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2024 (3) TMI 1328
Issues involved: The judgment involves issues related to the concept of mutuality in the appellant society, addition of interest on investments to the returned income, taxation of investment income derived from a bank, and taxability of interest earned from a savings account with a bank.
Concept of Mutuality in Appellant Society: The appeal questioned the justification of both authorities in dislodging the concept of mutuality in the appellant society despite having regular, associate, and nominal members within permissible limits. The appellate order was challenged for overlooking submissions and relying on distinguishable citations. The appellant sought clarification on the sustainability of the decision regarding the concept of mutuality.
Interest on Investments Addition: The issue revolved around the justification of the Commissioner of Income Tax (Appeals) in sustaining the addition for interest on investments to the returned income, holding it not eligible for deduction under section 80P of the Act. The appellant, being a Primary Agricultural Credit Society, contested the decision, citing contradictory judgments for support.
Taxation of Investment Income: The appellant questioned the correctness of upholding the decision that investment income derived from a bank was liable to be taxed and not eligible for deduction, contrary to judgments of the High Court of Kerala and ITAT Bengaluru. The appellant sought clarity on the taxability of interest earned from a savings account with a bank based on relevant legal precedents.
Judicial Review and Remand: The Tribunal acknowledged the submissions by the appellant's representative regarding the non-consideration of relevant decisions by the NFAC. In light of subsequent judgments by the Supreme Court, the Tribunal directed the NFAC to re-adjudicate the issue based on the observations and directions provided. The appeal was allowed for statistical purposes, and the case was remanded back for a detailed order on merits.
Conclusion: The judgment addressed the complex issues surrounding the concept of mutuality, addition of interest on investments, and taxation of investment income, emphasizing the need for a thorough reconsideration based on pertinent legal precedents. The Tribunal's decision to remand the case for a detailed review reflects a commitment to ensuring justice and fairness in the application of tax laws.
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2024 (3) TMI 1327
Issues: Condonation of delay in filing Form No.10 for Assessment Year 2019-20 under Section 119(2)(b) of the Income Tax Act, 1961.
Summary: The petitioner, a trust managing a Jain Derasar in Mumbai, filed an application for condonation of delay in submitting Form No.10 for Assessment Year 2019-20. The delay of 361 days in filing Form 10 was due to oversight by the trust's management. The condonation application was rejected by Respondent No.1 citing lack of supporting evidence for a reasonable cause preventing timely filing. The petitioner, an old trust registered in 1987, was expected to be aware of Income Tax Department regulations. However, an additional affidavit by the auditor, Mr. Dedhia, explained that the delay was unintentional and due to inadvertence. Mr. Dedhia admitted his oversight and ignorance of the rules, attributing the delay to the peak of the covid pandemic and subsequent intimation under Section 143(1) of the Act.
The High Court, after considering Mr. Dedhia's explanation and the circumstances, quashed the impugned order dated 3rd November 2023 and condoned the delay in filing Form No. 10 for Assessment Year 2019-20. The Court commended Mr. Dedhia for his candor in admitting the mistake. The petitioner was advised to take necessary steps, including filing an application under Section 154 of the Act for rectification within two weeks from the date of the order upload. It was clarified that no observations were made on the merits of the matter.
The petition was disposed of, and the delay in filing Form No. 10 was treated as condoned.
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2024 (3) TMI 1326
Issues involved: Challenge to adjudication order under CGST Act for lack of proper discussion of replies to show-cause notices and failure to pass order in accordance with law.
Summary:
The petitioner challenged an adjudication order dated 16th October, 2023, passed under the CGST Act, alleging that the adjudicating authority did not properly discuss the two replies to show-cause notices dated 30th January, 2023, and 7th August, 2023. The petitioner contended that the order was not passed in accordance with the law. The High Court noted that the impugned order was appellable under the statute and had been issued after providing the petitioner with a personal hearing and recording detailed reasons on the merits of the case. The Court held that it could not act as an appellate authority over the order but allowed the petitioner to file a statutory appeal within two weeks. The Court directed that all points raised in the writ petition be kept open before the appellate authority. If the appeal is filed within the specified time, the appellate authority was instructed not to raise the issue of limitation and to decide the appeal in accordance with the law and on merit. The writ petition was disposed of with these observations and directions.
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2024 (3) TMI 1325
Issues Involved: 1. Denial of refund of Service Tax on the ground of limitation. 2. Applicability of SEZ Act over other legislations regarding Service Tax exemptions. 3. Procedural requirements for claiming Service Tax refunds.
Summary:
1. Denial of refund of Service Tax on the ground of limitation: The appellant, located in a Special Economic Zone (SEZ) and engaged in the manufacture of Aluminium products, claimed a refund of Service Tax paid on 'erection and installation service' wholly consumed in the SEZ. The refund claim of Rs.15,99,135/- was denied by the Assistant Commissioner on the grounds of being time-barred and lack of required documents for certain invoices. The Commissioner (Appeals) upheld this decision, allowing only a partial refund of Rs.2,63,732/-.
2. Applicability of SEZ Act over other legislations regarding Service Tax exemptions: The appellant argued that u/s 26(1) of the SEZ Act read with Rule 31 of the SEZ Rules, services rendered to SEZ units for authorized operations are exempt from Service Tax. They contended that Section 51 of the SEZ Act gives it overriding effect over other legislations, and thus, a notification under Service Tax cannot impose a time-limit for refunds. This view was supported by various judicial precedents, including GMR Aerospace Engineering Ltd., SRF Ltd., DLF Assets Pvt. Ltd., and Lupin Ltd.
3. Procedural requirements for claiming Service Tax refunds: The appellant further argued that their refund claim was not under Notification No. 09/2009-S.T. but should be considered u/s 83 of the Finance Act read with Section 11B of the Central Excise Act, which allows a one-year period for claiming refunds. They cited the case of Tata Consultancy Services Ltd. to support their argument that the refund claim was filed within the permissible time frame.
Judgment: The Tribunal observed that the appellant's refund claim was rejected solely on the ground of limitation as per Notification No. 09/2009-S.T. However, it was noted that the SEZ Act, being a specialized act with overriding provisions u/s 51, takes precedence over other laws. The Tribunal referred to the decisions in SRF Ltd., DLF Assets Pvt. Ltd., and Lupin Ltd., which held that the SEZ Act overrides the charging sections of other acts, making exemption notifications and their conditions redundant. Consequently, the Tribunal concluded that the refund claim should be allowed as it was filed within the one-year period prescribed u/s 83 of the Finance Act read with Section 11B of the Central Excise Act.
Conclusion: The Tribunal set aside the impugned order and allowed the appeal, holding that the refund claim could not be rejected on the ground of time bar. The operative part of the order was pronounced in open court.
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2024 (3) TMI 1324
Issues involved: Interpretation of Section 148 of the Negotiable Instruments Act, 1881 regarding the power of an Appellate Court to order payment pending an appeal against conviction under Section 138 of the Act.
Summary: The judgment pertains to the interpretation of Section 148 of the Negotiable Instruments Act, 1881, specifically addressing the power of the Appellate Court to order payment pending an appeal against conviction under Section 138 of the Act. The cases were referred to the High Court by the Chief Justice based on a learned Single Judge's order. The issue revolved around the nature and extent of the statutory discretion conferred on the Appellate Court in ordering payments pending appeal against conviction under Section 138 of the Act and the requirement of furnishing reasons for such orders.
In analyzing the statutory provision and considering the precedents set by the Supreme Court in previous cases, the High Court concluded that the Appellate Court has the discretion to either order the appellant to deposit a portion of the fine or compensation awarded by the trial court or to waive such deposit. If the deposit is required, it should not be less than 20% of the fine or compensation awarded by the trial court. Additionally, if the Appellate Court directs the appellant to deposit an amount exceeding 20%, further reasons must be provided for such a decision.
The interpretation drawn by the High Court was based on a harmonious reading of the Supreme Court judgments in Surinder Singh Deswal and Jamboo Bhandari, aligning with the amended Section 148 of the Act and its objectives as outlined in the Amendment Act No.20 of 2018. While the cases could have been remitted back to the Single Judge for disposal, the High Court decided to set aside the impugned orders of the Appellate Court due to lack of reasons and directed the Appellate Court to pass fresh orders within three months from the date of the judgment.
In conclusion, the High Court provided a detailed interpretation of the Appellate Court's discretion under Section 148 of the Act, emphasizing the importance of providing reasons for decisions and ensuring compliance with the statutory provisions and objectives of the Amendment Act.
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2024 (3) TMI 1323
Issues Involved:
1. Validity of the assessment order due to bar of limitation. 2. Characterization and categorization of AMP expenditure as an international transaction. 3. Application of Bright Line Test (BLT) for transfer pricing adjustment. 4. Errors in benchmarking AMP expenditure. 5. Non-consideration of economic adjustments in AMP expenditure. 6. Disallowance of bonus u/s 43B. 7. Levying of interest u/s 234B and 234C.
Summary of the Judgment:
1. Validity of the Assessment Order Due to Bar of Limitation:
The assessee challenged the final assessment order on the grounds of being barred by limitation u/s 144C(13) of the Act. The DRP directions were issued on March 17, 2022, and uploaded on the ITBA portal on March 30, 2022. The AO passed the final assessment order on June 30, 2022. The Tribunal noted that the assessment case was transferred on April 22, 2022, and the DRP directions were uploaded in the case history noting on May 2, 2022. The Tribunal concluded that the limitation period expired in May 2022, rendering the assessment order passed on June 30, 2022, as time-barred and void.
2. Characterization and Categorization of AMP Expenditure as an International Transaction:
The assessee contended that the AMP expenditure did not constitute an international transaction under Chapter X of the Act. The Tribunal did not delve into this issue, as the assessment order was already found to be barred by limitation.
3. Application of Bright Line Test (BLT) for Transfer Pricing Adjustment:
The assessee argued against the application of the BLT for making transfer pricing adjustments. The Tribunal did not address this issue due to the primary finding of the assessment order being time-barred.
4. Errors in Benchmarking AMP Expenditure:
The assessee claimed errors in the benchmarking process of AMP expenditure by the AO/TPO. This issue was not adjudicated by the Tribunal as the assessment order was declared void due to the limitation bar.
5. Non-Consideration of Economic Adjustments in AMP Expenditure:
The assessee argued that the AO/DRP/TPO did not grant quantitative/economic adjustments while quantifying the arm's length price of the AMP expenditure. The Tribunal did not address this issue due to the primary finding of the assessment order being time-barred.
6. Disallowance of Bonus u/s 43B:
The assessee contested the disallowance of bonus paid amounting to INR 10,44,363 u/s 43B of the Act. The Tribunal did not address this issue as the assessment order was declared void due to the limitation bar.
7. Levying of Interest u/s 234B and 234C:
The assessee challenged the levying of interest u/s 234B and 234C of the Act. The Tribunal did not address this issue due to the primary finding of the assessment order being time-barred.
Conclusion:
The Tribunal allowed the appeal of the assessee, declaring the assessment order passed on June 30, 2022, as barred by limitation and void. The other grounds of appeal were not adjudicated due to the primary finding on the issue of limitation.
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2024 (3) TMI 1322
Issues Involved: 1. Applicability of the decision in CIT vs Idea Cellular Ltd to the present case. 2. Assessee-in-default status for non-deduction of tax u/s 194H. 3. Applicability of Section 194H to transactions between the Appellant and distributors. 4. Relationship characterization between Appellant and distributors. 5. Nature of the discount allowed to distributors. 6. Liability for recovery of tax and interest u/s 201(1A).
Summary:
1. Applicability of the decision in CIT vs Idea Cellular Ltd to the present case: The Tribunal erred in disregarding the contentions of the Appellant and solely relying on the decision in CIT vs Idea Cellular Ltd for AY 2003-04 and 2004-05 without appreciating that the facts in the present case are completely distinct.
2. Assessee-in-default status for non-deduction of tax u/s 194H: The solitary question for consideration was whether the ITAT was correct in holding the assessee to be in default for non-deduction of tax u/s 194H of the Income Tax Act. The Supreme Court in Bharti Cellular Limited vs. Assistant Commissioner of Income Tax clarified that the obligation to deduct tax at source arises when the legal relationship of principal-agent is established.
3. Applicability of Section 194H to transactions between the Appellant and distributors: The Supreme Court held that Section 194H is not applicable to the transactions between the Appellant and the distributors in respect of the sale of SIM Cards/Recharge Vouchers. The income of the franchisee/distributor is determined by the sale price received from the retailer/end-user/customer, and the assessee does not pay or credit the income by way of commission or brokerage.
4. Relationship characterization between Appellant and distributors: The relationship between the Appellant and distributors is not that of principal and agent. The distributor buys goods on his account and sells them in his territory, acting as an independent contractor rather than an agent. The Supreme Court emphasized that the term "agent" denotes a relationship different from that of an independent contractor.
5. Nature of the discount allowed to distributors: The discount allowed to distributors was not in the nature of commission out of which tax was deductible u/s 194H. The Supreme Court clarified that the obligation to deduct tax at source does not extend to true/genuine business transactions where the assessee is not responsible for paying or crediting income.
6. Liability for recovery of tax and interest u/s 201(1A): The appellant could not have been treated as an assessee in default, and thus, the orders for recovery of tax and interest u/s 201(1A) were set aside. The Supreme Court's decision in Bharti Cellular was pivotal in this determination.
Conclusion: The High Court allowed the appeal, setting aside the impugned order dated 30 October 2018, and the orders dated 28 March 2013 and 18 May 2015 passed by the AO and CIT(A) respectively, based on the Supreme Court's decision in Bharti Cellular.
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2024 (3) TMI 1321
Issues Involved: 1. Legality of the ex-parte appellate order passed by the CIT(A) u/s 250 of the Income Tax Act, 1961. 2. Confirmation of addition of Rs. 5,16,16,970/- by the AO invoking provisions of section 56(2)(viia) of the Act. 3. Admission of additional evidence by the assessee.
Summary of Judgment:
Issue 1: Legality of the Ex-Parte Appellate Order The assessee contended that the ex-parte appellate order passed by the CIT(A) u/s 250 of the Income Tax Act, 1961, was unjustified, bad in law, and against the principles of natural justice. The Tribunal observed that the CIT(A) had provided several opportunities for the assessee to be heard, but the assessee failed to appear on multiple occasions. Consequently, the Tribunal found no merit in the contention that the order was passed without providing a reasonable opportunity of being heard. Thus, the ground raised by the assessee was rejected.
Issue 2: Confirmation of Addition of Rs. 5,16,16,970/- The AO had made an addition of Rs. 5,16,16,970/- by invoking the provisions of section 56(2)(viia) of the Act, which was confirmed by the CIT(A). The Tribunal noted that the assessee had invested in shares at a face value lower than the fair market value, resulting in a profit. The CIT(A) had calculated the addition correctly, and since the assessee did not dislodge these calculations, the Tribunal found no infirmity in the order of the CIT(A). However, due to additional evidence submitted by the assessee, the Tribunal decided to restore the matter to the CIT(A) for fresh adjudication.
Issue 3: Admission of Additional Evidence The assessee submitted an application for the admission of additional evidence, citing reasons for not being able to present these documents earlier. The Tribunal acknowledged the reasons provided and admitted the additional evidence. The Tribunal referred to a similar case in the assessee's own matter for AY 2012-13 & 2013-14, where the matter was set aside to the CIT(A) for fresh adjudication. Following this precedent, the Tribunal restored the present appeal to the CIT(A) for re-adjudication after considering the additional evidence.
Conclusion: The Tribunal allowed the appeal for statistical purposes, directing the CIT(A) to re-adjudicate the matter after considering the additional documentary evidence. The CIT(A) is to afford a reasonable opportunity of being heard to the assessee during the set-aside proceedings. The order was pronounced in the open court on 07/03/2024.
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2024 (3) TMI 1320
Issues: The issues involved in this case are reopening of assessment u/s 147 of the Income-tax Act, treatment of purchases as non-genuine u/s 69C of the Act, addition of income based on non-genuine purchases, appeal against the order of the Learned Commissioner of Income Tax (Appeals), and determination of the profit element embedded in non-genuine purchases.
Reopening of Assessment: The appeal was filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) for the A.Y. 2012-13. The case was reopened u/s 147 of the Act based on information received about accommodation entries provided by various dealers, including the assessee. The Assessing Officer treated the purchases as non-genuine u/s 69C of the Act, leading to the determination of the assessee's income at a higher amount.
Treatment of Purchases as Non-genuine: The Assessing Officer concluded that the purchases made by the assessee were non-genuine, obtained as accommodation entries without actual transportation of materials. Despite the assessee's submissions, the Assessing Officer treated the purchases as bogus under section 69C of the Act, resulting in a higher income determination for the assessee.
Appeal Against CIT(A) Order: The assessee appealed before the Ld. CIT(A) and subsequently to the Appellate Tribunal, challenging the addition made by the Assessing Officer. The Ld. CIT(A) directed the Assessing Officer to restrict the addition to the Gross Profit Rate of 7.89% while working out the profit element embedded in the non-genuine purchases.
Determination of Profit Element: The Appellate Tribunal considered the submissions and material on record, emphasizing that only the profit element embedded in non-genuine purchases should be added to the income. The Tribunal referred to previous judgments and directed the Assessing Officer to disallow only 0.25% of the disputed purchases under section 68 of the Act, in line with the difference in gross profit declared in regular trading and non-genuine transactions.
Conclusion: Following the decision of the Hon'ble Bombay High Court and the previous case of the assessee, the Appellate Tribunal allowed the appeal filed by the assessee. The Tribunal directed the Assessing Officer to restrict the addition to the profit element embedded in the non-genuine purchases, highlighting the importance of estimating the profit reasonably in such cases.
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2024 (3) TMI 1319
Issues Involved: 1. Whether the assessee's application for final approval under Section 80G(5)(iii) of the Income Tax Act was valid and within the prescribed time limits. 2. Whether the assessee, who had commenced activities prior to provisional approval, was eligible for final registration under Section 80G(5)(iii).
Summary:
1. Validity and Timeliness of Application for Final Approval: The assessee, already registered under Section 80G(5) since 2021, was required to re-apply for approval due to the Amendment Act of 2020. The assessee mistakenly applied for provisional approval under Clause (iv) instead of revalidating the existing approval under Clause (i). The CIT(Exemption) rejected the application for final approval, stating that it was filed after the extended deadline of 30.09.2022 and beyond the prescribed period of six months prior to the expiry of the provisional approval. The Tribunal noted that the relevant provisions required institutions to apply for final registration under Clause (iii) at least six months before the expiry of the provisional approval or within six months of commencing activities, whichever is earlier.
2. Eligibility for Final Registration Despite Prior Activities: The Tribunal referred to the case of "Tomorrow's Foundation vs. CIT(Exemption)" and similar cases, highlighting that institutions granted provisional approval can apply for final registration regardless of prior activities. The Tribunal emphasized that the CIT(Exemption) misconstrued the CBDT Circulars, which extended deadlines for institutions already registered before the amendment but did not apply to institutions seeking fresh provisional registration under Clause (iv). The Tribunal clarified that institutions granted provisional approval under Clause (iv) are entitled to apply for final registration under Clause (iii) and that the date of activity commencement should be considered post-provisional registration.
Conclusion: The Tribunal directed the CIT(Exemption) to grant provisional approval under Clause (iii) to the assessee, provided it meets eligibility criteria, and to decide the application for final registration within three months. The appeal was allowed for statistical purposes.
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2024 (3) TMI 1318
Issues involved: Challenge to proceedings under Sections 447 and 448 of the Companies Act, 2013 for delay in convening a meeting and filing false returns.
The respondent filed a private complaint under Section 200 of Cr.P.C., alleging that the accused, required to call a meeting within three months, convened it late and filed false returns before the ROC, constituting an offence under Section 447 of the Companies Act, 2013.
The learned Magistrate took cognizance of the offence, and the application for discharge under Section 245(2) Cr.P.C. was dismissed. The issue of whether the Special Court under Section 435 of the Companies Act, 2013 can take cognizance of an offence under Section 447 on a private complaint was examined by the Division Bench. It was held that the Special Court cannot take cognizance based on a private complaint by a shareholder, but only upon a complaint by the Special Fraud Investigation Officer as per Section 212(6) read with 439(1) of the Act. Thus, the cognizance taken on a private complaint by a shareholder was deemed to be without jurisdiction, and continuing the proceedings would be an abuse of the legal process.
Judgment: The writ petition was allowed, and the proceedings in C.C.No.235/2017 related to the accused were quashed by the High Court.
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2024 (3) TMI 1317
Issues Involved: 1. Validity of the Resolution Plan. 2. Rights of Financial Creditors against Personal Guarantors. 3. Applicability of the Indian Contract Act, 1872, and Transfer of Property Act, 1882. 4. Commercial Wisdom of Committee of Creditors (CoC).
Summary:
1. Validity of the Resolution Plan: The Appellants challenged the Impugned Order dated 26.10.2020 approving the Resolution Plan, arguing that the inclusion of "Excluded Rights" allowing Financial Creditors to pursue Personal Guarantors was illegal. The Tribunal noted that the Resolution Plan was approved with 79.3% voting by the CoC and the debt was assigned to the SPV, Hasaud Steels Limited. The Tribunal found that the Plan's approval was within the ambit of the Insolvency & Bankruptcy Code, 2016 (IBC) and did not contravene any provisions of the law.
2. Rights of Financial Creditors against Personal Guarantors: The Appellants argued that once the debt was assigned to the SPV, Financial Creditors could not retain rights to pursue Personal Guarantors. The Tribunal held that Financial Creditors have the right to proceed against Personal Guarantors under the "Excluded Rights" clause in the Resolution Plan. The Tribunal emphasized that the IBC allows for the continuation of personal guarantees and that such provisions do not need confirmation from Personal Guarantors.
3. Applicability of the Indian Contract Act, 1872, and Transfer of Property Act, 1882: The Appellants contended that the approval of the Resolution Plan violated Sections 140 and 141 of the Indian Contract Act, 1872, and Section 6(e) of the Transfer of Property Act, 1882. The Tribunal clarified that the right of subrogation does not survive under the IBC, and the Code takes precedence over other laws due to Section 238. The Tribunal also found that the "Excluded Rights" do not constitute a "mere right to sue," which is non-transferable under Section 6(e) of the Transfer of Property Act, 1882.
4. Commercial Wisdom of Committee of Creditors (CoC): The Respondent No. 2 and CoC argued that the Resolution Plan was approved based on commercial wisdom, which is paramount and non-justiciable. The Tribunal reiterated that the commercial decisions of the CoC, including the retention of "Excluded Rights," are beyond judicial review as long as they comply with the IBC. The Tribunal cited the Supreme Court's judgments in K. Shashidhar Vs. Indian Overseas Bank and other cases to support this position.
Findings: The Tribunal concluded that the Resolution Plan's approval was legal and valid, and the Financial Creditors retained the right to pursue Personal Guarantors. The Tribunal dismissed the appeals, emphasizing that the IBC's objective is the revival of the Corporate Debtor and that Personal Guarantors cannot escape their liabilities. The Tribunal upheld the commercial wisdom of the CoC and found no error in the Impugned Order. The appeals were rejected with no costs.
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2024 (3) TMI 1316
Issues involved: The issues involved in this case include the applicability of Section 52 of the Central Goods and Services Tax Act, 2017 (CGST Act) on the Petitioner's business model, the demand for Tax Collected at Source (TCS) liability, and the legality of the show cause notice issued by the Respondent.
Applicability of Section 52 of the CGST Act: The Petitioner, engaged in providing e-auction services, argued that Section 52 of the CGST Act, pertaining to TCS, is not applicable to them as they do not guarantee settlement of transactions or collect TCS. Legal opinions obtained by the Petitioner supported this stance, stating that Section 52 does not apply to exempt supplies.
Demand for TCS Liability: Despite submitting certificates showing GST discharge by suppliers, the Petitioner was informed of unpaid TCS liability amounting to Rs. 380.69 crores. The Petitioner contested this demand, stating they are not liable to pay TCS under Section 52 of the CGST Act.
Legality of Show Cause Notice: The show cause notice issued to the Petitioner proposed to recover the TCS liability along with interest and penalty. The Petitioner argued that Section 73 of the CGST Act cannot be invoked for TCS recovery, as there is no provision for such recovery under Section 52. The High Court directed the Petitioner to raise preliminary objections before the adjudicating officer regarding the applicability of Section 52, to be decided as a preliminary issue.
Conclusion: The High Court directed the Petitioner to raise preliminary objections before the adjudicating officer regarding the applicability of Section 52 of the CGST Act. The adjudicating officer was instructed to consider and decide these preliminary issues before proceeding with the show cause notice. The Petitioner was asked to appear before the adjudicating officer by a specified date, with all remedies kept open in case of an adverse decision.
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2024 (3) TMI 1315
Issues Involved: 1. Bail application u/s 439 of Cr.P.C. in complaint case u/s 132(I)(b) & (c) of CGST Act, 2017 and IGST Act, 2017.
Summary: The petitioner filed a bail application under Section 439 of the Cr.P.C. seeking regular bail in a complaint case related to Sections 132(I)(b) & (c) of the CGST Act, 2017 and IGST Act, 2017. The petitioner claimed that mandatory provisions of Section 69 of the GST Act were not followed, leading to an illegal arrest without due process. It was argued that the petitioner did not benefit monetarily, did not supply goods or services without invoices, and did not claim Input Tax Credit. The petitioner had been in custody for 11 months, and the trial Court might take time to conclude the trial.
The respondents opposed the petitioner's claims, stating there was evidence of the petitioner violating the provisions of the CGST Act. After hearing both sides, the Court referred to the principles of bail as laid down by the Supreme Court, emphasizing that bail is to ensure the accused's appearance at trial and not as a form of punishment. The Court highlighted the importance of balancing personal liberty with societal interests and the presumption of innocence until proven guilty.
The Court concluded that the petitioner should be granted bail as the criminal liability was yet to be decided by the trial Court. The maximum sentence was five years, and the prosecution's case relied on official testimonies, minimizing the risk of witness tampering. Therefore, the petitioner was ordered to be released on bail, subject to various conditions to ensure his appearance and compliance with the legal process. The Court allowed the petition and set conditions for the petitioner's release on bail.
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2024 (3) TMI 1314
Issues involved: The issues involved in this case include challenging the legality of levying GST on the activity of holding equity capital by the parent company, seeking to quash show cause notices proposing to demand IGST, and requesting further reliefs as per the circumstances of the case.
Challenge to GST Levy on Holding Equity Capital: The petitioner sought to hold that the levy of GST on holding equity capital by the parent company is illegal and without jurisdiction, citing the IGST Act and the CGST Act. The petitioner relied on a judgment in a similar case to support their argument.
Circulars Clarifying Holding of Shares: The court referred to Circulars issued by the Central Government and the State Government clarifying that holding shares of a subsidiary company by a holding company does not constitute a supply of service under GST. These Circulars were pivotal in determining the legality of the impugned order.
Decision and Disposition: The Court found that the holding of shares by the parent company in its subsidiary does not amount to a supply of service for GST purposes, based on the Circulars and the precedent set by a previous judgment. Consequently, the impugned show cause notices were deemed without jurisdiction or authority of law and were quashed.
Final Orders: The petition was allowed and disposed of in line with the precedent set by a previous case. The impugned show cause notices were quashed, affirming that the holding of shares by the parent company in its subsidiary does not constitute a supply of service under GST regulations.
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2024 (3) TMI 1313
Issues involved: The issues involved in this case are the impugned Show Cause Notices leading to demands raised against the petitioner, cancellation of GST registration, lack of knowledge about Show Cause Notices, and the validity of the impugned orders passed under Section 73 of the Central Goods and Services Tax Act, 2017.
Impugned Show Cause Notices and Demands: The petitioner challenged the order disposing of Show Cause Notices dated 20.09.2023 and 29.09.2023, which proposed demands of Rs. 18,04,132.00 and Rs. 1,43,59,445.00 respectively, including penalties. The impugned orders were passed under Section 73 of the Act. The petitioner argued that they had closed all business activities during the Covid-19 pandemic and had no knowledge of these Show Cause Notices as they were not served directly but uploaded on a common portal. The Department had raised demands based on various grounds related to tax defaults and non-filing of returns.
Cancellation of GST Registration: The petitioner's GST registration was cancelled retrospectively from 01.08.2020 due to non-filing of returns for a continuous period of six months, as per a Show Cause Notice dated 25.08.2020. The petitioner contended that the retrospective cancellation was unjust as they were unaware of the Show Cause Notices and the cancellation was a consequence of not checking the portal after the retrospective cancellation.
Validity of Impugned Orders: The impugned orders dated 04.12.2023 were challenged on the grounds that they were passed ex-parte due to the petitioner's failure to reply, which the petitioner attributed to not being able to access the Show Cause Notices. The Court found that the orders solely based on the petitioner's non-reply were not sustainable. The matter was remitted to the Proper Officer for re-adjudication, directing the petitioner to file a reply within two weeks and ensuring a fresh speaking order after a personal hearing.
Conclusion: The Court set aside the impugned orders and remitted the matter for re-adjudication, emphasizing the importance of giving the petitioner an opportunity to respond. The Court clarified that it did not delve into the merits of the case and reserved all rights and contentions of the parties. Additionally, the challenge to Notification No. 9 of 2023 regarding the initial extension of time was left open, and the petition was disposed of accordingly.
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2024 (3) TMI 1312
Issues involved: Allegation of an illegal, arbitrary, and mala fide order in violation of natural justice regarding a show-cause notice under section 73(1) of the Jharkhand Goods and Service Tax Act, 2017.
The petitioner-Firm, aggrieved by an order in FORM GST DRC-07, challenged the order dated 28th December 2023, alleging it was passed illegally, arbitrarily, and mala fide, without providing a fair opportunity to respond to the show-cause notice for the financial years 2017-18 and 2018-19.
The petitioner contended that the order was passed before the expiry of the 15-day period, preventing them from adequately presenting their defense as required by law. Reference was made to legal precedents highlighting the necessity of a personal hearing before imposing additional demands on an assessee.
The Court noted that generally, challenges to show-cause notices are not entertained under Article 226 of the Constitution, emphasizing the importance of exhausting statutory remedies available under the law. The impugned order was found appealable under section 107 of the GST Act and JGST Act.
Citing legal precedent, the Court highlighted that writ jurisdiction should not ordinarily be exercised to quash a show-cause notice, as it does not infringe upon any party's rights until a final adverse order is passed. The petitioner's submission of a detailed show-cause reply after the impugned order was issued raised procedural concerns.
Given the factual circumstances, the Court directed the petitioner-Firm to seek recourse before the appellate authority, which would be better equipped to adjudicate the matter based on the available records and facts.
Ultimately, the Court declined to entertain the writ petition, dismissing it on the grounds that it did not establish a case for judicial intervention, emphasizing the importance of adhering to the statutory regime under the JGST Act.
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2024 (3) TMI 1311
Issues involved: The issues involved in the judgment are the taxability of Corporate Guarantee provided by a holding company to a subsidiary under Section 9 of the Central Goods & Service Tax Act, 2017 and the validity of a Circular issued by the Central Board of Indirect Taxes & Customs regarding the taxability of Personal Guarantee and Corporate Guarantee in GST.
Taxability of Corporate Guarantee: The petitioner sought a declaration that providing a Corporate Guarantee by a holding company to a subsidiary does not constitute a supply of services taxable under Section 9 of the CGST Act, 2017. The petitioner relied on a decision by CESTAT Chennai in the case of M/s Sterlite Industries India Ltd, which held that a Corporate Guarantee to an associate company is akin to an in-house guarantee and does not amount to providing services. Additionally, the petitioner referred to a Supreme Court order in the case of Commissioner of CGST & Central Excise Vs. M/s. Edelweiss Financial Services Ltd, where it was held that issuing a Corporate Guarantee without consideration does not fall within banking and financial services, thus not taxable.
Validity of Circular and Rule Amendment: The petitioner challenged a Circular dated 27.10.2023 issued by the Central Board of Indirect Taxes & Customs, which made the provision of Corporate Guarantee to an associate taxable at 1% of the guarantee value without amending the relevant rule or statute. The petitioner argued that this circular contradicted the amendment made to Rule 28 of the CGST Act, 2017 by Notification dated 26.10.2023. The petitioner contended that the value of a Corporate Guarantee should not be fixed at 1% as it could impose a burdensome obligation on the providing entity, especially considering that the guarantee's enforcement is contingent and not directly linked to its value.
Court Proceedings: The court issued notice on the matter, which was accepted by the respondent's counsel who requested time to file a counter affidavit. The court granted six weeks for the filing of the counter affidavit and allowed four weeks for a rejoinder thereafter. During this period, the court directed that no coercive action should be taken against the petitioner even if a final assessment order is passed or a demand is created. The case was listed for further hearing on 08.07.2024.
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2024 (3) TMI 1310
Issues involved: The issues involved in this case pertain to the appealability of an order passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act) and Odisha Goods and Services Tax Act, 2017 (OGST Act) under Section 112 of the Acts, the non-constitution of the Appellate Tribunal as required under section 109 of the Acts, and the statutory remedy of Appeal available to the petitioner.
Summary:
Issue 1: Appealability of the Order The order impugned in the writ petition is appealable under Section 112 of the CGST/OGST Act, 2017. Due to the non-constitution of the Appellate Tribunal as required by law, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefits under sub-sections 8 & 9 of section 112 of the Acts.
Issue 2: Removal of Difficulties Order The Government of India, based on the recommendation of the GST Council, issued the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 to address the absence of the Appellate Tribunal. This Order clarifies the calculation of time periods for filing appeals in cases where the Tribunal is not constituted.
Issue 3: Circular for Appeal Procedure A circular issued by the Central Board of Indirect Taxes and Customs provided further clarification on the appeal process in light of the non-constitution of the Appellate Tribunal. The circular specified that the time limit for filing an appeal would be counted from the date the President or State President of the Tribunal enters office.
Judgment: Considering the Removal of Difficulties Order and the circular, the Court disposed of the writ petition with the following directions: 1. The petitioner is granted the statutory benefit of stay on the deposit of a certain amount, ensuring they are not deprived of the benefit due to the non-constitution of the Tribunal. 2. The petitioner must file an appeal under Section 112 of the Acts once the Tribunal is constituted, observing all statutory requirements. 3. If the petitioner chooses not to file an appeal within the specified period after the Tribunal's constitution, the authorities are free to proceed further in accordance with the law.
With the above directions and liberty granted, the writ petition was disposed of, and an urgent certified copy of the order was to be issued as per rules.
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2024 (3) TMI 1309
Issues involved: Relief sought for additional tax liability in Government contracts u/s GST regime.
Summary:
The writ petition was filed seeking direction for the authorities to bear the additional tax liability for executing Government contracts awarded in pre-GST or post-GST regime without updating the Schedule of Rates (SOR) to incorporate applicable GST in Bill of Quantities (BOQ). Additionally, relief was sought to neutralize the impact of unforeseen tax burden on ongoing contracts awarded before the introduction of GST. The petitioner requested to update the State SOR with applicable GST instead of West Bengal VAT.
The High Court disposed of the petition by granting liberty to the petitioner to file a representation before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks. The Additional Chief Secretary was directed to make a final decision within four months after consulting relevant departments. It was emphasized that the representation should be considered, and a final decision should be made after giving an opportunity of hearing to the petitioner or their representatives. No coercive action was to be taken against the petitioner until the final decision was made. Failure to make the representation within the stipulated time would render the order ineffective.
The Court also noted that the Additional Chief Secretary must act in accordance with the law, pass a reasoned order on merit, and consider all relevant judgments of different High Courts that the petitioners intend to rely upon. The writ petition was thus disposed of with the mentioned observations and directions.
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