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2025 (4) TMI 1059
Applicability of provisions of the Interest Tax Act 1974 - ITAT treating appellant is a 'credit institution' as defined in Section 2(5A) r.w. Clause (va) of Section 2(5B) of the Interest Tax Act - Whether Appellate Tribunal is right in law in concurring with the views of the Commissioner (Appeals) and holding that mere acceptance of monies as deposits without any 'scheme or arrangement' as contemplated in the Reserve Bank directions/notification will attract the provisions of the Interest Tax Act?
HELD THAT:- Amendments to the 1974 Act in 1991 have not authorized a levy of interest tax on the interest paid or the liability incurred by a “scheduled bank” or “credit institution” under Section 4 of the 1974 Act.
Even if the Appellant/Assessee is covered under the ambit of the definition of “credit institution” in Section 2(5A) of the 1974 Act read with Section 2(5B) of the 1974 Act as it includes any other “financial company” as defined in Section 2(5B) of the 1974 Act, would not mean that the Appellant/Assessee was liable to pay interest tax on the interest paid on deposits collected from its Directors, Shareholders or its Group Companies.
Only if the amounts were lent by the Appellant/Assessee and interest were charged on the amount lent by the Appellant/Assessee, interest tax would be payable at the rate prescribed under Section 4(2) of the 1974 Act up to 31.03.2000 by the Appellant/Assessee.
In our view, no interest tax referred to in Section 4 of the 1974 Act is chargeable on the interest paid either by the “scheduled bank” or by a “credit institution” to its creditors/lenders.
In our view, there was no question of the Appellant/Assessee being held liable to pay interest tax under the 1974 Act on the interest paid on the deposits collected from its Shareholders, Directors and Group Companies.
Consequently, invocation of Section 8, Section 9 and Section 10 of the 1974 Act were without jurisdiction. The interest charged under Section 12A of the 1974 Act was also without jurisdiction.
Assessing Officer, the Commissioner of Income Tax (Appeals) III, Chennai and the ITAT have failed to consider the provisions of the 1974 Act and have wrongly held that the interest paid by the Appellant/Assessee as “credit institution”, its Directors, Shareholders and Group Companies was liable to tax under the 1974 Act.
Unfortunately, the Assessment Order dated 08.11.1999 has seen two rounds of litigation, from the stage of assessment up to ITAT. Neither the Assessing Officer nor the Tribunal have examined the provisions before concluding that the interest tax was payable on the interest paid on the amounts received from deposits/loans by the Appellant/Assessee from its Directors, Shareholders and Group Companies.
We answer the second substantial question of law raised in these Appeals in favour of the Appellant/Assessee and against the Income Tax Department.
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2025 (4) TMI 1058
Violation of provisions of Rule 138 of the U.P. Goods and Service Tax Rules, 2017 - transporting goods accompanied by a tax invoice and e-way bill issued by a supplier whose registration had been cancelled prior to the date of invoice and e-way bill generation - HELD THAT:- From perusal of Rule 138 of the U.P. Goods and Service Tax Rules, 2017, it is clear that the goods in transit has to be accompanied by the tax invoice along with e-way bills. In the instant case, though e-way bill and tax invoice was there, but registration of the supplier firm had already seized on 07.11.2020 as it was cancelled by the Taxing Authorities.
Once, the supplier firm was not in existence, it could not have issued the tax invoice dated 01.12.2020 and the transaction is sham. The tax invoice as produced by the petitioner firm issued by the supplier firm is against the provisions of Rule 138 of the Rules of 2017.
The order passed by the appellate authority needs no interference of this Court - Petition dismissed.
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2025 (4) TMI 1057
Challenge to penalty order - requirement to carry a valid e-way bill for the movement of goods from one place to another under the Uttar Pradesh Goods and Service Tax Act, 2017 (the Act of 2017) and the related Rules - HELD THAT:- The question is no more res integra after the 14th Amendment of the Uttar Pradesh Goods and Service Tax Rules, 2017 which came into effect from 01.04.2018. Post amendment in the Rule, it has become obligatory that goods should be accompanied with valid e-way bill. The co-ordinate Bench in Akhilesh Traders [2024 (2) TMI 1128 - ALLAHABAD HIGH COURT] had held that in case goods are not accompanied by e-way bill, a presumption may be read that there is an intention to evade tax. Such a presumption of evasion of tax then becomes rebuttable by the materials to be provided by the owner/transporter of the goods.
In Jhansi Enterprises [2024 (3) TMI 219 - ALLAHABAD HIGH COURT], the co-ordinate Bench following the decision rendered in Akhilesh Traders further held that mere furnishing of documents subsequent to interception cannot be a valid ground to show that there was no intention to evade tax. The Court further held that reliance placed upon the decision by petitioner therein was of transaction prior to April, 2018 but after April, 2018, those difficulties have been resolved and there is no difficulty in generating and downloading the e-way bill.
In the instant case, it is an admitted case that the goods were intercepted on 19.01.2023 at 3:22 pm at Lalitpur Road, Jhansi. The said transit in question was being done on basis of e-way bill no. 7713 1109 2438 and e-way bill no. 4313 0563 8265. After enquiry, it was found that transportation of goods was being done through different vehicle in place of the vehicle declared in Part B of the e-way bill no. 7713 1109 2438 and validity of e-way bill no. 4313 0563 8265 was only till 15.01.2023 while it was being transported on 19.01.2023.
Conclusion - Carrying a valid e-way bill during the transit of goods is mandatory under the Act of 2017 and Rules post 01.04.2018.
Petition dismissed.
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2025 (4) TMI 1056
Jurisdiction to levy GST on the affiliation fees collected by the petitioner University from its affiliated colleges - validity and legality of the Circular dated 17.02.2021 and paragraph 2 of the Circular dated 11.10.2021 - legality of paragraph 6 (ii) of the Press Note dated 09.09.2024 issued to summarize recommendations made in the 54th meeting of the GST Council - HELD THAT:- The Constitution of India has been amended vide Constitution (101st Amendment) Act, 2016 with effect from 16th September 2016. In terms of the above-referred Constitutional Amendment, the legislative competence of the Parliament and State Legislature to levy and collect tax on supply of goods and services is now traceable to Article 246A of the Constitution. Article 246A (1) of the Constitution empowers the Parliament and the State Legislatures to concurrently make laws with regard to tax on "intra-state" supply of goods and services. Article 246A (2) of the Constitution states that Parliament alone shall have exclusive power to make laws with regard to tax on supplies of goods or services or both made in the course of "inter-state trade or commerce".
The GST is being levied with concurrent jurisdiction of the Centre and the States on the supply of goods or services or both. GST is a destination-based value added tax on supply of goods or services or both which has come into force in India from 01/07/2017. GST is based on fundamental principle of consumption-based tax. In other words, tax shall accrue to the jurisdiction where consumption takes place.
It is well settled that the authority to act depends on the existence of jurisdictional fact. A jurisdictional fact is a fact which must exist before a Court, Tribunal or an authority assuming jurisdiction over a particular matter. If an authority wrongly assumes the existence of such fact, the order could be questioned under Article 226 of the Constitution. Section 9 of CGST Act, 2017/GGST Act, 2017, is the charging section which provides for levy of GST on 'supply of goods or services or both. Section 7 of the aforesaid statutes defines the scope of the phrase 'supply', in terms whereof, all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course of furtherance of business.
In Laxmi Engineering Works Vs P.S.G. Industrial Institute [1995 (4) TMI 294 - SUPREME COURT], the Supreme Court held that the term "commercial activity" in turn has been held to mean something pertaining to commerce or connected with or engaged in commerce; mercantile; having profit as the main aim.
The requirements of Section 7 of the CGST Act. Section 2 (31) of the CGST Act defines the phrase 'consideration' in terms whereof, the money or money value in respect or in response to the supply would be a consideration. The affiliation is undertaken by the University in terms of the requirement of the statute and in discharge of public functions, the fee so collected for affiliation fails to qualify as 'consideration'. The fees collected by the University i.e. Affiliation fees, PG registration fees and convocation fees are not amenable to GST in as much as the fees collected by the University is not a consideration as contemplated in section 7 of CGST Act/GGST Act, as the fees are collected in the nature of statutory fee or regulatory fee in terms of the statutory provisions and not contractual in nature. The same cannot be given a colour of commercial receipts as there is no element of commercial activity involved in the subject transaction.
The Impugned Show Cause Notice relies on the clarifications issued by the Respondent No. 2 vide Circular dated 17/06/2021. The Circular while clarifying the exemptions available to the National Board of Examination, in paragraph 4(iii) of the circular states that GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution. Based on the recommendations of the 54th GST Council meeting, the Respondent No. 2, vide paragraph 2 of the Circular dated 11/10/2024, clarified that affiliation services provided by universities to their constituent colleges are not covered within the ambit of exemptions provided to educational institutions.
The petitioner University has reported income in the income and expenditure account and its schedules and sub-schedules have been listed and the GST is demanded on the same without establishing as to how these incomes would be liable to GST. The GST is proposed on the sale of prospectus, sale of old newspaper, various fees towards sports, eligibility certificate, migration certificate, admission fee etc., received from students are also taken for the purpose of demand. Further, demand of tax is also proposed on interest income earned by the university. The Petitioner University has also tabulated the details of income which are listed for tax and also provided the reasons why such income cannot be subjected to tax. Learned Senior Advocate for the Petitioner University is justified in contending that where the main activity is not a business then any incidental or ancillary transaction held, would normally amount to business only if an independent intention to carry on business in the incidental or ancillary transaction is established. The burden to prove such intention rests on the Department. Hence, where the main and dominant activity of the University is education, it cannot be termed as business activity to demand tax.
Conclusion - The activities of the petitioner University not being commercial in nature, are not amenable to GST. There is a complete absence of jurisdictional facts to issue the impugned show cause notice.
Petition allowed.
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2025 (4) TMI 1055
Rejection of ITC claim of the petitioner on the sole issue that whatever purchases of goods made from the supplier by the petitioner, there is no actual movement of goods in terms of Section 16 (2) (b) (i) of CGST Act / BGST Act - HELD THAT:- On purchase of goods from the supplier, supplier was requested to deliver the goods to the end consumer directly, resultantly, there is no physical movement of goods to the petitioner from the supplier. This has not been appreciated by both the authorities in their impugned orders. In fact, respective contentions urged by the petitioners have not been appreciated and not dealt with, to that extent there is total non-application of mind. Whatever documents demanded by the authorities have been furnished from time to time with reference to their show cause notices and other communications.
Refund of accumulated ITC, for claiming ITC petitioner has to file form RFD – 01 with supporting material information within the time slot under Section 54 of the CGST Act read with Rule 89 of CGST Rules (i) supplier has filed GST returns and (ii) supplier has uploaded the invoice in their GSTR - 1 and GSTR – 2B of the recipient or buyer. In terms of CGST Circular No. 241/35/2024-GST dated 31.12.2024 in cases where goods are delivered by the supplier to the registered person (dealer), either directly or to any other person on the instruction of the said registered person.
In view of these facts and circumstances, receipt of goods by the dealer from supplier need not be in physical mode. On the other hand, if the dealer apprise the competent authority to the extent that there is an agreement / memorandum of understanding among the supplier, dealer and intimation to the end consumer insofar as transactions of purchase of goods and its delivery to the end consumer. In the present case, the petitioner submitted that he had produced all necessary material information to the concerned authority to the extent that he is in receipt of goods from the supplier. On the other hand, he had given instruction to the supplier to supply the purchased goods to the end consumer - To this extent the concerned authority is required to examine relevant material information like papers of memorandum of understanding / agreement among the petitioner – dealer and supplier and intimation to the end consumer so as to complete the transactions relating to purchase of goods by the dealer from the supplier and further selling the goods to the end consumer and receipt of goods or not?
Conclusion - The petitioner has made out a case so as to interfere with the impugned orders dated 14.01.2023 (Annexure – P 14) and 07.10.2023 (Annexure – P 1) and they are set aside. Matter is remanded to the second respondent – the Deputy Commissioner of State Tax, Patliputra Circle, Central Division, Pant Bhawan, Bailey Road, Patna to undertake fresh exercise insofar as compliance to Rule 16 (2) (b) of the CGST Act only to the extent that whether is there any memorandum of understanding between the petitioner - dealer with the supplier and further materials relating to informing the end consumer to the extent of receipt of goods (delivery of goods by the supplier, directly or through transporter or not?)
Petition disposed off by way of remand.
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2025 (4) TMI 1054
Seeking grant of first bail - availment of fake ITC - master-mind for creating a nexus of many fake firms to pass on fake Input Tax Credit (ITC) to various recipients - HELD THAT:- It appears that applicant stands accused of creation of fake firms for the purposes of availing Input Tax Credit fraudulently. The aspect of whether applicant's signatures or his being instrumental in creation of fake firms is subject matter of evidence. It is admitted between learned counsel for parties that maximum sentence in the sections imputed against applicant is being only five years, applicant is under incarceration since 14.11.2024. It is evident that investigation has already concluded.
Conclusion - Considering the aforesaid facts and circumstances that as yet trial has not yet commenced after conclusion of investigation and maximum sentence being only a five years, with the aspect of applicant's involvement in creation of fake firms being subject matter of evidence, prima facie, this Court finds, the applicant is entitled to be released on bail in this case.
The applicant is granted bail subject to fulfilment of conditions imposed.
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2025 (4) TMI 1053
Challenge to penalty order - detention of goods - Requirement of person in-charge of a conveyance is statutorily required to carry a physical copy of the tax invoice under the West Bengal Goods and Service Tax Rules, 2017 - HELD THAT:- Section 68 of the 2017 Act deals with inspection of goods in movement. Sub-section 3 of Section 68 empowers the intercepting officials to require the person in–charge of the conveyance to produce the documents prescribed and upon being required to do so the said person shall be liable to produce the documents and devices and also allow the inspection of the goods.
Clause (a) of sub-Rule (1) of Rule 138A of the 2017 Rules states that the person in-charge of a conveyance shall carry the invoice or bill of supply or delivery chalan, as the case may be. Clause (b) of sub-Rule (1) of Rule 138A speaks of a copy of the e-way bill. Sub-Rule 2 of Rule 138A deals with invoices issued in the manner prescribed under Sub-Rule (4) of Rule 48. It states that such invoice may be produced electronically for verification by the proper officer in lieu of physical copy of such tax invoice - Upon a conjoint reading of Sub-Rule 1(a) and Sub-Rule 2 of Rule 138A of the 2017 Rules, this Court holds that the person in-charge of a conveyance shall carry the physical copy of the tax invoice, except in cases falling under sub-Rule (2) of Rule 138 A of the 2017 Rules.
It is well settled that mere change of route or even if the conveyance is intercepted at a location which may not be en route geographically as per the declaration made in the e-way bill, cannot be a ground for invocation of the provisions of Section 129 of the 2017 Act as no inference can be drawn in such cases that there was intention to evade taxes. It is not in dispute that the e-way bill was produced at the time of inspection of the goods carried by the conveyance. It is not the case of the revenue that there is any discrepancy as to the quality or quantity of the goods as mentioned in e-way bill with that found at the time of physical inspection of the goods which were in the conveyance.
The Hon’ble Division Bench in Ashok Sharma [2025 (2) TMI 1002 - CALCUTTA HIGH COURT] held that in case there is no dispute as to the quantity or quality of the goods and also that there is no intention to evade payment of tax the provision under Section 129 of the 2017 Act could not have been invoked.
Conclusion - The person in-charge of a conveyance shall carry the physical copy of the tax invoice, except in cases falling under sub-Rule (2) of Rule 138 A of the 2017 Rules.
The order passed by the appellate authority dated January 16, 2025 affirming the penalty order passed by the original authority dated May 2, 2024, are set aside. The writ petition stands allowed.
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2025 (4) TMI 1052
Challenge to penalty order - person in charge of the conveyance is required to carry a physical copy of the tax invoice under the West Bengal Goods and Service Tax Rules, 2017 or not - HELD THAT:- Section 68 of the 2017 Act deals with inspection of goods in movement. Sub-section 3 of Section 68 empowers the intercepting officials to require the person in–charge of the conveyance to produce the documents prescribed and upon being required to do so the said person shall be liable to produce the documents and devices and also allow the inspection of the goods.
It is not the case of the petitioner that the tax invoice was produced electronically. Therefore, the person in-charge of the conveyance was under a statutory obligation to carry the physical copy of the tax invoice. For such reason, this Court is not inclined to accept the contention of the learned Advocate for the petitioner that displaying the image of the tax invoice from the mobile set of the person in-charge of the conveyance amounts to sufficient compliance of the requirements under Rule 138A (1) (a) of 2017 Rules.
This Court holds that mere change of route or even if the conveyance is intercepted at a location which may not be en route geographically as per the declaration made in the e-way bill, cannot be a ground for invocation of the provisions of Section 129 of the 2017 Act as no interference can be drawn in such cases that there was intention to evade taxes - The appellate authority in its order dated January 16, 2025 has not returned any finding that there was any intention on the part of the petitioner to evade the payment of taxes. Though the petitioner may not have produced the tax invoices either before the adjudicating authority or before the appellate authority but the fact remains that a copy of such tax invoice has been annexed to this writ petition. It is also not the case of the revenue that there has been any default or short payment in payment of taxes, duty. The veracity of the tax invoice which is annexed to this writ petition has also not been questioned by the revenue in course of hearing of this writ petition.
The Hon’ble Division Bench in Ashok Sharma [2025 (2) TMI 1002 - CALCUTTA HIGH COURT] held that in case there is no dispute as to the quantity or quality of the goods and also that there is no intention to evade payment of tax the provision under Section 129 of the 2017 Act could not have been invoked. The said decision shall squarely apply to the facts of the case on hand.
Conclusion - i) Without evidence of an intention to evade tax, the invocation of Section 129 is unjustified. ii) The penalty order and its affirmation by the appellate authority are set aside, and the petitioner was entitled to a refund of the penalty paid.
The order passed by the appellate authority dated November 14, 2024 affirming the penalty order passed by the original authority dated May 22, 2024, are set aside. The writ petition stands allowed.
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2025 (4) TMI 1051
Taxability - service of renting out immovable property by the applicant to the Social Justice and Special Assistance Department of Maharashtra Government for running a hostel for backward class girls - time of supply - applicability of Reverse charge or Forward charge mechanism - property is jointly owned by two persons registered separately under GST, all receipts should be disclosed under the applicant's GST registration number or otherwise - separate registration Under GST is required by joint name or not.
Whether such service is taxable or exempt? - HELD THAT:- The services provided are renting of immovable property services. These supplies of services do not involve any supply of goods and can be regarded as pure services. Further, the services are given to Social Justice and Special Assistance Department of Maharashtra Government. Thus, the services have been provided to the State Government.
Whether the said service is in relation to any functions entrusted to a Panchayat under article 243G or to a municipality under article 243W of the Constitution of India? - HELD THAT:- The renting out of immovable property, provided by the Appellant to the State Government, will definitely be construed as an activity in relation to the function entrusted to a Panchayat under article 243G of the Constitution, or in relation to the function entrusted to a Municipality under article 243 W of the Constitution, and thereby, are rightly eligible for exemption from GST in terms of the exemption entry at Sl. No. 3 of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017.
As the activities related to residential accommodation of the girls or women, belonging to the Backward Classes are held to be exempt from the levy of GST, other questions are not applicable.
Conclusion - Service provided by the applicant to the Social Justice and Special Assistance Department, Government of Maharashtra qualifies to be an exempted supply of pure services vide Sl. no. 3 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
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2025 (4) TMI 1050
Taxability - recoveries made by the Applicant from the employees for providing canteen facility to its employees - recoveries made by the Applicant from the employees for providing bus transport facilities to its employees - exemption under the SI. No. 15 of Notification No. 12/2017-Central Tax (Rate) - notice pay recoveries made by the Applicant from its employees for not serving the notice period - value on which GST is payable.
Whether the recoveries made by the Applicant from the employees for providing canteen facility to its employees is taxable under the GST laws? - Whether the recoveries made by the Applicant from the employees for providing bus transport facilities to its employees is taxable under the provisions of CGST Act? - HELD THAT:- As per Income Tax Act, 1961, perquisite is defined to be the value of free benefit or facility given by the employer to his employees. The collection from the employees of whatever value, is not covered under ‘perquisite’. It could be inferred from the above, that any service rendered free of charge, or, any service rendered on a concessional basis shall qualify as a perquisite. But, it is to be noted that only the value/ portion to the extent of concession offered by the employer is to be treated as a perquisite and not the remaining portion/value that has been charged by the employer. Applying the said analogy to the instant case, in respect of the canteen and transportation services provided by the applicant to its employees, it becomes clear that the exemption provided in Entry 1 of Schedule III to the CGST Act, 2017 applies only to the concession part extended to the employees and not on the value charged to the employees. Thus, the recoveries made from the employees for canteen and transportation services are liable to levy of tax.
Whether the Applicant would be exempted under the SI. No. 15 of Notification No. 12/2017-Central Tax (Rate)? - HELD THAT:- As per clause (b) of above SI. No. 15 of Notification No. 12/2017-Central Tax (Rate), dated 28.6.2017, the services of transportation of passengers, with or without accompanied belongings, by non-air-conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire is exempt from GST.
Further, the hire or charter services are excluded from the said entry 15 (b) of Notification No. 12/2017 CT(R) dated 28.06.2017. In view of aforesaid discussion, the transportation services provided by the Applicant to its employees are not covered by entry 15 (b) of the Notification No. 12/2017 CT(R) dated 28.06.2027. The services provided by M/s. Ferrero India Pvt. Ltd. squarely fall under transport of passengers under SAC 9964 and taxable at 5% without ITC or 12% with ITC (If ITC is not blocked by other provisions) under entry No. 8 (vi) of Not. No. 11/2017-CT (R) dated 28.06.2017 as amended from time to time.
Without prejudice, even if GST is payable in respect of aforesaid employee recoveries, what would be the value on which GST is payable? - HELD THAT:- The value of the outward supply of canteen and transportation service can be considered as having two parts. First part is the amount of recovery that is made from the employees, and second part is balance value of the services provided by the employer as perquisite which is in the lieu of the services provided by employees to the employer. The entire balance value of the services for which no amount is charged is the perquisite provided by the employer to the employees. As this part is in lieu of services of the employees to the employer which fall under schedule 3, the perquisite part is not taxable, as a corollary, deeming it to be falling in the said entry of schedule 3. Hence, though the employer and employee are related parties, the value on which tax is a liable to be paid is only the recovered amount from the employee as the remaining part of the value is the perquisite provided by the employer which is not liable to tax.
Whether the notice pay recoveries made by the Applicant from its employees for not serving the notice period is taxable under the GST laws? - HELD THAT:- The provisions for forfeiture of salary or recovery of bond amount in the event of the employee leaving the employment before the minimum agreed period are incorporated in the employment contract to discourage non-serious candidates from taking up employment. The said amounts are recovered by the employer not as a consideration for tolerating the act of such premature quitting of employment but as penalties for dissuading the non-serious employees from taking up employment and to discourage and deter such a situation. Further, the employee does not get anything in return from the employer against payment of such amounts. Therefore, such amounts recovered by the employer are not taxable as consideration for the service of agreeing to tolerate an act or a situation.” In view of this clarification, notice pay recoveries made from the employees are not liable to levy of tax under CGST Act, 2017.
Conclusion - i) The recoveries made by the Applicant from the employees for providing canteen facility to its employees is taxable under the GST laws. ii) The recoveries made by the Applicant from the employees for providing bus transport facilities to its employees is taxable under the provisions of CGST Act. iii) The services provided by M/s. Ferrero India Pvt. Ltd. squarely fall under transport of passengers under SAC 9964 and taxable at 5% without ITC or 12% with ITC (If ITC is not blocked by other provisions) under entry No. 8 (vi) of Not. No. 11/2017-CT (R) dated 28.06.2017 as amended from time to time. iv) Value on which GST is payable is the actual amount of recoveries made from the employees. v) The notice pay recoveries made by the Applicant from its employees for not serving the notice period is not taxable under the GST laws.
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2025 (4) TMI 1049
Supply of service - deduction of a nominal amount by the Applicant from the salary of the Employees who are availing the facility of food provided in the factory premises - applicability of GST - Availability of ITC to the Applicant on GST charged by the Canteen Service Providers for providing the catering services - services by the way of non-air-conditioned bus transportation facility provided by the Transport Service Providers - availability of ITC on GST charged by the Transport Service Providers for providing the non-air-conditioned bus transportation services.
Whether the deduction of a nominal amount by the Applicant from the salary of the Employees who are availing the facility of food provided in the factory premises would be considered as a “Supply of Service” by the Applicant under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017? - HELD THAT:- If a transaction or activity is not a supply u/s 7 (1) of CGST Act, then there would not be necessity to place such a transaction u/s 7 (2)(a) for deeming it to be neither supply of goods nor supply of services. Hence, Applicant’s activity of supply of canteen services falls u/s 7 (1) of CGST Act, 2017. Only the perquisites i.e., free supplies, in terms of a contractual agreement between the employer and employee are not to be subjected to GST as these are in lieu of the services provided by employee to the employer in relation to his employment. Hence, the recoveries made from the employees are liable to levy of tax as it is consideration against canteen services provided by the Applicant to the employees.
Whether ITC of tax paid to caterer for Canteen Services is available? - HELD THAT:- As per Section 17 (5) (b) of the CGST Act, ITC on food and beverages, outdoor catering, etc. is not available. However, it is seen that a proviso after sub- clause (iii) of clause (b) of sub- section (5) of section 17 of the CGST Act is provided to clarify that the ITC in respect of such goods or services or both would be eligible where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.
It is clear that Canteen Contractor is providing ‘Restaurant Service’ to the Applicant which is chargeable to GST @ 5% rate in terms of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, without availment of ITC. Under explanation to the aforesaid entry, it has been clarified that the concessional rate is mandatory rate and availing the normal rate of tax will not apply and that is the reason the amended Notification No. 20/2019-C.T. (Rate) dated 30.09.2019 has been issued exercising power under Section 16 (1) and Section 148 of the CGST Act, 2017, so as to come out of the provisions permitting availment of ITC. In other words, a Taxpayer providing Restaurant Service has no option of taking ITC by providing Restaurant Service at normal GST rate - Accordingly, the canteen service provider is providing the restaurant service to the employees of the Applicant on behalf the said Applicant and paying Tax at specified rate of 5% in terms of the Notification ibid.
Whether the services by the way of non-air-conditioned bus transportation facility provided by the Transport Service Providers would be construed as ‘supply of service’ by the Applicant to its employees under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017? - HELD THAT:- The perquisites in terms of a contractual agreement between the employer and employee are to be kept outside the ambit of GST. From the appointment letter given to the employees, it is seen that the Company promises ‘other benefits’ as per the company policy. As per the HR policy of the company, company offers free transportation facility to its employees. Thus, free bus transportation facility is given to the employees as part of their contractual agreement.
In respect of canteen services, supply of transportation services to the employees would in normal course constitute to be the supply of services u/s 7 (1) of GST Act 2017. However, it is now clarified by the CBIC circular No. 172/04/2022/GST dated 6th July 2022 that perquisite provided to the employees in view of the Contractual Agreement would not be subjected to GST. It is clarified that such perquisite are in lieu of the services provided by the employees to the employer in the course of or in relation to his employment, and should not be subjected to GST.
As the supply of perquisite by the employer to the employee would not have respite from above two aspects mentioned at Sr.No.1 and 2 above as the said supply is neither exempted nor a Non-GST supply. Hence, it would be appropriate to interpret that the perquisite given to the employees in view of the contractual agreement are in lieu of services given by the employee to the employer and would not be subjected to GST by deeming it to be part of Schedule III as a corollary to entry at Sr.No.1 of Schedule III for cohesive interpretation. In view of this, supply of free transportation service provided by the employer to the employee in view of contractual agreement with them will not be ‘supply’ u/s 7 of MGST ACT.
Whether ITC is available to the Applicant on GST charged by the Transport Service Providers for providing the non-air-conditioned bus transportation services? - HELD THAT:- Section 17 (5) (g) of CGST/MGST Act 2017 states that input tax credit shall not be available in respect of goods or services or both used for personal consumption. Provision of service of transportation of employees from residence to factory or office premises has been used for personal consumption or comfort of employees. The applicant is not under any statutory obligation to provide these services to his employees and the services provided comes under category of personal consumption which makes the applicant ineligible to avail input tax credit on the invoices issued to him by the transporter for transportation of employees as per Section 17 (5) (g) of CGST/MGST Act 2017.
Conclusion - ia) The deduction of a nominal amount by the Applicant from the salary of the Employees who are availing the facility of food provided in the factory premises would be considered as a “Supply of Service” by the Applicant under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017. ib) Nominal amounts deducted are not in the nature of perquisite provided to the employees and liable for levy of GST. ic) ITC is not available to the Applicant on GST charged by the Canteen Service Providers for providing the catering services. iia) The services by the way of non-air-conditioned bus transportation facility provided by the Transport Service Providers would not be construed as ‘supply of service’ by the Applicant to its employees under the provisions of Section 7 of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017. iib) ITC is not available to the Applicant on GST charged by the Transport Service Providers for providing the non-air-conditioned bus transportation services.
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2025 (4) TMI 1048
Classification of goods - HSN code - GST rate - Geo Membrance laminated HDPE woven polymer lining - whether the product manufactured by the applicant i.e. ‘Geomembrane for Water Proof Lining-Type-II as per IS:153151:2015’ is classifiable under Chapter 39 or Chapter 59 of the GST Tariff? - HELD THAT:- From the process of manufacture, as described by the applicant, it is apparent that after the process of extrusion and slitting, HDPE Tapes/ Strips of width less than 5mm are taken to circular looms and are woven into HDPE Woven Fabrics. The said High Density UV Stabilized Woven Fabrics are manufactured with specific weaving pattern through circular ring on horizontal and vertical direction to impact the essential property of Geomembrane fabrics i.e. impermeable to water for the specific end use of water retention. The said HDPE Tapes/Strips of width less than 5mm in width are appropriately classifiable under Heading 5404. Further Section Note 1(g) of Section XI excludes only strips of plastic where the width is exceeding 5mm.
The strips of plastic, of less than 5 mm width would be appropriately classifiable under Tariff Heading 5404 and the fabric woven out of the said strips would be appropriately classifiable under Tariff Heading 5407 20. Such fabrics would also be considered as a textile fabric. In this regard, we find that the Apex Court in the case of M/s. Porritts and Spencer (Asia) Limited, [1978 (9) TMI 72 - SUPREME COURT] has held that when yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other material, is woven into fabric, what comes out is a textile. It has been further held in the said case that whatever be the mode of weaving employed, the woven fabric would be “textile”. It is further held that the use to which it may be put is also immaterial and does not bear on its character as a textile.
In terms of Section Note 1 (h) of Section XI, even woven fabrics which are laminated with plastics or articles thereof of Chapter 39 are excluded from the said Section. Section XI covers Chapters 50 to Chapter 63 of the Customs Tariff. Therefore, even if during the course of manufacture of the said product, any woven fabric emerges and even if the said woven fabric is classified under Chapter 57 as a textile fabric, if the said goods are laminated with plastic and can be classified under chapter 39, the same will go out of the purview of Section XI and consequently out of the purview of Chapter 50 to Chapter 63.
The product manufactured by the applicant i.e. Geo Membrane for Water Proof Lining - Type-II as per IS 153151:2015 is an article of textile, laminated with plastic, of a kind used for technical purposes. This product is and can be classified under Tariff Item 59111000. When a classification based on the specification and use of any product is possible, it would not be proper to classify it in the general and residuary entry of ‘Other articles of plastic and articles of other materials of Heading 3901 to 3914’. It is also for this very reason that the provisions of Section Note 1(h) of Section XI would also not be applicable to the goods in the instant case as the goods in the instant case i.e. geo membrane does not find mention under any of the tariff items under Chapter 39 and when they can be correctly classified under Tariff Item 59111000, it would not be proper to consign it to the orphanage of a residuary entry as other articles of plastic under Chapter 3926.
Conclusion - i) Geo Membrance for Water Proof Lining is classifiable under Tariff item 591110. ii) Geo Membrance laminated HDPE woven polymer lining attract @ 12% GST.
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2025 (4) TMI 1047
Taxable supply of services - assignment of Lease Hold Rights of land by the Applicant in terms of the Asset Purchase Agreement (APA) - transfer of building by way of sale by the Applicant to HMI in terms of the APA - sale of items of plant and machinery, in terms of the APA.
Whether assignment of Lease Hold Rights of land by the Applicant in terms of the Asset Purchase Agreement qualifies as taxable supply of services under GST Laws? If yes, whether GST would apply on the price agreed for transfer of Lease Hold Rights under the Asset Purchase Agreement? - HELD THAT:- In the instant case, the applicant agrees to transfer the lease rights with the approval of MIDC. After the approval from MIDC, the lease rights get assigned to HMI. The leasehold rights in land are deemed to be services under paragraph 2(a) of Schedule II of CGST Act, 2017. Hence agreeing to assign such services which were being received by the Applicant from MIDC to the assignee i.e. HMI is a service. Service of leasing of land is provided by the MIDC. Now, original recipient of this service i.e. applicant has agreed to assign those service to HMI - This agreement results in transfer of leasehold rights to HMI after the approval of MIDC. As the resultant activity of leasehold rights of land getting transferred is a deemed service under para 2 of Schedule 2, the Act of pecasioning such resultant services squarely falls into the definition of Services’ 2 (102) of the GST Act.
The activity of assignment is in the nature of agreeing to transfer one’s leasehold rights. It is in the nature of compensation for agreeing to do the transfer of the applicant’s rights in favour of the assignee. It is a service classifiable under “Other miscellaneous service” (SAC 999792) and taxable at 18% under SI No. 35 of Notification No. 11/2017-CT (Rate) dated 28/06/2017, as amended from time to time.
Whether the transfer by way of sale of building by the Applicant to HMI in terms of the Asset Purchase Agreement qualifies as ‘neither a supply of goods nor a supply of services’ under Section 7 read with entry 5 of Schedule III of the GST Laws? - HELD THAT:- The Lease Deed dated 03.07.2010 clearly stipulates that the ‘lease’ would be of 300 acres of plot of land together with the buildings and erections now or at any time hereafter and being thereon. The lease also includes any buildings and structures currently present or built in the future, along with all associated rights and access, except for any underground mines and minerals, which remain with the Lessor. As the lease’ includes the lease of buildings, currently present or built in the future, the lessee holds only the leasehold rights towards the buildings and not the ownership rights of buildings built on leased land with the approval of MIDC - lease is transfer of the right to use property for a specific period of time in exchange for rent or consideration as agreed upon.
The Hon’ble Supreme Court in the case of Raghunath & Ors Vs. Radha Mohan & Ors [2020 (10) TMI 1362 - SUPREME COURT] held that a conveyance deed is an important document to prove the transfer of ownership from seller to the buyer. However, the conveyance deed alone is not conclusive proof of ownership. It must be supported by other evidence such as proof of sellers title to the property, evidence of possession, absence of encumbrances or competing claims etc. Further possession itself is a relevant factor but not conclusive. Possession must be supported by a valid title to be legally recognized. A clear and marketable title is essential to proving ownership.
The transfer/ assignment of leasehold rights are liable to tax under GST Act, being the service provided in terms of agreeing to assign leasehold rights in the building. As building is part of the Lease, there cannot be sale of the building as the applicant does not hold ownership rights in the buildings constructed on the plot. Thus, though the consideration for transfer of building has been shown separately, it is integral part of the total consideration received for agreeing to assign the leasehold rights in the ‘Lease’ and is liable to tax under GST Act under “Other miscellaneous service” (SAC 999792) and taxable at 18% under SI No.35 of Notification No. 11/2017-CT (Rate) dated 28/06/2017, as amended from time to time.
Whether the sale of items of plant and machinery in terms of the Asset Purchase Agreement qualifies as taxable supply of individual goods under GST Laws? - If yes, whether GST would apply on the price agreed between the parties for the sale of each such items under the Asset Purchase Agreement, as per classification and rate applicable to each item? - HELD THAT:- In the instant case, the Applicant has sold to HMI the plant and 33 machinery, which are undisputedly goods. These goods were capitalised in GMI books. Thus, the plant and machinery, to be sold in the present case qualify as a supply of goods in the present case and are liable to tax under GST Act - If the applicant has taken input tax credit on the said capital goods, the value of the goods shall be determined in terms of Section 18 (6) of the CGST Act, 2017.
Conclusion - i) The assignment of Lease Hold Rights of land by the Applicant in terms of the Asset Purchase Agreement qualifies as taxable supply of services under GST Laws. GST would apply on the price agreed for transfer of Lease Hold Rights under the Asset Purchase Agreement. The activity of assignment is in the nature of agreeing to do the transfer of the applicant’s leasehold rights in favour of the assignee. It is a service classifiable under “Other miscellaneous service” (SAC 999792) and taxable at 18% under SI No.35 of Notification No. 11/2017-CT (Rate) dated 28/06/2017, as amended from time to time. ii) The transfer by way of sale of building by the Applicant to HMI in terms of the Asset Purchase Agreement does not qualify as ‘neither a supply of goods nor a supply of services’ under Section 7 read with entry 5 of Schedule III of the GST Laws. Transfer of building does not constitute to be ‘sale of building’. Transfer is in the nature assignment of leasehold rights in the building. The activity of assignment is in the nature of agreeing to do the transfer of the applicant’s leasehold rights in favour of the assignee. It is a service classifiable under “Other miscellaneous service” (SAC 999792) and taxable at 18% under SI.No. 35 of Notification No. 11/2017-CT (Rate) dated 28/06/2017, as amended from time to time. iii) The sale of items of plant and machinery in terms of the Asset Purchase Agreement qualifies as taxable supply of individual goods under GST Laws. GST would apply on the price agreed between the parties for the sale of each such items under the Asset Purchase Agreement or the amount of input tax credit availed, if any, on such capital goods reduced by such percentage points as may be prescribed, which ever is higher, as provided under Section 18 (6) of the CGST Act, as per classification and rate applicable to each item.
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2025 (4) TMI 1046
Inquiry conducted in response to the Tax Evasion Petition [TEP] filed by petitioner - Income Tax Department obligation to disclose the full investigation report conducted pursuant to a Tax Evasion Petition - entitlement to receive the investigation report despite confidentiality provisions - income reflected in the petitioner's ITR which is denied to be hers but of spouse - HELD THAT:- First things first, there is nothing confidential about the report dated 29.08.2024, a bare perusal of which would show that, pursuant to directions of this Court, notices under Section 133 (6) of the Income Tax Act, 1961 were issued to various banks seeking the bank statements of the petitioner as well as her husband, including the companies in which he happens to be a Director/Shareholder.
Summons under Section 131 (1A) of the Income Tax Act, 1961 were also issued to her husband,for furnishing of relevant details and for his personal deposition. In response to the notices, both petitioner and her husband appeared before the concerned authority. The findings are to the effect that no case of tax evasion on the part of Mr. Sanjay Srivastava was found upon examining the ITRs for the assessment years 2018 to 2022-23.
Insofar as the petitioner is concerned, although the ITRs filed up to the assessment year 2021-22 mentioned the contact details and email address of her husband, it was found that the same were linked with the Aadhar Card of the petitioner, and the OTP [One Time Password] for re-verification of the ITRs had been sent to the personal mobile number of the petitioner. It is also noted in the report dated 29.08.2024 that the ITRs of the petitioner up to the assessment year 2021-22 had been filed by her Chartered Accountant, Mr. Ajay Aggarwal, presumably based on the information supplied by her as well as her husband. No ITR for the assessment year 2022-23 has been filed by the petitioner. As regards the assessment year 2023-24, the contact details of the petitioner, namely her mobile number and email address, are mentioned in the ITR.
The aforesaid facts do not constitute any matters that could be said to be confidential or disclosure of which would prejudice the respondent/Department of Income Tax in any manner.
Accordingly, CM APPL is hereby dismissed. The respondent/Department of Income Tax is directed to supply a copy of the report dated 29.08.2024 to the petitioner within two weeks from today, failing which, the petitioner shall be at liberty to avail a certified copy of the same from this Court.
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2025 (4) TMI 1045
Delay of 161 days in filing the appeal before the ITAT - appellant has assigned the reason that the CIT (Appeals) had dismissed the appeal vide its order dated 21.03.2022 and uploaded the order on ITBA portal about which the appellant was not aware and he came to know about this development while filing Tax Audit Report for assessment year 2022-23 and, therefore, he could not prefer an appeal right in time
HELD THAT:- The Supreme Court vide its Order in the matter of Vidya Shankar Jaiswal [2025 (1) TMI 1526 - SC ORDER] while setting aside the order of this Court rejecting the appeal on the ground of delay, has held that the High Court ought to have adopted justice oriented and liberal approach by condoning the delay.
In view of above and also for the reason shown by the assessee/appellant herein coupled with the fact that though the application of the appellant was supported by the affidavit, but the Revenue did not file any counter-affidavit controverting the reason assigned by the assessee and, as such, the delay of 161 days occurred in filing the appeal remained uncontroverted and also for the reason that the assessee was not aware of order passed by the CIT(Appeals) as it was only uploaded on ITBA portal, therefore, the sufficient cause has been show by the assessee/appellant for the delay of 161 days occurred in filing the appeal. Accordingly, the delay of 161 days occurred in filing the appeal deserves to be and is hereby condoned.
The matter is remitted back to the ITAT for deciding the appeal on merits.
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2025 (4) TMI 1044
Addition u/s 56(2)(ix) - assessee has forfeited the said amount received in advance against agreement to sale of land by making various incorrect & irrelevant observations - HELD THAT:- When the assessee filed the additional evidence, considering the specific prayer of the assessee same was forwarded for AO’s comments and without considering the merits of the dispute and without verifying the veracity of the documents the documents signed by third party cannot be directly held to be colorable devise. Therefore, the bench is of the view that lis between the parties has to be decided on merits, providing opportunity of being heard to the assessee.
We deem it fit to remand the matter to the file of the AO who will consider the factual aspect of the matter as raised by the assessee after due verification of the facts and charge the correct income in hands of the assessee after affording due opportunity to the assessee and dealing with the evidence placed on record. The assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the AO. Appeal filed by the assessee is disposed off for statistical purposes.
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2025 (4) TMI 1043
Denial of registration u/s 12AB - CIT(E) observed that the objects of the Trust are for the benefit of the residents of the Dwarika Green Society and its member and are not for the benefit of the public at large - HELD THAT:- In the present case, CIT [E] has considered the provisions of sec 13(1)(b) of the Act, which is applicable only in a case of Charitable Trust or Institution created or established after commencement of this Act and only for the benefit of the residents of the Dwarika Green Society and its members and thereby denied the registration, which in our considered view is well within the provision of amended law and therefore the order denying registration passed by Ld CIT[E] does not require any interference.
Case law relied by assessee namely Bayath Kutuchhi Dasha Oswal Jain Mahajan Trust [2016 (9) TMI 8 - GUJARAT HIGH COURT] held that the Trust had large number of other objects for the benefit of General Public apart from objects for benefit of Religious Community, therefore held that the Tribunal was correct in allowing Registration to the Trust
Thus the ratio of the above judgment will not be applicable to the facts of the assessee case, since the objects of the Assessee Trust which is meant only for the residents and members of the Society not for Public at Large. Thus we don’t find any infirmity in the order passed by Ld. CIT(E) and the same does not require any interference. Decided against assessee.
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2025 (4) TMI 1042
Unexplained investment in a property transaction which was not reflected in the books of accounts - reliance on loose unsigned hand written paper found at the premises of third party - HELD THAT:-The loose sheet has been recovered from the searched person i.e. Gurvinder Singh Duggal who is a third party, which bears no signature of either the Assessee or searched person and the same is not in the hand writing of either searched person or the Assessee.
Further, third party has specifically denied receiving any cash payment.
In the absence of any corroborative material brought on record during the assessment proceedings, the AO has committed error in making the addition based on the said loose sheet. Therefore, CIT(A) has erred in upholding the addition made by the A.O - Thus, addition made u/s 69B which has been sustained by the Ld. CIT(A) is hereby deleted. Appeal of the Assessee is allowed.
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2025 (4) TMI 1041
Issuance of a Standby Letter of Credit (SBLC) by the assessee in favor of its Associated Enterprise (AE) constitutes an international transaction or not? - HELD THAT:- We find that the issue has been extensively examined by the Bench on which both of us were in quorum and the Bench has considered the ratio in the case of CIT v. Everest Kento Cylinders Ltd. [2015 (5) TMI 395 - BOMBAY HIGH COURT] and has concluded that there is no difference between bank guarantee and SBLCs as compared to corporate guarantees. Further, we have also concluded that issuance of SBLC in the international transaction can be put to ALP tests. As for completeness, the observations and finding of the Bench in the case of Anand NVH Products Pvt. Ltd. [2025 (1) TMI 1003 - ITAT DELHI]
Thus, we are inclined to hold that the AO/TPO shall consider rate of 0.5% as against 1.3% to ALP for international transaction and accordingly determine the adjustment required to be made. Ground no.2 and its sub-grounds are accordingly decided in favour of the assessee.
Deduction u/s 80G - assessee made a donation to FCS Foundation a trust registered u/s 80G - AO has made the disallowance of cheque of Rs. 55 lakh on an allegation that the receipt issued by the said foundation is not of period ending 31.03.2016 as there was a cutting in the date - HELD THAT:- The assessee has produced the affidavit of the director as additional evidence before the DRP. However, the assessee could not produce any evidence from the recipient as to how this fund was received and acknowledged in the financials of the recipient.
At the same time, the AO has also not made any effort to enquire into the alleged fact of the receipt being dated 31.03.2016, thus we consider it appropriate to restore the issue to the file of the AO to give liberty for enquiry afresh with regard to the correctness of the claim of the assessee with respect to the disputed receipt number 400 to the extent of the date on which it was received by the trust namely FCS Foundation and the year in which it was accounted for. AO will allow the deduction u/s 80G if it was satisfactorily demonstrated by the assessee before the AO that the trust namely FCS Foundation has accounted the receipt paid by cheque. Accordingly, the ground allowed with the above observations.
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2025 (4) TMI 1040
Disallowance of late payment of Provident Fund - HELD THAT:- This issue is covered against the assessee by the Hon’ble Supreme Court judgment in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT]
Rectification orders passed u/s 154 reducing the refund claimed by the assessee when the intimation under section 143(1) was not served on the assessee - HELD THAT:- As perused the rectification order dated 08-11-2022 in that there is a column “details of previous order to be rectified” wherein it is mentioned as “143(1) dated 26-07-2022” but it is without DIN number. This makes it very clear since there is no DIN allotted to the 143(1) intimation, the same to be treated as not passed and therefore not served on the assessee.
As per 2nd proviso to Section 143(1) of the Act no intimation under sub-section shall be sent after the expiry of nine months from the end of the financial year in which the return was filed. Further as per 1st proviso to Section 143(1) of the Act, the intimation shall be sent to the assessee declaring the loss assessed/adjusted but no tax, interest or fee payable or no refund due to the assessee. Since the intimation made u/s. 143(1) of the Act was not served on the assessee, therefore, there cannot be adjustment or rectification u/s.154 of the Act, consequently the additions made by CPC are liable to be deleted and the refund claimed by the assessee is to be allowed.
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