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Case Laws
Showing 421 to 440 of 420205 Records
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2024 (11) TMI 1058
Reopening of assessment u/s 147 - Addition u/s 68 - bogus Long Term Capital Gains (LTCG) - AO relied on the statement of the principal officer of stock exchange and other persons - HELD THAT:- As the Assessee has demonstrated the genuineness of its claim by producing the payment voucher of purchase of shares, contract notes, shares in physical mode, Demat statement, broker ledger, statement bill cum transaction and bank statement etc. and none of the persons whose statements have been relied on by the AO, have made any allegations against the Assessee. Even otherwise the AO has not granted any opportunity to cross-examine the witnesses whose statements were recorded by the investigation wing as relied on by the AO. Further, there were/are no orders by the SEBI against the Assessee qua any irregularities or penalty. Whereas the Assessee has been able to discharge its prima-facie onus cast upon him u/s 68 of the Act, therefore the addition u/s 68 of the Act is at all unsustainable.
Reopening of assessment - As we have observed above that in the case of South Yara Holdings [2019 (3) TMI 582 - BOMBAY HIGH COURT] has quashed the reopening of proceedings in the identical facts and circumstances, as involved in this case and therefore on that aspect as well, the impugned assessment made on the basis of the reasons recorded and the notice issued u/s 148 of the Act, is liable to be quashed.
In cumulative effects, the addition on legal as well as on merits, is liable to be deleted, hence the same is deleted. In the result, the appeal filed by the Assessee stands allowed.
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2024 (11) TMI 1057
Addition based on Professional Receipt in the Original Return of Income - Assessee filed a Revised Return of Income to correct the same - HELD THAT:- There is no reason why Six Sigma Medicare & Research Limited should refund Rs. 1,89,909/- out of the total deposit of Rs. 28 lakhs, when assessee continues to be Consultant in the said hospital! Even otherwise, it is beyond comprehension that why a hospital shall refund an odd amount of Rs. 1,89,909/-.
As an admitted fact that hospital has made total payment of Rs. 47,26,546/- to the Assessee during the year, which were shown as professional receipts by the assessee in the Original Return of Income. Out of the total Professional Receipts received from Six Sigma Medicare & Research Ltd., there is no evidence to suggest that Rs. 1,89,909/- pertains to partial refund of deposits. Therefore, the addition of Rs. 1,89,909/- is confirmed.
Payment made to Anesthetist - Assessee has proved that assessee had made payment to Anesthetist. Hence, we accept the assessee’s contention and direct the Assessing Officer to delete the addition.
Payment to Kochar(Anesthetist) as professional charges - We agree that these Operation Notes were not filed before the AO/CIT(A). These Operation Notes have been considered by us as an evidence only to substantiate the primary evidence filed by the assessee before AO and CIT(A). We have already discussed in earlier paragraphs the evidences filed by assessee before the AO and CIT(A) in the form of copy of bank statement of Dr.RK, copy of TDS Return etc.
We are convinced that assessee had made payment to Dr. RK as professional fees. The said amount was wholly and exclusively for the purpose of the business of the assessee. Hence, we direct AO to delete the addition.
Petrol and Diesel Expenditure - Accountant only considered Rs. 5,955/- and failed to consider remaining amount of Rs. 1,05,230/-. No specific evidence has been filed by the assessee before us to prove the Diesel Expenditure. Assessee merely filed a Ledger Account at page no.60 and 61 of the paper book. The Ledger Account shows certain cash payments at periodic intervals. However, that does not prove that the expenditure has been incurred wholly and exclusively for the purpose of the business of the assessee. Accordingly, addition of Rs. 1,05,230/- is upheld.
Salary and Wages - The amount was the salary of March, 2020; hence, remained payable. It is observed from the submission of assessee before the AO dated 28.03.2022 that assessee had filed copy of salary register, name, PAN and Address of all the employees. Before us also assessee filed copy of ledger extract, copy of salary register - DR has not pointed out any discrepancy in these documents. On perusal of the Ledger Account, it is observed that Rs. 48,950/- was shown as payable on 31.03.2020. In these facts and circumstances of the case, we are convinced that it is an allowable expenditure. Accordingly, AO is directed to delete the addition.
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2024 (11) TMI 1056
Classification - ‘Integrated Circuit Micro Electro Mechanical System Microphones’ [hereafter also referred to as ‘the product’] being imported by the appellant - Customs Tariff Heading 8518, specifically Tariff Item 8518 10 00 OR under CTH 8542, specifically Tariff Item 8542 39 00.
HELD THAT:- Technical literature, relied upon by the appellant, itself describes the product as a “microphone” or “MEMS microphone” and does not use the term “Integrated Circuit MEMS Microphone” anywhere. This supports the view of this Court that the core identity of the product is a microphone, though it is enhanced or powered by MEMS technology.
Thus, while the appellant has referred to the product as an “Integrated Circuit MEMS Microphone”, it appears this terminology has been selectively chosen for potential classification advantage. The correct nomenclature for the product should simply be “Microphone” or “MEMS Microphone” or “MEMS-Enabled Microphone”.
It is also clear from a reading of the ‘Product Functioning’ provided by the appellant that the product acts as an energy conversion device and “performs the functions of converting sound signals into electrical signals”.
We are of the opinion that, it is not the technology which is used in the product that defines the product and decides its classification under the CTH, but it is the product (which may be created using a particular technology) which decides the classification. For this reason, it is the microphone which has the technology of MEMS, which adds value to the microphone, and it is not the microphone which is adding value to the technology of MEMS. The inclusion of MEMS technology enhances the product’s function but does not change its primary identity as a microphone. In the given case, the product is not a stand-alone sensor or an EIC.
This is not a case where the appellant is importing a separate integrated circuit that could be combined with various other components to create devices with diverse functions. Had the appellant imported an individual integrated circuit (such as an ASIC chip) or standalone MEMS sensors, our findings may have differed. However, the item being imported is a fully assembled MEMS microphone, a final product with integrated components like the ASIC chip (an EIC) and MEMS sensor, pre-packaged and mounted on a PCB, creating a complete and tradable unit: a microphone.
It is not the case of the appellant that it is importing only an integrated circuit sans the microphone. Had it been the case, our conclusion may have been different.
As considering the Headings, Section Notes, Chapter Notes of the Customs Tariff Act as well as the Explanatory Notes to HSN, we are of the firm view that the contention of the appellant that the product should be classified as an EIC, under CTH 8542, and not as a microphone under CTH 8518, is unmerited.
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2024 (11) TMI 1055
Requirement to pay Social Welfare Surcharge (SWS) - levy of SWS on imported goods, when the basic customs and additional duty of customs are debited in the scrip - HELD THAT:- We see from relevant provisions in section 110 reproduced above that the levy and collection is provided by sub-section (1). The levy is to be on goods imported into India and accordingly collected. Sub-section (3) is the charging provision. It says, the levy under sub-section (1) shall be calculated at 10% on the aggregate of duties, taxes and cesses, which are levied and collected by the Central Government in the Ministry of Finance (Department of Revenue) under section 12 of the Customs Act, 1962. There is no dispute before us that the scrip petitioner holds, exempts it on collection from it, the customs duty levied.
In M/s. Unicorn Industries [2019 (12) TMI 286 - SUPREME COURT] case of appellant before the Supreme Court was in resisting the levy and collection of National Calamity Contingency duty (NCCD). A finding by the Supreme Court that appeared to be obvious from the beginning was, absence of any notification issued under the legislation or Act providing for the levy and charge for collection of NCCD, being Finance Act, 2001.
On behalf of petitioner clear submission is, for furthering challenge in the writ petition reliance is not placed on M/s. Unicorn Industries (supra) nor SRD Nutrients Private Limited [2017 (11) TMI 655 - SUPREME COURT]. The challenge mounted is on case that where the charge is on amount of customs duty paid and such duty is exempt, the charge being a percentage of duty paid, must be zero. No duty was paid so there cannot be a percentage of it, to result in any sum payable as SWS.
Upon a person obtaining exemption, he cannot be said to be discharging liability to pay duty. There is no fact of collection following the levy. The charging provision by sub-section (3) in section 110 is a percentage of customs duty paid, as collected by the Central Government. The duty paid being zero, collection is zero and percentage of it must also be zero. Our reasoning might appear to be similar to that made by the Supreme Court in SRD Nutrients [supra] but petitioner is not relying on the judgment, understandably so. Petitioner’s case is of submitting to provisions in section 110 of Finance Act, 2018, as applicable to it but, working of the charging provision releasing it from paying SWS. Debits in the scrip is for purpose of measure of quantum of exemption utilized under it.
Having said that, it appears petitioner has prayed for exemption in its prayer. It is competent for us to mould the prayer. On query made Mr. Sridharan submits, his client protested but the new system in place does not permit registration of any protest. As such, his client was compelled to pay. In the circumstances, petitioner is entitled to and gets declaration that it is not required to pay SWS calculated on customs duty, exempted under scrip held by it. WP allowed.
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2024 (11) TMI 1054
Maintainability of application - initiation of CIRP u/s 9 of the I&B Code - performance pay - Operational Debt or not - Operational Creditor or not - issuance of Section 8 notice - HELD THAT:- Where a payment of a financial debt owing to the employment, if it is required to be arithmetically determined during the proceedings based upon a subjective satisfaction and application of criteria of performance pay, based upon the policy as referred to by the Learned Counsel for the Respondent i.e., 06.01.2019, that has to be read with the criteria of assessment of performance pay dated 24.04.2018, the amount claimed by the Appellant in his notice issued under Section 8, will fall to be a variable factor and that will not fall to be within the definition of the “operational debt” or even a “debt” as defined under the I & B Code and thus the denial of the same by the Learned Adjudicating Authority cannot be said to be irrational or without an application of mind.
There is yet another aspect which is required to be taken into consideration, its that at the stage of initiation of proceedings the issuance of demand notices under Section 8 of the I & B Code, which is a condition precedent for raising a determined demand for the claim, which is falling within the purview of debt or an operational debt herein, the Appellant admittedly has issued Form 3and Form 4. In fact, the two forms provided under rules, of the raising of a demand they altogether intend to meet a distinct objective accordingly it classifies the demand itself. The rules prescribe that the Operational Creditor can send a demand notice, either in Form 3 or in Form 4 as contemplated under Section 8 of the I & B Code, which is to be read with Rule 5 of the I & B Code, as well as the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016.
The Learned Adjudicating Authority while considering the claim has further observed, that the sending of the notices under Form 3, as well as under Form 4, that itself depicts that the Appellant was not very sure about the nature of the claim and its classification, under which he was raising because he himself has not been able to classify as to under which form of debt, would his claim towards the performance pay, would lie and thus issuance of two forms, i.e., Form 3 and Form 4, since they intend to meet a difference objective, as it has been dealt with in the Impugned Judgment, the claim raised by the Appellant Operational Creditor will not fall to be payable by the issuance of multiple formulated notices under Section 8 of the I & B Code and it cannot be taken as to be an operational debt for the purposes of invocation of the proceedings under Section 9 for drawing a CIRP proceedings against the Corporate Debtor.
The claim as raised by the Operational Creditor, in the proceedings of the Company Petition, will not be an operational debt and hence drawing of a proceedings by invocation of Section 9 will not be justified, to bring a Corporate Debtor to face the CIRP proceedings and particularly when the Appellant himself was not very sure enough, that it was not a determined claim of a debt, which was being raised before the Learned Adjudicating Authority and hence the rejection of the claim by virtue of the Impugned Order, which is under challenge i.e., dated 02.05.2024, as it has been rendered in petition, do not suffer from any apparent illegality which may call for an interference in the exercise of ours Appellate Jurisdiction under Section 61 of the I & B Code, 2016 and thus the reason which has been assigned by the Learned Adjudicating Authority is absolutely justified.
This Appeal lacks merit and the same is accordingly dismissed.
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2024 (11) TMI 1053
Maintainability of Civil suit - bar under Order 7 Rule 11 of CPC - Ownership and possession rights of the Appellant over the disputed land during CIRP proceedings - bar u/s 238 of I & B Code - specific case has been made that the property in question is being used for the industrial purposes of the Corporate Debtor, which is a fact not denied by the appellants and it was falling within the premises of the Corporator Debtor which is already in custody of the Resolution Professional - HELD THAT:- The orders under Section 7 were reserved on 06.02.2023 and the Corporate Debtor itself vide its Diary No. 5214 dated 02.12.2022, had stated that it signifies its willingness to admit the application and the directions for initiation of the CIRP proceedings in view of financial stress. In these circumstances, sale of the said property immediately after reserving of the judgment on 06.02.2023, itself is an avert act, and actions of the Appellant with regard to the aforesaid transaction which is subject matter of the Civil Suit, which has been instituted at his behest together with chronological sequence of transactions in the scheduled land during the pendency of CIRP proceedings shows that the sale was not bonafide and apart from this, since the appellant himself has already questioned the rights of the respondent in a regular Civil Suit, and his rights over the property are yet to be determined by the competent Civil Court, which he himself has invoked at this stage the pendency of the Civil Suit cannot be taken as a reason for interference in the CIRP proceedings. Further, the resolution plan as filed through IA No. 02/2024 in its Clause 5, describes the assets of the Corporate Debtor, which also refers to the ensuing litigation being Suit O.S. No. 16/2024.
The apprehension expressed on the basis of the written submissions is without basis, as the Resolution Plan since it does not in any manner transfer or affect the title of the subject property and there is no immediate change of ownership or the Applicant’s right. In view of the discussions as above, it does not call for any interference at this stage and that too, while exercising the inherent powers under Rule 11 of the NCLT Rules, 2016.
Having scrutinised the reasons which has been assigned by the Learned Adjudicating Authority in relation to the status of the property and the effect of the pendency of the Civil Suit filed by the Appellant, the rejection of the two applications of the Appellant by the Learned Adjudicating Authority by the Impugned order does not call for any interference in the exercise of the Appellate Jurisdiction under Section 61 of I & B Code.
Thus, these appeals lack merit and they are accordingly dismissed.
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2024 (11) TMI 1052
Rejection of application filed by the Appellant under Section 10 of the Insolvency and Bankruptcy Code, 2016 - proceedings under Section 13, sub-section (2) of the SARFAESI Act was initiated by the SBI against the Appellant prior to filing of Section 10 Application - main reason for dismissing Section 10 application is that Applicant has filed Section 10 application with malicious and fraudulent intent to delay and halt the recovery proceedings initiated by Respondent Bank - whether filing of an application by the Appellant under Section 10, can be termed as initiation of proceedings with fraudulent and malicious intent? - HELD THAT:- The basis for Section 65 application filed by the SBI is the fact that SBI has initiated proceedings under Section 13, sub-section (2) of the SARFAESI Act vide notice dated 24.02.2023, prior to filing of the application under Section 10 by the Corporate Applicant. Admittedly, Section 10 application was filed by the Appellant, subsequent to initiation of proceedings under Section 13, subsection (2) by the SBI. The pleadings of the of the SBI in proceedings under Section 13, sub-section (2) were that 13(2) proceedings were on the verge of being completed, when Corporate Applicant has filed application under Section 10 with malafide and fraudulent intent. From the pleadings in Section 65 application, we do not find any foundation to come to the conclusion that application under Section 10 was fraudulently initiated.
The learned Counsel for the Appellant has relied on judgment of this Tribunal in Unigreen Global Private Limited vs. Punjab National Bank and Ors. [2018 (1) TMI 505 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], where this Tribunal noticing Section 7 and Section 10 of the IBC held that, two factors are common i.e. the debt is due and there is a default - This Tribunal further held that action under Section 13(4) of SARFAESI Act against Corporate Debtor or proceedings before Debt Recovery Tribunal, if any, are pending, cannot be a ground to rejection application under Section 10, if the application is complete.
The present is a case where Adjudicating Authority has allowed Section 65 application filed by the SBI principally based on the foundation of the SBI that Section 10 application filed at the time when proceedings under Section 13, sub-section (2) were on the verge of completion. Whether Section 10 application deserve to be admitted or not, is a decision, which has to be taken by the Adjudicating Authority on facts of each case.
For allowing Section 65 application, fraudulent and malicious intent of CD has to be proved from some materials on record. Merely because proceeding under Section 13, sub-section (2) and (4) has been initiated by the creditor prior to filing of Section 10 application, cannot be a ground to hold that Section 10 application is filed with malicious and fraudulent intent. For proving fraudulent and malicious intent, something more is required to be pleaded and proved apart from initiation of proceedings under Section 13, sub-section (2) and (4) by the creditor against the Corporate Applicant.
The Adjudicating Authority committed error in allowing Section 65 application filed by the SBI and rejecting Section 10 application. In event a proposition of law is accepted that when a creditor has initiated proceedings under Section 13, sub-section (2) against the CD, he is precluded to file Section 10 application, that proposition will be clearly against the intent and purpose of Section 10 of the IBC - the basis of rejection of Section 10 application is the finding by the Adjudicating Authority that application has been filed with malicious and fraudulent intent to delay and halt the recovery proceedings. There mere fact that application is filed, consequent of which the recovery proceedings may be halted, cannot lead to conclusion that intent and purpose of the application is malicious and fraudulent - Adjudicating Authority committed error in allowing Section 65 application filed by the SBI.
The company petition filed under Section 10 is revived to be considered and decided by the Adjudicating Authority afresh - appeal allowed.
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2024 (11) TMI 1051
Rejection of Section 9 Application filed by the Appellant - pre-existing disputes - dispute existed much before Demand Notice was issued - inflated invoices - HELD THAT:- When the Corporate Debtor is entitled to all rights, interests and has to discharge all liabilities obligations of Transferor under the Principal Agreement, any entitlement or liability of it, which flow from the Master Service Agreement has to be shouldered/claimed by the Corporate Debtor. It cannot be said that inflated invoices which is claimed to have been issued by staff and employees of the Appellant though related to the different Project under the same Master Service Agreement is alien or foreign to claim which has been raised by the Appellant. In the present case, after coming to know about the issue of inflated invoices, Appellant itself has commenced investigation and filed the Police Complaint as well as directed for investigation through Ernst and Young, which is an admitted fact. Appellant in his Appeal has brought on record the Police Complaint which was submitted by Appellant on 24.02.2023.
The correspondence between the Parties which relates to the payments which are subject matter of Demand Notice and Section 9 Application is clear communication by Corporate Debtor that payments have been put on hold indicates that there was dispute raised by Corporate Debtor with regard to entitlement and payment of the invoices which are subject matter of Section 9 Application much before issuance of Demand Notice dated 06.11.2023.
Thus, it is clear that the claim of Appellant for payment of invoices which are subject matter of Section 9 Application was disputed much before Demand Notice was issued - In facts of the present case, Adjudicating Authority has not committed any error in refusing to initiate CIRP, there being Pre-Existing Dispute which is reflected with the correspondence which took place between the Parties much prior to issuance of Demand Notice.
Thus, no error has been committed by the Adjudicating Authority in rejecting Section 9 Application filed by the Appellant.
There is no merit in the Appeal - The Appeal is dismissed.
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2024 (11) TMI 1050
Maintainability of the appeal by a shareholder under Section 61 of the Insolvency and Bankruptcy Code, 2016 - pre- existing dispute between the appellant and Corporate Debtor/Respondent No.1 or not - interpretation of “dispute” under Section 5(6) of the code - HELD THAT:- The disputes related to shareholder oppression or mismanagement under the Companies Act, 2013 are distinct issues governed by separate statutory provisions and fall outside the purview of the Code. As a special statute, the IBC prevails over the Companies Act pursuant to Section 238, which has been affirmed by the Hon’ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank [2017 (9) TMI 58 - SUPREME COURT], which held that the resolution process under the IBC takes precedence over any conflicting laws. Hence, the contention of appellant regarding resolution of Company Petition under Section 241 & 242 of Companies Act, 2013 before the CIRP petition does not hold water.
The NCLT has passed the order after hearing both the parties and it’s an order complying with relevant provisions of the code. The debt and default are on record and there was no pleading of pre-existing dispute in this case.
As owners the equity shareholders are biggest beneficiaries when the company does well. Their capital is multiplied due to increase in share prices and by receipt of dividends. On the other hand, if the company performs badly and goes in liquidation, the equity shareholders loose their entire share capital. The owners of the company have a major role to play in the proper functioning of the company, as equity shareholders are represented through the Board of Directors (BoD) and the BoD holds the management accountable for its proper functioning - As soon as the CIRP petition is admitted and IRP is appointed, the functions of the BoD are taken over by IRP. As a representative of Shareholders erstwhile Directors of CD are allowed to intervene and file appeals under Section 61, but the individual or even majority shareholders are not allowed to pursue derivative action.
The appellant’s argument is that the definition of 'aggrieved person' under Section 61 should include any party whose legal interests are impacted by the outcome of insolvency proceedings, even if not directly named as a party in the original application. The restrictive interpretation conflicts with the broader intent of the IBC to allow for effective appeals by any stakeholder with a demonstrable interest, especially in complex insolvency scenarios where indirect impacts on third-party rights are substantial. Thus, the scope of 'aggrieved person' must not be so narrowly construed as to exclude genuine stakeholders who have a legitimate legal or financial interest in the outcome of the case.
The appellant being a shareholder of the company is not the “aggrieved party” as per the provisions of the Code. The appellant has no locus to file this appeal and the same is not maintainable.
Accordingly, the appeal is dismissed.
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2024 (11) TMI 1049
Service tax on amounts related to execution of statutory obligations - whether the amounts collected by the appellant from their customers towards KEB, BWSSB and Advocate fees should be treated as taxable value u/s 67 of the Finance Act, 1994 read with Rule 2A of the Service Tax (Determination of Value) Rules - as argued service tax is not payable by the appellant prior to 01.07.2010 in view of the Board Circular No. 108/02/2009-ST dated 29.01.2009 and the amounts related to execution of statutory obligations cannot be levied to service tax
HELD THAT:- The charges collected in dispute referred above are electricity charges, water charges and legal fees. These are statutory charges to be collected by the appellant and to be paid to the respective authorities are in the nature of reimbursable expenses. The issue of inclusion of reimbursable charges in the taxable value is no longer res integra in view of the decision by the Supreme Court in the case of Union of India Versus Intercontinental Consultants and Technocrats Pvt. Ltd. . [2018 (3) TMI 357 - SUPREME COURT]
In view of the above, as rightly claimed by the appellant, the above statutory reimbursable amounts cannot form part of the gross amount on which service tax is to be charged. Therefore, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.
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2024 (11) TMI 1048
Invoking extended period of limitation - Non discharge of service tax on the legal expenses incurred under the reverse charge mechanism - Appellant failed to register themselves under the Service tax since they are providing taxable service namely renting of Samudhaya Bhavana and also towards renting of shops for business purposes - HELD THAT:- As considering the communication made by Assistant Commissioner of Central Excise confirming that the Appellant is not liable for payment of service tax and in the absence of any allegation regarding any other service provided by appellant and without any amendment of relevant provision of law, no finding can be made that the Appellant who had registered under the Societies Act and filing income tax return regularly had suppressed the facts regarding service provided by them. Since the entire demand is made by invoking the extended period of limitation and no demand is falling under normal period, the demand is barred by limitation. Appeal allowed.
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2024 (11) TMI 1047
Service tax liability - rendering of service - sale/ transfer as a going concern by way of slump sale as defined under the Income Tax Act 1961, amounts to service - exemption from service tax under Sr. No. 37 of Notification No. 25/2012-ST - demand for Service Tax under the Proviso to Section 73 (1) with interest u/s 75 and imposed penalty equal to the said amount of service tax u/s 78.
HELD THAT:- As per entry in Notification No. 25/12–ST dated 20.06.2012 Services by way of transfer of the going concern as a whole or an independent part thereof is exempted.
Revenue, in the impugned order has denied the aforesaid exemption on the ground that in the present case the transfer of business is not an independent part of the appellant for the reason that the appellant is involved in the business of Software Development and the transfer of business is also nothing but a business of software development. Therefore, it is not an independent part of the appellant’s overall business.
Appellant before transfer of as going concern, they were providing a software solution of a product exclusively developed for the buyer of the business in the present case i.e. M/s ZeroChaos Workforce Solutions Private Limited. Therefore, the activity of software development, which was sold to M/s ZeroChaos was exclusively being done for ZeroChaos, therefore, it is clear that the software solution business which were earlier provided to ZeroChaos was absolutely independent, than their other software development business meant for other customers. Therefore, it is clear that the transfer of business as per the business agreement dated 30.10.2014 an exclusive part of the business of the appellant was out rightly transferred to ZeroChaos. The term used in the exemption entry that “ an independent part thereof” indicates that there should not be any situation where even though a business is transferred but the same is not independent and consequently the same is still continued by the transferor.
In the present case, the business related to ZeroChaos was exclusively being done for M/s. ZeroChaos and the entire business which was being done for M/s. Zero Chaos has been transferred. As per the agreement, it is clear that the same business is not subsequently continued by the appellant, which is also otherwise not possible, since, software solution was made and carried out exclusively for M/s ZeroChaos, the same business cannot be retained by the appellant for some other customer.
Appellant has transferred an exclusive part of their business to the transferee M/s. ZeroChaos, therefore, it is clearly an independent part. In this position, we do not find any doubt about the eligibility of the exemption to the appellant.
Therefore, we hold that the appellant is entitled for the exemption under Sr. No. 37 of Notification No. 25/2012-ST dated 20.06.2012. Since, we decide that the demand is not sustainable only on the ground that the appellant is eligible for exemption Notification 25/2012-ST, we are not addressing the issue that whether the transfer of business as slump sale as going concern, is service or otherwise.
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2024 (11) TMI 1046
Classification of services - demand service tax under the category of ‘Scientific or Technical Consultancy Services’ on RCM basis on the expenditure in foreign currency declared under the head ‘Professional fees’ and ‘Sampling charges’ in the Profit & Loss Account (‘P&L’)
As submitted the demand confirmed in the instant case on the expenditure in foreign currency recorded under the head ‘Professional fees’ and ‘Sampling charges’ in the P&L A/c for the relevant period does not tantamount to ‘Scientific or Technical Consultancy’ service defined under Section 65(92) of the Finance Act, 1994 as applicable prior to 01.07.2012 inasmuch as the said category covers services provided by a scientist or a technocrat, or any science or technology institution or organization unlike the instant case -
HELD THAT:- A perusal of the definition of ‘Scientific or Technical Consultancy’ reproduced above indicate that any service rendered by them is classifiable under the category of ‘Scientific or Technical Consultancy’ only when such service is provided by a scientist or a technocrat, or any science or technology institution or organization.
In the instant case, from the agreements entered into by the appellants with the foreign vendors reveals that the service providers cannot be called as a science or technology institution or organization. They are merely experts conducting site visits for assisting the Appellant in taking informed decision on the viability of acquisition of coal mining assets situated outside India. Accordingly, we hold that the service received by the appellant from the experts cannot be classified under the category of ‘Scientific or Technical Consultancy’.
Appellant has placed their reliance on the TRU Circular dated 09.07.2001 bearing F.No.B.11/1/2001-TRU, wherein it has been clarified that the scientific or technical consultancy service envisages expert opinion/ advice in one or more disciplines of science or technology.
We observe that the activities under taken by the experts involves review and validation of the data pursuant to site visits, meetings and discussions w.r.t. estimated resources and reserves of the mines; geological data; geotechnical and hydrological conditions effecting mining etc. These activities performed by the Foreign Service providers evidently do not fall within the ambit of scientific or technical consultancy services. Thus, the Circular issued by the Board cited above also supports the view that the service rendered by the appellant can be categorized as ‘Scientific or Technical Consultancy’ only when such service is provided by a scientist or a technocrat, or any science or technology institution or organization.
All services provided in relation to mining of minerals, including the then existing taxable service of ‘survey and exploration of mineral services' were also brought under the taxable service of ‘mining of mineral, oil or gas services’. Thus, we observe that w.e.f. 01.06.2007, the service rendered by the appellant would fall under the taxable category ‘mining of mineral, oil or gas as defined under Section 65(105)(zzzy) and 65(105(zzv) of the Act.
We hold that the demand confirmed in the impugned order under the category of ‘scientific or technical consultancy services’ is not sustainable.
Demand of service tax confirmed in the impugned order on 'sampling charges' - We observe that the payment in foreign currency has been made to third party inspection agencies for carrying out inspection w.r.t. the quality of iron ore exported by the Appellant as per the requirements of the export orders. Hence, the same is classifiable as ‘Technical Inspection and Certification Service’ as defined under Section 65(108) of the Act. The services are not provided by a science or technology institution or organization and are merely in the nature of technical inspection and certification service. However, we observe there is no demand made under the category of ‘Technical Inspection and Certification Service’ as defined under Section 65(105)(zzi) of the Act. Accordingly, we hold that the impugned order confirming the demand under ‘scientific or technical consultancy services’ is not sustainable.
In respect of services covered under Section 65(105)(zzi) and 65(105)(zzv) of the Act, the taxability shall arise when the services are performed in India. In the instant case, we observe that the mines are immovable property, which are situated outside India. Thus, we observe that the mining as well as technical inspection services have been performed outside India.
Service tax liability w.r.t. Professional Fees - demand of service tax confirmed for the Negative List period, in terms of Section 66B of the Act - As in terms of Guidance Note 5 –POPOS Rules, 2012 of Service Tax Education Guide, services connected with oil/gas/mineral exploration or exploitation relating to specific sites of land or the sea bed are specified as land-related services.
In the instant case, we observe that the place of provision of service is outside India, as the service is provided by team of experts deployed by the foreign services providers to identify mines (immovable property) situated outside India. Accordingly, we hold that the same shall not be chargeable to service tax at the hand of the appellant, on RCM basis.
Service Tax liability w.r.t. Sampling Charges - Para 5.4.1 of the Service Tax Education Guide specifies technical testing/ inspection/ certification service to be performance-based service covered under Rule 4 of the POPOS Rules. Hence, the place of provision in the instant case is the place where the services are actually performed (outside India). Accordingly, we hold that the same shall not be chargeable to service tax at the hand of the appellant, on RCM basis.
We hold that the taxability does not arise in India in respect of either of the services and set aside the demands of service tax confirmed in the impugned order.
Since the demand of service tax itself is not sustainable, the question of demanding interest and imposing penalty does not arise.
The impugned OIO has confirmed the demand post 01.07.2012 based on provisions of the Act that are not applicable post 01.07.2012. Since the order does not make reference to the provisions pertaining to the Negative List regime under the Section of ‘Discussion and Findings’, which were applicable for the period post 01.07.2012, therefore, in the absence of such reference, we hold that the service tax demand confirmed for the period post 01.07.2012 is not sustainable on this ground also.
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2024 (11) TMI 1045
Demand sustainability on the ground of limitation - Service tax demand under the category of Goods Transport Agency (GTA) services - mainly based on income tax data, form 26AS and balance sheets of the appellant’s business of transportation of goods - HELD THAT:- As demand of service tax is raised and confirmed solely based on data received from income tax department viz. from 26AS and admittedly there was no independent examination carried out even considering such recorded income whether related to consideration received towards taxable services provided and leviability of service tax thereon.
As seen from the records that appellant has filed ST-3 returns for the disputed period and maintained records which were furnished by the appellant during inquiry, in that view, nothing prevented department from verifying returns and raising query within normal period of limitation. It is further observed that there is no such specific finding in the show cause notice of wilful suppression of facts by the appellant except contending that it would not have come to the knowledge of department if the data from income tax returns were not received from income tax department. In this background, it cannot be alleged that appellant has wilfully suppressed facts from department with intention to evade tax. Therefore the demand is not sustainable on the ground of limitation.
Without prejudice to the above finding, we further find that the transport in the present case was undertaken by the owners of the transport vehicles and no consignment note was issued.
The transportation in the present case not being under GTA is not liable to service tax in terms of the above specific item in the negative list. Therefore for this reason also the transportation service in the facts of the present case is clearly not taxable. As per our above discussion and finding, the demand is not sustainable.
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2024 (11) TMI 1044
Request for adjourning the matter beyond three times - HELD THAT:-The reason for seeking adjournment is that the fire took place in the office of Counsel in the year 2021 i.e. more than three years from today. Even from 2021 this matter has been listed five times in the year of 2024, as stated in para-1 above.
If Counsel for the appellant was really serious about the matter, there was enough time to reconstruct the file or get the relevant documents from registry or from the appellant, for this reason also this request cannot be considered.
No justification for adjourning the matter beyond three times which is the maximum number statutorily provided. Appeal is dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982.
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2024 (11) TMI 1043
Rejection of refund claim - refund of the amount which was collected during investigation - refund of amount paid without liability whether permissible or not? - scope of assessee's substantive right to refund of the illegally recovered tax - HELD THAT:- The new judicial thesis instead rests on the principles of "economic and distributive justice" enshrined in the Preamble and the Directive Principles of State Policy. It also attaches significance to the unethical consequences which would flow and the fiscal and financial chaos which would follow if no bar of "unjust enrichment" is applied by the courts before ordering refunds.
Article 265 and Section 72 should all be read and understood, says the majority view, in the light of "the philosophy and the core values of (the Indian) Constitution" and in keeping with "equity and good conscience".
As discussed decision of Hon’ble Supreme Court Mafatlal Industries Ltd [1996 (12) TMI 50 - SUPREME COURT] are sufficient to clarify that seeking the refund is not a matter of right and the procedure as discussed in the decision has to be followed. In the present case, apparently none of the said procedure has been followed. Though there had been an earlier order of this Tribunal sanctioning the refund, however, the Tribunal remanded back the matter to the adjudicating authority to dispose of the refund application as per law. In compliance thereof, adjudicating authority has invoked section 11B of Central Excise Act. We do not find any infirmity in the same. We hold that the refund claim of appellant is not maintainable in the light of Mafatlal (supra) decision. Thus the order under challenge is upheld and the appeal is dismissed.
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2024 (11) TMI 1042
CENVAT Credit - capital goods - mobile service providers (MSPs) can claim CENVAT Credit on excise duties paid on mobile towers and prefabricated buildings (PFBs) or not - whether the credit so claimed can be used to pay service tax for the output services rendered by the MSPs? - HELD THAT:- Rule 3(1) of the CENVAT Rules enables a provider of taxable service to claim CENVAT credit on duties paid on any “capital goods” or “input” received in the premises of the service provider. Thus, if the mobile towers and prefabricated buildings, which are the items in issue here, qualify as “capital goods” or “inputs” received in the premises of the mobile service provider, the mobile service provider will be entitled to claim CENVAT credit which can be further used for paying service tax for the output services rendered by the mobile service provider.
In the light of the provisions of the CENVAT Rules, if it is held that towers and/or parts thereof and prefabricated buildings (PFBs) are “capital goods” or “inputs” used for providing output service within the meaning of the aforesaid CENVAT Rules, then CENVAT credit can be claimed on these items.
It appears that the definition of “goods” under the Sales of Goods Act, 1930 seems to be the basis of the term “goods” in other Statutes. Hence, we would primarily rely on the definition given in the Sale of Goods Act - the items in consideration viz., towers and prefabricated buildings are neither actionable claim nor money, nor do they come within the inclusive clause of the definition, viz., stocks, shares, growing crops, grass, and things attached to forming part of the land which are agreed to be severed before sale or under contract of sale.
In order to determine whether any property is movable or immovable, this Court, in the light of the statutory provisions has applied certain principles. It has also been noted that such determination may be done not based on a single test but after applying several criteria on the facts of each case.
In TRIVENI ENGINEERING & INDUS. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [2000 (8) TMI 86 - SUPREME COURT], this Court applied the marketability test, in which it took the view that if the goods in question are capable of being taken into the market and sold, the same cannot be treated to be as immovable but movable property - This Court observed that “marketability” itself indicates movability of the property in issue.
In the case of Sirpur Paper Mills Ltd. [1997 (12) TMI 109 - SUPREME COURT], this Court again applied the test of marketability. The issue which arose for consideration in the said case was whether paper machines assembled at site were liable for duties under the Excise Act. It was the plea of the Assessee that since the machine was embedded in concrete base, it became an immovable property though embedding was for providing a wobble-free operation of the machine. This Court rejected the plea and held that merely because the machine was attached to the earth for efficient working and wobble- free operation, it did not per se render the said property immovable since the said machine can be sold in the market.
In the present case, while mobile tower cannot be shifted to another location without dismantling it, it is to be noted that mobile tower itself was bought and brought in a completely knocked-down (CKD) or semi-knocked-down (SKD) condition and it was erected and installed at the site after assembling the parts. If the said mobile tower is to be shifted to another location, it obviously has to be dismantled and restored to its SKD or CKD condition and thereafter re-erected, which however, would not entail any damage to it.
There can no dispute that if the newly set up BTS/BSC is relocated to another site it may entail certain damages. However, what is important to be noted is that the damage is qua the BTS/BSC or cables connecting the various components, but not the tower itself or PFB with which we are concerned. If the tower or the PFB can be dismantled and relocated in another site without causing any damage to either the tower or PFB, the mobility or the marketability of these items is retained. Thus, as far as the tower and PFBs are concerned, these exhibit the character of a movable property.
Thus, merely because certain articles are attached to the earth, it does not ipso facto render these immovable properties. If such attachment to earth is not intended to be permanent but for providing support to the goods concerned and make their functioning more effective, and if such items can still be dismantled without any damage or without bringing any change in the nature of the goods and can be moved to market and sold, such goods cannot be considered immovable.
The PFB houses other BTS equipment and alternative electricity source in the form of diesel generators and other equipment to provide alternative and uninterrupted power supply to the antenna so that in the event of failure of main power supply, the generator can instantly provide backup electricity supply to the antenna and BTS. The PFBs house electric cables, other equipment related to antenna, BTS and generator. Thus, PFBs enhance the efficacy and functioning of mobile antenna as well as BTS and accordingly, PFBs can also be considered as accessories to the antenna and BTS which are “capital goods” falling under Chapter 85 of the Schedule to the Central Excise Tariff.
Having held that the tower and pre-fabricated buildings (PFBs) are “goods” and not immovable property and since these goods are used for providing mobile telecommunication services, the inescapable conclusion is that they would also qualify as “inputs” under Rule 2(k) for the purpose of credit benefits under the CENVAT Rules - Appeal disposed off.
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2024 (11) TMI 1041
Eligibility of SSI exemption Notification No.08/2003-CE dated 01.03.2003 - clubbing of clearance value of two units - failure to consider various submission - violation of principles of natural justice - HELD THAT:- From the finding of this Tribunal, it can be seen that the Ld. Commissioner (Appeals) was directed to particularly, look into the financial transaction, day to day management etc. to arrive at conclusion of relationship between the two units.
It was also observed that the Commissioner (Appeals) is supposed to reassess the evidences as brought out on record and also referred to specifically in the grounds of appeal and thereafter, applying the principles of natural justice reconsider the eligibility of SSI exemption Notification No.08/2003-CE. From the perusal of the impugned order, we find that the appellant have made multiple submissions such as limitation, discrepancy in issuance of the show cause notice and various records showing that there is no financial flowback and both the units are working separately and particularly, after certain stage, one factory was shifted to the different location. However, the Ld. Commissioner (Appeals) has not considered all this aspects in the proper perspective and passed the order without considering the various submissions and evidences produced by the appellant.
The request of the Ld. Counsel on behalf of the appellant for remanding the matter is just and proper. Accordingly, the impugned order is set aside and the appeal is allowed by way of remand to Commissioner (Appeals) for passing a fresh order.
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2024 (11) TMI 1040
Liability to pay 6% duty on by product namely Ammonium Sulphate - contravention of condition of Notification No.01/2011- CE - availment of Cenvat Credit on the inputs used in the Ammonium Sulphate - HELD THAT:- It is found that in the present case the demand of differential duty of 5% i.e. as against the 1% duty paid by the appellant and 6% duty was demanded on the ground that appellant have availed the Cenvat Credit on the input and used in the Ammonium Sulphate, hence, the Ammonium Sulphateis liable to duty at the rate of 6% instead of 1%.
It is found that in the facts of the present case, Ammonium Sulphate is generated unavoidably as by product, in case of by product it cannot be said that any input stage credit was availed even if, the by product is cleared at nil rate of duty Cenvat credit cannot be demanded only on the pretext that the entire input on which the credit was taken has been used in the manufacture of the final product and not in manufacture of by product. Therefore, the exemption Notification No.01/2011which carries the condition of non availment of Cenvat Credit on input cannot be denied.
This issue is no longer res-integra, in the appellant’s own case, HINDUSTAN CHEMICALS COMPANY VERSUS COMMISSIONER OF C.E. & S.T. -SURAT-II [2024 (5) TMI 459 - CESTAT AHMEDABAD] it was held that 'since the issue has been settled that Ammonium Sulphate being a by-product arising in the course of manufacture of final product, the demand under Rule 6(3) is not applicable. Accordingly, In the present case also being a similar issue, demand is not sustainable.'
In view of the above decision in the appellant’s own case, it has been held that the reversal under Rule 6(3) of Cenvat Credit Rules in respect of Ammonium sulphate being by product is not required to be made. This has been held with a view that Cenvat Credit on the input cannot be said to have been availed when any by product is cleared. Therefore, in view of the above settled position, the demand of excise duty on the Ammonium Sulphate which was made on the basis that the Cenvat Credit was availed on the inputs is not sustainable.
The impugned order is set aside - the appeal is allowed.
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2024 (11) TMI 1039
Levy of purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 during the Assessment Year 1994-1995 - defective parts that were collected from the customers by providing maintenance services to the customers / clients on behalf of the head office - HELD THAT:- A reading of sub-section (1) to Section 7-A of the Act makes it clear that the question of subjecting the respondent to purchase tax would arise only if there was a purchase of defective spare parts by the respondent from the customers / clients, question of involving Section 7-A of the TNGST Act, 1959 will apply.
In the present case, it cannot be said that the respondent was purchasing the defective spare parts from the customers / clients. All that, the respondent did was to replace the old defective parts with the new parts and gave a discounts on the replaced new parts to the customers.
Since there was no purchase of defective parts, question of levying purchase tax at the rate mentioned in Section 3 or Section 4 of TNGST Act, 1959 under Section 7-A of TNGST Act, 1959 does not arise - there are no merit in the challenge to the impugned order of the Tribunal - tax case dismissed.
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