TMI Tax Updates - e-Newsletter
June 5, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
GST
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Consultancy services for building works provided to the Government of Gujarat do not qualify as activities under Articles 243G or 243W.
The case concerns the classification of services provided by the applicant to the R&B department of the Government of Gujarat. The issue was whether the services of preparing plans, estimates, and DTP for building works qualify as pure services and are exempt u/s 3 of N/N. 12/2017-CT (R). The Authority for advance ruling (AAR) held that the services provided were indeed pure services. However, the blanket exemption sought by the applicant for all buildings constructed for the State government was not granted. The applicant must prove that the buildings are related to functions entrusted to a Panchayat or Municipality to be eligible for the exemption. The services provided do not qualify as activities u/r Article 243G or 243W of the Constitution.
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Retrospective cancellation of GST registration for business closure lacks details; violation of natural justice. Registration cancelled from application date.
The Delhi High Court dismissed an appeal due to time limitation regarding the retrospective cancellation of GST registration of the petitioner based on discontinuance of business. The court found the impugned order lacking in details and violating principles of natural justice. Section 29(2) of the Act allows cancellation of registration from a retrospective date based on objective criteria. The court modified the order to cancel registration from the date the petitioner applied for cancellation. The petitioner must comply with Section 29 of the Central Goods and Services Tax Act, 2017. The petition was disposed of accordingly.
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Challenging adjudication order u/s 78 of Finance Act, 1994 & Section 174 of CGST Act, 2017. Court emphasizes fair hearing & time limits.
The High Court addressed a challenge to an adjudication order u/s 78 of Finance Act, 1994 read with Section 174 of CGST Act, 2017. The Court emphasized that while Section 33A of the Central Excise Act, 1994 limits adjournments to three dates, it does not deny the right to a hearing. The Act aims to expedite adjudication proceedings. The Court noted that fixing three successive dates within a week may suggest bias. The adjudicating authority must pass specific orders for each adjournment sought. The petitioner's right to a fair hearing was deemed impaired, so the Court disposed of the petition without requiring alternative remedies, as the petitioner's right to hearing was affected.
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Refund claim for unutilized ITC accepted under "Any Other" category on GST portal. Arithmetical error corrected with supplementary applications.
The Rajasthan High Court addressed the issue of refunding unutilized Input Tax Credit (ITC) used for zero-rated supply of goods. The petitioner sought refund under the "Any Other" category on the GST portal for Dec. 2018. Upon realizing an arithmetical error in previous refund applications, supplementary applications were submitted. Citing a Gujarat High Court decision, the High Court held that substantive entitlement cannot be denied due to technical errors. The petition was disposed of, allowing manual submission of refund applications for the remaining amount. The respondent authorities were directed to scrutinize the claims in accordance with the law.
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Petition dismissed due to availability of statutory appeal remedy for transfer of business issue. No jurisdictional error found.
The Andhra Pradesh High Court held that the petition's maintainability depends on the availability of a statutory alternative remedy of appeal. The court emphasized that the question of whether there was a transfer of business is a factual matter requiring evidence for a definite finding, suitable for determination by the appellate authority. The argument that the impugned order lacked jurisdiction was deemed unconvincing as the order did not inherently lack jurisdiction. The court declined to delve into the disputed factual question and dismissed the Writ Petition solely on the basis of the availability of a statutory alternative remedy.
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Petition allowed for refund/recredit of recovered amounts. Respondents failed to explain Section 78 proviso.
The Madras High Court addressed a case involving a direction for recredit or refund of amounts recovered u/s assessment orders. The court found that the respondents did not adequately justify the use of the proviso to Section 78, entitling the petitioner to a refund. The petition was allowed, directing the first respondent to refund or recredit the amount to the petitioner's Electronic Cash or Credit Ledgers within one month from the date of the order.
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Tax deduction on work contracts & supplies: Conditions for Additional Tax Reimbursement clarified. Input tax credit benefits considered.
The High Court addressed the issue of tax deduction at source for work contracts and supplies, and entitlement to Additional Tax Reimbursement u/s 64A of the Sale of Goods Act, 1930. To invoke Section 64A, two pre-conditions must be met: absence of a contrary contract and duty rate change post-contract. The court referenced MAFATLAL case on unjust enrichment. The case involved potential input tax credit benefits post-July 2017. Circular No. 3/2017-GST mandates GST payment at 6% u/s 12 and 13 of the Act of 2017 and CGST. Court upheld the 6% GST liability for invoices post-July 2017. The court couldn't determine Section 64A benefit due to insufficient evidence. Writ petition was disposed of.
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ITC denied for air conditioning & ventilation system as they become immovable property post installation.
The Appellate Authority for Advance Ruling in Gujarat addressed the issue of Input Tax Credit (ITC) admissibility for air conditioning, cooling, and ventilation systems supplied and installed by M/s. Skai Air Control P Ltd. The authority held that these systems, once installed, become part of the building and are considered immovable property. Consequently, they cease to be classified as plant and machinery. As the installation was done through a works contract service for constructing an immovable property, ITC is not available u/s 17(5)(c) of the CGST Act, 2017. The appeal was dismissed.
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Classification of various flours under Chapter Heading 21.06 of the CTA, 1975 upheld by appellate authority. Mix Flour classified under Tariff Item 2106 90 99.
The Appellate Authority for Advance Ruling in Gujarat addressed the classification of various flours like Gota Flour, Khaman Flour, Dalwada Flour, and others under the GST rate. It was determined that these products fall under Chapter Heading 21.06 of the CTA, 1975, as they are food preparations for human consumption. The mix flours were classified under Tariff Item 2106 90 99 as "Other" since they were not specifically listed under any particular Tariff Item. The ruling clarified that any food preparation not elsewhere specified in the CTA, 1975, is covered under Chapter Heading 2106, regardless of additional preparation steps required before consumption.
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Classification of ZLD treated water under - Not exempt, taxable @ 18% u/s 24 of notification No. 01/2017-CT(R).
The Authority for Advance Ruling, Gujarat addressed the classification of ZLD treated water obtained from a ZLD plant under GST. The water, after undergoing processes in a CETP and ZLD plant, is suitable for industrial use with minimal dissolved minerals and chemicals. The treated water, considered as 'demineralized water,' does not qualify for exemption u/s 99 of notification No. 2/2017-CT(R). It is classified under Chapter 2201 and taxable at 18% u/s 24 of notification No. 01/2017-CT(R) as 'Waters, including natural or artificial mineral waters, not containing added sugar, and not flavored.'
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Classification of supply of "EDF Thrusters with Battery Pack for Jet Suit" determined as Electric Ducted Fans under CTH 84145990. Tax rate of 18% under Entry 317B.
The Advance Ruling Authority addressed the issue of the classification and tax rate applicable to the supply of "EDF Thrusters with Battery Pack for Jet Suit." The Authority determined that the supply involves Electrical Ducted Fans (EDFs) along with Battery packs and accessories. The EDFs are classified under CTH 84145990 as they function as fans enclosed in a cylindrical housing. The applicable GST rate for this classification is 18% as per Entry Number 317B of Schedule III to Notification 1/2017-Central Tax (Rate). The ruling clarified that the supply falls within this category and is subject to the specified tax rate.
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RCM - Individual truck owners providing transport services are considered Goods Transport Agency for GST purposes.
The Advance Ruling Authority addressed the issue of GST levy on services provided by individual truck owners for transporting raw materials and finished goods. The Authority held that individual truck owners qualify as Goods Transport Agency (GTA) as they issue consignment notes containing required details. The e-way bill must include the Transport Document Number, which acts as a goods receipt number. Failure to issue the transport document renders e-way bill issuance impossible. The definition of GTA includes any person providing road transport services and issuing consignment notes. Therefore, individual truck owners are deemed GTAs, necessitating GST payment by the service recipient as per CGST Act 2017 and relevant notifications.
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Writ petition entertained despite alternative remedy available. Time limitation for availing transitional input tax credit clarified.
The High Court addressed the issue of Transitional Input Tax Credit time limitation, ruling that availing credit beyond thirty days is inadmissible, leading to tax recovery with interest and penalty. The court discussed the maintainability of a writ petition u/s Article 226 of the Constitution despite alternative remedies. It held that when a writ petition raises a pure legal question without the need for factual investigation, the High Court can entertain it at its discretion. The court can review decisions of subordinate bodies for jurisdictional errors or violations of natural justice. Regarding time limitation, the court interpreted the General Clauses Act to calculate the thirty-day period u/s CGST Act, 2017, excluding the appointed day. Consequently, the court allowed the petition.
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Classification of "BEE-PRIME FEED" as artificial honey under HSN 1702.90 with 18% GST rate.
The Authority for Advance Rulings, Karnataka addressed the issue of classification of "BEE-PRIME FEED" under HSN 2309 9090. The product, a premium nutritional supplement for bees, contains ingredients like Vitamin C, niacin, and refined sugar. It was determined that the product, though not natural honey, qualifies as artificial honey due to its composition and role similar to flower honey. Therefore, it was classified under heading 1702.90 and subject to a GST rate of 18%.
Income Tax
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Penalty u/s 271(1)(c) not justified on estimate basis of 6% bogus purchases. No concealment proved.
The ITAT Mumbai ruled on penalty u/s 271(1)(c) for estimation of income on bogus purchases. The tribunal held that penalty cannot be levied on additions made on an estimate basis unless clear proof of concealment or furnishing inaccurate particulars is shown. As the addition was based on 6% of unproved purchases, considered an estimate, the penalty was deemed unjustified. Therefore, the penalty u/s 271(1)(c) was deleted, allowing the assessee's appeal.
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Levy of penalty u/s 271D without valid satisfaction recorded u/s 269SS - Penalty deleted for AY 2016-17 & 2017-18.
The ITAT Delhi held that the levy of penalty u/s 271D without valid satisfaction for alleged violation u/s 269SS is not justified. The AO must record satisfaction in the assessment order u/s 143(3) to initiate penalty proceedings u/s 271D. In this case, the AO failed to record satisfaction for penalty u/s 271D for the relevant assessment years. The tribunal referred to the case law of Jai Laxmi Rice Mills and concluded that penalty u/s 271D was not warranted. Consequently, the penalty imposed u/s 271D for both assessment years was deleted, and the appeals of the assessee were allowed.
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Expenses on ESOP scheme held allowable u/s 37(1) - ESOP expenses actually incurred are allowable
In a case before ITAT Delhi, the issue was whether expenses incurred on Employee Stock Option (ESOP) scheme are allowable u/s 37(1). The AO disallowed the expenses, deeming them as notional and contingent. However, the CIT(A) allowed the expenditure. The assessee, a private limited company in real estate consultancy, argued that ESOP expenses were actually incurred. Citing precedents like M/S. BIOCON LTD. and LEMON TREE HOTELS LTD., the Tribunal upheld the CIT(A)'s decision, stating that ESOP expenses are allowable. The Revenue's appeal was dismissed.
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Disallowance of provision for leave encashment upheld u/s 43B(f) - deduction allowed on actual payment basis. Excise duty subsidy held as capital receipt not taxable.
The ITAT Delhi addressed two key issues. Firstly, on disallowance of provision for leave encashment, the AO rejected the claim as it was not made through a revised return. The Tribunal held that deduction can only be allowed when actual payment is made u/s 43B(f) of the Act, citing a Supreme Court ruling. AO directed to verify actual payment date. Secondly, on taxability of excise duty subsidy, the Tribunal ruled it as capital receipt based on earlier decisions, holding it non-taxable. Additional ground raised by the assessee was allowed.
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Validity of additions u/s 153A questioned - no incriminating material found - Tribunal rules in favor of assessee.
The ITAT Delhi addressed the validity of additions in an assessment u/s 153A without incriminating material post a search u/s 132. Citing Abhisar Buildwell (P) Ltd., the Tribunal held that if no incriminating material is found during a search, the AO cannot assess or reassess completed/unabated assessments. Consequently, additions made without such material cannot stand. The Tribunal deleted the additions by the AO, including commission income, as they lacked a basis in incriminating material. Ground no. 1 was allowed in favor of the assessee.
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Cash sales supported by audited books, VAT returns, stock tally cannot be disregarded u/s 68. CIT(A) rightly relied on tribunal judgments.
The ITAT Delhi addressed the issue of addition u/s 68 for unexplained cash deposits in demonetized currency. The appellant demonstrated substantial cash sales supported by audited books, invoices, VAT records, and stock tally. The CIT(A) confirmed the regularity of cash sales over multiple assessment years. The tribunal found no defects in sales, purchases, or stock records, with substantial cash sales in all years. The AO accepted most sales except for a specific period. The tribunal upheld the CIT(A)'s decision, citing precedents, and dismissed the Revenue's appeal after thorough review of the record and arguments.
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Reopening of assessment u/s 147 beyond 4 years quashed. Addition u/s 68 not justified. Assessee provided documents to support claim.
The ITAT Mumbai ruled on the reopening of assessment u/s 147 beyond four years and disallowance of deduction u/s 10(38) for alleged bogus LTCG. The Tribunal held that as the Assessee had fully disclosed material facts, the reopening was unjustified. Regarding addition u/s 68 for shares purchased off-market and later sold online, the Tribunal found no evidence of wrongdoing by the Assessee or the broker. The Assessee provided relevant documents and the AO did not question their authenticity. Citing a precedent, the Tribunal allowed the deduction u/s 10(38) as the shares were legitimately traded on the stock exchange. The decision favored the Assessee.
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TP adjustments - CUP method justified, TNMM adopted. CIT(A) upheld royalty rate at 5%. Management fees & IT costs justified.
The ITAT Ahmedabad addressed Transfer Pricing (TP) adjustments, focusing on royalty, management fees, and IT allocation costs. The tribunal upheld the use of the Comparable Uncontrolled Price (CUP) method by the assessee, finding it suitable for determining the Arm's Length Price (ALP). The payment of royalty at 5% was deemed comparable with rates allowed by the Indian Regulatory Authority. The tribunal dismissed the Revenue's contentions on royalty payments. Regarding management fees, the tribunal found the markup of 15% justified based on actual costs incurred. The tribunal also upheld the payment for IT services, technical support, and management fees, noting detailed reimbursement provided by the assessee. The CIT(A) decisions were upheld, with no interference warranted. The tribunal dismissed the Revenue's challenges on all three aspects of TP adjustments.
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Land transfer under section 2(47) for capital gain - Delay in project completion not a defense. Fair market value as cost of acquisition.
The ITAT Cochin dealt with a case involving Long Term Capital Gains (LTCG) arising from a Joint Development Agreement (JDA). The tribunal held that the transfer of rights in 62% of the land in exchange for 38% of the developed area constituted a transfer u/s 2(47) of the Act. The delay in project completion did not alter the taxability of the transaction. The transaction with Plasma Developers Ltd. was deemed a transfer u/s 2(47)(vi), attracting capital gains tax for the current year. The capital gain was to be quantified based on the fair market value as of 01.04.2001, indexed under section 48. The sale consideration was to be compared with stamp value as of the transfer date, with the higher amount considered. The burden of proof lay with the assessee, and the AO was directed to decide the matter per a speaking order after allowing the assessee a fair opportunity to present their case.
Customs
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Appellant's goods (Thiram) classified under wrong heading, anti-dumping duty wrongly imposed. 3808 9230 specifically covers 'Thiram'
CESTAT AHMEDABAD addressed the issue of classification of imported goods (Thiram) by the appellant. The revenue sought to classify the goods under heading 3812 1000, while the appellant classified them under 3808 9230. The tribunal noted that 3808 9230 specifically covers 'Thiram,' whereas 3812 1000 is a general heading for prepared rubber accelerators. The show cause notice lacked specific reasons for the classification under 3812. As the goods were a single compound, not a mixture, classifying them under 3812 and imposing anti-dumping duty was deemed unjustified. The tribunal ruled in favor of the appellant, stating that the goods did not fall under the anti-dumping duty notification due to differences in methyl molecules. The impugned order was set aside, and the appeal was allowed.
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Imported goods misclassified as Biofos MCP under tariff heading 2835 2810 instead of 2309 9090. Deliberate attempt to misclassify goods for lower duty rate.
CESTAT AHMEDABAD held that Biofos Mono Calcium Phosphate (BMP) is classifiable u/s 2835 2610, not u/s 2309 9090. The deliberate attempt to misclassify was rejected as the fluorine content was not proven to be intentional. Specific description u/r 3(a) prevails over general description. Referring to a Supreme Court case, the Tribunal emphasized the importance of specific classification. The appellants' claim of intentional fluorine presence was unsubstantiated, indicating a deliberate misclassification for duty rate benefits. The appeal was dismissed for lack of merit.
DGFT
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Relaxation in 'Bill of Export' submission for SEZ supplies under Advance Authorisation/DFIA before 01.07.2017.
The Policy Circular No. 04/2024 issued by the Directorate General of Foreign Trade provides relaxation in the requirement of submitting 'Bill of Export' as evidence of export obligation discharge for supplies to SEZ units under Advance Authorisation/DFIA schemes made before 01.07.2017. The circular states that exporters can now submit alternative evidence including ARE-1 attested by Central Excise/GST Authorities, proof of receipt of supplies by the SEZ unit, and evidence of payment by the SEZ unit to the exporter. This relaxation is u/s Para 2.59 of the FTP and aims to address hardships faced by exporters in complying with the previous requirement.
State GST
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Guidelines for recovery proceedings u/s 168 of Goa GST Act: Recovery can start before 3 months only if justified to ensure interest of revenue.
The guidelines for initiation of recovery proceedings before 3 months from the date of service of a demand order are outlined in Instruction No. 01 of 2024-GST. u/s 168 of the Goa Goods and Services Tax Act, 2017, these guidelines are applicable with modifications. Recovery proceedings can be initiated before 3 months only in exceptional cases for the interest of revenue. The competent authority to examine reasons and issue directions for early payment is the Commissioner of State Tax, Goa. Specific justifications must be provided for early recovery, considering risks to revenue and the taxable person's financial status. Failure to comply leads to recovery as per u/s 79. Difficulties in implementation can be reported to the Board.
IBC
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Approval u/s 35(5) for Liquidator is mandatory. Post facto approval makes proceedings competent. No need to notify party before approval.
The case involved seeking ex-post facto approval for Section 7 applications u/s 35(5) proviso. The issue was whether prior approval by the Adjudicating Authority for the Liquidator to institute proceedings on behalf of the Corporate Debtor is mandatory. Held, it is mandatory. Proceedings without prior approval are unauthorized. Post facto approval makes them competent. No notice to the opposing party is required before approval u/s 33(5). The impugned order granting ex-post facto approval was upheld as adequate reasons were given. The appeal was dismissed, finding no grounds to interfere.
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Initiation of CIRP u/s 7 - Number of allottees key for threshold. Validity of possession and Occupancy Certificate discussed. No error in admitting application.
The National Company Law Appellate Tribunal, New Delhi, addressed the maintainability of a section 7 application concerning a real estate project with IT/ITES offices, residential units, and commercial spaces. The tribunal clarified that the number of allottees, not financial creditors, determines the threshold under Section 7. It emphasized that independent allotments to family members count as separate allottees. The tribunal also noted that no valid possession or occupancy certificates were issued, rejecting arguments to delete certain applicants. The Adjudicating Authority correctly admitted the section 7 application, including those claiming assured returns. The appeal was dismissed, with a directive to exclude a specific period from the Corporate Insolvency Resolution Process.
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Restoration of dismissed petition for non-prosecution allowed. Applicant showed sufficient cause. Forum shopping involved.
The case involved the restoration of a dismissed petition for non-prosecution. The Applicant established reasonable grounds for restoration, despite being accused of forum shopping. The Adjudicating Authority's rejection of the restoration application was deemed erroneous as the cause for non-appearance was considered valid. Reference was made to the G.P. Srivastava case on sufficient cause for non-appearance. The Applicant's conduct was questioned, but the Adjudicating Authority's premature observations were deemed uncalled for. Ultimately, the appeal was allowed, and the restoration application was granted, emphasizing the Applicant's shown sufficient cause.
SEBI
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Amendments to SEBI (Foreign Portfolio Investors) Regulations, 2024. New rules on registration fees and timelines for compliance.
The Securities and Exchange Board of India (SEBI) issued the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2024. The amendments include provisions for foreign portfolio investors to sell securities within 360 days if registration is invalid, payment of registration fees every three years, and consequences for non-payment. Amendments also modify timelines for reporting requirements u/r 7 and u/r 22, and introduce late fees for delayed payments. The Second Schedule outlines late fee amounts. The regulations aim to enhance compliance and streamline processes for foreign portfolio investors.
Service Tax
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Refund claim denied due to unjust enrichment. Appellant failed to prove no unjust enrichment. Appeal dismissed.
CESTAT NEW DELHI addressed unjust enrichment in a refund claim. The appellant sought a refund of Rs. 1,23,70,024 u/s the Tribunal's order. The appellant failed to prove it wouldn't unjustly enrich itself if refunded. The Credit Note indicated the amount was to be paid to specific entities upon refund. No evidence showed these entities didn't collect service tax from flat allottees. The Assistant Commissioner rightly decided the refund should go to the Consumer Welfare Fund. The Tribunal's final order required proof of no unjust enrichment for refund eligibility. The Commissioner (Appeals) decision was upheld, dismissing the appeal. The appellant couldn't contest the unjust enrichment principle after the Tribunal's final order.
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Transporting coal from pit heads to railway sidings not classified as mining services, but as GTA services.
CESTAT New Delhi ruled on the classification of service regarding transportation of coal from mining areas to railway sidings. The issue was whether it falls u/s 'mining service' or 'GTA service'. The Tribunal, citing precedent cases, held that transport of mined goods is classifiable under GTA services, not mining services. The decision in favor of the assessee was based on previous rulings and the lack of nexus between mining services and coal transport. The department's reliance on a different case was deemed inapplicable. The order was set aside for violating previous decisions, deeming it an act of judicial indiscipline. The appeal was allowed.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (6) TMI 119
Classification of services - activity in relation to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India or not - services of preparing and providing plans and estimate and preparing and providing DTP [Draft Tender Plan] for the building work provided by the assessee to the R B department - pure services or not - eligibility for exemption under serial number 3 of N/N. 12/2017-CT (R). dtd 28.6.2017. Whether the consultancy services provided by way of preparing and providing plans and estimates and DTP [draft tender paper] for building works-to R B department of the Government of Gujarat in terms of the scope of the tender issued by them are in relation to the functions entrusted to Municipalities under article 243W and to Panchayat under Article 243G of the Constitution of India and is therefore exempt in terms of Sr. No. 3 of notification No. 12/2017-CT (R.) dated 28.6.2017, as amended? - HELD THAT:- The claim of the service having been provided to State Government appears to be correct. Preparing and providing plans and estimates and DTP [draft tender plan], is a pure service or not - HELD THAT:- Since, the applicant is engaged in preparing and providing plans and estimates and DTP [draft tender plan], it is found that the second claim of the applicant of the service having been rendered being a pure service appears to be correct. Activity is in relation to function entrusted to a Municipality and a Panchayat, i.e. Articles 243G and W of the Constitution or not - HELD THAT:- The applicant who is engaged in preparing and providing plans and estimates and DTP [draft tender plan], is not eligible for a blanket exemption in terms of Sr. No. 3 of notification No. 12/2017-CT (R) dated 28.6.2017, as amended, in respect of all the buildings constructed for the State Government. However, it goes without saying that in case the applicant is in a position to prove that the building constructed is in relation to any of the functions entrusted to a Panchayat or Municipality, in terms of Schedule XI and XII, they would be eligible for the exemption under Sr. No. 3 of notification No. 12/2017-CT (R) dated 28.6.2017, as amended. This as is already mentioned would van and depend on the facts of each case - the blanket exemption sought by the applicant in respect of all the buildings constructed for the State government under the aforementioned notification, is not legally tenable. Providing services of preparing and providing plans and estimate and preparing and providing DTP [Draft Tender Plan] for the building work by the applicant to the R B department, Government of Gujarat under the contract would not qualify as an activity in relation to Panchayat or Municipality under Article 243G or Article 243W respectively, of the Constitution of India.
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2024 (6) TMI 118
Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - order u/s 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The observation in the impugned order dated 29.04.2024 is not sustainable for the reasons that the reply dated 15.12.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that that the tax payer has submitted incomplete supporting documents on the GST Portal in support of availing the benefit of cancelled dealer which ex-facie shows that the Proper Officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order dated 29.04.2024 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.
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2024 (6) TMI 117
Dismissal of appeal on the ground of time limitation - retrospective cancellation of GST registration of petitioner on the ground of discontinuance of business/ closure of business - impugned order is bereft of any details - violation of principles of natural justice - HELD THAT:- The Show Cause Notice and the impugned order are bereft of any details. Accordingly, the same cannot be sustained and neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria - It is clear that both the petitioner and the respondent want the GST registration to be cancelled, though for different reasons. The Petitioner does not seek to carry on business or continue the registration, the impugned order dated 18.08.2022 is modified to the limited extent that registration shall now be treated as cancelled with effect from 23.04.2021 i.e., the date when petitioner filed an application seeking cancellation of GST registration - Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. Petition disposed off.
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2024 (6) TMI 116
Validity of order u/s 73 of the Central Goods and Services Tax Act, 2017 - petitioner had not filed any reply/explanation, seeking one more opportunity - principles of natural justice - HELD THAT:- Clearly, petitioner has made out a case that Petitioner was under the impression that the proceedings under Section 73 of the Act had been closed, since the proceedings under Section 61 of the Act had culminated because of which petitioner did not file a reply. Keeping in view the peculiar facts of the present case and since the only reason for passing the impugned order is that petitioner had not filed any reply/explanation, one opportunity needs to be granted to the petitioner to respond to the Show Cause Notice. The matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 19.12.2023 is set aside. The Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75 (3) of the Act - Petition disposed off by way of remand.
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2024 (6) TMI 115
Time limitation - Challenge to adjudication order u/s 78 of Finance Act, 1994 read with Section 174 of CGST Act, 2017 - HELD THAT:- Undoubtedly, Section 33A of the Central Excise Act, 1994 seeks to limit the adjournment that may be granted to a noticeee facing adjudication proceedings, to three dates. Thus, the mandate of the Act exists to conclude the adjudication proceedings expeditiously. Once the legislature contemplates the limits the total adjournments to three dates, it does not contemplate denial of opportunity of hearing. Rather, it seeks to regulate and thereby restrict the number of total adjournments with the apparent intent to allow the adjudication proceedings to conclude in a time bound manner. In the course of adjudication proceedings, number of dates may be fixed. There is no prescription of law to restrict the total number of dates fixed in an adjudication proceeding, to any number. Also, there is no other prescription of time other than the general limitation of five years. Therefore, it is possible that in the course of adjudication proceedings, adjournment may or may not be sought at any particular date fixed. That event would remain case/circumstance specific. Fixing three successive dates within a period of one week was not a desirable course to be adopted as it does indicate a preconceived notion with the adjudicating authority qua the opportunity of adjournment that may be allowed. In any case the adjudicating authority had to pass specific orders to grant adjournment on each date fixed in the proceeding, if such adjournment was sought. It is at that stage that another date may have been fixed - In any case the adjudicating authority did not communicate to the petitioner the order allowing the adjournment sought/deemed to have been sought and allowed on any particular date. No useful purpose may be served in relegating the petitioner to the forum of the alternative remedy as his right of hearing has been seriously impaired. At the same time, in face of original show cause notice dated 19.10.2021 having been served on the petitioner and there being no denial as to that, the petitioner must be put to terms for the relief being claimed by him - Petition disposed off.
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2024 (6) TMI 114
Refund of unutilized ITC used in making zero-rated supply of goods - Acceptance of the refund claim application for the period Dec. 2018 under Any Other category on GST portal - When the petitioner realized the arithmetical error committed while submitting the applications for refund for particular months, supplementary applications have been made for getting the refund - HELD THAT:- The controversy involved in this case is covered by the decision passed by Gujarat High Court in MESSRS SHREE RENUKA SUGARS LTD. VERSUS STATE OF GUJARAT [ 2023 (7) TMI 938 - GUJARAT HIGH COURT ] where it was held that 'It is settled law that the benefit which otherwise a person is entitled to once the substantive conditions are satisfied cannot be denied due to a technical error or lacunae in the electronic system.' Thus, the joint acceptance of its applicability, the present petition is disposed of with liberty to the petitioner to furnish manually the refund applications for refund of the left out amount. However, it is open for the respondent authorities to scrutiny the claim of the petitioner for refund of the amount in accordance with law and to take appropriate decision on the applications which may be made by the petitioner.
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2024 (6) TMI 113
Maintainability of petition - availability of statutory alternative remedy of appeal - HELD THAT:- The crucial question is whether there is transfer of business or not, which basically is a question of fact, and requires determination based on evidence or material to arrive at a definite finding. The impugned order records that there was transfer of business. Such a question can well be determined by the appellate authority. It is not such a ground that cannot be taken before the appellate authority. The submission that the impugned order is without jurisdiction is not convincing. The reason is that the order on the face of it cannot be said to be without jurisdiction. It is not the argument of the learned counsel for petitioner that the authority passing the impugned order inherently lacked jurisdiction - it is not considered appropriate to enter into the disputed question of fact. Therefore, leaving it open to the petitioner to avail the statutory alternative remedy, if so advised, this Writ Petition is dismissed only on the ground of statutory alternative remedy.
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2024 (6) TMI 112
Seeking a direction for recredit or refund of the amounts recovered pursuant to assessment orders - Initiation of recovery proceedings - time limitation - HELD THAT:- In view of the fact that the respondents have failed to satisfactorily explain the recourse to the proviso to Section 78, the petitioner is entitled to a refund. Petition is allowed by directing the first respondent to either refund the recovered amount or recredit the same to the petitioner's Electronic Cash or Credit Ledgers, as the case may be, within one month from the date of receipt of a copy of this order.
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2024 (6) TMI 111
Transitional Input Tax Credit - time limitation - Inadmissibility of availing credit beyond thirty days - recovery of tax with interest and penalty - maintainability and entertainability of a writ petition under Article 226 of the Constitution of India, despite alternative remedy provided by the relevant statutes. Maintainability and entertainability of a writ petition under Article 226 of the Constitution of India - HELD THAT:- After making a survey of a number of decisions, it has been observed that when the writ petition raises a pure question of law and if investigation into facts is unnecessary, the High Court can entertain a writ petition in its discretion even though the alternative remedy is not availed of. It has been observed that where the controversy is a purely legal one and it does not involve disputed questions of fact, but only questions of law, then it should be decided by the High Court instead of dismissing the writ petition on the ground of an alternative remedy being available - It is also settled proposition of law that the High Court in its extra-ordinary and discretionary writ jurisdiction under Article 226 can examine the decision of a subordinate tribunals, bodies or officers to see whether it has acted wholly without jurisdiction, or in excess of it, or in violation of the principles of natural justice, or refuses to exercise a jurisdiction vested in them, or there is a manifest error in the face of the record. Time Limitation - HELD THAT:- It is within a period of thirty days from the appointed day, that is, 01.07.2017, an assessee like the petitioner has to comply with the provisions contained in sub-section [5] of Section 140 of the CGST Act, 2017. No provision in the CGST Act, 2017 regarding calculation of period of time has been brought to the notice of the Court by the learned counsel for the parties. The Constitution Bench, in Dilip Kumar and Company [ 2018 (7) TMI 1826 - SUPREME COURT ], has observed that an Act of Parliament/Legislature cannot foresee all types of situations and all types of consequences. It is for the Court to see whether a particular case falls within the broad principles of law enacted by the Legislature. It has been observed that there are many occasions where the language used and the phrases employed in the statute are not perfect. In all the Acts and Regulations, made either by the Parliament or the Legislature, the words and phrases as defined in the General Clauses Act and the principles of interpretation laid down in the General Clauses Act are to be necessarily kept in view. From plain and simple language of Section 9 of the General Clauses Act, it is discernible that if particular time-period is given from a certain date within which an act is to be done, the day on that date is to be excluded and meaning thereby, the period is to be calculated by excluding the day from which the period is to be reckoned. The provisions of sub-section [2] of Section 9 of the General Clauses Act has made it evidently clear that Section 9 applies to all Central Acts made after the third day of January, 1868, meaning thereby, Section 9 is applicable to the CGST Act, 2017. For the expression, within a period of thirty days from the appointed day , occurring in sub-section [5] of Section 140 of the CGST Act, 2017, the period has to be reckoned by excluding the appointed day, which is 01.07.2017. If after exclusion of the appointed day [01.07.2017], the period of thirty days is counted then the thirtieth day falls on 31.07.2017. Thus, this Court is of the unhesitant view that the impugned TRAN Invoices, which were entered in the recipients Books of Accounts on 31.07.2017 were within the period of thirty days from the appointed day [01.07.2017], as required in sub-section [5] of Section 140 of the CGST Act. Consequently, the findings recorded in Paragraph 7.0 of the Order-in-Original dated 23.11.2023 by the Adjudicating Authority is not sustainable in law. Petition allowed.
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2024 (6) TMI 110
Deduction of tax at source in respect of work contract and supplies - Entitlement to Additional Tax Reimbursement under Section 64A of the Sale of Goods Act, 1930 - HELD THAT:- There are two pre-conditions which are required to be fulfilled for the purpose of invoking the provision of Section 64A of the Act of 1930. First, that there was no contract to the contrary by which either the seller had precluded himself from claiming such enhanced duty, i.e. the contract having negative or limited the seller s right to prefer such a claim, or at least silent as regards what was to happen in the event of a duty being increased. The second pre-condition is that the change in the rate of duty was affected after the date of the contract. This very provision of Section 64 A of the Act of 1930 was relied upon by the Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ] in the context of examining the application of the principle of unjust enrichment and it was held that in view of the ability of the seller to recover the increase in the difference of excise or customs it would be legitimate for the Court to presume, until contrary is established that a duty of excise or customs have been passed on by the seller to the buyer. In the instant case, it may not be a case of reduction in rate of tax on any supply of goods or services but it may be a case where there might be benefit of input tax credit which have been availed by the petitioners taking into account that in the writ petitions, the works have been completed after 01.07.2017. Under such circumstances, these aspects of the matters also are required to be considered by the authority concerned. The Circular No. 3/2017-GST dated 24.08.2017 is in accordance with the provisions of Section 12 and Section 13 read with Clause 6 (a) of Schedule II of the Act of 2017 and CGST - The petitioners would be liable to pay GST @ 6% under the Act of 2017 and 6% under the CGST in respect to those invoices raised on or after 01.07.2017 and in respect to which received payments and/or receivable on or after 01.07.2017. Accordingly, the directions so issued in some of the writ petitions directing the petitioners to deposit GST @ 12% in respect to invoices raised on or after 01.07.2017 are in accordance with law - This Court is not in a position to decide as to whether the petitioners are entitled to the benefit of Section 64 A of the Act of 1930 in as much as the materials placed before this Court are insufficient to decide the various aspects as detailed out at paragraph No.55 (d) of the instant judgment. The writ petition is disposed off.
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2024 (6) TMI 109
Admissibility of Input Tax Credit (ITC) - air conditioning and cooling system - ventilation system - HELD THAT:- The work order awarded to M/s. Skai Air Control P Ltd., to supply, install and commission HVAC works for proposed factory, assembly, administration, staff facility associated works. The work order includes amongst other things even the maintenance and warranty of the air conditioning and cooling system and the ventilation system. Thus the averment raised that the air conditioning and cooling system and ventilation system, cannot be treated as one system and that the vendor is supplying various machines and not one standalone system and that the Air conditioning system is nothing but a group of inter-related and interdependent machines performing a desired task; that they do not lose their identity, is not a legally tenable argument. The Air Conditioning and cooling system and ventilation system becomes a part of the building once it is installed and thereby an immovable property. As the installation of the air conditioning and cooling system and ventilation system via a works contract service, makes it an immovable property, it ceases to be a plant and machinery. The appellant is not eligible to avail ITC on supply of air conditioning and cooling system and ventilation system since it ceases to be a plant and machinery and is blocked under Section 17 (5) (c) of CGST Act, 2017 as the same is works contract services for construction of an immovable property. Appeal dismissed.
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2024 (6) TMI 108
Classification of goods - different varieties of Flours i.e. Gota Flour, Khaman Flour, Dalwada Flour, Dahiwada Flour, Dhokla Flour, Idli Flour and Dosa Flour manufactured and supplied by applicant - rate of GST - HELD THAT:- As is evident from the explanatory notes, it covers food preparations not elsewhere specified or included. Further of 21.06 covers the preparation for use, cither directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.) for human consumption, and preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption, are classifiable under Chapter Heading 21.06 of the CTA, 1975. The appellant has already stated that his 7 products of Mix flour / Instant Mix flour are preparations consisting wholly of foodstuffs viz. flours of leguminous vegetables and cereals as well as spices and condiments, and these products are used in the making of food preparations ((i) Gota flour (ii) Khaman flour (iii) dalvada flour (iv) Dahiwada flour (v) Dhokla flour (vi) Idli flour (vii) Dosa flour), for human consumption. Further, these products are preparations for use, either directly or after processing, such as cooking, dissolving or boiling in water, milk, etc., for human consumption - all the aforementioned 7 products of Mix flour / Instant Mix flour are appropriately classifiable under 21.06 of the HSN. As these products are not specifically mentioned under any specific Tariff Item of Chapter Heading 2106 of the CTA, 1975, these products are classifiable under the residuary entry i.e. Tariff Item 2106 90 99 as Other . Mix Flour / Instant Mix Flour - HELD THAT:- Any product which is a food preparation and which is not elsewhere specified or included in the CTA. 1975, gets covered under Chapter Heading 2106 of the CTA, 1975. Therefore, merely because the end consumer of the Instant Mix Flour is required to follow certain food preparation processes before such product(s) can be consumed, is no ground to take these products out of Chapter Heading 2106 of the CTA, 1975.
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2024 (6) TMI 107
Classification of goods - ZLD treated water (RO) obtained from ZLD plant - classifiable under chapter heading 2201 or not - applicability of GST exemption under Sr. No. 24 of Schedule-Ill of notification No. 01/2017-Central Tax (Rate), dated 28-6-2017 as amended or under Sr. No. 99 of notification No. 02/2017-Central Tax (Rate), date 28-6-2017 as amended. HELD THAT:- The applicant has established a CETP for collection, treatment disposal of wastewater (effluent) generated from the industries. The CETP treated effluent goes through ultra-filtration process and reverse osmosis process in the ZLD plant. The applicant has stated that the effluent received from industries after having undergone process in CETP and the process of ultrafiltration and reverse osmosis in ZLD plant, is then suitable for Industrial use. The water obtained from CETP, which has further undergone the process of ultra-filtration and reverse osmosis in the ZLD plant, has micro amount of dissolved minerals and chemicals and is virtually free from ail types of toxic materials. This treated water is used in various industries for their manufacturing related process. Further, looking to the presence of miniscule amount of minerals in the water so obtained after treatment from ZLD, we find that it is covered under 'demineralized water'. Hence, the treated water obtained from ZLD is not eligible for exemption under Sr. No. 99 of notification No. 2/2017-CT(R) dated 28.6.2017. The 'treated water' obtained after undergoing the process through CETP thereafter through ZLD plant, is classifiable under Chapter 2201, and is taxable @ 18% by virtue of Sr. No. 24 of Schedule-III of notification No. 01/2017-CT(R) dated 28.6.2017 (as amended) as 'Waters, including natural or artificial mineral waters, and aerated waters, not containing added sugar or other sweetening matter nor flavoured (other than Drinking water packed in 20 litters bottles'.
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2024 (6) TMI 106
Classification of supply - supply of EDF Thrusters with Battery Pack for Jet Suit - HSN code for supply - applicable rate of tax under the Central Goods and Services Tax Act, 2017 and Karnataka State Goods and Services Tax Act, 2017 on the such supplies - HELD THAT:- The impugned supply of EDF Thrusters involves EDF Thrusters and Battery packs along with the performance mapping and test report. It is an admitted fact that the applicant does not manufacture the EDF thrusters and battery packs but procures domestically or imports them. The important aspect of the supply involved is the performance of the said EDF thrusters and thus the supply will be done on acceptance of the performance mapping and test report by the recipient, of the impugned supply. Therefore the applicant is involved in supply of EDFs i.e. Electrical Ducted Fans along with Battery packs and the accessories such as mounting brackets, wiring etc. Classification of EDF Thrusters with Battery Pack for Jet Suit - HELD THAT:- EDF is a type of propulsion system commonly used in electric radiocontrolled (RC) planes and some small drones. EDFs are designed to mimic the appearance and function of jet engines, that are powered by electric motors and are typically more compact. They consist of a ducted fan, which is essentially a fan enclosed in a cylindrical housing (the duct). The product EDF i.e. Electric Ducted Fan , works on electric current drawn from the battery - the impugned product specifically classifiable as a fan, enclosed by a metal sheet. - the EDF (Electric Ducted Fan) Thrusters are classifiable under CTH 84145990. Rate of tax - HELD THAT:- Entry Number 317B of Schedule III to the Notification 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, specifies the GST rate of 18% for the goods falling under 8414, having description Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters; Gas-tight biological safety cabinets, whether or not fitted with filters [other than bicycle pumps, other hand pumps and parts of air or vacuum pumps and compressors of bicycle pumps. In the instant case the impugned product merits classification 8414 5990, as a fan and thus attracts 18% GST in terms of the entry number 317B.
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2024 (6) TMI 105
Classification of goods - Honey bee Feeds - to be classified under HSN 2309 9090 or not - rate of tax - HELD THAT:- The description of the impugned product BEE-PRIME FEED specifies hat it is a premium nutritional supplement exclusively for bees and the same is a mixed supplementary feed. Further the Label specifies that the impugned product contains the ingredients of Vitamin C, niacin, vitamin B6 hydrochloride, vitamin B12, L-arginine, L-threonine, L-alcohol, L-alanine, L-histidine, L-serine, L-valine, Sodium chloride, potassium chloride, fructo-oligosaccharide, glucose, mixed with refined sugar. Therefore it is clearly evident from the said label that the predominant ingredient is refined sugar - the product, though is not a natural honey but is similar to it and hence it qualifies to be an artificial honey. In the instant case, it is an admitted fact that the impugned product has composition similar to that of the honey and thus the impugned product plays a role comparable to flower honey (natural honey) when water is added to the feed powder. Thus the impugned product merits classification under heading 1702.90, on the basis of specific description. Rate of tax - HELD THAT:- In the instant case the impugned product merits classification under heading 1702 as artificial honey and thus attract GST rate of 18%.
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2024 (6) TMI 104
Levy of GST - services provided by individual truck, owners for transport of raw materials finished goods including loading and unloading - individual truck owners are covered under the category of Goods Transport Agency or not - HELD THAT:- The transporter/contractor, in the instant case, admittedly carries supplier's invoice along with e-way bill, as per the provisions mentioned in Notification No. 12/2018-Central Tax dated 07.03.2018, which contain the details of GSTIN of recipient (Al), Place of delivery (A2), Invoice or Challan number (A3), Invoice or Challan date (A4), Value of goods (A5), HSN Code (A6), Reason for transportation (A7) and Transport Document Number (A8) under Part-A and Vehicle Number (B) under Part-B. An e-way bill must contain the Transport Document Number mandatorily, which is nothing but goods receipt number, under part A.8 of an e-way bill, without which the e-way bill cannot be issued. Therefore it is mandatory for the transporter/contractor to issue the transport document which is nothing but a consignment note, without which goods can't be transported. Further, the definition of GTA given at Serial No. ze of Notification 12/2017-Central Tax (Rate) dated 28/06/2017 refers to any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. Thus the document issued by the transporter containing the details as indicated above, in relation to transport of goods, by whatever name qualifies to be a consignment note. Thus the transporter/contractor qualifies to be a Goods Transport Agency and the GST has to be discharged as per the provisions of the CGST Act 2017 and the rules made thereunder read with Notification 11/2017-Central Tax(Rate) dtd 28.06.2017 read with Notification No. 13/2017-Central Tax(Rate) dtd 28.06.2017 by the service recipient.
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Income Tax
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2024 (6) TMI 103
Estimation of income - bogus purchases - HELD THAT:- No doubt, purchases made by the assessee have been proved as bogus purchases based on the fictitious invoices by the authorities below. However, it is settled law that entire amount of alleged bogus purchases cannot be added/disallowed in entirety but the profit element embedded therein can only be considered for making addition. Revenue department has made addition @ 12.5% of the alleged bogus purchases, therefore in order to maintain the consistency we are inclined to restrict the addition to the extent of 12.5% of the amount of alleged bogus purchases or the profit shown by the assessee voluntarily, which ever would be higher. Appeal filed by the assessee stands allowed.
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2024 (6) TMI 102
Penalty u/s 271(1)(c) - estimation of income on bogus purchases - addition as made being 6% held as unproved/unexplained purchases - HELD THAT:- It is a settled position that on the addition /disallowance made on an estimate basis, no penalty u/s. 271(1)(c) is leviable. For the purpose of levying penalty under 271(1)(c), AO has to clearly prove that the assessee has concealed the particulars of his income or has furnished inaccurate particulars of his income. Considering the undisputed fact that addition on which the penalty has been imposed is on an estimate basis i.e. 6% of bogus purchases, we are of the view that penalty so imposed u/s. 271(1)(c) is not justified. Accordingly, we delete the penalty imposed on the assessee. Thus, the ground no.1 taken by the assessee is allowed.
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2024 (6) TMI 101
Levy of penalty u/s 271D without recording valid satisfaction as recorded qua the alleged violation u/s 269SS - HELD THAT:- AO has to record his satisfaction in the assessment order u/s 143(3) of the Act for initiating penalty proceedings u/s 271D for violation of provisions of section 269SS - In this case, assessment order u/s 143(3) r.w.s 147 was passed on 27.12.2019 for A.Y 2016-17 and on 18.12.2019 for A.Y 2017-18. JCIT issued notice u/s 271D of the Act on 30.03.2022 for both the A.Ys and levied penalty u/s 271D of the Act on 31.03.2022. AO in his order u/s 143(3)/147 of the Act for both the A.Ys has recorded penalty proceedings u/s 271(1)(c) of the Act to be initiated separately. AO, however, has not recorded any satisfaction to initiate penalty u/s 271D of the Act for either of the A.Ys and thereby failed to adhere to the mandate of law as laid down in the case of Jai Laxmi Rice Mills [ 2015 (11) TMI 1453 - SUPREME COURT] We do not find these to be fit case for levy of penalty u/s 271D of the Act. We accordingly, delete the penalty so levied u/s 271D in both the A.Ys and allow both the appeals. Appeal of assessee allowed.
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2024 (6) TMI 100
Expenses incurred on Employee Stock Option (ESOP) scheme - allowable expenses u/s 37(1) or not? - AO held as such expenses are notional and contingent in nature and are not allowable - CIT(A) deleted the expenditure - assessee is a private limited company engaged in the business of providing services in the area of real estate related consultancy, site management, professional advisory, project management - HELD THAT:- Allowability of the ESOP expenses actually incurred and cross charged by the parent from an assessee has been decided in favour of the assessee in a plethora of cases including the Hon'ble jurisdictional High Court in M/S. BIOCON LTD. [ 2020 (11) TMI 779 - KARNATAKA HIGH COURT] , LEMON TREE HOTELS LTD [ 2015 (11) TMI 404 - DELHI HIGH COURT] , and the Coordinate Bench of ITAT Delhi Benches. Respectfully following the decision of the Hon'ble High Courts [supra] and Delhi ITAT CVENT INDIA PVT. LTD. [ 2023 (2) TMI 1063 - ITAT DELHI] , we decline to interfere with the findings of the ld. CIT(A) and dismiss the ground raised by the Revenue.
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2024 (6) TMI 99
Disallowance of provision made for leave encashment - assessee is a resident corporate entity and stated to be engaged in the business of manufacturing and trading of pesticides and insecticides etc. - AO rejected assessee s claim stating that such claim having not been made through a revised return of income cannot be accepted - HELD THAT:- Undisputedly, as per section 43B(f) of the Act, deduction on account of payment made towards leave encashment can be allowed only when actual payment is made. The constitutional validity of the aforesaid provision has been upheld in Union of India ors. vs. Exide Industries Limited Anr. ( 2020 (4) TMI 792 - SUPREME COURT ). Therefore, disputed deduction can only be allowed on actual payment basis. The Assessing Officer is directed to verify the date of actual payment of leave encashment and allow deduction in the assessment year wherein such payment has been actually made. Ground is allowed for statistical purposes. Taxability of excise duty subsidy - Revenue or capital receipt - assessee availed excise duty subsidy under a scheme in Jammu Kashmir and treated it as revenue in the return of income - HELD THAT:- It is observed, while deciding identical issue in assessee s own case in assessment year 2011-12, the coordinate Bench [ 2019 (12) TMI 980 - ITAT DELHI] while entertaining the additional ground raised by the assessee, has examined the relevant new industrial policy scheme and relying upon various judicial precedents concluded that the excise duty subsidy received by the assessee under the scheme is capital in nature, hence not taxable. The aforesaid decision of the coordinate Bench has been upheld Crystal Crop Protection (P) Ltd.[ 2022 (7) TMI 1162 - DELHI HIGH COURT] - Facts being identical, we hold that excise duty subsidy received by the assessee, being capital in nature, is not taxable. Additional ground no. 1 is allowed.
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2024 (6) TMI 98
Validity of the additions made in the assessment order passed u/s 153A - unabated assessment - no incriminating material found during a search and seizure operation u/s 132 - HELD THAT:- As decided in Abhisar Buildwell (P) Ltd. ( 2023 (4) TMI 1056 - SUPREME COURT ) AO cannot assess or reassess the income relating to completed/unabated assessment, in case no incriminating material is unearthed during the search. Thus, the above said ratio laid down by the Hon ble Supreme Court clinches the issue in favour of the assessee. Once it is established on record that the additions made by the AO are not with reference to any incriminating material found as a result of search, such additions cannot survive. That being the factual and legal position we have no hesitation in deleting the additions made by the AO. Thus the addition of commission income directed to be made by learned First Appellate Authority must also stand deleted as it is not based on any incriminating material found as a result of search and seizure operation. Ground no. 1 is allowed.
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2024 (6) TMI 97
Reopening of assessment u/s 147 - Notice issued beyond four years - Disallowance of claim of deduction u/s 10(38) - Bogus LTCG - HELD THAT:- Admittedly the case of the Assessee was reopened after expiry of four years and there is nothing on record to suggest that the assessee has failed to disclose material facts fully and truly qua said claim of deduction u/s 10(38) of the Act and therefore on this count itself the reopening under section 147 of the Act is liable to be quashed. Addition u/s 68 - We observe that admittedly the assessee though purchased the shares as involved through off market from share broker M/s. VRP Financial Services Ltd., Navi Mumbai, however, subsequently got the same dematerialized and sold the same after the gap of 2.5 years on online platform/stock exchange and there is no specific allegation against the assessee neither any role is attributed to the assessee and/or the share broker qua rigging of scrip involved and also there is no material available on record and it is also not the case of the Revenue Department that M/s. NCL Research Financial Services Ltd. (scrip) has already been suspended by the SEBI and/or not in existence as on today. It is also not in denial that the assessee has duly filed the relevant documents such as purchase note/bills, copy of bank statements, highlighting the payment made towards acquisition, computation of LTCG and contract notes for sale of shares of M/s. NCL Research Financial Services Ltd. and copy of Form No.10DB showing details of Securities Transaction Tax (STT) collected by the broker from the assessee, ledger account of the assessee in the books of broker, Demat account statement for the period 01.04.2008 to 31.03.2011 etc. and it is also a fact that the AO has not doubted any of the documents filed by the assessee to substantiate his claim. Therefore it goes to show that the assessee has discharged its prima-facie onus casted upon him. As decided in Indravadan Jain HUF [ 2023 (7) TMI 1091 - BOMBAY HIGH COURT ] has also dealt with the identical issue as involved in the instant case and ultimately affirmed the deletion of the identical addition on account of disallowance of deduction claimed under section 10(38) observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of Stock Exchange Thus, we are inclined to allow the claim of exemption sought under section 10(38) of the Act by the assessee. - Decided in favour of assessee.
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2024 (6) TMI 96
TP Adjustment - Addition on account of payment of royalty, management fees and IT allocation cost account treating it as not at arm s length price - selection of MAM [Most Appropriate Method] - AO had rejected the assessee's use of the Comparable Uncontrolled Price (CUP) method and the Transfer Pricing (TP) study, making adjustments based on the lack of documentary evidence and the incorrect application of methods - AR submitted that as regards the payment of royalty, the assessee entered into a Brand Licensing Agreement for 5 years whereby assessee was assigned the right to manufacture, market and distribute two products - AR submitted that TNMM must be adopted as Most Appropriate Method at the Entity Level in assessee s case - HELD THAT:- For applying the CUP method the assessee has not found identical comparable and therefore, used external CUP as it is the suitable method for determining the ALP. The Assessing Officer has not pointed out as to why external CUP method will not be applicable in assessee s case. In fact, the assessee has given all the relevant documents and fulfilled all the criteria of Rule 10D especially giving details as envisaged in Rule 10D(l), (g), (h) and (j) which are most crucial while applying external CUP method. It is not disputed by the revenue that the assessee has paid royalty @ 5.05% to Singapore AE. From the perusal of records it can be seen that the royalty payment was in consonance with the rate at which royalty is allowed by the Indian Regulatory Authority i.e. RBI. Thus, rate of 5% is comparable with the rate at which Government of India / RBI allows such payment. Therefore, CIT(A) has rightly allowed the rate at 5% of net sales for royalty determination. Hence, the contentions of the DR are not justifiable. There is no need to interfere with the findings of the CIT(A). As regards the alternate submissions of the AR, the same are rejected as we have not interfere with the findings given by the CIT(A). Thus, the aspect of royalty payment of Ground No. 1 is dismissed. Management fees - DR submitted that the agreement entered into by the assessee with its associated enterprise allow the payment of costs along with a markup of 15% - assessee claimed that the payment for the year under consideration was USD 293995, which included the actual costs incurred by the assessee along with a mark up of 15% - As pertinent to note that the assessee entered into Management Service Agreement with Pacific Asia Singapore Pte. Ltd. (Singapore AE) on 01.04.06 with addendum dated 05.01.09 to obtain expertise, methods and procedures, availability of information, development of work force, project administration, financial planning and control, etc. for utilizing the same in corporate functions, marketing and sales of the assessee. Pursuant to said agreement, the assessee paid to the concerned AE. Contention of the DR that the certificate produced by the assessee stated to be lower/ below the actual costs incurred by the associated enterprises, appears to be incorrect as per the supporting evidences produced by the assessee. The mark up of 15% was given as per the actual cost incurred by the assessee while providing the services. Besides this the Revenue has accepted the similar payment in the earlier three years and DR could not point out the factual discrepancy in the present assessment year to that of earlier assessment years. CIT(A) has rightly deleted the addition and there is no need to interfere with the findings of the CIT(A). Hence, the aspect of management fee payment of Ground No. 1 is dismissed. Payment of IT services, Technical support and management fees - HELD THAT:- It is pertinent to note that the assessee entered into an agreement with PL Pacific Asia (Singapore) Pte Ltd. (Singapore AE) on 01.05.06 in respect of Information Technology Services, Technical Support and Maintenance. The reimbursement of the expenditure incurred by the AE was in detail given by the assessee before the AO/ TPO. The finding of the AO that IT services, Technical support and maintenance fee was not actually incurred and no details given appears to be not correct facts. In fact, the assessee in the certificate given by the AE has given the details of the services provided by the AEs and also the reimbursement expenses incurred by the assessee and paid to AE. CIT(A) has verified the same and after taking cognizance of the same allow the payment/expenses. It is not the case of fixing margin for all associates in respect of management support services as contemplated by the Ld. DR but actual cost incurred by the assessee company which has been identified and allowed by the CIT(A). There is no need to interfere with the findings of the CIT(A). Besides this the Revenue has accepted the similar payment in the earlier three years and DR could not point out the factual discrepancy in the present assessment year to that of earlier assessment years. Hence, the aspect of IT services, Technical support and Maintenance fee payment of Ground No. 1 is dismissed.
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2024 (6) TMI 95
Addition u/s 68 - unexplained money being cash deposited in the form of demonetized currency - cash sales running into crores of rupees has been shown by the assessee in the book of accounts - Acceptance of Sales and Stock Records by the AO - as per CIT(A) appellant had been making regular huge cash sales in proceeding as well as succeeding assessment years and as cash sales made during these periods were bonafide and has a nexus with sales effected by the assessee - as per assessee Cash sales are supported by the audited books of account, invoices, suffered from VAT, VAT returns, Quantitative Stock tally and therefore, cannot be disregarded. HELD THAT:- CIT(A) has duly analyzed the sales purchases, stock, cash and compared it with F.Y. 2014-15, F.Y. 2015-16 and also F.Y. 2016-17. The day wise cash book has been examined, the same have been incorporated in this order. The comparative data of purchase and stock for four years to determine the regularity of the cash sales has been examined. No defects have been pointed in purchase, sale and stock. There have been substantial cash sales in all the four years and the AO has accepted sales in cash for all the years except for the period between 11.11.2016 to 15.11.2016. In the other years, about 88% of the stock has been sold in cash and the same cash has been deposited in the bank for which the revenue has no objection. No discrepancy in the VAT return has been found out. No specific defects in the books of accounts of the assessee have been found out and there was no negative stock on any of the dates which only goes to prove that the cash sales have been made against the available stock. AO has accepted the sales and hence the proceeds of the sales cannot be considered u/s 68 of the Income Tax Act, 1961. CIT(A) has rightly placed reliance in the comparable judgments of the Tribunal in the case of Agson Global Pvt. Ltd.[ 2019 (11) TMI 148 - ITAT DELHI ] and Hirapanna Jewellers, Vishakhapatnam [ 2021 (5) TMI 447 - ITAT VISAKHAPATNAM ] Having gone through the entire record viz., Assessment Order, submissions of the assessee before the AO, submissions of the assessee before the CIT(A), arguments of the ld. DR, arguments of the ld. AR and the order of the ld. CIT(A), we find no reason to interfere with the analysis, logic, ratio and reasonableness of the order of the ld. CIT(A). Double taxation of the same income - As assessee has himself offered the amount of cash sales as his income by duty including it in his total sales. Once a particular amount is already offered for taxation, the same cannot be again considered u/s 68 of the Act. In fact, such addition has resulted into double addition - Appeal of the Revenue is dismissed.
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2024 (6) TMI 94
LTCG - JDA - assessee transfers his rights in 62% of the land in lieu of 38% of the developed area to be constructed, over a period of time, covering the entire land, envisaged to yield 75,818 sq.ft. of built up area Annexure C to the JDA - transfer u/s. 2(47) - HELD THAT:- As regards s. 2(47)(vi), also pleaded, though found inapplicable in that case, the same, as a reading of the judgement would show, was in view of the peculiar facts of the case, wherein the agreement was subject to obtaining necessary permissions and clearances, since denied. It is this that led the Hon'ble Court to state of the possession as having been allowed for the limited purpose of construction. In fact, for the first two tranches, where agreement succeeded, the capital gain was not disputed. The instant, on the contrary, is not a case of project failure, but of a delay in its completion, with we having found time to be not of essence of the agreement. Rather, the assessee even though there is no material on record to substantiate the same, admits capital gain on execution of assignment deeds in favour of the buyers of the apartments constructed on 62% of the subject land, i.e., that falling to the share of the developer. This is apparently so done to save on stamp duty, which would otherwise stand to be levied twice, i.e., firstly, on registration of the agreement on the basis of which rights to the parties arise, being the JDA and GPA, and then, again, on transfer of title to the buyers of the flats, since constructed. Qua delay, how, one may ask, the assessee know at the time of filing his return for the year that there would be a delay? The law in the matter is patently clear, so that any agreement or arrangement or a transaction in any other manner, which has effect of transferring or enabling the enjoyment of an immovable property, would stand fall within the ambit of transfer u/s. 2(47) - it is well-settled that income is to be taxed in the hands of the right person and for the right year, and it is being offered to tax in the hands of another person or year would be of no moment in law, for which, apart from sections 3-5 of the Act, we may refer to some decisions, viz. CIT v. British Paints (I) Ltd [ 1990 (12) TMI 2 - SUPREME COURT] and CIT v. Chunilal V. Mehta Sons P. Ltd. [ 1971 (8) TMI 4 - SUPREME COURT] . In our clear view, the transaction between the assessee and Plasma Developers Ltd. vide the documents afore-referred, constitutes a transfer u/s. 2(47)(vi) of the Act, liable to capital gain for the current year. Quantification of the capital gain liable to be taxed for the current year - No dispute in this regard stands raised before us and, accordingly, not responded to by the other side. So, however, the assessee having raised a specific ground in this respect, which was not specifically stated as not pressed, we consider it incumbent on us to opine there-upon to the extent the same admits of no two views, i.e., is in complete consistence and harmony with the facts of the case and the law in the matter. We do this taking guidance from the decision Walchand Co. P. Ltd.[ 1967 (3) TMI 2 - SUPREME COURT] wherein it stands held that the Tribunal is to deal with and determine the questions which arise out of subject matter of the appeal in light of the evidence, and consistently with the justice of the case. The subject land is stated to have been acquired prior to 01.04.2001. Where so, without doubt, the fair market value as on that date shall be deemed as the cost of acquisition, and toward which the sale deed of lands in proximity of the subject land, preferably matching in size, on or close to that date, is to be adopted. The said cost would further stand to be indexed in terms of section 48. Similarly, for the sale consideration which has been adopted at the agreed rate between the parties, which would though need to be compared with the stamp value as on the transfer date, i.e., 27.06.2001, in view of section 50C r/ws. 48 of the Act, and the higher of the two taken as the sale consideration. The onus to prove his claims, as preferred, would though be on the assessee. AO shall decide in accordance with law per a speaking order upon allowing the assessee a reasonable opportunity to present his case.
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Customs
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2024 (6) TMI 93
Change of classification of goods imported by the appellant - Thiram -Tri Methyl Thirum Disulphide or Accelerator TMTD, Thiuram- C - imposition of Anti Dumping Duty - appellant classified goods under heading 3808 9230 but revenue was of the opinion goods are classifiable under heading 3812 1000 - HELD THAT:- It is seen that heading 3808 9230 is specifically covers Thiram (Tetra Methyl Thiram Di Sulphide ) whereas the heading 3812 1000 is about general heading which covers prepared rubber accelerators. It is also seen that the heading 3808 of Custom Tariff Act and the heading 3808 in the HSN is identical. However, the sub heading are described differently in the Custom Tariff heading and the HSN. The HSN does not contain the specific reference to Thiram (Tetra Methyl Thiram Di Sulphide). The allegations in the show cause notice do not provide any specific reasons why the goods are not classifiable under heading 3808. The only reason revenue is seeking classification under heading 3812 1000 is that the certificate of country of origin in the bill of entry No. 786 1159 dated 05.09.2012 describes the goods under CTH 3812 1000. In the instant case there is no dispute that goods imported are not in nature of mixture but single compound. In this circumstances at the rate of revenue to classify the goods under heading 3812 and demand anti dumping duty cannot be sustained. Thus, the anti dumping duty has been imposed on (Tetra Methyl Thiram Di Sulphide ). The show cause notice has been issued in respect of item namely (Tri Methyl Thiram Di Sulphide). Since the description of goods is different in so far as the one contains three methyl molecules (Tri Methyl Thiram Di Sulphide ) and other contains four methyl molecules (Tetra Methyl Thiram Di Sulphide ), the same are not covered in the notification. Thus, even otherwise the goods imported by the appellant are not covered by the entry 13 and 14 of the Notification 133/ 2008 custom dated 12 December, 2008 imposing anti dumping duty. There are no merit in the impugned order and the same is set aside - appeal allowed.
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2024 (6) TMI 92
Classification of imported goods - Biofos Mono Calcium Phosphate (BMP) - to be classifiable under tariff heading 2835 2810 or under 2309 9090? - Deliberate attempt to misclassify or not - HELD THAT:- The perusal of the CTH 2835 shows that sub heading 283526 specifically covers Phosphates of Calcium other than Di Calcium Phosphate falling under sub heading 2835 2500. It is seen that the entire defense of the appellants is based on the fact that the fluorine content in the product is not an impurity but deliberately left item. If it had been so, the name fluorine contain would have appeared in the composition information or ingredients of the product. In this circumstances there are no merit in the argument that the fluorine contained in the product has been deliberately left and is not in the nature of impurity. In terms of Rule 3(a) the heading which gives most specific description shall be prefer to providing more general description. It is found that sub heading 2835 2610 provides absolute specific description whereas the heading 2309 9090 provides a general description. This view is also supported by observation of Hon ble Apex Court in case of COMMNR. OF CENTRAL EXCISE, MUMBAI VERSUS M/S. PFIZER LTD. [ 2015 (12) TMI 1150 - SUPREME COURT] wherein Hon ble Court has observed 'in the present case, imported goods Virginiamycin is a well defined chemical of 100% purity with anti bacterial properties included specifically under Chapter 29 by virtue of Chapter Note 1(a).' - The ratio of above decision is equally applicable to instant case. Deliberate attempt to misclassify or not - HELD THAT:- In the instant case appellants were earlier classifying the goods under chapter heading 2835. The heading is very specific leaving no room for doubt. The appellants made a claim that fluorine left in biofos MCP also known as deflorinated phosphate is intentional. The said claim has not been substantiated by any literature or by product safety data sheet. In these circumstances, there was a deliberate attempt to misclassify the goods to avail a lower duty rate. There is no merit in the appeal and the same is dismissed.
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Insolvency & Bankruptcy
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2024 (6) TMI 91
Seeking ex-post facto approval in respect of Section 7 applications - statutory requirement under Section 35 Sub-section (5) proviso to obtain prior approval of the Adjudicating Authority by the Liquidator to institute a suit or proceeding on behalf of the Corporate Debtor is a mandatory requirement or only a directory requirement - consequences and status of the proceedings instituted by the Liquidator on behalf of the Corporate Debtor without prior approval of the Adjudicating Authority - approval under Section 33(5) to the Liquidator to institute proceeding on behalf of the Corporate Debtor, the party against whom proceedings are to be instituted has to be given an opportunity. Whether the statutory requirement under Section 35 Sub-section (5) proviso to obtain prior approval of the Adjudicating Authority by the Liquidator to institute a suit or proceeding on behalf of the Corporate Debtor is a mandatory requirement or only a directory requirement? - HELD THAT:- The legislative scheme as occurring in Section 33(5) is clear and categorical and the legislative intendment is clear that after the liquidation order is passed, no suit or legal proceeding is instituted by or against the Corporate Debtor with only one exception that suit or legal proceeding on behalf of the Corporate Debtor can be instituted with the prior approval of the Adjudicating Authority - looking to the statutory scheme, in use of the prohibitory word in Section 33(5), are satisfied that the requirement of prior approval by the Adjudicating Authority for instituting any suit or proceeding is mandatory and cannot be held to be directory. The mere fact that no consequences has been provided in the provision, cannot be a ground to treat the requirement as directory. The statutory requirement under Section 35 Sub-section (5) proviso to obtain prior approval of the Adjudicating Authority by the Liquidator to institute a suit or proceeding on behalf of the Corporate Debtor is a mandatory requirement. What are the consequences and status of the proceedings instituted by the Liquidator on behalf of the Corporate Debtor without prior approval of the Adjudicating Authority? - Whether a post facto approval granted by the Adjudicating Authority of proceedings instituted by the Liquidator without obtaining prior approval shall make the proceedings authorized/ competent? - HELD THAT:- On looking into the provision of Section 171 and Section 446, it is clear that leave of the Court has to be prior to the instituting any proceeding. Thus, the expression leave of the Court and prior approval denotes same meaning i.e. leave of the Court/ prior approval before any proceeding is instituted by the Liquidator. The legislative scheme which was earlier operating in the Companies Act, 1913 and Companies Act, 1956 has been carried forward by the IBC in so far as requirement under Section 33(5) are concerned. The consequence of the proceedings instituted by the Liquidator on behalf of the Corporate Debtor without prior approval of the Adjudicating Authority under Section 33(5) is unauthorized and incompetent - Post facto approval granted by the Adjudicating Authority with regard to continuation of proceedings already instituted by the Liquidator which were instituted without obtaining prior approval shall make the proceedings authorized and competent from the date when post facto approval is granted. Whether before approval under Section 33(5) to the Liquidator to institute proceeding on behalf of the Corporate Debtor, the party against whom proceedings are to be instituted has to be given an opportunity? - HELD THAT:- The scheme delineated under Section 33(5) does not indicate that the Liquidator has to give any opportunity or notice to the party against whom approval is sought to initiate proceedings. The provision of Section 33(5) is that the Adjudicating Authority should keep control over estate in the liquidation proceeding so that no proceeding can be initiated by the Liquidator so as to expose the Corporate Debtor to unnecessary expenses. Hence, the approval of the Adjudicating Authority is required to institute proceeding. For approval by the Adjudicating Authority, the legislative scheme does not indicate any notice or opportunity to the party against whom proceedings are to be instituted - Before granting approval under Section 33(5) proviso to institute proceedings by the Liquidator on behalf of the Corporate Debtor, the party against whom proceedings are to be instituted is not to be given a notice or hearing necessarily. Whether the impugned order dated 07.02.2024 passed by the Adjudicating Authority is unsustainable and deserves to be set aside? - HELD THAT:- The adequate reasons were given by the Adjudicating Authority for granting ex-post factor approval. The prayer made before the Adjudicating Authority was prayer to permit the Liquidator to continue and proceed with the Section 7 proceedings, which having been granted, the Liquidator was entitled to proceed with the Section 7 proceedings - the order of the Adjudicating Authority is not unsustainable. There are no ground to interfere with the order of the Adjudicating Authority - appeal dismissed.
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2024 (6) TMI 90
Maintainability of section 7 application - Fulfillment of the threshold of 100 allottees u/s 7 of the Code or not - Validity of possession and issuance of Occupancy Certificate. - Real Estate Project. - Project comprised of IT/ ITES office, Residential Units, Commercial Spaces and other facilities - NCLT admitted the application of the allotees. Maintainability of section 7 application - Fulfillment of the threshold of 100 allottees u/s 7 of the Code or not - HELD THAT:- The issue that for fulfilling the threshold under Section 7, it is number of allottees which is relevant and not the number of financial creditors is well settled. The Hon ble Supreme Court in Manish Kumar vs. Union of India And Anr. [ 2021 (1) TMI 802 - SUPREME COURT ] has laid down that ' As long as there are independent allotments made to him or his family members, all of them would qualify as separate allottees and they would count both in the calculation of the total allotments, as also in reckoning the figure of hundred allottees or one-tenth of the allottees, whichever is less.' Thus, for finding out as to whether threshold is fulfilled or not under Section 7 has to be look into number of allottees. A copy of the application which has been filed by the allottees indicate that in the application, document of the financial creditors including copy of the agreement were brought on record. Annexure-D Part-I which contains a list of financial creditors, along with details of allotted units was filed which indicate that in Column 4, unit number of each financial creditor has been mentioned. Validity of possession and issuance of Occupancy Certificate - HELD THAT:- On looking into the Report of the IRP, it was clearly mentioned that there were no possession of the unitholders noticed except Unit No.10A in the IT Block which was open and in possession of PAN Security Services and BLS Developer Pvt. Ltd. In paragraph 12, the aforesaid statement has been made by the IRP. Paragraph 12(e) which was relied by the Appellant only mentions that the status of the possession of the units in the commercial block could not be determined. However, Flex Boards/notices of various professionals/businesses were affixed in some of the units in the said tower/block. Thus, it is clear that for none of the units have been given Occupation Certificate or Completion Certificate and application for Occupancy Certificate is pending. In this context, we may also refer to the reply filed by the Respondent/allottees. Respondent has brought on record letter dated 16.11.2021 issued by the Greater Noida Industrial Development Authority to the allottees which was in reference to request of the allottes for completion certificate. There being no Occupancy Certificate issued by Greater Noida Authority and as per the Report of the IRP, Occupancy Certificates are pending - When no valid possession has been handed over to the allottees, we are not persuaded to accept the submission of the appellant that names of 23 units need to be deleted from the name of applicants who had filed Section 7 application. No Dues and No Claim Certificate relied by the appellant and Sub-Lease Agreement is not a ground on which the name of those who have given No Dues and No Claim Certificate should be deleted from number of the applicants who have filed Section 7 application. Adjudicating Authority has also in the impugned order has held that the construction is incomplete and the applicant fulfils the threshold of minimum 100 allottees. Adjudicating Authority also rejected the submission raised before it that 36 unitholders who have claimed assured return are speculative allottees and their names should be deleted from the application. The Adjudicating Authority did not commit any error in admitting Section 7 application. Taking the note of the fact that the interim order was passed by this Tribunal on 21.02.2023 and this appeal is being decided on 31.05.2024, we direct for exclusion of period from 21.02.2023 till 31.05.2024 in the CIRP of the Corporate Debtor. There is no merit in the appeal. The appeal is dismissed subject to exclusion of time from 21.02.2023 till 31.05.2024.
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2024 (6) TMI 89
Restoration of the dismissed petition for non-prosecution - reasonable ground established by the Applicant for restoration of the Application or not - applicant involved in Forum shopping. Whether there was any sufficient case for nonappearance on 01.05.2024? - HELD THAT:- It was not the case of the Bank that no death took place. The Adjudicating Authority has never directed the Appellant to file the copy of death certificate. The observations that no specific relationship of the deceased has been mentioned and no death certificate has been placed on record are not sufficient ground to reject the cause given in the Restoration Application for restoration. Further, it is noticed that the Adjudicating Authority embarked upon the earlier litigations under Section 13, sub-section (2) between the parties and came to the conclusion that Applicant has not approached the Tribunal with clean hands and rather he is involved in Forum shopping, as was found in paragraph 27. It is relevant to notice that Application under Section 94, was not up for consideration and the consideration on merits of the Application was uncalled for. Observation of the Adjudicating Authority that the Appellant has not approached the Tribunal with clean hands and is involved in Forum shopping, were the observations, which were made prematurely. It was open for the Adjudicating Authority to consider all the above issues when Application under Section 94 comes for consideration. Sufficient cause for non-appearance or not - HELD THAT:- Hon ble Supreme Court in in G.P. Srivastava vs. R.K. Raizada and Ors. [ 2000 (3) TMI 1126 - SUPREME COURT ], observed that while considering the question of sufficient cause for non-appearance, other circumstances anterior in time cannot be relied - Applicants were unable to show their bonafides and establish sufficient cause. It was further noticed in the facts of the said case that a defendant cannot be penalized and made to suffer the rigours of litigation over decades. The judgment of the above case was on the facts of the said case and has no bearing in the present matter. The sufficient cause had been shown by the Appellant for restoration of the Application. The Adjudicating Authority committed error in rejecting the Application by the impugned order dated 22.05.2024 - the Application under Section 94 was not up for consideration, hence, observations made by the Adjudicating Authority that Applicant has not approached the Tribunal with clean hands and rather he is involved in Forum shopping, were uncalled for and premature. The Adjudicating Authority could have considered the merits of the Application under Section 94 and the conduct of the Appellant, when the Application comes for consideration. Thus, sufficient cause was shown by the Appellant for allowing Restoration Application for recalling of order dated 01.05.2024, dismissing the Application for non-prosecution. Appeal allowed.
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Service Tax
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2024 (6) TMI 88
Refund claim - rejection on the ground that Services not covered under default list - Invoices of Services addressed to the outside of SEZ premises and having incomplete address - invoices were not produced before the Department - N/N. 17/2011-ST dated 01.03.2011 - HELD THAT:- It is informed that no order in the denovo proceedings have been passed by the Original Authority. As the issue is squarely covered in [ 2023 (12) TMI 1301 - CESTAT ALLAHABAD ], it would be fit that this matter is also remanded for a decision in light of the observations made in that order. The matter remanded to the original authority for reconsideration of the refund claims in the light of the observations made in appellant's own case - As the issue is in respect of the refund claims filed for the period from January 2012 to March 2012, Original Authority is directed to finalize the refund claims in remand proceedings within three months of the receipt of this order. Appeal allowed by way of remand.
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2024 (6) TMI 87
Principles of unjust enrichment - Refund claim - Whether the refund should be credited to the Consumer Welfare Fund due to unjust enrichment? - HELD THAT:- The letter dated 19.08.2014 that was sent by the appellant to the Assistant/Deputy Commissioner of Service Tax merely states that the appellant is entitled to refund of Rs. 1,23,70,024/- in terms of the order passed by the Tribunal. There is no averment, much less any proof in support thereof, that the appellant would not unjustly enrich itself if the amount is refunded - The appellant made no reference to the Credit Note that contained a stipulation that the amount would actually be paid to Unitech and Vatika only when the department refunds the amount to the appellant. The certificate does not even specify why the appellant would not unjustly enriched. In any view of the matter, even if it is assumed that such credit was done by the appellant in the books of accounts in favour of Unitech and Vatika, there is nothing on the record even in this appeal to substantiate that Unitech and Vatika had not collected service tax from the allottees to whom they had allotted the flats. This is what prevailed upon the Assistant/Deputy Commissioner to hold that refund should be credited in the Consumer Welfare Fund. Once such a finding was recorded by the Assistant Commissioner, it was incumbent upon the appellant to have at least filed sufficient evidence before the Commissioner (Appeals) to substantiate that these two builders had not recovered service tax from the allottees. There is no error in the Assistant Commissioner assuming, in the absence of any evidence led by the appellant, that the two builders had recovered service tax from the allottees of the flats and so they would be unjustly enriched even if the amount of service tax was paid by the appellant to the two builders after refund from the department. Thus, it is a clear case where the amount of service tax recovered by the appellant from Unitech and Vatika was not actually paid to Unitech and Vatika and only an assurance was given to them that the amount would be paid upon receipt of the refund amount from the Government. In any view of the matter, even if it is assumed that there was a credit by the appellant in favour of Unitech and Vatika, there is nothing on the record to indicate that Unitech and Vatika had not recovered service tax from the allottees - In the present case, the Tribunal while allowing the appeal filed by the appellant had made it absolutely clear that the appellant would be entitled to refund only if the appellant established that it would not be unjustly enriched. This order of the Tribunal has attained finality. In such circumstances, it is not open to the appellant to not now contend that the principles of unjust enrichment should not have been examined by the Adjudicating Authority. There is no error in the order passed by the Commissioner (Appeals) - Appeal dismissed.
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2024 (6) TMI 86
Classification of service - transportation of coal from the pit heads (mining areas) to the railway sidings - mining services or not - Failure to assess and discharge the service tax liability in the category of 'mining service' - recovery alongwith interest and penalty - HELD THAT:- The issue is no more resintegra. It has already been decided by this Tribunal in M/S. ARJUNA CARRIERS PVT. LTD. VERSUS C.S.T., RAIPUR [ 2014 (11) TMI 1048 - CESTAT NEW DELHI] in favour of assessee answering the above question in negative. Prior both these decisions, this tribunal in a matter titled as SINGH TRANSPORTERS VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2012 (7) TMI 566 - CESTAT, NEW DELHI] it has held that the definition of mining services has no nexus with the transport of mined goods (coal). The said activity is more appropriately classifiable under GTA services rather than mining services. The decision of this Tribunal in Singh Transporter case has been upheld by Hon'ble Supreme Court in the decision as relied upon by the appellant. The decision of M/S. MAHANADI COALFIELDS LTD. VERSUS COMMR. OF CENTRAL EXCISE SERVICE TAX, BBSR-I [ 2019 (7) TMI 1803 - CESTAT KOLKATA] as relied upon by the department is not found applicable to the facts of present circumstances as in that case department had alleged the activity of transportation of coal from pit heads to railway siding as an activity of goods transport agency since the Tribunal found that there was no consignment note issued by the transporter in the said case that the said allegation of department was set aside. In the present case, department has alleged the same activity as an activity of mining services. The order under challenge is passed under sheer violation of the previous decisions on the same issue. The order is, therefore, an act of judicial in-discipline. The order under challenge is hereby set aside - Appeal allowed.
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Central Excise
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2024 (6) TMI 85
Invocation of Extended period of limitation - recovery of CENVAT Credit with interest and penalty - Rent a Cab Service - HELD THAT:- There are no specific reason recorded in the show cause notice or the Order-in-Original or the impugned order on the basis of which it can be said that the Appellant has suppressed any facts from the Revenue with intention to evade payment of service taxes. Invocation of extended period of limitation as per Section 11A(4) for making this demand could not have been sustained in view of COMMISSIONER VERSUS MEGHMANI DYES INTERMEDIATES LTD. [ 2013 (6) TMI 141 - GUJARAT HIGH COURT] and M/S LG ELECTRONICS INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, (NOIDA) [ 2024 (4) TMI 533 - CESTAT ALLAHABAD] where it was held that 'Where merely a procedural violation in respect of complying with a condition of Notification cannot be said to be an act of suppression for invoking extended period of limitation. No justification for invoking extended period of limitation is forthcoming from the show cause notice, order in original or the impugned order.' The demand is barred by limitation - the impugned order is set aside - appeal allowed.
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Indian Laws
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2024 (6) TMI 84
Legality and validity of the non-bailable warrant, issued against the company - legality questioned on the ground that the company is in moratorium under the provisions of the Insolvency and Bankruptcy Code, 2016 and being a legal entity, cannot beprosecuted for the offence under Section 138 of the NI Act - HELD THAT:- On the first day of hearing, when the notice was issued, the complainants had appeared by way of caveat. In such circumstances, let fresh notice be issued to the complainants returnable on 19 July 2024.
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