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TMI Tax Updates - e-Newsletter June 16, 2023 Case Laws in this Newsletter: GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes GST Levy of GST on the one-time lease premium - letting plots of land on lease basis - long term lease - High Court has upheld the constitutional validity of levy of GST - Supreme Court agreed with the view of the High Court and refused to express any other view - However, the issue of grant of exemption after the decision of HC has not been examined and kept open for future deliberation, if required. - SC Visit to Get Source Exemption from Service Tax / GST - practicing advocate - This Court expresses its concern that practicing advocates should not have to face harassment on account of the department issuing notices and calling upon them to pay service tax/GST when they are exempted from doing so and in the process also calling them to prove that they are practicing advocates. - The Commissioner, GST is directed to issue clear direction in this regard - HC Visit to Get Source Provisional Attachment of Bank Account of petitioner - validity of attachment order after expiry of one year from the date of Order as per Section 83(2) of CGST Act - the provisional orders of attachment automatically by operation of law have been ceased to be in operation. - HC Visit to Get Source Validity of Show Cause Notice - Relied upon documents (RUD) - Non supply of RUD sought by Petitioner - "Reason to believe" for raising demand - Levy of GST - mining lease and/or royalty paid to the State Government - before issuance of notice in the matter, the Court is inclined to examine the records relating to show-cause notice for the purpose of examining whether “reasons to believe” exists or it is a mere pretence - Directions issued - HC Visit to Get Source Seeking grant of Regular Bail - fraudulent availing and passing on ineligible/fake Input Tax Credit - Considering the fact that the petitioners were in custody for 70 days; complaints had already been filed and the evidence is primarily documentary in nature the order of interim bail is made absolute till the trial or the complaint is quashed. - HC Visit to Get Source Search and seizure - seizure officer has authority to pass penalty order or not - The dispute raised before this Court that the search and seizure authority having passed the order under Annexure-10 has exceeded its jurisdiction is rejected. Rather the authority has acted within the competency to pass such order. Therefore, the contention raised that he cannot be a judge of his own cause, that principle is not applicable to the present case. - HC Visit to Get Source Income Tax Business expenses claimed under the head of “Provision for Warranty Expenses” - addition u/s 37 - Assessee company has not committed any error in making provisions inasmuch as large number of sophisticated goods were being manufactured in the past and if the facts established show that defects existing in some of the items manufactured and sold then the provision made for warranty in respect of the army of such sophisticated goods would be entitled to deduction from the gross receipt u/s 37 - No additions - HC Visit to Get Source Reopening of assessment u/s 147 - Tribunal was correct to hold that when reference was made to the TPO by AO for determination of arm’s length price in relation to the international transaction, no assessment proceedings were pending and hence it was invalid reference. The subsequent order passed by the TPO determining the assessment to the international transaction was a nullity in law and void ab initio. AO could not have relied upon an order of the TPO which is a nullity to form a belief that certain income chargeable to tax has escaped the assessment for the relevant Assessment Year. - HC Visit to Get Source TDS u/s 194LA - compensation amount paid on account of acquisition of land - High Court concluded that, after looking at from any angle, as long as the award is made under the Act of 2013, the compensation paid would not be liable for any tax. - The entire compensation amount payable to the petitioner is directed to be paid to the petitioner without deduction of any tax at source (TDS) - HC Visit to Get Source Charges against Income Tax Officer (ITO) and Assistant Director of Income Tax (Investigation) - independent approval of the Disciplinary Authority - The decisions of the Finance Minister approving the issuance of memorandum under Rule 14 of the Rules of 1965 were with a clear application of mind. So, in that sense the approvals were in conformity with the judgment of the Supreme Court - HC Visit to Get Source Reopening of assessment u/s 147 - Taxability of capital gains in the capacity of a Legal Representative of deceased assessee [mother] - one of the co-owners is solely picked out - it would be travesty of justice if one of the co-owners is solely picked out and an enhanced income for the same property is attributed in his hands. - AT Visit to Get Source Double taxation - Rectification of mistake u/s 154 - Rental income was offered as “income from house property” - Addition of the same income under the head “income from other sources” - There is clearly a mistake apparent from record while processing the return of income wherein the CPC, Bengaluru - Additions deleted - AT Visit to Get Source Levying late filing fees u/s 234E - Delay in deposit of TDS and Form 27Q on purchase of immovable property - merely on the ground that the assessee has not filed Form 27Q on 31.07.2019 and thus late filing cannot be the criteria for levying fees under Section 234E of the Act - Levy of fee deleted - AT Visit to Get Source Estimation of income - “real income/commission income” - Unexplained deposits in bank account - the assessee is engaged in the business of “cheque discounting” in order to earn commission income. - would not be correct to bring to tax the entire cash deposits as the assessee’s undisclosed income. - It would be reasonable to take 0.25% of total deposits in the bank accounts as commission income - AT Visit to Get Source Customs Confiscation of Vehicle - import of car is new one or old/ used vehicle - the vehicle was registered only for the purposes of transportation for the Port. Therefore, it cannot be held that the vehicle was old and used. In that circumstances, the ld.Commissioner (Appeals) has rightly given the benefit of Notification No.21/2002-Cus - AT Visit to Get Source Scope of Advance Ruling - Matter is already pending / under dispute - Classification of goods proposed to be imported - Data Projector ZH 350, ZW350e, ZX 350e - the matter of classification of similar devices is pending decision in the applicant’s own case before an officer of custom i.e. Pr. Commissioner/Commissioner (Appeal). Accordingly, in view of provisions of Section 28-I of the Customs Act, 1962 - Application rejected - AAR Visit to Get Source Re-import of goods/equipment from a SEZ/FTWZ to DTA - Under the SEZ Act, 2005 read with SEZ Rules, 2006, words 'import' and 'procure' have been assigned different meanings. It is also important to note that activity of bringing goods from a Unit or Developer in SEZ to DTA is not covered under the definition of the term, 'import ' under the SEZ Act, 2005, therefore such transfer from SEZ to DTA cannot be termed as 're-import' - AAR Visit to Get Source Indian Laws Share Articles on TMI portal. A Knowledge Sharing Portal. This feature is free for all. Visit to Get Source PMLA PMLA - Onus on Chartered Accountant (CA) for giving certificate - scheduled offences - whether mere issuance of Form 15CB at the request of client, would by itself, brings the CA into the net of conspiracy to indulge in money laundering? - HELD No - HC Visit to Get Source Offence under PMLA - Delay in registration of FIR i.e. 5 years - an intangible property derived as a result of criminal activity - scheduled offence - proceeds of crime under Section 2(1)(u) - Once an information relating to the acquisition of huge amount of illegal gratification in the matter of public employment has come into the public domain, it is the duty of the ED to register an Information Report - If the ED registers an Information Report immediately upon the registration of a FIR for a predicate offence, ED will be accused of acting in haste. If they wait until the drama unfolds up to a particular stage, ED will be attacked as guilty of delay. The accused should be thankful to ED for giving a long rope from 2016 till 2021. - SC Visit to Get Source Service Tax Validity of Show Cause Notice (SCN) - Validity challenged after the expiry of 2 years and 4 months - Inordinate delay in adjudicating the SCN - - Considering the conduct of the petitioner in approaching this writ court after an inordinate delay and making attempt to take advantage of lapse of the the Commissioner concerned in not finally adjudicating the impugned show-cause-notice and allowing the petitioner to take advantage of his conduct by allowing the impugned proceedings to become time barred as alleged by the petitioner, this writ petition is dismissed. - HC Visit to Get Source Levy of Service Tax - Manpower Recruitment or Supply Agency Service (MRSAS) - The facts establish that the appellant has obtained work order to execute certain works which are part of the manufacturing activity. The appellants are thus responsible to execute the work - the situation is not covered under MRSA Service (MRSAS) - AT Visit to Get Source Levy of Service tax - declared service or not - amount received towards damages in arbitration proceedings in connection with the purchase - The Circular issued under the GST regime emphasizes that there has to be an express or implied agreement to do or abstain from doing something against payment of consideration for a taxable supply to exist and such an act or a situation cannot be imagined or presumed to exist merely because there is a flow of money from one party to another - Demand set aside - AT Visit to Get Source Central Excise Levy of personal penalties on Director and Employee of the company - Since the major demand has been dropped moreover, the issue involved is interpretation of law and it is not the case of clandestine removal of goods, therefore, the individuals cannot be implicated in nature of present case - the personal penalties on both the persons are set aside - AT Visit to Get Source VAT Benefit of Amnesty Scheme - Substantial amount was paid withing prescribed time - Merely because the petitioner inadvertently paid Rs. 2000/- less towards principal outstanding amount of tax, it cannot be denied the benefit of the Amnesty Scheme. - HC Visit to Get Source Stay - Waiver of pre-deposit - power of Appellate Authority to insist on the assessee paying more than 20% of the disputed tax - Unless the assessee remits 20% of the disputed amount of tax along with the collected tax or at the time of filing the appeal, he/she will not be entitled to the benefit of the proviso, and he/she runs the risk of losing the benefit of the remittance of the 20% of the disputed amount of tax as a condition for grant of stay of recovery of the balance amount pending disposal of the appeal. This would be the legal position that flows from the main statutory provision, namely, Section 55(4) of the Act - HC Visit to Get Source Articles SCRUTINY OF GST RETURNS- SOME ISSUES Process for E-Way Bill Genration on Mobile Supply of goods and services through separate agreements will not be considered as composite supply Notifications Customs 39/2023 - dated 14-6-2023 - Cus Seeks to reduce BCD on crude and refined soya, sunflower and palm oils -Notification No. 48/2021-Customs, dated the 13th October, 2021 amended. GST - States 10/2023-State Tax - dated 2-6-2023 - Gujarat SGST Amendment in Notification No. 13/2020-State Tax, dated 27th March, 2020 G.O. Ms. No. 6 - dated 19-5-2023 - Puducherry SGST Under section 128 to provide amnesty to GSTR-10 non-filers under the Puducherry Goods and Services Tax Act, 2017 Income Tax 41/2023 - dated 14-6-2023 - IT Control of Notified Subordinate Officer under Income-Tax Authorities - Seeks to amend Notification No. S.O. 359, dated the 30th March, 1988 40/2023 - dated 14-6-2023 - IT Effect to the E-Appeals Scheme, 2023 - Prescribed income tax authorities shall exercise the powers and perform functions to facilitate the conduct of e-appeal proceedings with respect to appeals covered under section 246 Circulars / Instructions / Orders Customs - PUBLIC NOTICE NO. 17 /2023 - dated 19-5-2023 Indian Customs EDI System – Electronic Cash Ledger –Queries and Clarifications - Reg. Customs - PUBLIC NOTICE NO. 16/2023 - dated 2-5-2023 Customs — Declaration of Warehouse No. II measuring 14800 Sq. Ft. area in M/s. Sattva CFS & Logistics Pvt. Ltd., Vichoor Village, Chennai — 600103 as Customs Area for handling of LCL Import Cargo — reg. Customs - PUBLIC NOTICE No. 13/2023 - dated 6-4-2023 Amnesty scheme for one time settlement of default in export obligation by Advance and EPCG authorization holders -reg News CBIC releases National Time Release Study (NTRS) 2023 report India’s overall exports in May 2023 stands at US$ 60.29 Billion PM GatiShakti must be effectively leveraged with Area Development Approach to extend benefits to the nation beyond infrastructure: Shri Piyush Goyal Quality Control Orders (QCOs) are a game changer for the leather sector: Shri Piyush Goyal Sovereign Gold Bond Scheme 2023-24 Infrastructure Finance Secretariat(IFS), DEA launches the revamped website of PPPININDIA and online portals for India Infrastructure Project Development Funding Scheme (IIPDF) and the Best Practices in Infrastructure Case Laws: GST 2023 (6) TMI 637 Levy of GST on the one-time lease premium - letting plots of land on lease basis - long term lease - HELD THAT:- The question of exemption granted by Notification No. 12 of 2017-CT (Rate) dated 28.06.2017 w.e.f., 01.07.2017 not gone into - scope and ambit of the expression in Clause 2 (a) of Schedule-II licence to occupy land is a supply of services of the Central Goods and Services Act, 2017 not examined. The special leave petition is dismissed. 2023 (6) TMI 636 Order to conduct Special Audit for GST Accounts of the petitioner firm for the period mentioned therein, by appointing a Chartered Accountant for Special Audit under Section 72[a] of the Finance Act, 1994 read with Section 174[2][e] and Section 66 of the CGST Act, 2017 - HELD THAT:- Having regard to the provisions of Section 66 and Section 107 of the CGST Act, 2017 vis- -vis the contents of the impugned order dated 16.11.2020 which prima facie does not reflect about consideration of the two aspects mentioned in Section 66 of the CGST Act, 2017, it is provided that the respondent authorities shall not take any coercive action against the petitioner till the returnable date. Issue notice, returnable in 3 [three] weeks. 2023 (6) TMI 635 Exemption from Service Tax / GST - practicing advocate - HELD THAT:- During hearing a number of members of the Bar have informed this Court that similar notices have been issued to the various members of the Bar. This Court expresses its concern that practicing advocates should not have to face harassment on account of the department issuing notices and calling upon them to pay service tax/GST when they are exempted from doing so and in the process also calling them to prove that they are practicing advocates. The Commissioner, GST is directed to issue clear direction to the GST Commissionerate in Lucknow that no notices regarding payment of service tax /GST is issued to the lawyers rendering legal service falling in the negative list so far as service tax is concerned. Writ petition disposed off. 2023 (6) TMI 634 Provisional Attachment of Bank Account of petitioner - validity of attachment order after expiry of one year from the date of Order as per Section 83(2) of CGST Act - HELD THAT:- It is noticed that in terms of Section 83(2) of the Central Goods and Services Tax Act, 2017 (for short 'the Act') the provisional attachments orders by operation of law ceases of have effect after the expiry of a period of one year from the date of the order made under Sub-Section (1). Admittedly, in the present case, the period of one year from the passing of the provisional orders of attachment has expired as evident from the details furnished and the provisional orders of attachment automatically by operation of law have been ceased to be in operation. The impugned orders of attachment at Annexures-A, A1, A2, A4 and A5 are declared to be no longer in operation from the expiry of the period of one year as stipulated under Section 83(2) of the Act. The Bank authorities to take note of the same forthwith. Petition disposed off. 2023 (6) TMI 633 Validity of Show Cause Notice - Relied upon documents (RUD) - Non supply of RUD sought by Petitioner - Reason to believe for raising demand - Levy of GST - mining lease and/or royalty paid to the State Government - works contract services by way of construction of roads and bridges of Government bodies - HELD THAT:- In this case, the demand of GST on the petitioner is not only based on levy of GST on mining lease and/or royalty paid to the State Government which is the subject matter of decision by a larger Bench of the Supreme Court of India, but the demand is also based on other claims. Therefore, before issuance of notice in the matter, the Court is inclined to examine the records relating to show-cause notice for the purpose of examining whether reasons to believe exists or it is a mere pretence - the respondent no. 4 is directed to produce the records relating to show-cause notice dated 16.09.2022 (Annexure-A). The learned standing counsel for the petitioner shall send a downloaded copy of this order to the respondent no. 4 so as to enable him to send the relevant record for the perusal of the Court. List on 19.06.2023. 2023 (6) TMI 632 Cancellation of GST registration of petitioner - SCN simply states the reason for issuance of notice (as in case, Registration has been obtained by means of fraud, wilful misstatement or suppression of facts) - HELD THAT:- From the show-cause notice, it is clear that the respondents have not provided in details to the petitioner, how the petitioner has committed fraud, wilful misstatement or suppression of facts; while obtaining the registration, no documents were supplied to the petitioner alongwith the said show-cause notice. This Court has considered in the similar type of case of Aggrawal Dyeing [ 2022 (4) TMI 864 - GUJARAT HIGH COURT ] holding that According to the learned AGP, it is in such circumstances that the show cause notices and impugned orders without any details are being forwarded to the dealers. This hardly can be a valid explanation for the purpose of issuing such vague show cause notices and vague final orders cancelling the registration. From the aforesaid order, it reveals that, in the said case as similar type of contentions were raised on behalf of the respondent. However, this Court has quashed and set aside the similar type of show-cause notice issued to the concerned petitioner for cancellation of registration. The present matter is squarely covered by the aforesaid order passed by this Court, therefore, the impugned show-cause notice deserves to be quashed and set aside on the similar grounds. The impugned show-cause notice dated 06.01.2023, being without reasons, is cryptic and deserves to be quashed and set aside, and is hereby quashed and set aside - Petition allowed. 2023 (6) TMI 629 Seeking permission to withdraw the instant petition - directing/ commanding/ mandating the respondents to immediately released the bank accounts of the petitioner - HELD THAT:- The instant petition is dismissed as withdrawn. 2023 (6) TMI 628 Search and seizure - seizure officer has authority to pass penalty order or not - Seeking to quash the order of confiscation/adjudication under Annexure-10 levying and demanding fine and penalty - HELD THAT:- It is admitted fact that the authorization for inspection, search and seizure has been granted by the Joint Commissioner of State Tax, Enforcement Range on 22.12.2022 to Mr. M.K. Pradhan. Since the said power has been vested with him, on that basis he carried search and seizure operation of the petitioner s premises and thereafter passed the order of demand under Annexure-10 imposing penalty and fine under Section 130 of the OGST/CGST Act to the tune of Rs. 5,48,13,320/-. The dispute raised before this Court that the search and seizure authority having passed the order under Annexure-10 has exceeded its jurisdiction is rejected. Rather the authority has acted within the competency to pass such order. Therefore, the contention raised that he cannot be a judge of his own cause, that principle is not applicable to the present case. Had the same been passed under Section 73 or Section 74 of the Act, then matter would have been different. But here the order has been passed under Section 130 of the OGST/CGST Act. Though certain other questions were raised by Mr. R.P. Kar, learned counsel for the petitioner, in view of the fact that the order impugned is appealable one, this Court disposes of the writ petition giving liberty to the petitioner to pursue its remedy before the appropriate authority, if it is so advised. This writ petition stands disposed of. 2023 (6) TMI 627 Seeking grant of Regular Bail - fraudulent availing and passing on ineligible/fake Input Tax Credit - firms found non-existent at their registered premises - HELD THAT:- Considering the facts mentioned in the order dated 30th September 2021 and the fact that the petitioners were in custody for 70 days; complaints had already been filed and the evidence is primarily documentary in nature, the order dated 30th September 2021 is made absolute till the trial or the complaint is quashed. Liberty is granted to the petitioners to raise the legal issues raised herein in any other appropriate proceedings - Petition disposed off. 2023 (6) TMI 626 Parallel proceedings - Requirement to pay 20% of the disputed tax within a time frame for being entitled to interim protection from recovery - whether the State and the Central Authorities can proceed parallely with regard to the same set of facts and what would be the effect of Section 6(2)(b) the West Bengal Goods and Services Tax Act, 2017 which states that where a proper officer under the Central Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under the WBGST Act on the same subject matter? HELD THAT:- Admittedly, in the instant case the DGGI, Kolkata Zonal Unit conducted searches and commenced the investigation as on 13.11.2018. It may be true that show cause notice was issued by the State Authority on 30th September, 2022 but the show cause notice issued by the Central Authority preceded the said show cause notice. Therefore, the assessee had filed a rectification application pointing out this fact and requesting that since the Central Authority has already issued the show cause notice dated 30th September, 2022, before the notice dated 30th November, 2022 issued by the State Authority, requested to drop the proceedings. The said request for rectification was rejected. Admittedly, the investigation/proceedings commenced by the Central Authority is more comprehensive as it covers several other parties as well and the said party has been subject matter of issue with regard to the proceedings initiated by the State Authorities. Therefore, the question would be as to whether the State Authority can be permitted to proceed further. The recovery proceedings should remain stayed without imposing any pre-condition. Accordingly, the authorities are restrained from initiating any coercive steps for recovery till the disposal of the writ petition. Consequently, the condition imposed by the learned Single Bench directing deposit of 20% of the disputed tax is set aside. The time for filing affidavit-inopposition by the respondent is extended by three weeks from date, reply, if any, be filed within two weeks thereafter - petition disposed off. 2023 (6) TMI 625 Refund of eligible excess ITC amount - refund was for the period of the year 2018 and the jurisdiction in respect of the fourth respondent came only from 2019, the 4th respondent directed the petitioner to approach the third respondent - HELD THAT:- This Court directs the petitioner to give a manual application to the fourth respondent along with supporting documents within a period of two weeks from today. The fourth respondent is directed to consider the request of the petitioner and pass appropriate orders on merits and in accordance with law within a period of eight (8) weeks thereafter. This Writ Petition is disposed of. 2023 (6) TMI 580 Refund of IGST paid on export of goods - Restriction on receipt of certain supplies under Rule 19(10) of CGST - Advance Authorization scheme / Deemed Export etc. - Constitutional Validity of sub rule (10) of Rule 96 of the CGST Rules, 2017 - ultra vires Section 16 of the IGST Act, ultra vires Sections 54 and 164 of the CGST Act, 2017, and ultra vires Articles 14 and 19(1)(g) of the Constitution - levy of IGST on goods exported - refund of such tax paid on the goods exported under Section 16(3) of the IGST Act, 2017 - HELD THAT:- It was pointed out by learned advocate Mr. Dhaval Shah that in MESSRS KOSHAMBH MULTITRED PVT. LTD. VERSUS UNION OF INDIA [ 2023 (3) TMI 1371 - GUJARAT HIGH COURT] involving similar challenge has been entertained by this Court and ad-interim relief was also granted. In the facts and circumstances of the case and in aforesaid view, Notice to the respondents returnable on 22.06.2023. By way of ad- interim relief, it is directed that respondent authority shall not make any coercive recovery from the petitioner in respect of the refund of the integrated tax already paid, till further orders. Income Tax 2023 (6) TMI 624 Business expenses claimed under the head of Provision for Warranty Expenses - addition u/s 37 - HELD THAT:- We see that the Assessee company has not committed any error in making provisions inasmuch as large number of sophisticated goods were being manufactured in the past and if the facts established show that defects existing in some of the items manufactured and sold then the provision made for warranty in respect of the army of such sophisticated goods would be entitled to deduction from the gross receipt u/s 37 of 1961 Act. Consequently, the issue of provision of warranty in the facts and circumstances of the case goes in favour of the Assessee and against the Revenue. Provision of Liquidated Damage, Miscellaneous Provisions and Provision for Leave Travel Assistance, Sales Promotion - ITAT allowed deduction - HELD THAT:- We see that the Assessee has not committed any violation of the provisions of the I. T. Act and its Rules. As a matter of fact, learned I.T.A.T. has discussed each and every ground raised by the Revenue in detail and rejected the contentions of the Revenue and dismissed their appeal filed before it. We hold that no error has been committed by the learned tribunal in rejecting the claim of the respondent revenue and dismissing the respective appeals. 2023 (6) TMI 623 Reopening of assessment u/s 147 - reference made to the TPO for determining the arms length price of the international transaction - HELD THAT:- AO can make reference to the TPO u/s 92CA of the Act only after selecting the case for scrutiny assessment. The instructions of CBDT is also a pointer to the legislative import that the reference to the TPO for determining the arm s length price in relation to an international transaction is envisaged only in the course of the assessment proceedings, which is the only process known to the Act, whereby the assessment of total income is done. Therefore, Tribunal was correct to hold that when reference was made to the TPO by AO for determination of arm s length price in relation to the international transaction, no assessment proceedings were pending and hence it was invalid reference. The subsequent order passed by the TPO determining the assessment to the international transaction was a nullity in law and void ab initio. AO could not have relied upon an order of the TPO which is a nullity to form a belief that certain income chargeable to tax has escaped the assessment for the relevant Assessment Year. No substantial questions of law arise. 2023 (6) TMI 622 TDS u/s 194LA - compensation amount paid on account of acquisition of land - distinguish acquisition of agricultural land and non-agricultural land - HELD THAT:- As per Section 194LA any person responsible for paying to the resident any sum being in the nature of compensation or enhanced compensation, or consideration or enhanced consideration on account of compulsory acquisition of immovable property other than agricultural land at the time of payment of such sum, has to deduct an amount equivalent to 10% as income tax and deposit the same with the concerned authority to the account of the assessee. A perusal of Section 96 of the Act of 2013 would make it abundantly clear that no income tax or stamp duty shall be levied on any award or agreement made under the Act except under Section 46. A reading of Section 46 of the Act of 2013 would indicate that it relates to purchase of land through private negotiations, which necessarily means otherwise than through acquisition. This being so since the purchase price is fixed as per private negotiation and not by fixing of compensation under an award to be passed by following the parameters laid down under the Act of 2013. Thus, any land acquired and compensation paid in terms of an award passed under the Act of 2013, in terms of Section 96 of the Act of 2013, the compensation payable thereunder would not attract any income tax or stamp duty in terms of Section 96 of the Act of 2013 which is reinforced by the second proviso to Section 194LA of the IT Act. In the light of Section 96 of the Act of 2013 read with Second proviso to Section 194LA of the IT Act would categorically indicate that no such distinction could be made and that all lands which are acquired and the award passed in terms of the Act of 2013, is exempted from payment of income tax. When the compensation itself is exempted from income tax, the question of deducting tax at source on such exempted income would also not arise. Hence, looked at from any angle, as long as the award is made under the Act of 2013, the compensation paid would not be liable for any tax. It is not in dispute in the present matter that the an Award has been passed under the Act of 2013. This aspect has been completely missed out by the SLAO in his letter to the court, and the court, without looking into the provisions and appreciating the import thereof, has passed the impugned order, requiring this court to intercede and correct the injustice caused. ORDER: The entire compensation amount payable to the petitioner is directed to be paid to the petitioner without deduction of any tax at source. The Additional Registrar General of this Court is directed to forward a copy of this order to all the Courts which are handling land acquisition matters including the compensation thereto for necessary compliance. 2023 (6) TMI 621 Charges against Income Tax Officer (ITO) and Assistant Director of Income Tax (Investigation) - accumulation of wealth disproportionate to his known source of income to the extent of 285% - independent approval of the Disciplinary Authority - disciplinary proceedings were initiated against the petitioner way back in the year 2006 - as argued there is no application of mind on the part of the Competent Authority (in the year 2003) as it was a general direction for issuance of charge sheets to many officers HELD THAT:- Disciplinary Authority has to approve the initiation of disciplinary proceedings against the officer, approve the charge memo and appoint Inquiry Officer / Presenting Officer. In the present case, as noted from the above, the mandate of the Supreme Court in B.V. Gopinath [ 2009 (7) TMI 1384 - DELHI HIGH COURT] has been duly complied with by the respondents. Competent Authority has directed the issuance of charge sheet in terms of the approval given for initiating major penalty proceedings on December 1, 2005. The Competent Authority has also approved the Charge Memo under Rule 14 of the Rules of 1965, and had also accorded the appointment of Inquiry Officer / Presenting Officer, if required, in the course of departmental proceedings to be initiated against the petitioner. The decisions of the Finance Minister approving the issuance of memorandum under Rule 14 of the Rules of 1965 were with a clear application of mind. So, in that sense the approvals were in conformity with the judgment of the Supreme Court in CHAIRMAN-CUM-M. D., COAL INDIA LTD. [ 2011 (4) TMI 1216 - SUPREME COURT] . No merit in the petition, the same is dismissed. 2023 (6) TMI 620 Reopening of assessment - correctness of the order passed u/s 148 along with the impugned order passed u/s 148A(d) - Order at Annexure-A does not reflect consideration of the replies made by the petitioner pursuant to the show cause notice - HELD THAT:- Perused the impugned order passed u/s 148A(d) and the reasons clearly no consideration of the replies at Annexures G and J. The impugned order is passed stating that there are no details furnished with regard to source of remittances and purchases. A bare perusal of the table which is a part of the reply at Annexure 'G' would indicate otherwise. There is a case made out for reconsideration of the order under Section 148A(d) of the Act at Annexure-A. Accordingly, the order at Annexure-A is set aside with a direction to the Authority to reconsider the replies at Annexures G and J and advert to the same while passing fresh orders under Section 148A(d) of the Act. The petition is disposed off. The impugned order at Annexure-A is set aside subject to the directions as made out. 2023 (6) TMI 619 Validity of reopening of assessment - proceedings do not have the approval of the specified authority - according to revenue, the escaped income is below Rs.50,00,000/-, which is the threshold requirement provided under Section 149(1)(b) - HELD THAT:- Revenue, cannot but accept that the escaped income, as noted by us on 02.05.2023, is below Rs.50 lakhs. It is also obvious that more than three years have elapsed, since the end of the Assessment Year (AY) in issue. We had indicated on 02.05.2023 that if the department were to give instructions to resist the petition, a counter-affidavit should be filed. No counter-affidavit has been filed. Therefore, we will have to accept, for the moment, that the assertions made in the writ petition on facts are correct. Revenue cannot but accept that if the facts as set out in the petition are correct, then the reassessment proceedings cannot progress further. Prayer made in the petition is allowed. Impugned notice issued u/s 148A(b) and the order passed u/s 148A(d) are quashed. Decided in favour of assessee. 2023 (6) TMI 618 Disallowance u/s 14A - Expenditure incurred on exempt income - deletion of disallowance by Tribunal, as assessee has not made any claim qua exempt income - HELD THAT:- There is no dispute, that this issue is covered by a judgment of Cheminvest Limited [ 2015 (9) TMI 238 - DELHI HIGH COURT] and Chettinad Logistics (P.) Ltd. [ 2017 (4) TMI 298 - MADRAS HIGH COURT] and revenue does not dispute the fact that special leave petition preferred against the said judgment was dismissed by the Supreme Court [ 2018 (7) TMI 567 - SC ORDER] No substantial question of law arises for our consideration. 2023 (6) TMI 617 Disallowance u/s 14A - whether addition can exceed the amount of exempted dividend earned by the respondent/assessee? - HELD THAT:- This issue is covered against the appellant/revenue by the judgment rendered by this court in Joint Investments Pvt. Ltd. v. Commissioner of Income Tax [ 2015 (3) TMI 155 - DELHI HIGH COURT ] as held window for disallowance is indicated in Section 14A and is only to the extent of disallowing expenditure incurred by the assessee in relation to the tax exempt income . This proportion or portion of the tax exempt income surely cannot swallow the entire amount. In this case as well, the admitted position is that the dividend income, exempt u/s 10(34) Act, earned by the assessee, was Rs.45,06,37,556/-. and assessee had itself made a disallowance u/s 14A of the Act amounting to Rs.1,93,75,05,498/-. Over and above the aforesaid amount, AO had sought to disallow the amount equivalent to Rs.28,63,13,621/-. Clearly, the disallowance sought to engulf the exempt dividend income earned by the respondent/assessee. 2023 (6) TMI 616 Disallowance u/s 14A r.w.r. 8D - contention of the assessee that he had inter alia suo moto worked out the disallowance - HELD THAT:- As in the first round of appellate proceedings, CIT(A) had directed the AO to work out the disallowance as per the directions contained in the order dated 10.03.2015 which was not complied by the AO. Again in the second round of order, CIT(A) again directed the AO to work out the disallowance u/s 14A as per the directions contained therein but the same was also not complied with by the AO. It is the settled law that directions issued by a superior appellate authorities are binding on the AO and is required to strictly follow the directions of the appellate authorities and decide the issue as per the directions of the appellate authorities. It is not open to AO to ignore the directions of the appellate authorities unless the directions of the appellate authorities are overruled/ stayed by higher judicial forum. In the present case, we find that the directions given by CIT(A) has not been followed by AO. We therefore direct the AO to rework the disallowance u/s 14A r.w.r 8D as per the directions of CIT(A) in the first round of appeal and in accordance with law. Credit for TDS as claimed in the revised return as per 26AS statement denied - grievance of the assessee that despite the directions of CIT(A) to AO to grant the credit for TDS and prepaid taxes, the AO has not granted the same - HELD THAT:- Whatever credit of taxes and TDS which has been deducted on behalf of the assessee and the credit for which the assessee is entitled, the assessee should be given the credit of those taxes and the assessee should not be made to enter into prolonged litigation on the issue more so, when the claim of the credits is not found to be bogus. We do not appreciate the conduct of the authorities for not granting the legitimate credit of the tax paid on behalf of the assessee and assessee should not be made to fight for getting the credit of the prepaid taxes and TDS which is rightfully due to it - We direct the AO to promptly grant the credit of the prepaid taxes including TDS which is allowable to assessee in accordance with law at the earliest. Decided in favour of assessee. 2023 (6) TMI 615 Validity of order passed by CIT-A u/s 250 - CIT raising demand u/s 156 on the ground that the assesses has furnish inaccurate particulars of Income - HELD THAT:- From all foregoing decisions of the ld. CIT(A), it is clear that there is no infirmity whatsoever on all the points decided by him. The grounds taken up by the assessee in the appeal, as extracted above, do not refer to any prejudice having been caused by virtue of assessment or the order passed by the ld. CIT(A). The grounds are general and talk about the raising of demand u/s. 156, which is consequential to the assessment. There is no specific challenge to any addition. In fact, there is no addition at all inasmuch as the AO accepted the returned income and assessed the assessee at the same level. In the hue of the foregoing, it is clear that the view taken by the ld. CIT(A) is perfectly in order, not requiring any interference. Decided against assessee. 2023 (6) TMI 614 TP adjustment - international transaction undertaken with overseas Associated Enterprise (AE) - Comparable selection - assessee is a resident corporate entity stated to be engaged in Airport Ground Handling Services for Lufthansa Airlines, providing services in pursuance to an agreement executed with the concerned AE - HELD THAT:- Exclude Container Corporation of India from the list of comparables as functionally dissimilar with that of assessee. Sanco Trans Limited - As no segmental accounts prepared by M/s Sanco Trans has earned total operating revenue of Rs.4296.36 lakh and total employee cost incurred is 511.96 lakhs which in ratio terms is 11.91%. This shows that this is also not a service-oriented company. Thus we hold that Sanco Trans Limited cannot be treated as comparable to the assessee. 2023 (6) TMI 613 Revision u/s 263 - unexplained cash deposited during demonetization - as argued reasons for initiating the complete scrutiny under Computer Aided Scrutiny Selection ( CASS ) by AO was Large Cash Deposits during Demonetization - HELD THAT:- The assessee filed details of notes for different denomination giving details as required by the AO - The entire cash deposits into Axis Bank account were directly made by the Debtors of the assessee and the details of cash deposits from 11 parties were furnished before the AO. We also note that the assessee has explained the questionnaire issued by the AO. After the reply of the assessee dated 28.12.2019, the AO did not ask further questions which clearly shows that the AO was satisfied with the reply submitted by the assessee and passed the assessment order. AO is an investigation officer and thereafter he is an adjudicating officer. We note from the paper books filed by the assessee that the AO has issued notice u/s. 142(1) for investigating the matter which were subject matter of issues selected for scrutiny under CASS and from the submissions by the assessee, the AO was satisfied. When the AO has formed one possible view, then the ld. Pr. CIT cannot exercise jurisdiction u/s. 263 of the Act. The order passed by the AO is not erroneous prejudicial to the interests of the revenue. CIT is not correct in observing that the A.O. did not conduct proper enquiry on the issues before completion of assessment. Decided in favour of assessee. 2023 (6) TMI 612 Recovering any tax dues from the assessee declared insolvent under the insolvency and bankruptcy Act - HELD THAT:- As assessee itself has made a representation before the learned CIT(A) as per submission dated 21 November 2022 stating that the tax dues for assessment year 2017-18 cannot be recovered from the assessee as it was part of the resolution plan. CIT(A) reached at a conclusion that when nothing can be recovered from the assessee, there could not have been any grievance on part of the assessee; therefore he held that the appeal of the assessee is infructuous and was dismissed. Before us also it is apparent that nothing is recoverable from the assessee as the insolvency resolution plan included assessment year 2017-18 and tax demand any arising out of that assessment proceedings is not at all enforceable. According to the provisions of section 246A, the appeal could be preferred before the learned CIT(A) if assessee is aggrieved with the specified assessment. When the learned CIT(A) has clearly held that assessment order is not enforceable, there is no reason for filing any appeal before him. Even otherwise, he has already directed AO that the above demand cannot be recovered and if he wants to educate this issue the learned assessing officer should proceed before NCLAT. In this case assessee is not required to pay any tax, there is no liability of any nature arising on the assessee as well as the order of the learned CIT(A) has become final holding that AO does not have any right to pursue any consequences out of the assessment order against the assessee therefore it is in consequential that whether the appeal of the assessee before CIT(A) is stated to be dismissed or allowed - Decided in favour of assessee. 2023 (6) TMI 611 Nature of receipt - interest subsidy received under technology upgradation fund scheme - revenue or capital receipt - HELD THAT:- As decided in assessee own case [ 2020 (3) TMI 942 - ITAT MUMBAI ] issue is squarely covered in favour of the assessee wherein it has been held that interest subsidy received under technology upgradation fund scheme, though credited in the net off against the interest expenditure in the books of account is still capital in nature and therefore not chargeable to tax. Further the argument of the learned departmental representative has also been negated about the applicability of explanation 10 to section 43 (1) of the act by the decision of the coordinate bench in case of orbit exports [ 2020 (9) TMI 617 - ITAT MUMBAI ]. In view of this both the grounds of appeal raised by the learned assessing officer are dismissed. 2023 (6) TMI 610 Reopening of assessment u/s 147 - Taxability of capital gains in the capacity of a Legal Representative of deceased assessee [mother] - co-ownership in property - one of the co-owners is solely picked out - real owner v/s nominee in property of deceased assessee [mother] - assessee replied stating that his original return of income filed may be treated as return filed in response to the notice u/s 148 - HELD THAT:- As rightly observed by the CIT(A), the status of the assessee is obfuscated from the inception. AO recorded the reasons that the assessee had to account for the capital gains in the capacity of a Legal Representative of his mother and as a matter of fact, the notice under section 148 also reads the same. But in all the communication, the PAN of the assessee is referred to the PAN in his individual capacity. In these circumstances, the assessee seems to justify his request to treat the original return of income as the return of income in response to section 148 notice. Even if AO passed the assessment order by showing the assessee as the Legal Representative of late Smt. V. Rajyalakshmi, but he considered the return of income filed with PAN of the assessee [LR] and took into consideration the professional income returned by the assessee. In these circumstances, we find it difficult to hold that the learned CIT(A) committed any error. In the reasons recorded themselves show that the assessee is not the sole Legal Representative of late assessee and according to the reasons there is another brother - Hon'ble Madras High Court in the case of CIT vs. Muthukarupan [ 2006 (9) TMI 140 - MADRAS HIGH COURT] upheld the findings of the Tribunal that it would be travesty of justice if one of the co-owners is solely picked out and an enhanced income for the same property is attributed in his hands. Decided against revenue. 2023 (6) TMI 609 TP adjustment - claim of working capital adjustment - HELD THAT:- Assessee had never raised any argument seeking working capital adjustment. It is for the first time before the Tribunal that the assessee has raised a plea for grant of working capital adjustment. For adjudicating additional ground no fresh document is required to be adduced. Therefore, we admit additional ground of appeal. Since, the relief sought has been raised for the first time before the Tribunal, we deem it appropriate to restore the additional to the file of Assessing Officer for his consideration. The Assessing Officer is directed to consider the claim of working capital adjustment made by the assessee in the additional ground of appeal. Disallowance of sales promotion expenditure u/s. 40(a)(ia) - HELD THAT:- We find that similar ground was raised by the assessee in Assessment Year 2016-17[ 2023 (2) TMI 190 - ITAT MUMBAI] where held as in view of this second proviso, we direct the ld. AO to make factual verification as to whether the recipients had duly disclosed the subject mentioned receipts in their returns of income. The assessee is directed to furnish the necessary details in this regard in the prescribed form. Assessee appeal is allowed for statistical purpose 2023 (6) TMI 608 Computing export profit deductible u/s. 80 HHC - inclusion/exclusion of processing charges and lease rent received in the total turnover - HELD THAT:- The Hon'ble Apex Court in K. Ravindranathan Nair [ 2007 (11) TMI 10 - SUPREME COURT] explained that the processing charges constitute an important part of the cashew business and, therefore, were to be included in the TT thereof u/s. 80HHC(3) (para 23). Also, profit incentives and items like rent, commission, brokerage, etc., though form part of gross total income, had to be excluded in computing PB as they were independent incomes , which had no element of export turnover. Board Circular 621, dated 19.12.1991 ( explaining the amendments to the Act by Finance (No.2) Act, 1991, does so qua sec. 80HHC. Same sets out the rationale for deduction of independent incomes in computing profits of the business , on the basis of which, applying further filters, the export profit is determined. That is, incomes, which though stand credited to the Profit Loss Account, have no element of turnover. As some expenditure might be incurred in earning these incomes, which is generally by way of common expenses, an ad hoc deduction from such incomes is provided to account for the same, explaining thus the basis for deduction of such incomes at 90% (as against 100%) thereof. Clearly, there is a total harmony between the amendments as explained by the Board and as later elucidated by the Hon'ble Apex Court. We direct as under: - (a)processing charges shall form part of the total turnover; (b) profit on processing charges shall not be excluded in computing PB; (c)processing rent an independent income, shall not form part of TT, but shall stand reduced in computing PB, at 90%; (d) discount received on purchase of tin plates, reduced in computing PB vide assessment order dated 16.02.2099, has not been similarly reduced while giving effect vide order dated 09.04.2012, so that it obtains no longer. Being an integral part of assessee s trading operations, it is not an independent income and, therefore, rightly not reduced by the AO. The same, in fact, also forms part of the third question referred to the Hon ble High Court, and which had directed thus. No other adjustment, either to TT or PB stands made by the AO per the original assessment order. He has however while giving appeal effect reduced 90% REP premium (Rs.5,77,347), i.e., Rs. 5,19,612, in computing the PB. The same is not understood . When no adjustment in its respect was made per the original assessment, either by the assessee or the AO, how could the same be regarded as in dispute and, accordingly, subject to adjudication at any stage, including before the Hon'ble High Court, for it to adjudicate thereon per it s order dated 19/2/2009? The same has not been shown as so. The AO, if he considered the same as warranted, ought to have invoked section 154 of the Act. Even assessee has credited, and only rightly so, the entire amount of REP premium to the Profit Loss Account, it is only the profit component therein that would stand to be excluded on the transfer of the REP, as the assessee claims with reference to the decision in Topman Exports [ 2012 (2) TMI 100 - SUPREME COURT] Further still, as it appears, the same falls u/s. 28(iiie) of the Act, adjustment in respect of which stands co-opted in Explanation (baa) by Taxation Laws (Amendment) Act, 2005 w.r.e.f. 01.04.1998,i.e., AY 1998-99 onwards. As such, considered whichever way, there is no basis for the said adjustment in the instant proceedings. Appeal by the assessee is allowed. 2023 (6) TMI 607 TP Adjustment - Comparable selection - Larsen and Toubro Infotech Ltd., (ii) Mindtree Limited, (iii) Persistent Systems Ltd., and (iv) Infosys Limited - HELD THAT:- In the present case, the functional profile, assets, risks and activities of the assessee company are admittedly similar to the previous assessment years. Following the earlier years orders in the assessee s own case and the order of the Tribunal in the case of Yahoo Software development India P. Ltd.[ 2022 (7) TMI 1349 - ITAT BANGALORE] we direct exclusion of the above four companies from the final list of comparables. Tata Elxsi Ltd. - This company is not comparable with pure SWD services provider like the assessee this Assessment Year also. Therefore the same is directed to be excluded from the comparables. Cygnet Infotech - This company is not functionally comparable with the assessee as the functional profile of this company is dissimilar with the assessee company and excluded from the comparables. Infobeans Technologies Ltd - As relying on case of Radisys India Ltd. [ 2023 (3) TMI 598 - ITAT BANGALORE] we direct exclusion of this company on functional dissimilarity. Nihilent Ltd - Respectfully following the decisions of the Tribunal in assessee s own case for earlier AYs and in the case of Subex Ltd. [ 2023 (4) TMI 224 - ITAT BANGALORE] this company is excluded based on functional dissimilarity. Consilient Technologies (P) Ltd. - As it is appropriate to remit this issue to the file of AO/TPO to consider it afresh in the light of submissions made by the Ld. A.R. with regard to functionality of the comparable. Threesixty Logica Testing Services (P) Ltd - Tribunal in the case of Triology EBusiness Software India (P) Ltd. [ 2013 (1) TMI 672 - ITAT BANGALORE] and Lionbridge Technologies (P) Ltd., [ 2019 (8) TMI 1868 - ITAT MUMBAI] had clearly brought out the distinction between the company which is engaged in the business of providing software testing services and a company which is engaged in software development. As clearly held that a software development company cannot be compared with a software testing services - we restore the issue of exclusion of Threesixty Logica Testing Services (P) Ltd., to the files of the AO/TPO to consider whether the said company can be compared with that of the assessee company. Cybage Software (P) Ltd. - The functional profile of this company remains the same for both the Assessment Years. Therefore, respectfully following the above decision of the Tribunal in assessee s own case for earlier AYs, this company is held to be functional dissimilar and excluded from the comparables. Disallowance u/s 40(a)(i) - TDS u/s 195 or 192 - assessee had seconded employees from its AE - HELD THAT:- We restore the matter to the files of the AO. The AO is directed to consider the issue afresh by taking into account the principles laid down by the Hon ble jurisdictional High Court in the case of Flipkart Internet Pvt. Ltd [ 2022 (6) TMI 1251 - KARNATAKA HIGH COURT] . AO is directed to examine whether the assessee has deducted tax at source under section 192 of the Act with respect the salary paid to the seconded employees in its entirety. If assessee is able to prove that it had deducted tax at source with regard to the salary payment of the seconded employees in its entirety, the AO shall not make any disallowance under section 40(a)(i) of the Act for non-deduction of tax under section 195. 2023 (6) TMI 606 Double taxation - Rectification of mistake u/s 154 - Rental income was offered as income from house property - Addition of the same income under the head income from other sources - adjustment u/s 143(1) - HELD THAT:- Adjustment which has been made by CPC, Bengaluru relates to the rental income as reflected in Form No. 26AS which has form the basis of the adjustment done by CPC, Bangaluru wherein the same has been brought to tax under the head income from other sources . There is clearly a mistake apparent from record while processing the return of income wherein the CPC, Bengaluru has acknowledged the rental income under the head income from house property as so declared by the assessee in his return of income, and at the same time, has brought to tax again under the head income from other sources resulting in double taxation of same income - Addition so made by the CPC, Bengaluru and confirmed by the Ld. CIT(A), NFAC, Delhi is hereby directed to be deleted. Decided in favour of assessee for statistical purposes. 2023 (6) TMI 605 Levying late filing fees u/s 234E - Delay in deposit of TDS and Form 27Q on purchase of immovable property - procedural error in filing prescribed TDS form on account of old age and human error - intimation processed u/s 200A - HELD THAT:- Assessee being senior citizen has deposited TDS amount immediately after sale consideration was received and there was no lapse on the part of the assessee while depositing the TDS amount to the Treasury of Government of India. Due to the circumstances, the assessee could not file form 27Q within the time frame, but the assessee s intention is clear as the assessee filed the same in January 2021. Thus, merely on the ground that the assessee has not filed Form 27Q on 31.07.2019 and thus late filing cannot be the criteria for levying fees under Section 234E of the Act. Under the current circumstances, in the present case, it will be appropriate to delete the said levy of fee. Appeal of the assessee is thus allowed. 2023 (6) TMI 604 Deduction u/s 35(2AB) - in absence of Form 3CL issued by the competent authority, assessee s claim of deduction denied - HELD THAT:- Perusal of Form 3CL, it was issued by the competent authority on 31st March, 2022, which is post completion of assessment but before order was passed by the first appellate authority. As could be seen from the perusal of Form 3CL, it was issued by the competent authority on 31st March, 2022, which is post completion of assessment but before order was passed by the first appellate authority. Surprisingly, while deciding the appeal, the first appellate authority has completely ignored Form 3CL issued by the competent authority, though, it was placed on record. When the competent authority has issued Form 3CL entitling the assessee to claim deduction in respect of both capital and revenue expenditure, which is a mandate u/s 35(2AB) of the Act, the departmental authorities cannot disentitle the assessee from availing the deduction by ignoring Form 3CL - Assessee appeal allowed. 2023 (6) TMI 603 Estimation of income - real income/commission income - Unexplained deposits in bank account - undisclosed income - assessee is engaged in the business of cheque discounting - as argued by assessee once the AO has himself accepted in the assessment order that the assessee is engaged in the business of cheque discounting and has also made a specific note of the mode and the manner in which the business was being carried out, then, only the income earned by way of commission on such cheque discounting business can be subject to tax in the hands of the assessee and not the entire cash deposits - HELD THAT:- It would not be fair to treat the entire cash deposits as the undisclosed income of the assessee. We observe that AO himself, on the basis of documents unearthed during the course of search, has observed that the assessee is engaged in the business of cheque discounting and in the assessment order, the AO has also on sample basis given a finding as to the quantum of commission earned by the assessee on such cheque discounting on sample basis. Even before the Service Tax Department, the assessee had submitted that it is in the cheque discounting business and it has been also been accepted that the assessee is engaged in the business of cheque discounting in order to earn commission income. Therefore, in the instant set of facts, it would not be correct to bring to tax the entire cash deposits as the assessee s undisclosed income. As the assessee has submitted that he was operating through middlemen and does not know the name of beneficiaries in most of cases. However, most times, even the middlemen could not be contacted by the Department, since notices could not be served upon them as they were not available. Accordingly, in absence of details forthcoming from the assessee, a reasonable percentage may be arrived at, in the instant facts to arrive at the commission income earned by the assessee. It would be reasonable to take 0.25% of total deposits in the bank accounts owned/ operated by the assessee as commission income of the assessee for the assessment year under consideration. Assessee s claim of secret commission paid to other middlemen - As where the assessee has clearly submitted that he has no records of parties to whom such secret commission , but also considering the fact that the assessee submitted that payment of such commission helped in generating the cheque discounting business, we are directing that 50% of such secret commission may be allowed, in the interests of justice. Cash found during the course of search - assessee could not explain the source of such cash found - CIT-A accepted that cash found may be considered as application of income and the effect of telescoping may be give - Before us, assessee contented that while giving the benefit of telescoping, Ld. CIT(Appeals) erred in not giving a specific direction that this telescoping is required to be given against the corresponding income which was offered for taxation partly in the year under consideration and partly in the earlier years - HELD THAT:- As in view of the submission of the counsel for the assessee, we are restoring this issue to the file of Ld. CIT(Appeals) for necessary verification. The DR has also not objected to this issue being restored to the file of Ld. CIT(Appeals). Customs 2023 (6) TMI 602 Smuggling - gold of foreign origin - seizure under Section 110 of the Customs Act, 1962 - corroborative evidences that statement under Section 108 of the Customs Act cannot be read against the maker of the statement - HELD THAT:- After perusing the averments made in the present bail application as well as rejection order, this Court is of the opinion, that learned counsel for the applicant could not point out any good ground for grant of bail to the applicant. The bail application filed on behalf of the applicant is hereby rejected, at this stage - it is directed that the trial of the aforesaid case pending before the concerned court below be concluded expeditiously, preferably within six months in accordance with Section 309 Cr.P.C. 2023 (6) TMI 601 Levy of Anti-dumping Duty - aluminium based copper clad laminates imported by the respondent, which is a manufacturer of printed circuit boards - notification dated 06.12.2021 - HELD THAT:- As the finding recorded by the Commissioner (Appeals) that aluminium based copper clad laminates are not manufactured in India has not been controverted by the appellant, the three appeals filed by the department deserve to be dismissed and are dismissed. 2023 (6) TMI 600 Maintainability of appeal - challenge to self-assessment made - appeals rejected solely on the ground that the self assessment is not a appealable order and therefore, no appeal can be filed against such order - HELD THAT:- The Commissioner (Appeals) has rejected the appeal solely on the ground that no appeal can be filed against the self assessment order - the Commissioner orders did not have the benefit of the decision of the Hon ble Apex Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] where it was held that There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self-assessment is not found to be satisfactory, an order of re-assessment has to be passed under Section 17(4). Section 128 has not provided for an appeal against a speaking order but against any order which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law. The case is remanded back to the Commissioner (Appeals) for re-consideration. 2023 (6) TMI 599 Valuation of imported goods - LED lights - Value declared in the bill of entry rejected - case of Revenue is that declared value of goods was very much in the lower side, in comparison to the contemporaneous import prices - no speaking order was passed as per the provisions of sub-section (5) of Section 17 of the Customs Act, 1962 - violation of principles of natural justice - HELD THAT:- It is evident that since the declared value was enhanced by the department by way of re-assessment, the mandatory requirement of passing of speaking order as per sub-section (5) of Section 17 ibid has not been complied with. In view of the fact that the value has been enhanced by the department, which is contrary to the declaration made by the appellant, it is opined that the proper officer should pass a speaking order, by complying with the principles of natural justice. The appeal is allowed by way of remand to the proper officer for passing of speaking order in terms of Section 17(5) of the Customs Act, 1962. 2023 (6) TMI 598 Confiscation of Vehicle - redemption fine - penalty - rejection of declared value - value of the vehicle was proposed to be re-determined under Rule 9 of the Customs Valuation Rules, 2007 on the basis of value available on Parker s website - benefit of Notification No.21/2002-Cus dated 01.03.2002 - HELD THAT:- The adjudicating authority has held that the proposed value in the show cause notice is not acceptable. The said order was not challenged by the Revenue before any authority. Therefore, the said part of the order attains finality as there is no proposal in the show-cause notice to take valuation available from the manufacturer s website. Therefore, the ld.Commissioner (Appeals) has rightly held that the value adopted by the ld.Adjudicating authority is not acceptable in the absence of any other value of the said goods available at that time. Therefore, the declared value is to be accepted - there are no infirmity in the above observations. Further, it is the fact that the vehicle was manufactured in June 2007 as declared by the manufacturer and the registration was in August 2007, which was manufactured by the respondent vide Invoice of June, 2007 and the Bill of Lading was also available of July 2007. In that circumstances, the vehicle was registered only for the purposes of transportation for the Port. Therefore, it cannot be held that the vehicle was old and used. In that circumstances, the ld.Commissioner (Appeals) has rightly given the benefit of Notification No.21/2002-Cus dated 01.03.2002 Sl.No.344. The goods are not liable for confiscation as the facts are not controverted by any cogent evidence - It is found that at the time of import, the vehicle was physically examined and found new one - the respondent is entitled to the benefit of Notification No.21/2002-Cus dated 01.03.2002 Sl.No.344. The vehicle is not liable for confiscation, redemption fine and penalty are not imposable - there are no infirmity in the impugned order and the same is upheld - The appeal filed by the Revenue is dismissed. 2023 (6) TMI 597 Violation of principles of natural justice - Confiscation - gold bar weighing 1 kg - Department has not adduced proper evidence towards Delivery of the Gold - non-allowing of cross-examination of Sri Siddhart Mehta, Authorized Signatory and Accountant of JJ House - HELD THAT:- It is seen that the Appellant has not been given proper opportunity to defend his case. They were not allowed to cross-examine the crucial witness i. e. Mr. Siddharth Mehta, Accountant and Signatory of M/s J. J. House Pvt. Ltd. Whose recorded statement is relied upon to place emphasis that the gold was delivered to the Appellant only on 18/11/2017. It is seen that even the statement of Mr. Sripada Barik was retracted by him. In such circumstances, it is felt that the matter is required to be re-visited at the Adjudication level. The matter is being remanded to the Adjudicating Authority for the limited purpose to consider the following:- (i) The Appellant s should be given an opportunity to cross-examine Shri Siddhartha Mehta, Manager of J. J. House Pvt. Ltd. (ii) The Appellant should be given the details of delivery of goods by Brinks India to the Appellant No.2 after the invoice was prepared by J. J. House Pvt. Ltd. on 17/11/2017 from Brink India s Records. Appeal allowed by way of remand. 2023 (6) TMI 596 Scope of Advance Ruling - Matter is already pending / under dispute - Classification of goods proposed to be imported - Data Projector ZH 350, ZW350e, ZX 350e - applicability of Sr. No. 17 of Notification No. 24/2005-Customs, dated 01.03.2005, as amended. Discrepancy in Contrast ratio of subject goods as displayed on the website, against the contrast ratio submitted in their CAAR 1 application - HELD THAT:- Applicant has not given a satisfactory explanation on why there is a difference in contrast ratio mentioned in application vis a vis one mentioned by the manufacture in the public domain. Instead applicant has tried to intermix contrast ratio and dynamic ratio. The applicant s explanation for query mentioned cannot be agreed upon. Why the models covered under present CAAR 1 applications are different from those covered under ongoing dispute with Nhava Sheva-V Commissionerate? - HELD THAT:- It is seen that few of the impugned projectors covered in the Order in original No. 142/2022-23/ADC/Gr.VA/CAC/JNCH dated 23.05.2022, are listed under the Business/Education category of projectors on the said website. Also the technical features of the impugned products are similar to those of the subject goods, for which ruling has been sought. Thus though the model numbers of the impugned projectors are different from the model numbers for which ruling has been sought, the technical features of the projectors are not altogether different. I find that the principal or primary function of the impugned goods is not distinctly dissimilar from the functionality of the subject goods. Further despite been given an opportunity to present their case in the hearing and allowing additional submissions via rejoinder, the applicant has refrained from clarifying Why the models covered under present CAAR 1 applications are different from those covered under ongoing dispute with Nhava Sheva-V Commissionerate? . Thus, Data Projector (Model - ZH 350, ZW350e, ZX 350e) cannot be treated as an altogether different product compared to those covered in the 0-1-0 no. 142/2022-23/ADC/Gr. VA/CAC/JNCH dated 23.5.2022. Hence as declared at Sr. No. 11 of the CAAR-1 application, the matter of classification of similar devices is pending decision in the applicant s own case before an officer of custom i.e. Pr. Commissioner/Commissioner (Appeal) - in view of provisions of Section 28-I of the Customs Act, 1962, ruling in this case is not passed. 2023 (6) TMI 595 Re-import of goods/equipment from a SEZ/FTWZ to DTA - Applicability of serial number 5 of the Notification No. 45/2017-Cus. dated 30.06.2017 - Whether the goods are re-imported? - Whether the re-imported goods have been exported by a hundred percent export-oriented undertaking or a unit in a Free Trade Zone (Special Economic Zone)? HELD THAT:- The condition of re-export of the equipment after their import availing exemption under Notification 50/2017-Cus. is a condition built in the contract of the importer with their Contractor and the applicants have themselves admitted that it is not a condition prescribed under Notification No. 50/2017-Cus. However, the applicant has attempted to make a case starting with export of such equipment(s) on which exemption vide Notification No. 50/2017-Cus has been availed. The Notification No. 50/2017-Cus. provides for compliance with conditions prescribed under the notification. Non-fulfilment of such condition(s) will make the importer liable to pay differential duty along with interest, fine, penalty etc., as the case may be. It appears that the applicant has introduced concept of 'export' in relation to such imported equipment(s) in order to link it with Notification No. 45/2017-Cus which is not warranted but un-necessary as the same appears to have been done to confuse the issue for claiming undue exemption from payment of duties/taxes. Further, there is no doubt that for availment of exemption vide Notification No. 45/2017-Cus., goods have to be first exported and such exemption is not applicable to goods which have been warehoused, as in the current case. The use of words, 'imported', 'exported' and 'procured', in the provisions as per section 7 of the Special Economic Zones Act, 2005 will lead to inference that different meanings have been assigned to these words under the Special Economic Zones Act, 2005 and these words are not to be used inter-changeably. Further, as per the instant application, goods shall be first imported in a Domestic Tariff Area which after usage by a Sub-contractor gets transferred/warehoused to/in FTWZ by the importer of the goods i.e the applicant. As such this activity is covered under the term, 'export' as defined under the Special Economic Zones Act, 2005 as under Subsection (m) of section 2 of the Special Economic Zones Act, 2005, meaning of 'export' inter-alia includes supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer - this activity of transfer of goods from FTWZ to DTA cannot be termed as import/re-import in terms of the Special Economic Zones Act or Customs Act, 1962, thus not covered under section 7 of the SEZ Act, 2005 and hence no exemption from duties/taxes is admissible. The applicant while quoting CBIC Circular No. 21/2019-Customs has attempted to add another point in their support for claim of exemption vide Notification No 45/2017-Cus. However, it is noted that the concerned Commissioner has rightly mentioned that the Circular has been issued in a different context and the applicant has tried to read it out of context; it is apparent that the clarification vide the said circular has been issued w.r.t. goods which were exported earlier for exhibition purpose or on consignment basis however the applicant does not intend to export the goods either for exhibition or on consignment basis - applicant has drawn attention to rule 48 of the SEZ Rules, 2006, however this rule inter-alia states that where goods procured from DTA by a Unit are supplied back to the DTA, as it is or without substantial processing, such goods shall be treated as re-imported goods and shall be subject to such procedure and conditions as applicable in the case of normal re-import of goods from outside India. Under the SEZ Act, 2005 read with SEZ Rules, 2006, words 'import' and 'procure' have been assigned different meanings. It is also important to note that activity of bringing goods from a Unit or Developer in SEZ to DTA is not covered under the definition of the term, 'import ' under the SEZ Act, 2005, therefore such transfer from SEZ to DTA cannot be termed as 're-import'. Moreover, as per dictionary meaning of the word, 'procure ' is 'to obtain something' but when the goods are being warehoused in FTWZ, these are not procured by a Unit or Developer, therefore when transfer of goods from DTA to FTWZ or FTWZ to DTA is neither covered under the term 'procure' nor 'import', therefore such transfer/supply of goods cannot be treated as 'reimport' for application of procedures and conditions as applicable in the case of normal re-import of goods from outside India. Notification No. 45/2017-Cus is not applicable in the instant case. The facts of the application amply indicate that goods have been exported by units in FTWZ, which again makes the said Notification, inapplicable in view of the second proviso of the Notification. Moreover, there is no condition for 're-export' of goods under the Notification 50/2017-Cus., however a deeming fiction has been created by bringing in 're-export' which appears to have been done to deviate from the issue and the word 'export/re-export' is being un-necessarily equated with warehousing of goods. PMLA 2023 (6) TMI 594 Money Laundering - refusal of the High Court to extend the time for completion of investigation - access of certain documents available on record in the Special Court trying the predicate offences - application seeking the constitution of a Special Investigation Team. Challenge to the order for de novo investigation - inclusion of the name of the Minister and his accomplices in the Final Report submitted under Section 173(8) and the inclusion of the offences under the PC Act seems to have bothered Devasagayam more than the Minister himself. Therefore, Devasagayam filed a petition seeking a direction to the Investigating Officer to conduct a de novo investigation - HELD THAT:- The grounds on which Devasagayam sought de novo investigation were quite strange. In his petition seeking de novo investigation, Devasagayam stated that though his specific complaint was against one Baskar and nine others, the Final Report filed under Section 173(8) included other persons, who, according to Devasagayam, had no connection with the case. Devasagayam also stated in his petition seeking de novo investigation that Baskar and Kesavan against whom he made a specific complaint, are not shown as accused. In fact, the allegation made by Gopi in his petition before the High Court that Devasagayam had been won over by the accused, was not without substance, as can be seen from a few averments made by Devasagayam - It is not known whether Devasagayam was referring to the persons against whom he made a specific complaint as fictitious persons or whether he was calling the Minister and the person alleged to be his Secretary, named as accused in the Final Report as fictitious persons. The fact that Devasagayam s petition was intended to help the accused is also borne out by one more fact. His original complaint dated 29.10.2015 which led to the registration of FIR in Crime No.441 of 2015 was against ten persons and the offences registered therein were only under Sections 406 and 420 read with Section 34 IPC. On this complaint, a Final Report was filed under Section 173(2) of the Code on 13.06.2017 and this resulted in the registration of Calendar Case in CC No.3627 of 2017. Devasagayam was happy with the fact that the Report filed under Section 173(2) did not include the offences under the PC Act. Devasagayam was not bothered at that time about the fact that the register for entering the interview marks, sent to the Forensic Department had not been received. In the order impugned in these appeals, the High Court has indicated by using four different expressions and phrases that the investigation so far conducted shall not form part of the record. But even according to the learned senior counsel for Devasagayam and learned senior counsel for the accused, the operative portion of the impugned order of the High Court need not be understood in such a manner. If that is so, all those phrases and expressions deserve to be removed. If they are removed, the life gets ebbed out of the impugned order, which in our opinion, it richly deserves. The investigation and trial of a criminal case cannot be converted by the complainant and the accused into a friendly match. If they are allowed to do so, it is the Umpire who will lose his wicket - appeal on this issue allowed. Concerning proceedings by Enforcement Directorate - HELD THAT:- It is seen from the impugned order that at least two out of three accused specifically argued before the High Court that their case was squarely covered by the decision of this Court in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT] , but interestingly most of the arguments advanced before us turned out to be an attack on the correctness of the decision in Vijay Madanlal Choudhary. We are not suggesting that this defection from one point of view to the other is covered by Schedule X. In paragraph 22, the High Court recorded an opinion that the grant of stay would amount to eclipsing the proceedings. Therefore, on this sole ground, the High Court concluded in paragraph 22 of the impugned order that the ED has to await the outcome of the proceedings for quashing the criminal complaints, in which a stay order was in force. But the High Court made it clear that it was not entering upon the merits and demerits of the proceedings initiated by the ED and the High Court left all the questions to be dealt with in appropriate proceedings. It is clear that the provisions of PMLA are in tune with the Model Law drafted by United Nations Office on Drugs and Crime (UNODC). Whether without identifying the proceeds of crime or a property representing the proceeds of crime and without identifying any process or activity connected to proceeds of crime as required by Section 3, which constitute the foundational/jurisdictional fact, ED can initiate an investigation and issue summons? - HELD THAT:- It is true that there are some offences, which, though scheduled offences, may or may not generate proceeds of crime. For instance, the offence of murder punishable under Section 302 is a scheduled offence. Unless it is a murder for gain or murder by a hired assassin, the same may or may not generate proceeds of crime. It is in respect of such types of offences that one may possibly argue that mere commission of the crime is not sufficient but the generation of proceeds of crime is necessary. In the case of an offence of corruption, the criminal activity and the generation of the proceeds of crime are like Siamese twins. Therefore, even if an intangible property is derived as a result of criminal activity relating to a scheduled offence, it becomes proceeds of crime under Section 2(1)(u). In view of the above, we are not impressed with the contention that the investigation by ED was triggered without any foundational/jurisdictional facts. In our view, the allegations in the FIR point out to (i) involvement of persons in criminal activity relating to scheduled offences; (ii) the generation as well as (iii) laundering of the proceeds of crime within the meaning of Section 3. This is in view of the fact that wherever there are allegations of corruption, there is acquisition of proceeds of crime which itself tantamount to money-laundering. Once an information relating to the acquisition of huge amount of illegal gratification in the matter of public employment has come into the public domain, it is the duty of the ED to register an Information Report. This is because acquisition is an activity amounting to money-laundering and the illegal gratification acquired by a public servant represents proceeds of crime, generated through a criminal activity in respect of a scheduled offence. Therefore, it does not require any expedition, much less a fishing expedition for someone to say that the receipt of bribe money is an act of money-laundering - the contention of Shri Sidharth Luthra that there was no explanation for the delay on the part of the ED in registering the Information Report, is a self-serving argument. If the ED registers an Information Report immediately upon the registration of a FIR for a predicate offence, ED will be accused of acting in haste. If they wait until the drama unfolds up to a particular stage, ED will be attacked as guilty of delay. The accused should be thankful to ED for giving a long rope from 2016 till 2021. Whether in the light of the fact that notice has been ordered in the review petition and a few interim orders have been passed in some proceedings, it is necessary for this Court to tag these appeals along with a review petition or defer the hearing of these matters until a decision is rendered in the review petition and other petitions? - HELD THAT:- The accused have not come up with any appeal challenging the order of the High Court dated 01.09.2022. Therefore, they are entitled at the maximum, to argue only for the dismissal of the appeals filed by ED and others against the said decision. Suppose the learned counsel for the accused is agreed upon and the appeals filed by ED are dismissed, even then they cannot have an escape route since the impugned order of the High Court protects them only till the other proceedings are kept at bay. The accused is not entitled at all either to seek a reference to a larger Bench or to seek to defer the matter till a decision is rendered in the matters involving larger issues - Appeal allowed on this issue. Permission to ED to inspect the records of the Special Court trying the predicate offences - HELD THAT:- The grievance of the appellant in this appeal is that the High Court has overlooked the provisions of Rule 231(3) of the Rules, 2019 and also Section 65B of the Indian Evidence Act, 1872 (the Evidence Act). But both the above contentions are without substance. Rule 231 primarily deals with the grant of certified copies of certain other documents to the accused, before filing of the Final Report. Rule 231(3) states that certified copies of unmarked documents shall not be given. The High Court has not passed any order directing the grant of certified copies of unmarked documents. All that the High Court has done is permitting the ED to have an inspection of the documents under Rule 237 and thereafter to file a proper copy application. This is not contrary to Rule 231(3). It is not understood how an argument revolving around Section 65B of the Evidence Act is raised. Section 65B concerns the admissibility of electronic records. Without certification, ED may not be able to use those electronic records in evidence, in the prosecution under PMLA. But it does not mean that they cannot even have a look at the electronic record - there are no merits in the appeal - appeal on this issue dismissed. Extension of time to complete further investigation - HELD THAT:- When a petition for extension of time was moved, the Court rejected it by an order dated 01.11.2021 on the ground that the prayer had become infructuous. Therefore, worried about the fate of further investigation, the victim has come up with the above appeal. But the worry of the appellant is baseless. Merely because the High Court has not granted extension of time, it does not mean that the direction to conduct further investigation has become infructuous. On the contrary, a Final Report has already been filed under Section 173(8) of the Code on 08.03.2021 in CC No.3627 of 2017 and the same has now become CC No.24 of 2021 - Appeal on this issue dismissed. Application disposed off. Service Tax 2023 (6) TMI 630 Validity of Show Cause Notice (SCN) - Validity challenged after the expiry of 2 years and 4 months - Inordinate delay in adjudicating the SCN - Section 73 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 - HELD THAT:- I am constrained to observe the conduct of the Commissioner of CGST and CX, Kolkata South Commissionerate, for his lethargic attitude in sitting over the reply to the impugned show-cause-notice and not disposing of the same till date for the reasoned best known to him and allowing the impugned proceeding to become time barred for the benefit of the petitioner and to harm the interest of the revenue. Such conduct of the Commissioner concerned is highly deprecable. There is a serious lapses on the part of the petitioner also in challenging the impugned showcause- notice after the expiry of 2 years and 4 months. If according to the petitioner the impugned showcause- notice was without jurisdiction or bad in law it could have challenged the same immediately instead of waiting for so long in approaching this writ court. Considering the conduct of the petitioner in approaching this writ court after an inordinate delay and making attempt to take advantage of lapse of the the Commissioner concerned in not finally adjudicating the impugned show-cause-notice and allowing the petitioner to take advantage of his conduct by allowing the impugned proceedings to become time barred as alleged by the petitioner, this writ petition is dismissed. However, dismissal of this writ petition will not be a bar on the part of the Commissioner concerned to dispose of the pending show-cause-notice in accordance with law and by passing a reasoned and speaking order after giving an opportunity of hearing to the petitioner or its authorised representative within a period of four weeks from the date of communication of this order. 2023 (6) TMI 593 Classification of services - Commercial and Industrial Construction service or Works contract service - providing services such as laying, jointing and testing pipes for water supply/drainage/effluent pipeline/ MLD water scheme, etc. provided to Gujarat Industrial Development Corporation - benefit of abatement under Notification No.1/2006-CE dated 01.03.2006 - invocation of Extended Period of Limitation - HELD THAT:- The appellant have been providing service of laying down of pipes for drainage, water supply, affluent, etc. The work undertaken by the appellant is of the composite nature involving both supply of the goods as well as service. The appellants have classified their service under the Works Contract Service and has paid service tax. The work orders which have been executed by the appellant for Gujarat Industrial Development Corporation have been perused by us and we find that the work orders involved supply of pipes for water supply, drainage as well as laying the same as per the engineering drawings. Thus, it is accepted that that the activity undertaken by the appellant involves both supply of material as well as service - It has also been claimed by the learned advocate that they have paid VAT/service tax on the goods supplied by them to M/s. GIDC. In view of the above facts, it is convincing that the activity undertaken by the appellant is properly classifiable under Works Contract Service and since they have already paid service tax under the Works Contract Service, the Order-In-Original is found devoid of merit - the service provided by the appellant is rightly classifiable under the category of Works Contract Service as defined under Section 65 (105)(zzzza) of the Finance Act, 1994. Extended period of Limitation - HELD THAT:- On taking note of the fact that the assessee has been regularly filing their service tax returns under the Works Contract Service as well as they have entered into a correspondence with the department during August 2008 upto 20th October 2008 and therefore, there are no element of fraud, collusion or wilful mis-statement or suppression of facts are involved therefore, the demand is barred by limitation and deserves to be set aside on limitation ground also. Appeal allowed. 2023 (6) TMI 592 Levy of Service Tax - Manpower Recruitment or Supply Agency Service (MRSAS) - appellant provided MRSAS for the work of water cooling system pipeline laying to M/s.BHEL, Trichy - received payment from M/s.BHEL Trichy - period January 2011 to March 2011 - HELD THAT:- On perusal of the work orders and invoices, it is seen that the contract is for performance of work and not for supply of manpower. This is established from the invoices raised for payment made to the appellant. The payments are for the works executed on tonnage basis / unit basis and not on man hours or per person basis. Similar issue was considered by the Tribunal in the case of COMMISSIONER OF SERVICE TAX-II, KOLKATA VERSUS M/S. ANMOL BISCUITS LIMITED [ 2022 (3) TMI 105 - CESTAT KOLKATA ] wherein the Tribunal held In the given case since the contractors are being paid on the basis of quantity packed and not on the basis of number of persons deployed, the same cannot partake the nature of Manpower Supply Service - In the case of DIVYA ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, MANGALORE [ 2009 (12) TMI 155 - CESTAT, BANGALORE ] , the Tribunal observed that essence of the contract was for execution of work and not for supply of manpower. After scrutiny of the work orders, the Tribunal observed that the work was for completion of particular projects or tasks and therefore will not fall within the definition of MRSA Service . In the present case, the facts establish that the appellant has obtained work order to execute certain works which are part of the manufacturing activity. The appellants are thus responsible to execute the work. The payment is on tonnage basis / unit rate. Being a contractor for execution of work, the contractor gets to decide the number of persons that have to be engaged for completion of the work whereas, in the case of man power recruitment services, the contract for supply of workers and the payment is on the basis of man hours spent by the employee. The facts in both these appeals establish that the situation is not covered under MRSA Service. The demand cannot sustain - the impugned orders are set aside - Appeal allowed. 2023 (6) TMI 591 Levy of service tax - Clearing and Forwarding Agency service - reverse charge mechanism - services were provided as well as consumed outside India - HELD THAT:- The clearing and forwarding agency service that falls under sec. 65(105)(zj) is covered under sub-rule (ii) of the above Rule 3. It is clear that these category of services specified under sub-rule (ii) shall be totally excluded when the services are wholly provided / performed outside India. The adjudicating authority has held that the said Rule would not be applicable to the appellant on the ground that the same would be applicable only when part of the services are performed in India. On reading of the Rule, it is clear that if the services which are mentioned therein are performed outside India, there is no liability to pay service tax. In the case of the appellant in M/S. SUNDARAM INDUSTRIES LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, MADURAI COMMISSIONERATE [ 2018 (12) TMI 947 - CESTAT CHENNAI ], for a different period, the Tribunal has held since services have been wholly performed outside India, the activity will not be exigible to service tax by virtue of Rule 3 (ii) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. The learned AR has relied on the decision in the case of M/S. PARAMOUNT COMMUNICATIONS LTD. VERSUS CCE, DELHI [ 2018 (9) TMI 503 - CESTAT NEW DELHI ]. On going through the said decision, it is seen that the demand has been upheld by the Tribunal observing that part of the services were provided within India. The said decision being distinguishable on facts, it is not applicable. Thus, the demand cannot sustain. The impugned order is set aside. The appeal is allowed. 2023 (6) TMI 590 Waiver of penalty u/s 76, 77 and 78 of FA - invocation of sub-section (1) of section 80 of the Finance Act - leviability of service tax under the category of renting of immovable property service, under confusion during the initial period - case of Revenue is that respondent in this case did not pay the service tax for the period in question till the appeal was filed and are not eligible for the waiver of penalty as provided under sub-section (2) of section 80 of the Finance Act, 1994. HELD THAT:- In the present case, it cannot be disputed that there was confusion with regard to the levy and liability to pay the service tax under the category renting of immovable property service . There were several litigations pending before various forums. The amendment brought forth in section 65(105)(zzzz) vide Finance Act, 2010 made the provisions applicable retrospectively. Later, the Government also introduced sub-section (2) of section 80 granting time for the assessees to pay up the liability along with interest. However, sub-section (2) of section 80 does not bar the application of sub-section (1) of section 80. The Commissioner has recorded that there was confusion during the relevant time and the respondent was under bonafide belief that there was no liability to pay service tax. It is also noted by the Commissioner that being a statutory authority, under the Government, there cannot be any malafide intention to evade payment of service tax. It was thus held that there exists reasonable cause on the part of the respondent for the failure in discharging the service tax liability. There are no ground to take a different view as there was indeed confusions and litigations with regard to the payment of service tax on renting of immovable property service. In the case of ETA ENGINEERING LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [ 2004 (10) TMI 1 - CESTAT, NEW DELHI ], the Tribunal observed that the appellants being under bonafide doubt whether their activity was taxable or not, there existed a reasonable cause for non-payment of tax. The penalties were set aside in terms of sec. 80 of the Act. It was held that of Section 80 has an overriding effect over other sections. In the present case, there is nothing brought out by evidence that the respondent, Municipality had not paid the service tax with deliberate intention to evade tax. Instead there was confusion going on as to the levy of tax itself. In Kerala Cooperative Deposit Guarantee Fund Board Vs. CCE, Thiruvanthapuram [ 2020 (2) TMI 569 - CESTAT BANGALORE ], the Tribunal set aside the penalty observing that mens rea cannot be attributed to a body constituted under statute. There are no reasons to interfere with the impugned order. The same is sustained. The appeal filed by Revenue is dismissed. 2023 (6) TMI 589 Levy of Service tax - declared service or not - amount received towards damages in arbitration proceedings in connection with the purchase order dated 23.10.2007 issued for Pressure Filter Model HOSESCH FFP along with spares - section 66E (e) of the Finance Act, 1994 - period of dispute in the present appeal is post July 1, 2012 - HELD THAT:- Section 65B (44) defines service to mean any activity carried out by a person for another person for consideration, and includes a declared service. Under section 66E (e), a declared service shall constitute agreeing to the obligation to refrain from an act, or to tolerate an act or situation, or to do an act. Section 66 B provides that service tax shall be levied at the rate of 12 per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Section 66D contains a negative list of services, while section 66E contains a list of declared services - One of the declared services contemplated under section 66E is a service contemplated under clause (e) which service is agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act. There has, therefore, to be a flow of consideration from one person to another when one person agrees to the obligation to refrain from an act, or to tolerate an act, or a situation, or to do an act. Thus, a service conceived in an agreement where one person, for a consideration, agrees to an obligation to refrain from an act, would be a declared service , under section 66E(e) read with section 65B (44) of the Finance Act and would be taxable under section 68 of the Finance Act at the rate specified in section 66B. Likewise, there can be services conceived in agreements in relation to the other two activities referred to in section 66E(e). It would also be pertinent to refer to the Circular dated 03.08.2022 issued by the Department of Revenue regarding the applicability of goods and service tax on liquidated damages, compensation and penalty arising out of breach of contract in the context of agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act . This Circular emphasizes that there has to be an express or implied agreement to do or abstain from doing something against payment of consideration for a taxable supply to exist and such an act or a situation cannot be imagined or presumed to exist merely because there is a flow of money from one party to another. It also mentions that unless payment has been made for an independent activity of tolerating an act under an independent arrangement entered into for such activity or tolerating an act, such payment will not constitute consideration and such activities will not constitute supply . The demand could not have been confirmed as the appellant had not provided the declared service contemplated under section 66 (E) (e) of the Finance Act. It is, therefore, not possible to sustain the order dated 07.08.2017 passed by the Commissioner - Appeal allowed. 2023 (6) TMI 588 Refund of Service Tax paid - rejection on the ground that invoice dates are not matching - reverse charge mechanism - HELD THAT:- In respect of Rs.2,78,640/- (Rs.2,85,269-Rs.6,629/-) since all the claims made by the Appellants are verifiable by the Adjudicating Authority by going through the documentary evidence produced by the Appellant as well as Departmental records being available, it is deemed fit to remand the matter of refund of Rs.2,78,640/- to the Adjudicating Authority. He may get the verification done for the documentary evidence placed by the Appellant. He may pass necessary order by following the principles of natural justice within 4 months from the date of communication of this order. Appeal allowed by way of remand. Central Excise 2023 (6) TMI 587 100% EOU - Classification of goods - GSM band - to be classified under Central Excise Tariff Heading 90304000 of the First Schedule to the CEETA, 1985 or under CETH 85279990? - eligibility for benefit of exemption under Notification 10/1997-CE dated 1.3.1997 - scope of SCN - HELD THAT:- There is no allegation in the Show Cause Notice with regard to classification adopted by the appellant or a proposal for redetermination of classification. By redetermining the classification, indeed the adjudicating authority has travelled beyond the Show Cause Notice and hence the classification redetermined and adopted for raising the demand cannot sustain. Exemption Notification No. 10/1997 dated 1.3.1997 - HELD THAT:- It is clarified by the Board circular F.No.DGEP/EOU/03/2007/879 dated 2.4.2008 that wherein CVD is paid equal to excise duty as applicable, exemption of central excise notification shall also be applicable to EOU for computation of duty on DTA clearance. The circular clarifies that there is no bar under proviso to section 5A of Central Excise Act, 1944 to consider the exemption while calculating the additional customs duty payable b y an EOU on DTA clearance. The issue whether a 100% EOU is eligible to avail the benefit of exemption notification is no longer res integra and is squarely covered by the decision of the Tribunal in the case of COMMISSIONER OF C. EX., HYDERABAD-IV VERSUS SHANTA BIOTECHNICS LTD. [ 2010 (7) TMI 334 - CESTAT, BANGALORE ] has held that There is no dispute that the goods, which are manufactured and cleared by the assessee, are exempt from payment of Central Excise Duty under Notification 4/2006-C.E. After appreciating the facts, applying the Board circular as well as the decision of the Tribunal, it is opined that the demand cannot sustain and requires to be set aside. The appeal succeeds on merits. Appeal allowed. 2023 (6) TMI 586 CENVAT Credit - liability to pay 10% of the value of the clearance made to the SEZ developer under Rule 6(3) of Cenvat Credit Rules, 2004 - refundable security deposit received from the customer on Die development charges for making die which is used in the manufacture of final product i.e. Aluminium Profiles supplied to the customer - duty on excess insurance charges collected from the customers of their final product. Whether the appellant is liable to pay 10% on the value of the goods supplied to SEZ in terms of Rule 6(3) of Cenvat Credit Rules, 2004? - HELD THAT:- The supplies made to SEZ is considered as export even as per the SEZ Act therefore even though by Notification No. 50/2008-CE (N.T.) in Rule 6(6) specific clause (v) was added, before that also the supplies made to SEZ is considered as export of goods. In case of export of goods neither the duty on inputs/input service nor duty on the final product are exported. Moreover, keeping in view that the supplies made to SEZ is export, the legislature has incorporated a specific entry by Clause (v) of Rule 6(6) of Cenvat Credit Rules, 2004 by way of substitution therefore, this amendment may be taken as retrospective also - in respect of supplies made to SEZ, payment of 10% in terms of Rule 6(3) of Cenvat Credit Rules, 2004 does not apply. Accordingly, demand on this ground is set aside. Demand of duty on refundable security deposit for die development charges - HELD THAT:- Out of the total receipt of die development charges a part of amount has been refunded or adjusted against the sale therefore, the adjudicating authority has not demanded the duty. However, while proceeding was going on, a specific amount of refundable security deposit were retained by the appellant which is reflected in their books of account. If the appellant has retained the amount of die development charges and not returned which will amount to recovery of the price of the die development, in such case the amortized cost of die development charges should be included in the assessable value of the final product i.e. Aluminium Product supplied by the appellant on payment of duty however, this aspect has not been examined by the adjudicating authority therefore, the issue of demand of duty on refundable security deposit for die development charges needs to be re-examined and re-considered on the basis of factual position that what treatment was given to such refundable security deposit in the appellant s books of account, accordingly, this issue is remanded to the adjudicating authority. Differential duty on excess insurance charges collected from the customers - HELD THAT:- When the assessee charge an average amount of insurance charges in the invoice, it may be less or excess as compared to the actual insurance charges borne by the assessee supplier of the goods. On this issue various courts have held that the excess insurance not being part of the price of the goods, the same should not be liable to duty. This issue has been considered by the Hon ble Supreme Court in the case of BARODA ELECTRIC METERS LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1997 (7) TMI 126 - SC ORDER] wherein, the Hon ble Supreme Court has held that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. In view of the settled legal position, no duty is payable on the excess insurance charged by the appellant to the customer accordingly, the demand on this count is set aside. Levy of personal penalties on Director and Employee of the company - HELD THAT:- T he major demand has been dropped moreover, the issue involved is interpretation of law and it is not the case of clandestine removal of goods, therefore, the individuals cannot be implicated in nature of present case therefore, the personal penalties on both the persons are set aside. The impugned order stand modified to the above extent. The appeals are allowed. 2023 (6) TMI 585 CENVAT Credit - medicaments - exemption vide Notification No. 04/2006-CE dated. 01.03.2006 or not - Rule 6(3) of the Cenvat Credit Rules, 2004 - Section 11D of the Central Excise Act, 1944 - HELD THAT:- The appellant during the disputed period had cleared the pharmaceutical products on payment of duty @5% and deposited / debited the amount in statutory records. It is the case of the revenue that the disputed goods cleared by the appellant are exempted from payment of duty vide Notification No. 4/2006 and hence the appellant was required to deposit the said amount alongwith interest in terms of Section 11D of the Act. In the present matter at the time of clearances of goods appellant paid duty @5%. It is seen that the Appellant did not retain the amount collected from the customers. The provisions of Section 11D of the Central Excise Act, 1944 will come into play only when an assessee collects an amount as an excise duty and does not credit it to the government treasury. The Tribunal in the case of STERLITE INDUSTRIES (INDIA) LTD. VERSUS COMMISSIONER OF C. EX., VAPI [ 2007 (9) TMI 232 - CESTAT, AHMEDABAD] held that duty paid from Cenvat Account also excise duty and recovery under Section 11D of the Act is not sustainable - In the present case, the Appellant paid duty on the disputed goods and collected the amount from their customers as evident from the invoice. It is noted that the Appellant had not retained any amount and paid to the Government and, therefore, Section 11D of the Act cannot be invoked. So, the impugned order confirming demand under Section 11D is legally not correct. Whether Appellant was required to pay an amount of Rs. 62, 89,867/- (5% on clearances of disputed exempted goods) in terms of Rule 6 (3) of Cenvat Credit Rules 2004? - HELD THAT:- It is seen that, at the material point of time, there were two rates of duty applicable to Medicine - one a nil rate prescribed under Notification No. 4/2006-C.E. as amended and the other 5% prescribed under Notification No. 2/2011-C.E., dated 01-03-2011. Both these rates were unconditional rates. Therefore, it is not the case that the goods have been completely exempted. The exempted goods referred to in Rule6 have to be excisable goods which are fully exempt from duty or as chargeable to nil rate of duty. When two different Notifications prescribe two rates of duty, the assessee is at liberty to opt for whichever is beneficial to him - it is not a situation where the duty credit on inputs were availed in respect of exempted goods and dutiable goods simultaneously. It is clear that the goods supplied under Notification No. 02/2011-C.E. is not exempted. Accordingly the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 is not applicable in the facts of the case. The demand confirmed by the adjudicating authority has no legs and therefore the same cannot be sustained. Accordingly, the impugned order is set aside and Appeal is allowed. 2023 (6) TMI 584 Recovery of interest on wrongly availed Cenvat Credit by the respondent/ assessee - appropriation of credit which admittedly the respondent/assessee has already reversed - penalty on the respondent under the provisions of Rule 15(2), Cenvat Credit Rules, 2004 r/w Section 11AC of Central Excise Act, 1944. HELD THAT:- The impugned order has been passed in a most unusual way. There is no reasoning given in reaching the conclusion. Although it s a detailed order but in all those pages firstly the submissions of assessess s has been recorded followed by the submissions of revenue and thereafter in last two lines it has been concluded that In view of the above, the impugned order is set aside, with consequential relief as per law. Appeal allowed. There is a basic principle that justice need not only be done but also seen to be done. There is neither any reasoning nor any finding that too while setting aside the reasoned order passed by the adjudicating authority. Assessee s appeal was allowed by way of non-speaking order and entire adjudication order was set aside after citing one decision of Hon ble Karnataka High Court which seems to be limited to the issue of interest liability - Learned Commissioner ought to have, after referring the contentions of the appellant, dealt with the same on merits and also ought to have dealt with each finding/reasoning recorded by the adjudicating authority in its Order-in-Original before setting aside the said order. Matter remanded back to the learned Commissioner (Appeals) for fresh disposal on its own merits in accordance with law after giving reasonable opportunity of hearing to both the side and also by giving reasoning/findings while arriving at any conclusion in the appeal filed by the assessee. Appeal allowed by way of remand. 2023 (6) TMI 583 CENVAT Credit - Input Services - insurance of vehicles of the manufacturing unit - consultancy services engaged for receiving consultancy in relation to cogeneration plant - insurance availed for plant, machinery, equipment and stock of the goods - insurance on gratuity for the employees and subscription fee paid to National Sugar Federation - HELD THAT:- The co-generation plant though was not installed during the relevant period, consultancy was received during the said period and Service Tax paid on consultancy is claimed as CENVAT Credit and the same is admissible - It is also found that manufacture is not possible without plant, machinery and equipment being in order. To keep the plant, machinery and equipment in order, one of the method is to insure the same. Therefore, the Service Tax paid on insurance of plant, machinery and equipment required for manufacture is admissible as CENVAT Credit. Appeal allowed. 2023 (6) TMI 582 Seeking extension of Cum-Duty benefit - manufacture of Tread Rubber - case of Revenue is that appellant, having cleared the goods by way of parallel set of invoices, without payment of duty, is not entitled to the benefit of the cum-duty value - HELD THAT:- When the Tribunal had given a specific direction to extend the cum-duty benefit to the appellant, the Adjudicating Authority ought to have calculated the demand after granting the benefit. If the Department has not filed any appeal against the order passed by the Tribunal dated 06.11.2001 directing to extend the cum-tax benefit, the Commissioner cannot deny the benefit stating that the appellant is not entitled to modification of the demand as they have issued parallel set of invoices. The impugned order is modified to the extent of reducing the demand of Rs.4,66,796.14/- to Rs.3,69,606/- without disturbing the amounts paid or penalties thereon - Appeal allowed in part. CST, VAT & Sales Tax 2023 (6) TMI 631 Benefit of Amnesty Scheme - after the amount of Rs. 5,37,686/- is paid by the petitioner, the petitioner is orally informed that it has paid Rs. 2,000/- less and therefore, by way of the impugned communication dated 06.10.2022, the petitioner was informed that the application made by it under Amnesty Scheme has been disposed of, on the ground that the petitioner failed to make the payment of full principal amount of tax. HELD THAT:- It appears that the petitioner made an application under the Amnesty Scheme. However, while so doing, the petitioner through inadvertence mentioned the amount of outstanding tax as Rs. 5,37,686/-, instead of Rs. 5,39,787/- - From a perusal of the record, it is revealed that, as per Clause-7(3) of the Amnesty Scheme, after the submission of application by the petitioner, within the period of 15 days, but, not later than 28.02.2020, the concerned officer of the Respondents was required to intimate the petitioner online, about the amount to be paid under the Amnesty Scheme. From the observations made by the Division Bench of this Court in SUNFLOWERS DEVELOPERS [ 2020 (1) TMI 265 - GUJARAT HIGH COURT] , it can be said that the object of the amnesty scheme is to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs. Since such scheme is applicable to all pending cases, the officers acting under the relevant statutes are expected to respect the object of the scheme and to ensure that the assessees get the benefit under the scheme. Merely because the petitioner inadvertently paid Rs. 2000/- less towards principal outstanding amount of tax, it cannot be denied the benefit of the Amnesty Scheme. This petition, therefore, deserves to be allowed. Petition allowed. 2023 (6) TMI 581 Stay - Waiver of pre-deposit - power of Appellate Authority to insist on the assessee paying more than 20% of the disputed tax as a condition for stay of recovery of the balance amount of disputed tax pending disposal of the appeal - HELD THAT:- There are force in the submissions of the learned Government Pleader that while on payment of 20% of the disputed amount of tax along with the collected tax, the assessee would be entitled to a stay against recovery of the balance amount of tax confirmed against it pending disposal of the appeal by the First Appellate Authority, the legislature does not prevent the Appellate Authority from insisting on a deposit of more than 20% of the disputed tax amount as a condition for a stay of recovery of balance amount pending disposal of the appeal, from an assessee who has chosen not to pay the 20% of the disputed amount of tax along with the collected tax or at least at the time of filing the appeal before the Appellate Authority. As per the statutory provisions, while the assessee has an option of payment of 20% of the disputed tax along with the collected tax, or at the time of filing the appeal before the Appellate Authority and seeking immunity from recovery proceedings for the balance amount of tax pending disposal of the appeal, he/she virtually takes the risk of losing the benefit of the said proviso, and a stay on deposit of 20% of the disputed tax, if he/she chooses to contest the stay application so as to obtain better terms (payment of less than 20% of the disputed tax) for the grant of stay of the balance disputed tax pending disposal of the appeal. Unless the assessee remits 20% of the disputed amount of tax along with the collected tax or at the time of filing the appeal, he/she will not be entitled to the benefit of the proviso, and he/she runs the risk of losing the benefit of the remittance of the 20% of the disputed amount of tax as a condition for grant of stay of recovery of the balance amount pending disposal of the appeal. This would be the legal position that flows from the main statutory provision, namely, Section 55(4) of the Act, which obliges an assessee to pay the entire amount of tax confirmed against him by the assessing authority as a condition for maintaining an appeal before the First Appellate Authority subject to the discretion to be exercised by the Appellate Authority in terms of First Proviso of Section 55(4). Since these appeals have been pending before this Court since 2017, and it is likely that the statutory appeals which were the subject matter of the Writ Petitions have since been finally disposed by the statutory authority, the findings in this judgment are solely for the purposes of clarifying the scope and ambit of the statutory provision and not to affect the decisions already taken by the Appellate Authorities in the individual appeals. Appeal disposed off.
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