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2024 (3) TMI 1263 - CALCUTTA HIGH COURT
Seeking lifting of attachment of bank account - time limitation - Availment of input tax credit in excess of entitlement - HELD THAT:- It will be beneficial to take note of the decisions passed in the cases of Badal Shambhubhai Shah vs. Directorate General of Goods and Service Tax Intelligence [2020 (3) TMI 617 - GUJARAT HIGH COURT] and M/s. Futurist Innovation & Advertising vs. Union of India & Ors. [2022 (1) TMI 698 - BOMBAY HIGH COURT] wherein direction was issued to the competent authority to lift the attachment over the bank account wherein the period of one year had elapsed.
In the present case the same principle has to be applied to the appellant. Accordingly, the writ petition and the appeal along with the connected application are allowed with a direction to the authority concerned to lift the garnishee order dated 20th July, 2022 by addressing the Indian Oil Corporation and also lift the attachment over the appellant’s bank account by addressing his bankers.
Appeal allowed.
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2024 (3) TMI 1262 - APPELLATE AUTHORITY FOR ADVANCE RULING, RAJASTHAN
Maintainability of appeal - time limitation - whether the appeal has been filed within stipulated period (i.e. thirty days from the date on which the Ruling sought to be appealed against is communicated to the Appellant) prescribed under Section 100 (2) of CGST Act, 2017 or not? - HELD THAT:- As the Appellant, the date of communication of the Order of AAR, Rajasthan to the Appellant was 21.09.2021 and the appeal was filed on the portal on 19.10.2021 - the Appellant have filed the appeal within statutory period of 30 days of date of communication of the Order of the AAR.
Classification of service - activity undertaken by the Appellant by way of supply, survey, designing, installation and commissioning of project under EPC contract - whether the activities undertaken by them are were classifiable either under SAC Heading No. 9986 eligible for rate of tax prescribed vide entry serial number 24(ii) or alternatively under SAC Heading No. 9983 eligible for rate of tax prescribed vide entry serial number 21(ia) of Notification No. 11/2017-CT(R), dated 28.06.2017? or is classifiable under SAC Heading No. 9954? - HELD THAT:- The service in question has to be in the nature of support to the main activity which is that of oil and gas extraction. There is no denying the fact that the activity of oil and gas extraction can be undertaken by using the infrastructure which is already in place. It, therefore, follows that there are three distinct successive stages in the entire gamut of oil and gas extraction which contribute to completion of the work of oil and gas extraction. For the services to be eligible to classification under the instant SAC Heading No. 998621, it is required that the service should support the main activity of oil and gas extraction by the infrastructure put in place for the purpose.
From the detailed scope of work as mentioned in the EPC Contract, brief extracts of which have been reproduced above, we observe that M/s Vedanta Limited has planned to undertake major expansion in their production and processing capacity with consequent increase proposed in the sales and the instant EPC Contract has been awarded to the Appellant with mandate to establish the required infrastructure for the expansion proposed. Augmentation of Liquid handling capacity, augmentation of produced water treatment facility, augmenting existing injection water system facility are indicative of the fact that new facilities, in addition to the existing facilities, are being created by M/s Vedanta Limited for enhancement of oil and gas production and sales.
The Appellant are Obliged by the contract for satisfactory handover of complete enhancing liquid handling capacity including Non Process Buildings, including roads and drains within MPT Pipeline and approach roads to M/s Vedanta Limited. complete with applicable hook-up & tie-in with the existing & proposed facilities. This provision of the contract makes it amply clear that the Appellant have been assigned the work of establishment of new facilities for oil and natural gas extraction alongside the already existing facilities at the MPT.
Coming to the proposed classification under Heading 998621 it is observed that the said heading covers 'support services to oil and gas extraction' which is self explanatory in as much as the services proposed to be classified under this heading provide support to the main activity of oil and gas extraction and such activity of extraction eventually requires the infrastructure facilities established. These three parts of the entire gamut of oil and gas extraction are clearly distinguished from each other.
Since, the Appellant have been tasked with establishment of infrastructure facilities for oil and gas extraction, the activities undertaken by the Appellant in pursuance of the EPC Contract cannot, by any stretch of imagination, be said to be support services to oil and gas extraction. The distinction between the activities undertaken by the Appellant in terms of the EPC contract and the activities included in the definition of SAC Heading No. 998621 is strikingly clear. Therefore the activities undertaken by the Appellant in pursuance of the EPC Contract cannot be classified under SAC Heading No. 998621 as these are not in the nature of support services to oil and gas extraction.
SAC Heading No 9954 of the Scheme of Classification covers the overall construction services with SAC Heading No. 995425 the general construction services of mines and industrial plants. The explanatory notes clarify that the said service code includes construction services for mining and related facilities associated with mining operations. Since, oil and gas exploration is also a form of mining; therefore, the construction services proposed to be supplied by the Appellant for constructing facilities for handling the increased production capacity are appropriately classifiable under the SAC Heading No. 9954 - so far as classification of the supplies proposed to be undertaken by the Appellant are concerned, the composite supply in the instant cases shall be treated as supply of service defined as works contract and the pronouncement of the AAR, therefore, needs no interference up to that extent.
As already observed by us, entry Sl. No. 3(ii) of Notification No. 11/2017-CT (R), dated 28.06.2017 was omitted with effect from 01.04.2019 and, therefore, the supplies proposed to be undertaken by the Appellant could not have been eligible for the rate prescribed therein. However, it is observed that up to Notification No. 3/2019- CT (R), dated 29.03.2019, major changes have been made in the said entry under Sl. No. 3 of the basic Notification No. 11/2017-CT (R), dated 28.06.2017 to provide for different rates of tax for supplies under the categories of supply of construction services or supply of works contract services.
As regards the classification of the impugned services, it is held that the Impugned services of project management consultancy services provided the Appellant would merit classification under the SAC 998349 bearing description "Other technical and scientific services nowhere else classified, attracting GST at the rate of 18%.
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2024 (3) TMI 1261 - GUJARAT HIGH COURT
Validity of Settlement Commission orders - Pronouncement of decision after completion of hearing by Settlement Commission - Commission pronounced the judgement but the same was not reduced in writing - Petitioners have prayed to direct the respondent No. 1-Interim Board of Settlement to pass an order u/s 245D (4) of the Income Tax Act in case of the petitioners in the same terms of settlement as pronounced by the Settlement Commission on conclusion of the hearing on 27/28.01.2021.
HELD THAT:- Respondent No. 2 is not ready and willing to confirm the fact of conclusion of the settlement relying upon the official case Diary Notings. However, it is apparent from the record of the affidavit filed by the Vice President and Member of the Settlement Commission in compliance of the order dated 25.03.2021 passed by this Court in [2021 (3) TMI 1450 - GUJARAT HIGH COURT] to the effect that the case was heard on 28.01.2021 and the terms of the settlement were accepted by the Settlement Commission, immunity was granted with regard to interest and penalty and the case was pronounced as “settled”. Therefore, the affidavit filed by respondent No. 2 relying upon the Case Diary Noting is contrary to what is stated on oath by the Vice President and the then Member of the Settlement Commission.
In view of the above this Court shall give credence to the affidavit dated 28.03.2021 filed by the Vice President and Member of the Settlement Commission wherein, in no uncertain terms in para Nos. 2 and 6, the Vice President and the then Member of the Settlement Commission has confirmed that hearing was concluded and the terms of the settlement were pronounced by the Settlement Commission.
Therefore, relying upon the decision of Vinod Kumar Singh (1987 (11) TMI 385 - SUPREME COURT] we direct respondent No. 1-Interim Board to pass an order under section 245D (4) of the Act accepting the application as “settled” in terms of the settlement as pronounced by the Vice President and Member of the Settlement Commission on 28.01.2021 as per affidavit dated 28.03.2021 by granting immunity from penalties and prosecutions under Income Tax Act, 1961 to the petitioners. Petition allowed.
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2024 (3) TMI 1260 - MADRAS HIGH COURT
Assessment u/s 153C - Proceeding u/s 148 was initiated against the petitioner and was pending - Abatement of ongoing proceedings under Section 148 due to the subsequent notice under Section 153C - Exclusion of time between the initiation of the proceedings u/s 153C till the date of receipt of the certified copy of this order - satisfaction note issued by the AO both in the capacity of the AO of the “searched person” and in the capacity of the AO of the “other person” i.e., the petitioner herein
HELD THAT:- The provisions of Section 153A and 153C are intended and directed against the ‘searched person’ and the ‘other person’ like the petitioner respectively. As far as Section 153A is concerned, in case any proceeding for assessment or reassessment is pending on the date of issuance of a notice u/s 153C such proceedings will abate and such assessment has to be completed under Section 153A read with limitation prescribed u/s 153B.
The Hon’ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] held that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition u/s 132A of the IT Act, 1961.
The completed/unabated assessments can be re-opened by the AO in exercise of powers u/s 147/148 of the IT Act, 1961 subject to fulfilment of the conditions as envisaged/mentioned u/s 147/148 and those powers are saved.
Therefore, the proceedings initiated u/s 148 on 30.03.2021 could abate in view of the notice issued u/s 153C on 20.03.2022, if there incriminating material for relevant Assessment Year.
Section 153A of the IT Act, 1961 was introduced along with Section 153B and 153C of the IT Act, 1961 and deleted the special procedure for assessment of search cases under Chapter XIV-B of the IT Act, 1961.
As far as the ‘other person’ like the petitioner who was issued a notice under Section 153C of the IT Act, 1961 is concerned, there is no specific provision that would abate pending proceedings. However, as per Sub-clause (2) to Section 153C of the IT Act, 1961, the Assessing Officer has to issue notice and reassess the total income in the manner proceeded in Section 153A of the IT Act, 1961.
As per Section 153(C)(1) of the IT Act, 1961, wherever the Assessing Officer of the “searched person” and the “other person” (like the petitioner herein) is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of the other person like the petitioner, the Assessing Officer can proceed to issue notices for six assessment years immediately preceding the assessment year relating to the previous year in which the search was conducted or requisition was made for the relevant Assessment Year or years referred to Section 153(A) of IT Act, 1961.
As per proviso to section 153C(1) of the IT Act, 1961 limitation is from the date of receiving the books of accounts or documents or assets seized or requisitioned to the Assessing Officer having the jurisdiction over the “other person” viz., the petitioner.
If the limitation prescribed as per the main provision is construed, the Assessing Officer can issue a notice for the Assessment Year from 10.11.2020, herein the date of search at the premises of the “searched person”.
If the proviso is applied, six years is to be construed from the date of receipt of Books of Account, documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over the other person like the petitioner herein, in which case the proceeding under Section 153(C) of the IT Act, 1962 can be initiated only up to the assessment year 2015-2016.
Impliedly, all the pending proceedings for the years for which notices under Section 153C of the IT Act, 1961 can be issued will abate.
Therefore, the proceedings initiated against the Petitioner u/s 148 on 30.01.2021 would have abated. The date of Satisfaction Note and the Date of Handing over of the document would coincide as the AO of both “searched person” and “other person” is one and the same. When the notice was issued on 20.03.2022 u/s 153C the date of satisfaction note of “searched person” and the “other person” petitioner herein would be the same date i.e., 19.03.2022. The six preceding AY from that date would be from 2016-2017 to 2021-2022.
The Impugned Order passed by the AO u/s 153C r.w.s. 143(3) of the IT Act, 1961 is liable to be quashed. However, the proceedings pending under Section 148 of the IT Act, 1961 which stood abated on account of the notice issued under Section 153Cof the IT Act, 1961 dated 20.03.2022 cannot be said to have abated. It will stand revived.
Incorrect trajectory of the proceedings u/s 153C on 20.03.2022 which has culminated in the Impugned Order dated 31.03.2023 obviously could not abate the proceeding which was initiated u/s 148. Therefore, while quashing this impugned order passed u/s 153C read with Section 143(3) dated 31.03.2023, the reassessment proceedings initiated under Section 148 of the IT Act, 1961 has to be completed.
The Impugned Order stands quashed. However, there shall be a direction to the respondent to complete the reassessment proceeding initiated under Section 148 strictly in accordance within the timelines provided under Section 153 (2) of the IT Act, 1961 in terms of the decision of Abhisar Buildwell (P.) Ltd, (SUPRA] excluding the time between the initiation of the proceedings under Section 153C of the IT Act, 1961 on 20.03.20224 till the date of receipt of the certified copy of this order. The time between the initiation of the proceedings under Section 153C of the IT Act, 1961 shall stand excluded for completing the Assessment under Section 147 read with Section 143(3) of the IT Act, 1961.
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2024 (3) TMI 1259 - ITAT MUMBAI
Addition being 10 percent out of various expenses - books of assessee are duly audited under section 44AB of the Act - AO while making adhoc disallowance has not rejected the books of account - HELD THAT:- When books of account maintained by the assessee having been duly audited have not been rejected by the AO the adhoc disallowance made on the basis of surmises is not sustainable in view of the law laid down in case of R.G. Buildwell Engineers Ltd [2018 (10) TMI 252 - SC ORDER].
CIT(A) has dully thrashed the facts by perusing the relevant documents to allow the expenses claimed by the assessee qua freight, transport, coolie and cartage, loading/unloading charges, godown expenses, other expenses, brokerage/commission on purchases etc.
No doubt the relevant evidence has not been produced by the assessee before the AO hence he proceeded to make the adhoc disallowance. However now the CIT(A) during the appellate proceedings has duly perused the bills, vouchers, balance sheet, tax audit report, ledger copy and bank statement etc. qua the expenses claimed by the assessee in the light of the fact that the assessee is having turnover of Rs. 600 crores and duly audited books of accounts of the assessee have not been rejected by the AO and proceeded to delete the adhoc disallowance.
Assessee has also brought on record the comparative chart of gross profit earned by it during the year under consideration vis-a-vis. preceding years which shows that trading results are comparable with the preceding years - We are of the considered view that the CIT(A) has rightly and validly deleted the disallowance made by the AO. Finding no illegality or perversity in the impugned findings returned by the CIT(A) the appeal filed by the Revenue is hereby dismissed.
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2024 (3) TMI 1258 - ITAT MUMBAI
Accrual of income in India - Addition on account of royalty - receipt from Indian customer for subscription to database, sale of e-journals and membership fees - India-US tax treaty - HELD THAT:- During the course of appellate proceedings before us the ld. Counsel has referred various decision of the ITAT on the similar issue and identical fact for earlier years in the case of the assessee itself wherein held that subscription received from customer in India in respect of subscription to database and subscription to journals was not taxable as royalty.
With the assistance of ld. representative we have perused the decision of ITAT in the case of the assessee itself for assessment year 2016-17 which was further followed in the other assessment year wherein the ITAT in [2019 (4) TMI 1818 - ITAT MUMBAI] held that subscription fees received by the assessee from its customers for providing access to database and journals were not royalty as customers did not acquire copyright, therefore, such fees were not liable to be taxed in India.
Thus following the decision of the ITAT we direct the AO to delete the addition made on account of royalty. Accordingly, ground no. 1 & 2 are allowed.
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2024 (3) TMI 1257 - ITAT MUMBAI
Refund of excess dividend Distribution Tax (DDT) paid - rate of dividend distribution tax in relation to the dividend paid to its parent company should be circumscribed to 5% against the rate of 20.359% provided for u/s 115-O since the same was covered by the DTAA between Netherland & India - HELD THAT:- Since, in the case of the assessee contracting states has not extended treaty protection to domestic company paying dividend distribution tax therefore, after following the decision of Total Oil (P) Ltd [2023 (4) TMI 988 - ITAT MUMBAI (SB)] dividend distribution tax would be payable at the rate mentioned in Sec. 115-O of the Act and not at the rate of tax applicable to non-resident shareholders as specified. Therefore, this ground of appeal of the assessee is dismissed.
Short grant of credit of Tax Deducted at Source (TDS) - in the order passed u/s 143(3) AO has granted TDS credit less than TDS claimed made by the assessee - HELD THAT:- After hearing both the sides and perusal of the material on record, we restore this issue to the file of the assessing officer for deciding afresh after verification of the detail filed by the assessee. Therefore, this ground of appeal is allowed for statistical purposes.
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2024 (3) TMI 1256 - ITAT DELHI
Disallowance of deduction u/s 10B - assessee has 100% export oriented undertakings (“EOUs”) in Bangalore and Noida with respect to which it has been claiming deduction u/s 10B - HELD THAT:- So far as scrap sales are concerned as decided in in assessee’s own case for AY 2004-05 [2010 (6) TMI 904 - ITAT DELHI] to hold that the impugned income on account of scrap sales earned by the assessee EOUs at Bangalore and Noida during AY 2010-11 is eligible for deduction u/s 10B of the Act. Accordingly, we direct the Ld. AO to recompute the deduction allowable to the assessee under section 10B in accordance with the applicable provisions contained therein.
As regards tool development income and seating facility factual position is not controverted by the Ld. DR. Given the nature of these receipts / income, we tend to agree with the contention of the Ld. AR that these have been earned by the assessee in the process of manufacturing / production of goods at its EOUs. In our view, it thus arises in the ordinary course of the business carried out by the assessee i.e 100% export of goods manufactured by it in its export oriented undertaking at Bangalore, even though not as a direct result of export and is therefore eligible for 100% deduction under section 10B of the Act.
Sundries written back represent expenses claimed in the earlier years and credited to the P&L account in the relevant AY and thus reversal of the same should be treated as income of the EOU at Bangalore in the relevant AY. In our considered view the claim of the assessee is correct as these amounts represent expenses related to EOU which is credited to P&L account and thus becomes part of income of the EOU eligible for deduction under section 10B of the Act.
We have also perused various judicial precedents relied upon by the Ld. Representatives of both the parties. In the case of CIT vs. Hewlett Packard Global Soft Ltd. [2017 (11) TMI 205 - KARNATAKA HIGH COURT] while deciding on the allowability of deduction under section 10A/10B discarded the reliance placed by the Ld. AO on the decision in the case of Liberty India and Sterling Foods [1999 (4) TMI 1 - SUPREME COURT] holding that the analogy of Chapter VI deductions could not be telescoped or imported into section 10A or 10B of the Act. The words ‘derived by an Undertaking’ as appearing in section 10A or 10B are different from ‘derived from’ employed in section 80-HH etc. and therefore all profits and gains of the undertaking including any incidental income would be entitled to 100% exemption or deduction under section 10A and 10B.
The Hon’ble Karnataka High Court in Hewlett Packard Global Soft Ltd.[supra] has also affirmed the view expressed in the case of Motorola India Electronics (P.) Ltd. [2014 (1) TMI 1235 - KARNATAKA HIGH COURT] wherein it was held that entire profits and gains of 100% Export Oriented Undertaking including any incidental income would be entitled to 100% exemption or deduction under sections 10A/10B and as such the entire profits derived from the business of the undertaking should be taken into consideration, while computing the eligible deduction under section 10B/10A of the Act, by applying the provisions of section 10B(4).
Thus, we hold that the miscellaneous/other income in the form of scrap sales, tool development income, seating facility and sundries written back are eligible for claim of exemption under section 10B of the Act and direct the Ld. AO to re-compute the deduction in terms of section 10B(4) of the Act.
Adjustment made to the international transaction of receipt of interest on loans - HELD THAT:- Respectfully following the decision of the Tribunal’s order for AY 2007- 08 and 2008-09 and the order giving effect to the Tribunal’s order passed by the Ld. AO thereof, we are of the view that the interest rates arrived at by the assessee using EURIBOR is at arm’s length and no further TP adjustment is required in respect of the impugned international transaction. Accordingly, the addition made by the Ld. AO pertaining to receipt of interest on the loans given to its AE is hereby deleted. The Ld. AO is directed to amend the assessment accordingly. Ground No. 3 to 3.7 are allowed.
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2024 (3) TMI 1255 - ITAT PUNE
Deduction u/s 80IA(4) on wind mills and solar power plants - AO disallowed assessee’s claim of deduction on the ground that all wind mills and solar power plants shall be considered as “one undertaking”, whereas assessee had considered each wind mill as separate undertaking for deduction u/s 80IA(4) - HELD THAT:- As in earlier years [2019 (8) TMI 1900 - ITAT PUNE] A.Y. 2012-13, 2013-14 and 2014-15 ITAT has allowed assessee’s claim of deduction u/s 80IA(4) treating each wind mill as a separate undertaking and treating solar power plant as a separate undertaking. Accordingly, we hold that each wind mill and solar power plant is a separate undertaking for the purpose of calculation of 80IA(4) deduction - Decided against revenue.
Profit from eligible business for purpose of deduction u/s 80IA need not be computed after deduction of the notional brought forward losses and depreciation of eligible business even when the same had been set off against income from non-eligible business in earlier years - HELD THAT:- As can be seen from the above grounds of appeal raised by the Revenue for A.Y. 2012-13, A.Y. 2013-14 the Revenue has not raised any ground related to set-off of losses of earlier years of eligible undertaking and applicability of section 80IA(5) of the Act, though in the assessment orders for A.Y. 2012-13 & A.Y. 2013-14, the AO had discussed 80IA(5) and set-off of losses of earlier years of the eligible undertaking. It means Revenue has accepted the decision of ld.CIT(A) and preferred not to file an appeal on the impugned issued before ITAT.
Once Revenue has not preferred an appeal on the impugned issue before ITAT for A.Y. 2012-13, A.Y. 2013-14 & A.Y. 2014-15, means the impugned issue has attained finality. In these facts and circumstances of the case, Revenue cannot raise the impugned issue for A.Y. 2020-21 as Revenue has accepted the decision of ld.CIT(A) for earlier years as discussed above. Therefore, Revenue’s Ground No.3 is not maintainable.
As deciding on merits once the earlier years losses of eligible undertakings have been set-off against the profit from another business, then those losses will not be carry forwarded notionally to set-off against the profits of eligible undertakings for the purpose of section 80IA(4) of the Act - Thus respectfully following the case of PCIT Vs. Sterling Agro Industries Limited,[2023 (8) TMI 768 - DELHI HIGH COURT] it is held that since there were no actual losses for the eligible undertakings during the year i.e.A.Y.2020-21, there was no question of notional set-off. Accordingly, assessee is eligible for deduction under section 80IA(4) on the profit earned by each undertaking separately. Accordingly, Revenue’s Ground No.3 is dismissed.
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2024 (3) TMI 1254 - ITAT DELHI
Income deemed to accrue or arise in India - Payments received by the assessee from it Indian customers on account of Centralized Services - Fee for Technical Services as defined u/s 9(1)(vii) of the Income Tax Act, 1961 or “Fee for included Services as defined u/Article 12(4)(a) of the India - US DTAA - absence of a PE in India - Assessee Company is a Company incorporated in United States of America (USA) and carries on the business of providing various hotel related services in several countries across the world - HELD THAT:- As decided in assessee own case [2023 (9) TMI 1448 - ITAT DELHI] for A.Y. 2018-19 and A.Y. 2019-20 we agree with the decision of learned first appellate authority in declaring the receipts from centralized services to be not in the nature of FTS/FIS.
Fee received by the assessee under the Centralized Services Agreement cannot be treated as FIS either under Article 12(4)(a) or 12(4)(b) of the India–US Tax Treaty. As a natural corollary, it can only be treated as business income of the assessee. Hence, in absence of a PE in India, it will not be taxable. Decided in favour of assessee.
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2024 (3) TMI 1253 - BOMBAY HIGH COURT
Levy of stamp duty on ‘Bill of Entry’ (BoE) and on Delivery Orders (DO) - goods imported in Maharashtra - seek refund paid on stamp duty - Whether the State of Maharashtra has the legislative competence to levy, impose and collect stamp duty on a Delivery Order, an ‘instrument’ defined in Section 2(l) of the Maharashtra Stamp Act, 1958, chargeable with duty as mentioned in Article 29 of the First Schedule in the Maharashtra Stamp Act, 1958? - Entries 41 and 83 of List I of Schedule VII of the Constitution of India - ultra vires Article 246(1), 286(1)(b) and 286(2) - HELD THAT:- A plain reading of the taxing provision of the MSA suggests that a DO mentioned in Article 29 is indeed an instrument. It is not excluded from the definition of instrument. It creates an entitlement in the consignee, i.e., the Petitioners herein or any person named by them in the DO, to take delivery of the goods lying in any dock or port, in any warehouse in which the goods are stored, or deposited on rent or hire or upon any wharf etc.
The definition of ‘instrument’ includes every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished, or recorded. Certain documents have been specifically excluded from the definition. A DO is not one of them.
Once the goods reach the destination port, they are unloaded and stored in a warehouse or storage as directed by transacting parties. In the meantime, the consignee or his agent presents a document called the BoE also containing a description of the goods matching that contained in the BoL and other details to the customs authorities. It is on the basis of the BoE that customs duty payable is computed and paid by the consignee. Upon evidence of payment of customs duty, and also its own charges, the shipper then issues the DO saying that the custodian of the goods may hand the goods over to the consignee (as there is no pending duty, claim or demand). Stamp duty is then paid on the DO and upon verification of payment of the same, the custodian releases the custody of the goods.
Whether the DO is an integral part of the chain of events in the course of import of goods or is independent of the import albeit incidental thereto - If it is the latter, and not an integral part of the import, the State is well within its powers to levy stamp duty on it as per the pith and substance rule since the primary object and the essential purpose of Article 29 read with Section 2(l) of the MSA is then identified as distinct and not an integral part of an import but more as consequence of import.
The BoE is presented for computation of the customs duty. Once the customs duty is paid, the import process so far as the customs authorities and the Customs Act is concerned ends. The DO is then issued by the shipper upon proof of payment of customs duty and its own charges. The DO does not form part of the chain of the import process and the taxing event occurs beyond the course of import. As Dr Saraf puts it, if a consignee can take delivery without a DO, there would be no question of a stamp duty impost. There is thus, no overlap in the legislative field and, the State and the Centre are both well within their own occupied area of Legislation.
The DO in question in this group of cases only springs into being when that frontier has ended, i.e., after the process of assessment and recovery of customs duty is complete. The BoL, a document of title, originates when goods are laden on the vessel. It is the first in point of time. The BoE, as the Gujarat High Court judgments point out, is for the purposes of customs duty assessment. This is second in point of time. The DO comes into existence third in time sequence, after the customs duty, dues, freight, etc., are paid and the goods are lien-free, i.e., available for delivery. The ‘customs barrier’ is, therefore, not a physical ‘barrier’ per se, but speaks of a point in time after the role of customs has ended.
Thus, a parallel can be drawn between the taxing power of the State in respect of levy of entry tax in the aforesaid decision and levy of stamp duty on a DO in the present case. Article 286(1)(b) of the Constitution restricts the power of the State to impose tax on the supply of goods imported into the country. The imposition of stamp duty on a DO in no manner encroaches upon the parliamentary legislature in Entry 83 of List I of the VIIth Schedule.
Shipper’s lien on the goods - The DO in the present circumstances has nothing to do with the customs duty nor the clearance by the customs authority for domestic consumption. Dr Saraf candidly says that if the Petitioners are able to bye-pass the requirement of a DO, the State will not have any claim of stamp in such a situation. But the moment there is a DO, the same will not be valid or accepted by the custodian without proof of payment of the stamp duty.
DO is not a document of title under Article 29 of the MSA and hence, it is not an ‘instrument’ - It is a DO which entitles the person named therein to take delivery of the goods after discharging the dues of a shipper. It is only after the shipper’s charges are cleared that his lien on the goods is extinguished. A right to possession of the goods is distinct from ownership of the goods. Although title to goods includes ownership and possession, the former may exist without the latter. Ownership denotes de jure possession, but another person may be in de facto possession of the goods. The distinction between title and possession is self-evident. A BoL may, for instance, be transacted in a sale in the high sea. Title would pass. But the new/substituted consignee would not get physical possession of the goods sold, the high seas’ sale notwithstanding, until the goods were cleared through customs on arrival at the destination port. That possession may happen with or without a DO; and it is for each state government to decide whether or not to levy stamp duty on the DO.
Consequently, the DO is not a BoL, nor a BoE, and it is not covered by any exclusion of the BoL or the BoE. As in the present case, even if we were to accept the contention of the Petitioners that the BoL constitutes title to the goods, without a DO, the owner or the consignee may not have possession of the goods without payment of the carrier’s charges. Only upon release of the shipper’s lien is the consignee entitled to delivery/possession of the goods. Thus, it is not necessary for the DO to be a document of title to fall within the purview of the definition of ‘instrument’.
Once we have held that the State has not encroached upon the legislative field of the Union, merely because the amount of stamp duty is computed on the valuation of the goods does not preclude a DO from being an ‘instrument’ chargeable to stamp duty by the State.
Thus, we hold that the action of the State of Maharashtra in levying stamp duty on ‘DO’ as provided in Article 29 of Schedule I of the MSA is well within the legislative competence of the State and does not intrude upon the legislative domain of the Parliament as reserved in Entries 41 and 83 of List I of Schedule VII of the Constitution of India and is not ultra vires Article 246(1), 286(1)(b) and 286(2) of the Constitution of India.
The alternative prayer of the Petitioners to read down Article 29 of Schedule I of the Stamp Act of 1958 to not apply to a DO issued in respect of goods imported in Maharashtra is untenable. As held by the apex court in the matter of The Authorised officer, Central Bank of India vs Shanmugavelu [2024 (2) TMI 291 - SUPREME COURT], the rule of reading down is to be used for a limited purpose of making a particular provision workable and to bring it in harmony with other provisions of the statute. It is to be used keeping in view the scheme of the statute and to fulfil its purpose. We have already held that the DO is not an extension of a BoL and both are mutually exclusive documents. Thus, there is no statutory conflict and the requirement of reading down the provision does not arise.
Since we hold as such, the further question of granting refund of payments made by the Petitioners towards stamp duty is redundant.
All interim applications pending therein also stand disposed.
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2024 (3) TMI 1252 - DELHI HIGH COURT
Seeking direction to sanction and grant refund of excess duty - imports networking equipment - Non speaking order - HELD THAT:- Learned counsel for petitioner submits that the order in appeal was passed on 31.10.2022 and till date the adjudicating authority has not disposed of the proceedings. He further submits that the impugned order which records that the Notification dated 10.12.2019 was made effective from 01.01.2020 seems to suggest that the bill of entry lodged by the petitioner was filed after the Notification came into force. He submits that bill of entry was filed on 16.11.2019 before the Notification admittedly came into force on 01.01.2020.
Thus, the petition is disposed of directing the adjudicating authority to dispose of the proceedings expeditiously within a period of six weeks from today after giving an opportunity of personal hearing to the petitioner.
The petition is disposed of.
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2024 (3) TMI 1251 - MADRAS HIGH COURT
EPCG Scheme - Benefit of an EXIM scheme - Non fulfilment of the export obligations - Scope and terms of the Bond executed - Duty demand - differential duty - confiscation of the goods imported - fine - penalty - manufacture and export of air purifiers - Import of machinery at concessional rate of customs duty - HELD THAT:- Rule 6 deals with the conditions of licence, Sub Rule (2)(b) of the Rules mandates that an applicant for a licence should execute a bond for complying with the terms and conditions of the licence. The said Rule in clear terms mandates that an applicant for licence should execute a bond for complying with the terms and conditions of the licence. In compliance with the said Rule, the bond had to necessarily be executed by the appellant herein. It is axiomatic that when a person claims certain benefits on certain conditions and if that benefit is extended to a particular individual, he would have to fulfill his obligations on which basis the licence had been granted, or otherwise the executor can be penalised.
In this case he had been granted a benefit of reduced customs duty on the promise of bringing in foreign exchange into the country. Since, it had not full filled its part of obligations, definitely it is liable to be penalised. The condition which the appellant counsel seek to be void on the basis of not being supported by any substantive provision would have to fall, since an execution of bond is contemplated under Rule 6 (2) (b) of Foreign Trade (Regulation) Rules 1993 and the reason for the execution of the bond is for the appellant to fulfill its obligation under the licence. Therefore, it is too farfetched for the appellant to content that the said condition would be a void condition.
Thus, we are not inclined to interfere with the order passed by the learned Single Judge. In fine, this Writ Appeal fails and is accordingly, dismissed.
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2024 (3) TMI 1250 - MADRAS HIGH COURT
Validity of order of CESTAT - Redemption for home consumption allowed, despite admitting the fact that the condition of para 2.31 of the Foreign Trade Policy are not satisfied - CRO itself is formulated under the provisions of Bureau of Indian Standards Act - whether CESTAT is right in overlooking the CRO, 2012, which covers Multifunctional and Printers/ Devices (MFDs) along with printers and plotters? - HELD THAT:- It is submitted by both the counsel that the goods have already been released on payment of duty and other dues, as per the order of the Tribunal.
This Civil Miscellaneous Appeal stands dismissed, keeping the substantial questions of law involved herein open to be adjudicated in appropriate proceedings.
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2024 (3) TMI 1249 - MADRAS HIGH COURT
Recovery of duty drawback which was granted earlier with interest - Non-realisation of export proceeds - 100% Export Oriented Unit - exporter of cotton woven powerloom bed covers, pillow covers, cushion covers and bags to France - HELD THAT:- The learned counsel for the petitioner has relied on the web portal of the Directorate General of Foreign Trade and submits that the consignment dated 19.03.2014 was realised in the petitioner's account on 12.05.2014 and he is also having the certificate to that effect. However, the petitioner claims that it could have been verified by the respondent in their portal before passing the impugned order. On the other side, the respondents claim that the certificate ought to have been produced by the petitioner at the relevant point of time. This Court, in order to provide one more opportunity to the petitioner, is inclined to remand this matter back to the authorities to consider the matter afresh.
Thus, this writ petition is allowed. The order impugned in this writ petition is hereby set aside and the matter is remanded back to the respondents. The petitioner shall appear before the respondents on 15.02.2024, with the Bank Realization Certificate issued by the Directorate General of Foreign Trade and on such appearance, the respondents shall take a decision afresh after affording opportunity to this petitioner. No costs. Consequently, connected Miscellaneous Petitions are closed.
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2024 (3) TMI 1248 - CESTAT CHANDIGARH
Valuation - Validity of Re-determination of Value - Goods have already been cleared from the port of import after examination and enhancement of value - Valuation based on Chartered Engineer Certificate - Import of second-hand printing machines - No opportunity to cross-examine the Chartered Engineer - seizure - provisionally released on execution of Bond and Bank Guarantee - confiscation - differential duty - penalty - HELD THAT:- We are of the considered opinion that the Department cannot re-assess the impugned goods for the second time. We find that the investigating officers did not question the Chartered Engineer, who issued the certificate on import and have also not questioned the proper officers, who allowed the clearance of Bill of Entry after the initial re-assessment. Department has not brought forth any omission or commission on the part of the Chartered Engineer or the proper officer so as to necessitate the revision of the assessment order passed in respect of the impugned goods. The assessment orders, which have attained finality, have also not been challenged; the same were neither stayed nor set aside by a competent higher forum or authority. Thus, we find that the Department is not within their right to subject same machines to another examination and assessment.
We find that Department has seriously erred in re-determining the value of the impugned goods; the value of which is already enhanced at the time of import. We find that CVR 2007 does not give any scope for such re-assessment particularly when there was no challenge to the assessment made at the time of import by way of filing any appeal. Moreover, we find that whatever is construed as evidence in the impugned case pertains to import of some other machine albeit by the same importer. We find that evidence in one case cannot be a basis for confirmation of offence in some other case; such a confirmation defies all established principles of law.
The impugned order passed without giving an opportunity to the appellants to cross-examine the Chartered Engineer is a serious violation of principles of natural justice. An order passed in this manner cannot be held to be legal, proper and justified. We find that the Revenue has not made out any case for redetermination of the declared value which was already enhanced at the time of import. Therefore, there is no violation of any of the provisions of the Customs Act by the appellant-importer and thus, the goods are not liable for confiscation and no differential duty is payable by the appellant importer. Consequentially, no penalty is imposable either on the appellant-importer or their directors.
Thus, the impugned order is set aside and the all the appeals are allowed, with consequential relief, if any, as per law.
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2024 (3) TMI 1247 - CESTAT CHANDIGARH
Misdeclaration of the transaction value - Confiscation of goods - Recovery of the differential duty - interest and penalty - Import of Copper Cathodes - Acceptance of loaded value of the consignments earlier - HELD THAT:- We find that learned Commissioner finds that the date of invoice is later than the date of bill of lading; the appellants did not submit the original copy of the contract and therefore, there are reasons to believe that the transaction value is liable for rejection. On the other hand, learned Counsel for the appellants submits that, their business model was informed to the Commissioner and have produced the original contract along with bank payment remittance advice on 06/09/2012 and this being so rejection of the transaction value was incorrect; He further submits that none of the conditions illustrated under Rule 12 exist in the instant case and therefore, the rejection was not proper and legal. We find that Learned Commissioner finds that the importer was accepting the loaded value of the consignments cleared earlier and for that reason the importer does not have any reason for not accepting the loading of the value in the instant case.
It is also not explained as to how the situations illustrated under Rule 12 are existing and no case of payment of differential amounts through non-banking channels is alleged. Thus, we find that Revenue has not made any case for rejection of the transaction value i.e, the value declared by the importer.
Thus, we find that no case has been made for rejection of the declared value in the impugned case and therefore, the consequential redetermination of value, confiscation of the impugned goods and imposition of penalty are not proper and legal. Hence, the impugned order is set aside and the appeal is allowed.
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2024 (3) TMI 1246 - CESTAT CHENNAI
Misdeclaration and undervaluation of the goods - redemption fine and penalty - Imports Pile Fabrics declaring the same as ‘Stock Lot Polyester Knitted Fabrics’ - whether the enhancement of value as well as the allegation that the goods have been mis-declared is legal and proper - HELD THAT:- It can be seen that the textile expert who reported that the goods have brushing on one side does not have knowledge about what is brushing and how it is carried out. The allegation that the goods have been mis-declared is without any factual basis. Further, in para-2 of the SCN dt. 12.3.2008 it has been categorically stated by the department that docks officers have examined and reported that the goods are Stock Lot of Polyester Knitted Fabrics in different colours. We therefore hold that the finding of the department that goods have been mis-declared is without any factual basis and requires to be set aside.
Undervaluation of the goods - The appellant has declared the value of the goods as USD 1/kg. However, the department has re-determined the value as Rs.112.18/ kg and Rs.137.47/kg in the de novo orders. In the show cause notice, the enhancement of value has been proposed on the basis of market enquiry. This evidence with regard to the market enquiry was supplied to the appellant along with show cause notice. The appellant then cross examined these traders in the de novo proceedings. None of the traders supported the case of the department. Thereafter, in the de novo proceedings the original authority has completely rejected the evidence of the traders and relied upon the National Import Data Base (NIDB). The details of the NIDB data of which the adjudicating authority has relied for enhancing the value has not been supplied to the appellant. The SCN does not draw any reference of NIDB data and the enhancement was proposed in the SCN on the basis of market enquiry only. The department ought not to have relied on the NIDB data without providing copies to appellant. We therefore find that the enhancement of value is without any legal or factual basis. The same requires to be set aside which we hereby do.
Thus, we are of the considered opinion that the demand, interest, redemption fine and penalty imposed cannot sustain.
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2024 (3) TMI 1245 - CESTAT NEW DELHI
Monetary Limit - Filing of Appeal by the Revenue / Department - threshold limit for filing appeals as per Central Board of Indirect Customs (CBIC) circulars - Instruction are binding effect Or not - Valuation of imported goods - Aluminum Scrap - rejection of declared value - enhancement of assessable value - HELD THAT:- On Persual of the provisions, it is clear that the Instruction/Circulars are mandatory/binding vis-a-vis the Departmental Officers are concerned. However, vis-a-vis the Superior Courts including Tribunals, the objective is different. The Tribunal as well as Superior Courts have to prioritize the interest of justice. It is the mandate for the Courts to see that none shall be condemned un-heard and that none shall be pre-judicially affected. The Courts/Adjudicating Authorities have to see whether any Circular/Instruction of the department is sufficient enough to fulfil the requisite interest of justice in the given set of circumstances.
The order of Commissioner (Appeals) under challenge before us is held to have been passed in violation of statutory mandate. Hence it cannot be allowed to attain finality due to Departmental Instructions or Clarifications which have to be within the four corners of parent legislation. The circular was for department to follow and not for the assessee to rely upon, especially when the self assessment of assessee is under shadow of doubt, more so when the department is being denied the proper opportunity to defend its stance. Above all, there cannot be any intention of the Department to issue any instruction which is detrimental to its own interest. As observed above, the only intention of the impugned instruction for fixing monetary limit is to reduce the Department litigation.
The instruction cannot be enforced at the cost of prejudice to the issuing authority itself. Rule of law requires a fair opportunity of being heard even to Government Authorities/Department herein. Commissioner (Appeals) has wrongly relied upon the decision of Sanjivani Non-ferros Trading Pvt. Ltd. Vs. Commissioner of Customs, [2018 (12) TMI 738 - SUPREME COURT] as in that case, the enhancement has not under Section 17 of the Customs Act, 1962.
Instead of counting each Bill of Entry for the purpose of calculating threshold monetary limit for filing appeal, it may be seen that all the 30 Bills of Entry pertain to one importer, namely Century Metal Recycling Private Limited for the same commodity i.e. aluminium scrap imported during more or less same period/time. Further, the Commissioner (Appeals) has passed one Order -in -Appeal for all the 57 Bills of Entry though numbered as 59-115/2019. Against the said OIA, this appeal is filed before this Tribunal (CESTAT).
In view of said Rule 6A of CESTAT Procedure Rule, 1982, we hold that the present case to be a fit case for this bench to exercise its power to not accept the CBIC instructions in this particular appeal and hold that CBIC Instruction F. No. 90 dated 17.08.2011 prescribing monetary limit for filing appeals before this Tribunal is not mandatory. Consequently, we hold that the Departmental Appeals shall be heard on merits. List for final hearing on 13th May, 2024.
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2024 (3) TMI 1244 - CESTAT KOLKATA
Valuation - import of Old and used Digital Multifunction Printer - enhancement of value - restricted items - Without license - Confiscation - HELD THAT:- We hold that the date of importation in this case is from 19.10.2012 to 22.01.2013, which are prior to issuance of DGFT Notification No.35(RE-2012)/2009-2014 dated 28.02.2013. Therefore, following the decisions in the case of Bhawani Enterprises [2017 (11) TMI 974 - CESTAT KOLKATA], we hold that as the import has been affected prior to 28.02.2013, there is no restriction of import of the subject goods. Hence, no specific license is required for import of the impugned goods.
In that circumstances, we hold that for enhancement of value, the Chartered Accountant’s Certificate cannot be relied upon unless and until there is corroborative evidence. Therefore, we hold that that the goods are not liable for confiscation. No redemption fine can be imposed and no penalty on the respondent.
In the result, the Revenue’s appeal is dismissed.
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