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2024 (5) TMI 618 - CESTAT ALLAHABAD
CENVAT Credit of service tax paid - services used for repairs and renovation of the factory - period from December, 2015 to June, 2017 - HELD THAT:- The Appellant had taken Cenvat credit on Civil Construction Work on account of maintenance & repairs work of the factory which was done for smooth running of the plant.
In view of the Board’s Circular No.943/4/2011-CX dated 29.04.2011, it is found that the Cenvat credit involved in the dispute is related to the service tax paid on services used for repairs and renovation of the factory and as such is eligible as Cenvat credit. It is also found that the definition of input services as contained in Rule 2(l) specifically includes services used in relation to modernization, renovation or repairs of a factory. The said definition was amended w.e.f. 01.04.2011 wherein construction of the factory was excluded. As there is no exclusion in respect of the services relatable to renovation or repair, there are no reasons to hold that such services were not cenvatable.
The impugned orders cannot be sustained are therefore set aside - Appeal allowed.
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2024 (5) TMI 617 - CESTAT KOLKATA
Denial of CENVAT Credit - Corroborative evidences or not - entire proceedings have been initiated against the appellant solely on the basis of the allegations against M/s. V.K. Metal Works that they did not manufacture the goods and hence they could not have supplied the goods - interest and penalty - HELD THAT:- The Department has not brought in any evidence to substantiate the allegation that the appellant has received only invoices without actual receipt of the goods. The denial of credit only on the basis of the proceedings initiated against M/s. V.K. Metal Works, the supplier, is not sustainable without any corroborative evidence.
Further it is found that the proceedings initiated against the supplier M/s. V. K. Metal Works has already concluded in VINOD KUMAR JAIN VERSUS C.C.E. & S.T. -JAMMU & KASHMIR AND OTHERS [2018 (5) TMI 1512 - CESTAT NEW DELHI] issued by the Principal Bench of this Tribunal, New Delhi, wherein proceedings initiated against the supplier has been dropped, holding that they had manufactured the goods and supplied to other manufacturers against proper invoices.
Accordingly, the appellant has availed CENVAT Credit properly and the denial of CENVAT Credit availed by them in the impugned order is not sustainable.
Interest and penalty - HELD THAT:- Since, credit has been availed properly, the demand of interest and imposition of penalty also not sustainable. Accordingly, the same is set aside.
The impugned order is set aside - appeal allowed.
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2024 (5) TMI 616 - CESTAT HYDERABAD
Demand of differential Central Excise Duty with interest and penalty - inflating freight charges through their dummy transport unit - reduction in the assessable value within the average composite price paid by oil companies - contravention of proviso to Section 4(1)(b) of Central Excise Act, 1944 read with Rule 5 of Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000, Rules 4, 6, 8 and 11 of Central Excise Rules, 2002 - HELD THAT:- In view of the settled decision of law and the judgment of this Tribunal in MM Cylinders [2011 (9) TMI 779 - CESTAT, BANGALORE] being confirmed by Hon’ble Supreme Court in MM Cylinders Vs C [2012 (1) TMI 368 - SUPREME COURT OF INDIA], where it was held that 'The mere fact that the jurisdictional Superintendent of Central Excise might be aware that the SMT has been used for transport of goods and freight was claimed as abatement may not lead to any conclusion to say that the department was aware of intricate manipulation by the appellant-company'.
The appeal is dismissed.
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2024 (5) TMI 615 - UTTARAKHAND HIGH COURT
Classification of goods - rate of tax - Nylon Chips - plastic granules or not - absence of Form-C and F - to be classified under Section 29 (1) (c) of Uttarakhand Value Added Tax Act - re-assessment on the basis of change of opinion - Extended period of Limitation - HELD THAT:- In the present case, the department has taken a different view by changing the nature of the product, and not on account of wrong application of rates. Re- assessment, in such type of situation, is prohibited. The assessment order was a clear change of opinion, and was not under Section 29 (1) (c).
The other ground taken by the respondent was that the impugned order was illegal, as Section 29 (4) of the Uttarakhand Value Added Tax Act does not apply to the present case. In the instant case, the assessment year ended on 31.03.2012, and the period of limitation is to be counted from 31.12.2012. Three years & nine months from that date is 30.09.2016, and the authorization notice dated 27.02.2017, under Section 29 (4) of the Act, was issued beyond the period of limitation. The second notice was sent on 29.11.2016, and limitation had expired on 30.09.2016.
Extended period of Limitation - HELD THAT:- For seeking the benefit of enlarged period of limitation, under Section 29 (4) of the Act, reasons in writing have to be given. Moreover, there is no suppression of facts, or evidence by the respondent, with the intention to evade the payment of VAT. There is no reason given in the authorisation order and the impugned order, justifying the applicability of Section 29 (4) of the Act, where the time period of assessment, under the regular Section 29(3), had already expired.
In the present case, the Assessment Year is 2010-11, and before the end of six years, the reassessment order can be passed. The reassessment order has been passed on 25.03.2017, which is before the end of six years of the Assessment Year 2010-11, and hence the reassessment order passed under Section 29 (4) of the Act was done within limitation, and this aspect has been affirmed by the Tribunal, and the Appeals, qua this ground, has been rightly dismissed.
Whether Nylon Chips manufactured by the appellant are covered by Entry 83 of Schedule-(II) (B) of the Act? - HELD THAT:- Nylon will come under the plastic group, i.e. Plastics. The polymer manufactured by the respondent-company has been accepted to be cut into small sizes of 2 to 4 millimeters and sold to the customers. This can be called granules, which was evident from the samples presented by the respondent-company before the Tribunal at the time of hearing.
After going through the order passed by the Tribunal, the appellant-department have themselves accepted that, with respect to the Plastic Granules, when they are put into procedure by adding fillers and additives, the strength of the plastic becomes better. Further, as per the opinion given by the British Plastics Federation, and Central Institute of Plastics Engineering & Technology (CIPET), Nylon refers to a group of Plastics known as Polyamide, and there is no change in the original material (raw material) in this manufacturing process of Nylon-6. Hence, the use of raw material, i.e. Plastic Granules to produce Nylon Chips will not alter the character of Nylon Chips, being a Plastic, and under the British Plastics Federation, Nylon is considered under the Plastics group.
There is no substantial question of law, which requires to be considered in the present Revision. The Nylon Chips have been rightly held to be falling in Entry 83 of Schedule II (B) of the Act by the Tribunal.
There is no merit in the present Revision, and the same is, accordingly, dismissed.
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2024 (5) TMI 614 - CALCUTTA HIGH COURT
Dishonour of Cheque - legal heir of deceased - substitution of the opposite party (deceased complainant) - It is the case of the petitioner that the opposite party is not the sole legal heir of deceased - HELD THAT:- The Supreme Court in Rashida Kamaluddin Syed & Anr. v. Shaikh Saheblal Mardan (Dead) through LRs. & Anr. [2007 (3) TMI 725 - SUPREME COURT] held that 'it is clear that on the death of Shaikh Saheblal, the case did not abate. It was, therefore, open to the sons of complainant to apply for continuation of proceedings against accused persons.'
The learned Sessions Judge has allowed the application for substitution of the opposite party herein as one of the legal heirs of deceased Swapan Guha. The learned Judge had rightly held that it is for the legal heirs who intend to continue the prosecution on the original complainant’s death, who is to be permitted to prosecute the accused persons - Considering the said order under revision, this Court finds no irregularity in the said order, the same being in accordance with law thus requires no interference by this Court.
This Court has observed that there are other legal heirs of deceased Swapan Guha. The learned Sessions Judge has also clearly held in his order under revision that there are other legal heirs. But as the opposite party being one of the legal heirs wishes to proceed with the case, the learned Trial Court has rightly allowed the same.
The present revisional application is, thus, disposed of.
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2024 (5) TMI 613 - CALCUTTA HIGH COURT
Dishonour of Cheque - conviction of accused - discharge of existing legal liability - in spite of notice being duly served the cheque amount was not paid by the appellant - HELD THAT:- This Court finds that the cheque in question was issued by the appellant herein in discharge of his existing legal liability which he could not successfully rebut.
The demand notice has been duly served upon the accused/appellant and proved before the Trial Court and in spite of notice being duly served the cheque amount was not paid by the appellant herein - From the evidence on record, this Court finds that the learned Trial Court has considered the materials and the evidence on record in accordance with law and, as such, the said order of conviction being in accordance with law requires no interference by this Court.
In Tedhi Singh vs Narayan Dass Mahant [2022 (3) TMI 797 - SUPREME COURT] the Supreme Court held 'we would think that in the totality of facts of this case the appellant has not established a case for interference with the finding of the Courts below that the offence under Section 138 N. I. Act stands committed by the appellant. We have been told that the amount of compensation in a sum of Rs.7 Lakhs which is relatable to the cheque amount has been deposited already in the Trial Court.'
The judgment and order dated 18.03.2017 passed by the learned Additional District & Sessions Judge, (F.T.C. No. II) at Calcutta in Criminal Revision No. 01 of 2015 and the judgment and order of conviction and sentence passed by the learned Metropolitan Magistrate, 19th Court, Calcutta, dated 27.10.2014, in case no. C/16014/2011, convicting and sentencing the petitioner to suffer S.I. for one month and to pay Rs. 4,00,000/- to the complainant as compensation within three months in default to suffer simple imprisonment for a period of six months, is hereby modified - The substantive sentence to suffer S.I. for one month is set aside - Revision application disposed off.
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2024 (5) TMI 612 - BOMBAY HIGH COURT
Dishonour of Cheque - Continuation of proceedings during moratorium period - vicarious liability of director - Despite moratorium, whether institution or continuation of proceedings under Section 138 or 141 of the NI Act against the erstwhile Directors or the persons in-charge of or responsible for conduct of the business of a corporate debtor could be continue? - after resolution plan under Section 31 of the IB Code by Adjudicating Authority and in the light of provisions of Section 32-A of the IB Code, such criminal proceedings will stand terminated against a corporate debtor or not.
HELD THAT:- As per Section 14 of the IB Code, the adjudicating authority shall declare moratorium for prohibiting institution of suit or continuation of pending suit or proceedings against a corporate debtor including execution of any judgment, decree or order. The object of a moratorium provision such as Section 14 is to see that there is no depletion of a corporate debtor's assets during the insolvency resolution process so that it can be kept running as a going concern during this time, thus maximising value for all stakeholders - Notably, moratorium provision does not extinguish any liability, civil or criminal, but only casts a shadow on proceedings already initiated and on proceedings to be initiated. This moratorium shall remain into force till the date of approval of resolution plan or liquidation order under Section 31 of the IB Code. Then, Section 32-A of the IB Code comes into play.
Section 32-A(1) operates only after the moratorium comes to an end. On approval and commencement of the corporate resolution plan, the liability of a corporate debtor for an offence committed prior to commencement of corporate insolvency shall cease and a corporate debtor shall not be prosecuted for an offence if in the resolution plan there is a change in management or control of the corporate debtor to a person other than a promoter and other person mentioned in Section 32A of the IB Code - Interestingly, per the second proviso of Section 32A(1) of IB Code, a natural person, who was in any manner in charge of or responsible to the corporate debtor for the conduct of its business or associated with a corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence shall continue to be liable to be prosecuted and punished for an offence committed by a corporate debtor.
The applicant nos. 2 and 3 are the natural persons through whom the applicant no. 1-Company was managed, rather they are signatories to the cheques in question. The complaint specifically mentions that at the relevant time, the applicant nos. 2 and 3 were managing the day to day affairs and business of the applicant no. 1-Company - the protection of cessation of liability for prior offence under Section 32-A of the IB Code is applicable only to a corporate debtor i.e. a Company and that too only if the management of the Company is changed in the resolution approved by the adjudicating authority - there are substance in the argument of the learned counsel for the non-applicant that the applicant nos. 2 and 3 cannot be protected by Section 32-A of the IB Code.
The protection provided to a corporate debtor under Section 32-A(1) of absolving from its liability for an offence committed prior to commencement of the corporate insolvency process will not be available to the applicant no. 1, a corporate debtor also. Therefore, the applicant no. 1-Company (corporate debtor) is also not absolved from its criminal liability for an offence committed prior to commencement of insolvency proceedings.
There are no merit in the submission of the learned counsel for the applicants. The proceedings against the applicants, for the offence punishable under Section 138 of the NI Act, shall continue against the applicants, the company as well as its directors. Thus, the application is sans merits and fails.
The application is dismissed.
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2024 (5) TMI 611 - SC ORDER
Grant of Regular Bail - misappropriation and transfer of money into various shell companies - Hawala transactions - seeking to include the additional conditions in the interim bail order - it was held by High Court that As this Court granted interim bail on medical grounds, this Court thought fit that the petitioner was not supposed to conduct public meetings and rallies - HELD THAT:- As jointly prayed for by the learned Senior counsels for the parties, the matter is adjourned for ten weeks.
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2024 (5) TMI 610 - SC ORDER
Breach of fundamental rights or not - Seeking withdrawal of condition that appellant shall not create any untoward situation in public and shall not be involved in any political activities, directly or indirectly - HELD THAT:- The imposition of such condition would breach the fundamental rights of the appellant and no such conditions could have been imposed - the condition imposed by the High Court is quashed and set aside - appeal allowed.
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2024 (5) TMI 609 - BOMBAY HIGH COURT
Validity of search and seizure u/s 132 - Information and material enough to indicate a reason to believe or not? - basis of which a reasonable belief can be founded? - HELD THAT:- The position, that the Authority must have information in his possession on the basis of which a reasonable belief can be founded that the person concerned has omitted or failed to produce the books of accounts or other documents for production of which summons or notice has been issued or such person will not produce such books of accounts or other documents even if summons of notice is issued to him, or such person is in possession of any money, bullion or other valuable articles which represents either wholly or partly income or property which has not been or would not be disclosed has to be the basic fulcrum on which, the exercise of the power u/s 132 would revolve.
The Hon’ble Apex Court in Laljibhai Mandalia [2022 (7) TMI 639 - SUPREME COURT] has specifically held that such reasons may have to be placed before the High Court in the event of a challenge to formation of the belief of the Competent Authority in which event the Court would be entitled to examine the reasons for formation of the belief, though not the sufficiency or adequacy thereof.
We are not satisfied with the satisfaction of the requirement of Section 132 (1) of the said Act. It is also necessary to note that no notice has been issued to the Petitioners soliciting any information from them, in this regard, at any point of time earlier to the action under Section 132 (1) of the said Act, though it may not be necessary, in case the file would demonstrate the information and material enough to indicate a reason to believe. In absence of the same, we are, therefore, unable to sustain the action of the Respondents taken under Section 132 (1) of the said Act. The same is, therefore, hereby quashed and set aside.
Referring to original file of the Department having perused the same in extenso, we are of the considered opinion that it does not disclose any information which would lead the Authorities to have a reason to believe that any of the contingencies as contemplated by Section 132 (1) (a) to (c) of the said Act are satisfied. That apart, the note also does not contain anything altogether regarding any reason to believe, as regards what has been stated in Section 132 (1) (a) to (c) of the said Act, on account of which, in our considered opinion, there is total non-compliance with the requirements as contemplated by Section 132 (1) of the said Act which vitiates the search and seizure.
Respondents cannot rely upon what has been unearthed on account of opening of the lockers of the Petitioners, as the information and reason to believe as contemplated under Section 132 (1) of the said Act has to be prior to such seizure.
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2024 (5) TMI 608 - SUPREME COURT
Seeking refund of chit amount deposited until stoppage of the business - illegal termination of the chit fund business and consequent non-refund of the subscription amount - deficiency of service - OP refused to re-pay the subscription amount since, according to it, the complainant owed certain dues to it and therefore, it adjusted the subscription amount against pending dues of the complainant.
The OP had raised a plea in its version that the complainant does not satisfy the definition of consumer since the service was obtained for a commercial purpose.
HELD THAT:- The significance of deconstructing the definition of consumer into three parts was for the purpose of explaining on whom lies the onus to prove each of the different parts. There can hardly be any dispute that the onus of proving the first part i.e. that the person had bought goods/availed services for a consideration, rests on the complainant himself. The carve out clause, in the second part, is invoked by the service providers to exclude the complainants from availing benefits under the Act. The onus of proving that the person falls within the carve out must necessarily rest on the service provider and not the complainant. This is in sync with the general principle embodied in Section 101 and 102 of the Evidence Act that ‘one who pleads must prove’. Since it is always the service provider who pleads that the service was obtained for a commercial purpose, the onus of proving the same would have to be borne by it.
Having held that the onus to prove that the service was obtained for a commercial purpose is on the service provider, we may clarify the standard of proof that has to be met in order to discharge the onus. The standard of proof has to be measured against a ‘preponderance of probabilities’. The test to determine whether service obtained qualified as a commercial purpose is no longer res integra in view of this Court’s decision in Lilavathi v. Kiritlal [2019 (11) TMI 1824 - SUPREME COURT]. Para 19 sets out the principles on which it must be determined whether the onus of proving ‘commercial purpose’ has been properly discharged by the service provider.
The question of inquiring into the third part will only arise if the service provider succeeds in crossing the second part by discharging its onus and proving that the service obtained was for a commercial purpose. Unless the service provider discharges its onus, the onus does not shift back to the complainant to show that the service obtained was exclusively for earning its livelihood through the means of self-employment. In the facts of this case, the OP has merely pleaded in its version that the service was obtained for a commercial purpose. No evidence has been led to probabilise its case other than merely restating its claim on affidavit. It is now well too settled that a plea without proof and proof without plea is no evidence in the eyes of law.
Appeal dismissed.
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2024 (5) TMI 607 - BOMBAY HIGH COURT
Seeking grant of bail - Illegal arrest or not - blocking of the Input Tax Credit - detention for more than 24 hours - HELD THAT:- The petitioner appears to have been detained for more than 24 hours. Prima facie, the justification given by the respondent No. 2 explaining the detention of the petitioner, does not appear to reason, considering the conflicting stand taken by the respondent No. 2 in their affidavit filed in this Court and their reply filed before the trial Court. It is also pertinent to note that the GST investigation of the Company was done, sometime in 2021 and that the petitioner had appeared before the authorities on behalf of the said Company. It also appears that a full-fledged inquiry was done in 2021 and the authorities had audited the accounts of the years 2017 to 2020. The time span mentioned by the respondent Nos. 1 to 3 for generating the GST returns and getting the Dowment Identification Number (DIN), prima facie appears to be an eyewash and appears to have been done to show, that the petitioner was produced within 24 hours.
There was no reason for the respondent No. 2 to keep the petitioner overnight, when he came on 13th March 2023, more particularly, if the respondent No. 2 did not have documents to question the petitioner. It is not as if, the petitioner had not cooperated with the authorities and as such, it was well within the powers of the respondent No. 2 to call him on some other day or even on the next day - Arrest is a serious matter and cannot be made in a routine manner on a mere allegation of commission of an offence, inasmuch as, an arrest can cause incalculable harm to the reputation and self esteem of a person.
It is deemed appropriate to grant interim bail to the petitioner, pending the hearing and final disposal of the aforesaid petition, on the terms and conditions imposed - it is ordered that the petitioner be released on cash bail in the sum of Rs. 25,000/-, for a period of six weeks - petitioner shall within the said period of six weeks, furnish P.R. Bond in the sum of Rs. 25,000/- with one or two sureties in the like amount.
Petition be listed on 24th June 2024 for admission.
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2024 (5) TMI 606 - PUNJAB AND HARYANA HIGH COURT
Validity of Section 108 of Finance Act, 2021 whereby Section 7 (1) (aa) has been introduced vide notification dated 21.12.2021 under the Goods and Services Tax Act, 2017 w.e.f. 01.07.2017 - HELD THAT:- Mr. Gagandeep Singh Malhotra, Jr. Standing Counsel accepts notice on behalf of respondents No. 1 and 2; and Ms. Tanisha Peshawaria, DAG, Haryana accepts notice on behalf of respondents No. 3 to 5. They seek time to file reply. May do so, on or before the next date of hearing with a copy in advance to the counsel opposite.
In the meanwhile, until further orders, the effect and operation of the show cause notice dated 18.12.2023 (Annexure P-8) shall remain stayed - List again on 03.09.2024.
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2024 (5) TMI 605 - ALLAHABAD HIGH COURT
Levy of penalty - Violation of principles of natural justice - no opportunity of hearing was given to the petitioner to submit his reply - Interpretation of statutory provisions regarding E-Way bill - Compliance of E-Way bill as required under the provisions of the CGST/UPGST Act and related rule or not - presumption of tax evasion in its absence - procedural fairness in penalty imposition.
HELD THAT:- Upon a perusal of the E-Way Bill downloaded by the petitioner, it is clear that even though the driver could not produce the hard copy of the EWay Bill before the respondent No. 2, yet it was downloaded prior to the interception of the vehicle.
This Court had dealt with a similar issue in case of M/S. Hindustan Herbal Cosmetics V. State Of U.P. And 2 Others [2024 (1) TMI 282 - ALLAHABAD HIGH COURT] wherein it has been held that presence of mens rea for evasion of tax is a sine qua non for imposition of penalty. The Court further emphasized that a minor error in the documentation can not be a valid ground for passing of the penalty orders by the authorities.
This Court in case of Falguni Steels v. State of U.P. [2024 (1) TMI 1150 - ALLAHABAD HIGH COURT] has held that in a case where the E-Way Bill is downloaded and produced before passing of the penalty order by the authorities and no mens rea can be inferred from the act of the petitioner, there is no justification in passing of the penalty order by the authorities.
In the facts and circumstances, it is clear that only violation is a technical one wherein E-Way Bill was not present in the vehicle. However, it is clear that the E-Way Bill had been downloaded prior to the interception of the vehicle. Furthermore, invoice and the E-Way Bill matched with the goods in the vehicle, and accordingly, one can infer that there was no mens rea for the evasion of tax.
There was no intention to evade tax on the part of the petitioner. Further, respondent authorities failed to check the genuinness of the E-Way Bill number as informed by the driver from the GST portal and did not provide an opportunity of hearing to the petitioner which was against the principles of natural justice which strengthens the view that the authorities did not act in accordance with the law.
The impugned orders dated January 4, 2020 and May 21, 2019 are hereby quashed and set aside - petition allowed.
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2024 (5) TMI 604 - ALLAHABAD HIGH COURT
Penalty order u/s 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - penalty order subsequent to search and seizure of the godown - HELD THAT:- In the present case, the proceedings under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 have been initiated subsequent to search of the business premises of the petitioner.
It has been categorically held by the coordinate Bench of this Court in Mahavir Polyplast Pvt. Ltd. Vs. State of U.P. and 2 others [2022 (8) TMI 410 - ALLAHABAD HIGH COURT] that search and seizure of the godown cannot result in penalty proceedings under Section 129 of the Act.
The present proceedings are not justified, and accordingly, the impugned orders dated June 23, 2018 and May 7, 2019 are quashed and set aside - petition allowed.
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2024 (5) TMI 603 - DELHI HIGH COURT
Refund with interest - statutory period of 60 days as mentioned in section 54 of CGST Act has already elapsed - HELD THAT:- Section 54, sub section (7), mandates that proper officer shall pass an order within 60 days from the date of the receipt of the application complete in all respects - In view of the Board already having issued the Circular No. 125/44/2019-GST and keeping in view the provisions of Section 54 (7) of the Act, the proper officers have to comply with the said provisions and accordingly, no further directions are called for in the said matter - it was held in the Circular that 'all tax authorities are advised to issue the final sanction order in FORM GST RFD-06 and the payment order in FORM GST RFD-05 within 45 days of the date of generation of ARN, so that the disbursement is completed within 60 days.'
Insofar as the case of the petitioner is concerned, petitioner had filed refund claim on 22.01.2024 and as per the petitioner, till date no deficiency memo has been issued to the petitioner. Since the statutory period of 60 days has already elapsed, the proper officer is directed to expedite the processing of the application for refund and dispose of the same within a period of two weeks in accordance with law. The proper officer shall also take into account the Circular of the Board referred to above as also the provisions of the Act, while passing the order.
Petition disposed off.
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2024 (5) TMI 602 - DELHI HIGH COURT
Retrospective cancellation of GST registration of the petitioner - SCN does not specify any cogent reason - Violation of principles of natural justice - HELD THAT:- The Show Cause Notice and the impugned order are also bereft of any details. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. Accordingly, the same cannot be sustained.
In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.
It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent’s contention is required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
It is clear that both the petitioner and the respondent want the GST registration to be cancelled, though for different reasons.
The Petitioner does not seek to carry on business or continue the registration, impugned order dated 03.02.2021 is modified to the limited extent that registration shall now be treated as cancelled with effect from 12.01.2021 i.e., the date when Show Cause Notice seeking cancellation of GST registration was issued - Petition disposed off.
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2024 (5) TMI 601 - GUJARAT HIGH COURT
Restraint on respondents from taking action against the petitioner pursuant to the order of withholding of sanction of refund and blocking of Input Tax Credit (ITC) - HELD THAT:- Reliance placed upon the decision of the Division Bench of this Court in the case of M/S S.S. INDUSTRIES VERSUS UNION OF INDIA [2020 (12) TMI 1120 - GUJARAT HIGH COURT] wherein similar issue is considered by the Division Bench of this Court and considering the delay in completion of the investigation, where it was held that We, once again, clarify that we have not gone into the issue as regards the constitutional validity of Rule 86A of the Rules. None of the observations made by us in this judgment should prejudice any of the litigant who might have challenged or who may deem fit to challenge the constitutional validity of Rule 86A on the grounds available in law. The challenge to the constitutional validity of Rule 86A, if any, shall be examined independently.
This petition is disposed of as not pressed without expressing any opinion on merits on a statement made at the Bar by the learned A.G.P. that the investigation shall be completed within a period of three months from today and the notice in Form GST-DRC-01 shall be issued to the petitioner on or before 2nd August 2024 by the respondents authorities.
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2024 (5) TMI 600 - DELHI HIGH COURT
Penalty proceedings u/s 271AAC(1) - Unexplained expenditure u/s 69C - cumulative amounts as mentioned by CBIC relied upon - HELD THAT:- AO had relied solely on the assumption that the information provided by CBIC was correct notwithstanding that it had not disclosed the details of any import bills and that no reconciliation in this regard was carried out. AO had faulted the assessee for not reconciling the information regarding the quantum of purchases made as received from CBIC with that as disclosed by the assessee.
AO also had no knowledge as to which import or purchase made by the assessee was not disclosed by the assessee as the AO also had no such information. We accept the contention that apart from stating that it had not imported goods of the value as disclosed, it was impossible for the assessee to dispute the alleged additional purchases. The assessee could not be faulted for not reconciling the data as the information available with the AO is wholly insufficient for carrying out any reconciliation exercise.
If any addition was proposed to be made on the basis that the purchases as reflected in the assessee’s books is not correct and it has made certain imports that had not been recorded in the books of accounts, the least that the Assessing Officer was required to do was to identify the entries that ought to have been made in the Books of Accounts of the assessee and which it had failed to do. Merely proceeding on the basis that CBIC is an apex body and therefore, information provided by it cannot be doubted, without even identifying or meaningfully analysing such information, is wholly insufficient to proceed to make an addition.
We find merit in the contention that the impugned order is unsustainable and has been passed in violations of principles of natural justice. It is obvious that the AO must have some material to indicate that an expenditure has been made to make such an addition. The only material in this case are the cumulative amounts as mentioned by CBIC without details of any such expenditure.
Thus the impugned order is set aside. The matter is remanded to the Assessing Officer for decision afresh in accordance with law.
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2024 (5) TMI 599 - GAUHATI HIGH COURT
Legality of search and seizure conducted at the residential premises of the petitioner - legality and validity of the notice issued u/s 131 (1A) - petioner submitted that since search has already been conducted, no notice u/s 132 (1A) issued to the petitioner - mandation to state 'Reason to suspect' that any income has been concealed or likely to be concealed - HELD THAT:- A bare perusal of sub-section (1A) of Section 131 of the Act mandates that notice u/s 131 (1A) is issued before the authority, takes action under clauses (i) to (v) of Section 132 (1) of the Act. Pertinent that the designation of officers for exercise of powers are different as mentioned in Section 131 as compared to Section 131 (1A) of the Act. The designation as mentioned in Section 131 are of the Officers of Assessment Wing who makes assessment and those mentioned in Section 131 (1A) are of the Investigation Wing who carries out search & survey and as such both the sections operates in different fields.
Thus before making of a search, a notice under Section 131 (1A) of the Act has to be issued and since the taxing provisions of the statutes are to be interpreted strictly, the issuance of the notice under Section 131 (1A) of the Act in the instant case after conducting of the search is absolutely illegal & without jurisdiction.
Taxing Statutes are to be interpreted strictly - It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment - See Ajmera Housing Corporation & Anr. 2010 (8) TMI 35 - SUPREME COURT]
Ambiguity in the taxing provision - The words of a taxing statute must never be stretched against a tax-payer and if the legislature has failed to clarify its meaning by use of appropriate language, the benefit must go to the tax-payer. The Apex Court held that even if there is any doubt as to interpretation, it must be resolved in favor of the subject - See M/s Murarilal Mahabir Prasad [1975 (9) TMI 155 - SUPREME COURT]
The taxing provisions has to be interpreted strictly, and on the strict interpretation of Section 131 (1A) of the Act, it is clear that before making of the search, a notice under Section 131 (1A) is mandatorily required to be issued. When the legislature in clear words under Section 131 (1A) of the Act has provided that notice has to be issued under Section 131 (1A) prior to making of the search, notice under Section 131 (1A) cannot be issued after conducting of the search and thereby, the notice issued under Section 131 (1A) of the Act is illegal and without jurisdiction contrary to the provision of the Section 131 (1A) of the Act.
In the facts of the instant case, there could not have been any material that could be a reason to suspect that any income has been concealed or likely to be concealed by the petitioner. Section 131 (1A) of the Act consist of two conditions which are required to be fulfilled before any action is taken under Section 131 (1A). Both the conditions has to co-exist before any action of search and seizure is undertaken. These conditions are; a) Assessing Officer has reasons to suspect any income that is concealed or likely to be concealed and, (b)Upon existence of such reasons, issues notice for the purpose of making enquiry or investigation relating thereto. After fulfillment of the aforesaid two conditions, the Assessing Officer is empowered to take action under clauses i to v of sub-section 1 of Section 132. It is only after fulfilment of the aforesaid two conditions the Assessing Officer can conduct a search and seizure.
In the present case, the respondent has not placed any materials whatsoever to indicate that Assessing Authority had any materials on the basis of which he has reasons to suspect that the petitioner has concealed or is likely to conceal any income. The affidavit filed on behalf of the authority is absolutely silent in this regard. The very fact that the respondent issued notices under Section 131 (1A) of the Act after the search and seizure operation under Section 132 of the Act was conducted, goes to show that there was neither any reasons to suspect nor materials before the Authorizing Officer on the basis of which search operation could have been conducted under Section 132 of the Act. Thus, the two essential conditions being absent before the impugned search under Section 132 was conducted, the same is without jurisdiction.
Thus the subject search is absolutely illegal inasmuch as it is contrary to the express provisions of Section 131 (1A) of the Act. WP allowed.
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