Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 16, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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Seeking for correction of an invoice for the purpose of availing input tax credit - The present invoice is dated 23.10.2017 and hence, the input tax credit has to be claimed before 28.11.2017 or furnishing of the annual return for the assessment year 2017-18, whichever is earlier. There is absolutely no possibility of the input tax credit being availed of at this point. - There are no reason to direct the Railways to issue a revised invoice nor can the same be permitted - petition dismissed. - HC
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Denial of refund of the unutilized Input Tax Credit (ITC) - inverted duty structure - Denial on the ground that the one of the suppliers had erroneously mentioned HSN 6404 in respect of the goods supplied in its invoices notwithstanding that it had also furnished the certificate acknowledging the same - Matter restored back for fresh consideration - HC
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Levy of penalty - non availability of the delivery challan with the vehicles - In the instant case, there has been no evasion of tax. - E-way bill was properly generated. Tax was properly paid. It was mere non-compliance of the provisions of Section 55(5)(b) - Instead of proceeding u/s 129, the respondents authorities ought to have proceeded u/s 122. - Penalty order set aside - HC
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Exemption from GST or not - sale of unbranded /non packaged Broken Rice generated from manufacturing process - Tax is not payable by the applicant on supply of ‘broken rice’ if the same is supplied ‘other than pre-packaged and labeled’ - AAR
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Exempt supply or not - services to an educational institution - The supply of services for printing of question papers being provided by the applicant to different universities for conducting examinations is exempted from GST - AAR
Income Tax
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Unexplained expenditure u/s 69C - Addition emanated from noting in a diary found during search - Where the assessee had stated the notings in the diary as relating to his business and which stood disclosed by its partnership firm to the settlement commission, who in turn accepted the same also - CIT(A) rightly deleted the additions - AT
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Capital gain - Land transfered by assessee into partnership firm - stock-in-trade is introduced into a firm - valuation of land was done by the assessee himself more as against the cost price and the same has not been revalued by the joint venture or the firm - Additions confirmed - AT
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Disallowing part of interest expense claimed u/s 57 - expenditure incurred by the assessee, genuineness of which was not disputed by the A.O are allowable expenditure in terms of provisions of Section 57(iii) - Additions deleted - AT
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Accrual of income - Interest on FDs under Restraint Order - the lower authorities has committed an error in bringing the interest accrued on FD which is subject to prohibitory order by CBI Hyderabad into tax in these assessment years under consideration and the same has to be taxed in assessment year when it was actually received by the assessee or right to receive accrued to the assessee - AT
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Insurance Business - Addition on account of Surplus disclosed in Form 1 of Actuarial Report - Netting off of 'surplus' available both in Policy Holders Account and Share Holder's account - Relief granted by the CIT(A) confirmed - AT
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Penalty levied u/s 271C - bonafide belief - reasonable cause - failure to deduct the tax at source (TDS) - By the time the assessee was under obligation to deduct tax at source for the AYS under consideration, there were judgments in favour of assessee - penalty is not imposable u/s 271C - AT
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Sales Incentive (Commission) paid to different persons - commission paid to HUF - related parties - Assessee had furnished complete details - Payments were made through banking channels. The amount of due TDS was deposited by the assessee - Further, the findings of the AO that the HUF being non-living person cannot perform any duty are findings with a non-application of mind. - Claim of the assessee allowed - AT
Customs
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Classification of imported items - Golden Star Chafing Dish Fuel Wick - Liquid Chafing Fuel wick Plant - goods are classifiable under CTH 36061000 and appellant is entitled for the benefit of Exemption - AT
IBC
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Validity of order of NCALT - Clear directions issued by the Apex court was not considered - It is directed that an enquiry shall be conducted on the above allegations by the Chairperson of the NCLAT. A report shall be submitted before this Court by 5 pm on 16 October 2023 after specifically verifying the facts from the Judges who constituted the Bench of the NCLAT. - SC
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Initiation of CIRP - existence of genuine pre-existing dispute - From the email of 29.04.2018, it is clear that the Corporate Debtor gave opportunities to the Operational Creditor to sit across the table to sort out their problems amicably - A holistic analysis of the emails leads us to the inescapable conclusion that genuine pre-existing disputes were there and the Adjudicating Authority therefore committed no error in drawing similar conclusion of pre-existing disputes. - AT
Service Tax
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Classification of services - Business Auxiliary Service or not - In the SCN it is alleged that the activity of providing bed rolls would fall under clause (vi) of the definition under Section 65 (19). The appellant is not providing any service on behalf of IRCTC. The appellant is providing service to M/s. IRCTC. - Demand set aside - AT
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GTA service under reverse charge mechanism - Once the service provider discharged the service tax where the service recipient is liable to pay the service tax, demand of service tax on the same service from the service recipient shall not sustain on the ground that the particular service which already suffered the service tax cannot be suffer the service tax twice on the same service. - AT
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Extended period of limitation - Suppression of facts or not - Donation received in respect of yoga camp / residential Yoga camp - Donation is related to Education or Health and fitness service or not? - Demand confirmed by invoking the extended period of limitation with interest and penalty - AT
Articles
Notifications
Customs-
59/2023 - dated
13-10-2023
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Cus
Export duty exemption to specified varieties of Rice - Rate of duty shall come into force on the 1st day of April, 2024 - Notification No. 55/2022-Customs, dated the 31st October 2022 as amended
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75/2023 - dated
13-10-2023
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
GST - States-
25/2023-State Tax - dated
11-10-2023
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Delhi SGST
Seeks to amend Notification No. 07/2023– State Tax, dated 3rd July, 2023
Income Tax-
89A/2023 - dated
13-10-2023
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IT
Pension fund, namely, the Stichting Pensioen funds ABP specified u/s 10(23FE)
Money Laundering-
S.O. 4496 (E) - dated
13-10-2023
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PMLA
Special Court under the Prevention of Money laundering Act - New Area specified for trial of offence punishable under section 4 - Notification No. S.O.372(E) dated the 5th February, 2016 as amended.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (10) TMI 643
Maintainability of appeal - appeal dismissed on the ground of time limitation - HELD THAT:- On perusal of the records, it is revealed that while a show cause notice was served upon the petitioner under section 74 of the Act and in the first reminder issued to the petitioner on 04.08.2021, the date for filing the reply was fixed as 01.11.2021, the date of personal hearing was also fixed on 01.11.2021, the time of personal hearing was also indicated as well as the venue of the personal hearing was also clarified, however, as the petitioner had moved an application seeking adjournment, a second reminder was issued to the petitioner on 04.08.2021 in which the date by which the reply was to be submitted was fixed as 25.02.2022. The petitioner filed a detailed reply to the show cause notices denying the allegations levelled against him. However, without granting an opportunity of hearing, which is required under section 75(4) of the GST Act, an order came to be passed against the petitioner confirming the demands as raised in the show cause notice. The said order is on record. Although the reply filed by the petitioner was mentioned in the adjudication order, however, from the order as well as from the records, which have been produced today, clearly no opportunity of hearing was granted to the petitioner. The appeal filed by the petitioner was dismissed as being barred by limitation. Considering the fact that in the present case also, no opportunity of hearing was granted to the petitioner, neither any date for hearing was fixed, as such, following the said two judgments in the case of BHARAT MINT AND ALLIED CHEMICALS VERSUS COMMISSIONER COMMERCIAL TAX AND 2 OTHERS [ 2022 (3) TMI 492 - ALLAHABAD HIGH COURT] and M/S SANTOSH TRADERS THRU PROPRIETOR SANTOSH KUMAR GONDA VERSUS STATE OF U.P. THRU. PRIN. SECY (TAX AND REGISTRATION) LKO AND 2 OTHERS [ 2023 (9) TMI 47 - ALLAHABAD HIGH COURT] , the writ petition deserves to be allowed. The matter is remanded to the adjudicating authority to pass a fresh order after giving an opportunity of hearing to the petitioner in accordance with law.
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2023 (10) TMI 642
Grant of regular bail - monetizing ITC availed fraudulently - quantum of punishment - HELD THAT:- The statutory provision u/s 132 states that the maximum punishment provided is five years. The petitioner has already completed an incarceration of more than one year. The veracity of the allegations and counter-allegations would be assessed by the trial Court on the basis of the evidences to be led by both the sides and thus, this Court would refrain from commenting anything on the merits of the case. However, confining itself only to the prayer made by the petitioner for grant of bail, this Court is of the opinion that learned counsel for the petitioner succeeds in making out a case for grant of regular bail. The present petition is allowed and the petitioner is ordered to be released on bail on his furnishing bail/surety bonds to the satisfaction of the concerned trial Court/Duty Magistrate.
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2023 (10) TMI 641
Levy of penalty u/s 129(1)(b) of the Goods and Services Tax Act, 2017 - petitioner is not the owner of goods - HELD THAT:- Strong reliance has been placed upon the decision of this Court in M/S SHAHIL TRADERS VERSUS STATE OF U.P. AND ANOTHER [ 2023 (6) TMI 360 - ALLAHABAD HIGH COURT] which applies squarely to the case at hand, where it was held that penalty is set aside. Expressing full agreement with the view expressed by the Coordinate Bench of this Court in the case of M/s Sahil Traders, the impugned penalty order dated 08.09.2023 passed in Form MOV-09 under Section 129(1)(b) of the Goods and Services Tax Act, 2017 set aside. The writ petition is allowed. The Respondent No.2 is directed to pass fresh order treating the petitioner to be eligible to the benefit of Section 129(1)(a) of the Act. Petition allowed.
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2023 (10) TMI 640
Seeking for correction of an invoice for the purpose of availing input tax credit - denial of Input Tax Credit - levy of IGST or CGST and SGST? HELD THAT:- In the present case, the petitioner is a dealer registered under the BGST Act and the sale was effected from the State of Jharkhand. However, there is absolutely nothing to prove the movement of goods to the State of Bihar - There can be no understanding between the parties to the transaction that what has been paid as SGST and CGST is to be deemed to be paid as IGST without due compliance of th provisions of the taxation enactment. Such understanding cannot also regulate an input tax credit without such credit being shown in the ledger account maintained by the assessee with the Department. The invoice is one issued in assessment year 2017-18. The petitioner has filed the above writ petition in the year 2021 when the enabling provision for claiming input tax credit would not have been available in any event. Section 16(4) of the BGST Act, enables the input tax credit to be taken in respect of any invoice or debit note, in the case of a supplier, goods or services or both, after the due date of furnishing of the return under Section 39, in the month of September following the end of financial year to which such invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. The present invoice is dated 23.10.2017 and hence, the input tax credit has to be claimed before 28.11.2017 or furnishing of the annual return for the assessment year 2017-18, whichever is earlier. There is absolutely no possibility of the input tax credit being availed of at this point. There are no reason to direct the Railways to issue a revised invoice nor can the same be permitted - petition dismissed.
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2023 (10) TMI 639
Denial of refund of the unutilized Input Tax Credit (ITC) - inverted duty structure - Denial on the ground that the one of the suppliers had erroneously mentioned HSN 6404 in respect of the goods supplied in its invoices notwithstanding that it had also furnished the certificate acknowledging the same - HELD THAT:- The controversy relates to the six invoices issued by one of the suppliers (M/s V.K. Polymers). Undisputedly, the said supplier had charged the GST at the rate of 18% which is chargeable on PVC straps. There is no cavil that the tax chargeable on footwear (compete finished products) is 5% or 12%, depending on the value of the said product. The supplies made by M/s V. K. Polymers under the six invoices in question, were below the price of ₹1,000/-. Thus, if the said supplier had supplied a complete product, it would have charged GST at the rate of 5%. According to the petitioner, the petitioner had produced a certificate from the said supplier acknowledging that it had incorrectly classified the goods under HSN 6404 instead of HSN 6406. The fact that the GST had been charged by the said supplier at the correct rate is a material factor to be considered by the Adjudicating Authority. Whilst the concerned authorities have accepted the classification of the product supplied by a singular supplier, M/s V. K. Polymers, under six invoices, as correct; they have not accepted the classification of goods as far as the other suppliers are concerned. This is notwithstanding that there is no dispute that all suppliers have correctly charged the GST. Whether the petitioner would be entitled to the refund notwithstanding that the ITC availed for the month of October, 2020 and November, 2020 was in excess of the limit as specified in Rule 36(4) of the CGST Rules? - HELD THAT:- It is material to note that the learned counsel appearing for the respondents does not dispute that if the petitioner is correct that the mismatch is only on account of the suppliers filing the quarterly returns, the petitioner would be entitled to the refund. He, however, states that the petitioner did not submit the relevant documents to establish this claim - the learned counsel appearing for the parties state that in the aforesaid circumstances, the matter be remanded to the Adjudicating Authority to consider the matter afresh, with liberty to the petitioner to produce all the documents as to substantiate its claims. The matter is remanded to the Adjudicating Authority to consider the petitioner s claim regarding availing ITC in excess of the limit as prescribed under Rule 36(4) of the CGST Rules - petition allowed by way of remand.
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2023 (10) TMI 638
Maintainability of petition - availability of statutory remedy of appeal - non-constitution of the Tribunal - HELD THAT:- Due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act - the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act - petition disposed off.
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2023 (10) TMI 637
Amendment made to the Bihar Goods and Services Tax Act, 2017 by the Bihar Goods and Services Tax (Amendment) Act, 2021 specifically to Section 50 which is available in Section 6 of the Amendment Act - HELD THAT:- It is seen from the amendment that the proviso was incorporated by way of a substitution with effect from 1st of July, 2017 which takes in the relevant assessment year of the petitioner also, i.e. 2017-2018. In the above circumstance of a retrospective amendment having coming into the Act, it is opined that the Assessing Officer should reconsider the issue - matter shall be restored to the file of the Assessing Officer who shall consider the same after issuing notice to the petitioner. Petition allowed.
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2023 (10) TMI 636
Dismissal of appeal - appeal in contravention to Sub- Sections(1) (4) of Section 107 of the GST Act. It is contended that the petitioner has already deposited 10% of the demanded tax amount before the first appellate authority and as there is no second appellate forum, this Court should entertain this writ petition. HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd Appellate Tribunal, which has not yet been constituted, as an interim measure subject to the petitioner depositing entire tax demand within a period of fifteen days from today, the rest of the demand shall remain stayed during the pendency of the writ petition. Application disposed off.
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2023 (10) TMI 635
Levy of penalty - non availability of the delivery challan with the vehicles - order passed without appreciating the fact that the petitioner had already ensured all the compliances under CGST Act - HELD THAT:- Admittedly, the petitioner had generated e-way bills pertaining to both the vehicles. The vehicles were carrying invoices, e-way bills and bilty. It is not a case of tax evasion. All the dues had already been paid, including the tax. Documents have been referred to by the learned counsel for the petitioner to indicate that after tax had been paid, on the direction of SAIL, the goods were handed over to the petitioner at Kanpur. A bare reading of Section 129 of the Act, prior to the amendment dated 01.01.2022 indicates that essentially it had an element of tax also because sub (a) to sub-Section (1) to Section 129 of the Act, speaks of release of a vehicle on payment of applicable tax and penalty. The words applicable tax has now been deleted from this provision. Goods are to be transported alongwith certain documents as specified under the Act. If every non-compliance in respect of the documents that a vehicle should carry may attract the provisions of Section 129 of the Act, what would be those situation in which the provisions of Section 122 of the Act may be invoked? A bare reading of Section 130 of the Act, makes it clear that here what is to be established that (i) there has been non-compliance of the provisions of the Act, which leads to the evasion of the Tax and further the evasion of tax was intentional - initially when Section 129 of the Act was enacted, the legislature had considered that there was some tax element, which was to be addressed before the release of the vehicle. Section 122 of the Act, on the other hand, is simpliciter. Section 122 (xiv) of the Act makes one liable to some penalty if a person transports any taxable goods without the cover of the documents as may be specified in this behalf. It has no tax element. In the instant case, there has been no evasion of tax. There has been no intention to evade tax. Every information was with the GST authorities. Even if the petitioner was not carrying any delivery challan, there was no additional information that could have been provided by virtue of production of delivery challan. E-way bill was properly generated. Tax was properly paid. It was mere non-compliance of the provisions of Section 55 (5) (b) of the Act. This Court is of the view that instead of proceeding under Section 129, the respondents authorities ought to have proceeded under Section 122 of the Act - this Court is of the view that impugned orders are not in accordance with law - Petition allowed.
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2023 (10) TMI 634
Constitutional Validity of N/N. 8/2017-IT(Rate) dated, 28.07.2017 and the Entry of the N/N. 10 of 2017-IT(Rate), dated 28.06.2017 - levy of GST on Ocean Freight Services - HELD THAT:- It is an admitted fact that the issue of levy of GST on Ocean Freight Services is settled by the Hon ble Supreme Court and the Notification 8/2017-IT(Rate) dated, 28.07.2017 and the Entry of the Notification No.10 of 2017-IT(Rate), dated 28.06.2017 is struck down as ultra vires. In such circumstances the respondents are not empowered to collect GST for the Ocean Freight Services and consequently the respondents are bound to refund the amount collected. The respondents are liable to refund an amount of Rs. 45,93,793/- and the respondents are directed to refund the same. As far as the interest portion is concerned, this Court is leaving open to the parties to adjudicate the same. This Writ Petition is allowed.
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2023 (10) TMI 633
Grant of anticipatory bail - Validity of summon order issued - each and every document is with the GST authority - wrongful availment of GST Credit - HELD THAT:- The petitioner has merely been summoned so as to tender statement. If there is delay in concluding such proceedings it per se may not be a ground to quash the summoning order unless there are other attending circumstances requiring Court s interference. The order dated 10.06.2022, passed in the anticipatory bail of the petitioner is also part of the record. The Court has dealt with in quite detail as to what the allegations are. This Court does not see any reason to make any interference - Petition dismissed.
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2023 (10) TMI 632
Exemption from GST or not - sale of unbranded /non packaged Broken Rice generated from manufacturing process - HELD THAT:- The product broken rice is classifiable under Chapter Heading 1006. Therefore, the rate of tax on supply of broken rice would be same as in case of supply of rice. In terms of Notification No. 06/2022- Central Tax (Rate) dated 13.07.2022, Rice, pre-packaged and labelled attract tax @ 5% with effect from 18.07.2022. On the other hand, Notification No. 07/2022-Central Tax (Rate) dated 13.07.2022 exempts supply of Rice, other than pre-packaged and labelled with effect from 18.07.2022. Tax is not payable by the applicant on supply of broken rice if the same is supplied other than pre-packaged and labeled as specified in Notification No. 07/2022-Central Tax (Rate) dated 13.07.2022.
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2023 (10) TMI 631
Exempt supply or not - services to an educational institution - service of printing question papers for the conduct of examinations to educational institutions, supplied by the applicant - Sr. No 66 of the Notification No. 12/2017-Central tax (rate) as amended, and Notification No. 12/2017-State tax (rate) as amended - refund of GST previously charged on invoices to educational institutions for printing question papers for examinations - refund of GST collected on such invoices and deposit to the exchequer of the GST relating to the printing of question papers - principle of unjust enrichment. 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 Boards (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. It is noticed from the documents submitted that the applicant has been awarded agreement/work order by University namely Jharkhand University of Technology. There is no dispute that this University as referred above is regarded as educational institution'. 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:- It has already been stated that the applicant has undertaken activities like confidential printing of question papers of different educational institutions and other related examination activities for universities. 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. The supply of services for printing of question papers being provided by the applicant to different universities for conducting examinations shall get covered under serial number 66 of the Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017/West Bengal State Notification No. 1136 FT. dated 28.06.2017, as amended.
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Income Tax
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2023 (10) TMI 630
Capital gain on sale of shares of Indian company by one Non resident to another Non resident outside India Withholding TDS u/s 195 - Whether transactions designed prima facie for avoidance of income tax under the Act? - As decided by HC [ 2014 (8) TMI 606 - DELHI HIGH COURT] gains arising from sale of a share of a company incorporated overseas, which derives less than 50% of its value from assets situated in India would certainly not be taxable under section 9(1)(i) of the Act read with Explanation 5 thereto and contention of the Revenue that the entire transaction of sale of Copal-Jersey shares has been structured in a manner so as to include the sale of shares in CRIL and Exevo-US by the Mauritian companies only to avoid the incidence of tax and take benefit of the DTAA is ex facie flawed. HELD THAT:- This application has been moved by the appellant for withdrawal of case. For the reasons stated by learned counsel for the appellant, the application is allowed. The appellant is permitted to withdraw the instant Civil Appeal.
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2023 (10) TMI 629
Addition u/s 68 - assessee could not establish the creditworthiness of the shareholders as shown in the share capital investment during the relevant financial year - observations of the Tribunal that the appellant had not provided any documents or details before the lower authorities and/or not participated in the proceedings before the CIT [Appeals] - HELD THAT:- CIT(A) had come to a conclusion upon considering the documents and the submissions made by the assessee. Therefore, it may not be correct to state that no evidences have been produced by the assessee to prove the identity and creditworthiness of the investors as well as the genuineness of the transaction. What was required to be considered was whether the documents produced by assessee and the stand taken by them to the identity and creditworthiness of the investors as well as the genuineness of the transaction on the materials which were on the file of [CIT(A)] as well as the assessing officer. The assessee has to be partly blamed for the present situation as the assessee failed to respond to the notice issued to the assessee through e-mail as well as electronically. In any event, since the appellant s remedy before the learned tribunal is a very valuable remedy as the learned tribunal is the last fact finding forum which will be able to appreciate and re-appreciate the facts, we are of the opinion that the appeal should be decided by the learned tribunal on merits. Appeal is allowed and the order passed by the learned tribunal is set aside and the matter stands remanded to the learned tribunal for fresh consideration of the appeal on merits and in accordance with law.
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2023 (10) TMI 628
Prosecution proceeding u/s 276CC - not filing returns of income without giving any reasonable cause and noncompliance of the notices of the AO - HELD THAT:- As the amount in question has already been set at rest in view of different orders passed by the Appellate Authority as well as the Tribunal, as has been noted in the argument, thus as relying on K.C. Builders and Another case [ 2004 (1) TMI 7 - SUPREME COURT] the case of the petitioner is fully covered as there is no penalty or assessment against the petitioner in view of the subsequent orders passed by the competent authority in the said statute. There is no doubt that the penal provision is required to be dealt with as it is, and the Court is not required to shift the language of penal provision, however, in the case in hand, the facts are otherwise. Criminal proceedings quashed.
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2023 (10) TMI 627
Revision u/s 263 - bogus purchases and commission expenses - As per CIT AO has failed to consider that all the purchases made and the commission expenses claimed were not genuine - ITAT allowed assessee appeal - HELD THAT:- AO has made inquiries about the purchases made by the assessee and commission paid to the parties. The A.O. for inquiring into purchases made and commission paid issued notice and in response the assessee furnished bank statement, tax invoices and ledger accounts of the contra parties. CIT has not disputed the existence of the parties and the purchases made or commission paid. No contrary evidence was placed on record to substantiate that the purchases made or commission paid is bogus. No error in the order of ITAT so as to raise any substantial question of law in the present appeal.
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2023 (10) TMI 626
Reopening of assessment - notice was issued based on audit objections received by the assessing officer - petitioner had gifted a flat to Bezan Chenoy as per the Memorandum of Family arrangement and, therefore, has resorted to colorable device by way of gift of the said property to avoid tax liability. Therefore, this is a fit case for invoking provisions of Sec. 50C and value as per Stamp Duty-authority was required to be considered as sale consideration and taxed as short-term capital gain - HELD THAT:- As decided in Jet Speed Audio (P) Ltd. [ 2015 (2) TMI 766 - BOMBAY HIGH COURT] the court has held that the tangible material urged should emanate from the reasons recorded for issuing reopening notice u/s 148 - The tangible material as stated in the affidavit in reply and by counsel for revenue are the audit objections received by the assessing officer. But there is no mention of this in the reasons recorded for issuing reopening notice u/s148 - Therefore, the audit objection cannot be termed as tangible material. A Division Bench of this court in Aroni Commercials Ltd. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] has held that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the consideration bestowed on all issues raised by him during the assessment proceeding even where he is satisfied then it would be impossible for the AO to complete all the assessments which are required to be scrutinized by him under Section 143(3) of the Act. Therefore, there can be no doubt in the facts of this case that the reopening of the assessment by the impugned notice is merely on the basis of change of opinion of the assessing officer from that held earlier during the course of assessment proceedings leading to the assessment order dated 30th September 2010. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Petitioner has explained under Section 50C of the Act what is contemplated is a positive figure of consideration received or accruing as a result of a transfer being less than the value adopted by the stamp valuation authority. If consideration figure is zero or NIL, deeming fiction under Section 50C cannot come into play especially when gifts are categorically not considered as transfers under Section 47. After considering the submissions, the assessing officer has consciously dropped in the issue of Section 50C or not to levied any tax under Section 50C in respect of the said transaction. For the same reasons Phoolchand Bajrang Lal [ 1993 (7) TMI 1 - SUPREME COURT] will not be applicable to the facts of this case because the Apex Court has held that the assessing officer may start reassessment proceedings either because of some fresh facts come to light which where not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. No justification in reopening the assessment.
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2023 (10) TMI 625
Review application - denial of benefit of the provisions of Section 205 - tax at source deducted by company [CAL] to whom assessee provided services was not completely deposited with the respondent/revenue - non-applicant submitted that the tax deductor did not issue Form 16A, and it was not possible for the non-applicant/assessee to obtain the same - whether this court fell in error apparent on the face of record in placing reliance on the judgment in the case of Sanjay Sudan [ 2023 (2) TMI 1079 - DELHI HIGH COURT ]? HELD THAT:- As in the present case, it was mandatory duty of tax deductor to deduct tax at source qua the payments made to the nonapplicant/assessee. Also not in dispute is the legal proposition that vide Section 205 of the Income Tax Act, where the tax is deductable at source, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from his income. No doubt, Form 16A is amongst others, a piece of evidence which can establish deduction of tax at source. That said, Form 16A is not the only piece of evidence in that regard. In a case where the assessee can show reliable material other than Form 16A and prima facie establish the deduction of tax at source, in our view the assessee cannot be denied benefit of the provisions of Section 205 of the Act. The assessee cannot be left at mercy of the tax deductor, who for multiple reasons may not issue Form No. 16A and/or may not deposit the deducted tax. In the present case, the non-applicant/assessee admittedly declared in his return of income the tax deducted at source by tax deductor and supported the same with his ledger account. We are not oblivious that ledger account is not the conclusive evidence. But at the same time, we find no reason for failure on the part of the review applicant to carryout any inquiry if they were not satisfied about truthfulness of claim of the nonapplicant/assessee qua the tax deducted at source. Not only this, the non-applicant/assessee even filed a complaint with the revenue authorities alleging that Tax deductor had deducted but not deposited the tax deducted at source. But no action was taken on its complaint, so the non-applicant/assessee had to even seek information by way of his application under the Right to Information Act Despite the aforesaid, concerned officers of the review applicant opted not to quench their baseless doubt by way of detailed inquiry qua deduction of tax at source and came up with this review application raising the unsustainable differentia of Form 16A. The review applicant being the State and the non-applicant/assessee being the citizen, the latter cannot be burdened with the responsibility to somehow procure Form 16A to secure benefit of the provision of Section 205 of the Act. We are in respectful agreement with the view taken in the case of Yashpal Sahni [ 2007 (7) TMI 7 - HIGH COURT , BOMBAY ] to the effect that from language of Section 205 of the Act, it is clear that the bar operates as soon as it is established that the tax had been deducted at source and it is wholly irrelevant as to whether the tax deducted at source is deposited or not and whether Form No. 16A has been issued or not. No error as apparent on the face of record found which would persuade us to engage in reviewing the impugned order.
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2023 (10) TMI 624
Penalty u/s 271(1)(c) - non specification of charge - defective notice - whether it is for concealment of particulars of income or furnishing of inaccurate particulars of income? - HELD THAT:- As relying on Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] and Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] since the AO has not been specified u/s 274 as to whether penalty is proposed for alleged concealment of income OR furnishing of inaccurate particulars of such income , the penalty levied is hereby obliterated. Appeals of the assessee are allowed.
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2023 (10) TMI 623
Rectification u/s 154 - cash receipts do not constitute the business turnover of the assessee and therefore, it was a mistake apparent form the record which need to be rectified to reduce the burden of the Higher Authority - HELD THAT:- AO has examined the books of account of the assessee, the cash book in particular while computing turnover of the assessee. At this stage, the claim made by the appellant u/s 154 amounts to review of the assessment order by way of further verification and examination of books of account of the appellant, the ledger, cash book and other supporting documents. Meaning thereby, that AO would again require to conduct scrutiny by further verification to verify quantum of turnover as claimed by the appellant. Claim of the appellant that there was a wrong computation of turnover based on cash receipts credited in the cash book is debatable and review of the assessment proceedings which do not call under the category of omission or apparent mistake from the record. As per provisions u/s 154 only a mistake which are apparent and patent from record, and whose discovery is not depending on any further investigation/verification can be rectified u/s 154, thus instant case does not fall in the said category and hence, we hold that the issue being debatable which cannot be rectified u/s 154. Decided against assessee.
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2023 (10) TMI 622
Unexplained expenditure u/s 69C - Addition emanated from noting in a diary found during search conducted on the assessee s premises - CIT(A) deleted addition - HELD THAT:- There was no categorical admission by the assessee of the notings in the diary as all pertaining to him in his personal capacity, on the contrary he had stated that it related to his business also. CIT(A) has found that all income relating to entries noted in the diary stood disclosed by the partnership to and accepted by the settlement commission. This fact is not disputed before us - we agree with the CIT(A) that the objection of the ld.Pr.CIT to the ITSC being overruled by acceptance of income by ITSC, the said objection was irrelevant to merit any consideration while framing assessment in the hands of the assessee. Where the assessee had stated the notings in the diary as relating to his business and which stood disclosed by its partnership firm to the settlement commission, who in turn accepted the same also, we find no reason to interfere in the order of the CIT(A) deleting the addition made in the hands of the assessee finding the said income to be doubly assessed to taxed. Decided in favour of assesse.
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2023 (10) TMI 621
Foreign Tax Credit (FTC) denied - assessee did not file statement in Form No. 67 before the due date for filing the return u/s 139(1) but along with the revised return u/s 139(5) - HELD THAT:- The assessee due to factors beyond her control was unable to file Form 67 along with the original return u/s 139(1) - on obtaining the information/documents assessee could file Form 67 along with the revised return u/s 139(5) - The reason for the delay was stated to be that due to the death of her employer it resulted in procedural delay in receipt of documents from Ghana with respect to foreign income. Identical issue arose in the case of Nirmala Murli Relwani [ 2022 (12) TMI 395 - ITAT MUMBAI] who is the mother of the assessee and on identical facts held that the assessee is entitled for foreign tax credit. Assessee is entitled for foreign tax credit. Since the claim of the assessee was denied on the technical aspect i.e. for not filing Form 67 along with the original return and without going into the merits of the claim, we deem it proper to direct the AO to decide the claim for foreign tax credit on merits after accepting Form 67 and other related documents filed by the assessee - Appeal of the assessee is allowed for statistical purpose.
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2023 (10) TMI 620
Capital gain - Land transfered by assessee into partnership firm - stock-in-trade is introduced into a firm - valuation of land was done by the assessee himself more as against the cost price and the same has not been revalued by the joint venture or the firm - HELD THAT:- The amount recorded in the books of the firm should be deemed to be the full value of contribution received or accrued as a result of such transfer. CIT (A) has given a finding that the assessee was following method of valuation of closing stock of its business at cost or market price, whichever is lower, as per settled and accepted principles of accountancy. Accordingly, the land in question as well as of other plots of land held by the assessee as stock-in-trade were used to be valued as per the method of valuation at the end of the year when accounts of the assessee were made out - in the current year under consideration, the assessee got the land in question revalued determining market value at Rs. 6.0 crores which is more than the cost to the assessee and the land was then contributed to the newly constituted partnership firm as capital contribution and the surplus of Rs. 4.80 crores arising from the said transaction was credited in the P L Account of the assessee firm and the value of the land was credited in the capital account of the assessee partner in the books of the firm. Special Bench of the Tribunal in DLF Universal [ 2010 (1) TMI 54 - ITAT DELHI-B ] held that the provisions of section 45(3) also applies when stock-in-trade is introduced into a firm because the transaction on the capital account and stock-in-trade does not retain its character as stock-in-trade at the point of time of introduction. No infirmity in the order of the learned CIT (A) confirming that there was a transfer resulting in capital gain for the year under consideration and thereby confirming the addition made by the assessee. Accordingly, the grounds of appeal 3 raised by the assessee is dismissed. Deduction u/s 80IB (10) - addition due to transfer of land in question - HELD THAT:- As deduction u/s 80IB(10) is applicable to an undertaking developing and building housing projects with certain conditions. However, in the instant case, the assessee is not an undertaking developing and building housing projects but is merely a partner in a joint venture/partnership firm. In our opinion, the deduction u/s 80IB(10), if any, can be claimed by the joint venture and not by the assessee who is merely a partner in the said partnership firm. Therefore, the additional ground raised by the assessee is dismissed.
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2023 (10) TMI 619
Disallowing part of interest expense claimed u/s 57 - assessee had interest income as well as interest expenditure and such transactions of income and expenditure were revealed by the assessee under the head income from other sources - HELD THAT:- Since the issue pertaining to the allowability of expenditure u/s.57(iii) was dealt with by the Co-ordinate Bench of the ITAT, Raipur [ 2022 (5) TMI 1585 - ITAT RAIPUR ] and also the issue is squarely covered by the order of Rajendra Prasad Moody [ 1978 (10) TMI 133 - SUPREME COURT ] wherein it is specifically held that how expenditure which is otherwise a proper expenditure can cease to be such merely because there is no receipt of income. Whatever is a proper outgoing by way of expenditure must be debited irrespective of whether there is receipt of income or not. That is the plain requirement of proper accounting, and the interpretation of section 57(iii) cannot be different. The deduction of the expenditure cannot, in the circumstances, be held to be conditional upon the making or earning of the income. Since, in the present case there was income earned by the assessee by way of interest, however, the same was not equal to the percentage of interest in terms of interest expenditure incurred but the same could not be a reason to disqualify certain expenditure within the provision of Section 57(iii) when the Hon ble Apex Court, in an deficient situation than in the present case, has held that the expenditure could not be denied merely because there was no income earned during the relevant A.Y. In such circumstances, we are of the considered view that expenditure incurred by the assessee, genuineness of which was not disputed by the A.O are allowable expenditure in terms of provisions of Section 57(iii), thus, addition made by the A.O and confirmed by the CIT(Appeals) are not sustainable. We set aside the order of CIT(A) and direct the A.O to delete the addition made u/s.57(iii) of the Act. Thus, grounds of appeal raised by the assessee are allowed in terms of our aforesaid observations.
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2023 (10) TMI 618
Characterization of income earned by the assessee - Income accrued in India - royalty receipt - assessee derived income from transmitting of satellite signals from ship to the customers and vice versa - For provision of such services assessee purchased airtime on the satellite from Inmarsat Global Ltd., which is the group concern of the assessee and owns the satellite and is based in UK. Assessee is a tax resident of Netherland and is eligible to claim treaty benefit as per Indo Netherland DTAA - assessee claimed that in the absence of a permanent establishment in India the income is not chargeable to tax in India HELD THAT:- As decided in assessee own case [ 2018 (12) TMI 1321 - ITAT MUMBAI] Amounts received by the assessee for the use of transponder of tele-communication service charges are not royalty u/s 9(1)(vi) of the Act and also under Article 12(8) of Indo Netherland DTAA. Scope of amendment - As decided in New Skies Satellite BV [ 2016 (2) TMI 415 - DELHI HIGH COURT ] held that the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word royalty in Asia Satellite [ 2011 (1) TMI 47 - DELHI HIGH COURT] when the definitions were in fact pari materia (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both parties to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner so supra note that such income automatically becomes royalty. It is reiterated that the Court has not returned a finding on whether the amendment is in fact retrospective and applicable to cases preceding the Finance Act of 2012 where there exists no Double Tax Avoidance Agreement.
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2023 (10) TMI 617
Accrual of income - Notional Interest on FDs under Restraint Order - Treating the interest income accrued on the fixed deposits as under attachment by the orders of CBI Court - right to receive - whether Placing of prohibitory orders over the deposits has not affected the accrual of interest and as per section 5 of the Act, and there is accrual of interest income in the subject assessment year? - HELD THAT:- Interest income of the assessee can be recognized only when there is no uncertainty and significant scope to receive the same. Therefore, in the case of assessee, accrued interest on bank deposit on which prohibitory order placed by CBI Hyderabad cannot be treated as interest income of the assessee during these two assessment years, until the assessee has actually received it from the bank though it was subject to TDS. This view of ours is fortified by the order of Tribunal in the case of Selvi J. Jayalalitha [ 2016 (9) TMI 1662 - ITAT CHENNAI] Deduction of TDS u/s 194A - As held by [ 2021 (11) TMI 577 - KARNATAKA HIGH COURT] and the Hon ble High Court vide order dated 21.9.2021 Hon ble Court that the entitlement of interest accruing on the FDs to the assessee would be dependent on the result of the pending Court/CBI proceedings and consequently, till the conclusion of the said court proceedings, the interest accruing on the FD cannot be considered as income for the purpose of deduction of TDS u/s 194A and directed the bank not to deduct TDS on the interest of FDs. However, it cannot be treated as absolving the assessee of its liability to pay tax on the interest accruing on the FD if the petitioner becomes entitled to the same after conclusion of the court proceedings. Being so, in our opinion, the lower authorities has committed an error in bringing the interest accrued on FD which is subject to prohibitory order by CBI Hyderabad into tax in these assessment years under consideration and the same has to be taxed in assessment year when it was actually received by the assessee or right to receive accrued to the assessee - assessee has to pay the tax on the same on actual accrual of right to receive this impugned interest by the assessee in any assessment year and not in these assessment years. Accordingly, this ground of appeal of the assessee is partly allowed. Disallowance u/s 14A - expenditure related to exempt income - assessee argued that as AO has considered certain investments though it was not exempted income yielding investment - HELD THAT:- We hold that disallowance should be restricted to the amount of exempted income earned by the assessee after considering only the exempted income yielding investments, so as to apply the formula contained in Rule 8D. Accordingly, the issue is restored to the file of ld. AO for fresh consideration. This ground of assessee is partly allowed for statistical purposes. Computation of income u/s 115JB - As main grievance of ld. A.R. is that he has not followed the provisions of section 115JB r.w. Explanation in proper perspective and in our opinion, this issue requires to be examined by ld. AO and to pass a fresh order in total conformity with the provisions of section 115JB r.w. all the explanations therein. This ground of appeal is partly allowed for statistical purposes
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2023 (10) TMI 616
Insurance Business - Addition on account of Surplus disclosed in Form 1 of Actuarial Report - Netting off of 'surplus' available both in Policy Holders Account and Share Holder's account - Assessee is engaged in the business of life insurance and has obtained license of life insurance business from insurance regulatory and development authority - HELD THAT:- Assessee is maintaining its regular books of accounts in accordance with the directions issued by IRDA which mandate preparation of policy holders account and shareholders account separately and since assessee is into life insurance business, the computation of profit and loss account of insurance / business for the purpose of tax has to be made in accordance with Section 44 r.w.r. 2 of first Rule of the Act. According to the Regulations, Profit and Loss Account (P L A/C) of Insurance Company is divided into a Technical Account (Policyholder's Account) also called as Revenue Account and Non Technical Account (Shareholder's Account) also called as P L Account. Technical Account deals with all the transactions relating to the income by way of premium and expenditures and actuarial provisions shown segment wise. All the transactions relating to Shareholder's like funding the deficit, income earned on investment of share capital and reserves are dealt in non technical Shareholder's account. IRDA (Actuarial Report and Abstract) Regulations 2000 prescribes a method of preparation of actuarial report and abstract. As per Regulation 4(2)(d) item no.iv, Form I was prescribed for purpose of valuation result and to indicate surplus of deficit in the life insurance business. This precise question was answered by the Hon ble Jurisdictional High Court in the case of CIT vs. ICICI Prudential Insurance Ltd. [ 2015 (7) TMI 972 - BOMBAY HIGH COURT] wherein held that the order of the Tribunal holding that income from shareholders account is also to be taxed as part of life insurance business and cannot be found fault with the view of the clear mandate of Section 44 of the Act. The order of the ld. CIT(A) confirmed - Decided in favor of assessee. Disallowance of profits from pension fund - pension fund scheme was managed by FGILI in A.Y. 2010-11 which was approved by IRDA - assessee had surplus/deficit of Life Insurance business during the relevant year and same has been taken into consideration while computing actuarial appointed by the assessee and AO has disallowed the same stating that he is adding the same in order to keep the issue alive - HELD THAT :- As per the provision of Section 10(23AAB) any income arise from pension scheme is exempt under the Act. Thus, the intention was to bring incentive provided in insurance sector so that terms will be added to the contributors in the insurance industry. In view of the Section 10(23AAB) r.w. First Schedule of Rule 2, assessee had taken into consideration the actuarial valuation report wherein it has considered the total business income/loss without bifurcating into pension / non-pension business. The assessee had surplus from approved pension scheme during the relevant year and since same forms part of the Life Insurance business only, the said amount has been accounted while arriving at the actuarial surplus and that surplus need to be considered for computing profits from life insurance business. Decided against revenue.
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2023 (10) TMI 615
Revision u/s 263 - grant additional TDS credit - Tribunal allowing the appeal of the assessee [ 2022 (7) TMI 1406 - ITAT DLEHI] - HELD THAT:- As first revision order passed u/s 263 of the Act by the Ld. PCIT dated 23/03/2020, the said issue was already decided by the CIT(A) vide order dated 08/05/2019. Hence, on the date of initiation of section 263 proceedings on 02/08/2019, CIT(A) had already disposed of the appeal on 08/05/2019 by adjudicating the issue on merits. Hence, this issue of grant additional TDS credit was already considered and decided by the Ld. CIT(A) by his order dated 08.05.2019. Hence, for adjudication of very same issue, the Ld. PCIT cannot invoke revision proceedings u/s 263 of the Act in view of the provisions of Explanation-1(c) to section 263(1) of the Act. Assessee appeal allowed.
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2023 (10) TMI 614
Validity of reopening of assessment - no notice u/s 143(2) was issued and served on the assessee after the assumption of jurisdiction by the Ld. A.O. in the reassessment proceedings - addition u/s 68 - Curable defect u/s 292BB or not? - HELD THAT:- As notice u/s 143(2) of the Act was never issued to the company in the reassessment proceedings. CIT(A) is only trying to take shelter of the proviso to section 292BB of the Act that the assessee had cooperated during the course of assessment proceedings and had not raised this objection before the Ld. A.O. This goes to prove categorically that no notice u/s 143(2) of the Act was issued to the assessee company after issuance of notice u/s 148 of the Act. As decided in LAXMAN DAS KHANDELWAL [ 2019 (8) TMI 660 - SUPREME COURT] non- issuance of notices u/s 143(2) of the Act is jurisdictional defect not curable u/s 292BB of the Act. The entire reassessment proceedings are to be declared as void ab-initio. Decided in favour of assessee.
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2023 (10) TMI 613
TP Adjustment - international transaction in the nature of provision of brand promotion service AMP expenditure incurred - HELD THAT:- As this recurring issue raised in this appeal has been decided in favour of the assessee wherein it was held that there was no arrangement between the assessee and the AE pertaining to AMP expenses. Tribunal in the earlier years has held that the onus of proof lies on the Revenue to prove that there was an international transaction in existence. Tribunal further held that the proposition laid down in the case of Maruti Suzuki India Ltd. [ 2010 (7) TMI 84 - DELHI HIGH COURT] is that the absence of a machinery provision qua AMP expenses, the A.O. is not at liberty to levy tax on an imagined transaction. In such case, the provisions of Chapter X cannot be invoked for making a TP adjustment. Tribunal has also relied on the decision of Bausch and Lomb (India) Pvt. Ltd. [ 2015 (12) TMI 1332 - DELHI HIGH COURT] and held that the impugned transaction is not an international transaction for which the TPO was not entitled to invoke the provision of Chapter X of the Act. We are of the considered opinion that this issue is no longer resintegra and has been decided by the Tribunal in its earlier decision in favour of the assessee by holding that the impugned transaction is not an international transaction as per the provisions of the law. As there has been no change in the factal matrix of this case in order to have a consistent view on this issue, we hereby allow these grounds of appeal raised by the assessee.
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2023 (10) TMI 612
Penalty levied u/s 271C - bonafide belief - reasonable cause - failure to deduct the tax at source on discount allowed by the assessee - assessee supplied Pre-paid SIM Card, and recharge vouchers to pre-paid distributors at a discounted price - contradictory pronouncements by different High Courts on this issue - Reasonable cause for such default - HELD THAT:- As decided in Idea Cellular Ltd. [ 2023 (9) TMI 1021 - ITAT INDORE] it is undisputed fact that this is debatable issue having two possible views and the assessee was of the view that it was not under obligation to deduct tax at source as per the provisions of chapter XVII of Income Tax and particularly u/s 194H of the tax. This belief of the assessee is one of the possible view and therefore failure to deduct the tax at source in respect of the discount/commission allowed to the distributors in light of divergent decisions by the different High Courts as well as by the different benches of this Tribunal clearly established the genuine and bona fide decision of the assessee not to deduct tax u/s 194H. Hence there was a reasonable cause as provided u/s 273B of the Act to have not deducted TDS on these transactions. No doubt assessee has not specifically submitted before the Tax Authorities that non-deduction of tax at source was based on it's understanding of provisions of section 194H of the Act, which in turn constitutes a 'reasonable cause'. But the fact remains that by the time the assessee was under obligation to deduct tax at source for the AYS under consideration, there were judgments in favour of assessee and even after the decisions of Hon'ble Delhi High Court and Kerala High Court, Hon'ble Karnataka High Court had taken a different view of the matter which implies that non- deduction of tax was based on such understanding of relevant provisions of the Act in which event penalty is not imposable u/s 271C of the Act. We therefore set aside the order passed by AO as well as Ld CIT (A) on this aspect and hold that penalty u/s 271C is not imposable, in the circumstances of the case. Decided in favour of assessee.
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2023 (10) TMI 611
Sales Incentive (Commission) paid to different persons - commission paid to HUF - related parties - Allegation that, nature of services was not furnished by the assessee - HELD THAT:- It is noted that the books of account were not rejected by the AO. As noted from the records that the assessee had furnished complete details and basis of payment of sales incentive paid to different persons during the year and payments were made through banking channels. The amount of due TDS was deposited by the assessee. It is also noteworthy to mention that the assessee had paid sales incentives in the earlier years for the services rendered by them and the Department did not question the same and in the immediately preceding year, the assessee paid sales incentives at Rs. 34.74 lacs to the subjected persons which was accepted by the Department and thus acknowledged the services rendered by them. AR also submitted that assessment for A.Y. 2010-11, 2011-12 and 2012-13 were completed u/s 143(3) without disallowance. Also decided for the assessment year 2001-02 in HUF is a person defined u/s 2(31)(ii) of the Act. Therefore, the findings of the AO that the HUF being non-living person cannot perform any duty are findings with a non-application of mind. Whereas the HUF can perform the duties as any other person can do under Income Tax Act. Decided in favour of assessee. Low withdrawal of household expenses - HELD THAT:- As during the course of hearing, AR could not advance any satisfactory reply controverting the order of the CIT(A). In this situation, the Bench has no other alternative except to confirm the order of the ld. CIT(A). Ground No. 2 of the assessee is dismissed. 10% disallowance of DG Fuel Expenses claimed by the proprietary firm - addition made as said payment was made in cash hence not verifiable - HELD THAT:- As during the course of hearing, the ld. AR could not advance any satisfactory reply controverting the order of the ld.CIT(A). In this situation, the Bench has no other alternative except to confirm the order of the ld. CIT(A). Thus Ground No. 3 of the assessee is dismissed.
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Customs
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2023 (10) TMI 610
Non-determination of fulfillment of export obligation certificate - HELD THAT:- This Court is of the opinion that the larger interest of justice will be subserved if the impugned order is sustained except to the extent of the slight modification - No substantial question of law arises. The direction to pay penalty imposed upon the Directors/employees of the appellant(s)-Company to the extent of ₹ 25 lacs in aggregate is hereby set aside. The balance, if any, may be paid after adjusting the amounts encashed through the Bank Guarantee and the amounts paid subsequently by the appellant(s)-Company. Appeal allowed in part.
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2023 (10) TMI 609
Review application - especial grievance of petitioner is that the learned Commissioner has not returned any finding, one way or the other, on the request of the petitioner for being provided copies of the licenses/scrips containing all annexures and amendments under which exemptions for customs duty was granted and which formed subject matter of the dispute in the show cause notice. HELD THAT:- The learned Commissioner has not returned any finding of the petitioner s request for being provided the original copies of the licenses/scrips as requested in para 7 of the representation dated 30th July, 2019. It appears that the finding, in judgment dated 27th November, 2019 [ 2019 (11) TMI 1361 - DELHI HIGH COURT] to the effect that the learned Commissioner had adequately dealt with the representation dated 30th July, 2019 does not appear to be correct. The application for review is allowed.
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2023 (10) TMI 608
Classification of imported items - Golden Star Chafing Dish Fuel Wick - Liquid Chafing Fuel wick Plant - to be classified under CTH 36061000 or under CTH 84198190? - absolute confiscation - penalty - Waiver of demurrage charge - HELD THAT:- Regarding classification of goods under CTH 36061000 and on claiming the benefit of Exemption Notification No. 26 of 2000, as per HSN 3606 10 00, Liquid or liquefied-gas fuels in containers of a kind used for filling or refilling cigarette or similar lighters and of a capacity not exceeding 300 cm3 will fall under said category. Moreover, as evident from the documents relied by appellant, same goods are traded by classifying the same under CTH 3606 1000 and allowed to clear under CTH 36061000 through Nhava Sheva port and Chennai port. On the other hand, while rejecting the above said classification, department considered the proper adjustment as falling under Chapter 8419 which lies to plant and machinery. Even as per the impugned order, Appellate Authority held that impugned goods cannot be considered as a machinery or as a plant. There is no specific Tariff item for the impugned goods, which is basically and equipment incorporating a fuel and a wick for heating/warming food. Hence goods are classifiable under CTH 36061000 and appellant is entitled for the benefit of Exemption Notification No. 26 of 2000 as claimed. Confiscation of goods - HELD THAT:- Regarding violation of the provisions of Manufacture, Storage and Import of Hazardous Chemical Rules, 1989, said Rules would apply only in cases where chemicals listed in the Schedules of above Rules are imported and not when imported as a finished product Chafing Dish Fuel Wick . Moreover, fuel in the imported containers is less than 300 Cm3 and as per the definition it is clear that if liquid or liquefied-gas fuels in containers of a kind used for filling or refilling cigarette or similar lighters of a capacity not exceeding 300 cm3, it is to be treated as different category. Thus confiscation of goods on the alleged violation of the provisions of Manufacture, Storage and Import of Hazardous Chemical Rules, 1989 is unsustainable. Waiver of demurrage charge - HELD THAT:- There is no finding in impugned order. However considering the order of absolute confiscation, appellant if approach respondent for issuing detention certificate, same will be considered in accordance with law. Classification of goods under Tariff item 8419 8190 and penalty imposed on appellant are set aside - Appeal allowed.
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Corporate Laws
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2023 (10) TMI 607
Principles of natural justice - opportunity of hearing not provided to the Appellant - non-speaking order - Appellant was restrained from disturbing the possession of the Respondent No.1 - HELD THAT:- Basis the appeal and also the written and oral submissions of Appellant and Respondents, it emerges that Apparently the appellant was not given any opportunity to file reply and in the very first hearing interim orders were issued on 04.07.2023. The impugned judgment and order passed by the Adjudicating Authority is quashed and set aside. The matter is remitted back to the Adjudicating Authority to look into all the aspects before passing any order in accordance with law - Appeal allowed.
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Insolvency & Bankruptcy
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2023 (10) TMI 606
Validity of order of NCALT - Clear directions issued by the Apex court was not considered - Restoration of the status quo ante at a stage when the arguments were concluded and the matter was reserved for judgment - HELD THAT:- The Court has been apprised of the fact that the Bench of the NCLAT consisting of Mr Rakesh Kumar and Dr Alok Srivastava proceeded to deliver the order. If what is stated is correct, this will clearly constitute the defiance of the order of this Court by the NCLAT. It is directed that an enquiry shall be conducted on the above allegations by the Chairperson of the NCLAT. A report shall be submitted before this Court by 5 pm on 16 October 2023 after specifically verifying the facts from the Judges who constituted the Bench of the NCLAT.
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2023 (10) TMI 605
Admissibility of application under Section 9 of the IBC - initiation of CIRP - Corporate Debtor denied the demand raised by the Operational Creditor in the reply to the Section 8 demand notice - debt barred by limitation - HELD THAT:- The wordings of the email do not show that the Corporate Debtor had denied or disputed the existence of outstanding debt qua the Operational Creditor. All that can be inferred from a plain reading of this letter is that they were in the process of reconciliation of accounts on completion of which they were to determine the payment plan. By no stretch of extrapolation can it be concluded that any dispute qua the debt was raised in the said email or the payment was denied by the Corporate Debtor therein. Even after the Corporate Debtor mentioned about reconciliation of accounts in their email, the Operational Creditor again sent an email on 19.05.2018 seeking a confirmation reply from the Corporate Debtor with regard to the outstanding balance payable to them towards services rendered - The email was again followed up a day later on 20.06.2018 by the Operational Creditor seeking release of outstanding payment and the schedule of payment as is placed at page 114 of APB. This shows that the Operational Creditor had been consistently pressing for release of their outstanding amount while there is nothing on record to show that the Corporate Debtor objected to the claims raised by the Operational Creditor or disputed the issue of outstanding payment raised by the Operational Creditor. There are no material having been placed on record to show that the Corporate Debtor had claimed an amount of Rs.7,71,434/- as receivable from the Operational Creditor prior to the issue of demand notice. The existence of debt, due and payable, has not been controverted by the Corporate Debtor in the emails exchanged by them with the Operational Creditor. The Adjudicating Authority in the present case has duly considered the reply and submissions made by the Corporate Debtor and correctly come to the conclusion that there is no ground to establish any real and substantial pre-existing dispute which can thwart the admission of Section 9 application against the Corporate Debtor - the Adjudicating Authority has rightly admitted the application of the Operational Creditor filed under Section 9 of IBC. The impugned order does not warrant any interference - Appeal dismissed.
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2023 (10) TMI 604
Rejection of section 9 application - initiation of CIRP - existence of genuine pre-existing dispute surrounding the debt claimed by the Operational Creditor to be due and payable to them by the Corporate Debtor or not - HELD THAT:- The existence of dispute and its communication to the Operational Creditor is therefore statutorily provided for in Section 8. In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 30.07.2018 and notice of dispute raised by the Corporate Debtor on 09.08.2018. It is also an undisputed fact in the present matter that the Operational Creditor did not receive any payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC. It is a well settled proposition that for a pre-existing dispute to be a ground to nullify an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application. The Adjudicating Authority has taken note of the correspondences exchanged between the two parties prior to the Section 8 demand notice to determine the issue of pre-existing dispute. Two of such communications dated 29.04.2018 and 30.04.2018 sent by the Corporate Debtor to the Operational Creditor have been reproduced at para 18 of the impugned order. From the email of 29.04.2018, it is clear that the Corporate Debtor gave opportunities to the Operational Creditor to sit across the table to sort out their problems amicably - A holistic analysis of the emails leads us to the inescapable conclusion that genuine pre-existing disputes were there and the Adjudicating Authority therefore committed no error in drawing similar conclusion of pre-existing disputes. It is well settled that in Section 9 proceeding, there is no need to enter into final adjudication with regard to existence of dispute between the parties regarding operational debt. For such disputed operational debt, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. The Adjudicating Authority has therefore correctly noted that the conditions laid down in section 9 having not been fulfilled, the application deserved to be rejected. There are no reasons to disagree with the findings of the Adjudicating Authority - the Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant - appeal dismissed.
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2023 (10) TMI 603
Contempt petition - decision in personam - admission of application and initiation of CIRP - case of the Petitioner is that the Respondent No. 1 (RP) has violated the order by appointing a project monitoring consultancy during the subsistence of the order i.e. in the month of June, 2020. HELD THAT:- It is well settled that the contempt is a serious matter because it causes both physical and fiscal punishment specially when the contempt has been alleged against a professional (RP). The Petitioner has to make out a full proof case about the wilful violation of the order passed by the Tribunal for the purpose of seeking attention to issue an order of contempt and punish accordingly. In the present case, the petition has been filed after the expiry of limitation of one year as the order was passed on 24.01.2020 and the petition has been filed on 12.08.2023 and is clearly barred by limitation because the Petitioner was very well aware of the appointment of the PMC which was duly ratified in the second meeting of CoC held on 21.08.2020 and the Petitioner attended 3rd and 4th CoC meeting held on 10.09.2020 and 16.09.2020 subsequently. The case of the Petitioner is that he came to know about the appointment of the PMC somewhere in April, 2023 when the alleged promoters/directors of the PMC challenged the FIR registered against them before the Patna High Court and were not successful cannot be believed. Locus Standi - HELD THAT:- The decision in the case of Girish Mittal [ 2019 (4) TMI 1630 - SUPREME COURT ] is also of no help because in that case it was an order passed in rem which could have affected a person in the street, therefore, the contempt was filed because of the direction issued by the Hon ble Supreme Court were not followed but here is the case in which the direction issued was between the parties, therefore, it was a decision in personam. There is no contempt made out in this case because the order which was passed on 24.01.2020 was only to the extent that the CoC shall not be constituted if it is not yet constituted and the RP has to ensure that the company remains a going concern which is also the spirit of Section 20(1) of the Code and further the RP was directed to take assistance of the suspended board of director which is again the spirit of Section 19 of the Code. Petition dismissed.
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Service Tax
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2023 (10) TMI 602
Seeking permission to withdraw the application - HELD THAT:- As prayed, permission is granted - The Miscellaneous Application is disposed of as withdrawn.
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2023 (10) TMI 601
Levy of Service tax or VAT? - transaction of work wear rental - supply of tangible goods Service or not - right to use the goods - It was held by CESTAT that work wear does not amount to supply of tangible goods so as to attract service tax. HELD THAT:- There are no merit in these appeals. Consequently, the appeals stand dismissed.
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2023 (10) TMI 600
Classification of services - Business Auxiliary Service or not - supply of bed rolls to the passengers of trains during their journey in Air Condition / First class compartments of trains running in different sectors - SCN dated 9/6/2011 is issued for the period 2006-07 and 2007-08 - time limitation - suppression of facts or not - HELD THAT:- On perusal of the Show Cause Notice, it is found that there is no averment that the notice is issued invoking the extended period. There is no whisper that the appellant has suppressed facts with intend to evade payment of tax. So also, the proviso to Section 73 (1) has not been mentioned or invoked in the Show Cause Notice. In such circumstances, Show Cause Notice which is not issued within the normal period cannot sustain. The notice issued is therefore time barred. In the SCN it is alleged that the activity of providing bed rolls would fall under clause (vi) of the definition under Section 65 (19). The appellant is not providing any service on behalf of IRCTC. The appellant is providing service to M/s. IRCTC. There is no amount collected by the appellant from the passengers. In fact, the services are provided to M/s. IRCTC and amount is also collected from M/s. IRCTC. For this reason, the activity cannot be considered as a service provided on behalf of a client. On merits also the demand cannot sustain and requires to be set aside. The appellant succeeds on merits as well as on limitation. The impugned order is set aside - Appeal allowed.
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2023 (10) TMI 599
Taxability - real estate agent service - assignment fee / nomination fee received by them for causing the sale of land to JC as a real estate agent service - Consulting Engineer Service - managing the construction of a project belonging to M/s Golden Constructions - Penalty - service tax on GTA service paid before issuance of SCN - interest amount is to be quantified and paid - Extended period of limitation - Penalty u/s 77 and 78 of FA. Taxability - real estate agent service - assignment fee / nomination fee received by them for causing the sale of land to JC as a real estate agent service - HELD THAT:- The true meaning of the phrase assignment/ nomination fee for causing the sale of land by JRBS in favour of M/s JC, is the payment of agent fee/ commission to the appellant by the buyer for facilitating the sale of land. The appellant has thus rendered active service in relation to sale of land to JC and is hence covered under the real estate agent service. The whole activity as it unfolds above shows that the appellant deliberately tried to suppress information and build up an alternate story just to evade payment of service tax. They are hence liable to pay duty and interest as per the extended time limit evoked by the impugned order. The imposition of penalty will be examined separately. Consulting Engineer Service - managing the construction of a project belonging to M/s Golden Constructions - HELD THAT:- The appellants activities as stated by them are in the nature of support services of business or commerce and are taxable accordingly. No consultancy or advice was rendered. Even during the recording of statement from the appellant on 26/08/2009 the department Superintendent had as per question 19 referred to the supervision of construction activity and management of the project being classifiable under Business Support Service w.e.f. 01/05/2006. The impugned order is based on assumptions and presumptions, only because the appellant charged management fee of Rs 85/- per square feet. The mode of payment cannot be determinative of the service rendered. No attempt was made to unearth the actual activities rendered by the appellant as a consultant engineer before making the allegations - Duty needs be paid/ collected to the extent as required under support services of business or commerce . Interest is to be quantified and is pending payment. The imposition of penalty in this regard does not survive. Penalty - service tax on GTA service paid before issuance of SCN - interest amount is to be quantified and paid - HELD THAT:- The impugned order does not disclose suppression of fact with intention to evade duty as far as GTA service is concerned. It is found that the proceedings would stand concluded in terms of sub-section (3) of section 73 of the Finance Act, 1994 when there is no suppression, fraud etc. involved and the duty and interest have both been paid before issue of SCN. Since interest has not been paid the condition does not stand fulfilled. However, in the circumstances no further penalty need be paid in this regard. Extended period of limitation - HELD THAT:- The appellant states that there was no mens rea on their part in evading duty. They cannot be alleged to have suppressed the facts with intention to evade tax. Hence the extended period for issue of SCN cannot be invoked and no penalty can be imposed. Penalty u/s 77 and 78 of FA - HELD THAT:- Suppression with intention to evade payment of duty has been established in this case, hence the appellant is liable to pay the statutory penalty as per section 78 of FA 1994. Having agreed with the appellant as regards duty payment on the other two services are concerned and having found a penalty under section 78 ibid to be proper, the penalty under section 77 need not be separately imposed. Appeal allowed in part.
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2023 (10) TMI 598
Denial of abatement benefit - Commercial or Industrial Construction Service (CICS) - availed cenvat credit on various input services - period December 2008 to March 2010 - disallowance of credit on various input services in the nature of insurance services - Penalties. Denial of abatement benefit - Commercial or Industrial Construction Service (CICS) - availed cenvat credit on various input services - period December 2008 to March 2010 - HELD THAT:- The dispute with regard to denial of benefit of abatement itself establishes that the contracts are composite in nature which involves both element of supply of goods as well as rendering of services. The decision in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] would then apply and the demand therefore cannot sustain, where it was held that For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter - thus, the demand of differential service tax under commercial or industrial construction service denying abatement cannot sustain and requires to be set aside Disallowance of credit on various input services in the nature of insurance services - HELD THAT:- The period involved is prior to 1.4.2011 when the definition of input service had wide ambit as it included the words activities relating to business . The decisions of various forums have held that the said services would be eligible for credit. We hold that the appellant has established that the services were availed for providing output services and therefore is eligible for credit. The denial of credit is without basis and cannot be justified. Penalty - HELD THAT:- The appellant has paid up the non-contested/admitted tax liability. For this reason, we hold that penalties imposed therefore cannot sustain and require to be set aside. The impugned order is modified to the extent of (i) setting aside the differential tax demand of Rs.26,08,254/- and interest and penalties thereon (out of Rs.73,33,337/-) without disturbing the confirmation or appropriation of the remaining demand - disallowance of credit to the tune of Rs.12,24,474/- is also set aside - Penalties are entirely set aside. The appeal is allowed.
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2023 (10) TMI 597
Refund claim - appellants had not commenced authorized operation of manufacture - services received can be considered as wholly consumed for the authorised operation within the SEZ unit or not - HELD THAT:- From the order of the Commissioner (Appeals) it can be seen that the Commissioner (Appeals) has the remanded the matter with direction to reexamine the claim and to pass a speaking and reasoned order following the principle of natural justice. It was also directed to the respondent to produce the relevant evidence/documents, therefore, it is clear that the Adjudicating Authority has to examine the refund as whole. As regard the issue whether the Commissioner (Appeals) has power to remand back the matter to the original authority, the issue is no longer res - integra as held by the Hon ble Jurisdictional High Court in the case of COMMISSIONER OF SERVICE TAX VERSUS VERSUS ASSOCIATED HOTELS LIMITED [ 2014 (4) TMI 406 - GUJARAT HIGH COURT] in which the support was taken from the Hon ble Supreme Court Judgment in the case of MIL INDIA LTD. VERSUS COMMISSIONER OF C. EX., NOIDA [ 2007 (3) TMI 8 - SUPREME COURT] . Therefore, in view of the settled legal position on this issue the remand made by the learned Commissioner (Appeals) is legal and proper. There are no infirmity in the impugned order. Hence, the same is upheld - appeal of revenue dismissed.
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2023 (10) TMI 596
Exemption from GST - N/N. 04/2004-ST dated 31.03.2004 - sub-contractor of the main contractor M/s. Khurana Construction provided the service in the SEZ to Suzlon Infrastructure Ltd. Revenue has denied the exemption to the appellant on the ground that the appellant being sub- contractor provided the service not to the SEZ but to the main contractor i.e. M/s. Khurana Construction, therefore, they are liable to pay the service tax. HELD THAT:- Even though the service was provided by the appellant on the behest of the main contractor M/s. Khurana Construction but there is no dispute that the service was provided in relation to various operations of the SEZ and the services was undisputedly consumed in the SEZ therefore, the appellant has provided the service in SEZ. Accordingly, they are eligible for exemption Notification No. 04/2004-ST dated 31.03.2004. In view of the COMMISSIONER OF SERVICE TAX-I VERSUS FEDCO PAINTS AND CONTRACTS [ 2017 (5) TMI 338 - CESTAT MUMBAI] , it is settled that the service of sub- contractor provided in SEZ shall be eligible for exemption under Notification No. 04/2004-ST and other identical notifications. The impugned order is not sustainable, hence, the same is set aside - Appeal is allowed.
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2023 (10) TMI 595
Demand of service tax - GTA service under reverse charge mechanism - service provider i.e. Transport Agency has already paid the service tax on the GTA Service - CENVAT credit in respect of the service tax paid by the transport agency - HELD THAT:- Even though legally the appellant is liable to pay the service tax but in the facts of the present case the transport agency has admittedly paid such service tax. The assessment of payment of service tax by the transport agency has not been disputed by their jurisdictional officer, therefore no question can be raised as regard the service tax payment and assessment thereof at the end of the transport agency. If this be so, then the payment of service tax by the goods transport agency was made good as payment of service tax therefore, the demand against the appellant for the same service will amount to demand of service tax twice on the same service which in any case is not permissible - once the payment of service tax was made by the transport agency which has not been altered by taking any action by the department, the cenvat credit of the said amount is also rightly available to the appellant. Once the service provider discharged the service tax where the service recipient is liable to pay the service tax, demand of service tax on the same service from the service recipient shall not sustain on the ground that the particular service which already suffered the service tax cannot be suffer the service tax twice on the same service. Accordingly, the service tax paid by the transport agency in the facts of the present case is the payment of service tax and not deposit. Therefore, no demand can be raised from the appellant, for the same reason once the amount paid by the transport agency being service tax amount, the appellant is eligible for cenvat credit. The impugned order is not sustainable. Hence, the same is set aside. Appeal is allowed.
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2023 (10) TMI 594
Extended period of limitation - Suppression of facts or not - Levy of Service Tax - health and fitness service - providing education to patients regarding Yoga - donation received in respect of yoga camp / residential Yoga camp - Donation is related to Education or Health and fitness service or not? - penalty - benefit of Section 80 of FA - HELD THAT:- The fact that in case of sister concern in which Shri Acharya Balkrishna was Secretary General certain investigations/ enquiries were being made will not make the appellant immune from the charge of suppression etc., required to be establish for invoking the extended period of limitation. Each case and each period has to be examined for the existence of these ingredients on the facts and evidence available for the said period. More so over in the case of self assessment where the complete trust has been placed on the assesses to conduct their business transparently and file their tax returns accordingly. Any misdemeanour to suppress the income in guise of donation if established is enough to invoke the charge of suppression for that period - the appellant has suppressed the fact that they have received consideration for the provision of these services and collected the same from the participants in residential and non residential camps by reflecting the same as donation on the receipts and the book of accounts. This suppression was clearly with the intent to evade payment of service tax. - Order of Commissioner against the appellant / assessee sustained. Penalties - HELD THAT:- The penalties under Section 76 and 77 are for the violation done and are absolute in nature if certain violations are attributable to the appellant. In the present case undoubtedly appellant had failed to take registration as required even though he was providing the taxable services. It is also the fact that they were not paying service tax and not filing the returns as required under provisions of Service Tax law, i.e Chapter V of Finance Act, 1994 and Service Tax Rules, 1994. For the contraventions of these provisions penalty imposed on the appellant under Section 76 and 77 cannot be faulted with. Interest - HELD THAT:- The interest liability for delayed payment of service tax also cannot be disputed. Appellant has not paid the service tax, payable by them on the taxable services provided by them by the due date and hence demand of interest on the delayed payment of service tax is justified. There are no merits in the submissions made by the appellant in the appeal filed. However it is observed that demand for the period 01.10.2006 to 31.03.2007 needs to be recomputed after reconciling the amounts received by the appellant during that period with the accounts of appellant and the certificate dated 21.01.2012 of the Chartered Accountant (Anil Ashok Associates). According the impugned order is upheld in all respects, but remanded back to original authority for recomputation of demand and penalty under Section 78 only for period 01.10.2006 to 31.03.2007 after taking into account the afore-stated certificate of Chartered Accountant. Appeal allowed in part.
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2023 (10) TMI 593
Extended period of limitation - Demand of Service Tax - banking and other financial services - upfront/arrangement fees paid to foreign financial institution/banks for providing finance in nature of external commercial borrowing (ECB) - roaming charges paid to foreign telecom operators (FTO) - various expenditures made in foreign currency - interest - penalty Banking and other financial services - penalty - HELD THAT:- The entire amount of disputed tax along with interest was deposited by the Appellant before issuance of SCN. From the impugned order, it is observed that out of the total demand of service tax of Rs. 95,22,267/-, the Appellant paid service tax of Rs. 82,67,455/- on 05.10.2010 and interest of Rs. 85,393/- was also paid on 20.01.2011 immediately on receipt of the letter dated 08.11.2010 from the department. In the impugned order, the Ld. Commissioner has rightly observed that there was no malafide intention on the part of the Appellant to evade payment of service tax and accordingly extended the benefit of Section 73(3) of the Finance Act, 1994 and not imposed any penalty. A perusal of the documents available on record indicate that there was no ground for imposition of penalty on this demand, as there was no intention to evade payment of tax. Thus, the Ld. Commissioner has rightly not imposed penalty. Accordingly, the appeal filed by the department on this count is dismissed. Regarding the demand of Rs. 12,54,812/-, it is observed that the payment on this account was made by the Appellant on 06.08.2009 - Since the payment of service tax along with interest was made before issue of the Notice, no malafide can be attributed to the Appellant and the benefit of Section 73(3) of the Finance Act, 1994 should have been extended to this demand also. Accordingly, the penalty under Section 78 of the finance Act, 1994 imposed on the appellant on this count is not sustainable. Demand of service tax confirmed under the head Telecommunication services on roaming charges paid to Foreign Telecommunication Operators (FTOs) - HELD THAT:- The payment of roaming charges was made by the Appellant to FTOs for providing connectivity services to their subscribers when they are abroad. During the relevant period only telecommunication services provided by a Telegraph Authority to a person were taxable. In the instant case, FTOs located abroad providing the connectivity services would not fall within the ambit of 'Telegraphy Authority' as defined under Section 65(111) of the Finance Act, 1994 read with Section 3(6) of the India Telegraph Act, 1885 - the charges paid for the services rendered by the FTOs cannot be taxed under head telecommunication services on the Appellant. The issue is no longer res-integra as the issue has been settled by the decision of the CESTAT, New Delhi in case of one of the Appellant's group Companies, viz. VODAFONE ESSAR MOBILE VERSUS C.S.T., DELHI [ 2017 (9) TMI 359 - CESTAT NEW DELHI ] . The Tribunal in the aforesaid ruling was considering whether roaming services provided by foreign telecom company can be taxable under the head business auxiliary service wherein the Tribunal has observed It was held that services to inbound roamers is delivered and consumed in India and hence, it is not an export of service. It was further clarified that international practice treats the telephone service provided to an inbound roamer by the visited network, for purpose of taxation, in the same manner as a telephone service provided to any home subscriber. The demand confirmed in the impugned order on this count is not sustainable. Since the demand is not sustainable consequently, demand of interest and penalty is also not sustainable. Interest - penalty - revenue neutrality - HELD THAT:- The Appellant have paid the demand amount at the time of investigation stage itself and availed Cenvat credit thereon, making the entire situation revenue neutral. Since the tax payable by them under reverse charge mechanism is available to them as CENVAT credit, it is observed that the whole exercise is revenue neutral - the entire situation is revenue neutral and under these circumstances no interest and penalty is payable. Extended period of limitation - HELD THAT:- There is no suppression of fact with an intention to evade payment of tax exists in this case. Accordingly, they contended that extended period not invocable in this case. The Appellant has paid the service tax along with interest wherever payable, before issue of the Notice. The department has not brought in any evidence on record to substantiate the allegation of suppression. In the absence of any such evidence, invocation of extended period to demand service tax is not sustainable. Accordingly, the demands confirmed in the impugned order are liable to be set aside on the ground of limitation also. Appeal disposed off.
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2023 (10) TMI 590
Improper payment of service tax - claiming exemptions/ exclusions wrongly under Chapter V of the Finance Act, 1994 - construction of transport terminal - construction done for Common Wealth Games 2010 - Construction of APMC Market - Work executed for NG, Ranchi -short payment of Service Tax on certain ongoing projects in terms of sub rule (2) of Rule 3 of Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 - Benefit of abatement (for material) under the Notification No. 1/2006-ST - extended period of limitation. Construction of transport terminal - HELD THAT:- The same was exempt under the definition of works contract service under Section 65 (105) (zzzza), firstly, because the definition read with explanation (II) (b) specifically provides construction of a new building or civil structure primarily for purposes of commerce or industry. Further, the main definition provided the exclusion of transport terminals. Further, it is found that from 01.07.2012 as admittedly the service was provided to Government or Government Corporations, the same are exempt under Clause No. 12 of Notification No. 25/2012-ST wherein clause A provides for exemption of services provided to Government, Local Authorities or Government Authorities in respect of a civil structure or other original work meant predominantly for used other than for commerce nature or any other business or profession. Construction done for Common Wealth Games 2010 - HELD THAT:- The same was an International Sporting Event and not a commercial activity. Accordingly, the same was exempt and not taxable. Construction done for Delhi University - HELD THAT:- The Learned Commissioner have erred in observing that the appellant could not prove that services for these purposes are non-commercial in nature. It is held that inclusion of the clause in the agreement that service tax if any has to be borne by the contractor/ service provider, does not alter in any way the provisions of service tax with respect to the tax liability. It is also found that the works of construction of transport terminal is also exempt from service tax under clause 12(a) of Notification No. 25/2012-ST, as the said clause provided for exemption in respect of construction etc., of interalia terminals for road transport for use by general public. The findings are supported by clarification by Board Circular vide its letter number F.No. 137/93/2009-CX 4 dated 07.01.2010. Construction of APMC Market - HELD THAT:- The issue is no longer res- integra as it had been held not taxable by this Tribunal in the case of M/S. A.B. PROJECTS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2017 (8) TMI 518 - CESTAT MUMBAI ] - Further, non-taxability with respect to work for Andhra Pradesh has been clarified by the Board vide Circular No. 157/8/2012-ST read with Circular No. 80/10/2004-ST. - It is however, found that post 01.07.2012 the services provided to APMC are in the nature of construction is exempted, under Notification No. 25/2012-ST as amended by Notification No. 2/2014-ST. Since the services were rendered to the State Government or a Government Authority. Ongoing projects (which were started prior to 01.06.2007) - HELD THAT:- The issue of ongoing projects prior to 01.06.2007 stands settled by Hon ble Supreme Court in the subsequent ruling of L T in [ 2015 (8) TMI 749 - SUPREME COURT ]. In the circumstances, as the scheme of composition was introduced for the first time for ease of business, and to avoid harassment to the assessees, the window to pay tax under the composite scheme was provided. The benefit of the scheme to the appellant was denied as it could not opt for composition scheme in due time. Thus, the benefit of composition scheme is available to the assessee, and accordingly the denial of benefit of composition scheme is set aside. Benefit of abatement (for material) under the Notification No. 1/2006-ST - HELD THAT:- The appellant had initially taken the Cenvat Credit which they had reversed under intimation to Revenue. Such claim have not been found to be wrong. Hon ble Supreme Court have held in the case of Chandrapur Magnet Wires [ 1995 (12) TMI 72 - SUPREME COURT ] that where the Cenvat Credit taken is reversed, it amounts to Cenvat Credit have never been taken. Accordingly, the denial of benefit of abatement under Notification No. 1/2006-ST is bad and is set aside. Subsequent to the ruling of Larson Toubro [ 2015 (8) TMI 749 - SUPREME COURT ], Tribunal and the High Courts in several matters have held that the assessee are entitled to composition scheme, particularly in the case of Mehta Corporation Vs CCE, Jaipur [ 2014 (5) TMI 1131 - CESTAT NEW DELHI ]. Work executed for NG, Ranchi - HELD THAT:- So far the demand of tax with respect to the work executed for NG, Ranchi Rs. 7,04,639/- and Rs. 7,10,971/- is concerned, the same is set aside and allowed by way of remand. The appellant shall file fresh computation of tax for this work before the Adjudicating Authority. Same will be accordingly verified and in case any short fall is pointed out, the appellant shall deposit the same. Extended period of limitation - HELD THAT:- The extended period of limitation could not have been invoked, in the facts and circumstances, the appellant was registered with the Department and regularly filing their ST-III returns. Further, appellant maintains proper books of accounts which are subject to audit by the company auditor and also under tax audits. Further, whatever demands have been raised, has been raised based on the records maintained by the appellant and there is no mis representation, or any suppression or mis statement or fraud on the part of the appellant. Accordingly, the extended period of limitation is not available to Revenue. All the penalties imposed are set aside. The impugned orders are set aside - Appeal allowed.
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Central Excise
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2023 (10) TMI 592
CENVAT Credit - services of environmental due diligence audit of the factory site for investigation of soil and ground water contamination and services of consequential remedial action - inputs such as TMT Bars, Steel Support Structure, Joists, Beams, Angles, Channels, and MS Angles etc. used for support structure of capital goods in the factory of the appellant - clearance of MS Scarps and scrape of capital goods - Rule 3 (5A) of Cenvat Credit Rules, 2004 - time limitation - penalty. Whether the services related to pollution control measures received by the appellant are eligible input services as defined under Rule 2 (l) of Cenvat Credit Rules, 2004? - HELD THAT:- The services in question related to pollution control of the factory is integral in the operation of the production activity in the appellant s factory. Even though the services do not contribute directly in the manufacture but being necessary to run the factory in relation to the manufacture indirectly. As per the definition of input service if the services is used in or in relation to manufacture and whether directly or in directly, the same is qualified as input service. The court and Tribunal in various judgments held the services related to pollution control as input services and credit was allowed even though such services are not directly used in the manufacture of final product. It is settled that the services which are in relation to pollution control of the factory, the same are input services in terms of Rule 2 (l) of Cenvat Credit Rules, 2004 and hence, eligible for cenvat credit. Whether the services received prior to acquisition of the factory and commencement of manufacture? - HELD THAT:- The services related to pollution control are in relation to the production in the factory, therefore, the time of receipt of service is immaterial so long it is undisputed that the services were used in pollution control which in turn necessary for running the production activity in the appellant s factory. Therefore, even if the services were received prior to acquisition of the factory, the fact remains the services were received by the appellant only and the invoices therefore were also issued in favour of the appellant. It is a settled law that even though the services were received prior to the commencement of production so long it is in relation to the manufacturing activity of the assessee, the cenvat credit cannot be denied only because the same were received prior to acquisition of the factory and/ or commencement of the production. Cenvat credit on various steel items such as TMT Bars, Steel Support Structure, Joists, Beams, Angles, Channels, and MS Angles etc - HELD THAT:- The learned Commissioner denied the cevat credit on the aforesaid goods relying on the decision of the Larger Bench of the Tribunal in the case of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [ 2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] . However subsequently to the impugned order passed, the Hon ble High Court of Chhattisgarh in Vandana Global Ltd - 2018 (16) GSTL 462 reversed the larger bench judgment of CESTAT in case of Vandana Global Ltd. Moreover this issue has ben considered in the case of COMMR. OF CUS., C. EX. S.T., BILASPUR VERSUS SINGHAL ENTERPRISES PVT. LTD. [ 2017 (7) TMI 1112 - CHHATTISGARH HIGH COURT] and M/S. MANGLAM CEMENT LTD. VERSUS C.C.E., JAIPUR-I [ 2018 (3) TMI 1547 - CESTAT NEW DELHI] as cited by the learned counsel. Therefore, in light of the Hon ble Chhattisgarh High Court judgment and subsequent judgments the appellant is entitled for the cenvat credit on the aforesaid goods. Demand of duty on clearance of waste and scrap of the capital goods - HELD THAT:- In the present case the demand is on the capital goods used by the appellant and cleared as waste and scrap. Obviously such waste and scrap does not arise out of manufacture of excisable goods. The capital goods itself became waste and scrap after used for long time, therefore, the demand of duty on such waste and scrap on its transaction value is absolutely correct and legal. Therefore, the demand on this count is sustainable on merit. Extended period of limitation - HELD THAT:- The issue being interpretation of legal statute and appellant being registered under Central Excise, the suppression of fact, collusion, fraud etc. cannot by attributed on the appellant. Therefore, the demand for the extended period will not be sustainable. However, if there is any demand within a normal period in respect of waste and scrap of capital goods, the same need to be worked out and recovered by the department. Penalty - HELD THAT:- Since there is no malafide attributed on the part of the appellant and extended period is not invokable, the penalty is not sustainable. Moreover, the major demand was set aside on merit. Corresponding to the said demand also no penalty can be imposed. The impugned order is modified - Appeal allowed.
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2023 (10) TMI 591
Bar in availing the cenvat credit on the capital goods - Benefit of exemption notification No. 05/2006- CE dated 01.03.2006 - denial of exemption on the ground that the Ceramic Roller and Bellow are inputs and availment of credit on such inputs amounts to contravention of condition of the Notification No. 05/2006 CE which is not correct - HELD THAT:- The appellant have conceded that they are ready to reverse the credit which was taken on ceramic rollers and bellow amounting to Rs. 1,57,799/- and also ready to pay interest there on. It is found that the appellant has already paid the amount of Rs. 2 Lacs, however, the interest element on the cenvat credit of Rs. 1, 57,799/- has not been quantified. If the appellant makes good the reversal of cenvat credit and interest there on which can be adjusted against Rs. 2 Lacs already paid and if there is any shortfall, the same may be paid by the appellant at the time of de-novo adjudication. Thus the appellant is entitled for the exemption Notification - The appellant are eligible for the exemption Notification No 05/2006-CE on the payment of cenvat credit and interest thereon. Appeal is allowed by way of remand to the Adjudicating Authority for computing the interest on the cenvat credit and ensure the payment thereof and thereafter a reasoned de-novo order may be passed.
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2023 (10) TMI 589
Availability of the credit of Sugar Cess (and Ed.Cess and SHE Cess) paid on raw sugar imported by the Appellant - HELD THAT:- The issue is no more res integra, as in their own case, the CESTAT Chennai, as reported in [ 2007 (8) TMI 147 - CESTAT, BANGALORE] , has allowed the credit of Sugar Cess (and Ed.Cess and SHE Cess) paid on raw sugar. The department has challenged the validity of the said order before the Hon'ble Karnataka High Court and the Hon'ble High Court has upheld the said order of the Tribunal, as reported in [ 2014 (1) TMI 1469 - KARNATAKA HIGH COURT] . There is no stay available against the order passed by the Hon'ble Karnataka High Court and hence it is held that the ratio of the said decision is squarely applicable to the present case on hand as the facts of this case are the same as that of the order passed by the Hon'ble Karnataka High Court. Thus, by following the above cited decision of the Hon'ble Karnataka High Court, the Appellant are eligible for availing and utilizing the credit of Sugar Cess (and Ed.Cess and SHE Cess) paid on raw sugar imported by them. Since, the credit is admissible, there is no question of demanding interest or imposing penalty on the Appellant. The impugned order set aside - appeal allowed.
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2023 (10) TMI 588
Recovery of the erroneous refund of education cess or higher education cess - appellants are located in the state of Sikkim - N/N. 20/2007-CE dated 25.04.2007 - HELD THAT:- The refund claims were sanctioned in the light of the decision of the Hon ble Apex Court in the case of M/S. SRD NUTRIENTS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE GUWAHATI [ 2017 (11) TMI 655 - SUPREME COURT] and thereafter the decision of SRD Nutrients was over-ruled by the Hon ble Apex Court in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS [ 2019 (12) TMI 286 - SUPREME COURT] , it does not mean that at the time of sanctioning of refund claim, the decision of the Hon ble Apex Court in the case of SRD Nutrients was valid. As the decision of Hon ble Apex Court in the case of SRD Nutrients during the relevant period holding the field, in that circumstances, the refund claims were rightly sanctioned to the appellants as held by the Hon ble High Courts in the above-cited decisions namely TRIPURA ISPAT (A UNIT OF LOHIA GROUP) VERSUS UNION OF INDIA, COMMISSIONER, CENTRAL GOODS SERVICE TAX, ASSISTANT COMMISSIONER, CENTRAL GOODS SERVICE TAX [ 2021 (1) TMI 753 - TRIPURA HIGH COURT] , therefore, the show cause notice issued to the appellant are not sustainable. The impugned orders are bad in law - Appeal allowed.
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2023 (10) TMI 587
Clearance of cement in bulk packs, on tender, to various institutional/industrial consumers by availing benefit of Notification No.4/2006-CE dated 01.03.2006 on the transaction value - requirement to affix MRP on the packages of the said goods - HELD THAT:- The issue has already been settled by this Tribunal, wherein this Tribunal in the case of M/S. ULTRATECH CEMENT LIMITED VERSUS COMMISSIONER OF CGST EXCISE, DURGAPUR [ 2023 (7) TMI 1110 - CESTAT KOLKATA] has held the demand of duty is not sustainable against the appellant as the cement in 50 kgs bags sold to the above buyers qualifies as sale to institutional/industrial customers to avail the benefit of the above cited Notification. As the issue is no more res integra, therefore, the appellants have cleared cement in 50 kgs. bags to the buyers qualified as institutional or industrial customers, therefore, they are entitled for the benefit of Notification No.4/2006-CE dated 01.03.2006. There are no merit in the impugned order and the same is set aside - appeal allowed.
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CST, VAT & Sales Tax
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2023 (10) TMI 586
Permission to pay tax on compounded basis - an amount of Rs.305 crores was established to represent the turnover in relation to sales effected to its sister concerns by the petitioner who had effected purchases of the goods in question as an agent of the said sister concerns - HELD THAT:- While the petitioner had shown the agency sales affected to its sister concerns as part of its turnover in its accounts, as also in the returns filed before the KVAT authorities during 2010-11, the mistaken turnover shown did not have any implication for the payment of tax on compound basis for the said year because the payment of tax under Section 8(f)(v) was only in relation to the tax paid by the petitioner for the immediately preceding year i.e. the petitioner was statutorily obliged to pay only 125% of tax paid during 2009-10, irrespective of its actual sales turnover for the year 2010-11. It is also not in dispute that the petitioner had discharged its tax liability for the year 2010-11 in accordance with the statutory provisions then in force. The First Appellate Authority found that since the petitioner had obtained the statutorily prescribed Form 25F to claim exemption of the agency sales turnover from its declared turnover for the year in question, the same could be excluded for the purposes of computation of tax in terms of Section 8(f)(v) for the year 2011-12. The Appellate Tribunal, however, set aside the order of the First Appellate Authority on the finding that Form 25F had relevance only in a situation where the assessment to tax was in terms of Section 6 of the KVAT Act and not in situations where the payment of tax was on compounded basis under Section 8(f)(v) of the KVAT Act. In the instant case while the turnover of the assessee was a factor for determination of tax liability in terms of Section 6 of the KVAT Act, it was not a relevant factor for determination of tax liability, in terms of the formula under Section 8(f) of the KVAT Act in 2010-11 as also till later in the assessment year 2011-12. It was only after the assessee had exercised its option to pay tax on compounded basis for 2011-12 that Section 8(f)(v) was amended to make the turnover of the previous year a part of the formula for determination of tax liability in terms of Section 8(f)(v) - when the turnover of the previous year is suddenly introduced as a new factor in the formula for determining tax liability in terms of the compounding provisions, it would be grossly unfair to deny an assessee the opportunity to demonstrate that any amount shown in his accounts/return does not represent his turnover. Merely because the Form 25 declaration is prescribed under the KVAT Rules in connection with a determination of tax liability in terms of Section 6 read with Rule 10 of the KVAT Act and Rules it does not mean that the facts intended to be proved through it cease to exist or be relevant merely because the assessment is on a different basis, and in accordance with a formula which treats that fact as relevant and incorporates it as a component - When an assesee furnishes a declaration in Form 25 to his assessing officer, he seeks to exclude the amount covered by the Form 25 declarations from the computation of his turnover for the purposes of assessment to tax. It is not a case where the assessee initially includes an amount in his turnover and then seeks exemption/deduction of that amount for computing his taxable turnover. The amounts covered by the Form 25 declaration do not form part of his turnover at all. The amounts covered by Form 25 declarations cannot form part of the assessee's turnover even for the purposes of Section 8(f) of the KVAT Act - Revision disposed off.
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Indian Laws
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2023 (10) TMI 585
Dishonour of Cheque - insufficient funds - vicarious liability - prosecution against the Trust and the Managing Trustee - private or public charitable Trust - juristic person for the purpose of the N.I. Act or not - whether Trust, either private or public, is a company in terms of Section 141 of the N.I. Act? - HELD THAT:- On scrutiny of the case put up by the accused before the trial court and the Appellate Court, it appears that the accused raised contentions before the trial court by filing a statement under Section 313(5) of Cr.P.C. that the accused have not committed any offence. The accused have not issued cheque for Rs. 9,50,000/- to the complainant. The 2nd accused was one of the Managing Trustees of Prana Educational and Charitable Trust which is a non profitable charitable institution. That trust is not conducting real estate business. Rameshan, husband of the 2nd accused, was having close friendship with the husband of the complainant, and during that time, the accused and her husband deposited amount in Prana Charitable Trust - The complainant filed the case misusing the cheque issued as a security by writing the amount and date in that cheque. The complainant is not entitled to get any amount from the accused. The accused are not liable to pay compensation or interest to the complainant. The conviction imposed by the trial court and confirmed by the Appellate Court does not require any interference. Coming to the sentence, the same also is very reasonable and the same also does not require any interference - Revision petition dismissed.
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2023 (10) TMI 584
Dishonour of Cheque - insufficient funds - acquittal of accused - discharge of a legally enforceable debt or not - complainant proved the offence under Section 138 of the NI Act against the accused beyond reasonable doubt or not - HELD THAT:- The claim of the complainant before a competent Senior Civil Judge claiming huge amount of Rs. 75,000/- was disbelieved by holding the amount due was only Rs. 25,000/-. So, in such circumstances, it is really doubtful as to whether accused could have issued Ex.P-1 for a sum of Rs. 75,000/-. So, important link is missing in the evidence to connect Ex. P-1 with that of a legally enforceable debt pertaining to the chit transaction. Though, there is no dispute about the factum of dishonor of cheque but the complainant has to establish that it was issued towards discharge of a legally enforceable debt. The evidence on record would not at all prove all those aspects. This Appeal is against an order of acquittal. Having gone through the judgment of the trial Court, as above, it cannot be held that the learned III Additional Judicial Magistrate of First Class decided the matter with any unreasonable grounds. There are no reasons whatsoever to interfere with the judgment in Calendar Case No. 101 of 2002, dated 20.06.2007, on the file of the Court of III Additional Judicial Magistrate of First Class, Kakinada. The complainant miserably failed to prove the offence under Section 138 of the NI Act against the respondent/accused beyond reasonable doubt. Appeal dismissed.
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