returns - International inbound roaming Service - markup outroamer charges which are also in the nature of interconnection usage charges - Activation deposit - interest on delayed payment and penalty - extended period of limitation. Discrepancies between credit balance of subscriber service charges shown in the Trial Balance and the value of taxable services - HELD THAT:- Whether the figures shown in the Trial Balance was prepared on accrual basis or on receipt basis, is a question of fact. We have found it was non-disclosure of facts that was within their exclusive knowledge, that has led to an adverse inference and to the issue of the SCN. If it was the appellants apprehension that the question of taxability had not being addressed correctly in the Show Cause Notice, they had an opportunity to put forward the facts and evidences, including the relevant ledger entries, available with them when asked to reconcile data during the dispute resolution process - While the question of taxability is to be decided according to the principles of law, what was the factual accountancy practice followed must be disclosed with evidence so as to examine the applicability of the principles of law involved to those facts. International inbound roaming Service is not liable to Service tax - HELD THAT:- Once the FTO is identified as the service recipient, it becomes evident that the international inbound roaming services are rendered to the FTO outside the territory of India and the transaction becomes an export of services as per Rule 3(iii) of the EoS Rules - It is seen that the Original Authority has held that the appellant has not furnished the required breakup for the financial year 2004-05 and 2005-06 for the Head 4027 General Roaming which includes National and International Inbound Revenue. The appellant has again not refuted the same, except for putting up a legal argument of non-taxability of the service for the period after 14/01/2007 also. What cannot be factually distinguished cannot be legally determined. Their reluctance to disclose factual evidence, which if true, may have given a different perspective to the Original Authority in accordance with their legal view, is perplexing and also fatal to their stand in this era of self-assessment. Out-roamer charges which are also in the nature of interconnection usage charges are not taxable prior to 01.06.2007 - HELD THAT:- The appellant has made an inference without presenting any fact that the deposits were actually refunded. Merely labelling a payment receipt as security deposits and making inferences about their treatment in law will not suffice - The Apex Court in SURESH BUDHARMAL KALANI ALIAS PAPPU KALANI VERSUS. STATE OF MAHARASHTRA [ 1998 (9) TMI 656 - SUPREME COURT] has held that A presumption can be drawn only from facts and not from other presumptions by a process of probable and logical reasoning . It is a well-accepted legal proposition that the nomenclature of any activity or document etc, is not decisive of its nature - the appellant has not produced any evidence to show that security deposits were indeed refunded and not retained by them. Further whether they were refunded in full or partially, whether interest was paid to the customers for the deposit etc. The appellant, despite ample opportunity, has not pleaded or demonstrated through documents that the service would have been operationalized even if these charges were not paid. Hence the gross consideration that is shown to contribute in rendering the service will form a part of the gross value of the taxable service - The impugned Order has accepted that no service tax is payable on interest on delayed payment (Rs.19,86,353/-), and thus, the Appellant is not liable to pay service tax on the same. The appellant has not disclosed any facts on which the inference was made by them. It is not disclosed whether the delay, if any, was on the part of the Adjudicating Authority or caused by the appellant themselves. This is even more relevant as it was pointed out in the impugned order that the appellant was not diligent in responding to the queries of the Department in reconciling the Trial Balance with the ST 3 Return - the order does not disclose the precise provision in law which permits statutory authorities to set aside the impugned order based on delay, if any. In fact, the Act at the relevant time did not provide any period within which the adjudication proceedings should be completed. The following issues raised by the appellant remain to be examined - (A) The entire demand is barred by limitation. The extended period of limitation ought not to be invoked as none of the conditions in Proviso of Section 73(1) are invocable in the instant case - (B) No interest is payable. No penalty is imposable. Matter remanded back to the Original Authority for de novo adjudication - appeal disposed off. 2023 (9) TMI 71 Valuation - expenditure or costs incurred by the service provider shall be treated as consideration for the taxable service provided and shall be included in the value for the purpose of charging service tax or not - pure agency services - Rule 5(1) of the valuation Rules - suppression of facts or not - extended period of limitation - HELD THAT:- Service provider has not acted as a pure agent for the service recipient within the meaning provided in Explanation 1 to Rule 5(2) of Valuation Rules. Service provider further not fulfilled the conditions detailed in Rule 5 (2) of the valuation Rules. It is beyond doubt that in order to exclude expenditures or costs incurred by the service provider, they should have acted as a pure agent and the condition detailed in Rule 5 (2) of the valuation Rules were required to be followed in principle. The benefits are considerable and substantial and therefore, condition have to necessarily be fulfilled in order to exclude the costs and expenditure, which is not the case here - Therefore, there is no question of excluding any amount from the total taxable value received by the Service provider from the service recipient on any count. The adjudicating authority has not taken into cognizance the provisions of Rules 5(1) and 5(2) of the Service Tax valuation Rules. From a perusal of the activity undertaken by the appellant, it is seen that the appellant had only paid the amount / charges on behalf of their clients to respective service providers and their clients reimbursed the charges to the appellant. The said transactions of appellant do not fall under Support Service of Business or commerce . Demand on difference between the amounts received from the client as reimbursable expenses and the amount spent/ incurred - HELD THAT:- The demand is not sustainable - Once the Ld. Commissioner hold that the reimbursable part of expenses is not taxable, then there is no legal basis to confirm the service tax on differential amount under Support Service of Business or Commerce . Further, there is no evidences on records to establish that the said difference amount are pertaining to the service provided by the appellant - the service tax demand confirmed by the Ld. Commissioner on difference amount is not sustainable and we set aside the same. Taxability of Ocean Freight and reimbursement expenses - HELD THAT:- The issue involved herein is purely of interpretation of law about valuation and taxability of the service. It is also fact that the appellant have been submitting all the documents details to the department. In this fact no malafied intention can be alleged against the appellant - since there is no suppuration of fact or malafied intention to evade payment of service tax, demand for the extended period shall not be sustainable also on the ground of limitation. The demand is set aside not only on merit but also on limitation for the period which is beyond normal period of limitation - the impugned order confirming service tax demand cannot be sustained and need to be set aside - Appeal filed by assessee is allowed. 2023 (9) TMI 69 Levy of Penalty u/s 78 of FA - suppression of facts or not - manpower supply agency service - reverse charge mechanism within the meaning of Section 66A of the Finance Act, 1994 read with Rule 3(iii) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - extended period of limitation - HELD THAT:- The Hon ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S ADECCO FLEXIONE WORKFORCE SOLUTIONS LTD [ 2011 (9) TMI 114 - KARNATAKA HIGH COURT] had an occasion to consider a similar situation where the Revenue having appropriated the duty liability as well as interest, had issued Show Cause Notice, wherein the proposal was made again to appropriate the amount already paid towards the duty liability and interest and also thereby proposing penalty, had deleted the penalty so levied since there was no loss to the exchequer. The issue of penalty came up for the consideration before the High Court of Karnataka in the case of COMMISSIONER OF SERVICE TAX, BANGALORE VERSUS MASTER KLEEN [ 2011 (9) TMI 788 - KARNATAKA HIGH COURT] where it was held that It is unfortunate that inspite of statutory provisions, the authorities have issued a show cause notice claiming penalty. So, tax and interest was paid before issue of show cause notice. Therefore, the Tribunal was justified in setting aside those orders. As the said order is strictly in accordance with law we do not find any legal infirmity that calls for interference. It is found that the same reasons apply even for invoking the larger period since other than mere alleging suppression, no documentary evidence is placed on record - the Show Cause Notice is therefore clearly issued only for levying penalty and to this extent, the above decision of the Hon ble High Court of Karnataka in M/s. Adecco Flexione Workforce Solutions Ltd. squarely applies. The demand for the normal period alone upheld - appeal disposed off. 2023 (9) TMI 68 Levy of Service Tax - international inbound roaming charges received by the appellant - filing ST-3 returns periodically in terms of Rule 7 of the Service Tax Rules, 1994 As per (SULEKHA BEEVI C.S.), MEMBER (JUDICIAL) HELD THAT:- The facts have already been narrated in detail and it is found that the very same issue has been considered by the Tribunal in the appellant's own case for a different period in the case of M/S. VODAFONE CELLULAR LTD. VERSUS COMMISSIONER OF GS CENTRAL EXCISE COIMBATORE [ 2019 (3) TMI 617 - CESTAT CHENNAI] wherein the Tribunal has analysed the very same issue for the periods from 01.04.2011 to 30.06.2012 and 01.10.2013 to 30.09.2014, where the demand was raised on international inbound roaming services and it was held that The services are not exigible to service tax being export of service. Thus, there are no reason to take a different view from the decision rendered in the case of M/s. Vodafone Cellular Ltd. Following the same, it is opined that the demand cannot sustain. As per (SANJIV SRIVASTAVA), MEMBER (TECHNICAL) HELD THAT:- The international roamer while roaming outside is home network gets hooked to the network which is available and with whom the home network has made necessary agreement for providing the roaming services. Every time the international roamer makes the call he is calling the available network and all calls made by him are only routed through the available network in the place where he is located. In actual the calling facility is provided to the international roamer by the available network only and not by his home network. Thus the actual service recipient i.e. international roamer is getting the services from the available network. All the literature suggests that in the case of international roaming the Home Service Provider is only acting as the facilitator for getting the service provided through the available network in the place where the roamer is located through the network with whom he has agreement - The Home Network of roamer receives the details of the calls made by the roamer while roaming in the area where Vodafone network exists through clearing house mechanism, and also is billed for the provision of the service to the international roamer. Home network makes the payment to Vodafone as per the agreed tariff and in turn recovers it from his customer while raising the bill on him. The findings of the Commissioner in the impugned order in respect of the location of service provider and service recipient to be in accordance with the available technical literature on the subject and the same cannot be faulted with. In view of the above finding the question of law as to the services provided by the appellant to international roamer will be export of services or not needs to be considered - the issue needs to be reconsidered for the period in respect of the of the period post 01.07.2012 on the basis of the Place of Provision of Service Rules, 2012 and Education Guide 2012 issued explaining the said provision. The view of the Commissioner in the impugned order is concurred with to effect that benefit of export of services is not available in the present case - the decision in the Appellants own case referred to by the Learned Member (Judicial) a part of demand period is after 01.07.2012, and Tribunal has made observation for that period in para 5.2, which in my view is sub-silentio and hence cannot be a binding precedent. In view of the findings as above the appeal needs to be dismissed. Difference of opinion - HELD THAT:- In view of the difference of opinion between the Members, the following questions are framed for resolution of the same, as under:- (1) Whether the decision of the Tribunal in the appellant's own case on the same issue which covers the period from 01.04.2011 to 30.06.2012 and 01.10.2013 to 30.09.2014 [M/S. VODAFONE CELLULAR LTD. VERSUS COMMISSIONER OF GS CENTRAL EXCISE COIMBATORE [ 2019 (3) TMI 617 - CESTAT CHENNAI] ] has to be applied to this appeal which pertains to the period from July 2012 to September 2013 and the appeal has to be allowed, as held by the Member (Judicial)? OR (2) Whether the decision of the Tribunal in the appellant's own case is not a binding precedent for the reason that the observations made by the Tribunal in paragraph 5.2 of the said decision is sub silentio for the period after 01.07.2012 and the appeal has to be dismissed, as held by the Member (Technical)? As per Per: Dr. D.M. MISRA, MEMBER (JUDICIAL) Whether, after notifying the POPS Rules, 2012, the FTO is no more to be considered as the service receiver and the person who visits India and beneficiary of the said roaming service becomes the service receiver? HELD THAT:- In the present case, the legal relationship is between the appellant and the overseas FTO for provision of the service, when their(FTO's) subscriber visits India and uses the services during his stay in India. The consideration/payment for the service flows from the FTO to the appellant, for the said service, under an agreement, even though the beneficiary for such service is subscriber of the FTO. Thus, the FTO is the person who is legally entitled to receive the service as per the agreement, even though the beneficiary is the customer of FTO on their visit to India. Therefore, in my view, there is no change of status of the FTO, from service receiver to an Intermediary, post introduction of POPS Rules, 2012, when read in the context of the charging section 66B - In the present case, it is the agreement between the appellant and the FTO; hence any deficiency in the service provided by the appellant to the Customers' of FTO, can only be proceeded by the FTO and not the subscriber of the FTO, who is the beneficiary of the service during his visit to the taxable territory. Also, the subscriber of the FTO, cannot proceed against the Appellant for any deficiency, but only against the FTO with whom he has a valid agreement. Examining the issue from all angles, it cannot be said that the FTO is not the service receiver, but the visitors to India who use the service during their visit to India, are the service receiver. The opinion of the Ld. Member(J) agreed upon that the precedent in the Appellant's own case be followed and the Appeal deserves to be allowed. The matter be placed before the Division Bench for appropriate order accordingly. MAJORITY ORDER In view of the majority order, it is held that Tribunal's decision in the appellant's own case M/s. Vodafone Cellular Ltd. v. Commissioner of G.S.T and C.Ex. Coimbatore has to be applied and the appeal is allowed. 2023 (9) TMI 67 Valuation - GTA services - inclusion of reimbursable expenditure or cost in the assessable value or not - N/N. 32/2004-ST dated 03.12.04 - HELD THAT:- The issue is well covered by the Apex Court judgment in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] . The Notice sought to charge tax on whole value including those received as reimbursement of expenses from their client - reliance placed on the decision in the case of M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. wherein it was held by Hon ble Supreme Court that reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax only w.e.f. 14th May 2015. The adjudicating authority has rightly dropped the demands. The department has not brought in any evidence to the contrary. Accordingly, the department appeal is liable to be rejected - Appeal of Revenue dismissed. 2023 (9) TMI 66 Levy of Service tax - Business Auxiliary Services - promotional or marketing activities for the finance companies by providing space in the premises and helping to provide auto loans to customers - suppression of facts or not - extended period of limitation - HELD THAT:- Appellant was only providing space to the finance companies who provide auto loans to the customers. They did not undertake any promotional or marketing activities for the finance companies. Their business is sale of Maruti Cars, as a dealer. A customer may choose to make full down payment or may choose to go for financing. In case he chooses to go for financing, he may choose any one of the choice of banks available with him, for which he collects information from the Appellant. Finance commission is received by the Appellant from various financing banks, which are chosen by the customer, in respect of the amount of finance provided by the finance companies to the customers - the Appellant has not provided any Commission Agent service liable to service tax under the category of BAS - it is observed that the Appellant was not performing any of the activities of the commission agent. The issue has already been settled by the decision of the Larger bench of Tribunal in the case of M/S PAGARIYA AUTO CENTER VERSUS CCE, AURANGABAD [ 2014 (2) TMI 98 - CESTAT NEW DELHI (LB)] with identical facts, wherein it was held that providing space to finance institutions by Auto companies would not be liable to service tax under the category of BAS. The Appellants were not liable to pay service tax under the category of BAS. Accordingly, the demands in the impugned order are liable to be set aside. Since the demand is not sustainable, the demand of interest and penalty also will not survive. The Department s appeal praying for imposition of penalty under Section 76 of the Finance Act, 1994 also not sustainable - Appeal allowed. Central Excise 2023 (9) TMI 65 CENVAT Credit - input service - Bus Transportation Charges being in the nature of Rent-a-cab service - Mainly the case of Revenue is that after the amendment in Rule 2(l) ibid w.e.f.1.4.2011 rented/contracted bus service has been expressly excluded from the definition of input service and the said service is no longer eligible for taking credit w.e.f. 1.4.2011 - HELD THAT:- Taking into consideration the amended definition of Rule 2(l) ibid and in particular Rule 2(l)(B) ibid it has been held by the Hon ble High Court in SOLAR INDUSTRIES INDIA LIMITED. VERSUS THE COMMISSIONER, CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, NAGPUR [ 2021 (12) TMI 1047 - BOMBAY HIGH COURT] that the transportation of employees for reaching factory is not an activity which could be said to be part of manufacturing activity and it is merely for personal convenience of employees to enable them to reach the premises of the factory so as to participate in the manufacturing activity which is not permitted to be treated as input service after 1.4.2011 in view of the amended provisions. Although it has been brought to my notice that for the earlier period i.e. 2012-13 the issue has been decided in favour of the appellant in an appeal filed by the appellant before some other Commissioner (Appeals), but it is not going to help the appellant in any manner in view of the aforesaid decision of the Hon ble High Court. In the matter of SOLAR INDUSTRIES INDIA LIMITED. VERSUS THE COMMISSIONER, CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, NAGPUR [ 2021 (12) TMI 1047 - BOMBAY HIGH COURT] , the facility of transportation provided by the appellant to its employees for reaching factory cannot be treated as input service in view of amended definition of Rule 2(l) and in particular Rule 2(l)(B) ibid which specifically excludes services provided by way of renting of motor vehicle, insofar as they relate to a motor vehicle which is not a capital goods, from the definition of input service and its merely a personal service to its employees. The impugned order is upheld and the appeal filed by the appellant is dismissed. 2023 (9) TMI 64 Clandestine Removal - fabrication of production records - issuance of bogus invoices without actual production and clearance of goods with an intent to claim inadmissible refund (N/N. 56/2002) /self credit of duty paid through PLA fraudulently - facilitating in availment of inadmissible CENVAT credit to their buyers fraudulently - HELD THAT:- As per the allegation in the show cause notice, the investigation were undertaken by the Merrut Commissionerte and it was found that the suppliers of raw- material to the appellant were non-existent. Further, the demands have been confirmed only on the basis that there was no alternative source of electricity generation which is factually incorrect. Further, it is found that on the basis of the same investigation, the demands were confirmed against many parties and some of the decisions have been rendered by this Tribunal on the same allegations and the demands have been dropped. The issue involved in the present appeals is no more res-integra as this Tribunal as well as the Tribunal at Allahabad has consistently set-aside the demands by considering all the evidences produced before them. The impugned order passed without affording an opportunity of cross examining the witnesses in spite of the request made by the appellant for cross examination of the witnesses and in the absence of cross examination, their statements cannot be relied upon as held by the Hon ble Punjab and Haryana High Court in the case of M/S JINDAL DRUGS PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [ 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT] . The impugned order is not sustainable in law - Appeal allowed. 2023 (9) TMI 63 Penalty - suppression of facts or not - Availment of Irregular Credit - HELD THAT:- It is necessary to prove either fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions with intention to evade payment of duty. Unfortunately, none of these ingredients have been invoked in the notices and the impugned order also does not provide any evidences except to state that that the irregular availment of cenvat credit came to light only at the time of audit. The present case is based only on the audit para and there is no iota of evidence to prove either suppression or misdeclaration of facts or contravention of provisions with intention to evade payment of duty. On the other hand, the appellant immediately reversed the credit as and when it was pointed out by the audit officers and the officers clearly noted that interest and penalty are not to be levied. Inspite of these notices were issued after nearly 2 years after the audit observations and reversal of credit. The Hon ble Karnataka High Court in the case of COMMR. OF C. EX., BANGALORE-I VERSUS GENEVA FINE PUNCH ENCLOSURES LTD. [ 2011 (1) TMI 746 - KARNATAKA HIGH COURT] where the order of the Tribunal held not to impose penalty, was upheld by the Hon ble High Court of Karnataka. There are no merit either in the show-cause notices or in the impugned order - appeal allowed. 2023 (9) TMI 62 Extended period of limitation - suppression of true nature of the goods manufactured - area based exemption under N/N. 50/2003 - HELD THAT:- In the instant case, the respondents have informed the Department as early as on 28.03.2003, their intention to change the classification; though the intent of extending area-based exemption was made public by the Ministry of Commerce in the month of January 2003, actual notification, exempting the goods by the Finance Ministry, was issued on 10.06.2003; it cannot be inferred that the appellants have changed the classification with a view to avail undue benefit; even if such a proposition is accepted, the intent to change the classification was informed to the department in March 2003 itself; the Department was free to cause necessary verification and to change the classification; the argument that verification took long time because of the procedures involved like testing by the agencies, cannot be a reason to allege suppression of fact; there should be a positive act of suppression, wilful mis-statement with an intent to evade payment of duty so as to attract the provisions of Section 11A for invoking the extended period - the Department has not produced any such evidence to that effect. This being a matter of fact, needs to be decided on case to case basis. The respondents have produced the copies of the invoices issued by them. The sample invoices show the total assessable value at a lower level say X ; right of CENVAT and CENVAT paid are shown at NIL rate; CST/ GST @ 1% are included along with freight; thus, the total invoice price is Y , which is equivalent to X plus CST/ GST plus freight charges. Therefore, it is to be understood that the CENVAT duty is not paid and is not recovered - the total invoice value subsumes the CENVAT duty. Accordingly, the value adopted requires to be considered as a cum-duty price. For this reason, the benefit of cum-duty is available to the respondents. The extended period is not invokable and cum-duty benefit is available to the respondent - Appeal allowed. 2023 (9) TMI 61 Clandestine removal - removal of scrap from manufacturing premises - Non-payment of Central Excise Duty - violation of Section 6 of the Central Excise Act 1944 read with Rule 9 (1) and( 2) of Central Excise Rules, 2002 - HELD THAT:- Department has not come out with any proof to show that the said scrap was not purchased by the appellant or to show that the scarp was generated in the factory. As Central Excise duty is on the manufacture of scrap, it is incumbent on the part of the department to show proof that the said scrap has been manufactured in the factory. No investigation was conducted to show the purchase of raw material, deployment of labour, consumption of electricity etc. to prove the production of the scrap. Understandably, huge quantities of scrap, involving a duty of about Eighty Lakhs cannot be done without commensurate production of primary materials i.e. bars, rods, etc; no such discussion is seen either in the show cause notice or in the Order-in-Original - It is found that not even a simple stocktaking of the raw material, finished product, the scrap generated was undertaken. The Department has failed to substantiate the allegation of clandestine removal of scrap by the appellants. In fact, the show-cause notice makes a bare averment that the appellants have violated Section 6 of the Central Excise Act 1944 read with Rule 9 (1) and (2) of Central Excise Rules, 2002 and for the reason, Excise Duty payable is demanded under the proviso to Section 11A of Central Excise Act 1944. As no other penalty, for violation of the provisions of the Act and the rules, if any, is proposed in the show cause notice, imposition of penalty even for not obtaining registration cannot be considered at this stage. Such a show-cause notice bereft of any investigation and proof thereof cannot be sustained; for the reasons, the show-cause notice and the impugned order are liable to be set aside - Appeal allowed. 2023 (9) TMI 60 CENVAT Credit - allegation of the department is that the appellants have not availed CENVAT Credit available to them in order to manipulate the cash refund in terms of Notification no. 56/2002 - HELD THAT:- Hon ble Supreme Court in the case of COMMISSIONER OF C. EX., HYDERABAD VERSUS NOVAPAN INDUSTRIES LTD. [ 2007 (1) TMI 5 - SUPREME COURT] held that as against this the ld. Commissioner (Appeals) has recorded that this element when inbuilt in the price and claimed as a deduction to be in the nature of an abatement and as therefore concluded that such a claim for abatement was not considered by the Hon ble Supreme Court in the GOVERNMENT OF INDIA VERSUS MADRAS RUBBER FACTORY LTD. [ 1995 (5) TMI 28 - SUPREME COURT] case. Revenue seeks to include the value of cardboard boxes supplied free of cost by the customer to be included in the assessable value of the tin containers. We find that the issue is no longer res integra. Hon'ble Apex Court in the case of JAUSS POLYMERS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT [ 2003 (9) TMI 87 - SUPREME COURT] held that since the drums were supplied by the buyer and were not supplied by the manufacturer, their cost cannot be included. The appellant has not violated any provisions of either CENVAT Credit Rules, 2004 or the conditions of Notification No. 56/2002. The appellants did not avail cash refund in some months and in some months, they availed refund less than the upper limit of 39%. This goes to prove the bona fides of the appellant - the appellants are not required to include the cost of packing material supplied free by the appellant in the assessable value of the tin containers manufactured and cleared by them. Therefore, the demands raised and confirmed thereof; penalties imposed are not sustainable. Appeal allowed. 2023 (9) TMI 59 CENVAT Credit - supplies made to SEZ by DTA unit, specially to SEZ developers - credit denied to the supplier under Rule 6 (6) of the Cenvat Credit Rules, 2004 on the ground that during the material time no exemption was available to the appellant - HELD THAT:- Notification No. 50/2008-CE (NT) specifically provided benefit to SEZ, came into existence only on 31.12.2008 and there was no way having its retrospective application - Other issues regarding export and all have also been elaborated by Commissioner (Appeals). There are no merit in the appeal - appeal dismissed. 2023 (9) TMI 58 Utilization of BED utilized for payment of EC and SHEC while availing area based exemption in contravention of Rule 3(7)(b) of the CCR, 2004 - wilful evasion on part of the appellant in payment of EC and SHEC - N/N. 20/2008-CE dated 27.03.2008 - HELD THAT:- On going through the decision of the Hon ble Apex Court wherein the appeals have been disposed off in the light of the decision of the Hon ble Apex Court in the case of SRD Nutrients [ 2017 (11) TMI 655 - SUPREME COURT] . In the case of SRD Nutrients the issue is before the Hon ble Apex Court is whether the refund of EC SHEC is available to the assesse paid through PLA availing area based exemption or not, where it was held that appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy - Although the said decision has been examined by the Hon ble Apex Court in the case of Unicorn Industries Vs. Union of India [ 2019 (12) TMI 286 - SUPREME COURT] , which has been disposed off in the light of the decision of the Hon ble Apex Court in the case of SRD Nutrients. The issue whether the BCD can be utilised for payment of EC SHEC was not examined by the Hon ble Apex Court in the case of Hitachi Home [ 2018 (9) TMI 383 - SC ORDER] . Now, the jurisdictional High Court of Guwahati has an occasion to examine the issue in hand in the case of UNION OF INDIA VERSUS KAMAKHYA COSMETICS PHARMACEUTICAL PVT. LTD. [ 2012 (7) TMI 902 - GAUHATI HIGH COURT] , wherein the Hon ble High Court has held there was no bar to utilize Cenvat credit of Basic Excise Duty for payment of Education Cess. Thus, the appellants are entitled to utilise the cenvat credit of BED for payment of EC and SHEC - impugned order set aside - appeal allowed. 2023 (9) TMI 57 CENVAT Credit - removal of inputs as such to job-worker - job-workers were actual manufacturers - Supplier of raw material not registered with Department - classification of goods under CETH 87089900 or not - suppression of facts or not - extended period of limitation - HELD THAT:- In the case OPG Metals Pvt Ltd. [ 2015 (11) TMI 1036 - CESTAT CHENNAI] and Moon Chemicals [ 2007 (6) TMI 324 - CESTAT, CHENNAI] , the suppliers of raw materials were registered with Central Excise department and they were following Notification 214/86 and Rule 4(5)(a) of the Central Excise Rules, 2002 to send the raw materials to the job worker. Hence, it was held that the liability of duty , if any, would arise only on the raw material supplier, when the conditions of Notification 214/86 are followed - However, in the present case on hand the supplier of raw material M/s Bidisha Enterprise was not registered with the department and hence the question of them complying with the conditions of Notification 214/86 would not arise at all. In the case of Vandana Dyeing Pvt. Ltd [ 2014 (8) TMI 441 - CESTAT MUMBAI] also, the goods were moved by following the procedure prescribed under Rule 4(5)(a) of the Central Excise Rules, 2002 to the job worker. Accordingly, it was held that the duty liability was on the supplier of the raw materials - thus, the job worker M/s Jamuna enterprise are the actual manufacturers . Classification of goods - providing conversion services of MS Rounds, bars etc. and converting the same to sockets, bends etc - to be classified under CETH 87089900 or not - HELD THAT:- Even though the Challans issued by them indicate that the job worker has converted the MS Rounds and Bright Bars into sockets and bends, no evidence has been brought on record to classify the goods as Parts of Motor Vehicles under the Chapter Heading 87089900. The classification has been arrived at without ascertaining the actual processes under taken by the Appellant. It was only presumed that the finished goods are Motor Vehicle Parts . There is no findings in the impugned order on what basis this classification was arrived at by the Adjudicating Authority - the evidence available on record does not support the classification arrived at in the impugned order. Hence, the duty demanded from the Appellant under the Chapter heading 87089900, as parts of motor vehicles are not sustainable. Extended period of limitation - Suppression of facts or not - HELD THAT:- Extended period of limitation under section 11A(1) of the Act can be invoked only if suppression, wilful misstatement occurs due to deliberate evasion of duty on part of the assessee. It is clear that such act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to avoid payment of duty - It is not a case where the Appellant has collected central excise duty from the customers and not paid the same to the government. They were under the bonafide belief that the processes undertaken by them did not amount to manufacture and accordingly cleared the goods to the raw material supplier on collection of job charges only. Thus there is no evidence available on record to establish that the Appellant has suppressed the information of manufacture of dutiable goods with an intention to evade payment of duty. Thus, the department has not brought in any evidence to establish that the Appellant has suppressed the facts with an intention to evade payment of duty. Thus, the demand of duty by invoking extended period is not sustainable in this case. Accordingly, the demand is liable to be set aside on the ground of limitation. Penalty imposed on the other Appellant Shri Biswajit Saha under Rule 26(1) of the Central Excise Rules, 2002 - HELD THAT:- It is observed that he has sent the raw materials for job work and received the finished goods under Challans. There is no evidence available on record to conclude that he has in any way abetted the job worker to clear the goods without payment of duty. In the absence of any such evidence, penalty is not imposable on him under Rule 26(1) of the Central Excise Rules, 2002. Accordingly, the penalty imposed on the Appellant Shri. Biswajit Saha under Rule 26(1) of the Central Excise Rules, is not sustainable. Appeal allowed. 2023 (9) TMI 56 Method of Valuation - Section 4 (1) (a) or 4 (1) (b) of Central Excise Act, 1944? - physician samples (P P medicaments) - HELD THAT:- The issue to be decided is whether the physician samples (P P medicaments) are to be assessed under Section 4 (1) (a) or 4 (1) (b) of Central Excise Act, 1944. The discussion of the Hon ble Apex Court in the case of COMMR. OF CENTRAL EXCISE CUSTOMS, SURAT VERSUS M/S SUN PHARMACEUTICALS INDS. LTD. ORS. [ 2015 (12) TMI 670 - SUPREME COURT] where it was held that What ultimately distributors did with these goods is extraneous and could not be the relevant consideration to determine the valuation of excisable goods. When we find that price was charged by the assessee from the distributors, the show cause notice is clearly founded on a wrong reason. The case would squarely be covered under the provisions of Section 4(1)(a) of the Act. The demand cannot sustain. The impugned orders are set aside. The appeals are allowed. 2023 (9) TMI 55 Recovery of CENVAT Credit alongwith interest and penalty - input services - setting up of a factory - denial of credit on the input services availed for setting up of a factory' as the same has been specifically omitted from the includes part of the definition vide Notification No. 03/2011 dated 01.03.2011, w.e.f. 01.04.2011 - HELD THAT:- In the case of M/S BHARAT COKING COAL LTD. VERSUS COMMR. OF CENTRAL EXCISE S. TAX, RANCHI [ 2021 (10) TMI 383 - CESTAT KOLKATA] the Tribunal Kolkata, allowed CENVAT Credit of the service tax paid towards setting up of plant. The subject input services have a direct nexus with the manufacture of finished goods in the means clause of the definition of input services. Accordingly even if the word setting up of a factory has been specifically excluded from the definition w.e.f. 01.04.2011, such services are covered within the ambit of main clause of the definition. Hence, it would still qualify as an input service as per Rule 1(I) of CCR, 2004. Cenvat credit availed by the Appellant on the input services used in setting up of the factory is allowed - impugned order confirming the demand along with interest and imposing penalty is set aside - appeal allowed. CST, VAT & Sales Tax 2023 (9) TMI 54 Taxability - Deemed sale or not - receipts towards royalty and the transfer of the right to use intangible property - HELD THAT:- A reading of the judgment in Quick Heal Technologies [ 2022 (8) TMI 283 - SUPREME COURT] clearly shows that the issue is not whether there is a transfer of property in goods but if there is a transfer of the right to use the property in goods. The first Appellate Authority and the Tribunal essentially held that there is no exclusive transfer of the goods and that the decision of the Division Bench in Malabar Gold regarding the trademark would come to the rescue of the assessee. The judgment in Malabar Gold [ 2013 (7) TMI 101 - KERALA HIGH COURT] has not become final as it is challenged before the Supreme Court. That apart, it cannot be held that it is a requirement of law that there should be a transfer of the entire right to the exclusion of the transferor for there to be a transfer of the right to use. The transfer of the right to use goods is distinct and separate from the transfer of goods. Thus, it has to be held that in a contract for the transfer of the right to use the goods, the taxable event is the execution of the contract for delivery of the goods, and if that has taken place, it was immaterial whether the transfer was exclusively or to the exclusion of all others. In the instant case, the transferee obtained a legal right to use the goods for the period during which he had such legal rights, which had to be to the exclusion of the transferor - the Tribunal has clearly gone wrong in law while dismissing the appeals preferred by the State. The order of the Tribunal impugned before us is set aside. Case remitted back to the assessing officer to consider the question afresh and pass a speaking order dealing with the contentions of the assessee. The questions of law are answered in favour of the State and against the assessee - revision disposed off. 2023 (9) TMI 53 Seeking adjustment of 25% of the tax confirmed by the second respondent towards pre-deposit - HELD THAT:- The Writ Petition has to fail as no amounts remains for being adjusted towards pre-deposit in the Input Tax Credit of the petitioner. The Writ Petition fails. However, liberty is given to the petitioner to pay 25% of tax as is contemplated under Section 51 of the TNVAT Act within a period of thirty days from the date of receipt of a copy of this order. Indian Laws 2023 (9) TMI 52 Dishonour of Cheque - insufficient funds - Seeking a judgment and a decree jointly and severally against the defendants as guarantors under the deeds of guarantee dated 21st March 2018 executed by the defendants respectively in favour of the plaintiff - whether the matter could be preceded with ex-parte when during the pendency of the suit, the defendants were adjudged the insolvents? HELD THAT:- With regard to the Court s query as to whether the suit can proceed when the Defendant is adjudicated insolvent pending the suit, in view of the Division Bench judgement of this Court in the case of Om Prakash Nihalani [ 2008 (12) TMI 831 - BOMBAY HIGH COURT] , there are no impediment in proceeding to pass a decree. The Division Bench has concurred with the view taken by the Madras High Court in the case of Official Assignee, High Court Madras Ors. [ 1980 (2) TMI 287 - MADRAS HIGH COURT] . The Madras High Court held that under Cl.(d) of section 68(1) the official assignee would be a necessary party only if the suit was relating to the property of the insolvent , and the term relating to cannot be taken to mean affecting . Thus, the Defendant has been adjudicated insolvent pending the proceeding, as it is a money decree and does not relate to the property of the defendant section 68(1)(d) is not attracted and the official assignee is not required to be made a necessary party. Thus, as per Order XXXVII Rule 6 (a) of the Code of Civil Procedure, the plaintiff is entitled to a judgment forthwith - suit disposed off. 2023 (9) TMI 51 Dishonour of Cheque - legally recoverable debt or other liability or not - mandatory requirements of Sections 138 and 142 of the N.I. Act were not complied with - rebuttal of presumptions. Whether both the cheques in question were issued for legally recoverable debt or other liability? - HELD THAT:- In view of Section 139 of the N.I. Act, the legal presumption is raised after issuance of the cheque that it was issued for a legally recoverable debt or other liability. Since the complainant had discharged his burden in regard to issuance of the cheque on which the signature has been admitted by the accused himself and the amount is not dispute, therefore, the burden of proof shifts upon the accused to rebut this legal presumption under Section 139 of the N.I. Act to show that the cheque was not issued for any legally recoverable debt or other liability. In view of the Section 118 of the N.I. Act until the contrary is proved the presumptions shall be made that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration. The legal presumption in regard to the issuance of the cheque and also the legally recoverable debt or liability, in view of the evidence adduced on behalf of the complainant to prove the complaint case, the burden of proof which was shifted upon the accused to rebut this presumption of liability of Section 118 and 139 of N.I. Act shifted on the accused but the same has not been discharged at all. The accused has taken the defence under Section 313 Cr.P.C. but has not produced himself in evidence there being no evidence, the compliant case is found proved beyond all reasonable doubt on behalf of the complainant. The finding recorded by the learned trial court as well as the learned appellate court holding the appellant guilty for the offence under Section 138 N.I. Act is not based on any perversity and both the judgments passed by the trial court and appellate court needs no interference and the same are affirmed. Accordingly, this criminal revision is hereby dismissed.
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