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TMI Tax Updates - e-Newsletter January 13, 2024 Case Laws in this Newsletter: GST Income Tax Benami Property Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Articles RIGHT OF WAY FOR TELECOMMUNICATION NETWORK ITC cannot be denied when FORM GSTR-2 was not notified GST and seconded employees – Conundrum of control, supervision, and costs Penalty cannot be imposed if terms of the Show Cause Notice have been complied with News DPIIT organises Startup India Innovation Week from 10th-18th January 2024 Notifications GST - States 26/2023-STATE TAX - dated 3-1-2024 - Manipur SGST Seeks to extend dates of specified compliances in exercise of powers under section 168A of MGST Act Circulars / Instructions / Orders SEBI SEBI/HO/MIRSD/POD-1/P/CIR/2024/4 - dated 12-1-2024 Ease of Doing Investments by Investors- Facility of voluntary freezing/ blocking of Trading Accounts by Clients SEBI/HO/AFD/PoD1/CIR/2024/2 - dated 11-1-2024 Foreign investment in Alternative Investment Funds (AIFs) DGFT 37/2023 - dated 12-1-2024 Extension of validity of Pre-Shipment Inspection Agencies (PSIAs) Customs PUBLIC NOTICE No. 51/2023 - dated 28-12-2023 Enabling ICES for compliance of Board Circular No.19/2016-Cus. and modification in ACB role in ICES for suspended/revoking warehouse- reg Highlights / Catch Notes GST Cancellation of GST registration of petitioner - SCN does not contain any reason for the proposed cancellation - A taxpayer’s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. - The impugned show cause notice dated 03.08.2023 and the order of cancellation dated 15.09.2023 are set aside. The GST registration of the petitioner is restored to its original number. Petitioner shall file the requisite returns in accordance with law. - HC Visit to Get Source Violation of principles of natural justice (audi alterem partem) - In the present case, when the petitioner had cancelled its registration in the year 2019, a proper notice was required to be issued to it u/s 74 of the Act at its address. However, the authorities simply uploaded the Section 74 show cause notice on the web portal inspite of knowing that the petitioner had already cancelled its registration prior to the date of issuance of the show cause notice. This action clearly prevented the petitioner from appearing in the hearing in the original proceeding u/s 74 of the Act that was accordingly passed ex parte - HC Visit to Get Source Revocation of GST registration - as now the Petitioner has regularized the returns upto March 2023 and is also willing to regularize the future returns within four weeks from the date the registration is restored, the Petitioner needs to be granted such an opportunity to undertake filing of the returns for the future period after March 2023. - HC Visit to Get Source Penalty u/s 129 - the E-Way Bill which was later produced was infact generated after the interception of the vehicle by the revenue authority. The said E-Way Bill was rejected as it was found to be an attempt to post facto rationalize the illicit transportation of goods. The aforesaid findings have not been assailed before the initial authority in the show cause notice or in the memo of appeal or even in the writ petition. - The writ petition (tax) is dismissed - HC Visit to Get Source Rate of GST - Rental / Leasing Charges for Industrial Equipment’s provided with operator - The supplies of rental / leasing services made by the applicant fall under sub entry (viia) of entry of sl no 17 of Notification 11/2017. Therefore the rate of tax for the service shall be same as applicable on supply of such goods - AAR Visit to Get Source Liability of TDS under GST - Notified persons u/s 51 of CGST ACT 2017 read with Notification No. 33/2017 - The Applicant is established by the Government under the ministry of fertilizer as a PSU. - Cumulative shareholdings in the company i.e., 87.3% belong to Central PSUs & the State Government of Telangana. - The applicant falls u/s 51(1)(d) of the CGST Act. - the applicant supplier will not attract TDS. - AAR Visit to Get Source Income Tax Validity of reopening of assessment - The assessment order would disclose that all replies given by the petitioner were considered. Even if some aspects were not considered, statutory remedy of appeal against the assessment order is available to the petitioner. - HC Visit to Get Source Offences triable by Special Court - offences u/s 276C(1)/278 r.w.s. 278B/278E - ACMM had committed a grave illegality and irregularity of procedure by not only entertaining the application but also hearing detailed arguments on behalf of the proposed accused person, admittedly at a stage when cognizance was yet to be taken. In other words, learned ACMM appears to have not only committed a procedural irregularity but simultaneously also violated the law as declared by the Constitutional Courts. - HC Visit to Get Source Addition u/s 68 - proposal to tax the same u/s 115BBE - According to the petitioner, the sum represented a genuine unsecured loan from an entity - There is nothing to indicate that the appellate authority independently applied his mind. The conclusions are in the nature of ipse dixit and no supporting reasons are discernible. - Matter restored back for re-consideration - HC Visit to Get Source LTCG on sale of property - reference to ld. DVO - if the sale consideration shown by the assessee itself is equal to or less than the value fixed by the stamp valuation authority, the value shown by the assessee is to be adopted as the full value of consideration - the reference made per se thereon is illegal and against the provisions of section 50C of the Act which is a specific provision. - AT Visit to Get Source Doctrine of merger - Validity of Revision u/s 263 when existing pending appeal against order passed u/s 153C r.w.s. 144 - when larger issue was pending before CIT(A), the revisionary authority could not exercise jurisdiction u/s 263. thus we would hold that the impugned revision u/s 263 was bad-in-law - AT Visit to Get Source Liability to collect tax at source (TCS) u/s 206C(6A)/206C(7) - Form No.27C filled belatedly - sale of scrap - When there was no dispute about such a declaration being filed in a prescribed format and there was no dispute about the genuineness of such declaration, mere delay in filing the said declaration would not defeat the very claim. - AT Visit to Get Source Power of CIT(A) for enhancement u/s 251(2) - Enhancing the assessed income by making disallowances of deferred revenue expenses - There is no material on record suggesting that the assessee was awarded the opportunity of being heard before the enhancement of income by the learned CIT(A). As such, the appellate authority cannot enhance the assessment without issuing show cause notice. - AT Visit to Get Source Applicability of provisions of section 28(vi)(a) - conversion of the unsold inventory into fixed asset - merely because some of the built-up area was leased out for earning rental income does not alter the nature of the asset and it would tantamount to exploitation of the unsold inventory to earn income. No infirmity in his order holding that provisions of section 28(vi)(a) do not apply to the facts of the case for the impugned A.Y. - AT Visit to Get Source Customs Requirement of mandatory pre-deposit under Section 129-E of Customs Act, 1962 - The mandatory provisions are required to be adhered to by the petitioner - the same cannot be declared to be inapplicable in the facts of the case as it is mandatory requirement for the petitioner to pre-deposit requisite amount so as to enable the appellate authority to consider the appeal on merits. - HC Visit to Get Source Validity of show cause notice - Diversion of duty-free imported gold under the Advance Authorization Scheme - At this stage, it is not relevant to consider whether the petitioner would ultimately succeed. The arguments raised require adjudication of facts - Whether the allegations would conclusively prove case against the assessee is not material. The same is in the realm of subjective satisfaction, which at this stage, cannot be said to be unfounded. Any such adjudication by this Court would amount to adjudicating the Show Cause Notice dated 11.08.2021. - HC Visit to Get Source Confiscation - redemption fine - penalty - The appellant has contravened the provisions of Section 17 and 46(4) of the Act by intentionally filing wrong declarations and by their acts of omissions and commissions had rendered the goods liable for confiscation under Section 111(l) and 111(m) of the Act. The appellant filing the Bill of Entry under self-assessment was duty bound to submit true and correct details. - No interference is called for in the quantum of redemption fine - AT Visit to Get Source Valuation of imported goods - Methyl Phenyl Acetylene - Availability of contemporaneous import or not - it is not unusual for a foreign supplier to give a higher discount to an importer who is importing a much larger quantity and merely because such a discount has been given by the supplier it cannot be said that there has been any undervaluation in the invoice. - AT Visit to Get Source Indian Laws Dishonour of Cheque - All that a complaint under Section 138 of N.I. Act requires to contain is such factual averments as are necessary to satisfy the ingredients of the said provision, namely, that the cheque/money bill which has been dishonoured was issued to discharge full or partial pre-existing debt liability. It is not be the pre-requisite of Section 138 of the N.I. Act to plead evidence in the complaint itself. - SC Visit to Get Source IBC Eligibility to submit Resolution Plan - former promotor/director of the company - Ineligibility is being held only on the ground that Respondent No.2 was promoter of the Corporate Debtor till 2018 when he resigned. The view taken by the Adjudicating Authority is not as per the true and correct interpretation of Section 29A. Section 29A does not make per se promoters and directors ineligible to submit a plan unless they are ineligible under clauses (a) to (g) - Since in the present case, it is not the case that any of the clauses (a) to (g) are attracted on Respondent No.2, the mere fact that Respondent No.2 was promoter and director shall not make him ineligible to submit a Resolution Plan. - AT Visit to Get Source Request for closer of CIRP - 88% shareholders ready to provide funds and repay the debts - Rejection of the proposal of the shareholders / corporate debtors - The decision of the CoC is arbitrary in not approving 12A Proposal which Proposal offered to pay entire debt of Financial Creditors as well as all other creditors. From the minutes of 14th and 15th CoC, it is clear that CoC has expressed its willingness to accept the proposal if entire amount is deposited, however, opportunity was not granted by the CoC and within three days from 10.10.2023 meeting i.e. on 13.10.2023 they dissented the proposal although they initially granted six weeks’ time to deposit the amount. - AT Visit to Get Source Settlement proposal under Section 12A of IBS - Resolution Plan already approved by the Coc - The Adjudicating Authority committed error in giving an opportunity to Respondent No. 1 to arrive at acceptable settlement. - The application for approval of the Resolution Plan which has already been filed and pending consideration, the Adjudicating Authority ought to have considered and decided the Application for approval of the plan - AT Visit to Get Source SEBI Foreign investment in Alternative Investment Funds (AIFs) - to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. - Circular Visit to Get Source Service Tax Nature of transaction - sale or service - Hall Hire Charges - full VAT stood paid on food sale component - The constraint of separate contract emphasized in impugned order remains of no legal consequence, when supplier of service and service receiver indicate through invoice by implication that separation of both elements was agreed upon and accepted by both parties to the contract - extended period cannot be invoked against the appellant, even if some contrary decisions existed too, as matter involves interpretation of law. - AT Visit to Get Source Classification of services - GIDC is collecting charges towards the maintenance and providing common facilities such as approach roads, street lights, etc. - the charges for maintenance is mandatory hence it is clearly a statutory levy on which no service tax is chargeable as clarified in the board circular No. 89/7/06 dated 18.12.2006 read with observation of the Hon’ble Supreme Court - AT Visit to Get Source Doctrine of mutuality - Liability to pay service tax Club or Association services or not - the definition in Sec 65 (25aa), w.e.f. 01.07.2012, also specifically excludes – any body established or constituted by or under any law for the time being in force. The Appellant is a body registered or incorporated under the Andhra Pradesh Societies Registration Act, 2001. Further explanation 3(a) to Sec 65(44) does not apply to members’ Club/Association, which are incorporated. - AT Visit to Get Source VAT Doctrine of promissory estoppel - Benefit of tax concessions - The notifications withdrawing the backward area status from the concerned Panchayats will have only prospective effect i.e. will be applicable to industries being set up/expanded after the date of withdrawal notifications. These cannot be applied retrospectively to the petitioner units which had already come into production by the time the backward areas status was withdrawn from such Panchayats. These Panchayats shall have to be construed as backward areas/ tax free zone for the purpose of grant of tax incentives to the petitioners for specific period as per the promise extended by the State. - HC Visit to Get Source Rejection of refund claim - Period of limitation - From scrutiny of Section 55 of the JVAT Act it would make it evident that interest would be levied for the period commencing 90 days after the application for refund. Thus, the legislature has intended that Refund Application should be decided within a period of 90 days. In the present case, the same has been given a complete go by - the action of the Respondents is unjust and arbitrary which seek to defeat legitimate claims of the petitioner. - HC Visit to Get Source Case Laws: GST 2024 (1) TMI 574 Cancellation of GST registration of petitioner - SCN does not contain any reason for the proposed cancellation - HELD THAT:- It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. Further, the Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, petitioner had no opportunity to even object to the retrospective cancellation of the registration. The impugned show cause notice dated 03.08.2023 and the order of cancellation dated 15.09.2023 are set aside. The GST registration of the petitioner is restored to its original number. Petitioner shall file the requisite returns in accordance with law. 2024 (1) TMI 573 Cancellation of GST registration with retrospective effect - HELD THAT:- It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the fact that petitioner does not seek to carry on business or continue the registration, the impugned order dated 04.04.2022 is modified to the limited extent that registration shall now be treated as cancelled with effect from 24.08.2021 i.e. date of demise of Sh. Surinder Singh. Respondents are also not precluded from taking any steps for recovery of any tax, penalty or interest that may be due in respect of the subject firm in accordance with law. Petition disposed off. 2024 (1) TMI 572 Seizure of Vehicle - penalty order passed in ex-parte - no SCN issued to the petitioner to show cause why the truck in question may not be seized - violation of principles of natural justice - HELD THAT:- By virtue of the statutory law, the petitioner may not be entitled to release of the truck unless he deposits Rs. One lakh as provided under proviso-1 of Section 129 (6) of the Act. In such facts, it appears that the petitioner is entitled to one opportunity of hearing before the authority to furnish his explanation and to establish the fact that there was no connivance of the petitioner or no active role played by the petitioner in the illegality that are attributed to the dealer viz-a-viz the goods being transported on the truck in question. At present, the penalty order does not appear to bring out any conduct of the petitioner as may indicate or establish collusion between the petitioner and the importing dealer M/s Royal India Enterprises. Truck being the valuable property and a capital asset of the transporter which is utilised to generate revenue/ income, we perceive valuable civil right of the petitioner having being adversely affected exparte. In so far as no opportunity of hearing has been granted to the petitioner before the truck has been seized and since amount of Rs. One lakh has otherwise become due for release of the vehicle, the writ petition is disposed off - petitioner may treat the penalty order as the show cause notice and furnish reply to the Respondent No. 2 only for the purpose of obtaining release of the truck. Petition disposed off. 2024 (1) TMI 571 Maintainability of petition - appealable order - non-constitution of Appellate Tribunal - HELD THAT:- The order impugned is appellable under Section 112 of the West Bengal Goods and Services Tax Act, 2017 corresponding to the Central Goods and Services Tax Act, 2017 and the appeal lies to the Appellate Tribunal - It is not in dispute that the Appellate Tribunal has not yet been constituted. The Government of India, Ministry of Finance, Department of Revenue Central Board of Direct Taxes and Customs GST Policy Wing issued a Circular dated 18th March 2020 on the subject of clarification in respect of appeal with regard to the non-constitution of Appellate Tribunal - The Hon ble Division Bench of the Bombay High Court in the case of Rochem India Pvt. Ltd. [ 2023 (2) TMI 878 - BOMBAY HIGH COURT] after taking note of paragraph 4.2, 4.3 and 5 of the said circular observed that the Government with the intent that the taxpayers are not prejudiced for want of the tribunal extended the period of limitation. It is well settled that in the event the statutory remedy is not available, writ petition is maintainable - This Court is also of the considered view that a reasonable time should be allowed to the petitioner to approach the Appellate Tribunal after it becomes functional. This Court is, therefore, inclined to follow the time limit stipulated in paragraph 4.2 of the Circular dated 18th March, 2020 as such time limit appears to be reasonable within which the petitioner will be at liberty to file the appeal before the Appellate Tribunal. This Court is of the considered view that the following order will protect the interest of the petitioner as well as the Revenue - Petition disposed off. 2024 (1) TMI 570 Violation of principles of natural justice (audi alterem partem) - cancellation of registration voluntarily on September 18, 2019, whereas the notice under Section 74 of the Act was given to it only by way of uploading the same on the web portal on a subsequent date - HELD THAT:- It is trite law that principles of audi alteram partem are required to be followed by the authority and giving a go by to the same results in violation of the principles of natural justice. One may examine the development of the law in relation to natural justice. The Division Bench of this Court in SR COLD STORAGE VERSUS UNION OF INDIA AND 3 OTHERS [ 2022 (8) TMI 806 - ALLAHABAD HIGH COURT] held Natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. The purpose of following the principles of natural justice is the prevention of miscarriage of justice. The Supreme Court, in the celebrated constitutional judgment in MANEKA GANDHI VERSUS UNION OF INDIA [ 1978 (1) TMI 161 - SUPREME COURT] , while dealing with a challenge laid to an order by which a passport was impounded, expounded upon the significance of the principles of audi alteram partem to the doctrine of natural justice. The Supreme Court in M/S. DHARAMPAL SATYAPAL LTD. VERSUS DEPUTY COMMISSIONER OF CENTRAL EXCISE, GAUHATI OTHERS [ 2015 (5) TMI 500 - SUPREME COURT] outlined the fundamental importance of providing an opportunity for hearing before making any decision, and characterized it as a basic requirement in any legal proceedings. The Supreme Court further propounded that compliance with principles of natural justice is an implied mandatory requirement, and non-observance of these principles can invalidate the exercise of power. In the present case, when the petitioner had cancelled its registration in the year 2019, a proper notice was required to be issued to it under Section 74 of the Act at its address. However, the authorities simply uploaded the Section 74 show cause notice on the web portal inspite of knowing that the petitioner had already cancelled its registration prior to the date of issuance of the show cause notice. This action clearly prevented the petitioner from appearing in the hearing in the original proceeding under Section 74 of the Act that was accordingly passed ex parte - any action that proceeds without proper intimation and service of the show cause notice to the petitioner is vitiated and bad in law, and is, accordingly required to be quashed and set aside. The impugned orders dated September 14, 2021 and October 5, 2023 are quashed and set aside with a direction upon respondent No.3 to grant an opportunity of hearing to the petitioner on January 30, 2024 at 11.00 AM, and after hearing the petitioner, pass a reasoned order within two weeks from the date of hearing. It is expected that no unnecessary adjournments shall be granted by the authority concerned. The writ petition is allowed. 2024 (1) TMI 569 Maintainability of petition - availability of alternative remedy - Rejection of Input Tax Credit - HELD THAT:- The impugned order contains a detailed narration of the facts. The legal provisions relating to input tax credit are also reproduced therein. Thereafter, the respondent has set out in paragraph 4 of the impugned order that input tax credit was refused because of the failure of the petitioner to file the return within the period prescribed by statute. Significantly, the impugned order takes into account the petitioner's reply to the show cause notice and it is evident that said order was issued after providing a personal hearing to the petitioner. The discretionary jurisdiction cannot be exercised - this writ petition is not entertained in light of the statutory remedy available to the petitioner - petition dismissed. 2024 (1) TMI 568 Revocation of GST registration - Petitioner had not filed its 3B returns for more than six months - proper opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- Considering the peculiar facts of the case and the nature of the impugned orders and the grievance of the Petitioner that the Petitioner was not adequately heard in the impugned orders being passed, it is opined that as now the Petitioner has regularized the returns upto March 2023 and is also willing to regularize the future returns within four weeks from the date the registration is restored, the Petitioner needs to be granted such an opportunity to undertake filing of the returns for the future period after March 2023. The impugned orders dated 31st May 2023 and 14th September 2023 are hereby quashed and set aside - Respondents are directed to restore the GST registration of the Petitioner within a period of one week from the date of uploading of this Order - petition allowed. 2024 (1) TMI 567 Condonation of delay in filing appeal - sufficient cause for delay or not - HELD THAT:- It appears that the reasons assigned by the petitioner for the delay in filing the Appeal are reasonable. Hence, this Court is inclined to condone the delay, as, the petitioner's right to prefer appeal cannot be deprived of on account of the delay, which has occurred beyond their control. Accordingly, the delay in filing the appeal is condoned. Therefore, the Appellate Authority is directed to entertain the appeal filed by the petitioner and dispose of the same, in accordance with law. Petition disposed off. 2024 (1) TMI 566 Cancellation of petitioner's GST Registration - petitioner submitted that the petitioner would file GST returns and would pay tax along with penalties and interest thereon etc. ,in the event of its GST Registration number being restored - HELD THAT:- In view of the fact that the petitioner has been continuing his business operations and due to the ill health of the Managing Partner of the petitioner-Firm, who was incharge of filing the GST returns of the petitioner, the petitioner-Firm was not in a position to file GST Returns and in the light of the judgments relied on by the learned counsel for the petitioner, this court, in the interest of justice, is inclined to allow this Writ Petition. The petitioner is directed to file restoration petition and the respondent is directed to accept the same and restore the GST Registration number within a week from the date of filing of restoration petition. On restoration of GST Registration, the petitioner is directed to pay the GST dues from July 2022 to December 2022 along with interest, penalty etc., within a period of 45 days from the date of restoration of GST. The impugned order is set aside - Petition allowed. 2024 (1) TMI 565 Penalty proceedings taken out under Section 129 of the GST Act - petitioner not in possession of a valid E-Way Bill while transporting the goods - HELD THAT:- The E-Way Bill is a mandatory requirement under Rule 138A of the GST Rules. Transporting the goods without possession in the absence of E-Way Bill constitutes a contravention of the provisions of the GST Act. The authorities have further found that the E-Way Bill which was later produced was infact generated after the interception of the vehicle by the revenue authority. The said E-Way Bill was rejected as it was found to be an attempt to post facto rationalize the illicit transportation of goods. The aforesaid findings have not been assailed before the initial authority in the show cause notice or in the memo of appeal or even in the writ petition. The writ petition (tax) is dismissed. 2024 (1) TMI 564 Classification of service - rate of GST - Rental / Leasing Charges for Industrial Equipment s provided with operator - Classification under HSN Codes, 84151090, 84798920, 84145930, or not - HELD THAT:- The supplies of rental / leasing services made by the applicant fall under sub entry (viia) of entry of sl no 17 of Notification 11/2017. Therefore the rate of tax for the service shall be same as applicable on supply of such goods which are: For HSN Code 84151090 - CGST 14% + SGST 14 %. For HSN Code 84798920 - CGST 6% + SGST 6%. For HSN Code 84145930 - CGST 9% + SGST 9% 2024 (1) TMI 563 Liability of TDS under GST - Notified persons under section 51 of CGST ACT 2017 read with Notification No. 33/2017 dated 15 September 2017 or not - liability to pay GST TDS by deducting it from the consideration payable to the Supplies - applicability of exemption notification for the transactions undertaken by the applicant if other applicable conditions remain satisfied. HELD THAT:- The Applicant is established by the Government under the ministry of fertilizer as a PSU. - Cumulative shareholdings in the company i.e., 87.3% belong to Central PSUs the State Government of Telangana. - The applicant falls under section 51(1)(d) of the CGST Act. Any supplies made to persons falling under clauses (a), (b), (c) (d) of the sub-section (1) of section 51 will not attract TDS at the hands of the recipients of such supplies by virtue of Notification No.73/2018 dt: 31-12-2018. Income Tax 2024 (1) TMI 575 Computation of LTCG - cost of acquisition from the sale consideration to compute the long term capital gains - HELD THAT:- DRP found the sale consideration of 29 flats at Rs. 5,12,07,000/- and the cost of acquisition was Rs. 3,80,05,661/-. Since the AO failed to reduce the cost of acquisition from the sale consideration to compute the long term capital gains, learned DRP directed the AO to consider this aspect and to allow the indexed cost of acquisition to be reduced from the sale consideration to compute the correct long term capital gains. AO mistook this direction and he computed the long term capital gains at Rs. 3,80,05,664/-. We, therefore, accept the request of the assessee and direct AO to reduce the sale consideration by indexed cost of acquisition, taking the cost of acquisition at Rs. 3,80,05,664/-. Ground No. 2 is accordingly allowed. Deduction u/s 54F - For the assessment year 2012-13, a Co-ordinate Bench of the Tribunal directed the learned CIT(A) to verify whether the assessee is entitled to claim deduction under section 54F of the Act; that pursuant to such a direction, learned CIT(A) called for remand report of the learned Assessing Officer and such an appeal is pending at that stage. As submitted that pending finalization of the issue relating to section 54F of the Act in the appeal for the assessment year 2012-13, this issue may be restored to the file of the learned Assessing Officer to be taken up after the learned CIT(A) finalizes the issue for the assessment year 2012-13. Learned DR placed reliance on the assessment order and argued in justification thereof. Since there is no dispute on the factual aspect, we deem it just and proper to restore the issue to the file of the learned CIT(A) to take a view inconsonance with the view to be taken in the appeal for the assessment year 2012-13. Ground No. 3 is, therefore, treated as allowed for statistical purposes. 2024 (1) TMI 562 Penalty u/s 271(1)(c) - debatable issue - bonafide claim by disclosing income and particulars of such income - HELD THAT:- As stated by the learned counsel for the parties the matter has been amicably settled between the parties under the Vivad se Vishwas Scheme. Special leave petition has rendered infructuous and is disposed of as such. 2024 (1) TMI 561 Disallowing the allowance of interest - appeals came to be dismissed by the High Court of Rajasthan without adjudication on merits - HELD THAT:- We are of the opinion that the High Court would have condoned the delay in filing the paper books As Appeal stood dismissed for non-compliance, the High Court was of the opinion that inconsistent orders cannot be passed and proceeded to dismiss appeal without examining the matter on merits. We are of the opinion that the Appellant is entitled to have his appeals heard on merits. 2024 (1) TMI 560 TDS u/s 195 - payments made by the assessee for marketing services to the US Company as taxable in India as FTS [Fee for Technical Services] - US Company does not have any permanent establishment in India - order under Section 201(1) 201(1A) - India- USA DTAA - as per HC [ 2023 (3) TMI 422 - KARNATAKA HIGH COURT] services received by the assessee cannot be considered as Royalty or Fee for included services to deduct TDS - HELD THAT:- Delay in filing the special leave petitions is condoned. We are not inclined to interfere in the matter. Following the order [ 2023 (11) TMI 594 - SC ORDER] , this special leave petition is also dismissed. 2024 (1) TMI 559 Eligibility of deductions u/s 80IC - no printing or manufacturing of books in the eligible undertaking at Rudrapur - as per AO assessee did not carry out any printing or binding of books in the eligible undertaking at Rudrapur as neither the paper nor the printed material reached the eligible unit for printing, cutting and binding etc. and no manufacturing activity had actually taken place, therefore, the deduction u/s 80IC not be allowed - according to assessee process of printing and binding of books is certainly carried out in the eligible undertaking of the respondent/assessee at Rudrapur - HELD THAT:- The question as to whether the exercise of printing and binding of books is carried out at the eligible undertaking of the respondent/assessee is a question of fact, on which findings of CIT(A) in favour of the respondent/assessee were confirmed by the Tribunal.There being no ground raised by the appellant/revenue alleging perversity in the said findings of facts, this court under Section 260A of the Act cannot venture into that aspect. TDS u/s 194H - trade discount offered by the assessee to the buyer - non deduction of TDS - HELD THAT:- The issue under Section 40(a)(ia) of the Act stands already covered in favour of the assessee by way of judgment of the Supreme Court in the case of Ahmedabad Stamp Vendors Association [ 2012 (9) TMI 298 - SC ORDER] 2024 (1) TMI 558 Validity of reopening of assessment - petitioner as alleged that his reply to the notice u/s 142(1) was not considered and petitioner was not given personal hearing - HELD THAT:- Insofar as the question of personal hearing is concerned, from Ext. P10, it is evident that the petitioner was provided VC link and password and that therefore, the petitioner cannot say that no opportunity of personal hearing was given to him. The assessment order would disclose that all replies given by the petitioner were considered. Even if some aspects were not considered, statutory remedy of appeal against the assessment order is available to the petitioner. There is no ground to entertain the present writ petition and the same is hereby dismissed leaving it open to the petitioner to take recourse to any other remedy available to him under the law. 2024 (1) TMI 557 Offences triable by Special Court - ACMM at Delhi's territorial jurisdiction - offences u/s 276C(1)/278 r.w.s. 278B/278E of the Income Tax Act, 1961 and Sections 120B/199/200/204 of the Indian Penal Code, 1865 - a promotee IAS officer in the state of Chhattisgarh is engaged in movement of unaccounted cash through different channels with regard to sectors such as agriculture, mining, liquor trade and licensing in the state of Chhattisgarh. His son Yash Tuteja (accused no. 2) and Saumya Chaurasia (accused no. 3) Deputy Secretary of Chief Minister of Chhattisgarh are his accomplices who are actively engaged and involved in aforementioned illegal operations Interim application seeking stay of that portion of the impugned order passed by the learned ACMM (Special Acts), whereby the said learned ACMM had returned the complaint in respect of the offences under Sections 276C(1)/278 read with Sections 278B/278E of the Income Tax Act, 1961 and Sections 120B/199/200/204 of the Indian Penal Code, 1860 to the petitioner for filing the same before the Court of competent jurisdiction, Whether the Respondents had any right to appear and address arguments or raise any issue on facts or on law, before the learned ACMM at the pre-cognizance stage? - HELD THAT:- So far as an accused person is concerned, till the stage when the accused has been summoned by the Criminal Courts, he has no locus to interject or interfere with the proceedings before a Magistrate. The reason is not far to see, in as much as, till the cognizance of the offence is taken, the accused is not a person who is identified as such, for him to be vested with any right of audience, apart from the fact that it is possible that even after the preliminary inquiry under Section 202 Cr.P.C., the magistrate may dismiss the complaint, without even calling upon the accused. Even this Court in Mohua Moitra s case, [ 2019 (10) TMI 1579 - DELHI HIGH COURT] while relying upon the judgements of the Supreme Court, has assertively concluded that the prospective accused cannot stall the proceedings. In the present case, the learned ACMM had not only entertained and heard detailed arguments on behalf of the Respondent No. 8/Accused No. 8, but had actually dismissed the said application vide its order dated 01.11.2022 and yet, had retained the arguments/contentions raised by the Applicant/Accused No. 8 regarding the very maintainability of the complaint as also the lack of territorial jurisdiction to entertain such complaint, for consideration at an appropriate stage. ACMM had committed a grave illegality and irregularity of procedure by not only entertaining the application but also hearing detailed arguments on behalf of the proposed accused person, admittedly at a stage when cognizance was yet to be taken. In other words, learned ACMM appears to have not only committed a procedural irregularity but simultaneously also violated the law as declared by the Constitutional Courts. Whether learned ACMM at Delhi had any territorial jurisdiction, whether conspiracy arose or not, and whether there were any extraordinary or special circumstances arising in the present case entitling the petitioners to approach this Court under Section 482 Cr.P.C? - Though the learned ACMM appears to have applied his mind, however, seems to have been misdirected to reach definitive conclusions on issues like territorial jurisdiction and conspiracy, which in the opinion of this Court could not have been reached without there being evidence on such aspects. This Court has cursorily examined Section 177 Cr.P.C through till Section 187 Cr.P.C., and observes that the Cr.P.C. itself provides for varied places of jurisdiction in varied kind of situations depending upon case to case basis. It would be relevant to consider the provisions of Section 178 Cr.P.C. whereby different situations in respect of an offence, be it where the said offence is committed partly in one local area and partly in another or, where an offence is a continuing one and continues to be committed in more local areas than one or where it consists of several acts done in different local areas may be inquired into or tried by a Court having jurisdiction over any of such local areas. Likewise, the other sections also give simultaneous power to Magistrates in such various jurisdictions, provided some cause of action as contained in the aforesaid sections arises. Similar would be the effect of Section 220 Cr.P.C. Thus, so far as issue (i) is concerned, this Court is of the firm opinion that the respondents had no locus to either file an application or raise any objections qua territorial jurisdiction, conspiracy or bias etc. at the pre-cognizance stage. Equally, the learned Magistrate had, by entertaining the said application and retaining the arguments on such objections and considering the same vide the impugned order, acted with material irregularity necessitating entertaining of the present petition under section 482 Cr.P.C. Whether the issue of conspiracy is an issue of fact which can be proved or disproved only during trial at the time of evidence? - Conspiracy is an issue of fact and can be proved or disproved by the parties by leading evidence during trial and cannot be ascertained merely by appreciating either documents or arguments and therefore, no definitive conclusion on such issue can be reached by any Court at the stage of taking cognizance. The petitioner in the present case has leveled an allegation that the conspiracy has continued at Delhi, which may need to be tested in trial. In the present case, the learned ACMM appears to have committed the error of precisely reaching a definitive conclusion regarding conspiracy. Ld' Magistrate had also definitively concluded that the conspiracy had indeed ended in Chhattisgarh and no part of the said conspiracy continued till Delhi. This conclusion could not and ought not to have been reached by the learned ACMM, particularly at the stage where cognizance of the offences was to be taken. In case such an order is made to stand, then at the stage of taking cognizance, the accused by mere arguments would get an opportunity to show that no such conspiracy was hatched, that too without any evidence. This would be contrary not only to the aforesaid judgement in Mahua Moitra (supra) but also against all cannons of law and procedure. It is trite that conspiracy is an issue of fact which can be proved or disproved only during trial. This Court is of the considered opinion that the definitive conclusion reached by the learned Magistrate in respect of issue (ii), that is, the alleged conspiracy in the present case, is contrary to the law and prima facie unsustainable. In the light of the prima facie observations rendered above in respect of issue nos.(i) and (ii) and the material illegality and irregularity committed by the learned Magistrate, this Court is also of the opinion that the issue no.(iii) regarding relief of stay of the impugned order has to be in the affirmative. Resultantly, the operation of the impugned order dated 06.04.2023 passed by the learned ACMM in Ct. Cases 1183/ 2022 to the extent of return of complaint qua the offences under Section 276C(1)/278 read with Section 278B/278E of the Income Tax Act, 1961 and Sections 120B/199/200/204 of the Indian Penal Code, 1860 is restrained till further orders. 2024 (1) TMI 556 Addition u/s 68 - proposal to tax the same u/s 115BBE - According to the petitioner, the sum represented a genuine unsecured loan from an entity - AO did not accept this contention because M/s.Magunta Exports had filed a return indicating nil income in the relevant assessment year - appellate authority accepted all the conclusions of the assessing officer and rejected the appeal - HELD THAT:- On examining the impugned order, we find that the appellate authority has set out the grounds raised by the appellant, the written submissions of the appellant and the inferences and conclusions drawn by the assessing officer. The appellate authority has drawn the conclusion that the inferences and findings of the assessing officer are acceptable. However, there is nothing to indicate that the appellate authority independently applied his mind. The conclusions are in the nature of ipse dixit and no supporting reasons are discernible. On this sole ground, albeit without expressing any opinion on the merits of the matter, we inclined to interfere with the appellate order. Consequently, W.P. allowed by quashing the impugned order. As a corollary, the matter is remanded for reconsideration by the appellate authority. 2024 (1) TMI 555 Short grant of TDS credit - petitioner filed a rectification application u/s 154 before the Assessing Officer for the relevant Assessment Year, however, the same has not been decided till date despite several reminder letters - HELD THAT:- Keeping in view the limited relief sought in the present writ petition, the same is disposed of with a direction to the respondent No.1 to decide the petitioner s rectification application dated 20th March, 2018 by way of a speaking order in accordance with law within eight weeks and consequential refund along with up to date interest, if any, be released in further eight weeks time. 2024 (1) TMI 554 Levy of penalty u/s. 271(1)(c) - deduction u/s. 80P as interest income owned by the assessee that their investment with bank is held not eligible for deduction - treatment for debatable issue - HELD THAT:- It is pertinent to note that at the time of disallowing the deduction u/s. 80P(2)(a)(i) of the Act was decided by various courts in two different views across the country. The Jurisdictional High Court also given a finding which was against the assessee but the same was pending before the Hon ble Supreme Court at that juncture. Thus, the issue was debatable and the assessee has not furnished any inaccurate particulars of income but has simply claimed the deduction. Thus, the penalty itself u/s 271(1)(c) will not be attracted in the present case. Assesee appeal allowed. 2024 (1) TMI 553 LTCG on sale of property - reference to ld. DVO - adopting the value adopted by the Departmental Valuation Officer (DVO) ignoring the guideline value determined u/s 50C of the Act - HELD THAT:- The provisions of section 50C of the Act (which is a special provision) are very clear by stating that the full value of consideration shown by the assessee is less than the value fixed by the stamp valuation authority for the purpose of levy of stamp duty, then the value as fixed by the stamp valuation authority shall be deemed to be the full value of consideration. Accordingly, if the sale consideration shown by the assessee itself is equal to or less than the value fixed by the stamp valuation authority, the value shown by the assessee is to be adopted as the full value of consideration Viewing from this angle, we hold that there is absolutely no need for the ld. AO to refer the valuation of the land to ld. DVO u/s 55A of the Act. We hold that the reference made per se thereon is illegal and against the provisions of section 50C of the Act which is a specific provision. Hence we hold that the sale consideration value adopted by the ld. AO by relying on ld. DVO report at Rs. 3,56,93,000/- is patently illegal. The ld. AO is directed to adopt the sale consideration figure at Rs. 2,20,00,000/- only. Purchase cost of land value claimed by the assessee is more than the fair market value determined by the ld. DVO. Accordingly, the reference per se made u/s 55A of the Act becomes illegal in terms of section 55A(1)(a) of the Act. Our view is further fortified by the decision of Puja Prints [ 2014 (1) TMI 764 - BOMBAY HIGH COURT] wherein it was held that prior to 1.7.2012, reference to valuation officer u/s 55A of the Act could not be made if the value of asset given by the assessee was more than its market value. From 1.7.2012, the Act is amended by stating that the value so claimed is at variance with its fair market value . Hence the reference made u/s 55A of the Act in the facts and circumstances of the instant case to determine the fair market value as on 1.4.1981 for determining cost of acquisition is patently illegal and does not gain support from the provisions of the Act. Accordingly, the indexed cost of acquisition should be considered at Rs. 2,17,20,240/-. Appeal of the assessee is allowed. 2024 (1) TMI 552 Delayed contribution towards PF/ESI under Section 36(1)(va) - employer s contribution or employees contribution - CPC processed intimation u/s 143(1) disallowed employer s contribution to PF/ESI in tune with Section 43B of the Act wrongly assuming it to be employee contribution, but on realizing the mistake suo motu rectified the aforesaid intimation - assessee preferred impugned appeal before the CIT(A) against the original intimation and in turn CIT(A) wrongfully confirmed the original intimation without taking cognizance of the rectification order passed u/s 154 which accepted the correct position that sum represents employer s contribution and thus is governed by Section 43B of the Act and provisions of Section 36(1)(va) would not apply in respect of employer s contribution. HELD THAT:- CIT(A) wrongfully confirmed the original intimation without taking cognizance of the rectification order passed under Section 154 which accepted the correct position that the amount represents employer s contribution and thus is governed by Section 43B of the Act and provisions of Section 36(1)(va) would not apply in respect of employer s contribution. The aforesaid amount attributable to employer s contribution emanates from facts on record and therefore, the order of the CIT(A) requires to be set aside to restore the stance of the assessee and assess correct income in accordance with law. As DR for the Revenue did not offer any comment, we find palpable justification in the relief sought by the assessee. The denial of relief in respect of employer s contribution by the CIT(A) on misconception of facts is thus reversed and the position adopted by the Assessing Officer in the rectification order passed under Section 154 is restored. 2024 (1) TMI 551 Delay of 530 days in filing the present appeals before this Tribunal - HELD THAT:- Hon'ble Supreme Court in case of N.Balakrishnan vs. M. Krishnamurthy [ 1998 (9) TMI 602 - SUPREME COURT] in a similar circumstances, held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. The decision of Hon'ble Mumbai Benches in the case of Y.P. Trivedi vs. JCIT [ 2012 (9) TMI 794 - ITAT MUMBAI] held that delay in filing the appeal due to CA's fault is bona fide and must be condoned and the delay of 438 days was condoned. Thus when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non deliberate delay. See MST. KATIJI AND OTHERS [ 1987 (2) TMI 61 - SUPREME COURT] Fee imposed u/s 234(E) for delay in filing the TDS return - CPCTDS while processing the return wrongly charged fee u/s 234E for belatedly filing the TDS return. The Act has been amended from 01/06/2015 and prior to this period, levy of fee was in the statute book, therefore, the assessee is not liable for the period till 01/06/2015 and the issue is squarely covered in favour of the assessee by the decision of jurisdictional High Court in the case of Fatheraj Singhvi [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] 2024 (1) TMI 550 Doctrine of merger - Validity of Revision u/s 263 when existing pending appeal against order passed u/s 153C r.w.s. 144 - as per CIT assessment order, though considered the issue of disallowance u/s 40(a)(ia), did not consider the issue of disallowance of donation and CSR expenses which make the order erroneous and prejudicial to the interest of the revenue - HELD THAT:- As in the pending appeal against order passed u/s 153C r.w.s. 144, the assessee has questioned the legality of reassessment proceedings u/s 147, inter-alia, on the ground that no fresh material came into the possession of Ld. AO so as to form an opinion of escapement of income. Since the proceedings u/s 147 was bad in law, the scope of assessment u/s 153C would not include the scope of reassessment u/s 147. The assessee also assailed the proceedings on the ground that sanction issued u/s 151 was given in a mechanical and casual manner. The assessee has also challenged the legality of proceedings u/s 153C. Since the larger issues including legal issues are already pending before first appellate authority, the order passed by Ld. AO, in our considered opinion, could not be subjected to revision u/s 263. The assessee s case, in such a situation, would be covered under Clause (c) of Explanation-1 to Sec. 263 which puts a bar on initiation of revision u/s 263 when an appeal is pending before Ld. CIT(A). Even otherwise also, the powers of Ld. CIT(A) are co-terminus with those of the AO and he can do what AO could do and can also direct the later to do what the later has failed to do so. As decided in the case of Smt. Renuka Philip vs. ITO [ 2018 (12) TMI 129 - MADRAS HIGH COURT] when larger issue was pending before CIT(A), the revisionary authority could not exercise jurisdiction u/s 263 . thus we would hold that the impugned revision u/s 263 was bad-in-law and the same is therefore, liable to the quashed. Also see VAM Resorts and Hotels Pvt. Ltd. [ 2019 (8) TMI 1418 - ALLAHABAD HIGH COURT] Assessee appeal allowed. 2024 (1) TMI 549 TP Adjustment - differential interest on account of bareboat Charter cum demise lease - HELD THAT:- We have carefully considered the rival contention and find that the assessee has offered income under tonnage tax scheme for it shipping operations. The coordinate bench in case of the assessee for assessment year 2013 14 [ 2020 (3) TMI 430 - ITAT MUMBAI] held that the provisions of transfer pricing regulations are not applicable to the assessee to the extent of operation carried by assessee through qualifying ships which is covered by Tonnage Tax Scheme. Thus we find that this issue has already been decided by the coordinate bench in assessee s favour in assessee s own case for earlier years and also in case of subsequent assessment years. DR could not point out us any reason to deviate from the same and this judicial precedent binds us. As the learned CIT A has also followed the decision of the coordinate bench we do not find any infirmity in the order of the first appellate authority in deleting the above addition and therefore his order is confirmed. The main ground and sub grounds of ground number 1 are dismissed. TP adjustment - Addition as made at the rate of 0.5% in respect of negative lien provided in favour of associated enterprises for obtaining bank loan by AE - HELD THAT:- We find that undertaking by the assessee to not to transfer its holding in another company without prior approval of the bankers of the AE is an international transaction resulting in to a benefit to the AE in obtaining loan. IT needs to be benchmarked. Coordinate bench has held that benchmarking at rate of 0.25 % of the amount of investment. As the issue is decided by the coordinate bench in assessee s own case , we do not find any reason to disturb the order of the learned CIT A as the transaction has originated in the earlier years and not in this year and further there is no difference in the facts and circumstances as well as the risk and assets employed by the assessee pointed out before us. In view of this, the benchmarking at the rate of 0.25% adopted by the learned CIT A was found to be correct as same is also not agitated by assessee, accordingly ground number 2 and its sub- grounds are dismissed confirming the order of the learned CIT appeal. TP adjustment on hire charges - CIT(A) deleted adjustment - HELD THJAT:- As the issue is decided by the coordinate bench in assessee s own case , we do not find any reason to disturb the order of the learned CIT A as the transaction has originated in the earlier years and not in this year and further there is no difference in the facts and circumstances as well as the risk and assets employed by the assessee pointed out before us. In view of this, the benchmarking at the rate of 0.25% adopted by the learned CIT A was found to be correct as same is also not agitated by assessee, accordingly ground number 2 and its sub- grounds are dismissed confirming the order of the learned CIT appeal. TP adjustment on hire charges - HELD THAT:- The fact that is undisputed is that the assessee has offered income under the tonnage taxation scheme for its shipping operation and as it has been held that since tonnage tax scheme actual receipt and expenses incurred are not taken into consideration for the purpose of determining the income of the assessee but it is decided on the basis of the tonnage of the ship and therefore transfer pricing provisions do not apply. This was held by the coordinate benches in assessee s own case for earlier years and therefore we do not find any infirmity in the order of the learned CIT A who followed the decision of the coordinate bench in assessee s own case. Accordingly, ground number 3 of the appeal of learned AO is dismissed and order of the learned CIT A is confirmed. Correct head of income - Consideration of the interest treated by the assessee as income from business, which is treated by the learned assessing officer as income from other sources - HELD THAT:- The money With the bank as margin money was out of the business compulsion and not as per the will of the assessee and therefore such interest income was also considered to be taxable as business income. There is no change in the facts and circumstances of the case and therefore respectfully following the decision of the coordinate bench in assessee s own case for assessment year 2013 14, we have no hesitation in holding that interest received from subsidiary company and the bank are for the purpose of the business and therefore same is required to be charged to tax under the head income from business and not income from other sources. Accordingly ground number 4 of the appeal of the learned assessing officer is dismissed. Interest expenditure disallowed as business expenditure u/s 36 (1) - HELD THAT:- As per assessee s own case for earlier years, we held that the disallowance made by AO has been correctly deleted by the CIT A of the business interest expenditure under section 36 (1) (iii) of the act. Accordingly ground of the appeal of the learned assessing officer is dismissed confirming the order of the learned CIT- A. Disallowance of common interest expenditure - HELD THAT:- We found that the identical issue arose in the case of the assessee for assessment year 2013 14 [ 2020 (3) TMI 430 - ITAT MUMBAI] AO apportioned the said expenditure on the basis of turnover between tonnage and non tonnage activities. We do not find any merit in the order of the A.O. in so far as the interest expenditure is periodic cost of borrowing incurred for the purpose of financing business activities. Therefore it has to be apportioned on basis of cost of financing i.e. value of assets and not on basis of turnover, since the turnover of the business has got no relation with the interest expenditure so incurred by the assessee. We, accordingly, restore this issue to the file of the A.O. to recompute the same by allocating interest expenditure in the ratio of assets employed between the tonnage and non tonnage activities. Decided against revenue. Admission of the additional ground by the learned CIT- A - CIT - A admitted the additional claim made by the learned assessing officer for set off of tonnage business income of the current year loss - HELD THAT:- The ground was admitted by the learned CIT A subject to verification of the learned assessing officer. The learned departmental representative did not agitated the same before us stating any specific reason that why the learned CIT A is not correct in admitting the additional ground of appeal. The facts clearly show that the assessee company in the return of income has shown tonnage tax business income and non-tonnage business loss and computed thereafter the net business loss. However while calculating the tax liability the assessee made an error of calculating the tax at the rate of 30% inadvertently. It was merely an arithmetic error which required to be rectified, allowed by the CIT A in the additional ground. No infirmity in the order of the learned CIT A in admitting the additional ground and directing the learned assessing officer to compute the correct taxable income. Accordingly, the ground of the appeal of the learned assessing officer is dismissed. 2024 (1) TMI 548 Validity of Reopening of assessment - survey action u/s 133A as carried out at the premises of the LO, in course of which, certain documents/CDs were impounded, which contained communication between the LO and head office - HELD THAT:- The information contained in the impounded documents found at the time of survey operation coupled with revelation made regarding activities of the LO from the statements recorded from two of the officers working at the LO, certainly gave an insight not only with regard to the business activities carried on by the HO in India but the extent of involvement of the LO in such business activities of the HO. Thus, in our view, the information gathered at the time of survey operation, either from the documents impounded or from the statements recorded from the officers working at LO certainly constitute tangible material to hold a prima facie view that the income chargeable to tax has escaped assessment. Whether the information contained in the documents and the statements recorded would ultimately result in assessment of escaped income, is a factor which need not be gone into at the time of recording reasons for forming the belief that the income chargeable to tax has escaped assessment. What is required at the stage of recording of reasons is whether there are tangible materials available on record to form a belief that income has escaped assessment. Having examined the facts on record, we are firmly of the view that the Assessing Officer, at the time of forming the belief regarding escapement of income, had tangible material available with him. Thus, in our view, there is a direct nexus/live link between the material available on record and the formation of belief for reopening the assessments under section 147 of the Act. Therefore, we do not find merit in the submissions made by the assessee that reopening of assessments under section 147 of the Act is invalid. PE in India - Whether the assessee had a PE in India? - Whether liaison office (LO) in India can be treated as permanent establishment (PE) in terms of Article 5(2) of India-Germany Double Taxation Avoidance Agreement(DTAA)? - HELD THAT:- LO has a major say with regard to not only the titles to be reprinted in India, but their pricing also. It is also a fact on record that in a report submitted by Conny Schindewolf, the achievement of the LO in increasing the sale of products of the assessee has been appreciated. Though, learned counsel for the assessee has submitted before us that much importance cannot be attached to the said report, as it was for internal consumption , however, we are not impressed. From various invoices placed in the paper book, it is observed that Conny Schindewolf was in an authoritative position of the company, hence, her report carries much weight. While examining the issue relating to existence or otherwise of PE, learned first appellate authority has recorded a factual finding that the LO plays an active role with regard to printing of books in the EPZ, deciding their cost component and their sales. The assessee has not been able to rebut the concurrent factual finding of the departmental authorities in so far as it relates to activities of the LO in printing of books in EPZ. Therefore, in our view, the LO constitutes a PE in terms of Article 5(1) read with Article 5(2) of the treaty, at least, in relation to reprinting of books at EPZ. The exceptions provided under Article 5(4) would not be applicable, as, in our view, the activities undertaken by the LO is not merely limited to preparatory or auxiliary character of a communication channel between the clients in India and HO. In our view, the decision of Nagase Company Ltd.[ 2018 (4) TMI 1964 - ITAT MUMBAI] would be of no help to the assessee, as in that case, the facts on record did not indicate that the role of LO is not limited to preparatory and auxiliary work. In aforesaid view of the matter, we hold that the LO constitutes PE of the assessee in India. Attribution of profit to the PE - As observed, with regard to EPZ sales, learned Commissioner (Appeals) has determined net profit rate at 15% of the total sales made in India and out of that has attributed 80% to the PE. In our view, the attribution of profit by learned Commissioner (Appeals) appears to be irrational and not in consonance with the facts on record. From the assessment order, it is evident that the assessee has incorporated a subsidiary in India in the year 2002. The Assessing Officer has himself observed that the subsidiary is remunerated with a mark up of 11% of the gross receipts while rendering similar nature of services as rendered by the LO. Thus, in our view, the profit rate, at which the Indian subsidiary was remunerated, can be taken as an yardstick to determine the quantum of profit attributable to PE. AO has attributed 15% of the gross revenue as profit to the PE. Whereas, learned first appellate authority has determined the net profit rate at 15% of the total sales and attributed 80% out of that to the PE. In our view, it will be reasonable to estimate the net profit at 11% of the total sales made in India and out of that attribute 80% as income of the PE, as major role was played by the PE with regard to EPZ sales. Of course, while computing the income of the PE, the Assessing Officer must consider assessee s claim of expenses incurred towards making sales in India and other deductions such as depreciation, head office expenses, turnover discounts etc. While undertaking such exercise, the Assessing Officer must provide reasonable opportunity of being heard to the assessee. Though the assessee has taken an argument that no profit is attributable to PE with regard to EPZ sales in terms of Article 7(5) of the treaty, however, on careful consideration, we are not convinced with the submissions of the assessee. We have discussed in detail the role of LO in procuring orders for EPZ sales. In that view of the mater, it cannot be said that no profit can be attributed to the PE. 2024 (1) TMI 547 Nature of receipt - revenue v/s capital receipt - grant-in-aid received from Ministry of Food Processing Industries Government of India - treated as revenue in nature - AO has disallowed the claim of the assessee on the ground that the assessee has not produced supporting bills and vouchers and further only part sum was incurred by the assessee as per ledger account of plant and machinery for the year under consideration - HELD THAT:- As it is evident from the reply reproduced by the AO that the assessee has stated that it produced voluminous bills and vouchers in support of the capital expenditure incurred before the AO for necessary verification whereas the AO has considered only ledger account and raised the objection that assessee failed to comply with the instruction made in grant-in-aid as well as failed to furnish evident in support of the claim. This observation of the AO is contrary to the reply itself. As per letter of grant-in-aid Ministry has clearly stated that this amount has been released against the reimbursement of the expenditure already incurred by the assessee as it was verified from the audited accounts. As specifically stated that the grant-in-aid shall be utilized exclusively for the purpose for which it is sanctioned. No Utilization Certificate(UC) is required to be furnished in instant case as per Rule 212(1) of GFR since grant-in-aid are being made as reimbursement of expenditure already incurred on the basis of duly audited accounts. Assessee has also explained before authorities below that the expenditure was already incurred for more than Rs. 4,81,58,385/- out of which a sum of Rs. 4,89,65,171/- was claimed to be eligible for grant-in-aid from Ministry of Food Processing Industries. This expenditure was already incurred in the earlier years and only sum of Rs. 8,06,786/- was incurred during the year under consideration. Thus, the disallowance made by the AO by considering incorrect fact and rather taking incomplete facts is highly unjustified. Thus, when the Ministry of Food Processing Industries has acknowledged the expenditure and released amount of grant-in-aid as reimbursement of the expenditure already incurred then in the absence of any contrary facts or material on record there is no reason for the AO to doubt the expenditure incurred by the assessee. AO has not doubted the claim of the grant-in-aid as received second instalment for F.Y.2012-13 relevant to A.Y.2013-14 based on the same facts of expenditure already incurred by the assessee. There is no dispute that grant-in-aid in question is in the form of reimbursement of the cost of asset and duly taken in the account in accordance with provisions of explanation (10) to clause(1) of section 43 of the Act. The assessee has also reduced the amount of grant-in-aid from the written down value of the fixed asset and therefore, the same would fall in the exclusion sub-clause (a) of section 2(24)(xviii) of the Act. Accordingly in the facts and circumstances of the case grant-in-aid received as reimbursement of the expenditure on modernization/expansion of the plant and machinery/manufacturing facility of the assessee is capital in nature as held by the Hon ble Supreme Court in case of CIT vs. Ponni Sugars Chemicals Ltd. Ors [ 2008 (9) TMI 14 - SUPREME COURT] Accordingly addition made by the AO on this account is deleted. Decided in favour of assesse. 2024 (1) TMI 546 Liability to collect tax at source (TCS) u/s 206C(6A)/206C(7) - Form No.27C filled belatedly - assessee has sold scrap to various dealers without collecting tax at source and has not received Form No.27C as required u/s 206C(1) - assessee submitted that there is no dispute that assessee has belatedly collected the declaration in Form No.27C and has filed the same before ITO(TDS) - if such declaration is not filed to be prescribed authority within the prescribed time, can the liability of TCS can be fastened on the assessee.? - HELD THAT:- Even if there is a breach on the part of the assessee in not obtaining the declaration from the buyer, the moment the sale is effected and in filing it before the CCIT or the CIT, such breach is to be considered only technical which is liable to be condoned in as much as the main thrust of sub-section 1A of section 206C is to make a declaration as prescribed, upon which, the liability to collect tax at source under subsection (1) would not apply. When there was no dispute about such a declaration being filed in a prescribed format and there was no dispute about the genuineness of such declaration, mere delay in filing the said declaration would not defeat the very claim. CIT (A) has referred to the decision of Hon ble ITAT Chennai Bench [ 2023 (6) TMI 166 - ITAT CHENNAI] where form No. 27C was not obtained within a reasonable time and form no. 27BA was collected after lapse of 7 years which is not the facts of the present case. In any case, since the decision of Madras High Court [ 2010 (12) TMI 1084 - MADRAS HIGH COURT] and Gujarat High Court [ 2016 (7) TMI 68 - GUJARAT HIGH COURT] and that of ITAT Jaipur Bench [ 2016 (8) TMI 952 - ITAT JAIPUR] is in favour of the assessee, we are inclined to accept the contention of the assessee and thus this ground in all the three years is allowed. 2024 (1) TMI 545 Disallowance of Depreciation on assets purchased and put to use for more than 180 days - CIT-A set aside the issue to the AO with clear direction to the assessee to provide all necessary details regarding the commissioning of the assets on different dates before the AO to compute the correct depreciation - HELD THAT:- The controversy before us relates to whether the assessee has put to use the machinery before the end of the relevant financial year i.e. 31-3-2006, the year under consideration. To adjudicate the issue on hand, the assessee has to provide the details as directed by the ld. CIT-A discussed above. As such, we do not find any infirmity in the direction of the ld. CIT-A. Hence this ground of appeal of the assessee is dismissed. Income recognition on government grant subsidy - @ 15% or @ 10 % - AO found that the Government Grants and recoveries from consumer were made towards capital assets and with respect to majority of capital assets, the assessee is claiming depreciation at the rate of 15% per annum - HELD THAT:- As decided in own case [ 2022 (7) TMI 1498 - ITAT AHMEDABAD] wherein the issue has been restored back to the A.O. to adjudicate afresh after verifying amount of grants to be apportioned relating to different assets and calculate the amount of depreciation allowances accordingly - Hence, this ground of appeal preferred by the assessee is allowed for statistical purposes. CIT(A) powers of enhancement under subsection (2) of section 251 - Enhancing the assessed income by making disallowances of deferred revenue expenses - HELD THAT:- As provision of subsection 2 to section 251 of the Act provides that the ld. commissioner appeal shall not enhance an assessment unless appellant has been provided with the reasonable opportunity of being heard against such enhancement. In the case on hand, the disallowance made by the learned CIT(A) was not part of the assessment order or appeal meaning thereby that the learned CIT(A) have made disallowances or assessed new income not forming part of assessment order or appeal. Thus, the learned CIT(A) before exercising the power under section 251(1)(a) to enhance the assessment was required to provide reasonable opportunity to show cause against such enhancement, but no such opportunity has been provided. The learned DR also did not bring any material on record suggesting that the assessee was awarded the opportunity of being heard before the enhancement of income by the learned CIT(A). As such, the appellate authority cannot enhance the assessment without issuing show cause notice. In holding so, we also draw support and guidance from the judgment of Hon ble Gujarat High court in the case of Saheli Synthetics (P.) Ltd [ 2008 (2) TMI 182 - GUJARAT HIGH COURT] Thus we hereby set aside the finding of the learned CIT(A). Hence the ground of appeal of the assessee is hereby allowed. Disallowances of unpaid service tax u/s 43B - HELD THAT:- As per the provision of section 43B of the Act, any sum payable by assessee by way of tax, fee, or duty then such sum shall be allowed as deduction in the year in which same was actually paid. In the present case, the assessee had unpaid service tax liability which was suo-moto disallowed by the assessee in the computation of income. Subsequently, the assessee before the assessing officer as well as before the learned CIT(A) claimed that such unpaid liability of service tax should be allowed as deduction. However, the same was concurrently rejected by the lower authorities. The learned AR for the assessee at the time of hearing before us seek direction from us to be given to the AO that the deduction on account of service tax liability shall be allowed in the year in which such service tax liability shall be paid. In terms of unambiguous provision of second 43B of the Act that the certain sums payable by the assessee shall be allowed as deduction in the year in which actually paid, we hereby direct the AO to allow the claim of the assessee in the year in which service tax is actually paid - Appeal of the assessee is hereby allowed for statistical purposes. MAT computation - disallowance of deferred tax assets while computing book profit u/s 115JB - assessee conceded that the issue is covered against the assessee vide amended provision of explanation 1 to section 115JB - HELD THAT:- The provision of explanation 1 to section 115JB of the Act was amended vide Finance Act 2008 with retrospective effect from 1st April 2001. As per clause (h) of explanation 1 to section 115JB of the Act, the book profit shall be the net profit shown in profit and loss account which is to be increased by the amount of deferred tax assets or provision thereof. Therefore, considering the amended provision of clause (h) of explanation 1 to section 115JB of the Act, we do find any infirmity in order of the learned CIT(A). Hence, the ground of appeal of the assessee is hereby dismissed. 2024 (1) TMI 544 Validity of CIT s impugned revision order quoting no DIN number - as CIT s impugned order duly stood allotted the corresponding DIN number - HELD THAT:- CBDT s Circular No.19 of 2019 dated 14.08.2019 issued under section 119 of the Act has made it clear that such a failure renders the same as void. Not a curable defect u/s 292B. As decided in Ashok Commercial Enterprises Vs. ACIT [ 2023 (9) TMI 335 - BOMBAY HIGH COURT] order issued without a DIN does not bear the required format set out in paragraph 3 of the Circular and, therefore, the assessment orders without quoting DIN ought to be treated as invalid and deemed never to have been issued - The consequences of contravention of the Circular set out above, therefore, ought to be given full effect to. The object of the said Circular is clear and laudatory and intended to ensure that proper trail of all assessment and other orders are maintained and further that any deviation therefrom can only be undertaken after prior written approval of the higher authorities under the Act. Delay of 581 days in filing of the instant appeal against PCIT s revision order is condoned since falling under Covid-2019 pandemic outbreak period between 15.03.2020 to 28.02.2022 as per hon'ble apex court s directions in Cognizance for Extension of Limitation, In re [ 2021 (11) TMI 387 - SC ORDER] read with judgment in Cognizance for Extension of Limitation, In re [ 2021 (3) TMI 497 - SC ORDER] and [ 2020 (5) TMI 418 - SC ORDER] excluding the covid-19 pandemic outbreak period from for all intents and purposes under the limitation law. 2024 (1) TMI 543 TP Adjustment - international transaction involving corporate guarantee - HELD THAT:- We observe from the record that assessee has entered into international transactions of giving corporate guarantee to its AE s. It is fact on record that assessee has collected guarantee commission from its AE @0.65% at the same time we also observe that assessee was given a sanction facility by IDBI bank and ICICI bank which has quoted the average bank guarantee fee of 0.65%. However, Transfer Pricing Officer has collected information regarding guarantee commission from HDFC bank and SBI bank. Since Transfer Pricing Officer has collected the above said information by issuing notice under section 133(6) of the Act it is normal for the banks to give card rate of charges without considering the financials of the tested parties. As assessee has received the quote of sanction of credit facility as well as bank guarantee facility from IDBI bank and ICICI bank, from perusal of the documents submitted by the assessee relating to IDBI bank and ICICI bank we observe that assessee has received the above said quotes from IDBI bank and ICICI bank based on actual utilization of bank guarantee by the assessee. Since assessee has also passed on the above burden to its AE. Therefore, Internal CUP is already available in this transaction. It is unwarranted to rely on External CUP by Transfer Pricing Officer which were not based on actual exposure. In our considered view, ALP adjustment proposed by the Transfer Pricing Officer is not proper. Accordingly, Ground No. 1 raised by the assessee is allowed. Addition of premia income on forward contracts to the total income of the Appellant - Gain/loss on settlement of the transaction - whether the said amount represents income already taxed in earlier years? - HELD THAT:- No doubt assessee has followed method of accounting to declare the gain / loss in the above said POS[Principal Only Swap] transaction. However, mere submission of financial records and computation of income does not give clear picture for the Assessing Officer to verify the same. In our considered view assessee has to submit the relevant contract notes and working of the various contracts which has matured on April 2017 before Assessing Officer and submit the gain / loss recorded by the assessee in previous year as well as the loss / gains recorded by the assessee during the current assessment year. Since it is a factual matter and which requires detailed verification, we deem it fit and proper to remit this issue back to the file of the Assessing Officer to verify the same we also direct the assessee to submit the relevant information before Assessing Officer. Accordingly, the Assessing Officer is directed to verify the same before allowing the deduction claimed by the assessee. Accordingly, Ground Nos. 2 and 3 raised by the assessee is allowed for statistical purpose. Reversal of provision for doubtful debts - AO has rejected the claim for the reason that assessee has not filed one to one correlation of the provision of doubtful debts - HELD THAT:- After considering the submissions of the assessee we observe from the record that assessee is following method of accounting consistently over the years and assessee creates provision for doubtful debts and reverses the same in computation of income. Therefore, we direct the AO to verify the claim of the assessee that the assessee created the provision for doubtful debts in profit and loss account. However, reverses the same while computing the computation of income for the purposes of taxation in the same assessment year. Therefore, we direct the AO to verify the claim of the assessee and allow the same. Ground No.4 raised by the assessee is allowed for statistical purpose. Interest credit to profit and loss account as required by Accounting standards IND-AS- 109 - claim of the assessee that recognizing the finance instrument at fair value also results in rental expenses which is not incurred but should therefore also be allowed as an expenses on the same principle while computing the total income of the assessee - HELD THAT:- Since Ld. DRP has not given clear findings and Assessing Officer also not verified the claim of the assessee, we deem it fit and proper to remit this issue back to the file of the Assessing Officer to verify the claim of the assessee in detail and allow the same after due verification. Assessee shall cooperate with the proceedings before the Assessing Officer without taking unnecessary adjournments. Ground No. 6 is allowed for statistical purpose. Disallowance u/s 14A - suo moto addition made by assessee - mandation of recording satisfaction - HELD THAT:- We observe from the record that Assessing Officer while passing the final assessment order made a small clerical error of determining the net disallowance of ₹. 60,35,270/- instead of ₹. 6,35,270/- after adjusting the suomoto disallowance made by the assessee. Since the mistake is apparent on record we direct the Assessing Officer to make the disallowance of ₹. 6,35,270/- only. With regard to the objections raised by the assessee on the non-recording of satisfaction by the Assessing Officer we are not inclined to accept the above submissions. Accordingly, Ground No. 7 raised by the assessee is dismissed and Ground No. 8 raised by the assessee is allowed. Addition u/s 69C - unexplained sales - non-reporting of export sales of products - HELD THAT:- it is brought to our notice that assessee is re-exporting the goods after providing the services. Therefore, these goods re-exported are nothing but the goods imported by the assessee and after providing the services same goods were being re-exported. He agreed that certain documents were filed before Assessing Officer. However, he submitted that additional evidences will prove the nature of transactions. Considering the importance of these documents we deem it fit and proper to admit the additional evidences and remit this issue back to the file of the Assessing Officer to verify the same and after due verification if found proper the claim of the assessee may be allowed. Assessee shall cooperate with the proceedings before the Assessing Officer without taking unnecessary adjournments - Ground No. 9 raised by the assessee is allowed for statistical purpose. Double taxation relief claimed for not filing any supporting documents of DIT relief - HELD THAT:- Before us, assessee has filed Form 67 which requires verification. Accordingly, we direct the Assessing Officer to verify the above Form 67 and claim of the assessee and after due verification as per law. Assessee shall cooperate with the proceedings before the AO without taking unnecessary adjournments. Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee. Accordingly, Ground No. 10 raised by the assessee is allowed for statistical purpose. Credit of dividend distribution tax claimed by the assessee - assessee submitted evidences of remittance and these evidences are against the credit of dividend distribution tax claimed by the assessee - HELD THAT:- We deem it fit and proper to remit these evidences to the file of the AO with the direction to verify the same and allow the same as per law. Assessee shall cooperate with the proceedings before the AO without taking unnecessary adjournments. Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee. Accordingly, Ground No. 11 raised by the assessee is allowed for statistical purpose. 2024 (1) TMI 542 Estimation of profit - unaccounted receipts - HELD THAT:- Considering the totality of the facts of the case and considering the fact that the assessee has already offered the additional income to the tune of Rs. 6.00 crores in the return of income filed for A.Y 2016-17 to 2019-20, we modify the order of the learned CIT (A) and direct the Assessing Officer to adopt the profit rate of 15% on the unaccounted receipts of Rs. 68.17 crores for the A.Y 2016-17 to 2020-21, Disallowance u/s 40A(3) - CIT (A) while deleting the addition held that the provisions of section 40A(3) do not apply when the income is estimated - HELD THAT:- CIT(A) relied on the decision of the Hon'ble jurisdictional High Court in the case of M/s Indwell Constructions [ 1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] where it has been held that no disallowance u/s 40A(3) can be made when the books of account are rejected and the net profit rate is estimated. Since in the instant case also the profit of the assessee has been estimated, therefore, the decision of the Hon'ble jurisdictional High Court relied on by the learned CIT (A) is squarely applicable to the facts of the case of the assessee and therefore, we do not find any infirmity in the order of the CIT (A) in deleting the addition u/s 40A(3). Validity of assessment u/s 153A in absence of any incriminating material - HELD THAT:- It is an admitted fact that various payments details and name of individual customers were found during the course of search which contain receipts in cash as well as through Bank. When these documents were confronted to the Directors of the Company, they have admitted that these were cash payments received from customers which were reflected in the consolidated statement found during the course of search. Therefore, it cannot be said that no incriminating material was found during the course of search. CIT (A) has thoroughly discussed this issue while upholding the addition made in the return filed in response to notice u/s 153A. Under these circumstances, we do not find any infirmity in the order of the learned CIT (A) on this issue and the grounds raised by the assessee are dismissed. Addition of excess expenditure - Addition on the basis of cash expenditure incurred between April, 2008 to December, 2015 as per survey proceedings and actual cash expenditure as per books of account - CIT(A) deleted addition - HELD THAT:- We find the AO during the proceedings u/s 153A, called for the material impounded during survey available with the DCIT, Circle-14(1) and on verification of the impounded material noticed that the cash expenditure of Rs. 9,83,81,222/- was found in the books as against Rs. 18.68 crores that was allowed during the survey assessment. From the impounded survey material, he arrived at a different conclusion on the same facts that were used to assess income during survey. This in our opinion, is a change of opinion by the A0 in interpreting the material impounded during survey during the current 153A proceedings. CIT (A) relying the decision of the Hon'ble Supreme Court in the case of Sun Engineering Works (P) Ltd [ 1992 (9) TMI 1 - SUPREME COURT] observed that the Assessing Officer is not allowed to review his own decision directly or indirectly unless there is material evidence to show that the earlier decision arrived at was incorrect or new facts were discovered during search. However, we find from the impugned assessment order that the AO sought to re- examine the impounded material during survey to arrive at a different conclusion which is nothing but reviewing one's own decision which is impermissible in law. Therefore, we concur with the finding of the learned CIT (A) that the addition made on account of unsubstantiated cash expenditure cannot be sustained. Estimation of income on account of on-money receipts/cash receipts - @15% on the gross receipts while adjudicating the appeal on this issue by rejecting the books of account - HELD THAT:- As held in the case of M/s. Indwell Corporation [ 1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] that once the books are rejected and the income is estimated, no new disallowance can be made on the same set of books. Since in the instant case the income has been estimated @15% of the gross cash receipts, therefore, it is deemed that the assessee has incurred the remaining 85% as its expenses. The above disallowance of cash expenses gets subsumed in the same. Therefore, in our opinion, no new disallowance can be made on this issue. Order of the learned CIT (A) deleting the addition of income on account of unsubstantiated cash expenditure is upheld and the ground raised by the Revenue on this issue is dismissed. Non granting of TDS credit - HELD THAT:- It is an admitted fact that this issue was neither raised before the AO nor before the CIT (A) and therefore, there was no occasion for either of the authorities to adjudicate the issue. However, since it is the case of the assessee that the TDS has been deducted by the customers in the name of M/s Skill Promoters (Firm) which was subsequently changed to M/s. Skill Promoters (P) Ltd and such TDS is supported by Form 26AS, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to verify the claim of such TDS credited and decide the issue as per law after giving due opportunity of being heard to the assessee. The grounds raised by the assessee are accordingly allowed for statistical purposes. Disallowance of personal expenditure - HELD THAT:- Admittedly, the so-called expenditure which according to the Assessing Officer is personal in nature was found from the seized documents which contain both income as well as expenditure. The income from such unrecorded sales has already been estimated in the preceding paragraphs. As held in the case of M/s. Indwell Corporation [ 1998 (3) TMI 121 - ANDHRA PRADESH HIGH COURT] Once the books were rejected and the profit was estimated no further disallowance can be made on the same rejecting the books as the expenses gets subsumed in the estimation of profit. Since the learned CIT (A) while deleting the addition has followed the decision of the Hon'ble jurisdictional High Court, therefore, in absence of any contrary material brought to our notice by the learned DR, the order of the learned CIT (A) on this issue is upheld and the grounds raised by the Revenue is dismissed. Applicability of provisions of section 28(vi)(a) - assessee has converted the unsold inventory into fixed asset and therefore, brought the same to tax as business income - asset was treated as a capital asset - CIT(A) deleted addition - HELD THAT:- We are of the considered opinion that the nature of the built-up area that was received by the assessee being a Developer in lieu of development of the land is stock-in-trade and this nature would continue to be so unless specifically converted into a capital asset. We concur with the findings of the learned CIT (A) that merely because some of the built-up area was leased out for earning rental income does not alter the nature of the asset and it would tantamount to exploitation of the unsold inventory to earn income. No infirmity in his order holding that provisions of section 28(vi)(a) do not apply to the facts of the case for the impugned A.Y. We therefore, uphold the order of the learned CIT (A) on this issue and the grounds raised by the Revenue are dismissed. Benami Property 2024 (1) TMI 541 Prohibition of Benami Property Transaction - Applicability of provisions of Section 5 of the Amended Act, 2016 - funds infused into the shell companies by multiple layering in the guise of share capital or loan - Initiating Officer had reasons to believe that the arrangements made by the respondent with various shell companies is a benami transaction within the meaning of Section 2 A (9) of the Prohibition of Benami Property Transactions Act, 1988 - as contended on the side of the appellants that Section 5 of the Prohibition of Benami Property Transactions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 will have retrospective effect and therefore, the common order passed by the Tribunal, to the contrary, is liable to be interfered with. HELD THAT:- Today, when the matters were taken up for hearing, the learned counsel appearing for both sides in unison, submitted that a batch of appeals challenging the very same impugned order of the Appellate Tribunal, was disposed of, by this court, by passing a detailed judgment [ 2023 (12) TMI 620 - MADRAS HIGH COURT] wherein as opinioned that as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd [ 2022 (8) TMI 1047 - SUPREME COURT] holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced. It is to be noted that in the Review Petition [ 2023 (1) TMI 1327 - SC ORDER] filed by the Department to review the order passed by the Honourable Supreme Court in Union of India vs. Ganapati Dealcom Pvt Ltd [ 2022 (8) TMI 1047 - SUPREME COURT] delay was condoned and the application for oral hearing of the review petition was allowed, however, no stay order was granted. In such circumstances, pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd, cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals. 2024 (1) TMI 540 Prohibition of Benami Property Transactions - whether transactions are prior to the coming into force of Prohibition of Benami Property Transactions (PBPT) Act, 1988 as amended in 2016 i.e. 25.10.2016? - HELD THAT:- In the light of the judgments passed in the present matters by the Hon ble High Court, Calcutta at Kolkata [ 2023 (3) TMI 1446 - CALCUTTA HIGH COURT] the appeals are disposed of with following conditions:- (i) It is however made clear that finding recorded by the Adjudicating Authority, either of facts or on law, would not be binding on either of the parties rather they would be at liberty to take up factual and legal issues in future, if so required, in the appropriate proceedings. This order is not to be taken in confirmation of the impugned order. (ii) It is also made clear that independent to the action taken by the Initiating Officer referring Benami Transactions of a period prior to the amendment by the Amending Act of 2016, if the Department has legal right under the law to take the proceedings, treating the amendment by the Amending Act of 2016 to be prospective, this order would not come in their way. It is however made clear that any such action should not offend the judgment of the Apex Court in the case of Union of India Anr. Versus M/s. Ganpati Dealcom Pvt. Ltd. [ 2022 (8) TMI 1047 - SUPREME COURT ]. In case, the Apex Court reviews its judgment having bearing on this appeal, the appellant would be at liberty to take appropriate remedies, which would may even a Review Petition before this Tribunal. In view of the above, the applications are allowed and the appeals are disposed of with the aforesaid directions/conditions. Customs 2024 (1) TMI 539 Requirement of mandatory pre-deposit under Section 129-E of Customs Act, 1962 - HELD THAT:- On perusal of Section 129E of the Customs Act, it is clear that it is mandatory for the person being aggrieved by the order passed by the authority to deposit 7.5% or 10%, as the case may be, of the total demand as pre-condition and pre-deposit towards preferring appeal before the appellate authority. This mandatory provisions are required to be adhered to by the petitioner - the same cannot be declared to be inapplicable in the facts of the case as it is mandatory requirement for the petitioner to pre-deposit requisite amount so as to enable the appellate authority to consider the appeal on merits. It is made clear that the merits of the matter or prima face case of the petitioner in view of the mandatory provision requiring the petitioner to pre-deposit requisite amount as per section 129E of the Customs Act, not considered. The petitioner would be entitled to raise all the contentions raised in this petition before the appropriate authority. Petition dismissed. 2024 (1) TMI 538 Validity of show cause notice - Jurisdiction - power of DRI to issue SCN - Attachment of Bank Accounts of petitioner - Diversion of duty-free imported gold under the Advance Authorization Scheme - HELD THAT:- In terms of Section 110(5) of the Customs Act, the attachment of the bank account cannot continue beyond the period of six months, the same can be extended by another period of six months in terms of proviso to Section 110(5). The petitioner s bank accounts were initially attached from 20.08.2020 till 20.02.2021. The attachment was extended in relation to one bank account in Yes Bank till 20.08.2021. The order of attachment of bank accounts, thus, has ceased to be operative with efflux of time, and therefore, no order is required to be passed in regard to the prayer seeking defreezing of the bank accounts of the petitioner. There is prima facie some merit in the arguments advanced by the learned counsel for the petitioner that 53 kg gold bars, at the time of detention, were found in the declared premises and, thus, could not have been seized. The said gold was cleared from customs in late hours of 13.08.2020. The said gold was safely kept by the principal officers of the petitioner company. The gold could not be brought inside the declared premises because a search was being conducted during the relevant time on 13.08.2020 / 14.08.2020. However, it was brought inside immediately thereafter. At this stage, it is not relevant to consider whether the petitioner would ultimately succeed. The arguments raised require adjudication of facts - Whether the allegations would conclusively prove case against the assessee is not material. The same is in the realm of subjective satisfaction, which at this stage, cannot be said to be unfounded. Any such adjudication by this Court would amount to adjudicating the Show Cause Notice dated 11.08.2021. The adjudication of some of the issues raised would necessarily involve addressing disputed questions of fact and it would not be apposite to do so in these proceedings. Unless the High Court is fully satisfied that the show cause notice is ex facie without jurisdiction, a writ petition should not be entertained - In the present case, admittedly the contentions advanced can be urged before the Adjudicating Authority. It is a settled law that the statutory fora are empowered to adjudicate not only the factual aspects, but also the issues in relation to their jurisdiction and other legal aspects. The Gold, in relation to which the petitioner is seeking revalidation / extension of the period of export is lying seized with the respondents pending adjudication of the Show Cause Notice dated 11.08.2021. The petitioner would be at liberty to apply for any such extension/ revalidation of the Advance Authorisation licence after the adjudication of the Show Cause Notice dated 11.08.2021. As and when any such application is filed, the DGFT shall consider the same in accordance with law, keeping in mind the peculiar facts of the case, as the petitioner is contesting Respondent no. 2 s power to seize the gold and has been effectively prevented from exporting the same. The DGFT shall also consider the petitioner s request for waiver or relaxation of the composition fee. This Court does not consider it apposite to pass any direction for quashing of the Seizure Order dated 28.12.2020, whereby the gold was seized - Petition disposed off. 2024 (1) TMI 537 Classification of imported goods - Bra Cups - to be classified under CTH 3926 of the Customs Tariff Act, 1975 or under CTH 6212? - period from 25.02.2010 to 14.07.2010 - benefit of the Notification No. 26/2000 Cus. dated 1.3.2000 - HELD THAT:- In this case, the Chapter 6212 clearly includes Brassier and when there is a specific description, the goods cannot be classified based on the content of the material used to manufacture the same. The Interpretative Rules as seen under clause 2(a) the essential character of the product decides the classification and here the bra cups undoubtedly are used as part of a Brassier and the impugned products are more akin to the description given under 6212 and therefore rightly classifiable under 6212 90 as per clause 4 of the Interpretative Rules. Regarding the benefit of the Notification, since it was not claimed at the time of import and the conditions therein were not satisfied the question of extending the benefit does not arise. The packing list placed clearly shows the items were imported in pairs and it is also a fact that a pair of bra cups are used for one brassier. The invoice also shows that the unit price shown is per pair and accordingly the total value is calculated. Therefore, the unit price for the pair should be taken as per unit price (set of 2 pieces) rather than artificially splitting the price for per piece. Section 19 of the Customs Act takes cognisance of articles imported in sets and therefore the said goods which are in pairs should be considered as a unit and the rate of duty to be calculated accordingly. The classification of the imported goods under CTH 6212 upheld - the impugned order is upheld as far as classification is concerned and appeal is remanded to the adjudicating authority to recalculate the duty taking into consideration the unit price for pairs as a single unit price. The appeal is disposed of by way of remand. 2024 (1) TMI 536 Confiscation - redemption fine - penalty - Mis-declaration of imported goods - mis-declaration in respect of number of cartons/number of pieces/number of bulbs in light chain and the declared gross weight - evasion of customs duty - HELD THAT:- The present case is squarely covered by the decision of this Tribunal in the case of the appellant himself in M/S SURENDRA ELECTRICALS VERSUS PRINCIPAL COMMISSIONER, CUSTOMS (EXPORT) -NEW DELHI (ICD TKD) [ 2023 (7) TMI 967 - CESTAT NEW DELHI] . The facts of the case are absolutely identical where on the basis of an intelligence the goods were examined and were found to be 42% more than what was declared in the bill of entry. The plea taken by the appellant there was also same that due to mistake the supplier sent more goods. The Tribunal observing that the goods were found to be in excess of what was stated in the bill of entry and therefore liable to confiscation under Section 111(l) and (m) and also when excess quantity of goods is established, it was logical for the officer assessing the bill of entry to reject the transaction value because the transaction value reflected in the invoices and other documents was for declared quantity and not for the quantity actually imported. In the factual matrix of the case, the Tribunal found the redemption fine imposed as just and fair Also the penalty under Section 112 (a)(ii) and Section 114AA was upheld. Considering the repeated attempts of the appellant to fraudulently evade the liability of customs duty by deliberately mis-declaring the actual quantity of the goods, the contention of the appellant rejected that no intentional mis-declaration has been made by them and they knowingly did not make any false and incorrect statement with respect to the quantity and value of the goods. The plea taken by the appellant that the error was on the part of the supplier who sent excess quantity, is absolutely unbelievable and unpractical as business dealings and more so in overseas transactions are conducted as per the agreement between the parties and as per the settled procedure. There is no scope of any variation without the consent of both the parties. The present case being of mis-declaration which has been detected only on examination of the goods, it was justified for the department to reject the transaction value and redetermine the same in terms of the Customs Valuation Rules which has been done as per Rule 5. The appellant has contravened the provisions of Section 17 and 46(4) of the Act by intentionally filing wrong declarations and by their acts of omissions and commissions had rendered the goods liable for confiscation under Section 111(l) and 111(m) of the Act. The appellant filing the Bill of Entry under self-assessment was duty bound to submit true and correct details. No interference is called for in the quantum of redemption fine as the redetermined value is Rs.50,27,992 + 41,12,991 total Rs.91,40,983/- and redemption fine is Rs.10,00,000/-, and the same is within the prescribed limit as prescribed under Section 125 which provides that the amount of redemption fine shall not exceed the market value of the goods. Suffice it to say that the appellant is a habitual defaulter importing goods by mis-declaring both on account of quantity and value is liable to penalty under Section 112(a)(ii) and section 114AA of the Act. The impugned order upheld - appeal dismissed. 2024 (1) TMI 535 Sanction of refund claim - eligibility for refund filed under section 26A of the Customs Act, 1962 - monetary limit involved in the appeal - HELD THAT:- It is to be noted that the department does not deny the claim of the respondent for eligibility of drawback. This aspect has been taken note of by the Commissioner (Appeals) who has directed the respondent to make a representation for claim of drawback. Further, the original authority has made inquiry and on verification found that the respondent is eligible for refund. For these reasons, there are no merit in the appeal filed by the department. Further, the amount involved is less than Rs.50 lakhs and there is no legal issue or the issue is not recurring in nature. The department s appeal falls within the litigation policy also and is to be dismissed. The impugned order is sustained. The appeal filed by the department is dismissed. 2024 (1) TMI 534 Levy of penalty of 50,000/- each on Shri Harendra M Karia and M/s Asia Shipping - proceedings initiated under CBLR for revocation of license - Regulation 18 of Customs Broker Licensing Regulation - HELD THAT:- The appeals filed by Shri Harendra M Karia and M/s Asia Shipping relate to the imposition of penalty of Rs. 50,000/- on each of them. The Commissioner has admitted that it was a procedural lapse. Shri Harendra M Karia and M/s Asia Shipping had acted bona fide by applying for substitution and thereafter it was the responsibility of Revenue to allow the substitute in the license of M/s Asia Shipping. Having failed to do so, it was a fault of Revenue and not that of the appellants. In these circumstances, the imposition of penalty under Regulation 18 even though there was technical violation is not justified. The penalties imposed against Shri Harendra M Karia and M/s Asia Shipping is set aside and appeals are allowed. 2024 (1) TMI 533 Valuation of imported goods - Methyl Phenyl Acetylene - Availability of contemporaneous import or not - nature of goods and country of origin of impugned as well as contemporaneous goods - HELD THAT:- The appellant categorically submit that the goods imported by the appellant cannot be considered as at par with the import made by the importer M/s. Dimesco Footcare(India) Pvt. Ltd. as alleged. Since times of import, quantity and country of import are different. As held by Apex court in the matter of BASANT INDUSTRIES VERSUS ADDL. COLLECTOR OF CUSTOMS, BOMBAY [ 1995 (1) TMI 89 - SUPREME COURT] , a mere comparison of two invoices without anything more, it may not be correct to proceed on the premise that there is undervaluation. The relationship between the supplier and importer has also to be kept in mind because it is a matter of common knowledge that a price which is offered by a supplier to an old customer may be different from a price which the same supplier offers to a totally new customer. Similarly, as held by Apex court in the matter of Mirah Exports Pvt Ltd [ 1998 (2) TMI 124 - SUPREME COURT] in the business world, considerations of relationship with the customer are also a relevant factor and the price offered by a supplier to an old customer may be different from a price which the same supplier offers to a totally new customer. Thus it is not unusual for a foreign supplier to give a higher discount to an importer who is importing a much larger quantity and merely because such a discount has been given by the supplier it cannot be said that there has been any undervaluation in the invoice. There are no reason to confirm the demand of the differential duty on appellant. Hence the appeal is allowed. 2024 (1) TMI 532 Levy of penalty under Section 114A of Customs Act, 1962 - HELD THAT:- Hon ble Supreme Court has in the case of UK ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2007 (11) TMI 27 - SUPREME COURT ] after taking the note of the provisions of Section 114A, observed A bare perusal of Section 114A makes it clear that the liability to pay penalty can be equal to the amount of duty and could not exceed the payable duty. Hence, the penalty imposed was against the express provisions of law. There are no merits in this appeal filed by the revenue - appeal dismissed. Insolvency & Bankruptcy 2024 (1) TMI 531 Maintainability of application under Section 7 of IBC - dismissal on the ground that the debt was barred by limitation - HELD THAT:- When the order of the NCLT was questioned in appeal, the NCLAT set aside the order of the NCLT as being patently illegal . Once the order of the NCLT was set aside, the order would cease to exist. The observations in regard to whether there was a debt due and payable would also not exist with the setting aside of the order. The order of the NCLAT, properly construed, dealt with the issue as to whether the debt was barred by limitation. A passing reference in the order of the NCLAT to whether the debt was in dispute must be read in the context of the nature of the appeal which arose from an order of the NCLT that the debt was barred by limitation. Hence, it would be inappropriate to read the order of the NCLAT as concluding the issue in regard to whether the application under Section 7 was or was not liable to be admitted. A stray observation in the order of the NCLAT cannot be regarded as a conclusive determination on merits - it was inappropriate for the NCLAT to direct the NCLT to admit the application under Section 7 straightaway without an evaluation of the rival contentions on merits. The application under Section 7 has already been restored to the file of the NCLT. The NCLT shall, after hearing the parties, determine as to whether the application under Section 7 is liable to be admitted - Appeal allowed. 2024 (1) TMI 530 Eligibility to submit Resolution Plan - former promotor/director of the company - whether a mere fact that the person submitting a Resolution Plan has been promoter or director makes ineligible to submit a Resolution Plan? - HELD THAT:- The Hon ble Supreme Court had occasion to consider Section 29A in reference to promoters of the Corporate Debtor in HARI BABU THOTA VERSUS MR. BISHWAJIT DUBEY, AMICUS CURIAE [ 2023 (12) TMI 1255 - SUPREME COURT] . In the above case, a plan proposed by the promoter was approved by the Committee of Creditors and the application was filed by the Resolution Professional for approval of the plan which was dismissed on the ground that the promoters could not have presented the plan. The Appeal was filed by the Resolution Professional challenging the order of the Adjudicating Authority. One of the questions which was considered in the case was as to whether Resolution Applicant who was promoter was disqualified under Section 29A. The Hon ble Supreme Court in the above case has held that there is no per se disqualification under Section 29A. In the above case, MSME certificate was issued after commencement of the CIRP, hence, Section 240A was not relied by the Adjudicating Authority. The present is not a case where any of the clauses of Section 29A are being pressed for ineligibility of Respondent No.2. Ineligibility is being held only on the ground that Respondent No.2 was promoter of the Corporate Debtor till 2018 when he resigned. The view taken by the Adjudicating Authority is not as per the true and correct interpretation of Section 29A. Section 29A does not make per se promoters and directors ineligible to submit a plan unless they are ineligible under clauses (a) to (g) - Since in the present case, it is not the case that any of the clauses (a) to (g) are attracted on Respondent No.2, the mere fact that Respondent No.2 was promoter and director shall not make him ineligible to submit a Resolution Plan. The Adjudicating Authority committed error in holding that the Respondent No.2 is ineligible to submit a Resolution Plan. The rejection of IA No.2828 of 2021 is thus, unsustainable - Appeal disposed off. 2024 (1) TMI 529 Request for closer of CIRP - 88% shareholders ready to provide funds and repay the debts - Rejection of the proposal of the shareholders / corporate debtors - - whether decision of CoC, in which UVARCL has 98.84% voting share, to reject the proposal under Section 12A dated 11.08.2023 as revised on 04.10.2023 is arbitrary and unsustainable? - HELD THAT:- The statutory scheme which has been brought by insertion of Section 12A in the I B Code by Act 26 of 2018 w.e.f. 06.06.2018. It is to be noted that prior to insertion of Section 12A there was no provision in the Code for withdrawal of CIRP except Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Consequential amendments were also made in Insolvency and Bankruptcy Board of India. (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 by inserting Regulation 30A by notification dated 25.07.2019. The Hon ble Supreme Court had occasion to consider Section 12A in Swiss Ribbons Pvt Ltd. Anr. vs. Union of India, [ 2019 (1) TMI 1508 - SUPREME COURT ] in which various provisions of I B Code including 12A were under challenge - it was held in the said case that If the Committee of Creditors arbitrarily rejects a just settlement and/or withdrawal claim, NCLT, and thereafter, NCLAT can always set aside such decision under Section 60 of the Code. Section 12A provides for withdrawal of the application admitted under Section 7 or 9, on an application made by the applicant with the approval of 90% voting share of the Committee of Creditors. Application has to be filed as per procedure provided under Regulation 30A. The objective of Section 12A and Section 29A are totally different. Section 29A is a provision which debars certain categories of applicants from submitting Resolution Plan whereas Section 12A is entirely different provision where CIRP can be withdrawn after admission. The proposal is submitted by Applicant before the CoC and if the proposal is approved by 90% CoC, Regulation 30A provides for procedure for withdrawal. If the CoC approval is granted with 90% vote share, an application has to be filed by the IRP/RP in Form FA. The question of ineligibility of Promoters to submit the proposal does not arise under Section 12A. The submission of Shri Maninder Singh, Advocate for UV ARCL that by proposal under Section 12A the Appellants are trying to circumvent Section 29A cannot be accepted. The CoC having decided to refund the EMD of one of the Prospective Resolution Applicant, there cannot be any difficulty in refunding EMD of all of the Prospective Resolution Applicants in event the Proposal under 12A is ultimately found to be acceptable - the CoC cannot be directed to evaluate the Resolution Plan which it has received. The said course cannot be allowed to be directed since the Proposal under 12A has to be finally determined as to whether it deserves to be accepted and the decision of the CoC to refuse to accept Proposal is arbitrary and unsustainable. The decision of the CoC is arbitrary in not approving 12A Proposal which Proposal offered to pay entire debt of Financial Creditors as well as all other creditors. From the minutes of 14th and 15th CoC, it is clear that CoC has expressed its willingness to accept the proposal if entire amount is deposited, however, opportunity was not granted by the CoC and within three days from 10.10.2023 meeting i.e. on 13.10.2023 they dissented the proposal although they initially granted six weeks time to deposit the amount. When in pursuance of order dated 17.10.2023, the entire amount has been deposited, the UVARCL refused to accept the amount which shows its malafide intent. Thus, the facts and circumstances and sequence of events clearly proves that decision of the CoC not accepting the proposal for payment of 100% dues is arbitrary and unsustainable. Appeal allowed. 2024 (1) TMI 528 Settlement proposal under Section 12A of IBC - Resolution Plan already approved by the CoC - whether settlement proposal under Section 12A can be given at any stage even after approval of the Resolution Plan? - HELD THAT:- In the case of Shaji Purushothaman Vs. Union Bank of India Ors. [ 2019 (9) TMI 1344 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] , this Tribunal noted that Resolution Plan was approved but after noticing that it was observed that no direction can be issued but liberty was given to the Appellant to file an application under Section 12A and this Tribunal has observed that if application under Section 12A is filed COC may decide as to whether proposal given by the Appellant is better than the plan. Coming to the facts of the present case, proposal under Section 12A submitted by the Respondent No.1 was also directed by this Tribunal to be considered along with Resolution Plan as has been noticed above and CoC in its 14th CoC meeting has already considered the Resolution Plan along with settlement proposal submitted by Respondent No. 1. Thus the facts of the present case are entirely different where the Settlement proposal submitted by Respondent No.1 has already been considered by the CoC, the above Judgment does not help the Respondent No.1 in the present case. The Adjudicating Authority committed error in giving an opportunity to Respondent No. 1 to arrive at acceptable settlement. The application for approval of the Resolution Plan which has already been filed and pending consideration, the Adjudicating Authority ought to have considered and decided the Application for approval of the plan - The plan having been approved on 08th January, 2023 and application is pending for about last one year before the Adjudicating Authority, the Adjudicating Authority may proceed expeditiously to decide application filed by the Resolution Professional for approval of the plan i.e. I.A. No. 987 of 2023. Appeal disposed off. Service Tax 2024 (1) TMI 527 Sabka Vishwas Legacy Dispute Resolution Scheme 2019 - eligibility for CENVAT Credit or not - HELD THAT:- The applicant under the Scheme would be entitled to waiver of 70% of the tax dues if the tax dues relate to a show cause notice or an appeal and the amount of duty is Rs. 50,00,000/- or less. In this case, the amount is undoubtedly below Rs. 50,00,000/-. Therefore, the petitioner has correctly computed the amount due and payable after also reckoning the sum of Rs. 50,000/- which was deposited by the petitioner pursuant to the order dated 01.08.2018 in W.P.No.19462 of 2016. Since the impugned order was issued by disregarding the above material facts and the provisions of the Scheme, the impugned order is unsustainable. The respondent is directed to issue a modified order in Form SVLDRS-3 specifying the sum payable by the petitioner as Rs. 95,988.40/- - impugned order set aside - petition allowed. 2024 (1) TMI 526 Levy of service tax - Business Auxiliary Service - Technical Inspection and Certification Service - GTA Service - extended period of limitation. Business Auxiliary Service - Technical Inspection and Certification Service - contention of the appellant is that the appellant has made certain deductions in the invoices raised to M/s.Bonprix, Germany, which are only discounts in a transaction of sale - HELD THAT:- It is brought out from evidence that garments are sold by the appellant to M/s.Bonprix, Germany. M/s.JPS Trading, Dubai has played a role of middleman in making arrangements. The quality test is done by M/s.Fashion Force in India. According to the department, it is an agent of M/s.JPS Trading, Dubai. However, there is no payment made by the appellant to M/s.Fashion Force - It cannot be understood how there would be a service rendered by M/s.Bonprix, Germany to the appellant so as to be taxable under reverse charge mechanism. Even if there was any service rendered in regard to quality checking, the demand ought to have been raised against M/s.Fashion Force, who is the service provider for quality checking - If the department is of the view that Fashion Force, Tiruppur is the branch office of JPS Trading, Dubai then it would be M/s.Fashion Force, Tiruppur who is liable to pay service tax. It cannot be said that the deductions made in the invoices raised in the name of M/s.Bonprix, Germany is a payment made to Fashion Force, Tiruppur. For these reasons, the demand raised under BAS , Technical Inspection and Certification Service is without any factual or legal basis and requires to be set aside which we hereby do. The issue on merits is answered in favour of the appellant and against the Revenue. GTA Service - extended period of limitation - HELD THAT:- Even if the appellant paid tax on GTA services, the appellant would be eligible for availing cenvat credit of the tax paid. The entire situation is revenue-neutral. In such situation, the extended period cannot be invoked as decided in the case of NIRLON LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2015 (5) TMI 101 - SUPREME COURT] . The impugned order is modified to the extent of setting aside the demand, interest and penalties under Business Auxiliary Service , Technical Inspection and Certification Services . The demand, interest and penalties in regard to GTA Service is set aside for the extended period. The details as to whether GTA services were used only for export is not before us. Therefore, the appellant is liable to pay the tax on GTA services for the normal period along with interest. For the same reasons of revenue neutral situation, the penalties are set aside entirely. Appeal allowed in part. 2024 (1) TMI 525 Levy of service tax - Business Auxiliary Service - Technical Inspection and Certification Service - GTA Service - Extended period of limitation - revenue neutrality. Business Auxiliary Service - Technical Inspection and Certification Service - HELD THAT:- It is brought out from evidence that garments are sold by the appellant to M/s.Bonprix, Germany. M/s.JPS Trading, Dubai has played a role of middleman in making arrangements. The quality test is done by M/s.Fashion Force in India. According to the department, it is an agent of M/s.JPS Trading, Dubai. However, there is no payment made by the appellant to M/s.Fashion Force. We therefore do not understand how there would be a service rendered by M/s.Bonprix, Germany to the appellant so as to be taxable under reverse charge mechanism. Even if there was any service rendered in regard to quality checking, the demand ought to have been raised against M/s.Fashion Force, who is the service provider for quality checking. If the department is of the view that Fashion Force, Tiruppur is the branch office of JPS Trading, Dubai then it would be M/s.Fashion Force, Tiruppur who is liable to pay service tax. It cannot be said that the deductions made in the invoices raised in the name of M/s.Bonprix, Germany is a payment made to Fashion Force, Tiruppur - the demand raised under BAS , Technical Inspection and Certification Service is without any factual or legal basis and requires to be set aside - The issue on merits is answered in favour of the appellant and against the Revenue. GTA Service - HELD THAT:- The authorities below have extended the benefit of abatement after the period 1.3.2008. The show cause notice has been issued invoking the extended period. Even if the appellant paid tax on GTA services, the appellant would be eligible for availing cenvat credit of the tax paid. The entire situation is revenue-neutral. In such situation, the extended period cannot be invoked as decided in the case of NIRLON LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2015 (5) TMI 101 - SUPREME COURT ]. The impugned order is modified to the extent of setting aside the demand, interest and penalties under Business Auxiliary Service , Technical Inspection and Certification Services - demand, interest and penalties in regard to GTA Service is set aside for the extended period. The details as to whether GTA services were used only for export is present. Therefore, the appellant is liable to pay the tax on GTA services for the normal period along with interest. For the same reasons of revenue neutral situation, the penalties are set aside entirely. The appeal is partly allowed. 2024 (1) TMI 524 Levy of service tax - PSF and Airport Taxes - Admin fee - Whether collection of Admin fee is in the nature of pre-ponement, postponement or cancellation charges, or not? - HELD THAT:- This is a fact to be verified by the Commissioner and if no Admin fee is collected by the appellant at all, the question of levying service tax on it does not arise. The impugned order set aside insofar as the demand of service tax on PSF and Airport Taxes is concerned. The appeal is partly allowed setting aside the demand of service tax on PSF and Airport Taxes. However, the matter is remanded to the Commissioner for verification whether the appellant had collected any admin charges during the relevant period and if so, the taxability. 2024 (1) TMI 523 Eligibility to avail and utilise the input service credit on various services availed - invocation of extended period in terms of proviso to Section 73(1) of the Finance act, 1994 - imposition of penalties under Section 76, 77 and 78 of the Finance Act, 1994. Eligibility of CENVAT Credit on input services availed - HELD THAT:- In the case of M/S. RUKMINI INDUSTRIES VERSUS THE COMMISSIONER OF CENTRAL EXCISE, HYDERABAD-I [ 2014 (7) TMI 921 - ANDHRA PRADESH HIGH COURT ], it was held that there is no specific rule rendering manufacturer ineligible for availing MODVAT credit when such manufacturer is involved in suppression of turnover or clearance of goods out of record and benefit of MODVAT credit to the extent of input utilized in manufacture of dutiable finished product cannot be denied under Rule 57B of erstwhile Central Excise Rules, 1944. In DHANANIWALA TEXTILES PVT. LTD. VERSUS COMMR. OF CUS. C. EX., HYDERABAD [ 2000 (12) TMI 158 - CEGAT, CHENNAI ], it was held that the order of denial of MODVAT Credit is not correct in law when duty paid goods were used in the manufacture of dutiable final products. The law under CENVAT Credit Rules, 2004, does not say that the adjustment of Credit is not to be allowed, if the returns are filed belatedly. On such score, disallowance of credit is not legal and proper. Eligible credit has to be allowed for adjustment to compute the assessee s tax liability. However, the amount of credit has to be verified. The assessee has furnished the table showing the details of the credit available. Even as per Audit report, it was informed that they are eligible for CENVAT Credit. However, we are of the opinion that matter of computation on CENVAT Credit eligible needs to be remanded to the original adjudicating authority for the limited purpose of verifying the amount of credit as furnished in the table and allow the adjustment towards liability. As such, the lower adjudicating authority is directed to requantify the duty liability after adjusting the CENVAT Credit amount. Invocation of extended period of limitation - HELD THAT:- The non-payment of Service Tax collected along with the link charges from the cable operators had resulted in undue financial accommodation and therefore the suppression indulged has all necessary elements to be considered as having been resorted to with intent to evade payment of Service Tax. In such a situation extended proviso is rightly invokable as held by the CESTAT, Mumbai in the case of M/s. Safe Sure Marine Service Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai [ 2012 (4) TMI 56 - CESTAT, MUMBAI] wherein it was held interalia that the appellant, after having collected the tax from their customers, have never informed the Department of the same and have suppressed facts from the Department and, therefore, the extended period of time has been rightly invoked in the instant case. The above ratio is squarely applicable in this case . Considering the facts and circumstances of this case and relying upon the above decision, there are no hesitation to hold that the extended period of limitation in terms of the proviso to Sub-Section (1) of Section 73 of Chapter V of the Finance Act, 1994 is rightly invokable in this case. Penalties - HELD THAT:- Considering the peculiar circumstance of the case as the appellant has paid substantially the Service Tax amount before the issuance of the Show Cause Notice No. 25/2011 dated 18.04.2011, it is sufficient cause to waive the penalties imposed under Section 76 of the Finance Act, 1994 in terms of provisions of Section 80 of the Finance Act, 1994 in respect of both the Show Cause Notices - penalties imposed under Section 77 of the Finance Act, 1994 are not disturbed. The original adjudicating authority is directed to arrive at the Service Tax payable after allowing the adjustment of CENVAT Credit eligible. Thus, the appeal filed by the assessee is partly allowed and partly remanded. 2024 (1) TMI 522 Rejection of partial refund claim - rejection primarily on the ground of no direct nexus between input and output service - HELD THAT:- In the Appellant s own case for the prior and subsequent period, all these disputed credit were held to be admissible by this Tribunal. On the ground on which it was held to be admissible remained unshakeable as in the parallel proceeding initiated under Rule 14 of the CENVAT Credit Rules, 2004, the said demand that was conformed up to the Commissioner (Appeals) s level was set aside by this Tribunal and the same do cover the present disputed period. Therefore, in furtherance to the Judicial precedent set by this Tribunal and in order to ensure consistency and predictability to the order passed by it, the following order is passed. The order passed by the Commissioner (Appeals) to the extent of rejection of CENVAT Credit to the Appellant is hereby set aside - Appeal allowed. 2024 (1) TMI 521 Nature of transaction - sale or service - whether the Appellant has correctly discharged full Service Tax on Hall Hire Charges, when full VAT stood paid on food sale component? - extended period of limitation - HELD THAT:- In the matter of M/S CHOKHI DHANI VERSUS THE PRINCIPAL COMMISSIONER CENTRAL EXCISE SERVICE TAX [ 2020 (1) TMI 675 - CESTAT NEW DELHI ], Tribunal has held that banquet and supply of food and beverages having been shown separately by different charges as banquet hall charges and similarly for food charges separately in relation to Mandap Keeper services is permissible and does not disentitle benefit of Notification No. 12/2003ST dated 28th June, 2003. It is also found that not only the supply of food has been segregated but also appellants have discharged VAT tax on such food component and have also paid service Tax on Mandap keeper charges extracted from the parties and paid service tax on it. The constraint of separate contract emphasized in impugned order remains of no legal consequence, when supplier of service and service receiver indicate through invoice by implication that separation of both elements was agreed upon and accepted by both parties to the contract - extended period cannot be invoked against the appellant, even if some contrary decisions existed too, as matter involves interpretation of law. The impugned order set aside - appeal allowed. 2024 (1) TMI 520 Classification of services - Management Maintenance or Repairing Services or not - GIDC is collecting charges towards the maintenance and providing common facilities such as approach roads, street lights, etc. - HELD THAT:- This Tribunal in this appeal vide its order no. A/12479/2018 dated 30.10.2018 [ 2018 (11) TMI 363 - CESTAT AHMEDABAD] allowed the appeal by holding that there is no taxability on Maintenance Charges collected by State Industrial Development Corporation from the industrial plot owners. From the finding of the Hon ble Supreme Court in KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR [ 2022 (2) TMI 1113 - SUPREME COURT] , it is seen that the statutory levy has been interpreted on the basis that if the levy is mandatory than only it is statutorily and if it is discretionary then it cannot be treated as statutory levy. The Hon ble Apex Court interpreted the Section 9 (2) (xvii) that as per the said section word may was used which indicates that it is not a mandatory levy hence the exemption provided as per the board circular dated 18.12.2006 shall not apply. In the present case the demand was raised on the service of management, maintenance and repair service for which the charges are prescribed. In the Rule 13 wherein the words used are Service charged determined from time to time shall have to be paid by the hirer to the corporation . This clearly indicated that the charges for maintenance is mandatory hence it is clearly a statutory levy on which no service tax is chargeable as clarified in the board circular No. 89/7/06 dated 18.12.2006 read with observation of the Hon ble Supreme Court in the case of Krishi Upaj Mandi Samiti and therefore, in the present case the charges being statutory levy, the same is not liable to Service Tax. The impugned order is set aside - Appeal is allowed. 2024 (1) TMI 519 Doctrine of mutuality - Liability to pay service tax Club or Association services or not - amount of the contributions made by their members for their mutual benefit in the nature of maintenance charges, etc. - Appellant is an association of house owners (in group residential houses), registered under the Andhra Pradesh Societies Registration Act, 2001 - period 01.04.2011 to 31.03.2016 - extended period of limitation - HELD THAT:- The issue herein is squarely covered in favour of the Appellant by the ruling of the Apex Court in the case of State of West Bengal vs Calcutta Club Ltd [ 2019 (10) TMI 160 - SUPREME COURT] , wherein in the matter of service tax it has been held Explanation 3(a) to Section 65B(44) does not apply to members clubs which are incorporated. In view of the aforementioned ruling of the Apex Court in the case of Calcutta Club Ltd, it is found that the dispute herein is covered on all fours in favour of the Appellant - the definition in Sec 65 (25aa), w.e.f. 01.07.2012, also specifically excludes any body established or constituted by or under any law for the time being in force. The Appellant is a body registered or incorporated under the Andhra Pradesh Societies Registration Act, 2001. Further explanation 3(a) to Sec 65(44) does not apply to members Club/Association, which are incorporated. The impugned order set aside - appeal allowed. 2024 (1) TMI 518 Levy of penalty u/s 78 of FA - Suppression of facts and allegation of fraud, existing or not - HELD THAT:- There is no allegation of fraud or suppression, save and accept, that had the audit, not taken notice of the errors in the computation of taxes, the same would have gone unnoticed. Further, we find from the facts on record that the appellant have deposited almost all the taxes with interest before issue of the show cause notice, without any protest. In this view of the matter, there is no condition precedent under Section 78 available and accordingly, the appeal is allowed and the penalties set aside. Central Excise 2024 (1) TMI 517 Adjustment of excess payment against the liability, if any, in the subsequent months - HELD THAT:- The appellant has made some excess payment in the month of December 2014. They have utilized the same against their liability in the month of February 2015 and reported the same in the return filed in the month of May 2015. The issue involved is of procedural in nature. There is no allegation in the impugned order that the appellant has not discharged their duty liability during February 2015. The impugned order alleges that excess payment, if any, in the month of December 2014 must have been adjusted immediately after the next month i.e. in the month of January 2015. However, the appellant has adjusted it against the liability in the month of February 2015, which is not permissible - the appellant is permitted to adjust excess payment, if any, made on the subsequent month. There is no provision in the Rules that the adjustment must be made immediately after the next month. There is no infirmity in the adjustment made by the appellant in the month of February 2015 and reporting the same in the return filed in the month of May 2015 - the demand of duty along with interest and penalty imposed in the impugned order is not sustainable - Appeal allowed. 2024 (1) TMI 516 Denial of CENVAT Credit - Excise Duty paid on the de-bonded inputs / raw materials and the duty paid on the capital goods - HELD THAT:- The Order-in-Original is very silent on all the documents claimed to have been furnished by the appellant. There is also no denial insofar as the merger of M/s. SGM with the appellant is concerned, nor is there any denial as to the availability of unutilized CENVAT Credit with M/s. SGM that came to be transferred to the appellant. The matter, however, required verification of records per se and nothing beyond that; if the records support the claims of the appellant, then there is nothing to be done. Though much water has flown, in the interests of justice, the matter requires re-adjudication since what is required is the verification of the documents vis- -vis the claim of the appellant, which can only be done by the original authority - The appeal is allowed by way of remand. 2024 (1) TMI 515 Rejection of refund claim, claimed in terms of N/N. 33/99 CE dated 08/07/99 - Time Limitation - denial of refund on the ground that filing of statement within 7 days of the next month in which the duty has been paid from the account current, is a mandatory requirement which must be complied with by the appellant to claim the refund - HELD THAT:- The Board has clarified vide letter No.354/8/98-CE TRU (Part- II) dated 06/10/1999 that the provisions of Section 11B of the Central Excise Act, 1944 are not applicable in case of refunds claimed under Notification 33/99-CE dated 08/07/99. The coordinated Bench of Guwahati has held in the case of M/s M.K.Jokai Agri Plantations (P) Ltd Vs Commissioner of Central Excise and Service Tax, Dibrugarh [ 2018 (9) TMI 566 - GAUHATI HIGH COURT] that the refunds filed under Notification 33/99-CE dated 08/07/99 cannot be denied on the ground of limitation. Thus, refund claims cannot be denied on the ground of limitation, if the appellant is otherwise entitled for the claim. The question of 25% of expansion by the appellant within the stipulated date was examined by the department and later satisfied that the appellant has made 25% of expansion in the installed capacity within the stipulated date. Thus, the Appellant could not have filed the refund application till confirmation of the substantial expansion condition by the department. However, the Appellant has filed RT-12 returns regularly wherein they have categorically mentioned the duty paid by them from the account current. It is observed that the details disclosed in the RT-12 return would be sufficient to fulfill the Clause 2(a) of the Notification 33/99-CE dated 08/07/99. Also, substantial benefit like refund cannot be denied on account of procedural infirmities. Since, the Appellant has fulfilled the procedural requirement as mentioned in Clause 2(a) of Notification 33/99-CE dated 08/07/99, the refund applications filed by the appellant cannot be rejected on the procedural grounds of non compliance of Clause 2(a) of notification 33/99-CE dated 08/07/99. The appellant has fulfilled both the condition as required under the notification 33/99 -CE dated 08/07/99. Accordingly, the appellant is eligible for the refund and hence we set aside the impugned order rejecting the refund claims - Appeal allowed. 2024 (1) TMI 514 CENVAT Credit - denial on the ground that Appellant had not followed the procedure contained in Rule 6(3) of the CENVAT Credit Rules, 2004 and not reversed proportionate credit against exempted services provided by it as job worker - HELD THAT:- When Notification No. 214/86-CE was issued tax on service activities was not in existence, for which the activity of Appellant, since did not involve sale or transfer of title in any goods or moveable or immoveable property, as referred in the Commissioner s order in para 2 under facts of the case without the same being alleged in the show-cause notice, cannot be accepted as an issue covered under excise provisions as the entire activities were covered under the said Notification No. 214/86-CE issued under Central Excise Act, as apparently he was hinting at the definition of Sales Tax and not at the Central Excise Act. Moreover, under serial No. 30 of Notification No. 25/2012-S.T., certain definite activities are defined to have been covered under the job work and exempted from the purview of Service Tax but those relates to processes on selected intermediate production and not production of any kind of goods or goods in general. In the instant case the nature of resultant output from the job workers end is not referred anywhere in the entire appeal case record including show-cause notice, orders etc., except that nature of work undertaken by it is mentioned as machining of shaft and rollers but whether the final outcome of the same would be a marketable product without any further development by the principal/original manufacturer is not forthcoming form the show-cause notice or from the orders. In Hema Engineering Industries Ltd. [ 2017 (5) TMI 1347 - CESTAT NEW DELHI] , placing reliance on which learned Commissioner (Appeals) had passed his order, Notification No. 08/2005-S.T. was considered therein so as to determine exemption from Service Tax only when the process undertaken doesn t amount to manufacture but in the instant case it has not been determined as to if Appellant was processing an intermediate product or was manufacturing the same since serial No. 30 of Notification No. 25/2012-S.T. has clearly categorised specified items for processing as intermediate product like products on agriculture, printing, textile, polishing diamonds and gemstones etc. that would fall under it but Appellant s activity doesn t fall into it. Other works like doing agriculture or manufacturing textile since are different from processing of products of agriculture or textile processing, machining of shaft or rollers could also be different from manufacturing of shaft or rollers but when for decades, Appellant has been allowed to avail the benefit of Central Excise Notification No. 214/86-CE, its activity can only be considered as an activity covered under Central Excise Act and not rendering of a service, so as to invoke the provision contained in Rule 6 of the CENVAT Credit Rules, 2004. Appeal allowed. CST, VAT & Sales Tax 2024 (1) TMI 513 Interpretation of statute - time limitation - Rejection of refund claim - HELD THAT:- There has been a continuing lapse on the part of the petitioners herein. In the circumstances, the interest of justice would be sub-served, if interest @ 6% on the refund amount is directed to be paid w.e.f. 26.04.2023 till the date of realisation in the instant case. It is needless to observe that the aforesaid refund amount with interest shall be paid within a period of four weeks from today without seeking any extension of time either before this Court or before the High Court. SLP disposed off. 2024 (1) TMI 512 Whether the Tribunal being the last fact finding authority ought to have returned a clear finding with respect to charges incurred by the importer till the stage of bringing the goods in the local area and charges incurred inside the local area after its entry; before including such charges in the value of goods defined u/s 2(h) Entry Tax Act, 2007? - HELD THAT:- With regard to the issue of demurrage, and the bank charges, the Tribunal in subsequent years has accepted the contention of the revisionists and held in their favour. In light of the same, the benefit is required to be given for the assessment year in question. With regard to the unloading cost and other charges, the Tribunal has not come to any finding whether the same included unloading prior to entry of the goods into the local area or subsequent to entry into the local area. Accordingly, these issues are required to be remitted to the Tribunal for a fresh decision. The question of law is, accordingly, answered in the affirmative in favour of the assessee and against the revenue. 2024 (1) TMI 511 Levy of penalty - reversal of ITC as per return was not taken into consideration more particularly, relating to purchase return and there is no binding of any wrong availment of ITC are producing false bill - violation of principles of natural justice - Requirement of SCN that the petitioner is liable under the Sections 27(1) and 27(2) of the Act - HELD THAT:- When the show cause notice is not issued by invoking Section 27 and 27(4) of the Act then levying penalty under those sections is violating the principles of natural justice. As rightly pointed out by the Learned Senior counsel appearing for the petitioner, even if the respondent is intended to impose the penalty under Section 27(4), then a show cause notice ought to be issued to impose under Section 27(4) simply, because show cause notice was issued under Section 22(2) the respondent cannot impose 300% penalty, retrospectively, by invoking Section 27(2) of the Act. Moreover, there must be a finding that wrong availment of ITC are produced false bills etc. The absence of such finding, the respondent lapsed jurisdiction for which the Judgment relied earlier i.e.(earlier Judgment) is applicable. In the present case also the respondent have not rendered the such finding. In such circumstances, invoking section 27(4) read with 27(2) penalty cannot be imposed. Moreover, penalty cannot be imposed automatically. Some criminalities ought to be in existence to impose penalty and the framing of proof required for imposition of penalty is different from and much higher than i.e., required for the purpose of framing the best Judgment demand assessment. Therefore, the impugned orders cannot be sustained. Hence the impugned orders are quashed. Petition allowed. 2024 (1) TMI 510 Validity of impugned orders of assessment dated 12.07.2021 under the Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001 - stock transfer - exemption on the sales to CSD under the TNGST Act - revenue neutrality - time limitation - whether time spent in challenging validity of a levy would be excluded under Section 16 (5) of the TNGST Act? - HELD THAT:- On applying the construction placed on the expressions assessments and in respect of , while interpreting section 16 (5) of the TNGST Act, it is clear that any proceeding connected with the assessment would be covered by Section 16(5) of the TNGST Act - there is no doubt in the light of the above discussion that the validity of the levy is certainly connected with the assessment and thus the time spent challenging the validity of the levy ought to be excluded while reckoning the limitation, for assessment of escaped turnover or value of Schedule goods or reassessment ought to be excluded in terms of Section 10 of Entry Tax Act read with Section 16(5) of TNGST Act. Whether Section 16 (5) of the TNGST Act, would have relevance in determining what would constitute reasonable period for the purposes of making an assessment under Rule 4 of Entry Tax Rules? - HELD THAT:- The limitation provided under Section 16 of the Act is indicative of what would constitute reasonable period for the purpose of assessment under Rule 4 of the Entry Tax Rules. If the impugned orders of assessments are treated as original assessment under Rule 4 of Entry Tax Rules, which does not prescribe any limitation and thus ought to be made within a reasonable period. If one bears in mind the scheme of the Act, there is no doubt that the impugned orders of assessment are made within a reasonable period - thus, Section 12C of the TNGST Act, may not have any relevance in determining whether the impugned orders of assessment are barred by limitation or otherwise. Legality of the impugned orders - escaped assessment - HELD THAT:- Assuming that the impugned proceedings qualify as assessments of escaped value of scheduled good in which event it would be governed by Section 10 of the Entry Tax Act read with Section 16 of the TNGST Act. Then applying the exclusion provided under Section 16 (5) of the TNGST Act, the impugned orders of assessment are within period stipulated under Section 10 of the Entry Tax Act readwith Section 16 of the TNGST Act and thus the plea of the impugned orders being barred by limitation is liable to be rejected. The matters are remitted back for reconsideration - Petition disposed off by way of remand. 2024 (1) TMI 509 Invocation of doctrine of promissory estoppel against the State for continuing to avail the tax concessions - whether tax incentives granted to the petitioner-industrial units under specific Rules and statutory Notifications framed issued pursuant to the State Industrial Policy, 2004, could be withdrawn during the currency of the exemption period promised under the Industrial Policy/ Rules/Notifications? - HELD THAT:- It is, thus, quite apparent that petitioner units had acted upon the promise extended to them by the State for investing in backward Panchayats of the State categorized as tax free zone. The promise being exemption from payment of VAT/CST for a period of ten years from the date of commencement of production. The petitioner units changed their position and invested in the State by setting up industrial units in backward areas/tax free zone. The doctrine of promissory estoppel is definitely applicable to the facts of the instant case. Having promised the petitioners exemption from payment of VAT/CST for a specific period, the respondents-State cannot be permitted to now assert that it is entitled to withdraw the tax concessions and to direct the industrial units to pay VAT/CST merely because in the subsequent years the Panchayats where the petitioners had set up their industrial units were de-notified and no longer carried the backward status. The growth of industrial sector can be said to be one significant factor in the development of an area. Doctrine of promissory estoppel is applicable in the facts of the cases and can certainly be successfully invoked by the petitioners in such circumstances to compel the State to adhere to its side of bargain promised under the Industrial Policy, 2004 and the Rules framed thereunder. The action of the respondent in withdrawing tax concessions granted to the petitioner units is not in consonance with law. The notifications withdrawing the backward area status from the concerned Panchayats will have only prospective effect i.e. will be applicable to industries being set up/expanded after the date of withdrawal notifications. These cannot be applied retrospectively to the petitioner units which had already come into production by the time the backward areas status was withdrawn from such Panchayats. These Panchayats shall have to be construed as backward areas/ tax free zone for the purpose of grant of tax incentives to the petitioners for specific period as per the promise extended by the State. The impugned office communication dated 26.04.2013 directing realization of tax from the petitioner Industrial units established in tax free zones, the consequent notices issued to the petitioners to deposit tax are quashed and set aside. Petitioners are held entitled to tax exemptions in terms of the Industrial Policy, 2004, the Incentive Rules, 2004 and the tax exemption notifications dated 30.03.2005(GST CST) and 19.01.2006 (VAT) till the coming into force of GST regime in the year 2017. Petition allowed. 2024 (1) TMI 508 Interpretation of statute - time limitation - Rejection of refund claim - no prescription of time limitation in the parent Act - striking down the rules as ultra vires. Whether rules can provide a period of limitation when there is no such prescription in the parent Act? - HELD THAT:- It has been considered by the Hon ble Apex Court in the case of BHARAT BARREL DRUM MFG. CO. LTD. ANR. VERSUS EMPLOYEES STATE INSURANCE CORPORATION [ 1971 (9) TMI 183 - SUPREME COURT ] . The Hon ble Supreme Court delved into the question as to whether limitation affects substantive and procedural rights - it has been inter alia held that where the legislature intends to provide the period of limitation it specifically provides for the same in the main Act and does not leave it to the government under its delegated power. Since the Rule bars the claim of the Corporation, the same can t be within the realm of procedure. It was also held that since such a provision affects substantive rights, it must be dealt with the legislature itself and cannot be inferred from the rule making power unless provided for expressly. In the present case as well, the right to refund gets extinguished by the time limit provided in the JVAT Rules. This certainly affects the substantive and statutory right of the petitioner to get refund to which it is guaranteed under Section 52 of the JVAT Act. Thus, we hold that the refund application of the petitioner could not have been rejected on the ground of limitation since Rule 19(2)(a) is de hors the provision of Section 52 of the JVAT Act. From scrutiny of Section 55 of the JVAT Act it would make it evident that interest would be levied for the period commencing 90 days after the application for refund. Thus, the legislature has intended that Refund Application should be decided within a period of 90 days. In the present case, the same has been given a complete go by - the action of the Respondents is unjust and arbitrary which seek to defeat legitimate claims of the petitioner. The impugned order has been rejected, is hereby, quashed and set-aside - Application disposed off. Indian Laws 2024 (1) TMI 507 Dishonour of Cheque - no factual basis to show existing debt or liability - absence of necessary averments in the complaint regarding the nature of transaction between the parties - HELD THAT:- All that a complaint under Section 138 of N.I. Act requires to contain is such factual averments as are necessary to satisfy the ingredients of the said provision, namely, that the cheque/money bill which has been dishonoured was issued to discharge full or partial pre-existing debt liability. It is not be the pre-requisite of Section 138 of the N.I. Act to plead evidence in the complaint itself. Once a specific plea has been taken, it can be later on substantiated by adducing evidence at an appropriate stage. On a reading of paragraph 3 of the complaint, the appellant has made the necessary averments in order to prima facie attract the consequences under provisions of the N.I. Act. The High Court, thus, fell in error in misconstruing the averments made in the complaint(s). The impugned order dated 17.07.2019 of the High Court is set aside and all the five complaints filed by the appellant against the respondents under Sections 138, 141 and 142 of the Negotiable Instrument (Amendment Miscellaneous Provisions) Act, 2002 read with Section 420 of the Indian Penal Code 1860, are restored to their original numbers and files - Appeal allowed.
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