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2025 (3) TMI 84
TDS u/s 194A - interest paid by the assessee co-operative bank to its members & other co-operative societies - HELD THAT:- By virtue of section 194A(3)(v) of the Act (whether pre amended and/or post amendment assessee bank is not liable to deduct TDS on any payment made to a cooperative society and contentions canvassed by the assessee bank is meritorious in nature. The Assessee bank has rightly not deducted TDS on payment made to “SMR Coop Bank Emp Society Nahan”& “The SBI Emp Non-Agri/CR/SEV Coop Society”. The addition made on this count is liable to be deleted.
Section 194A(3)(v) of the Act was express and clear with regard to cooperative society. We hold that it is not mandatory requirement in law that such societies (depositors) should be “Members” of Cooperative Bank.
Section 194A(3)(v) expressly say that “Income is credited or paid by a cooperative society to any other cooperative society” then such income payment or credit need not be made subject matter of TDS. The other cooperative societies to whom payment is made or amount credited need not be a member of cooperative society so making payment.
We gainfully refer to the order of Punjab State Co-operative Bank Ltd. Chandigarh [2016 (7) TMI 205 - ITAT CHANDIGARH]. The Ludhiana Central Co-operative Bank ltd. Ludhiana [2016 (11) TMI 1766 - ITAT CHANDIGARH] wherein it has been that when assessee being a Cooperative Society paid interest without deducting tax at source to other cooperative societies then such assessee would enjoy immunity from deduction of tax at source by virtue of section 194A(3)(v) of the Act. The said decisions would squarely apply in the present case. We thus hold that by virtue of the provisions of Section 194(A)(3)(v) the assessee is not required to deduct from payment of interest on time deposit of other being a cooperative society and that any demand raised to the contrary view (Supra) needs to be deleted.
Assessee was required to deduct “TDS” on interest paid to “Jagan Nath Temple Nahan” we hold that said temple is being run by state Government that interest payable to Temple is not liable to TDS/or subject to TDS by virtue of notification so 3489 dt. 22/10/1970 under section 194A(3)(iii)(f) which includes “any undertaking or body, including a society registered under the Societies registration Act, 1860 (21 of 1860) financed wholly by the Government.”
We hold that Assessee’s action in not deducting TDS is justifiable. Assessee appeal allowed.
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2025 (3) TMI 83
Validity of the reopening of assessment - mandation to get approval for reopening - Addition on account of sale consideration - HELD THAT:- The impugned approval which was mandatory before the initiating reassessment was quite mechanical in nature and without proper application of mind and appears to be accord before receiving the reasons to believe by the AO or based same date and specially not mentioned that which material or the relevant para of the material was perused to grant impugned approval.
We find material substance in the submissions made by AR and we are of the opinion that reopening action made u/s 147/148 of the Act, without jurisdiction and consequent assessment order was also invalid and legally unsustainable and grounds raised by the assessee allowed accordingly.
Addition on account of sale consideration - as per CIT(A) land was not transferred during the year under consideration within the meaning of section 2(47) - CIT(A) while passing the impugned order clearly observed that the Ld. AO has not brought anything on record to show that the land in question was transferred in the AY under consideration. Hence, no any substance in the appeal preferred by revenue and this ground is liable to be dismissed.
Revenue appeal dismissed.
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2025 (3) TMI 82
Validity of additions made u/s 153A in the absence of incriminating material found during the search - addition u/s 68 for unsecured loans, and u/s 37(1) for disallowance of interest expenses - HELD THAT:- As decided in PCIT v/s Abhisar Buildwell (P.) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] wherein held that in case no incriminating material is found during the search conducted under section 132 of the Act, the AO has no jurisdiction to make an assessment in respect of completed/unabated assessments.
We find that in PCIT v/s Pavitra Realcon (P) Ltd. [2024 (5) TMI 1408 - DELHI HIGH COURT] held that statement under section 132(4) of the Act alone, without any other material discovered during the search which would corroborate search statement, do not grant the AO authority to make an assessment.
Since, in the present case, it is undisputed that the assessment year under consideration is an unabated/concluded year, therefore, we find no basis in upholding the additions made by the AO u/s 68 and disallowance made u/s 37(1) of the Act in the absence of incriminating evidence found during the search. Decided in favour of assessee.
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2025 (3) TMI 81
Applications filed by the assessee for renewal of registration u/s 12A(1)(ac)(iii) and approval u/s 80G(5)(iii) - non-compliance by the assessee - HELD THAT:- It is evident from the record that the assessee filed its response on 21.08.2024, within the due date mentioned in the CIT(E)'s notice. CIT(E) ignored this submission and erroneously rejected the application citing non- compliance.
Such an approach violates natural justice, as the assessee's submission should have been duly considered before passing an adverse order. In case of approval u/s 80G(5)(iii) also the assessee filed a detailed submission on 21.08.2024, complying with the notice dated 09.08.2024.
CIT(E), however, did not examine the documents submitted and rejected the application on incorrect factual grounds. Given that the documents were submitted, the rejection was without proper verification. Appeals of the assessee are allowed for statistical purposes.
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2025 (3) TMI 80
Denial of Exemption u/s 10(23C)(vi) - as per revenue Trust was not existing solely for educational purposes, and it was engaged in carrying on activities other than the main object of providing education - CIT(A) allowed claim - HELD THAT:- CIT(A) held that the main criteria for eligibility u/s 10(23C)(vi) was that the institution is existing solely for educational purposes and not for purpose of profit and also gave a finding that providing hostel facility is an integral part of the main object and surplus generated from hostel facility of Rs. 6.21 crores is being ploughed back towards the main object of imparting education. This is where we feel that the Ld. CIT(A) erred on appreciation of the facts.
CIT(A) relied on the orders in the case of Shree Shanskar Tirth Educational and Charitable Trust [2022 (5) TMI 1152 - ITAT RAJKOT] wherein it was held that exemption u/s 10(23C) could not be denied merely because object clause of trust deed of assessee also contained objects other than educational activities.
CIT(A) relied on the order of Shree Ahmedabad Lohana Vidyarthi Bhavan [2018 (7) TMI 1084 - ITAT AHMEDABAD] wherein it was held that where providing hostel facility to students is an essential component of education institution and also an aid for attaining educational object, said activity would fall under purview of ‘education’ as provided u/s 2(15) of the Act.
Hon’ble Supreme Court of India in the case of Ahmedabad Urban Development Authority [2022 (11) TMI 255 - SUPREME COURT] held that a charitable organisation cannot be engaged in any trade, commerce or business, or provide services in relation thereto for any consideration unless such commercial activity is incidental to the main object of GPU and is also within the monetary threshold of up to 20% of its total receipts, as prescribed under section 2(15) of the IT Act. To ascertain whether an activity would constitute “trade, commerce or business”, the Hon’ble Apex Court clarified that it would depend on the cost at which the services are availed and the price at which they are provided by the institution to its beneficiaries.
Based on the facts of the case, we hold that :-
(a) Providing education is a charitable activity.
(b) Providing hostel facility to the students of the school providing education is a charitable activity. The provision of hostels to the students in an integrated manner is a charitable activity.
(c) Running hostels for students separately on a commercial basis is a business activity.
The Hon’ble Apex Court held that where "fee, cess or other consideration" is statutorily fixed or where it represents recoupment of cost or cost with nominal mark up, the activity may not be construed as "trade, commerce or business" and will be excluded from the mischief of commercial activity under the amended provision. If, however, "fee, cess or other consideration" charged is substantially higher over cost, it is considered as "trade, commerce or business" and will qualify for tax exemption only if receipts are within the quantitative limit prescribed by the amended provision. The observations and ratio thereof of the Hon’ble Apex Court are squarely applicable to the facts of the instant case and hence, we hereby affirm the order of the AO and decline to support the order of the Ld. CIT(A). Appeal of the Revenue is allowed.
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2025 (3) TMI 79
Computation of interest demand u/s 201(1A) - Validity of order u/s 201(1A) charging interest for the delayed payment - HELD THAT:- On perusal of the findings of the Ld. CIT(A) it is observed that the Ld. CIT(A) directed the Assessing Officer to look into and ensure that the calculation of interest as charged by the Assessing Officer u/s 201(1A) is as per law. It is also observed that the Ld. CIT(Appeals) held that the dispute in appeal is only with regard to charging of interest u/s 201(1A) which was rightly made by the Assessing Officer for the delayed deposit of TDS. We do not see any infirmity in the order of the Ld. CIT(A).
Assessee contends that interest u/s 201(1A) was incorrectly charged. Therefore, we direct the AO to look into the contention of the assessee with regard to incorrect levy of interest u/s 201(1A) of the Act and pass order afresh in accordance with law after providing adequate opportunity of being heard. Ground no.7 of grounds of appeal is allowed for statistical purpose.
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2025 (3) TMI 78
Addition u/s. 68 - unexplained cash credit in the form of cash deposited during the demonetization period - AO invoked section 115BBE of the Act - HELD THAT:- Revenue authorities have not doubted the gross sales and more particularly the credit sales effected during the demonetization period and the total sales effected in the period other than the demonetization period. It establishes that the assessee has been carrying out the regular business activity and making sales during the year which has been accepted by the Revenue authorities.
Merely for the reason that there is cash deposit during the demonetization period, the present issue has arisen. It is accepted that nobody was aware about the declaration of Demonetization Scheme and the moment it was announced it created panic. In this process, people tend to make some cash purchases and also to pay their outstanding debtors.
Until and unless the source of cash is not explained one cannot doubt the genuineness of cash deposit. In the instant case, the assessee successfully demonstrated that it is carrying out regular business activity, making regular sales both through cash and credit and that the alleged deposit is out of the cash balances available with the assessee in its books of account and therefore find merit in the contention of assessee. This view is further fortified in the case of Vasant and Company [2024 (10) TMI 1638 - ITAT CHENNAI] wherein held source of deposits has not been disputed and has been created out of ordinary business sales which has been credited into books of accounts and profits has also been duly included in the return of income filed in relevant assessment year. Therefore, we are of the considered view that, additions cannot be made u/s. 69 of the Act and taxed u/s. 115BBE of the Act towards cash deposits made to bank account of demonetized cash in SBNs’
The impugned addition made u/s. 68 of the Act is directed to deleted and the action of the AO invoking provisions of section 115BBE is also set-aside. Effective Grounds of Appeal raised by the assessee on merits are allowed.
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2025 (3) TMI 77
Addition u/s 68 - unexplained entries - protective assessment made by the AO in hands of assessee - HELD THAT:- CIT (A) has found that the assessee is not the real owner of funds and the funds in the bank of the assessee is for the use of ultimate beneficiaries and it acted only as a conduit. In such circumstances, we find that the protective additions have no leg to stand.
It is the finding of the AO as well as the CIT (A) that the assessee is not the owner of the credits/deposits in its bank account and that the assessee acts only as a conduit for transferring the said funds to the ultimate real/actual beneficiaries.
Respectfully following the decision in the cases of Zed Enterprises (P) Ltd [2024 (1) TMI 1442 - ITAT DELHI], Shivij Garments (P) Ltd [2024 (2) TMI 454 - ITAT DELHI], Zen Tradex (P) Ltd [2024 (9) TMI 1701 - ITAT DELHI], M/s Round Square Exim Pvt Ltd [2025 (1) TMI 1521 - ITAT DELHI] we hold that the protective addition made in the instant case deserves to be deleted.
Addition on account of commission income is also deleted as the same has been considered in the hands of the main entry operators Sh Anand Jain and Naresh Jain. Accordingly, the ground no 1 and 2 are dismissed.
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2025 (3) TMI 76
Concessional rate of duty - import of Cement - import of cement in bags of 50 kgs retail packing and not in bulk - failure to fulfill the conditions stipulated in the N/N. 4/2006-CE - HELD THAT:- Based on the Bills of Entry and admission of the importer, the Adjudication Authority in his Order in Original dated 16.01.2015 held that the importer is not eligible for concessional rate of duty. The violation of the concession condition amounts to misdeclaration to evade duty. Whereas, the CESTAT by a common final order had set aside the order in original without adverting to the factual aspects of the individual case. The reasoning given by CESTAT to interefere the well considered order of the Adjudicating Authority of the face of it suffers patent infirmity.
In the instant case, it is an admitted fact by the importer that he did not purchase the cement from the manufacturer directly. It was a high sea purchase from a non-manufacturer/trader. No doubt, the Bill of Entry contains details of the manufacturer, but that is not sufficient to claim concessional rate of duty. The concessional rule not only specifically mandates that the purchase must be from the manufacturer directly, it also specifies the mode of manufacturing and the capacity of the manufacturer. If the reasoning given by the CESTAT to be accepted, then the condition in Clause IB in the Notification which imposes condition about the mode of manufacturing and capacity of the manufacturer will become redundant.
In this case, the records reveals that, by way of show cause notice the department had sought for explanation about the Post- Importation actual user confirmation. The importer has admitted that the cement imported was used for manufacturing Hollow bricks and sold to its customers. Therefore, it is evident that the cement was not used for institutional/industrial purposes. Hence, the CESTAT order which is apparently against the terms of the notification and the evidence by way of Bills of Entry and Statement of importer, is liable to be set aside.
Conclusion - The CESTAT erred in allowing the benefit of concessional rate of counter veiling Duty (CVD) to the respondent M/s A-1, Hallow Bricks and Manufacturer despite gross violation of the concession condition. Hence, the question of law is answered in negative favouring the Department.
Appeal allowed.
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2025 (3) TMI 75
Refund of Extra Duty Deposit (EDD) - rejection on the ground being filed beyond the period of limitation prescribed under the provision i.e., beyond one year - related party under Rule 2 (g) (2) (iv) & (v) of the Customs Valuation (Determination of Value of Imported Goods), Rules, 2007 - relationship has led to undervaluation of the imported goods or not.
Whether EDD constitutes a payment in the nature of customs duty under the scope of Section 27 of the Customs Act, 1962? - HELD THAT:- This issue is no longer res integra. Firstly, Circular No.5/2016-Customs dated 9th February, 2016, as submitted by the Petitioner, expressly clarifies that payment collected after provisional assessment for the release of goods shall be in the form of ‘security deposit’.
The question, therefore, is as to whether EDD constitutes customs duty. This issue has been settled by various High Courts. Madras High Court in Nithin India Tech Ltd v. The Deputy Commissioner of Customs (Refund) [2024 (9) TMI 1502 - MADRAS HIGH COURT] has observed that 'The amount that was collected by the Assessing Officer in view of the Special Valuation Branch (SVB) proceedings are nothing to [‘to’ here is to be read as ‘but’] deposit and not a customs duty as is contemplated under Section 12 of the Customs Act, 1962, although such deposit were eligible to be appropriated towards the duty liability of the petitioner after final assessment of the Bill of Entry.'
A perusal of Section 27 would show that the same deals with refund of customs duty. It is abundantly clear that EDD is not in the nature of customs duty. The deposit of the EDD was itself to secure any customs duty which may have been later on found to be payable, due to the allegation of under-declaration - The impugned order holding that the refund application is beyond the limitation is, thus, untenable. Moreover, the impugned order itself acknowledges that the said amount is over and above with duty which was determined by the SVB. The Customs Department could not have rejected the prayer for EDD refund.
Conclusion - The period of limitation for seeking refund of customs duty under Section 27 of the Customs Act, 1962, would not apply qua EDD. EDD is not equivalent to customs duty and thus not subject to the limitation period under Section 27.
Petition allowed.
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2025 (3) TMI 74
Maintainability of appeal - appropriate forum - Classification of imported goods - Windows XPE Embedded software and Windows XPE Embedded stickers - no evidence of the imported goods being nothing other than license stickers or licenses - CESTAT, being last fact finding authority, has passed reasoned and speaking order or not - violaton of principles of natural justice - HELD THAT:- Since the basic issue which arises from the Tribunal’s order deals with the classification and rate of duty, appeal under Section 130E read with Section 130 of the Customs Act would not lie before this Court since it is an order relating to determination of question having relation to rate of customs duty. Whether the goods imported fall under one particular tariff entry or another would have the effect of determination of the rate of duty and therefore, the present appeal would not be maintainable before this Court but would lie before the Supreme Court as contended by respondent-importer.
Appeal dismissed as not maintainable.
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2025 (3) TMI 73
Benefit of Notification No.12/2012-Cus. dated 17.03.2012 (Sl.No.125) - imported Coke Breeze - admissibility of exemption notification to Coke Breeze has been denied by the Department on the ground that Metallurgical Coke and Coke Breeze are two different products, the exemption notification since mentions only Metallurgical Coke; therefore, Coke Breeze imported by the appellants are not eligible to the benefit of the said notification.
HELD THAT:- The issue has been considered at length by the co-ordinate Bench of this Tribunal in the case of Jindal Steel & Power Ltd. [2024 (1) TMI 1335 - CESTAT KOLKATA], wherein the Tribunal held 'metallurgical coke and coke breeze are two distinct and different products having their own separate characteristics and uses. The two in no way can be considered as one and the same and thus at par. Coke Breeze being a byproduct of the process of coke manufacture and not utilizable as such in a blast furnace, where met coke alone fits the bill. As the two products are clearly distinct with wide variation in their sales price, we are of the view that the question of interpretation of an exemption notification and the case law analysis on this aspect of the matter does not actually arise.'
Conclusion - The benefit of Notification No.12/2012-Cus. dated 17.03.2012 (Sl.No.125) cannot be extended to Coke Breeze imported by the appellants, as it is not the same as Metallurgical Coke.
Appeal dismissed.
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2025 (3) TMI 72
Alleged contravention of Condition (iii) of Notification No. 32/1997-Cus dated 01.04.1997 - import of Shell on Shrimps - goods were found contaminated with Nitrofuran Metabolite AHD, rendering them unsuitable for export or consumption - HELD THAT:- In the present case, the Appellant sought permission for destruction of the goods and had not proceeded for disposal of the goods to demand customs duty. The Hon’ble Supreme Court in the matter of M/s BPL Display Devices Ltd. [2004 (10) TMI 92 - SUPREME COURT], held 'object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage.'
Similarly, as evidenced from the facts of the case, after import, the goods were used for job work and thereby the appellant made best efforts to comply with the Rule 8 of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. Facts being so, there is no reason or justification to demand duty from the Appellant for the goods, since the goods were subjected to job work and appellant was ready to export. However, since the sample of imported goods were held to be contaminated with the presence of ‘Nitro furan Metabolite AHD’, export obligation could not be fulfilled.
Conclusion - The duty cannot be demanded when goods were intended for use but became unfit due to unforeseen circumstances.
Appeal allowed.
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2025 (3) TMI 71
Time limitation of refund claim filed - appellants have failed to prove that incidence of duty has not been passed on as they have not booked/ accounted for the refund claim amount in the relevant financial year - principles of unjust enrichment.
Delay in filing the refund claim - HELD THAT:- In case of Provisional Assessment under Section 18 of the Customs Act, the party become entitled for refund only after final assessment, because the provision of Section 18(2) of the Customs Act starts with words “When the duty leviable on such goods is assessed finally”. Further in Sub Section 18 (a) and (b), it has been provided that the amount paid shall be adjusted against the duty finally assessed. In the present case, Bill of Entry was finalized on 15.03.2007 and final assessment was done for the first time on 15.03.2007 after the cut-off date 13.07.2006, after which the doctrine of Unjust Enrichment became applicable.
The appellant did not become entitled for a refund on their filing of the Bill of Entry for warehousing but only after it was finalized. After the first final assessment order, the appellant filed an appeal before Commissioner (Appeals) which was allowed vide order dated 03.06.2008. Therefore, assessee became entitled for refund as a result of the order of Commissioner (Appeals) dated 03.06.2008. Therefore, the appellant was bound to get the refund application processed under Section 27 of the Customs Act.
Whether the refund application was barred by limitation as it was not filed within the prescribed period mentioned in Section 27 of Customs Act? - HELD THAT:- No doubt the duty paid by the appellant was made refundable by the Commissioner (Appeals) vide order dated 03.06.2008 but the department opted for continuation of the said litigation by filing an appeal before the CESTAT. Once that option got exercised, the final judgment about entitlement of appellant to have the refund of the said duty paid, is the judgement pronounced by CESTAT on 13.10.2015 in the said appeal. Since the appeal of the department was dismissed by CESTAT on 13.10.2015, the entitlement of the appellant to refund of duty paid got finalized only on 13.10.2015. Hence, the relevant date for counting the period of limitation is 13.10.2015. Refund application was filed on 30.11.2015 which is within the limitation period. Hence, learned Commissioner (Appeals) and the first Adjudicating Authority have wrongly held that the refund application was barred by time. Therefore, the refund application filed by the appellant is not barred by limitation.
Unjust Enrichment - HELD THAT:- When the Chartered Accountant has given a certificate after verification of accounts and corroborative evidences that the duty incidence has not been passed on to the customers then this certificate should not be brushed aside without any cogent reason and the lower Adjudicating Authority and the learned Commissioner (Appeals) has brushed aside the Chartered Accountant certificate without any cogent reason - it cannot be said that the appellant had added the excess payment of duty paid provisionally on raw material in the cost of final products and burden of duty has been shifted to the end user of the final products manufactured by the appellant.
Conclusion - The limitation period for a refund claim should be calculated from the date of the final adjudication of entitlement, and not from an earlier provisional or intermediate order. The refund claim was not barred by limitation and that the doctrine of unjust enrichment did not prevent the refund from being granted.
Appeal allowed.
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2025 (3) TMI 70
Waiver of interest on the goods which were initially in warehouse and were cleared later - CBIC Circular No. 10/2006 - HELD THAT:- This Court has considered the materials placed before it, along with CBIC Circular and finds that the order has conveyed of the Chief Commissioner, is totally unreasoned and has denied natural justice, as even the party was not heard in the matter. The discretion has been exercised in most arbitrary manner without exhibiting any reasons, whatsoever. It is a trite law that even the administrative orders which seek to deny party any of it is entitlement need to be reasoned so the courts can exercise a mind as so whether they were correctly arrived at or not.
In the instant matter, this court finds that it has been completely denied of looking into the reasons of the Chief Commissioner. Further this court finds that while the CBIC Circular is well-reasoned and gives out as to why certain kind of projects, which include, interalia, the power projects deserve to be considered sympathetically for waiver of interest, no such application of mind or reasoning is appearing from the order of the Chief Commissioner conveyed to the party vide the aforesaid letters. In view of the foregoing, the matter is remitted back to Chief Commissioner with direction to give reasoned order, after hearing the party as it affects their interest and also unnecessarily raises project cost of the power project.
Appeal allowed by way of remand.
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2025 (3) TMI 69
Reclassification of goods on the basis of re-testing report of the imported remnant samples - no such re-test report is furnished to the appellants-importer - principles of natural justice - HELD THAT:- The customs authorities had send remnant samples of imported goods subsequent to the clearance of such goods, for retesting by CRCL, which is a in-house laboratory of New Custom House. It is fact on record that the Less Charge- Cum-demand notice dated 23.12.2003 gives a reference to such test report as “the samples is cut piece of dyed (Navy Blue) woven fabric made of non- textured polyester filament yarn (58.4%), Textured Polyester filament yarn (balance)” , and on this basis the department had gone ahead for re- classification of goods under CTI 5407 7200 for demanding higher customs duty.
It is fact, that there is no legible copy of CRCL re-test report is available on record and no such copy was furnished to the appellants- importer. Inasmuch as the imported goods have been examined by the jurisdictional customs authorities and after subjecting the imported goods for examination on first-check basis, that too after testing by the Textiles Committee Laboratory and on the basis of such test report, the imported goods had been cleared, there appears no ground or evidence for re-testing the same goods under the pretext of alleged mis-declaration of goods by some other person.
The essential requirements of legal provisions of Section 28 of the Customs Act, 1962 such as service of notice of the basis on which the appellants-importer is being asked to pay the differential duty, reasonable opportunity to be given for enabling them to present their representation for due consideration before passing of the order, have not been carried out by the authorities below. This is evident from the fact that the original order does not even provide the re-test report; but it has gone in detail about the visit of Joint Director of CRCL to the Textiles Committee Laboratory to state that they did not follow the standard testing requirements, to doubt the test report given by them earlier in confirmation of the imported goods as Non-texturized polyester yarn. Therefore, the confirmation of the duty demand under Section 28 ibid does not stand the scrutiny of law.
In the case of Ramchand Jashanmal Narwani [2019 (5) TMI 1577 - CESTAT MUMBAI] involving similar set of facts, the Co-ordinate Bench of the Tribunal has held that there is lack of any record to sustain the variation in test reports and dismissed the appeal filed by the department.
Conclusion - The essential requirements of legal provisions of Section 28 of the Customs Act, 1962 such as service of notice of the basis on which the appellants-importer is being asked to pay the differential duty, reasonable opportunity to be given for enabling them to present their representation for due consideration before passing of the order, have not been carried out by the authorities below. Demand of duty do not sustain.
Appeal allowed.
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2025 (3) TMI 68
Approval of the resolution plan - approval of resolution plan after expiry of CIRP period - compliance with Section 30(2)(b) of the IBC, specifically regarding the allocation of payments to dissenting financial creditors or not.
Compliance with Section 30(2)(b) of the IBC or not - HELD THAT:- From the materials on the record, it is clear that only pay out under the plan is to the unsecured financial creditor which is Rs.1.5 Crore against the 13.81% vote shares. The appellant sought to raise a grievance that homebuyers are being provided unit and they are not sharing any haircut in their entitlement. It is true that the SRA is spending certain amount in completing the construction for delivering the unit to the homebuyer. Unsecured financial creditor who are dissenting financial creditor in the present case are entitled to the amount not less than the amount as contemplated by Section 30(2)(b) - The claim of unsecured financial creditor who are dissenting financial creditor which is admitted of not related parties is Rs.10.94 Crore. Vote share of dissenting financial creditor is 13.44, hence the payout of Rs.1.5 Crore to the dissenting financial creditor in no manner violates Section 30(2)(b).
Law is well settled that jurisdiction of Adjudicating Authority and this Appellate Tribunal to interfere with approval of resolution plan is too limited. Adjudicating Authority can interfere with the approval of the resolution plan only in the case where there is a non-compliance of Section 30(2) of the IBC.
Approval of resolution plan after expiry of CIRP period - HELD THAT:- According to own case of appellant, 330 days period expiring on 03.05.2023. Resolution plan has been approved by the CoC on 31.01.2023, and the application was filed for approval of the plan before the aforesaid expiry of 330 days period. The fact that Adjudicating Authority approved the resolution plan on 14.05.2024 cannot be a ground to say that the order was passed after expiry of 330 days. When the resolution plan has been approved within 330 days and the application was also filed by the RP for approval, the date of the passing of the order by Adjudicating Authority cannot be relied for contending that the said date is beyond 330 days. The resolution plan having been approved by votes of 86.67% vote shares, at the instance of dissenting financial creditor whose payments under the plan is not less than the payment which they are entitled under Section 30(2)(b), no interference is called.
Conclusion - The plan complied with the statutory requirements under the IBC. Adjudicating Authority by the impugned order has not committed any error in approving the resolution plan submitted by SRA.
Appeal dismissed.
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2025 (3) TMI 67
Challenge to impugned order by which appellant was held guilty of perjury and have been imposed a fine - appellants have given wrong information to the ROC in Form No.18 required for converting a company into LLP - appellants had filed an affidavit wherein the appellants had deposed the units were handed over to the parties way back in December, 2016 but whereas their learned counsel stated the units will be handed over to the parties - HELD THAT:- Admittedly the impugned order dated 17.05.2021 has held the appellants guilty of act of perjury only on account of a declaration in Form 18 filed before the ROC (see Page 194 of the Appeal Paper Book). In the said declaration, against point No.15 viz whether any proceedings by or against the company is pending in any court or tribunal or any authority, the answer given by one Mr Ajay Vij, i.e. the appellant No.1 was NO. It is fairly conceded by the learned counsel for the appellant that declaration/Form 18 dated 03.11.2018 was incorrect since by that time i.e. on 25.04.2018 an application under Section 9 IBC stood filed against Corporate Debtor. Further CIRP commenced later on 14.3.2019.
A wrong declaration in Form 18 allegedly made inadvertently before the ROC cannot be said to be material in the context of conversion from a Company into LLP so as to fall within the definition of perjury u/s 199 IPC. Thus holding the Appellants guilty of an act of perjury deserves to be set aside on this ground alone; and consequential impugned order dated 04.08.2021 permitting the Liquidator to file complaint u/s 340 Cr.P.C also deserves to be set aside - Admittedly such declaration in Form 18 was never made/filed before the Ld. NCLT but before the ROC; therefore, it was not for the Ld. NCLT/Liquidator to move u/s 195 Cr.P.C for initiating action on such account.
Thus, no act of perjury has been committed by the Appellants. But even if it is presumed just for the arguments’ sake that an offence of perjury stands committed, then also the impugned order dated 04.08.2021 r/w impugned order dated 17.05.2021 permitting the Liquidator to file complaint u/s 340 Cr.P.C is not sustainable there being admittedly no finding recoded to the effect “that it is expedient in the interest of justice a complaint should be filed. In the absence of a finding to the above effect which is a sine qua non under S. 340(1)(a) Cr.P.C, the impugned order dated 04.08.2021 is not sustainable in law.
Ld. NCLT has no jurisdiction to convict a person for an offence under Section 68 under Chapter VII of Part II IBC in view of the express provision contained in S. 236(1) IBC.
Conclusion - There exists a Special Court per Section 236 of the Companies Act, 2013, hence the Ld. NCLT has no power to convict the appellants and impose a fine and as such the conviction and the fine imposed by Ld. Adjudicating Authority is hereby set aside.
Appeal allowed.
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2025 (3) TMI 66
Penalty imposed for contraventions u/s 8(3) and 8(4) of FERA -person “guilty” of offences under the FERA Act - HELD THAT:- Proceedings under the FERA Act are not criminal proceedings but are adjudicatory in nature. Appellant Tribunal for Foreign Exchange is an adjudicatory body, which performs quasi-judicial functions and act as administrators and adjudicators. They are not ‘courts’. While it is very much within their powers, to impose penalties for non-compliance of provisions of FERA, however, it does not lie within their domain to pronounce a person “guilty” of offences under the FERA Act.
Pronouncing a person “guilty” has serious consequences and to adjudicate and give a finding of ‘guilty’ lies within the exclusive domain of the competent courts of jurisdiction.
In this view of the matter, the penalty imposed by the Appellant Tribunal for Foreign Exchange on the appellants is upheld, however, the word “guilty” used in the entire order 02.06.2016 against the appellants is to be considered as “redacted”.
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2025 (3) TMI 65
Disallowance of wrongly availed and utilized input service credit - input service or not - Packaging Service - Department was of the view that such input services were availed by the appellant not only for rendering the services to BPCL but also for the sale of their own LPG on which no excise duty or service tax was paid - HELD THAT:- The issue whether the input service tax credit taken on taxable services availed while providing taxable output services as well as engaging in the activity of trading is no more res-integra as it has now been consistently held by High Courts of different jurisdictions that credit cannot be taken of entire service tax paid on taxable services availed while providing taxable output services or manufacturing taxable goods as well as simultaneously engaging in the activity of trading.
It is seen that the Honourable High Court of Madras in its decision in M/s. Ruchika Global Interlinks v The CESTAT, Chennai, [2017 (6) TMI 635 - MADRAS HIGH COURT] has held that 'learly, both before and after amendment, “exempted services” meant those taxable services, which were exempt from whole of Service Tax and, included those services on which Service Tax was not leviable, under Section 66 of the Finance Act. The inclusion in Explanation to Rule 2(e) “trading” was, without doubt, only clarificatory. As accepted by Mr. Jayachandran, the appellant had not been paying Service Tax on trading activity during the relevant period.'
Again, in CCE Thane II v. Milton Polyplas (I) Pvt Ltd, [2019 (4) TMI 240 - BOMBAY HIGH COURT], the Honourable High Court of Bombay was deciding whether the notice issued invoking the erstwhile Rule 57 I of the MODVAT rules demanding fraudulently availed credit during the period 1995 to 1999 would abate as contended by the Respondent-assessee therein, since the MODVAT rules were omitted and/or substituted by CENVAT Rules w.e.f 1st April 2000.
The effect of Section 38A, namely that it will not affect the previous operation of the rules and the right, privilege, obligation or liability acquired, accrued or incurred or incurred under the said repealed rules is subject to the caveat “unless a different intention appears”, stipulated therein. However, while the Cenvat Credit Amendment Rules, 2011, notified by Notification No.3/2011-CE (NT) dated 01-03-2011, which came into effect from 01.04.2011, effected sweeping changes, we could not glean or discern a different intention to curb any right, privilege, obligation or liability acquired, accrued or incurred under any rule, notification or order so amended, repealed, superseded or rescinded, so as to deny the benefit under Rule 6(5) of the CCR that is being claimed by the appellant.
If the appellants were availing any of the aforementioned specified taxable services and had taken credit of service tax paid on the same and have not used such specified taxable services exclusively in or in relation to providing exempted services, then irrespective of the stipulations in sub-rules (1), (2) and (3) of Rule 6 of the Cenvat Credit Rules, 2004, credit of the whole of service tax paid on such specified taxable services shall be allowed and such taking of credit is correct and legal. The jurisdictional High Court in the case of M/s. Ruchika Global Interlinks has held that the explanation to Rule 2(e) stipulating that “exempted services” includes trading is clarificatory. Thus, for the relevant period, trading is to be treated as “exempted services”.
Conclusion - i) Input service tax credit on services used in trading activities cannot be availed as trading is treated as an exempted service. ii) The benefit of Rule 6(5) of the Cenvat Credit Rules, 2004, applies to the relevant period, allowing credit on specified services unless used exclusively for exempted services. iii) Penalties imposed on the appellants are unsustainable due to the interpretational ambiguities and the appellants' bona fide belief in their entitlement to credits.
The matter needs to be remanded to the jurisdictional adjudicating authority in order to determine the extent to which the cenvat credit has been taken on the services which the appellants have claimed would be taxable services as specified in the sub-clauses of clause (105) of Section 65 of the Finance Act as listed in Rule 6(5), and credit of whole of service tax of which shall be allowed unless such service is used exclusively in or in relation to manufacture of exempted goods or providing exempted services - Appeal disposed off by way of remand.
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