TMI Tax Updates - e-Newsletter
January 11, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. BAIL FOR A FOREIGNER

   By: DR.MARIAPPAN GOVINDARAJAN

2. Transfer and Transmission of Shares in the Case of Joint Shareholders

   By: Ishita Ramani

3. Section 68: Cash Credits, Tax Compliance, and Case Studies

   By: Poornima Gupta

4. In-flight Food and Beverages supply to airlines classifies as ‘Outdoor Catering Services’

   By: Bimal jain

5. Assignment of GIDC rights: A comic episode

   By: pooja jajwni

News

1. Snag in system: Govt extends monthly GST return, payment deadline

2. GSTN seeks extension of GSTR-1 filing deadline as technical snag hits system

3. SC stays GST notices worth over Rs 1 lakh crore against online gaming firms for tax fraud

4. Congress spreading propaganda against GST: BJP

5. 'Complicated' GST was brought to loot poor and middle class: Gujarat Cong chief

6. Modi govt has made GST a means of 'looting' poor, middle class: Kharge

7. GST collection increased 170% in 5 years, people hardly saw its benefits: Congress leader Khera

8. Congress' Gaurav Gogoi seeks revamp of GST rates in Union Budget

9. Union Minister of State for Finance Shri Pankaj Chaudhary presides over the Passing Out Parade of 74th Batch of Indian Revenue Service (Customs and Indirect Taxes) in Palasamudram, today

10. Union Government releases tax devolution of ₹1,73,030 crore to State Governments to accelerate capital spending and finance their development and welfare-related expenditures

11. UK Treasury chief heading to China to revive suspended economic and financial talks

12. Centre releases Rs 1.73 lakh cr towards tax devolution to states

13. IDFC FIRST Bank Goes Live on Direct Tax Collection System of CBDT

14. ED raids RJD MLA, others in Bihar co-op bank 'fraud' PMLA case

15. Union Minister of Commerce & Industry Shri Piyush Goyal launches 8th edition of National Programme for Organic Production

16. Ministry of Commerce and Industry revises trade data after reconciliation

17. UN predicts world economic growth at subdued 2.8% in 2025

18. Govt forms panel to create mechanism for consistent data publication amid gold import data error

19. ED arrests Maha co-op society promoter in fraud linked PMLA case

20. Iran holds military drills as it faces rising economic pressures, Trump's return

21. Want to strengthen political, economic relations with India: Afghanistan

22. Why is Walmik Karad getting preferential treatment, asks Sule; seeks PMLA case against him

Notifications

SEBI

1. SEBI/LAD-NRO/GN/2025/224 - dated 9-1-2025 - SEBI

Renewal of recognition to the AMC Repo Clearing Limited

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/RRD_PoD_TPD/P/CIR/2025/05 - dated 10-1-2025

Procedure for seeking waiver or reduction of interest in respect of recovery proceedings initiated for failure to pay penalty.

2. SEBI/HO/OIAE/OIAE_IAD-3/P/ON/2025/01650 - dated 10-1-2025

Revise and Revamp Nomination Facilities in the Indian Securities Market

Highlights / Catch Notes

GST

• HC accepts apology for improper arrest of businessman in Rs. 9.54 crore GST fraud case.

  Case-Laws - HC : The HC accepted the apology tendered by GST officers for the manner of arrest of Mr. Mishal J. Shah, Karta of the Petitioner HUF and Director of M/s. JMC Metals Private Limited, in relation to alleged fraudulent availment of input tax credit of approximately Rs. 9.54 crores by the company. The petition was disposed of after the officers' apology was accepted.
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• Sec 74(1) allows single notice for tax dues across periods.

  Case-Laws - HC : The HC held that u/s 74(1), the authority can issue a single notice calling upon the assessee to pay tax not paid, short paid, erroneously refunded, or where input tax credit was wrongly availed due to fraud, misstatement or suppression of facts, for any period, provided the notice is given at least 6 months prior to the time limit specified in Section 74(10). The petitioner's argument that separate notices should have been issued for each financial year was rejected. The petition challenging the show cause notice was dismissed, allowing the petitioner to raise all arguments before the concerned authority.
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• Dismissed appeal on GST tax determination; exhaust statutory remedies first.

  Case-Laws - HC : HC dismissed appeal. Refusal justified to entertain writ petitions due to alternative statutory remedy u/s 107 of Tamil Nadu GST Act against order determining tax payable by proper officer u/s 74. Constitutional remedy under Article 226 available but HC rightly imposed self-restriction, directing appellant to exhaust statutory appeal first as matter of judicial discipline despite onerous condition of pre-deposit.
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• Unlawful seizure of cash under GST Act: HC quashes order, directs return.

  Case-Laws - HC : HC held that currency is not "goods" under the Central Goods and Services Tax Act, 2017. Seizure of Rs. 23,50,000/- cash from petitioner was unlawful u/s 67. HC quashed seizure order and directed respondents to return seized amount along with applicable interest to petitioner expeditiously. Petition allowed.
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• Excess stock not offense u/s 130 of UPGST Act: HC.

  Case-Laws - HC : Excess stock found during survey cannot lead to proceedings u/s 130 of UPGST Act against registered dealer. As per HC, in cases of excess stock, tax determination proceedings u/ss 73 or 74 of UPGST Act are applicable instead of Section 130. Relying on precedent, HC quashed impugned orders initiating action u/s 130 for excess stock and allowed petition.
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• Notice Uploaded Solely on Portal Without Attempting Other Modes is Invalid Service Under Sec 169 TNGST Act.

  Case-Laws - HC : The HC held that service of notice by uploading on web portal alone without resorting to other prescribed modes u/s 169 of Tamil Nadu GST Act 2017 is not valid compliance. Section 169 mandates service by registered post/email, and only on failure can notice be uploaded on portal. Uploading notice solely on portal without attempting other modes is insufficient. The impugned assessment orders were set aside by the HC for non-compliance with mandatory notice requirements.
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• Leasehold Rights Transfer Constitutes Sale of Immovable Property, Not Service.

  Case-Laws - HC : The HC held that the assignment/sale/transfer of leasehold rights by the lessee to a third party for a lump-sum consideration is a transfer of "immovable property" and not a supply of service under the GST Act. The leasehold rights encompass incorporeal ownership rights over the land and building, constituting "immovable property". Consequently, such transactions are not subject to GST levy u/s 9(1) of the GST Act.
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• Surrendering leasehold rights sans construction bars ITC on GST paid.

  Case-Laws - AAAR : ITC of GST paid on services for surrendering leasehold rights not eligible when construction activity not undertaken on leasehold land. SC in Safari Retreats laid down functionality test - if building qualifies as plant, ITC available for renting/leasing, else not available if for recipient's own use. Appellant did not construct on leasehold land acquired from GACL despite stating 99.85% utilization for plant/machinery. GST paid on surrendering leasehold rights ineligible for ITC. Appeal dismissed by AAAR.
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Income Tax

• TDS deposited late for property purchase over Rs. 50L despite voluntary deduction, penalty upheld.

  Case-Laws - AT : The assessee paid consideration over Rs. 50 lakh for purchase of property whose stamp duty valuation exceeded Rs. 50 lakh. Though TDS was deducted voluntarily, it was deposited belatedly along with Form 26QB. CIT(A) rejected assessee's claim of agricultural land exemption u/s 194IA(2). ITAT upheld levy of penalty u/s 234E for late filing of TDS return, as delayed deposit denied TDS credit to deductee, despite voluntary deduction. Assessee's appeal was dismissed.
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• Deceased Assessee's Tax Notice Invalid, Legal Heir Notice Mandatory.

  Case-Laws - HC : Impugned notice u/s 148A(b) of the Income Tax Act quashed. HC held that issuing notice u/s 148 to a deceased assessee instead of legal heir u/s 159(2)(b) is invalid and a condition precedent for reopening assessment. Section 159 applies when proceedings initiated during assessee's lifetime, not when assessee died before notice. Relying on Sumit Balkrishna Gupta and Dharamraj, HC ruled Section 292B also inapplicable in such cases. Writ petition allowed.
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• Cash Deposit Declared as Income Can't Be Taxed Again u/s 69A.

  Case-Laws - AT : Assessee declared cash deposit of Rs. 42 lacs during demonetization period as income. AO made another addition u/s 69A for same amount, treating it as unexplained money and levied tax u/s 115BBE, resulting in double taxation of same income. ITAT held that AO's action of making addition over and above income declared by assessee is wrong and against provisions of Act. Since assessee had already offered cash deposit as income, no separate addition could be made. Appeal allowed.
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• Penalty proceedings against dissolved company remanded to AO after NCLT approved resolution plan.

  Case-Laws - AT : ITAT partly allowed assessee's appeals and remanded matter to AO to take necessary steps u/s 156A regarding penalty u/s 271(1)(c) against dissolved company. NCLT had approved resolution plan and granted moratorium under IBC. As per Section 14, after moratorium, pending proceedings against corporate debtor are prohibited. Relying on Supreme Court's decision, ITAT held once resolution plan is approved, claims get frozen and are binding on all stakeholders including government authorities. Since resolution plan was yet to be finalized, matter was remanded to AO.
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• Reassessment Jurisdiction Lost After Stated Reason Addressed, Further Additions Unlawful.

  Case-Laws - AT : The ITAT held that once the AO found the issue of cash deposit into the assessee's bank account, for which reassessment proceedings were initiated u/s 147, was satisfactorily explained, he lost jurisdiction to make any other additions or disallowances. As the reason for reopening the assessment did not subsist, the AO was required to pass a nil order and any further additions made were illegal. Consequently, the other disallowances u/ss 56 and 80P were held unlawful, and the assessee's appeal was allowed.
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• High Court denies late amendment to appeal memo, allows 100% computation for disputed tax Hashtags.

  Case-Laws - HC : HC rejected petitioner's attempt to belatedly amend appeal memo to include addition u/s 68 for benefits under DTVSV Act as petitioner had conceded and paid tax on such addition without demur. However, HC allowed petitioner's contention that computation should be at 100% of disputed tax instead of 125% as it was a non-search case, directing respondents to issue revised Form-3 within 30 days along with consequential benefits.
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• ITAT: AO exceeded jurisdiction, deposits wrongly treated as unsecured loans.

  Case-Laws - AT : The ITAT held that the Assessing Officer (AO) exceeded jurisdiction by making an addition u/s 68 for unexplained unsecured loans by treating security deposits from sub/petty contractors as unsecured loans. The case was selected for limited scrutiny, and the AO was required to obtain permission from the PCIT before investigating matters outside the selected parameters. The security deposits were against executed projects, evidenced by TDS deductions on payments to sub-contractors. The unsecured loans in the balance sheet pertained to different parties already examined by the AO. Therefore, the ITAT decided in favor of the assessee and held the addition unsustainable.
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• Income Tax Penalty Quashed Due to Reasonable Cause, Compliance Efforts.

  Case-Laws - AT : AO proceeded with best judgment assessment u/s 144 making addition u/s 68 for unexplained cash deposit. CIT(A) upheld penalty u/s 272A(1)(d) for non-compliance with notices u/s 142(1), 143(2). ITAT held non-compliance wasn't willful, but due to negligence of authorized representative beyond assessee's control. Show-cause notice by AO u/s 274 r.w.s. 272A(1)(d) lacked specificity, erroneously invoking inapplicable provision. Assessee demonstrated reasonable cause u/s 273B through affidavits explaining default wasn't mala fide. Initial compliance showed intention to cooperate. Penalty unsustainable. Decided in assessee's favor.
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• Deduction u/s 54B disallowed as land not used for agriculture in preceding 2 years.

  Case-Laws - AT : The ITAT dismissed the assessee's appeal. It upheld the revisional order passed by the PCIT u/s 263, setting aside the original assessment order which had erroneously allowed deduction u/s 54B. The ITAT observed that the AO failed to inquire whether the capital asset was used for agricultural purposes for two years immediately preceding the transfer, a prerequisite for claiming deduction u/s 54B. The PCIT had obtained a report substantiating that no agricultural activities were carried out during the relevant period on the properties sold and purchased by the assessee. Relying on the precedent in Ramanbhai Bholidas Patel, the ITAT held that s.54B deduction is not applicable if the land was not used for agricultural purposes in the two years preceding the transfer date.
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• ITAT Rejects 153A Additions, Allows Partner's Remuneration Expense Following SC Precedent.

  Case-Laws - AT : ITAT held that additions made u/s 153A for AYs 2014-15 to 2018-19 are unsustainable in absence of incriminating material found during search, following Supreme Court's ruling in Abhisar Buildwell (P.) Ltd. case. Remuneration paid to partner is allowable as business expenditure u/s 37, as partner's involvement in accounts maintenance is proved, despite not attending office daily. Remuneration is taxable in partner's hands u/s 28(v), which is undisputed. Assessee's appeal allowed on both issues.
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Customs

• Royalty, advertisement cost excluded from assessable value in related party imports.

  Case-Laws - SC : Appellant challenged inclusion of royalty and cost of advertisement incurred in India in assessable value of imported goods u/rs 10(1)(c) and 10(1)(e) of Customs Valuation Rules 2007 involving related party transaction. SC concurred with CESTAT's view that appellant's obligation under agreement to be responsible for sales, distribution, and expenditure in consultation with seller does not attract Rule 10(1)(e). Appeal dismissed.
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• Appellant's Motorbike Cleared of Customs Duty, Confiscation; Redemption Fine & Penalties Waived.

  Case-Laws - AT : Appellant not the importer of motorbike, hence not liable to pay Customs Duty u/s 28 of Customs Act, 1962. Confiscation of motorbike set aside due to lack of finding on grounds for confiscation. Redemption fine u/s 125 not payable as confiscation unsustainable. Title of goods reverts to appellant without payment of duty or charges. Penalty u/ss 112(a) and 112(b) set aside as consequential to confiscation being set aside. Appellant entitled to refund of deposited amount with interest. Appeal before CESTAT allowed.
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Corporate Law

• Clarification Applications by Transferees of Shares Maintainable Despite Prior Sale.

  Case-Laws - HC : The HC held that the appeal filed by appellant No.1 CRBCML, through appellant No.2 Mr. C.R. Bhansali, is not maintainable in law u/s 483 read with Sections 521 & 531-A of the Companies Act, 1956. The objections raised by them to the clarification applications preferred by the applicants/transferees in the winding-up petition cannot be entertained. Since the sale of shares took place prior to 09.04.1997, although the company remained its de jure owner, the de facto legal right or title passed on to the applicants in the ordinary course of business and was saved by Section 562(2) of the Act. The appeal is dismissed.
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IBC

• IRP removed for breach of duties, non-disclosure in Sequel Buildcon insolvency case.

  Case-Laws - AT : The NCLAT held that there was a breach of fiduciary duties and conflict of interest by the Interim Resolution Professional (IRP) in the appointment of consultants during the Corporate Insolvency Resolution Process of Sequel Buildcon Private Limited. The IRP failed to disclose relevant information regarding credentials and manner of appointment of consultants to the applicant, a key financier. The IRP's non-disclosure of past associations with the consultants violated the Code of Conduct under the Insolvency and Bankruptcy Code. To safeguard the interests of stakeholders, especially homebuyers, the NCLAT directed the immediate removal of the IRP and the consultants appointed by them.
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• Tripura HC quashes blacklisting of company after I&B Code resolution plan approval.

  Case-Laws - HC : The HC quashed the order blacklisting the petitioner company for 3 years and debarring it from participating in future tenders by the Government of Tripura. Approving the resolution plan under the I&B Code aims to revive the corporate debtor as a going concern with a clean slate. Blacklisting post-resolution would defeat this objective and be disproportionate after forfeiture of the performance bank guarantee. The plea against blacklisting was not entertained by the Arbitral Tribunal. Denying judicial review would amount to denying a legal remedy. The order of blacklisting was quashed to uphold the I&B Code's aim of corporate revival.
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• NCLAT upholds dismissal of CIRP initiation against pre-existing disputes.

  Case-Laws - AT : NCLAT dismissed appeal against order rejecting Section 9 application by Operational Creditor to initiate Corporate Insolvency Resolution Process. Pre-existing dispute existed between parties evidenced by arbitration notice before demand notice u/s 8, constituting ground for dismissal. No novation of original contract. Appeal dismissed.
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Indian Laws

• Conviction u/s 138 upheld; accused failed to rebut statutory presumptions.

  Case-Laws - HC : Accused's conviction u/s 138 of Negotiable Instruments Act upheld. Once execution of cheque admitted, presumptions u/ss 118 and 139 raised against accused. Accused failed to rebut presumptions or establish probable defence showing no debt/liability existed on preponderance of probabilities. HC found no infirmity in trial court's findings upholding conviction. Petition dismissed.
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PMLA

• Borrower's malicious criminal proceedings against lender quashed by HC.

  Case-Laws - HC : Borrower initiated criminal proceedings against lender Indiabulls by filing complaint u/s 156(3) CrPC alleging money laundering, despite existence of arbitration clause in loan agreement. HC held initiation of criminal proceedings by suppressing material facts like arbitration clause, pending arbitration, was malicious, lacking bona fides, to avoid loan repayment and secure leverage in arbitration. HC quashed FIRs and ECIR, directed disputes be resolved through arbitration. Petition allowed.
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VAT

• Odisha HC upholds rusk classification, dismisses bread manufacturer's challenge.

  Case-Laws - HC : The HC upheld the Tribunal's classification of the product as "Rusk" under Entry 77B instead of "Bread" under Entry 34, finding it to be hardened/toasted bread. The HC distinguished the Kesharwani case as inapplicable since the Odisha VAT Act has separate entries for bread and rusk. It rejected the petitioner's reliance on G. Radhakrishna Murthi, holding the product fits the separate "Rusk" entry for hardened bread. The HC dismissed the review petition, upholding the Tribunal's order imposing penalty, finding no substantial question of law.
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Service Tax

• TASMAC liable for service tax on license fees for 1.7.2012-28.3.2013 period.

  Case-Laws - AT : TASMAC liable for service tax on license fees received for period 1.7.2012 to 28.3.2013. Interest u/s 75 payable on delayed payment, but penalties u/ss 77 and 78 not imposable due to interpretative nature of issue. Appeal disposed of by CESTAT.
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• Exporter entitled to refund of pre-GST Service Tax on input services for exported diamonds.

  Case-Laws - AT : Appellant entitled to refund of Service Tax paid on input services used for manufacturing exported cut and polished diamonds prior to GST regime as per Rule 5 of CENVAT Credit Rules 2004 and Notification No. 41/2012-ST. CESTAT held that Section 42 read with Section 174 of CGST Act mandates that Service Tax paid before GST commencement be dealt with under Finance Act 1994 and related rules. Commissioner (Appeals) erred in applying CGST Act instead of existing law. Refund claims for pre-GST taxes to be processed under prior laws, not CGST Act. Appeal allowed.
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• Renting of immovable property, Mandap services taxable, not exempted as Government authority.

  Case-Laws - AT : Appellant is not a Governmental Authority exempted under Notification No. 25/2012-ST. Renting of immovable property and Mandap Keeper services provided by Appellant are taxable. Show cause notice was not vague. Appellant failed to prove community centres were given for religious activities. Appellant is neither a Government nor local authority. Extended period of limitation correctly invoked. Penalties u/s 78 set aside, but upheld u/s 77 for non-registration and non-filing of returns. Appeal allowed in part by CESTAT.
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• Appellant eligible for 12% interest on delayed refund from 3 months after claim filing.

  Case-Laws - AT : The appellant is eligible for interest on delayed refund from 22.02.2008 till the refund payment date, calculated at 12% per annum rate. CESTAT allowed the appeal, directing interest payment within 8 weeks from order communication. The relevant date for interest computation is 3 months from refund claim filing, not refund order date as per SC precedent in Ranbaxy case. Interest rate of 12% is based on Allahabad CESTAT's Parle Agro judgment interpreting Section 11BB.
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Central Excise

• Statutory interest on differential excise duty upheld from goods removal date.

  Case-Laws - AT : The CESTAT held that interest on differential duty is a statutory liability arising from the date of removal of goods, irrespective of when the differential duty is paid. The interest serves as compensation for the delay in payment of the duty due. The appeal was dismissed, upholding the levy of interest on differential duty paid before finalization of provisional assessment u/r 7(4) of Central Excise Rules, 2002.
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Case Laws:

• GST

• 2025 (1) TMI 520
  Provisional attachment and freezing of the Petitioner's bank account - fraudulent availment of ITC - arrest of Karta of the Petitioner HUF - HELD THAT:- In the Affidavits, it is pointed out that Mr. Mishal J. Shah is not only the Karta of the Petitioner HUF but is also a Director of M/s. JMC Metals Private Limited and who, according to the GST Authorities has fraudulently availed of the input tax credit of approximately Rs. 9.54 Crores. Mr. Mishal J. Shah was arrested because he was a Director of M/s. JMC Metals Private Limited and not because of any action to be taken against the Petitioner HUF. Despite this, both the officers, who are present in Court today, have apologized in the manner in which the arrest was conducted. After going through these two Affidavits, the apology is accepted that has been tendered by the two officers and discharge the Show Cause Notice issued to them. Petition disposed off.

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• 2025 (1) TMI 519
  Permissibility of proceedings under Section 130 of the UPGST Act against a registered dealer when excess stock is found during a survey - HELD THAT:- This Court on the various occasions has held that if the excess stock is found, the proceedings under Section 73 or 74 of the UPGST Act will come into play rather than under Section 130 of the UPGST Act read with Rule 122 of the UPGST Rule, 2017. This Court in the case of S/S Dinesh Kumar Pradeep Kumar [ 2024 (8) TMI 71 - ALLAHABAD HIGH COURT] has held ' even if excess stock is found, the proceedings under section 130 of the UPGST Act cannot be initiated.' Conclusion - The proceedings under Section 130 are not applicable for cases of excess stock found during a survey and that proper tax determination procedures must be followed. The impugned orders cannot be sustained in the eyes of law and the same are hereby quashed - Petition allowed.

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• 2025 (1) TMI 518
  Issuance of one SCN for multiple years - petitioner argued that separate notices should have been issued for each financial year within this period - wrongful availment of ITC - HELD THAT:- There is nothing in Section 74 and more particularly 74 (1) which would prohibit the Authority from issuing a notice calling upon the assessee to pay tax that has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised, by reason of fraud, or any wilful misstatement or suppression of facts to evade tax. At least prima facie, a notice under Section 74 (1) can be issued for any period provided said notice is given at least 6 months prior to the time limit specified in sub-section (10) of Section 74 for issuance of the order. In the present case, admittedly there is no issue of limitation as contemplated under Section 74(10). In these circumstances, at least prima facie we are not satisfied that this Writ Petition ought to be entertained and which is challenging the show cause notice. The Petitioner will have to face the show cause notice and can canvass all arguments before the authority concerned, including the issues raised in the present Writ Petition. Petition disposed off.

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• 2025 (1) TMI 517
  Service of notice - compliance of Section 169 of the Tamil Nadu Goods and Services Tax Act 2017 or not - It is the contentions of the petitioners that the respondents in each of the cases had uploaded only the notices/ orders in the web portal and not by any other modes as prescribed under Section 169 of the Act - HELD THAT:- Having perused section 31 of the TNGST Act and rule 52 (1) of the Rules made thereunder, it is not inclined to accede to the submissions of the learned counsel for the petitioner that only after resorting to the service of notice in person, service through registered post was permissible. A reading of rule 52 (1), makes it clear that the set of expressions in the first part of rule 52 (1), viz., may be effected in any of the following ways makes it amply clear that the service of notice on a dealer can be resorted to by any one of the modes specified in rule 52 (1) (a), (b), (c). Only sub-rule 52 (1) (d) specifies that if none of the modes provided under rule 52 (1)(a), (b), (c) is practicable, the alternative mode of affixing notice in some conspicuous place at the last known business or residence can be resorted to. As far as the modes of service specified in rule 52 (1) (a), (b), (c) are concerned, it is for the authorities concerned to resort to anyone of the modes specified therein. Coming to Section 169 (1), it is to be noted that a learned Single Judge of this Court in a judgment in the case of Pandidorai Sethupathi Raja Vs Superintendent of Central Tax, Chennai [ 2022 (12) TMI 1028 - MADRAS HIGH COURT ] had held that it is the obligation of the assessee to visit the portal and therefore, posting of summons and orders through portal is a sufficient compliance of notice on the assessee and therefore, there is no necessity for any alert. The learned single Judge had also compared the explanation of (r) to (u) of Section 144B of the Income Tax Act which had mandated an alert either to the registered e-mail ID of the assessee or by way of SMS to the registered mobile number of the assessee. Conclusion - Section 169 mandates a notice in person or by registered post or to the registered e-mail ID alternatively and on a failure or impracticability of adopting any of the aforesaid modes, then the State can, in addition, make a publication of such notices/ summons/ orders in the portal/ newspaper through the concerned officials. The orders of assessment impugned in these Writ Petitions are set aside. Petition allowed.

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• 2025 (1) TMI 516
  Levy of goods and service tax - assignment of leasehold rights of the plot of land allotted on lease by Gujarat Industrial Development Corporation (GIDC) and building constructed thereon by the lessee or its successor (assignor) to a third party (assignee) on payment of lump-sum consideration considering the same as supply of service under the provisions of Central/State Goods and Service Tax Act, 2017 - whether the transfer/assignment of leasehold rights is a transaction of sale pertaining to immovable property or is supply of goods or supply of services in the course or furtherance of business so as to levy GST as per section 9 (1) of the GST Act at the rate which may be notified by the Government on recommendations of the GST Council? HELD THAT:- Sub-clause(a) of section 14 of the GIDC Act empowers the GIDC to acquire and hold such property, both movable and immovable as may be necessary for the performance of any of its activities and to lease, sell, exchange or otherwise transfer any property held by it on such conditions as may be deemed proper by the Corporation. In exercise of such powers, GIDC enters into lease agreement of 99 years for allotment of land for industrial purpose in the industrial estate developed by it - The ownership of the plot of land allotted by GIDC remains with it and only the right of possession and occupation are transferred by way of leasehold rights in favour of allottee-lessee. Even if the assignment of leasehold rights on the land on charge of one time upfront amount by the GIDC for allotment of plot of land to the industrial unit is covered within the scope of supply of services as per clause 5(a) of the Schedule II read with section 7 (1) of the GST Act, charging of one time upfront amount as premium by the GIDC would attract Nil rate of tax as per the aforesaid notification. Therefore, when the industrial unit is allotted land by the GIDC, no GST is required to be paid under the provisions of GST Act as per entry no. 41 of Notification No. 12/2017. It is pertinent to note that what the petitioner has transferred by way of assignment/sale is leasehold rights which is over and above the actual physical plot of land and building, encompasses incorporeal ownership right in such land and building such as the right to possess, to enjoy the income from, to alienate, or to recover ownership of such right from one who has improperly obtained the title. Therefore, immovable property includes in addition to right of ownership, aggregate of rights that are guaranteed and protected by the further agreement or contract between the owner and the lessee. The place of supply of service may be at the location of the immovable property, however when the lessee-assignor transfers absolute right by way of sale of leasehold rights in favour of the assignee, the same shall be transfer of immovable property as leasehold rights is nothing but benefits arising out of immovable property which according to the definition contained in other statutes would be immovable property . Therefore, the question of supply of services or place of supply of services does not arise in view of the above analysis of the provisions of the GST Act as the term immovable property is not defined under the GST Act - it is clear that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words and entire matter is governed only by the language of the provision. In view of the legislative intention, section 7 of the GST Act which provides for the scope of supply of good or services or both for the purpose of the GST Act includes all forms of supply of goods or services or both by any form such as transfer, sale, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Therefore, considering the settled legal position as held by the Hon ble Supreme Court and other High Courts from time to time, it is true that any lease or letting out of a building including commercial, industrial, residential complex for business either wholly or partly would be supply of service . Therefore, reading the provisions of the Act together and harmoniously to understand the nature of levy and the object and purpose of its imposition, no activity of the nature mentioned in the inclusive provision of section 7 of the GST Act can be left out of the net of tax - when the GIDC allots the plot of land on lease of 99 years and charges premium for such allotment followed by periodical lease rent to be paid, is to be considered as supply of service in relation to land and building read with clause 5(a) of Schedule-II which specifically provides that renting of immovable property shall be treated as supply of services. Thus, the scope of supply of services would not include transfer of leasehold rights as supply of service as it would be transfer of immovable property being a benefit arising out of immovable property consisting of land and building. GIDC had only allotted the plot of land to the lessee who constructed the building and developed the land to run the business or industry for which such plot of land was allotted. Therefore, what is assigned by the lessee/assignor to the assignee for a consideration is not only the land allotted by GIDC on lease but the entire land along with building thereon which was constructed on such land. The entire land and building is therefore, transferred along with leasehold rights and interest in land which is a capital asset in form of an immovable property and the lessee/assignor earned benefits out of land by way of constructing and operating factory building/shed which constitutes a profit a pendre which is also an immovable property and therefore, would not be subject to tax under the GST Act. Conclusion - Assignment by sale and transfer of leasehold rights of the plot of land allotted by GIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/ transfer of benefits arising out of immovable property by the lessee-assignor in favour of third party-assignee who would become lessee of GIDC in place of original allottee-lessee. In such circumstances, provisions of section 7 (1) (a) of the GST Act providing for scope of supply read with clause 5(b) of Schedule II and Clause 5 of Schedule III would not be applicable to such transaction of assignment of leasehold rights of land and building and same would not be subject to levy of GST as provided under section 9 of the GST Act. The impugned show cause notices and orders in original or appeal as the case may be, are hereby quashed and set aside - petition allowed.

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• 2025 (1) TMI 515
  Refusal to entertain the writ petitions, in view of the alternative remedy that is available under Section 107 of the Tamil Nadu Goods and Services Tax Act, 2017 - challenge to order of the State Tax Officer, Divisional Central Investigating Wing 2 by which the Officer passed an order under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 determining the tax payable by the appellant - proper officer to pass the order - HELD THAT:- Section 74 enables the Proper Officer to issue show cause notice to an assessee, if it appears to him or her, that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized by reason of fraud, or any wilful misstatement or any like reason to issue a show cause notice as to why he should not be directed to pay the amount along with interest and penalty and Section 74(9) enables the Proper Officer to determine the amount of tax payable and issue an order. The remedy under Article 226 of the Constitution of India is available to every citizen and no legislation can put fetters on exercise of power by the High Court under Article 226 of the Constitution of India - The condition requiring deposit of the entire tax payable may appear to be onerous, but, the enactment involved is taxing statute and therefore we cannot go by the onerousness or otherwise of the condition imposed. Once it is found that there is effective alternative remedy, as the matter of self-imposed restriction and judicial discipline, the High Court will have to necessarily direct the parties to invoke such alternative remedy instead of the constitutional remedy. Conclusion - The writ Court was justified in refusing to exercise jurisdiction and directing the appellant to avail of the statutory remedy by way of appeal under Section 107 of the Act. Appeal dismissed.

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• 2025 (1) TMI 514
  Challenge to impugned order on the limited ground that the impugned order traverses beyond the show cause notice - petitioner never had an opportunity to respond - violation of principles of natural justice - HELD THAT:- The petitioner shall treat the impugned order as a show cause notice and file its objections within a period of 4 weeks from the date of receipt of a copy of this order. If any such objections are filed by the petitioner, the respondent shall consider the objections and pass orders after affording the petitioner a reasonable opportunity of hearing. The impugned order is set aside - Petition disposed off.

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• 2025 (1) TMI 513
  Invocation of extra ordinary writ jurisdiction of this Court under Article 226 of the Constitution of India, 1950 - seeking quashing of the seizure order - Indian currency can be classified as goods under Section 2(52) of the Central Goods and Services Tax Act, 2017 or not - HELD THAT:- Upon plaint reading of Clauses (i), (ii), (iii) and (iv) of Sub-Section (1) of Section 130 of the Act, it is evident that goods supplied in contravention of the provisions of the Act with the intent to evade payment of tax, or goods that are unaccounted for and chargeable to tax, as well as the supply of goods chargeable to tax by a tax payer without applying for registration, or where the tax payer contravenes any provisions of the Act with the intent to evade payment of tax, can only be subjected to confiscation. The respondents are directed to return and release a sum of Rs. 23,50,000/- along with the applicable interest to the petitioner, which process be completed with due expedition. Conclusion - Currency is not goods under the Act and cannot be seized under Section 67. The seizure of cash or any other valuables is outside the ambit of Section 2 (52) of the Act and such exercise of powers conferred under Section 67 of the Act, is not sustainable in law. Petition allowed.

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• 2025 (1) TMI 512
  Input Tax Credit (ITC) of the GST paid on services provided by GACL in the form of agreeing to surrender/relinquish its right on leasehold property in favor of the appellant - HELD THAT:- The Hon ble Supreme Court in the case of M/s. Safari Retreats P Ltd [ 2024 (10) TMI 286 - SUPREME COURT] while analyzing the expression plant or machinery, held that there could be a plant that is an immovable property; that the word plant not having been defined under the Act, its ordinary meaning in commercial terms will have to be attached to it. The Hon ble Court, thereafter laid down a functionality test, further concluding that if a building qualifies to be a plant, ITC can be availed against the supply of services in the form of renting or leasing the building or premises, provided the other terms and conditions of the CGST Act and Rules framed thereunder are fulfilled; that however, if the construction of a building by the recipient of service is for his own use, the chain will break, and ITC would not be available. The appellant has not denied the fact that construction activity has not been done on the leasehold land acquired from GACL. Though the averment is that the chartered engineers certificate states that 99.85% of the land would be utilized for construction of plant and machinery; that plant building will be constructed on a part of leaseholding premises and the unconstructed area will be used for auxiliary services. Conclusion - The GST paid on the surrender of leasehold rights is ineligible for ITC. Appeal dismissed.

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• Income Tax

• 2025 (1) TMI 523
  Penalty u/s 234E - late fling of TDS form No, 26QB - As argued assessee deducted TDS voluntarily and property was agriculture land - HELD THAT:- In the assessee s case the purchase consideration paid individually by him is more than 50 lakh, the total stamp duty valuation of the property is more than 50 lacs. CIT(A) held that the assessee cannot claim exemption under sub-section 2 of Section 194IA of the Income Tax Act, 1961. Besides this the CIT(A) further held that the plea of the assessee that the said land is agricultural land has not been established through documents by the assessee before the CIT(A). But the fact remains that the assessee deducted the TDS at the time of paying consideration and not deposited the TDS within the statutory time which denied the credit to deductor for his tax purpose. In the present assessee s case the TDS was deposited belated as well as Form 26QB. The purpose of depositing the TDS within the stipulated/statutory time is to allow the credit to the other party i.e. deductee, once it is deducted by the deductor. But in the present case the deductee could not avail the same. Thus, CPC-TDS has rightly imposed the penalty u/s. 234E of the Act. The appeal of the assessee is dismissed.

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• 2025 (1) TMI 522
  Addition u/s 68 - unexplained credits - Assessee has routed its unaccounted money in the guise of share application and share premium - CIT(A) deleted the addition - D.R. submitted that the assessee has not been able to explain the source of source of share capital contribution received by the assessee company during the year under consideration - HELD THAT:- We hold that assessee has explained the identity, creditworthiness and genuineness of transaction of share capital contribution in terms of provisions of section 68 of the Act. CIT(A) has correctly deleted the addition in the case of assessee under section 68 of the Act and does not call for any interference. Share capital contribution is not unexplained credit considering facts and evidence on record. In view of above, we find no merits in the appeal filed by the Revenue. Accordingly, the grounds of appeal raised by the Revenue are dismissed.

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• 2025 (1) TMI 521
  Addition u/s 68 - share capital raised during the year - money raised by the assessee was not explained as the assessee failed to establish the identity, creditworthiness of the subscribers and genuineness of the transactions - CIT(A) deleted addition - HELD THAT:- CIT (A) noted that these transactions were routed through banking channel and all the evidences were placed before the ld. AO qua these subscribers. CIT (A) has noted that the assessee has filed all the evidences and the AO has not pointed out any defect or deficiency in these documents on record in the assessment proceedings as well as during remand proceedings. In the case of Dataware Private Limited [ 2011 (9) TMI 175 - CALCUTTA HIGH COURT] has held that where the assessee has given PAN No. and other information along with name of creditors, the ld. AO should enquire from the AO of the creditors about the creditworthiness, genuineness of the transactions and whether such transaction has been accepted by the AO in the case of the Creditors but instead of adopting such course, the AO himself could not brand the creditors as unworthy of credence - so long as it is not established that that return submitted by the creditor/subscriber has been rejected by its AO, the AO of the assessee is bound to accept the same as genuine when the identity of creditor and genuineness of the transactions through account payee cheque has been established. Similarly, in the case of PCIT Vs. Naina Distributors Pvt. Ltd. [ 2023 (6) TMI 1362 - CALCUTTA HIGH COURT] has decided the issue in favour of the assessee by holding that mere non-production of director cannot be the ground for making any addition in the hands of assessee u/s 68 of the Act. Reopening based on borrowed satisfaction - We find that the ld. AO in the reason recorded referred to the search material found during the course of search and also post search enquiries that the assessee was a beneficiary of bogus share capital. We note that that the ld. AO has not made any enquiry and just reached a conclusion that income has escaped assessment and thus reopened the assessment based on the post search enquiries. Therefore, this is the case of borrowed satisfaction by the ld. Assessing Officer. See Meenakshi Overseas (P.) Ltd. [ 2017 (5) TMI 1428 - DELHI HIGH COURT] wherein it has been held that no reopening could be made on borrowed satisfaction. Assessee appeal allowed.

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• 2025 (1) TMI 511
  Condonation of delay in filing of revised return of income - CBDT rejecting petitioner s application u/s 119 - delay in filing the returns of Income based on the recasted accounts - Resignation by the statutory auditors happened before completing their term and reference made to unauthorised and undisclosed transactions - HC [ 2024 (5) TMI 502 - BOMBAY HIGH COURT] decided when the order u/s 130 (2) of the Companies Act has been passed by the NCLT to recast the accounts on an application filed by the MCA, Government of India and the accounts have been recasted and accepted by the NCLT and also filed with the RoC under the Ministry of Corporate affairs, how could the Income Tax Department raise such frivolous objections that the delay in filing the returns of Income based on the recasted accounts should not be even condoned. Also Petitioner shall file physical returns of income based on books of account, revised/recasted under Section 130 (2) of the Companies Act, 2013, as taken on record by the NCLT for A.Y. 2015-16 to A.Y. 2020-21 before the JAO within 30 days from the date this order is uploaded. HELD THAT:- Having heard the learned Senior counsel appearing for the petitioners and having gone through the materials on record, we see no reason to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed.

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• 2025 (1) TMI 510
  Reopening of assessment against dead person/ assessee - respondent directed the deceased assessee to reassess his income and further deemed financial transactions as his taxable income - applicability of Section 159 of the Income Tax Act concerning proceedings against legal representatives of a deceased assessee - HELD THAT:- Issuance of a notice under section 148 of the Act is the foundation for reopening of an assessment. Consequently, the sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. See Sumit Balkrishna Gupta [ 2019 (2) TMI 1209 - BOMBAY HIGH COURT ] As no notice was issued to the legal heir of the deceased under Section 159(2)(b) of the Act, despite the respondent being informed of the death. Section 159 of the Act is applicable when proceedings are initiated and pending against an assessee during their lifetime, and the legal representative assumes responsibility after the assessee's death. This was not the factual scenario in the present case; therefore, Section 159 of the Act is not applicable here. We may also refer to decision of this Court in Dharamraj [ 2022 (1) TMI 844 - DELHI HIGH COURT ] wherein also the assessee had died much prior to the issuance of the notice under Section 148 of the Act, and the issuance of such a notice was held to be unsustainable in law, inter-alia holding that even section 292B of the Act does not apply in such a situation. This writ petition is allowed, and resultantly, the impugned notice u/s 148A(b) is quashed.

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• 2025 (1) TMI 509
  Determining the disputed tax under the Direct Tax Vivad Se Vishwas Act - calculation is based on the premise that a search was executed in some other taxpayer s case and that this was not a case of voluntary disclosure by the Petitioner or that this was not a non-search case - as submitted that the calculation should have been based on the rate of 100% of the disputed tax, not 125% - addition towards the claim of LTCG u/s 68 - HELD THAT:- There is no material on record to show that the Petitioner retracted from the concession given regarding the addition u/s 68 either by raising an additional ground or otherwise in such an appeal. Only after the DTVSV Act came into force, or rather, only after the CBDT issued its Circular dated 04 December 2020, was an attempt made by the Petitioner to belatedly amend the Appeal Memo and challenge the addition. While giving the Petitioner benefits of the DTVSV Scheme, the Respondents correctly refused to consider this belated attempt to amend the Appeal Memo, claiming that even Rs. 2,02,50,919/- constituted a disputed tax . Such approbation and reprobation were quite correctly not appreciated by the Respondents. The Respondents' approach is consistent with the DTVSV Act and the CBDT circular dated 04 December 2020. DTVSV Act aims to settle tax disputes pending in Courts and other adjudicatory authorities as of the specified date. The petitioner attempted to post facto and belatedly expand the scope of the dispute to include amounts that the Petitioner had explicitly conceded as liable to additions. The Petitioner never appealed such additions and restricted its appeal only to the addition of Rs. 9,11,037/- under Section 69C of the Income Tax Act. The Petitioner also paid the tax on the added amount of Rs. 2,02,50,919/- towards LTCG. By such a belated expansion of the disputes, the object of the DTVSV Act or the amnesty schemes cannot be frustrated. The remedies under Articles 226 and 227 of the Constitution are discretionary and equitable. Such jurisdiction must be exercised to promote justice. Here is the Petitioner, who conceded and acknowledged the addition of Rs. 2,02,50,919/- towards LTCG, which was incorrectly claimed. It paid tax on this amount without any serious demur. Naturally, therefore, the Assessment Order dated 26 December 2016, which made the addition based upon such concession/acknowledgement, could not have been ordinarily appealed by the Petitioner. Petitioner, therefore, did not appeal this addition in the Memo of Appeal lodged on 27 January 2017. By attempting to amend the appeal memo belatedly and after the specified date, this amount of Rs. 2,02,50,919/- towards LTCG cannot be considered the disputed tax amount. If this is permitted, the Petitioner, by such a subterfuge or by creating an artificial dispute, will claim a refund of the tax paid without demur or claim concessions even with respect to undisputed taxes already paid. Accordingly, we are satisfied that the Respondents did not act illegally or arbitrarily in not considering the additional grounds concerning the addition u/s 68 in determining the amount payable under the DTVSV Act. Therefore, the challenge on this count is liable to be rejected and is hereby rejected. Petitioner is on firm ground in contending that the Petitioner s case was not a search case , or that it was a non-search case , and therefore, the computation at the rate of 125% as also FAQ 70 of Circular dated 04 December 2020 could be adopted . The record shows, and in fact, it was conceded by the Respondents, that the Petitioner s case was a non-search case . Therefore, the computation could not be at the rate of 125% but had to be at the rate of only 100%. The decision in Bhupendra Mehta [ 2021 (5) TMI 47 - BOMBAY HIGH COUR ] supports the Petitioner s case regarding the computation of the tax payable amount at 100% instead of 125%. The Respondents conceded this position at the stage of arguments and in the Principal Commissioner s Affidavit dated 17 July 2021. Accordingly, limited interference on this aspect is called for in this matter. Considering that the Affidavit was filed on 17 July 2021, this revised Form-3 should have been issued by now. In any event, we direct that revised Form-3 determining the amount payable at the rate of 100% of the disputed tax for the Assessment Year 2014-15 should be issued by the Competent Authority to the Petitioner within 30 (thirty) days from today, along with all consequential benefits. Claim for including addition u/s 68 for benefits under the DTVSV Act/Scheme is rejected. However, the Petitioner s contention about determining the amount payable at the rate of 100% of the disputed tax for the Assessment Year 2014-15 is allowed, and the Respondents are directed to issue the revised Form-3 as undertaken by them in their Affidavit within 30 (thirty) days from today along with all consequential benefits.

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• 2025 (1) TMI 508
  Validity of assessment order and the consequential demand notice - relegating the petitioner to avail of the alternate remedy - petitioner request for personal hearing through video conference rejected - HELD THAT:- As it is apparent that no personal hearing was granted to the petitioner, and this denial was not due to any reasons attributable to the petitioner. The impugned order and the consequential notices must be set aside on this short ground. The petitioner had digitally uploaded 21 annexures. The 21st annexure was, in fact, the reply to the show cause notice. The impugned order, however, records that the Assessing Officer could not see the annexures. Surprisingly, the assessing officer took cognisance of the 21st annexure, i.e., the reply to the show-cause notice. Again, for reasons not attributable to the petitioner, its documents/annexures were not seen or considered by the Assessing Officer. This also amounts to a violation of the principles of natural justice and fair play. Although the petitioner has raised or attempted to raise other grounds, without going into all such grounds and based on the failure of natural justice, we set aside the impugned assessment order dated 28 March 2023 and consequential notices issued based upon the impugned order. We remand the matter to the National Faceless Assessment Centre i.e. respondent No.1, for disposing of the show cause notice following the law with liberty to pass a fresh assessment order within 4 months from the date of uploading of this order on the website of the Court.

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• 2025 (1) TMI 507
  Validity of reassessment proceedings - Shorter time to respond to the notice issued un/s 148A(b) - petitioner was provided seven days to respond to the same, however, three days out of seven days were holidays - HELD THAT:- In the present case, the petitioner was required to clearly show the movement of goods to establish that the goods had in fact moved from Shri Ajay Gupta to the petitioner. It does not appear that any such information was provided by the petitioner to the AO. AO, after taking note of the response submitted by the petitioner, issued an order holding that it was a fit case for issuance of notice u/s 148. AO had also noted that the Goods and Service Tax Identification Numbers (GSTIN) of the said dealer (Ajay Gupta) had been cancelled as the concerned authorities had found that the said entities were not involved in actual business activities but were mere shell entities. After issuance of notice u/s 148 AO had also issued notices u/s 142 (1) of the Act and the reassessment proceedings are being conducted. The petitioner has also filed his response to the said notices. The contention that the petitioner was not afforded sufficient time to file a reply to the notice issued u/s 148A (b) of the Act is unpersuasive. The said ground clearly appears to be an afterthought as the petitioner had not made any request for further time to file a response to the said notice. On the contrary, the petitioner had filed his response to the said notice within the stipulated period. Clause (b) of Section 148A of the Act does not stipulate that the Assessee is required to be provided minimum of seven working days. The Assessee is required to be provided notice not being less than seven days but not exceeding thirty days for furnishing his reply. Even if it is accepted that the public holidays are required to be excluded for the purpose of calculation of seven days, the petitioner would be required to file his reply on the next date following the public holiday. However, petitioner did in fact file his reply within the specified period and, therefore, he cannot make any grievance at this stage of not being provided sufficient time to do so. Petition dismissed.

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• 2025 (1) TMI 506
  Reopening of assessment - Unexplained investment u/s 69 - HELD THAT:- No reason is indicated in the assessment order and/or in the impugned first appellate order as to why the explanation of the assessee is not being accepted. Mere investment with M/s Wasankar Group by itself is no reason to derive belief for escapement of income as has been concluded in the reasons recorded for issue of notice u/s 148. The addition made in the assessment is unjustified and unsustainable considering the fact and evidence on record. The details of withdrawals and bank account for the past four years are placed on record. Withdrawal during the year under consideration itself and earlier year is around ₹ 25 lakh. The assessee has given reasonable explanation along with documentary evidence to explain the cash given to M/s. Wasankar Group. Thus, we are of the opinion that ₹ 15.50 lakh stands reasonably explained by the assessee considering withdrawals from the bank account and documentary evidences placed on record. Notice issued under section 148 - We find that the AO had issued notice under section 148 of the Act on mere information of deposit of cash with M/s. Wasankar Group. No verification has been made by the Assessing Officer before issuance of such notice to derive belief of escapement of income. In our opinion, no valid notice under section 148 of the Act can be issued on the basis of mere information of amount given to M/s. Wasankar Group, without verification as to the assessee not having source to explain the cash deposit. Reasons recorded for issuance of notice under section 148 of the Act are not in accordance with law and consequent notice is held to be suspicion. In our opinion, no valid belief of escapement of income is derived in the assessee s case to issue notice under section 148 of the Act. Assessee appeal allowed.

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• 2025 (1) TMI 505
  Addition u/s 69A - cash deposited during the demonetization period - taxing the same u/s 115BBE - HELD THAT:- We note that AO has not disputed the return filed by the assessee, wherein the assessee has suomoto shown the cash deposit of Rs. 42 lacs as income. However, made another addition over and above the income declared by the assessee towards cash deposited resulting into double addition of the same amount of income and also levied taxes at the rate as provided u/s 115BBE. In our opinion, the order passed by the AO and confirmed by the CIT(A) is totally wrong as the same income cannot be taxed twice. On the one hand the AO accepted the income declared by the assessee in the return of income, which included the amount of ₹42 lacs deposited as cash into the bank account of the assessee and secondly, the addition was made by way of unexplained money u/s 69A - The said addition is wrong and against the provisions of the Act. See Shri Dinesh Kumar singal [ 2023 (6) TMI 606 - ITAT CHANDIGARH] Aakriti Jain [ 2024 (11) TMI 1187 - ITAT CHANDIGARH] Appeal of the assessee is allowed.

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• 2025 (1) TMI 504
  Penalty u/s 271(1)(c) against company dissolved - National Company Law Tribunal (NCLT) is seized of the proceedings initiated under section 7 of the Insolvency and Bankruptcy Code, 2016 and has already approved a resolution plan and granted the moratorium in respect of any other proceedings pending before any authority or tribunal etc.- HELD THAT:- Section 14 of IBC Code is very clear on the aspect that once moratorium is drawn and the insolvency commencement date is declared any institution of suits or definition of pending suits or proceedings against the creditor, debtor (in the present facts of the case of assessee before us) including the execution of any judgment, decree, or order in any Court of law, Tribunal, Arbitration Resolution Plan/Process has been accepted by the NCLT. At this juncture, we refer to the decision in the case of Ghanshyam Manz Retails Pvt. Ltd. Mishra and Sons Pvt. Ltd. [ 2021 (4) TMI 613 - SUPREME COURT ] wherein has considered a situation wherein, the resolution plan was approved by the adjudicating authority under Section 31(1) of the IBC Code. Hon ble Supreme Court observed that, once the resolution plan was drawn, the claim as provided in the resolution plan stood frozen, and will be binding on the corporate debtor, its employee, its members, creditors, Central Government and any State Government or legal authority, guarantor and other stakeholders. We also note that in the present facts of the case, the resolution plan is yet to be finalized. When, we read the newly inserted provisions of Section 156A of the Act, it is necessary to remand the appeal to the AO to take necessary steps/action as per Rules. Our above order applies mutatis mutandis to all the assessment years in appeal. Hence, in the above circumstances, we deem it fit and proper to remand these appeals back to AO to take necessary steps as per Section 156A of the Act. Accordingly, we partly allow the appeals filed by the assessee.

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• 2025 (1) TMI 503
  Assumption of jurisdiction u/s 147 r.w.s 151 - Validity of approval granted by the Competent Authority u/s 151 for reopening the assessment - additions made towards Long Term Capital gain ( LTCG ) on sale of land on merits - HELD THAT:- In the peculiar facts of the instant case, the purported sanction of the Addl.CIT is based on the premise that the assessee has not filed return of income at all and engaged in land deals of substantial amount. Driven by such grossly incorrect factual position, the Addl.CIT has granted sanction resulting in civil consequences to the assessee. This apart, an omnibus approval without any comment on any aspect betrays the application of mind on foundational points recorded in reasons for reopening. The approval granted do not utter a word towards any reasons which induced him to obtain satisfaction on the alleged escapement claimed by the AO. Approval u/s 151 grossly suffers from the vice of non-application of mind. The Hon ble Delhi High Court in the case of N.C. Cables[ 2017 (1) TMI 1036 - DELHI HIGH COURT] ; Pioneer Town Planners[ 2024 (3) TMI 828 - DELHI HIGH COURT] ; Manujendra Shah [ 2023 (7) TMI 1093 - DELHI HIGH COURT] have struck a balance and declined to endorse a rubber stamp approval granted by the Competent Authority under s. 151 of the Act. We see palpable merit in the plea of the assessee that the sanction granted under s. 151 of the Act is extraneous and an empty formality and do not accord with its salutary purpose. Validity of re-assessment order is contingent upon the valid approval under s. 151 of the Act. Where the identity of sanctioning authority itself is under cloud and coupled with this, the requirement of law to grant speaking approval under s. 151 of the Act is not found to be fulfilled, the notice issued under s. 148 as a sequel to such sanction and resultant assessment would also to be vitiated in law. Re-assessment proceedings under s. 147 as a consequence of nonest and invalid approval is without sanction of law and consequently, the re-assessment order in question is bad in law. Hence, the jurisdiction usurped by the AO based on such approval is required to be cancelled and set aside. Appeal of the assessee is allowed.

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• 2025 (1) TMI 502
  Validity of Reopening of assessment u/s 147 r.w.s 148 - assessee has earned bogus commodity profits - as argued information received from the investigation wing without any independent application of mind/ tangible material and is on the borrowed satisfaction and therefore bad in law - HELD THAT:- We note that the assessee has disclosed a details of commodity profits from transactions done through Kali Commodity Pvt. Ltd. which is inclusive of ₹ 20 lacs as per the arguments presented before us which could not be controverted b y the ld. DR. Thus, the very basis of the reopening fails and therefore, it is adequately clear that the reopening has been made on the basis of information received without any independent verification and application of mind and is a case of in fact borrowed satisfaction, which is not permissible under the Act. The case of the assessee is supported by the decision of Meenakshi Overseas [ 2017 (5) TMI 1428 - DELHI HIGH COURT] . Thus, we are inclined to hold that the reopening of assessment has been made invalidly and is bad in law. Decided in favour of assessee.

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• 2025 (1) TMI 501
  Addition u/s 68 - unexplained unsecured loan - Assessee submitted that it was the amount of SD (Security Deposit) of sub/petty contractors - case was selected for limited scrutiny - HELD THAT:- As evident from a perusal of the balance-sheet of the assessee that the issue of security deposit from sub/petty contractors, which figure as secured loans within Schedule B of the assessee s balance-sheet was not a subject matter selected for limited scrutiny under the CASS parameters. Therefore, as per the CBDT guidelines, if the AO was to enquire into the same, he was required to obtain permission from the concerned PCIT in writing before making investigations / additions in the matter. There is no indication in the assessment order that this has been done instead the ld. AO has expanded the scope of limited scrutiny by expression of an opinion that the security deposits by the petty / sub-contractors amount to unsecured loans and therefore, could be investigated within the parameters selected under the CASS. As this is clearly outside the jurisdiction of the ld. AO, the addition made by him in this regard is unsustainable on this count. Also amounts that were collected from these petty/sub-contractors were against project that were executed by them on behalf of the assessee and the fact remains that the assessee has made payments to the sub-contractors against execution of such contracts which is proved by the deduction of tax at source against such payments. Therefore, there does not appear to be any reason to doubt the receipt of this security money, which has subsequently been deposited with the Government Departments. As unsecured loans as referred to in Schedule C of the assessee s balance-sheet pertained to altogether different parties and the ld. AO has already satisfied himself that these were on account of opening balances, not calling for any action in this assessment - Unsecured loan in Schedule F pertain to different amounts which do not seem to be the subject matter of the additions. Therefore, on the basis of the aforesaid facts, we hold that the addition made by the AO of security deposits from sub/petty contractors is unsustainable - Decided in favour of assessee.

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• 2025 (1) TMI 500
  Reopening of assessment u/s 147 - addition on account of Interest income u/s 56 and addition on account of proposed disallowance u/s 80P - addition of cash deposit in the bank account - HELD THAT:- The issue of cash deposit was examined by the AO during assessment proceedings and in the assessment order AO states that no variation is proposed on the issue of cash deposit by the assessee society in its bank account and finally he has not made any addition on this score. He has disallowed the claim of the assessee u/s 80P claimed on interest from Bank and the surplus appearing in Profit and Loss Account. It is apparent that no addition has been made by the ld. AO on the issue on which reassessment was undertaken by him. In various case laws relied upon by the ld. AR the Hon`ble Courts including the jurisdictional High Court of Rajasthan [ 2008 (5) TMI 200 - RAJASTHAN HIGH COURT] have held that if the AO finds that the issue on which reassessment proceedings were initiated does not subsist then the ld. AO looses jurisdiction to assess other issues of concealment that comes to his knowledge. AO was required to stop at the point when he found that the issue of cash deposit into bank account was out of genuine sources and was required to pass a NIL order. Once it is found that none of the reasons recorded by the AO for initiating proceedings under section 147 was germane to initiation of such proceedings, then it has to be held that the AO had no reason to believe that any income had escaped assessment and, therefore, any further proceeding would be without jurisdiction. But still he moved further without having jurisdiction and made other additions in the assessment which is illegal as the AO has exhausted his jurisdiction as soon as he was satisfied that the cash deposit in the bank account of the assessee, for which the case of the assessee was reopened under the provisions of section 147 read with section 148 of the IT Act, was satisfactorily explained - we are of the view that the other disallowances/additions made by the AO in the assessment order are illegal - Appeal of the assessee is allowed.

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• 2025 (1) TMI 499
  Disallowance u/s 14A read with Rule 8D - when no exempt income is earned by assessee company - scope of explanation brought in by the Finance Act, effective from 1.4.2022, regarding disallowance u/s 14A - HELD THAT:- We note that in this case assessee has not earned any exempt income and it is a well settled proposition that when any exempt income has not been earned, disallowance cannot be made. As regards the explanation, which the Ld. CIT(A) has held to be retrospective, we note that in the case of PCIT vs. Sahara India Financial Corporation Ltd. [ [ 2024 (10) TMI 1207 - DELHI HIGH COURT] has held that no disallowance of any expenditure u/s. 14A could be done, when the assessee has not earned any exempt income, and that this explanation is applicable prospectively. Hence, this explanation is not applicable to the present assessment years 2015-16 2016-17. Thus, respectfully following the precedent, as aforesaid, we set aside the order of the Ld. CIT(A) and decide the issue in favour of the assessee.

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• 2025 (1) TMI 498
  Penalty u/s 272A(1)(d) - assessee allegedly failed to comply with the notices u/s 142(1) and u/s 143(2) - AO proceeded to make a best judgment assessment u/s. 144 making an addition u/s 68 of the Act for unexplained cash deposit - CIT(A) concluded that the assessee failed to demonstrate reasonable cause u/s 273B and upheld the penalty - HELD THAT:- Non-compliance was not due to any willful default or mala fide intent on the part of the assessee. The lapse occurred due to the negligence of the authorized representative, which was beyond the control of the assessee. There are many judicial precedents where it is held that an assessee should not be penalized for the omissions or errors of their legal representative when the assessee has placed bona fide reliance on them. In the present case, the failure of the representative to communicate notices cannot be attributed to any fault of the assessee, who is a senior citizen relying on professional guidance for compliance. The show-cause notice issued by the AO under Section 274 r.w.s. 272A(1)(d) of the Act failed to specify the exact section or details of non-compliance. Instead, it vaguely referred to multiple provisions [Sections 143(2), 142(1), 142(2A)] without clearly identifying the specific default. This amounts to non-application of mind by the AO. The inclusion of Section 142(2A) of the Act (related to a special audit) in the show-cause notice was erroneous and irrelevant, as the assessee was not required to maintain any books of accounts, being a senior citizen deriving income from pension and bank interest. The invocation of an inapplicable provision demonstrates a mechanical and baseless approach by the AO, further rendering the penalty proceedings unsustainable. Section 273B of the Act provides relief from penalties under Section 272A(1)(d) of the Act, if the assessee can demonstrate a reasonable cause for non-compliance. In this case, the affidavits filed by the assessee and the authorized representative explain the genuine reasons behind the non-compliance. There was no evidence to suggest any mala fide intent or willful defiance by the assessee. Therefore, the penalty imposed does not stand in light of the reasonable cause demonstrated by the assessee Assessee complied with the initial notice u/s 143(2) and only failed to comply with subsequent notices due to a communication gap. This shows that the assessee had the intention to comply with the proceedings and that the subsequent default was inadvertent and not deliberate. Hence, the penalty imposed cannot be justified - Decided in favour of assessee.

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• 2025 (1) TMI 497
  Revision u/s 263 - holding the original assessment order as erroneous and prejudicial to the interest of the Revenue regarding the deduction allowed u/s 54B - HELD THAT:- Language of Section 54B is very categorical in which it has been expressly stated that for claiming deduction u/s 54B of the Act, the capital asset should be used for agricultural purposes for two years immediately preceding the date of transfer of such agricultural land. We observe that PCIT has clearly brought on record certain anomalies with respect to this aspect and the AO has in our view omitted to enquire into this crucial aspect. Another aspect on which there was failure on part of the AO to make due inquiries was that a sum had been paid by the assessee towards obtaining relinquishment rights from third parties, and the AO had not made due inquiries whether this amount was eligible for claim of deduction u/s 54B of the Act. We observe that PCIT had also obtained report from the concerned Government Authority / agency to substantiate that no agricultural activities were being carried out between the years 2014 to 2018 in respect of both the properties which was sold by the assessee and also the property which was subsequently purchased by the assessee with respect to which deduction u/s 54B was claimed. In the case of Ramanbhai Bholidas Patel [ 2022 (12) TMI 1012 - ITAT AHMEDABAD] ITAT has held that Section 54B would not be applicable in case land was not used for agricultural purposes in two years preceding date of transfer. Where Assessing officer had not made necessary inquiry before allowing deduction under Section 54B but grossly allowed claim made by assessee, revisional order passed by Principal Commissioner under section 263 setting aside assessment order, should not call for any interference. Appeal of the assessee is dismissed.

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• 2025 (1) TMI 496
  Assessment u/s 153A - validity of additions made in absence of incriminating material found as a result of search and seizure operation - addition/disallowance made are remuneration paid to the partner as remuneration paid does not qualify as business expense u/s. 37 - HELD THAT:- Though, the A.O. has referred to a statement recorded u/s. 132(4) however, that cannot be considered as an incriminating material for enabling the A.O. to vest with himself the jurisdiction to make the disputed disallowances in assessments completed u/s. 153A of the Act. Thus, in view of the ratio laid down in the case of Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] the additions made in A.Ys. 2014-15 to 2018-19 are unsustainable. Accordingly, we delete such disallowances. Remuneration paid to partner - AO initially was of the view that remuneration is not allowable in terms of section 40(b) but ultimately made the disallowance u/s. 37 which, in other words, means that the expenditure incurred is not for the purpose of business. As in the statement recorded u/s. 132(4) in response to a specific query raised, one of the partners of the assessee firm has specifically stated that Ms. Chhaya D. Vora helps in accounts maintenance of the firm and for that purpose she comes to the office once or twice a week. Partner comes to office and helps in maintenance of accounts is proved on record. Merely because she does not come to office on daily basis, cannot be a ground to hold that she is only a sleeping partner and, hence, not entitled to remuneration. In any case of the matter, the remuneration paid to partner is taxable at the hands of the partner u/s.28(v) of the Act. Undisputedly, the remuneration received has been offered to tax at the hands of the concerned partner. That being the factual position emerging on record, expenditure towards remuneration paid to the partner is certainly allowable at the hands of the assessee firm. Decided in favour of assessee.

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• Customs

• 2025 (1) TMI 495
  Classification of imported goods - Transponder, Muxponder, and Optical splitter cards - to be classified under Customs Tariff Item (CTI) 8517 62 90 or under CTI 8517 70 90 as claimed by the appellant - it was held by CESTAT that 'The subject cards are not similar in nature to NIC Cards and any reliance on the classification of NIC Cards to determine appropriate classification for the subject cards is misplaced - the subject cards deserves classification under CTI 8517 70 90.' HELD THAT:- There are no reason to interfere with the impugned order passed by the Central Excise Service Tax Appellate Tribunal. Appeal dismissed.

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• 2025 (1) TMI 494
  Valuation of imported goods - inclusion of royalty and the cost of advertisement incurred by the Appellant in India in assessable value - related party - Rule 10(1)(c) and Rule 10 (1)(e) of the Customs Valuation Rules 2007 - it was held by CESTAT that ' As per the stipulation in the agreement, the appellant is obliged to be responsible for sales and distribution in its territory of distribution and further to make such expenditure in consultation with the seller, does not attract the provisions of Rule 10(1)(e) of CV Rules.' HELD THAT:- The view taken by the Tribunal is concurred with. Appeal dismissed.

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• 2025 (1) TMI 493
  Seizure of gold of foreign origin, silver granules and Indian currency notes - confiscation u/s 111 (b),111 (d) and 121 - Penalty u/s 112 (a) and/or 112 (b) and 117 - Smuggling - Burden to prove on co-noticees - Sale proceeds of smuggled gold and silver - huge amount of cash of Indian currency - Reliance on the statement - Presumptions of innocence - Retracted confession - it was held by High Court that 'The mobile phones which were recovered and the call details record which were obtained have all been elaborately discussed by the adjudicating authority. This aspect has not been dealt with by the learned tribunal.' HELD THAT:- There are no reason to interfere with the impugned order passed by the High Court. SLP dismissed.

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• 2025 (1) TMI 492
  Classification of imported goods - goods imported by the appellants for providing support services in respect of telecommunication networking equipment - whether, the goods merits classification as parts under CTH 8517 70 as claimed by the appellants; or, is it classifiable as apparatus under CTI 8517 6290 as contended by the Department - eligibility for exemption under the Notification No. 11/2014 Customs dated 11.07.2014 for deciding on the appropriate levy of customs duty - it was held by CESTAT that 'the impugned goods under consideration would appropriately be classifiable under CTH 8517 70 and not under CTH 8517 62 90, as claimed by Revenue' - HELD THAT:- It not required to interfere with the judgment and order passed by the Custom Excise Service Tax Appellate Tribunal,West Zonal Bench at Mumbai. The Civil Appeal is dismissed.

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• 2025 (1) TMI 491
  Valuation of imported goods - related party transactions - addition of 5% royalty on carbon brushes under Rule 10(1)(c) of the Customs Valuation Rules, 2007 - it was held by CESTAT that 'In the present appeal, the facts have clearly proved that the pricing was at arm s length and the relationship had not influenced the price, which has been accepted by the department hence there is no question of adding the royalty to the transaction value.' HELD THAT:- There are no reason to interfere with the impugned order passed by the Customs, Excise Service Tax Appellate Tribunal, Bangalore. Appeal dismissed.

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• 2025 (1) TMI 490
  Reduction of redemption fine and penalty imposed under the Customs Act, 1962 - liability of appellant to pay Customs Duty - appellant is not the importer of motorbike - HELD THAT:- It is not in dispute that the appellant was not the importer and was, therefore, not liable to pay duty on the motorbike under section 28 of the Customs Act. Although the Joint Commissioner held in his order-in-original that the appellant had, by depositing the amount of Rs. 5,00,000/- towards the duty during investigation, held himself out to be the importer and, therefore, must be considered as importer, this finding has been set aside by the Commissioner (Appeals) in the impugned order. The issue that the appellant is not the importer is settled. Confiscation of the goods - HELD THAT:- It needs to be pointed out that for redemption fine to be imposed the goods must be confiscated in the first place. If goods are confiscated, the title of the goods passes to the Central Government. However, if an option of redemption is given to the appellant and the appellant chooses that option, then the title of the goods goes back to the appellant under section 125 of the Customs Act. Consequently, the appellant will also be liable to pay duty and other charges, as applicable by virtue of section 125 of the Customs Act. In this case, the Commissioner (Appeals) did not record any finding as to why the goods were liable for confiscation - There is also no finding anywhere in the order of the Joint Commissioner as to why the motorbike was liable for confiscation under what section. Reduction of redemption fine - HELD THAT:- In the absence of any specific finding that the goods were liable for confiscation under any specific legal provision, the confiscation of the motorbike cannot be sustained. The confiscation of the motorbike, therefore, needs to be set aside. Consequently, the title of the goods shifts back to the appellant and motorbike need not be redeemed by paying any redemption fine by the appellant. Since the appellant is not liable to pay redemption fine under section 125 of the Customs Act, the appellant is also not liable to pay any duty and other charges under section 125 of the Customs Act. Levy of penalty - HELD THAT:- Penalty under section 112 (a) and 112 (b) of the Customs Act can be imposed for acts and omissions which rendered the goods liable for confiscation under section 111 of the Customs Act. Since the confiscation is set aside, penalty imposed under section 112 of the Customs Act also needs to be set aside. Conclusion - i) In the absence of any specific finding that the goods were liable for confiscation under any specific legal provision, the confiscation of the motorbike cannot be sustained. ii) The appellant is not liable for customs duty, the confiscation and associated fines are set aside, and the appellant is entitled to a refund of the deposited amount with interest. Appeal allowed.

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• Corporate Laws

• 2025 (1) TMI 489
  Maintainability of appeal under Section 483 of the Companies Act, 1956 - transfer of Equity shares - fraudulent preferences or void transactions under Sections 531, 531-A, and 536 of the Companies Act, 1956 - HELD THAT:- There are no hesitation in holding that the appeal filed by the appellant No.1 CRBCML, through appellant No.2 Mr. C.R. Bhansali is not maintainable in law. First things first, it is pertinent to mention that the learned Single Judge while passing the impugned order dated 25.07.2023 had delved into the issue of the maintainability of the objections that were being raised on behalf of the appellants - it is an undisputed position that the shares in questions were purchased by the applicants through the RBI-approved Stock brokers in the open market. Furthermore, it is a matter of fact that the Reserve Bank of India's (RBI) order dated April 9, 1997, directing CRBCML not to proceed with any sale, transfer, or charge on the property or assets without written consent, was not in the public domain, and the applicants had no notice of the directions passed by the Company Court. The applicants, in ignorance of such facts, apparently bought the shares from open market and paid the consideration thereof. It is not within the jurisdiction of the Company Court to investigate, at the behest of the appellants, the sale of shares by CRBCML, including the recipients or the consideration involved. Undoubtedly, the transfer of equity shares occurred during a period when such transfers were typically executed through the exchange of share certificates along with signed or blank transfer deeds. The sole requirements were a Contract Note in favour of the transferee, substantiated by the payment of the share amount to the Stock Broker. Conclusion - i) The present appeal by Appellant No. 1, CCL, and Appellant No. 2/Ex-Director, is not maintainable under Section 483 read with Sections 521 531-A of the Act. The objections raised by them to the clarification applications preferred by the applicants/transferees in the winding-up petition cannot be entertained in law. ii) Since the sale of shares took place prior to 09.04.1997, although the company (in liquidation) remained its de jure owner, the de facto legal right or title in the same passed on to the applicants in the ordinary course of business and thus was saved by Section 562 (2) of the Act. Appeal dismissed.

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• 2025 (1) TMI 488
  Maintainability of petition - availability of alternative remedy - Liability for default in holding the Annual General Meeting - HELD THAT:- The Petitioner herein in accordance with the scheme of the Companies Act, has rightly approached the NCLT with a Petition under Section 241 of the Companies Act, 2013 wherein admittedly one of the five Reliefs claimed are for holding of the Annual General Meeting. Though the waiver has not been granted to the Petitioner since the Petition was not supported by 1/5th members of the Company, however, Section 421 of the Companies Act, 2013 clearly provides for a remedy by way of an Appeal to Appellate Tribunal. The Petitioner himself has submitted that he intends to approach the NCLAT for redressal of his grievances of rejection of petition under Section 241 of the Companies Act, by NCLT. From the submissions of the Petitioner himself it is evident that firstly, the AGM was scheduled for 29.09.2023 but could not be held on account of sealing of premises by DDA which is still continuing. Secondly, he has already approached the NCLT and has an alternate efficacious remedy to file an Appeal against the orders of NCLT under Section 421 of the Companies Act, 2013. Conclusion - There being an alternate efficacious remedy available to the Petitioner, the present Writ Petition is not maintainable. Petition dismissed.

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• Insolvency & Bankruptcy

• 2025 (1) TMI 487
  Blacklisting order - Seeking quashing of the order issued by the respondents whereby the petitioner has been blacklisted for a period of three years and debarred from participating in the tender process for any work advertised by the Government of Tripura - Whether the order of blacklisting dated 5th October, 2023 is proper in the eye of law and on facts? - HELD THAT:- The impugned order of blacklisting for a period of three years and debarment of the petitioner from participating in the future tender processes for any work advertised by the Government of Tripura cannot be held to be proper in the eye of law for the reasons recorded hereinafter. The object of revival of a sick company on approval of the resolution plan by the NCLT is intended to provide a clean slate for the company to ensure that the new management makes a clean break from the past. The resolution plan of the successful resolution applicant has been approved under Section 31 of the I B Code by the learned NCLT vide its order dated 11th August, 2023 which is Annexure-2 to the writ petition. It records that on the date of approval of the resolution plan by the adjudicating authority all such claims which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. Reference made to the decision of the Apex Court in Ghanashyam Mishra Sons Pvt. Ltd [ 2021 (4) TMI 613 - SUPREME COURT ] wherein it has been held that once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Govt. any State Govt. or any local authority, guarantors and other stakeholders. In the case of Ghanashyam Mishra Sons Pvt. Ltd the apex court held that one of dominant objects of the I B Code is to see that an attempt has to be made for revival of the corporate debtor and make it a running concern. The scheme of the I B Code is therefore to make an attempt by divesting the erstwhile management of its powers and vesting it in a professional agency to continue the business of the corporate debtor as a going concern until a resolution plan is drawn up - The apex court held that one of the principal object of the I B Code is to provide for revival of the corporate debtor and make it a growing concern. Once action in the nature of forfeiture of performance bank guarantee to the tune of Rs. 95,58,000/- has been imposed upon the company for the delay in the execution of the work of the contract, the order of blacklisting would not be proper in the eye of law. The penalty of blacklisting for a period of three years and debarment from future contracts with the Government of Tripura would thus be disproportionate as the petitioner would be practically unable to enter into new contracts and undertake business in order to become a growing and running concern. The respondents have taken a stand that challenge to the order of blacklisting in an independent proceeding would lead multiplicity of proceedings and conflicting views which are best avoided. However, as it appears that the learned Arbitral Tribunal has not entertained the plea against the order of blacklisting as no such claim was made before it. In such a case, refusal to entertain a challenge to the order of blacklisting by this Court under Article 226 of the Constitution of India would amount to denying a remedy available in law. Conclusion - Such order of blacklisting and debarment of the petitioner company after approval of the resolution plan with a new management would defeat the dominant aim and object of the Insolvency and Bankruptcy Code, 2016 and in all likelihood defeat the very purpose of revival of the company. The order of blacklisting is quashed. Petition allowed.

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• 2025 (1) TMI 486
  Seeking replacement of the Interim Resolution Professional of Sequel Buildcon Private Limited-Corporate Debtor undergoing Corporate Insolvency Resolution Process - whether the conduct of the IRP in the given factual matrix gives adequate reason to believe that there was a breach of the Code of Conduct of Insolvency Professionals by IRP warranting his removal and replacement by another IRP? - HELD THAT:- Regulation 3(1) and the explanatory clause of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 lays down that the RP must not have any conflict of interest or business relationship with the corporate debtor, its promoters, or any other stakeholders. Regulation 7(2)(h) of the IBBI (Insolvency Professionals) Regulations, 2016 provides that insolvency professionals must adhere to a Code of Conduct specified in the First Schedule to these regulations for avoiding conflicts of interest and maintaining independence. Keeping in mind the status of Applicant as a strategic project partner and a key financier of the project, it does stand to reason for them to have raised questions on the manner of selection of consultants followed by the IRP when they were not satisfied with the quality of services rendered. From material on record, it is noticed that the Applicant had issued letters to the IRP to clarify the manner in which these consultants were appointed including details of their credentials, professional profile, work experience, man power and HR structure etc. The stone-walling of such relevant information by the IRP does create room for suspicion on the conduct of the IRP of trying to conceal/supress relevant and necessary facts. The apprehensions of the Applicant with regard to the manner of appointment of the consultants ought to have been allayed by the IRP rather than create a shroud of opacity. There was a clear breach of fiduciary duties on the part of the IRP besides conflict of interest in the appointment of the consultants. Hence the IRP should be immediately replaced. Per contra, the IRP has justified non-disclosure of its association with CLL, PMC and other related business entities on the ground that Clauses 8B, 8C and 8D of the Code of Conduct apply only to a period of 3 years preceding their appointment of IRP and since their association had terminated more than 3 years back, it need not have been disclosed - this cannot come to the rescue of the IRP since in terms of Clause 8C of the Code of Conduct, the disclosure requirement comes into play at any time when the IRP is a key managerial person, a partner of a related party or a partner or director of the concerned company, firm or LLP. In the conduct of Reverse CIRP, the relationship between the IRP and stakeholders of the Corporate Debtor including home-buyers and interim financier is built on trust. Once this trust is belied, it has the potential to jeopardise the resolution process. In the present case, the IRP has been found to be forthcoming in parting with all relevant information with regard to the credentials of their consultants to the Applicant. As a key financier, the Applicant had a definite stake in the manner of appointment of the PMC and LC. The contention of the IRP that the consent of the Applicant had been obtained before the appointment of the PMC and LC has been denied by the Applicant. The IRP had merely informed the Applicant regarding the appointment of PMC post their appointment which cannot be viewed as their concurrence after consultation - For a Corporate Debtor which was already financially stressed and insolvent, payment of fees by the IRP to related party consultants without commensurate services forthcoming from them constituted sufficient ground to seek change of the IRP. The Applicant definitely enjoys locus standi to file the present application since it has been infusing funds into the project for the benefit of all stakeholders including the home-buyers. There is merit in the application filed by the Applicant seeking replacement of the IRP with another IRP who can better safeguard the interest of all stakeholders, especially home-buyers. Conclusion - There is incidence of infringement of the Code of Conduct of the Insolvency Professionals by the present IRP for not having disclosed their relationships or potential conflicts of interest in the appointment of consultants. To prevent further abuse of process and to meet the ends of justice, the removal of the IRP directed forthwith and the consultants appointed by them. Application allowed.

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• 2025 (1) TMI 485
  Dismissal of Section 9 application filed by the Operational Creditor for initiating Corporate Insolvency Resolution Process - novation of the original contract between the parties - pre-existing dispute existed between the Operational Creditor and the Corporate Debtor - HELD THAT:- A look at the relevant statutory construct of IBC at this juncture would be useful. Section 8 of the IBC requires the Operational Creditor, on occurrence of a default by the Corporate Debtor, to deliver a Demand Notice in respect of the outstanding Operational Debt. Section 8(2) lays down that the Corporate Debtor within a period of 10 days of the receipt of the Demand Notice would have to bring to the notice of the Operational Creditor, the existence of dispute, if any. After issue of demand notice by the Operational Creditor, if the Operational Creditor does not receive payment from the Corporate Debtor or notice of the dispute under Section 8(2), he may file an Application under Section 9(1) of IBC - it is clear that the existence of dispute and its communication to the Operational Creditor is therefore statutorily provided for in Section 8. It is an undisputed fact in the present matter that the Operational Creditor did not receive any payment from the Corporate Debtor and had therefore proceeded to file an application under Section 9 of IBC. Pre-existing dispute - HELD THAT:- It is also a well settled proposition of law that for a pre-existing dispute to be a ground to nullify an application under Section 9, the dispute raised must be truly existing at the time of filing a reply to notice of demand as contemplated by Section 8(2) of IBC or at the time of filing the Section 9 application. In the present case, the pre-existing dispute has been predicated on notice invoking arbitration dated 19.01.2023 prior to the issue of Section 8 Demand Notice on 25.02.2023 as was highlighted by in the Notice of dispute of the Corporate Debtor dated 17.03.2023 - the reply to the Section 8 Demand Notice clearly articulates the ongoing arbitration between the two parties which predated the Section 8 demand notice. In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 25.02.2023 and a notice of dispute raised by the Corporate Debtor on 17.03.2023 wherein the issue of invocation of notice of arbitration of 19.01.2023 on was articulated as a ground of pre-existing dispute. The pre-existing dispute must relate to the transaction or debt that forms the basis of the Section 9 application. Clearly the debt in this case arises out of RA Bills relating to the original work order of 12.10.2018. When an arbitration notice is served in respect of disputes stemming from the original work order and the arbitration notice was issued before the Section 8 demand notice, clearly it signifies that a dispute already existed between the parties. As an arbitration notice is a formal communication from one party to the other, initiating arbitration proceedings, the arbitration notice evidences a pre-existing dispute. This therefore constitutes sufficient ground for rejection of a Section 9 application. Conclusion - There was no novation of the contract and that a pre-existing dispute existed, leading to the dismissal of the appeal. The existence of a pre-existing dispute, as evidenced by an arbitration notice, is sufficient to reject a Section 9 application under the IBC. The Adjudicating Authority did not commit any error in rejecting the Section 9 Application filed by the Appellant - Appeal dismissed.

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• PMLA

• 2025 (1) TMI 484
  Money Laundring - proceeds of crime - seeking declaration that Section 420 IPC be declared as manifestly arbitrary and ultravires Article 14 and 21 of the Constitution of India - whether lodging of the impugned FIRs and the consequential ECIR is an abuse of the criminal process? HELD THAT:- Sanction of loan is a commercial transaction. It is to be regulated by the terms of loan/contract and any dispute in respect thereof would require adjudication in the manner stipulated therein. It is undisputed that sanction of loan to the borrower is pursuant to loan agreement which contain an Arbitration clause. Even the pledge of shares of Kadam is in accordance with the pledge agreement dated 6.4.2018 which contains clause 20 as per which any dispute/disagreement/differences between the lender and pledger and/or confirming party (defined in the pledge agreement i.e. Indiabulls, borrower and Kadam) has to be resolved by way of arbitration. There is complete suppression in the complaint filed before the Chief Judicial Magistrate, Gautam Budh Nagar with regard to the terms of loan agreement; existence of Arbitration clause, therein; invocation of Arbitration clause by the borrower; rejection of application filed by borrower before the Delhi High Court under Section 9 of the Act of 1996 and many other relevant facts which have a material bearing on the issue in question. Suppression of material facts by the borrower while invoking criminal proceedings against the lender assumes greater significance in the facts of the present case as repeated attempts made by it to injunct the lender i.e. Indiabulls from proceeding against the pledged property had not succeeded. The non-disclosure of material facts would lead to an inference that criminal proceedings are maliciously instituted with the intent to avoid repayment of availed loan facility; to secure leverage in pending Arbitration and other proceedings inter-se between the parties; coerce the lender i.e. Indiabulls to succumb to the terms dictated by the defaulter borrower. There are substance in the petitioners argument that the conduct of borrower in initiating criminal action vide Complaint instituted under Section 156(3) Cr.P.C. on 23.3.2023 is lacking in bona fide. Admittedly, the borrower with open eyes had entered into commercial transaction with the Indiabulls and having prima facie defaulted in honouring the terms of contract, availed the remedy in respect of the coercive action taken against it. After having failed at it the borrower has initiated criminal action, concealing the orders of Delhi High Court in pending Arbitration proceedings as per which the issues raised are required to be resolved in Arbitration. Institution of criminal action can therefore be said to be with oblique motive. Conclusion - i) There are no hesitation in holding that initiation of criminal proceedings at the instance of borrower are instituted on the strength of suppression and concealment of relevant facts, with unexplained delay and malicious intent to thwart legitimate steps taken by Indiabulls to recover the financial assistance extended to the borrower. Such proceedings are also intended to create leverage in ongoing civil/arbitration proceedings inter se between the parties. The criminal proceedings are, therefore, clearly an abuse of the process of law and deserve to be quashed. ii) The FIRs and ECIR were quashed, the disputes were directed to be resolved through arbitration. Petition allowed.

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• Service Tax

• 2025 (1) TMI 483
  Classification of service - Support Service for Business or Commerce or not - services rendered by TASMAC by giving license and permitting contractors to do the business within the bars - levy of interest and penalty - HELD THAT:- As stated by revenue an identical issue was considered by a coordinate bench of this Tribunal in the appellants own case M/S. TAMILNADU STATE MARKETING CORPORATION LTD. VERSUS THE PRINCIPAL COMMISSIONER OF GST AND CENTRAL EXCISE, CHENNAI NORTH COMMISSIONERATE, CHENNAI [ 2019 (6) TMI 1328 - MADRAS HIGH COURT ] where it was held that 'TASMAC is liable to pay service tax of the licence fees received for the period 1.7.2012 to 28.3.2013.' Levying of interest under section 75 and imposition of penalty under section 76 (as it stood prior to amendment on 14/05/2015), 77 78 of the Finance Act 1994 - HELD THAT:- It is no longer res integra that interest is necessarily linked to the delayed or deferred payment of duty, such liability arises automatically by operation of law, as under section 75 of the Finance Act 1994, in the instant case. The same cannot hence be set aside once delayed payment of duty is demanded. Similarly, the imposition of penalty under section 76 of the Finance Act, 1994 is statutory in nature and becomes payable when there is a failure to pay service tax in the normal course. Conclusion - i) TASMAC is liable for service tax for the period 1st July 2012 to 28th March 2013. ii) Interest is applicable, but penalties under sections 77 and 78 are not, due to the interpretative nature of the issue. Appeal disposed off.

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• 2025 (1) TMI 482
  Denial of refund of Service Tax paid on input services, in pre- GST era on manufacturing of cut and polished diamonds which were exported post commencement of GST regime - Rule, 5 of the CENVAT Credit Rules, 2004 read with Notification No. 41/2012-ST dated 29.06.2012 (2016) - HELD THAT:- It is a recognisable fact that Section 42 read with Section 174 of the CGST Act have made it crystal clear that Service Tax paid on inputs or input services before commencement of GST would be dealt by the Finance Act, 1994 and its connected notifications, rules etc. As could be noticed from the order passed by the Refund Sanctioning Authority, it has been clearly mentioned that Appellant/Claimant had issued export invoices after 01.07.2017 i.e. after the appointed day prescribed in CGST Act, 2019. This being the command of law, his finding that received concurrence of the Commissioner (Appeals) that provision of existing law would mean CGST Act is erroneous and contrary to the provision of law and therefore, Claimant s/Appellant s filing of refund applications was made appropriately under the provisions of Finance Act read with Rule, 5 of the CENVAT Credit Rules, 2004, that can t be said to be not maintainable. Since the Commissioner (Appeals) was supposed to pass his order in accordance to Section 35A(4) of the Central Excise Act, 1944, equally applicable to Service Tax matters, in view of operation of Section 85(5) of the Finance Act, 1994 and as no other ground or reason is cited by the Commissioner (Appeals) for refusal of refund, which Appellant is entitled to get the refund as sought under the existing law. Conclusion - Refund claims for taxes paid before the GST rollout should be processed under the existing law, not the CGST Act, 2017. Appeal allowed.

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• 2025 (1) TMI 481
  Liability to pay service tax on the taxable value received - Cargo Handling Services - providing services of cargo handling to the projects of Northern Coalfield Ltd. by deploying the tipping trucks, for loading of coal into contractor s tipping trucks by contractor s pay loaders - reverse charge mechanism - extended period of limitation. Liability to pay service tax on the taxable value received - Cargo Handling Services - providing services of cargo handling to the projects of Northern Coalfield Ltd. by deploying the tipping trucks, for loading of coal into contractor s tipping trucks by contractor s pay loaders - HELD THAT:- The issue of transportation of goods is different from cargo handlings transportation of coals from the coal mines to the tippers/trucks is no more res integra as it stands decided that the activity is not a Cargo Handling Service but is that of transportation of goods by road. The service recipient is liable to pay service tax on this activity under Reverse Charge Mechanism. Apparently and admittedly M/s. Northern Coalfield Ltd., the service recipient has already discharged the same. These observations are sufficient to hold that the demand for this partial period has rightly been dropped by Commissioner (Appeals) - There is no evidence on record that respondent-assesse is a Goods Transport Agency nor any consignment note is placed on record. Thus in terms of Section 66B, there is no tax liability on the impugned activity even for the post negative period. The demand for this period is also rightly dropped by Commissioner (Appeals). Invocation of extended period of limitation - HELD THAT:- It is observed from the SCN that the demand has been proposed based upon the respondent s own documents. It is also clear that the fact of discharge of the impugned service tax liability by the service recipient/Northern Coalfield Ltd. under Reverse Charge Mechanism was also brought to be notice of the department. There are no act of alleged suppression on part of the respondent-assessee. The department rather has failed to take into consideration the submissions of the assessee-respondent at the time of issuing the show cause notice. In absence of any such evidence which may prove the mala fide intent with the assessee to evade payment of tax, the department was not entitled to invoke the proviso to Section 73 of Finance Act, 1994 - The show cause notice is therefore held to be barred by time. Conclusion - i) The issue of transportation of goods is different from cargo handlings transportation of coals from the coal mines to the tippers/trucks is no more res integra as it stands decided that the activity is not a Cargo Handling Service but is that of transportation of goods by road. The service recipient is liable to pay service tax on this activity under Reverse Charge Mechanism. ii) In absence of any evidence which may prove the mala fide intent with the assessee to evade payment of tax, the department was not entitled to invoke the proviso to Section 73 of Finance Act, 1994. Appeal of Revenue dismissed.

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• 2025 (1) TMI 480
  Recovery of service tax with interest and penalty - Renting of immovable property service - Mandap Keeper/ Renting of Community Centre service - Appellant is a Governmental Authority as defined by Notification No 25/2012-ST dated 20.06.2012 and thus exempted in terms of S No 39 of the Notification or not. Appellant is a Governmental Authority as defined by Notification No 25/2012-ST dated 20.06.2012 and thus exempted in terms of S No 39 of the Notification - HELD THAT:- In the case of GREATER NOIDA INDUSTRIAL DEV. AUTHORITY VERSUS COMMR. OF CUS., C. EX. [ 2015 (4) TMI 1231 - ALLAHABAD HIGH COURT ] Hon ble Allahabad High Court has held ' Letting of immovable property for consideration, which is determined on the basis of offers received from public at large by the assessee Greater Noida Industrial Development Authority is a service provided for consideration and not on payment of statutory fees, neither it is a statutory service performed by the assessee. It may be that the statute permits such activities of letting out of immovable property for augmenting its finances but the same cannot be termed as the service in public interest nor it is a mandatory or statutory functions of the Development Authority. Accordingly such activity of leasing do constitute a taxable service.' Vague SCN - HELD THAT:- There are no merits in the contention of the appellant that the show cause notice is vague etc., impugned order has specifically considered this issue and after examination of the said show cause notice concluded that there is no vagueness. Even otherwise till the time the show cause notice is able to communicate the allegations and reasons for the demand being made the same cannot be termed as vague. The show cause notice or in fact any document issued in course of transaction of Government business or in a judicial proceedings is not a document of literature but only means of communication. Till the time the person or whom the said document is issued is able to read and respond to the same, it cannot be termed as vague - there are no merits in the submissions made by the appellant to the effect that show cause notice dated 21.05.2014 has been issued quoting the obsolete provisions and hence bad in law. Taxability - mandap keeper service - renting of immovable property service - HELD THAT:- It is found that even after the introduction negative list regime with effect from 01.07.2012 onwards the activities undertaken by the appellant fall within the definition of service as per the Section 65B (44) and are taxable being not in negative list or exempted it is not inclined to accept the submission of the appellant in this respect. Further impugned order after examination of the documents in respect of the Mandap Keeper Services have concluded that there is no evidence to the effect that these services were for the purpose of religious functions appellant have not countered the said findings by producing the relevant documents to show that these service were indeed rendered by them in respect of such religious ceremonies and functions. The reliance placed on the decisions in this respect is not correct as impugned order has recorded a finding of fact. Conclusion - i) The appellant failed to provide any evidence which may prove that the said community centres are given for religious activities. ii) The appellant is neither a Government Authority nor a local authority. iii) The extended period of limitation as envisaged under proviso to Section 73(1) of the Finance Act, 1994 has been correctly invoked in this case. Penalties u/s 78 set aside. iv) As appellant have failed to take registration and file the returns by the due date the penalties imposed under Section 77 upheld. Appeal allowed in part.

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• 2025 (1) TMI 479
  Interest on delayed refund - relevant date from which the interest would be payable by the Revenue - rate of interest thereon. Interest on delayed refund - relevant date from which the interest would be payable by the Revenue - HELD THAT:- The issue is no more res integra. The Hon‟ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] has held that ' the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made.' Thus, the appellant is eligible for the interest taking the refund claim date as the base. The appellant has filed the refund claim on 22.11.2007. Hence after considering the period of 3 months for processing of this application, the interest would be payable from 22.02.2008 till the date on which the refund has been paid to them. Rate of interest to adopted - HELD THAT:- The Allahabad Bench, in the case of M/S. PARLE AGRO PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, NOIDA (VICE-VERSA) [ 2021 (5) TMI 870 - CESTAT ALLAHABAD] has held that ' Section 11BB provides for interest on delayed refund. It states that if any duty ordered to be refunded under sub-section (2) of Section 11B is not refunded within three months from the date of receipt of the application, then the applicant shall be entitled to interest after the expiry of three months from the date of receipt of the application at such rate not below 5% and not exceeding 30% as may be notified by the Central Government in the Official Gazette.' - thus, the appellant would be eligible for interest @ 12% per annum. Conclusion - i) The interest is required to be paid from three months from the date of the initial filing of the refund claim till the date of granting the refund. ii) The interest is to be paid @ 12% per annum. iii) Interest to be paid within 8 weeks from the date of communication of this order. Appeal allowed.

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• 2025 (1) TMI 478
  Rejection of appeal on the grounds of limitation - delay in filing the said appeal was much beyond the period of 60 days + 30 days as per Section 85 of Finance Act, 1994 - HELD THAT:- Sub clause 3(A) of Section 85 of the Finance Act, 1994, makes it abundantly clear that the Commissioner (Appeals) is being vested with the power to condone the delay which may occur while filing the appeal before him, only for further period of one month (30 days) over and above the period of two months during which, otherwise, the appeal would have been filed. The present appeal apparently and admittedly has been after a delay of more than 12 months from the date of receipt of order-in-original as shown in the document received from Postal Department. Keeping in view the said statutory mandate of Section 85(3A) of Finance Act, 1994, there are no infirmity in the impugned order where the Commissioner (Appeals) has rejected the present appeal on the grounds of limitation. There are no request from the appellant even post receiving the recovery notice dated 15.02.2023 vide which appellant would have requested the department for the status/copy of the order in original. It is also observed that even after receiving the copy of order in appeal admittedly, on 24.02.2023 the present appeal has been filed at the period of two months from the said date. The said conduct is insufficient to reflect the due diligence on part of the appellant specifically when appellant was aware of the impugned proceedings. Conclusion - The statutory limits for filing appeals under Section 85 of the Finance Act, 1994, are strict and cannot be extended beyond the prescribed period. The appeal was dismissed due to being filed beyond the permissible period. Appeal dismissed.

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• Central Excise

• 2025 (1) TMI 477
  Demands made for violation of Rule 8(3A) of the Central Excise Rules, 2002 - HELD THAT:- This bench has in the case of M/S. SAS AUTOCOM ENGINEERS INDIA PVT. LTD. AND SHRI S. SHYAM RAJ VERSUS COMMISSIONER OF GST AND CENTRAL EXCISE, CHENNAI [ 2024 (11) TMI 343 - CESTAT CHENNAI] , followed the ratio decidendi laid down in the aforementioned Judgements of the Honourable High Courts of Gujarat and Madras and has held 'Rule 8(3A) of Rules, 2002 is ultra vires of Article 14 of Constitution being unreasonable, irrational, arbitrary and violative.' - in view of the above position in law as settled by the Honourable Constitutional Courts, which is being consistently followed by this Bench, there is no merit in the confirmation of demands made in the impugned order and hence the impugned order cannot sustain. Interest due on the duty amount paid by the Appellant - HELD THAT:- While the impugned order has confirmed the demand of additional payment towards interest due after considering the amount paid by the Appellant, on the basis of the report dated 06.04.2015 of the Preventive Unit, Puducherry; in light of the affidavit filed by the Appellant duly supported by the chartered accountant s certificate, reiterating the payable interest as Rs.15,18,153/-, that has already been paid, we leave it to the Adjudicating Authority to verify the CA certificate, if felt necessary, and hold the Appellant to its affidavit. Registry is directed to forward a copy of the affidavit and the CA certificate filed to the jurisdictional Commissioner, while dispatching this order. Conclusion - Rule 8(3A) of the Central Excise Rules, 2002, is unconstitutional and invalid as it infringes upon the substantive right of an assessee to utilize CENVAT credit. The rule is unreasonable, irrational, arbitrary, and violative of Article 14 of the Constitution. The impugned order set aside - appeal allowed.

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• 2025 (1) TMI 476
  Disallowance/recovery of CENVAT Credit along with interest and imposed equal amount of tax as penalty - service tax paid under the reverse charge mechanism (RCM) for Goods Transportation Agency (GTA) services - Interest and penalty - HELD THAT:- The appellant has paid service tax on GTA service under RCM basis. Under RCM basis, the service tax liability is paid within 5th of the next month and the CENVAT Credit of the same is availed by the Appellant while filing the ST 3 return of the half year wherein the said amount paid by the Appellant is also shown as CENVAT Credit in the Cenvat table of the return. The same is also disclosed in ER 1 return by the Appellant. Thus, it is observed that the allegation of availment of CENVAT Credit without payment cannot arise as the payment is done within the due date of payment of service tax which is also visible from the table set out in the demand order. There is no dispute with respect to the genuineness of input services availed by them. Thus, the appellant is eligible to avail the credit and the allegation in this regard in the impugned order is not sustainable. Utilization of credit before making payment of the service tax - HELD THAT:- It is observed that if the appellant has utilized the credit before making the payment of service tax on GTA service, at the maximum the department could have demanded interest for the few days before which the credit was utilised, before payment. However, it is observed from the submission of the appellant that although they have availed the CENVAT Credit during the relevant period, they have not utilised the credit for the payment of any other liabilities for the said month. Thus, there is no obligation on them to pay any interest. Hon ble Supreme Court in UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] held that no interest is payable when there is no utilisation of CENVAT Credit. By following the ratio of the decisions, it is held that the appellant is not liable to pay interest as the credit taken by the appellant was not utilized before making the payment of service tax. Levy of penalty - HELD THAT:- Since there is no irregularity in availment of the credit, no penalty imposable on the appellant and hence the penalty imposed in the impugned order is set aside. Conclusion - i) The appellant is eligible to avail the CENVAT Credit of service tax of Rs. 1,35,91,278 - paid by them on RCM basis for Goods Transportation Agency Services and hence the demand confirmed in the impugned order along with interest, is set aside. ii) The penalty imposed on the appellant in the impugned order is set aside. Appeal disposed off.

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• 2025 (1) TMI 475
  Liability of interest if differential duty is paid before finalization of provisional assessment in terms of Rule 7(4) of Central Excise Rules, 2002 - HELD THAT:- The issue regarding demand of interest on the goods which were cleared provisionally was considered by the Hon ble High Court of Allahabad in the matter of M/s Bharat Heavy Electricals Ltd [ 2015 (8) TMI 1055 - ALLAHABAD HIGH COURT] , wherein it is held that ' There is no doubt that interest is compensatory in nature and is imposed on an assessed amount who has withheld any tax as and when it was due and payable. Levy of interest is on actual amount of tax withheld and the extent of the delay in paying the tax on the due date'. Conclusion - Interest on differential duty is a statutory liability that arises from the date of removal of goods, irrespective of when the differential duty is paid. The interest serves as compensation for the delay in payment of the duty due. Appeal dismissed.

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• 2025 (1) TMI 474
  Eligibility of CENVAT Credit on inputs received from EOU unit of the appellant - Whether the credit availed by the appellant based on the strength of the invoices issued by the 100% EOU prior to amendment Rule 3(7)(a) of the Cenvat Credit Rules, 2004 by Notification No.22/2009 CE (NT) dated 07.09.2009 is correct or otherwise? - HELD THAT:- The very same issue was considered by this Tribunal in the matter of SHREYA PETS PVT. LTD. VERSUS COMMISSIONER OF CUS. C. EX., HYDERABAD-IV [ 2008 (9) TMI 351 - CESTAT, BANGALORE] , wherein it is held that ' Mumbai Bench has given a clear cut finding that appellants are entitled to avail 100% credit of Education Cess on the goods supplied to them by a 100% EOU in terms of the above findings. The findings given by the Commissioner (A) is not legal and proper and the same is set aside by allowing the appeal with consequential relief.' Conclusion - Rule 3(7)(a) of the Cenvat Credit Rules, 2004, restricts the availment of credit only for the basic excise duty and does not extend to other duties such as Education Cess and Secondary Higher Education Cess. The appellant is eligible for the CENVAT Credit and the appeal is sustainable. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (1) TMI 473
  Maintainability of petition - availability of alternative statutory appellate remedy - invocation of writ jurisdiction of the High Court - HELD THAT:- It is inclined to grant a limited indulgence in the matter to the effect that appellant can prefer a statutory appeal against the orders that were impugned in the writ petitions subject to he making pre-deposit of 30% of disputed tax along with interest accruing due thereon till the filing of writ petitions i.e., 30.08.2019, within four weeks. This appeal is disposed off permitting the appellant to avail the remedy of statutory appeal under section 62 of the 2003 Act subject to depositing 30% of the amount due in terms of the impugned Assessment Orders; the interest accruing due on such amount only till 30.08.2019 shall also be reckoned while computing this.

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• 2025 (1) TMI 472
  Violation of principles of natural justice - passing a non-speaking order without considering the submissions of the Petitioner - classification of product as Rusk under Entry 77B of the Schedule of the OVAT Act, 2004, instead of classifying it as Bread (branded or otherwise) under Entry 34 of Schedule A of the OVAT Act, 2004 - non-consideration of judgment of KESHARWANI ENTERPRISES VERSUS STATE OF CHHATTISGARH AND OTHERS (AND OTHER CASES) [ 2018 (3) TMI 1683 - CHATTISGARH HIGH COURT] - HELD THAT:- The product in question is essentially bread. However, the Odisha Act provides for two separate entries in respect of bread. When something more is done to it to result in toasted bread, it is included in the separate taxable entry. On perusal of the assessment order, the first appellate order and impugned order we do find there has been different findings on fact regarding the product. However, the Tribunal does not appear to have suffered from any confusion in finding, as the last forum to find on facts that the product is toasted bread. Though entry 77B in Schedule B includes products other than rusk, but given meaning by the entry, of rusk to be hardened bread, the Tribunal cannot be faulted for coming to a finding that petitioner s product is hardened bread as in toast. It is a clear case of the product of bread having two applicable classifications. The decision in Kesharwani Enterprises is not applicable since the Chhattisgarh Act does not have an entry corresponding to entry 77B in Schedule B. Also, revenue s submission regarding G. RADHAKRISHNA MURTHI CO. AND OTHERS VERSUS COMMERCIAL TAX OFFICER-IVB, VIJAYAWADA AND OTHERS (AND OTHER APPEALS AND WRIT PETITION) [ 1997 (2) TMI 474 - SUPREME COURT] , of a distinct and separate product said by the Supreme Court as cannot come within the entry, as cannot be expanded to accommodate it, to be inapplicable because the Odisha Act provides for two separate entries in respect of essentially the same products bread and rusk, the latter being hardened bread as in toast. Conclusion - The product in question is essentially bread. The Tribunal's classification of the product under Entry 77B and imposition of penalty is upheld. There are no substantial question of law to arise from impugned judgment of the Tribunal. The review petition is dismissed.

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• 2025 (1) TMI 471
  Applicability of provisions of sub-section (4) of Section 16 of HP VAT Act, 2005 - HELD THAT:- Without there being a specific finding with regard to applicability of sub-section (4) of Section 16, the orders passed by the authorities below cannot sustain. The present revision petition is allowed and the matter is remitted back to the assessing authority to decide the case afresh and while doing the assessing authority shall take into consideration the ratio of the judgments laid down by the Hon ble Supreme Court in HINDUSTAN STEEL LIMITED VERSUS STATE OF ORISSA [ 1969 (8) TMI 31 - SUPREME COURT] , the judgment of Rajasthan High Court in ASSISTANT COMMERCIAL TAXES OFFICER VERSUS KAMAL GLASS BOTTLES SUPPLY CO. [ 1992 (3) TMI 340 - RAJASTHAN HIGH COURT] , A Division Bench judgment of Orissa High Court in INDIAN PAINTS AND CHEMICALS (P) LTD. VERSUS SALES TAX OFFICER, CUTTACK CENTRAL I CIRCLE [ 1997 (5) TMI 409 - ORISSA HIGH COURT] and the judgment of Hon ble Supreme Court in DAYLE DE SOUZA VERSUS GOVERNMENT OF INDIA THROUGH DEPUTY CHIEF LABOUR COMMISSIONER (C) AND ANOTHER [ 2021 (11) TMI 67 - SUPREME COURT] , wherein it was held that ' Under the Proviso (a) to Section 200 of the 1973 Code, there may lie an exemption from recording pre-summoning evidence when a private complaint is filed by a public servant in discharge of his official duties; however, it is the duty of the Magistrate to apply his mind to see whether on the basis of the allegations made and the evidence, a prima facie case for taking cognizance and summoning the accused is made out or not.' Matter remanded back to the assessing authority for fresh consideration with specific instructions to comply with procedural requirements and exercise discretion judiciously.

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• 2025 (1) TMI 470
  Condonation of delay in filing the appeal against the ex-parte assessment order - no sufficient cause has been made out for condoning the delay - HELD THAT:- The First Appellate Authority as well as the MSTT have correctly come to the conclusion that no sufficient cause has been made out for condoning the delay. It is the case of the Appellant that the ex-parte assessment order, and which was challenged under Section 26, was served upon the brother of one of the partners of the Appellant-Firm. That brother did not inform any of the partners of the passing of the assessment order and therefore the delay in filing the Appeal. Both the Authorities below have disbelieved this story and hence refused to exercise their discretion in condoning the delay. After going through the record we also find the story of the Appellant rather unbelievable. There is absolutely no explanation coming forward as to how the brother of one of the partners of the firm, and who claims that he was never a partner of the Appellant-firm, got his hands on the seal of the partnership firm. Even the affidavit filed by the said brother, and which is on record at Exhibit- F of the Petition, is completely silent on how he (the brother) had in his possession the seal of a partnership firm of which he claims he was never a partner. Even in the above Appeal, no explanation is given as to how the brother of the one of the partners had in his possession the seal of the partnership firm. Conclusion - The delay in filing the appeal was not condoned due to the lack of sufficient cause. Appeal dismissed.

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• Indian Laws

• 2025 (1) TMI 469
  Dishonour of cheque - acquittal of offence under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumption under Sections 118 and 139 of the NI Act - HELD THAT:- The present case relates to acquittal of an accused in a complaint under Section 138 of the NI Act. The restriction on the power of Appellate Court in regard to other offence does not apply with same vigor in the offence under NI Act which entails presumption against the accused. It is also well settled that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque/ respondent received the cheque in discharge of a legally enforceable debt or liability are raised against the accused. In the present case, the ground on which the respondent has been acquitted is that since the money was advanced by the complainant and his children, the complainant himself was not entitled to the entire sum of money, that is, Rs. 7,00,000/-. The learned MM noted that the person in whose favour the cheque was issued must be entitled to the cheque amount or must have some special authorization to file a complaint qua the cheque of other person. It was noted that the present complaint was not maintainable qua Manish Gupta and Bhumika Gupta. Consequently, the learned MM noted that since the complainant himself was not entitled to the entire cheque amount thereby making the cheque amount more than the liability owed by the respondent, the respondent was liable to be acquitted. It is undisputed that the respondent had entered into the agreement with the complainant, pursuant to which the subject cheque was issued to the complainant. The subject cheque, on presentation, dishonoured for the reason Funds Insufficient. Thus, all the ingredients to constitute an offence under Section 138 of the NI Act are met - The respondent was obligated to raise a probable defence in order to rebut the presumptions raised against him under Section 139 and 118 of the NI Act. Except for contentions that the complainant was not competent to file the complaint, and that the respondent was not liable to the entire cheque amount towards the complainant, the respondent has failed to raise a probable defence to rebut the presumptions raised against him. Conclusion - The respondent failed to rebut the presumptions raised against him under Sections 139 and 118 of the NI Act. The impugned judgment dated 19.11.2018, acquitting the respondent of the offence under Section 138 of the NI Act is accordingly set aside - List on 16.01.2025 for further directions.

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• 2025 (1) TMI 468
  Dishonour of cheque - conviction of the accused under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumptions under Sections 118 and 139 of the NI Act - HELD THAT:- It is trite law that this Court is required to exercise restraint and should not interfere with the findings in the impugned orders or reappreciate evidence merely because another view is possible unless the impugned orders are wholly unreasonable or untenable in law. It is also well settled that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque/ respondent received the cheque in discharge of a legally enforceable debt or liability are raised against the accused. From a perusal of the statement of the petitioner under Section 313 of the CrPC, it is apparent that the petitioner does not dispute that the respondent had advanced a sum of Rs. 20,00,000/- to the petitioner. The petitioner in fact admitted that he had already returned a sum of Rs. 12,00,000/- by way of various cash installments. He stated that the said amount was arranged by him by withdrawing the same from his bank account, and that he also had receipts in that regard - From a perusal of the impugned judgment, it is apparent that the learned ASJ took into account all the contentions of the petitioner. It was noted that since the petitioner had admitted his signatures on the cheque, the presumptions under Section 139 and 118 were raised against the petitioner. In the present case, the petitioner sought to raise a probable defence by stating that the cheques in question were misplaced from his office for which he had lodged a police complaint and had given intimation to the bank. Though pleaded that the cheques were stolen, and that he had filed a police complaint, the petitioner failed to lead any evidence to corroborate the same. The petitioner failed to produce or append a copy of such police complaint. In the absence of any evidence to substantiate his claim, a bare averment that a police complaint had also been filed does not suffice to refute the presumption raised against the petitioner under Sections 139 and 118 of the NI Act - Since the signatures on the cheque were not disputed, the presumptions were raised against the petitioner under Section 139 and 118 of the NI Act. It was thus up to the petitioner to raise a probable defence on a preponderance of probabilities to contend that there existed no debt/liability in the manner as pleaded by the respondent. Even otherwise, the learned ASJ did not rely upon the testimony of the Court witnesses while upholding the conviction of the petitioner under Section 138 of the NI Act. Since the signatures were not disputed, the onus was on the petitioner to have raised a probable defence on a preponderance of probabilities that there existed no debt/liability in the manner as pleaded by the respondent. Conclusion - The petitioner had not led any evidence to controvert the presumptions against him under Section 118 and Section 139 of the NI Act. Once the signature on the cheque was admitted, it was for the petitioner to rebut, and establish a probable defence to show that on a preponderance of probabilities, there existed no debt/liability in the manner pleaded in the complaint/demand notice/affidavit evidence. In the opinion of this Court, the said burden had not been discharged. The learned ASJ rightly upheld the conviction of the petitioner under Section 138 of the NI Act, and the same cannot be faulted with. Petition dismissed.

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