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2025 (6) TMI 1745
CIT(Appeals) justification in dismissing the appeals filed by the assessee on account of non-prosecution and non-participation in the appellate proceedings - ex-parte order u/s. 153A r.w.s. 144 - HELD THAT:- We are unable to persuade myself to concur with the manner in which the CIT(Appeals) had proceeded with and disposed off the appeal without adverting to the issue and the grounds, based on which, the impugned order was assailed before him. CIT(Appeals) ought to have called for the records, and adjudicated upon the specific grounds of appeal, based on which, the impugned addition was assailed by the assessee before him.
We are unable to persuade myself to accept the manner in which the appeal of the assessee has been disposed off by the CIT(Appeals). In my considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of nonprosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the "Explanation" to Sec.251(2) of the Act reveals that the CIT(Appeals) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per the mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution.
The aforesaid view is fortified in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) [2016 (5) TMI 290 - BOMBAY HIGH COURT]
Thus, not being able to persuade myself to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits. CIT(Appeals) shall in the course of the de-novo appellate proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty so substantiate his claim based on documentary evidence, if any.
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2025 (6) TMI 1744
Protective additions to the income of the appellants - alleged accommodation entries and unaccounted commission income - substantive additions having been made and confirmed in the hands of directors/related persons.
HELD THAT:- Hon’ble apex court in Lalji Haridas Vs. ITO [1961 (7) TMI 8 - SUPREME COURT] has settled the issue long back that when there arises a doubt in the mind of the AO that a particular income might be taxable in more than one assessee’s hands, he could indeed make such protective addition so as to protect the interest of the Revenue as per ‘ex-abundat cautela” i.e. as a matter of abundant caution. We now advert to the Revenue instant identical sole substantive grievance wherein it seeks to revive the impugned protective additions.
We are of the considered view that allthough there would be no dispute about the foregoing settled legal propostion involving a protective assessment, the facts herein stand on a different footing since there is a clear cut finding that the corresponding substantive additions in case of Diroctor/Sh. Arun Tyagi involving former Sh. Ram Prakash Bhatia in the latter assessees’ case, had been duly confirmed.
And also that both these assessees are found to be mere namelanders only without having derived any independent taxable income. We accordingly are of the considered view that the learrned CIT(A) has rightly deleted the impugned protective additions after only confirming the corresponding substantive additions and therefore, the Revenue’s instant identical sole grievance deserves to be rejected. Ordered accordingly.
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2025 (6) TMI 1743
Validity of proceedings u/s.147 against dead person/assessee - consequential direction as contemplated u/s.159 - HELD THAT:- Ostensibly, the legal heir of the assessee (since deceased), had in the course of the appellate proceedings, brought the fact about the death of the assessee to the notice of the CIT(A). However, we find that the CIT(A) despite having been intimated about the fact that the assessee had expired failed to implead his legal heir and passed the order in the name of the deceased assessee.
As stated by the AR, and rightly so, as per the settled principle of law, no order can be passed against a dead person, and thus, any proceedings taken against the deceased assessee shall be continued against the legal representative from the stage at which it stood on the date of the death of the deceased.
In a case where an assessee dies pending any assessment proceedings, the provisions of Section 159 get attracted. Accordingly, it is incumbent on the A.O to ensure compliance with sub-section (2) of Section 159 before any order is passed. The aforesaid view is supported by the judgment of Dalumal Shyamumal [2004 (11) TMI 57 - MADHYA PRADESH HIGH COURT] as observed that as the A.O had framed the assessment in the name of the assessee (since deceased), therefore, assessment so framed was a nullity. However, the Hon’ble High Court was of the view that once the assessment order was held to be nullity, then the Tribunal should have given a consequential direction as contemplated u/s. 159 of the Act to the A.O so that proper assessment order could be passed.
Thus, remand the matter to his file for ensuring compliance with Section 159(2) of the Act for passing an appropriate order after validly putting to notice the legal representative/representatives of the deceased assessee. CIT(Appeals) is also directed to consider the submissions that were filed by the assessee before him on 14.08.2024.
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2025 (6) TMI 1742
Additions against Unsecured loan - Scrutiny proceedings u/s 143(3) - addition mainly for the reasons that notice u/s 133(6) issued by the AO was not complied by M/s Santosh Tradelink Ltd. (Third party)
HELD THAT:- AO has made attempt by way of sending notice u/s 133(6) at the two addresses of assessee and letter to the Chairman/Secretary of the Society, where office of said party was located and also by way of deputing Ward Inspector for verification of the address. But the said party was not found to be in existence at that address provided.
Assessee submitted that said party had complied to the notice u/s 133(6) of the Act but said reply was received in the office of the AO after completion of the assessment. Since the identity of the party could not be established in assessment and appellate proceedings, the assessee is seeking one more opportunity.
Thus,we feel it appropriate to restore this issue back to the Assessing Officer with the direction for issuing fresh notice u/s 133(6) of the Act to M/s Santosh Tradelink Ltd at the address which will be provided by the assessee to the AO. Thereafter, the Assessing Officer may examine the issue of addition u/s 68 of the Act in accordance with law. The ground of the appeal of the assessee are accordingly allowed for statistical purposes.
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2025 (6) TMI 1741
Assessment u/s.144 - addition of the deposits in the bank account as well as in the Post Office account - Non filing of return of income for the impugned assessment year - HELD THAT:- From the perusal of the computation of total income and balance sheet etc, filed in the paper book, we find that all the deposits in the form FDs, RDs account and other cash deposits find place in the assets shown in the balance sheet and also the income earned thereon in the shape of interest etc are duly taken to the computation of total income where after considering other incomes and investments made for deduction under Chapter VIA, the total income of the assessee was computed which is lower than the amount maximum not chargeable to tax.
Further from the perusal of the fund flow statement, we find that there was opening balance taken from the balance sheet of preceding year and the closing balance was taken to the next year where the return was also not filed being income not exceeding the amount not chargeable to tax.
It would be fair and reasonable to set aside the matter to the file of the Assessing Officer with the direction to examine whether all these deposits are forming part of the balance sheet submitted before us.
On verification, if the AO found that all these forming part of balance sheet, then no addition is required to be made as the income computed on such Balance Sheet is lower than the amount not chargeable to tax. Appeal of the assessee stands partly allowed for statistical purposes.
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2025 (6) TMI 1740
Addition u/s 68 - unexplained cash credit being unexplained unsecured loans - HELD THAT:- Assessee has furnished before us the details of loans taken and the creditworthiness of persons giving loan to the assessee. DR has not provided any materials to dislodge the claim of the assessee regarding the identity, genuineness and creditworthiness of the transactions.
CIT(A) held that once the assessee has furnished the identity, details of the investor alongwith their bank account statement showing credit worthiness and genuineness. The onus shifted on the AO to prove that the investor did not have sufficient balance of funds to provide the money to the assessee company. We are of the considered view that no adverse inference can be drawn from such findings of the CIT(A) and the conclusions of the CIT(A) cannot be faulted with.
Since the assessee has successfully explained the three ingredients necessary to discharge the onus cast upon her, section 68 of the Act is clearly not applicable. Appeal of revenue dismissed.
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2025 (6) TMI 1739
Denying benefit of exemption u/s 11 - charitable activity u/s 2(15) - assessee is predominately a mutual association and that on the principle of mutuality the interest income and other income are taxable - As per AO assessee is engaged in the activity of providing / rendering services to Members / Non-members in relation to trade, commerce or business for a fee - AR submitted that the 1st proviso to section 2(15) cannot be applied in assessee's case for reason that the assessee is not involved in carrying on any activity in the nature of trade, commerce or business for a cess or fee or any other consideration - HELD THAT:- The assessee is a charitable trust existing since 2001, having registration under section 12A of the Act.
In assessee's case it is not in dispute that it is a charitable organization since the assessee is registered under section 12A of the Act and that the revenue till now has not held the assessee to be otherwise. Now coming to the question of whether the assessee is a mutual organization, from the perusal of the financial statements of the assessee, we notice that the income of the assessee consist of subscription fee from members, sponsorship fees for annual event and bank interest. Further from the perusal of the brochure of the annual event, we notice that the event is held for the benefit of insurance consumers and brokers and that the events conducted without collecting any fees.
Therefore, in our considered view there is merit in the submission of the ld. AR that the assessee is not only for the benefit of members but is also for the benefit of insurance consumers from general public. In our view when the assessee is engaged in charitable activity in the nature of advancement of any other object of general public utility, it cannot be said that the assessee is exclusively engaged in the activities beneficial only to its members. Therefore, we are of the view that the action of the AO in applying the principle of mutuality in assessee's case is not sustainable and accordingly the addition made towards interest and other income on that ground is not tenable.
Whether proviso to section 2(15) is applicable in assessee's case? - From the plain reading of the section, it is clear that the Trust whose objects is for the advancement of any other object of general public utility shall be held to be not for charitable purpose if it involves the carrying on of any activity in the nature of trade, commerce business for rendering of any service to any trade, commerce or business for a cess or fee or any other consideration. We also notice that the income of the assessee does not contain any revenue from any activity in the nature of trade, commerce or business. Further the participation in the annual meet for which the sponsorship fees is received is free of cost and therefore cannot be held to be a service for a fee for rendering service. Considering these facts we are of the view that the AO is not correct in stating that the 1st proviso to section 2(15) is applicable in assessee's case without bringing anything on record to substantiate the claim. See Ahmadabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT]
We are of the view that the AO is not correct in denying the benefit of section 11 to the assessee by invoking the proviso to section 2(15) of the Act and in holding that the principle of mutuality is applicable to assessee to make an addition towards interest and other income. Accordingly, the AO is directed to delete the addition made in this regard.
Addition towards interest and other income by applying the principle of mutuality to the assessee - Since we have held that the assessee is entitled to claim exemption u/s 11 and that the principle of mutuality is not applicable in assessee's case.
Assessee appeal allowed.
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2025 (6) TMI 1738
Power to formulate and amend the FTP - power of DGFT to stipulate any condition which is contrary to the FTP and which has the effect of amending, modifying or altering the FTP - Validity of 'condition x' whereby import consignments landing at Indian Ports after the date of issuance of TRQ license shall only be considered for clearance under TRQ - goods were not cleared holding that goods stood warehoused before issuance of TRQ license and that the same being legal issue and till resolution thereof goods will not cleared against the aforesaid TRQ license - applicability of principle of estoppel, waiver and acquiescence - HELD THAT:- Having perused the provisions of the FTDR Act and the relevant provisions of the Customs Act, 1962, this Court is of the view that the power to formulate and announce the Foreign Trade Policy (FTP) and consequentially to amend the said policy lies exclusively with the Central Government under Section 5 read with Section 6(3) of the FTDR Act and not by the DGFT. Any provision for prohibiting, restricting or regulating in any manner, the import or export of goods can be done only by the Central Government in terms of Section 3(2) of the FTDR Act. The power to frame and amend only the procedure for the purpose of implementation of the Foreign Trade Policy can be issued by the DGFT. The power of the DGFT for the purpose of issuing procedural Circulars/Notices can be traced not to the FTDR Act but to the Foreign Trade Policy itself, particularly, paragraph Nos.1.02, 1.03 and 2.04 of the Foreign Trade Policy. The public notices dated 24.05.2022 and 14.06.2022 issued by the DGFT cannot be said to be issued in exercise of powers under the FTDR Act but, in exercise of the powers vested under the DGFT in paragraph No. 1.03 and 2.04 of the Foreign Trade Policy. Therefore, it has to be held that DGFT cannot be cloaked with the powers of amending altering or modifying the Foreign Trade Policy which would have the essence of taking away something from or being contrary to the Foreign Trade Policy itself which is formulated by the Central Government exercising its powers under Section 5 of the FTDR Act. In that view of the matter, ‘condition No. x’ at Serial No. 3 in the Condition Sheet in the TRQ licence must be held to be outside the powers of DGFT.
The contention of the respondents that the DGFT is also the Ex-officio Additional Secretary to the Government of India and therefore, the public notices has been issued in such capacity and therefore, meets the test of Kanak Export (Supra) is rejected, for the reason that it would be apparent from the perusal of the public notice dated 14.06.2022 that “Ex-officio Additional Secretary to the Government of India” only describes the post held by the DGFT and does not reference the power exercised by him. Therefore, it is clear that the public notices have been issued by the DGFT as DGFT and not as the Central Government under Section 5 or 6(3) or 3(2) of the FTDR Act.
Further, as per Section 25(1) of the Customs Act, 1962, the Central Government has the power to grant exemption from payment of duty. Section 15 provides the relevant date for the determination of the rate of duty and tariff valuation of the imported goods. Section 15(1)(b) speaks of the rate of duty applicable in case of goods clear from a warehouse under Section 68, to be the duty in force on the date on which the bill of entry for home consumption is filed in respect of such goods. Thus, ‘condition No. x’ is contrary to the Customs Act itself.
Conclusion - i) The ‘condition No. x’ mentioned in paragraph No. 2 of the Public Notice No. 15/2015 -20 dated 14.06.2022 is contrary to the Foreign Trade Policy and beyond the powers of the DGFT. Consequently, the ‘condition No. x’ in paragraph No. 2 of the Public Notice No. 15/2015-20 dated 14.06.2022 is quashed and sert aside. ii) Condition No. 3 in Condition Sheet of the Tariff Rate Quota dated 05.07.2022 issued to the petitioner is quashed and consequently, the respondents are directed to permit the clearance of 2597.330 Mts. of the subject goods from the customs bonded warehouse in terms of Section 68 of the Customs Act, 1962 on production of Tariff Rate Quota dated 05.07.2022 by the petitioner, extending the benefit of Notification No. 30 of 2022-Cus. Dated 24.05.2022 on such clearance of the goods.
Petition disposed off.
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2025 (6) TMI 1737
Levy of penalties - benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - seperate/legal existence - application was treated to have been filed by HUF in view of the PAN number of the HUF being shown in the application whereas the penalty was imposed upon the individual - HELD THAT:- It is not in dispute that the petitioner has filed the Form-SVLDRS-1 regarding the penalty imposed in case of M/s. Shriram Tubes Private Limited and M/s. Shital Tubes Private Limited. The respondents authorities have accepted the Form-SVLDRS-1 in case of both the companies and other Directors. Even in case of M/s. Shital Tubes Private Limited, Form-SVLDRS-1 filed by the petitioner on 14/10/2019 is accepted without any demur and no objection was raised with regard to the surname or PAN shown by the petitioner in the form.
The object of SVLDRS is to reduce the litigation by resolution of the disputes so as to liquidate the legacy cases of the Central Excise and Service Tax which are subsumed in GST and which were pending in various forums.
Under Section 124(1)(b) of the scheme, tax dues are relatable to a show cause notice for pending litigation and the amount of duty or penalty as per the said notice is required to be paid as per the provision of the scheme and if only penalty is imposed under the Act then no amount is required to be paid by filing the form by stating the amount as Nil as the entire amount of either late fee or penalty or interest would be waived.
In the facts of the case, it is not in dispute that penalty was imposed upon the petitioner in respect of both the companies and therefore the petitioner was eligible to have the benefit of SVLDRS as the petitioner does not fall in any of the clauses being clause-A to clause-H of sub-section 125 which provides that all persons shall be eligible to make a declaration except falling under clause-A to clause-H. It is not even the case of the respondents that the petitioner is not eligible as per Section 125(1) of the scheme. The respondents therefore were not justified in rejecting the application on ground of change in surname of the petitioner to ‘Jain’ instead of ‘Shah’ or the PAN of HUF shown in the application which could have been corrected so as to grant benefit of the scheme to the petitioner.
The respondent could not have rejected the application Form-SVLDRS-1 filed by the petitioner on the technical grounds denying the benefit of the scheme. Moreover, the respondent could not have discarded the representation made by the petitioner by the impugned communication dated 25/07/2023 on the ground that this Court did not quash and set aside the order passed by the designated committee.
The approach of the respondent authority in not entertaining the representation made by the petitioner is deprecated and the respondents authorities are accordingly directed to pass appropriate order accepting the application Form-SVLDRS-1 filed by the petitioner changing the PAN shown by the petitioner to that of his individual PAN instead of the PAN of HUF and accepting the name of the petitioner as ‘ Jitendra C. Jain’ instead of ‘Jitendra C. Shah’ and issue Form-SVLDRS-4.
Conclusion - The petitioner is eligible for the benefits of SVLDRS, the rejection of the application on technical grounds is unjustified, and the respondents are directed to accept the corrected application and issue the requisite Form-SVLDRS-4 within twelve weeks.
Application disposed off.
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2025 (6) TMI 1736
Refund of service tax - rejection on the ground of time limitation - failure to follow judicial discipline - HELD THAT:- It is observed that the amount in question became refundable pursuant to Notification No. 6/2015 dated 14.5.2016 with reference to Section 102(3) of the Finance Act, 2016. The notification itself prescribes time limit of six months w.e.f. 14.05.2016. Admittedly, the refund claim is filed beyond said six months. Still has been sanctioned contrary to the mandate of said notification. The exemption notifications have to be read strictly as held by Hon’ble Supreme Court in the case of Sunrays Engineers Pvt. Ltd. Vs. CCE [2015 (4) TMI 122 - SUPREME COURT].
In the case of Zaigham Enterprises Vs. Commissioner of Cus., C. Ex. & ST, Noida [2019 (8) TMI 1567 - CESTAT ALLAHABAD] it was held that notification requiring filing of refund application within six months from date of Finance Bill, 2016 receiving assent of President. Court has no jurisdiction to enlarge limitation period provided under a notification which required to be strictly interpreted. Delay in filing refund application not condonable.
Conclusion - Irrespective the delay in filing the refund claim is a procedural lapse but there is no reasonable explanation for the occurrence of said delay. A litigant is required to be diligent. The Commissioner (Appeals) has failed to follow the judicial discipline.
The order under challenge is accordingly, set aside and both the appeals filed by department is allowed.
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2025 (6) TMI 1735
Time limitation - Condonation of delay in filing the appeal by the Commissioner (Appeal) - sufficient cause for delay or not - HELD THAT:- In the present case the appeal has been filed as observed by the Commissioner (Appeal) after more than expiry of period of 90 days after the receipt of the order of original authority - In terms of Section 85 (3A) of the Finance Act, 1994 it is observed that the appeal was to be filed before the Commissioner (Appeal) within two months of the date of the receipt of the order in original by the appellant. As per the proviso Commissioner (Appeal) has been granted the power to condone delay of one month in filing the appeal on sufficient cause being shown. In the present case appeal was filed before the Commissioner (Appeal) after more than a year from the date of receipt of order in original. Hence Commissioner (Appeal) has rightly held that appeal was filed beyond the prescribed period of limitation and has dismissed the same on this ground alone.
This issue is squarely covered by the decision of Hon’ble Supreme Court in the case of M/s Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], wherein it has been held that Commissioner (Appeals) could not condone the delay beyond the 30 days in filing the appeal before him.
There are no merits in this appeal filed by the appellant - appeal dismissed.
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2025 (6) TMI 1734
Demand u/s 73A - Amount collected by the assesse in the nature of service tax or not - collection of 13% airport authority levy by the appellant from their clients - demand raised under Best Judgment method under section 73 of the Finance Act, 1994 - Levy of service tax when appellant has been discharging VAT on the AAI levy collected with respect to the transaction related to sale of food & beverages - Levy of penalty.
Inclusion of component of service tax or not - collection of 13% airport authority levy by the appellant from their clients - applicability of section 73A of FA, 1994 - HELD THAT:- Section 73A (w.e.f. 18.04.2006) provides that any person who has collected any amount in excess of Service Tax assessed or determined and paid on any taxable service from recipient of Service Tax in any manner as representing Service Tax, shall forthwith pay the amount so collected to the credit of the Central Government.The provisions of this section come to play only when any excess amount has been collected as service tax from the service recipient. If such amount of service tax is collected, which is in excess of service tax assessed or determined or paid on any taxable service, such amount is required to be deposited forthwith to the credit of the Central Government. In this context, it is noted that the word ‘Collection’ precedes ‘payment’. Thus, if no amount of service tax is collected, then section 73A is not applicable.
The Tribunal in Alstom Projects India Ltd. v. CC, CE & ST Coimbatore [2013 (6) TMI 202 - CESTAT CHENNAI] held that so far as section 73A is concerned, it applies only when a person collects any sum in name of service tax, which could not have been done by a person claiming all through that he is not liable to pay Service Tax.
A perusal of the sample invoice raised by the appellant on Singapore Airlines (invoice no. 001753 dated 30.09.2013) on sale of food and beverages reveals that the appellant has charged VAT at various applicable rates and AAI levy at 13% from the client. There are no collection of any amount representing as service tax in the said invoice.
Section 73A is categorical that the amount should have been collected as Service tax and not deposited. In the instant case, no such evidence has been brought forward by the Revenue to establish that the said amount representing service tax was collected by the appellant from the sale of Food and beverages - The charging section 73A categorically applies only when a person collects any sum in name of service tax, which is not the case in this appeal.
In the instant case, it has been demonstrated by the learned Counsel that no amount was collected by the appellant representing service tax in their sale invoices raised in respect of food and beverages. What has been collected is VAT and AAI levy. It is also on record that the appellant had duly deposited service tax collected on invoices raised in respect of provision of services. The department has not disputed this fact. The impugned order has held that “Apparently, no Service Tax has been collected by the Appellant separately on the AAI levy from their clients either in the invoice pertaining to supply of food or provision of services” - A perusal of the invoices reveal that VAT & AAI levy and service tax and AAI levy was collected on the invoices issued to their customers. However, it is not required to accept that service tax was not indicated separately in the invoices issued for provision of services.
Demand raised under Best Judgment method under section 73 of the Finance Act, 1994 - HELD THAT:- It has been held in the impugned order that the instant show cause notice has incorrectly been issued under section 73 - If the instant SCN is to be considered to have been issued under Section 73A, then the said demand cannot be upheld.
Levy of service tax when appellant has been discharging VAT on the AAI levy collected with respect to the transaction related to sale of food & beverages - HELD THAT:- The said demand has been raised on the transactions where VAT was paid by the appellant on sale of food and beverage. Consequently, on this ground as well the demand cannot be sustained.
Levy of penalty - HELD THAT:- Once demand cannot be sustained, the penalties are also not sustainable.
Conclusion - i) Section 73A is categorical that the amount should have been collected as Service tax and not deposited. In the instant case, no such evidence has been brought forward by the Revenue to establish that the said amount representing service tax was collected by the appellant from the sale of Food and beverages. ii) Payments of service tax as also the VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. iii) The appellant had not collected any amount representing service tax in their sale invoices raised in respect of food and beverages. iv) Once demand cannot be sustained, the penalties are also not sustainable.
The impugned order set aside - appeal allowed.
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2025 (6) TMI 1733
Levy of service tax - affiliation fees charged by the appellant from the educational institutions /colleges - HELD THAT:- The issue is no longer res integra and has been decided in favour of the appellant by the Tribunal in the case of M/s Jiwaji Vishwavidhyalaya versus Commissioner, CGST & CE, Bhopal [2025 (5) TMI 153 - CESTAT NEW DELHI]. The Tribunal has relied on the decision of the Karnataka High Court in Rajiv Gandhi University of Health Sciences, Karnataka [2022 (8) TMI 707 - KARNATAKA HIGH COURT] where it has been held that the act of University in granting affiliation to a private college has to be considered as a service in furtherance of providing education and the decision of the department to consider otherwise is erroneous.
The Commissioner (Appeals) after considering the provisions in the post negative era, analysed the nature of affiliation fees paid by the educational institutions to the appellant and also the nature of activity involved in the process of receiving affiliation fees, concluded that the same is not chargeable to service tax. There are no error in the findings arrived at by the Commissioner (Appeals), which are in conformity with the decisions of the superior forums.
There are no reason to interfere with the findings recorded by the Commissioner and therefore accept the same.
Conclusion - The affiliation fees collected by the university from affiliated colleges are not liable to service tax under the Finance Act, 1994.
The appeal filed by the Revenue accordingly stands dismissed.
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2025 (6) TMI 1732
Levy of service tax - Stock Broker Services - Delayed Payment Charges - HELD THAT:- The consistent view taken by the Tribunal is that the appellant had made payments to Stock Exchanges on behalf of their clients, who delayed the payments against their transactions of securities and the appellant charged the DPC from the said clients by making debit entries in their ledger, which cannot be termed as consideration for the service rendered. On the same analogy, it was held that it cannot be considered as service of tolerating or refraining from an act or to tolerate an act or situation, or to do an act and accordingly and the demand of service tax was therefore, set aside.
Conclusion - The service tax demand on delayed payment charges collected by the stock broker company from its clients set aside.
The impugned order is unsustainable - The demand of service tax on DPC is accordingly set aside - Appeal allowed.
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2025 (6) TMI 1731
Extended period of limitation - short payment of tax due to mismatch between its ST-3 and 26AS/ITR returns - liability to pay service tax - Name of the appellant appearing in Form 26AS - Failure to extend cum-tax benefit to the appellant.
Short payment of tax due to mismatch between its ST-3 and 26AS/ITR returns - HELD THAT:- The appellant did file the reply to show cause notice on 01.04.2021 but the same was not considered by the learned appellate authority. It is also found that Order-in-Original was passed ex-parte on the ground that the appellant did not file the reply to show cause notice and did not attend the personal hearing which is factually incorrect because the appellant did not get the personal hearing notice from the respondent.
Further, it is found that it is a settled law that demand cannot be raised solely on the basis of difference between ST-3 and 26AS/ITR. This issue is no more res integra and has been considered by various benches of Tribunal and this Bench in the case of Indian Machine Tools Manufacturers Association Vs. Commissioner of Central Excise, Panchakula [2023 (9) TMI 815 - CESTAT CHANDIGARH] and Shreejee RMC Private Limited Vs. Commissioner of CGST & C.E., Rohtak [2024 (5) TMI 671 - CESTAT CHANDIGARH] has examined this issue and it was held that 'Coming to third and final issue as to whether any demand can be sustained on the basis of difference between the figures of ST-3 Returns and the balance sheets, we find that it is a settled principle of law that service tax can be levied only when there is a clear Identification of service provider, service recipient and consideration paid for the same. In the absence of any such evidence of the service recipient and the service provided, service tax cannot be demanded and confirmed.'
Thus, it has been consistently held that demand cannot be raised on the basis of the difference between ST-3 and 26AS/ITR returns, hence, on this issue alone, the demand is set asie.
Liability to pay service tax - HELD THAT:- The appellant has rendered services to body corporate and vide Notification No. 30/2012-S.T. dated 20.06.2012 the taxable services provided by the GTA in respect of Transportation of goods by road where the person is liable to pay freight is body corporate established by or under any law, then the liability to pay service tax in such cases will be on the body corporate receiving GTA service by way of reverse charge mechanism and it is found that the most of the companies to whom the appellant has rendered the services are body corporates and therefore service tax cannot be demanded from the appellant. Further, it is found that the services rendered to other GTA are exempted from the payment of service tax as GTA are also exempted from payment of service tax as per the entry 22 of the Notification No. 25/2012-ST dated 20.06.2012 because both the conditions which are required to be satisfied are satisfied by the appellant.
Name of the appellant appearing in Form 26AS - HELD THAT:- In the present case during the relevant period the rates of tax has been changed and the computation of service tax made by the Department is incorrect. Further, it is found that the Department has wrongly applied best judgment method for computation of demand from April’17 to June’17. Once, the appellant has duly filed the ST-3 returns during the relevant period therefore the question of invoking the best judgment method is not warranted.
Failure to extend cum-tax benefit to the appellant - HELD THAT:- The Department has failed to extend cum-tax benefit to the appellant which the appellant was entitled in view of Section 67(2) of the Act.
Extended period of limitation - HELD THAT:- The show cause notice was issued on 24.12.2020 and the same was received by the appellant on 01.01.2021, it is also noted that the appellant was regularly filing the ST-3 returns and the Department was aware of the fact that the appellant is providing GTA service. The appellant was under a bonafide belief that they are not liable to pay the service tax on GTA service and therefore, suppression cannot be alleged by the Department on the part of the appellant in order to invoke the extended period of limitation.
Conclusion - i) The demand cannot be raised on the basis of the difference between ST-3 and 26AS/ITR returns. ii) The services rendered to other GTA are exempted from the payment of service tax as GTA are also exempted from payment of service tax as per the entry 22 of the Notification No. 25/2012-ST dated 20.06.2012 because both the conditions which are required to be satisfied are satisfied by the appellant. iii) Once, the appellant has duly filed the ST-3 returns during the relevant period therefore the question of invoking the best judgment method is not warranted. iv) The Department has failed to extend cum-tax benefit to the appellant which the appellant was entitled in view of Section 67(2) of the Act. v) The appellant was under a bonafide belief that they are not liable to pay the service tax on GTA service and therefore, suppression cannot be alleged by the Department on the part of the appellant in order to invoke the extended period of limitation.
The impugned order is not sustainable in law on merits as well as on limitation - Appeal allowed.
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2025 (6) TMI 1730
Time limitation - Condonation of delay in filing the appeal by the Commissioner (Appeal) - sufficient cause for delay or not - HELD THAT:- In the present case the appeal has been filed as observed by the Commissioner (Appeal) after more than expiry of period of 90 days after the receipt of the order of original authority - In terms of Section 85 (3A) of the Finance Act, 1994 it is observed that the appeal was to be filed before the Commissioner (Appeal) within two months of the date of the receipt of the order in original by the appellant. As per the proviso Commissioner (Appeal) has been granted the power to condone delay of one month in filing the appeal on sufficient cause being shown. In the present case appeal was filed before the Commissioner (Appeal) after more than a year from the date of receipt of order in original. Hence Commissioner (Appeal) has rightly held that appeal was filed beyond the prescribed period of limitation and has dismissed the same on this ground alone.
This issue is squarely covered by the decision of Hon’ble Supreme Court in the case of M/s Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], wherein it has been held that Commissioner (Appeals) could not condone the delay beyond the 30 days in filing the appeal before him.
There are no merits in this appeal filed by the appellant - appeal dismissed.
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2025 (6) TMI 1729
Survival or abatement of appeal - approval of Resolution Plan - seeking disposal of Appeals after hearing the parties since substantial demands have been raised in the impugned orders - HELD THAT:- Now that the Resolution Plan stands accepted which is undisputed by both the parties, the present appeals would not survive as ruled by the Hon’ble Apex Court in Ghanashyam Mishra and Sons Pvt. Ltd. Vs Edelweiss Asset Reconstruction Company Ltd. & Ors. [2021 (4) TMI 613 - SUPREME COURT] which decision has been followed by various CESTAT Benches across India. Ld. Advocate Ms. Shwetha Vasudevan would place reliance on a latest decision of the Hon’ble High Court of Karnataka in the case of Patanjali Foods Ltd. Vs Commissioner of Customs, Mangalore [2024 (10) TMI 233 - KARNATAKA HIGH COURT] and would pray to hold the abatement of ‘demands’ and not ‘appeals’ as directed in the said order of the Hon’ble High Court of Karnataka.
Conclusion - Thus, once the Resolution Plan is approved by the Adjudicating Authority under Section 31 (1) of Insolvency and Bankruptcy Code, 2016 (IBC) then ‘no person will be entitled to initiate or continue any proceedings in respect to a claim which is not part of the resolution plan’. That means even the present proceedings cannot be continued as held in Ghanashyam Mishra and Sons Pvt. Ltd.
Appeal closed.
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2025 (6) TMI 1728
Levy of service tax - foreclosure charges on account of pre-mature termination of the loan agreement - seizure charges on availing loan towards purchase of the vehicles - the charges are forming part of the taxable services under the category of Banking and Financial Services or not - HELD THAT:- The facts that the appellants, as registered assessee under the Service Tax statute, have discharged the service tax liability in respect of the banking and other financial services provided by them to their customers, are not in dispute. Payment of service tax on the provision of taxable service has been mandated under Section 67 of the Finance Act, 1994, providing that on the amount charged for provision of “such service”, which is ultimately provided by the assessee to the recipient of service should be considered as the taxable value for payment of service tax thereon.
The issue, whether any other charges should also form part of the taxable value for the purpose of levy of service tax thereon, was the subject matter of the dispute before the Hon'ble Supreme Court in the case of M/s Bhayana Builders [2018 (2) TMI 1325 - SUPREME COURT], wherein the Hon'ble Supreme Court have observed 'The value of the goods/materials cannot be added for the purpose of aforesaid notification dated September 10, 2004, as amended by notification dated March 01, 2005.'
Further, the issue with regard to collection of various charges, over and above, the taxable value received for the provision of service was also considered by the Larger Bench of this Tribunal, in the case of Repco Home Finance [2020 (7) TMI 472 - CESTAT CHENNAI]. The issue involved in such case was, whether the foreclosure charges levied by Banks and Non-Banking Financial company on premature termination of the loan, could be subjected to levy of service tax under the Banking and other Financial Services? Such question was answered by the Larger Bench, holding that the foreclosure charges collected by the Banks and Non-Banking Financial company on premature termination of loan cannot form part of gross taxable value and not leviable to service tax under Section 65(105) of the Finance Act, 1994.
Furthermore, with regard to the charges collected for bouncing of cheque and penal interest, this Bench of the Tribunal in the case of the appellants themselves [2023 (8) TMI 473 - CESTAT MUMBAI], has held that such charges are not in context with provision of ‘such services’, for which the appellants are registered with the Service Tax Department. Though, this Bench of the Tribunal, in the case of the appellants, has dealt with the issue of ‘cheque bounce charges’ collected on bouncing of cheque, but the ratio is squarely applicable to the facts of the present case, inasmuch as the seizure charges has also been collected as a penalty from the customers for non-performance of the clause(s) provided under the agreement entered between both sides.
The learned adjudicating authority view that the appellants should be liable for payment of service tax on the ‘foreclosure charges’ and ‘seizure charges’ collected by them from the customers, not agreed upon.
Conclusion - i) Foreclosure charges collected on premature loan repayment do not form part of the taxable value for service tax. ii) Seizure charges collected for release of vehicles seized due to loan default are not taxable under the category of Banking and Financial Services.
The impugned order is set aside and the appeal is allowed.
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2025 (6) TMI 1727
Quantum of penalty - Commissioner (Appeals) failed to entertain Cross Objections as also in enhancing the penalty - levy of service tax on construction services.
HELD THAT:- It is no longer res-integra that there is no liability of service tax on construction services till 01.07.2010. It is also noted the fact that they have paid the entire duty and also paid 25% of the penalty, as applicable, after the passing of the Order-in-Original. In so far as the Commissioner (Appeals)’s observation that he being a creature of statute, he cannot extend any benefit beyond Statute, it is found that the same is correct and he could not have entertained “Cross Objections” filed by the appellant. However, there are catena of judgments which held that where the cross objections, per se, are not permissible, the said cross objections itself has to be taken as counter to the grounds taken by the Department.
Further, it is noted that, while the Commissioner (Appeals) has not considered that there is any provision for entertaining Cross Objections, however, he has taken into consideration, the grounds raised in their letter dated 31.08.2012 which not only included the grounds for Cross Objections but also other arguments as regards non-imposition of penalty. It is also an admitted fact that no specific show cause notice, as such, was issued to the respondent before enhancing the penalty as against the Order-in-Original.
Conclusion - It is found that, as far as the decision of not treating the application dated 31.08.2012 as regards Cross Objections, in view of the Statutory Provisions are concerned, there are no infirmity with the decision of the Commissioner (Appeals). However, it is found that in the given factual matrix, the respondent was not able to effectively present their case, especially when the proposal was for enhancing the penalty.
In the facts of the case, especially when on merit itself there was no need even for them to pay any duty and the fact that they have also paid all the imposed duties along with the interest, it is held, in the interest of justice, the matter needs to be remanded back to the Commissioner (Appeals), who shall now issue a notice to the respondent indicating the reasons as to why the penalty should be increased under Section 78 - appeal allowed by way of remand.
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2025 (6) TMI 1726
Time limitation - Liability of appellant to pay service tax - Man Power Supply Service - levy of service tax on the reimbursable expenses received by the appellant - extension of benefit under Section 80 for waiver of penalty imposed under Section 77 or 78 of FA - HELD THAT:- While considering the grounds for extending applicability of Section 80, Commissioner (Appeals) has made certain observations which show that the appellants had reasonable belief and that there was no intention to evade payment of service tax and that there was no deliberate cause for non-payment of service tax.
It is also a fact that the Department had come in appeal against the said order of the Commissioner (Appeals), however, on the grounds of monetary limits they had withdrawn their appeal. Therefore, this observation of the Commissioner (Appeals) stands today as far as the factual matrix is concerned. Therefore, in the given factual matrix, as observed by the Commissioner (Appeals) at para 18, it is found that there is no sufficient ground for invoking extended period. The major part of demand has already been covered by the period of limitation and the remaining part, the appellants are not objecting the demand of service tax within the normal period. It is also made clear that the issue on merit not decided.
It is, however, made clear that whatever amount of the service tax had already been paid along with interest by the appellant, they will not be claiming any refund thereof, as they have not pressed for the same. However, demand to the extent of normal period is upheld.
Conclusion - The extended period of limitation could not be invoked in this case. Demand to the extent of normal period is upheld. Penalties also set aside.
Appeal allowed partly.
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