TMI Tax Updates - e-Newsletter
January 14, 2025

Case Laws in this Newsletter:

GST Income Tax Customs PMLA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Notice/ Order shall be mandatorily be served through post or electronic mode

   By: Bimal jain

2. Key Advantages of LLP Over a Traditional Partnership

   By: Ishita Ramani

3. LEGAL TERMINOLOGY IN GST LAW (PART -5)

   By: Dr. Sanjiv Agarwal

4. ITAT WEBSITE PRONOUNCEMENT DATES DELAYED UPLOADED – may lose importance of DESIRED timely communication.

   By: DEVKUMAR KOTHARI and CA UMA KOTHARI

5. CROSS EXAMINATION OF WITNESSES IN ARBITRAL PROCEEDINGS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GST officers must explain 'grounds of arrest' to offenders, obtain acknowledgement: CBIC

2. Retail inflation eases to 4-month low of 5.2 pc in Dec; creates room for RBI's rate cut

3. Auction for Sale (re-issue) of (i) ‘6.75% GS 2029’, (ii) ‘6.92% GS 2039’ and (iii) ‘7.09% GS 2054’

4. SUGGESTIONS ON COMPREHENSIVE REVIEW OF THE INCOME TAX ACT, 1961

5. India-Nepal Inter-Governmental Committee meeting on trade transit and cooperation to combat unauthorised trade concludes in Kathmandu

6. India's coal import rises 2 pc to 182 MT in Apr-Nov period

7. GJEPC optimistic about diamond export revival, eyes Bengal's Singur as global jewellery hub

Notifications

DGFT

1. 50/2024-25 - dated 13-1-2025 - FTP

Notification of Schedule-II (Export Policy) of ITC(HS) 2022, in sync with Finance Act 2024 dated 16.08.2024

GST - States

2. 06/2024-State Tax (Rate) - dated 8-1-2025 - Delhi SGST

Amendment in Notification No. 04/2017- State Tax (Rate), dated the 30th June, 2017

3. 06/2024-State Tax - dated 8-1-2025 - Delhi SGST

Seeks to notify “Public Tech Platform for Frictionless Credit” as the system with which information may be shared by the common portal based on consent under sub-section (2) of Section 158A of the Delhi Goods and Services Tax Act, 2017

4. 26/2024-State Tax - dated 9-12-2024 - Maharashtra SGST

Extension of due date for filing of return in FORM GSTR-3B for the month of October, 2024

Circulars / Instructions / Orders

GST

1. Instruction No. 01/2025 - dated 13-1-2025

Guidelines for Arrest and Bail in relation to Offences Punishable Under The CGST Act, 2017

Highlights / Catch Notes

GST

• From January 2025, GSTR-1 and GSTR-1A require dropdown HSN code selection in Table 12 with new validations.

  News : In Phase-III implementation for GSTR-1 and GSTR-1A, from January 2025 return period, Table 12 requires selecting HSN codes from dropdown instead of manual entry. Table 12 bifurcates into B2B and B2C tabs to report supplies separately. Validations introduced for supply values and tax amounts, initially in warning mode without blocking GSTR filing.
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• Supreme Court Pauses GST Showcause Actions Against Online Gaming, Casinos; Cases Consolidated for Final Ruling.

  News : SC stayed showcause notices issued by GST authorities worth over Rs 1 lakh crore to online gaming companies and casinos over alleged tax evasion. A bench of JJ. J B Pardiwala and R Mahadevan said matters required hearing and all proceedings against gaming companies should remain stayed. Govt amended GST law making it mandatory for overseas online gaming firms to register in India from Oct 1, 2023 and 28% GST would be levied on full value of bets placed. Gaming firms contested such GST demands before HCs. SC transferred pleas from 9 HCs to itself for authoritative pronouncement.
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• High Court Quashes GST Assessment Order for Denying Personal Hearing; Case Remitted for Reassessment by January 2025.

  Case-Laws - HC : HC quashed assessment order and order in Form GST DRC-07 for violation of principles of natural justice by not granting personal hearing. Matter remitted to Assessing Officer to provide opportunity of personal hearing to assessee on 15.01.2025 or adjourned date. Assessing Officer directed to pass orders within 3 months from HC judgment date or limitation period, whichever is later, after hearing assessee.
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• Input Tax Credit Denied for Motor Vehicles Seating 13 or Fewer, Failing Exceptions in Section 17(5)(a) CGST/TNGST Act.

  Case-Laws - AAR : The AAR held that input tax credit is not available on motor vehicles with an approved seating capacity of less than or equal to 13 persons (including driver), except for specific categories mentioned u/s 17(5)(a) of CGST/TNGST Act, 2017. The applicant's activity of providing 'Automobile Bench Marking Service' and supplying 'Scrap of Automobiles' does not fall within the exceptions. Therefore, input tax credit on purchase of motor vehicles used for such outward taxable supplies is not available to the applicant.
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• Slack Adjusters for Buses/Trucks Taxed at 28% GST, Trailers at 18% GST, Classified by Application Under HSN Codes.

  Case-Laws - AAR : Slack adjusters used in braking systems of buses and trucks are classifiable under HSN 87089900 as 'Parts and accessories of motor vehicles' attracting 28% GST. Slack adjusters used in trailers' braking systems are classifiable under HSN 87169010 as 'Parts and accessories of trailers' attracting 18% GST. Irrespective of OEM or aftermarket sales, correct classification based on application in buses/trucks or trailers should be ensured by the applicant.
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Income Tax

• Court Rules AO Needs Evidence, Not Allegations, to Reopen Assessment; Notices u/ss 148, 148A(b), 148A(d) Nullified.

  Case-Laws - HC : AO issued notice u/s 148A(b) alleging petitioner received accommodation entries from entities controlled by Sh. Joginder Pal Gupta. Petitioner denied receiving any amount and provided bank account details. HC held AO cannot reopen assessment without examining material to establish petitioner received entries in bank accounts. Mere allegation of accommodation entries without substantiating material is insufficient. AO must ascertain basic facts are sustainable before reopening assessment. Impugned notices u/s 148, 148A(b) and order u/s 148A(d) set aside by HC.
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• High Court Invalidates Assessment Orders for Exceeding Time Limit u/s 144C(13); Orders Issued After Deadline.

  Case-Laws - HC : The HC held that the assessment orders dated 30.08.2022 and 01.09.2022 were issued beyond the permissible limitation period. As per Section 144C(13), the AO must complete proceedings within one month from the end of the month in which the DRP directions u/s 144C(5) are received. The HC ruled that when the DRP uploaded its directions on the portal on 30.06.2022, it amounted to 'despatch' u/s 13(2) of the IT Act, and the AO's 'receipt' occurred on the same date when the electronic record entered the department's computer resource. Thus, the limitation period began from 30.06.2022, not 05.07.2022 when the email was received, rendering the impugned orders time-barred.
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• Assessee's Claims Approved: Sales Promotion, Insurance, and Interest Expenses Validated by Assessing Officer's Ruling.

  Case-Laws - AT : Assessee's claims allowed: 1) Sales promotion expenses booked on gross basis and settled on actual utilization basis as per matching principle and regularly followed accounting method. 2) Insurance expenditure paid to National Insurance Company for enhancing sum insured and part of premium policy already paid. 3) Interest on delayed payment treated as allowable financial charge, being in nature of revenue expenditure and not connected to acquisition of capital asset.
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• ITAT rules Section 153C proceedings invalid without Assessing Officer's Section 65B certificate for record authenticity.

  Case-Laws - AT : The ITAT held that initiation of proceedings u/s 153C requires the Assessing Officer to obtain a certificate verifying the veracity and reliability of the record. In the absence of such compliance and a certificate u/s 65B of the Evidence Act, 1872, which is mandatory, the action of the Assessing Officer to initiate proceedings u/s 153C was improper. Accordingly, the relevant ground raised by the assessee was allowed.
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• ITAT Rules Assessee Not Liable for Penalties u/ss 271E and 271D Due to Lack of Inherited Assets.

  Case-Laws - AT : Assessee not liable for penalties u/s 271E/271D for violation of sections 269SS/269ST by company where she was neither shareholder nor director. ITAT held assessee cannot be fastened with liability for acts/omissions of her deceased husband who was director, as she neither inherited any estate from him nor was involved in company's dealings. Provisions of section 159(6) limit legal representative's liability to extent of assets acquired. Revenue failed to establish assessee received any estate from late husband. Penalties deleted.
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• Government Educational Institute Granted Tax Exemption by ITAT for Central Government Funding u/s 10(23C)(iiiab.

  Case-Laws - AT : The assessee, a government educational institute, received a grant of Rs. 2.50 crore from the Central Government's Ministry of Labour and Employment under the "Upgradation of 1396 Government ITIs through Public Private Partnership" scheme between 2008-09 and 2011-12. The grant was invested in fixed deposits with scheduled banks. Out of the total gross receipts of Rs. 26,13,473/- during the year, Rs. 19,32,473/- was received as interest from the fixed deposits made from the government grant and savings bank account, accounting for more than 50% of the grant receipts. The ITAT held that the assessee institute is substantially funded by the Central Government and is entitled to exemption u/s 10(23C)(iiiab) of the Income Tax Act. The decision was in favor of the assessee.
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• ITAT Supports AO in Treating Excess Stock as Business Income; Rejects CIT's Revision Order Due to Lack of Grounds.

  Case-Laws - AT : ITAT quashed CIT's revision order holding AO's assessment order treating excess stock disclosed in survey as business income not erroneous. AO made enquiries regarding stock valuation, discrepancy during assessment proceedings. Assessee explained causes for excess stock pertaining to business. No addition u/s 115BBE warranted as AO adopted a plausible view based on enquiry. Lack of jurisdictional condition for revision when AO's view sustainable.
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Customs

• Court Halts Bank Guarantee Encashment; No Coercive Steps Allowed During Appeal Period u/s 129A of Customs Act 1962.

  Case-Laws - HC : HC stayed encashment of bank guarantee. Coercive measures prohibited during appeal limitation period under Circular 984/08/2014-CX. Pre-deposit made, remaining amount cannot be recovered by encashment. Impugned order dated 06.12.2024, appeal period 3 months u/s 129A of Customs Act 1962. Considering substantial sum appropriated, encashment of bank guarantee restrained subject to petitioner keeping it alive.
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• CESTAT Rules in Favor of Appellants: Confiscated Foreign Gold Classified as Restricted, Not Prohibited, Confiscation Overturned.

  Case-Laws - AT : Foreign marked gold was a restricted item, not prohibited. Appellants produced import Bill of Entry from Kotak Mahindra Bank, claiming legitimate purchase reflected in accounts. CESTAT held onus shifts to department once documents produced. Department failed to investigate or rebut documents linking seized gold to import. Mere lack of visibility of last two digits insufficient for presuming smuggling when other details matched import documents. Preponderance of probability favored appellants. Confiscation quashed, appeal allowed by CESTAT.
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IBC

• IBBI mandates eBKray platform for all asset auctions in liquidation under Insolvency and Bankruptcy Code, effective April 2025.

  Circulars : The Insolvency and Bankruptcy Board of India (IBBI) issued a circular mandating the exclusive use of the eBKray auction platform for conducting auctions and listing unsold assets in all liquidation processes under the Insolvency and Bankruptcy Code, 2016 with effect from April 1, 2025. All ongoing liquidation cases must list unsold assets on the platform by March 31, 2025. The directive aims to streamline the liquidation process and improve transparency.
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• IBBI Extends Deadline for Liquidation Forms Submission Under IBC 2016 to March 31, 2025; Accuracy Emphasized.

  Circulars : IBBI extended last date for submission of liquidation and voluntary liquidation forms under IBC, 2016 till 31.03.2025. IPs directed to ensure information submitted is accurate, truthful and consistent with supporting documents attached.
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Indian Laws

• High Court: Directors Liable u/s 138 of Negotiable Instruments Act Despite Company Insolvency; Section 96 IBC Inapplicable.

  Case-Laws - HC : Petitioners, Managing Director and Director of Ms. Kudos Chemie Pvt. Ltd., sought stay of proceedings u/s 138 of Negotiable Instruments Act, 1881, invoking Section 96 of Insolvency and Bankruptcy Code, 2016. HC held proceedings u/s 138 NI Act penal in nature, not in respect of any debt. Directors cannot escape penal liability u/ss 138/141 NI Act due to company's insolvency. Section 96 IBC not a bar to continue Section 138 proceedings against Directors. Petition dismissed as misuse of process to delay 9-year-old proceedings.
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• NFRA Issues Guidance to Boost Auditor-Committee Dialogue on Accounting Estimates, Focus on Expected Credit Losses Under Ind AS 109.

  News : NFRA releases first part of Auditor-Audit Committee Interaction Series on Audit of Accounting Estimates and Judgments focusing on Expected Credit Losses under Ind AS 109. Series aims to enhance communication between auditors and audit committees, promote audit quality and investor protection by highlighting potential questions audit committees may ask auditors regarding accounting estimates and judgments, drawing from requirements under CA 2013, SA 260(R), 265, other SAs and SQC.
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PMLA

• ED Not Required to Share "Reasons to Believe" Under PMLA Section 17(1), Tribunal Upholds Decision.

  Case-Laws - AT : ED not obligated to provide "reasons to believe" u/s 17(1) PMLA to appellant. AT dismissed appeal, holding Adjudicating Authority rightly denied copy; reasons in sealed cover for Authority's perusal with other material to decide show cause notice, no mandate to supply.
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VAT

• High Court Upholds Rule 6-B(2)(iii) Validity, Finds L1 Certificate Cancellation Disproportionate; Case Remanded for Reassessment.

  Case-Laws - HC : The HC held that Rule 6-B(2)(iii) of the A.P.G.S.T Act prescribing conditions for cancellation of composition tax permission u/s 5-G is intra vires. However, the cancellation of the L1 certificate for late filing of returns appeared disproportionate. The matter was remanded to the Assessing Authority to reconsider the cancellation issue. The parties were anonymized.
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• High Court Dismisses Petition Against Audit Assessment, Validates Extended Limitation u/s 21(5) for Tax Evasion.

  Case-Laws - HC : Petitioner challenged audit assessment dated 13.10.2020 alleging violation of natural justice and limitation period. HC held non-mentioning of Section 21(5) in show cause notices not fatal as petitioner failed to respond. Audit assessment within extended limitation period u/s 21(5) for tax evasion. Petition dismissed.
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Service Tax

• CESTAT Rules Transactions Aren't "Supply of Tangible Goods Service" u/s 65(105)(zzzzj) of Finance Act, 1994.

  Case-Laws - AT : The CESTAT held that the transactions do not constitute "Supply of Tangible Goods Service" u/s 65(105)(zzzzj) of the Finance Act, 1994. The Appellant had possession, control, and right to use the packaging material once delivered by Volvo. Volvo's access to information did not confer control or possession over the material. The Appellant could use the material as deemed fit, was liable for damages, and had more than mere custody. The CESTAT relied on the coordinate bench decision in CARAVEL LOGISTICS PVT. LTD. case applying the Supreme Court's five-fold test in BSNL case. Consequently, the appeal was allowed.
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Central Excise

• Appellant Wins Refund of CENVAT Credit Despite Time Limits, Supported by CGST Act and Constitutional Rights.

  Case-Laws - AT : The appellant is eligible for refund of unutilized CENVAT credit amounting to Rs.2,67,659/- u/s 142(3) of the CGST Act, 2017 read with Section 54 and Section 49(6), notwithstanding the time limitation u/s 11B(1) for filing refund claim. Denial of such transitional credit would violate Articles 14 and 300A of the Constitution as it is a vested right and property. The CESTAT allowed the appeal directing the Department to process the refund, holding that there is no unjust enrichment as the amount pertains to credit.
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• Appellants to Include Various Charges in Vehicle Value u/s 4 of Central Excise Act; Penalties Dismissed.

  Case-Laws - AT : The appellants are required to include pool cancellation charges, pool lifting charges, penalty on dealers and cancellation charges in the assessable value of motor vehicles as per Section 4 of the Central Excise Act, 1944. The CESTAT held that these charges relate to the transaction of sale and are payable by the buyer to the assessee in connection with the sale. All demands are sustained, however, penalties are set aside and cum-duty benefit is ordered to be accorded. Appeal allowed in part.
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Case Laws:

• GST

• 2025 (1) TMI 617
  Challenge to assessment order - impugned order passed without granting a personal hearing - violation of principles of natural justice - HELD THAT:- The impugned order and the order in Form GST DRC-07 dated 30.04.2024 (Annexure-P3 series), are set aside on violation of the statutory mandate for notice of personal hearing and the matter is remitted to the Assessing Officer directing the assessee to appear before the Assessing Officer on 15.01.2025. If he appears on the date notified, or on a date once adjourned, the Assessing Officer shall after hearing the assessee pass orders within three months from the date of this judgment or within the limitation period provided, if not expired, whichever falls later. Petition disposed off by way of remand.

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• 2025 (1) TMI 616
  Admissibility of ITC of tax paid or deemed to have been paid - Whether input tax credit can be claimed on the purchase of motor vehicles in terms of exception provided under Section 17 (5) (a) of Central/Tamilnadu Goods and Services Act, 2017? - HELD THAT:- Input Tax Credit is not available on motor vehicles with an approved seating capacity of less than or equal to 13 persons (including the driver). This encompasses most cars commonly used for business travel. There are exceptions to the general rule, allowing ITC to be claimed on specific categories of motor vehicles. However, specific restrictions apply to claiming ITC on motor vehicles. The eligibility of ITC on motor vehicles is provided with a particular focus on exceptions for motor vehicles not exceeding 13 persons (excluding driver) of seating capacity. To understand the intention of the Government and to decide the eligibility of input tax credit on motor vehicles for transportation of persons , the definition of Motor Vehicle and the provisions of Section 17 (5) of the CGST Act, 2017 is required to be studied. By providing an exception to the exclusion for availability of Input Tax Credit, the law is very clear and specific that except for the exceptions provided as sub-clause (A), (B) and (C), the input tax credit on the purchase of vehicles irrespective of any kind of outward supplies shall not be eligible. Hence, it is clear that for a motor vehicle specified in 17 (5) (a) of the Act, even if it is used for supplying goods or services is not eligible for availment of input tax credit, irrespective of whether or not it is used in providing taxable outward supply. The nature of outward supply rendered by the applicant would not fall under any of the exceptions provided under Section 17 (5) (a) of the Act. Accordingly, Input Tax Credit on the Motor Vehicles purchased for providing the taxable output supply of Automobile bench marking service is not available to the applicant for availment. Conclusion - The input tax credit on the purchase of motor vehicles used for providing taxable outward supply of Automobile Bench Marking Service and supplied as Scrap of Automobiles is not available to the applicant as the applicant s activity would not fall within the exception to the exclusion provided under Section 17 (5) (a) of CGST/TNGST Act, 2017.

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• 2025 (1) TMI 615
  Classification of slack adjusters used in the braking systems of trucks, buses, and trailers - rate of GST - to be classified under HSN 87089900 as Parts and accessories of Motor Vehicles or not - HELD THAT:- In the instant case, Slack adjuster is an essential part of a Air-braking system in Buses, Trucks or Trailers and shall not be treated as parts of general use . Accordingly, it has to be classified as Parts and accessories of Motor Vehicles under HSN 8708 and can be sub-classified under 87089900 as Others chargeable @ 28%. The applicant have informed that at present they are classifying the slack adjusters as per the Purchase order from the respective groups of OEM customers and raised concern that they have received information that the trade and other manufacturers of slack adjusters are classifying the product used in Truck and bus application under HSN 87169010 and charging 18% GST in their respective aftermarket sales. The slack adjusters used in the braking system of Buses and Trucks supplied to both OEMs and aftermarket Sales are classifiable as Parts and accessories of motor vehicles of heading 8701 to 8705, ---Others under HSN 87089900 and attracts GST at the rate of 28%. The slack adjusters used in the braking system of a Trailer supplied to OEMs and aftermarket Sales are classifiable as Parts and accessories of trailers under 87169010 and attracts GST at the rate of 18%. Irrespective of nature of customers namely, OEMs or aftersales, and the HSN classification in the purchase orders received, the applicant should ensure to adopt correct classification of the product as the slack adjusters supplied are different for both buses trucks application and trailer application. Conclusion - The slack adjusters used in the braking system of Buses and Trucks are classifiable as Parts and accessories of motor vehicles of heading 8701 to 8705---Others under HSN 87089900 and attracts GST at the rate of 28%. The slack adjusters used in the braking system of Trailers are classifiable as Parts and accessories of trailers under 87169010 and attracts GST at the rate of 18%.

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• Income Tax

• 2025 (1) TMI 614
  Initiation of proceedings u/s 153C - no certificate available on assessment record - HELD THAT:- These are basic requirement while recording the satisfaction note that the Assessing Officer should have obtained a certificate verifying the veracity and reliability of the record. In absence of such compliance, action of the Assessing Officer to initiate action u/s 153C is not proper. As it is fact on record that there is no certificate under section 65B of the Evidence Act, 1872 which is mandatory to proceed in any proceedings. Accordingly, the relevant ground raised by the assessee is allowed in favour of the assessee

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• 2025 (1) TMI 613
  Penalty u/s 271E/271D - contravention of section 269SS and 269ST - Addition u/s 69A - Receipt of estate from her late husband - HELD THAT:- It is not disputed that neither the assessee was a shareholder nor director in the concerned entity M/s Ronnie Finance Company Ltd. AO has not brought anything on record to show that the assessee was involved in any way with the business dealings of M/s. Ronnie Finance Limited. In the instant facts of the case, there is no dispute that the violation of section 269SS and 269ST was committed by the said company. The assessee in the instant case, cannot be held liable for the acts/omissions on the behalf of her deceased husband i.e. Late Nimit Kumar Sachdeva , who was only a director in the said company. The assessee, neither as legal heir of her husband nor in her individual capacity, inherited any estate or any other valuable article on account of her late husband. We also find that during course of the assessment proceedings and the penalty proceedings, the assessee was never apprised with any tangible/incriminating material, through which serious allegations had been made in the present case. We find that the provisions of Section 159(6) of the Act, provides that the liability of a legal representative is limited to the extent of assets acquired by the legal representative. In the instant case, the Revenue has not made a case that the assessee received any estate from her late husband. The action of the Revenue, therefore, to fasten the assessee with the liability of the business dealings conducted by the M/s. Ronnie Finance Limited is neither legally permissible nor just. Accordingly, we do not find any reason to interfere with the well-reasoned decision of the ld. CIT(A) and direct the AO to delete the penalties levied u/s 271D and 271E - Decided against revenue.

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• 2025 (1) TMI 612
  Penalty levied u/s.271D - cash deposit during demonetization period in the assessee s bank account - HELD THAT:- This Tribunal in several cases [T Shiju v. JCIT [ 2019 (6) TMI 603 - ITAT CHENNAI ] has held that recording of satisfaction by the AO in the assessment order regarding the violation of the provisions of section 269SS is a mandatory requirement for valid initiation of penalty proceedings us 271D of the Act and no penalty could be levied if the AO failed to record such satisfaction in the assessment order. In the present case, on perusal of the assessment order u/s 143(3) dated 31.10.2019, it is seen that no such satisfaction has been recorded by the AO in the said assessment order. Hence, having regard to the failure of the AO to record his satisfaction in the assessment order with regard to the violation of the provisions of Sec. 269SS, it is held that the penalty proceedings u/s. 271D of the Act have not been validly initiated and consequently, the penalty order passed by the Addl. CIT is held to be bad in Law. Assessee appeal allowed.

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• 2025 (1) TMI 611
  Exemption u/s. 10(23C)(iiiab) - JCIT(A) observed that the assessee is not recognized as a university by the University Grants Commission and that the assessee has not received any Government grant during the year - HELD THAT:- Admittedly, the assessee institute is a Government Education Institute, and in the past received Grant of Rs. 2.50 crore from the Central Government, Ministry of Labour and Employment under the Institute Development Plan for Government ITI in the scheme Upgradation of 1396 Government ITIs through Public Private Partnership and the said Grant has been invested in Fixed Deposit with Scheduled Bank. Section 10(23C) provides that any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government . Admittedly, the interest received on such grant from the Central Government was utilized by the assessee institute for the purpose of the Institute as per the Memorandum of Association and Rules and Regulations of Society. So far as the aspect of substantially financed by the Government, as notice that ostensibly the assessee received grant of Rs. 2.50 crore during the period 2008-09 to 2011-12 and the said Grant received by the institute from the Central Government was utilized making Fixed Deposit. So far as the gross receipts during the year is concerned, out of total gross receipts of Rs. 26,13,473/- the institute has received Rs. 19,32,473/- on account of Interest from Fixed Deposit made from Govt. Grant and Saving Bank Account and the same accounts for more than 50% of Grant receipts during the year. These facts reveal that the assessee institute is substantially funded by the Central Government and the assessee would be entitled to exemption by virtue of provisions of section 10(23C)(iiiab) of the Act. Thus assessee institute is entitled for exemption u/s. 10(23C)(iiiab) - Decided in favour of assessee.

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• 2025 (1) TMI 610
  Revision u/s 263 - amount disclosed during the survey proceedings as unaccounted excess stock under business head - As per CIT tax was not charged u/s. 115BBE - HELD THAT:- AO has asked details regarding valuation of closing stock and discrepancy of stock - AO made enquiry during the assessment proceedings, therefore, the order passed by the assessing officer should not be erroneous. After considering the assessee s reply in respect of the showcause notice issued by the assessing officer, dated 08.09.2021, wherein the assessing officer specially asked about the valuation of the closing stock and discrepancy of stock, and the assessing officer has also asked the assessee to explain that how assessee has accounted this discrepancy in his books of accounts. Therefore, we find that during the assessment proceedings, the assessing officer has conducted necessary enquiries. During the course of hearing, assessee has also agreed that the assessee has not explained the source of the excess stock, as it was not required to explain, because the assessing officer did not raise this question. We find merit in the submission of ld. Counsel that it was not required to explain, the source by the assessee, once the assessee has explained the causes of excess stock and the causes of discrepancy in the stock and this excess stock and the discrepancy in the stock were related to the assessee s business, which are sufficient to hold, that stock pertains to the assessee`s business. We note that no doubt the excess stock found and the discrepancy in the stock found during the survey proceedings is related to the business activity of the assessee, and the excess stock and the discrepancy in stock pertains to the business of the assessee, therefore, no addition u/s.115BBE of the Act, at the higher rate of taxation be imposed on the assessee. We note that assessee has submitted the relevant details and documents regarding closing stock and causes of discrepancy in the stock, considering, these facts, the assessing officer has taken a possible view and framed the assessment order. Therefore, no addition should be made u/s 115BBE of the Act The present order of assessing officer passed u/s 143(3) cannot be termed as erroneous, since enquiry was, in fact, carried out by assessing officer, on the issue on which the ld PCIT has found fault with and has taken a plausible view. Thus, we note that the assessing officer enquired during assessment proceedings and the assessee had filed details before him. So, we find that the assessing officer s action cannot be termed erroneous . Since not only enquiry was carried out by the assessing officer on the issue under consideration and based on the evidence gathered, assessing officer has taken a plausible view, which at any rate cannot be called as an unsustainable view. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . Therefore, we are of the considered opinion that assessing officer s order cannot be termed as erroneous as well as prejudicial to the interest of the revenue and therefore, jurisdictional condition precedent as prescribed by statute for invoking revisional jurisdiction is absent and therefore, we quash order of the Learned Principal Commissioner of Income Tax and allow the appeal of the assessee.

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• 2025 (1) TMI 601
  Seizure of cash in search proceedings - application for release of the amount seized by CBI rejected as matter was under investigation by the Income Tax Department - whether there was any delay in issuing the impugned requisition and if so, the effect thereof? - HELD THAT:- There has been some delay in issuance of the impugned requisition, however, the Income Tax Department has explained that the said delay was on account of investigations conducted by it. In the given circumstances, we are unable to accept that the impugned requisition is liable to be rejected on the ground of delay. Whether the impugned requisition is liable to be set aside on the ground that there was no reason to believe that the cash seized could not be disclosed by the petitioner? - According to the petitioner, he continued to hold cash against a transaction, which never fructified. There is no material on record to show the creditworthiness of Mr. Vinay Sharma or any explanation why he made payments in cash. Given the nature of explanation, we find no infirmity with the decision of the Income Tax Authorities in not accepting the same. Thus, the petitioner s contention that the Income Tax Authorities had no reason to believe that the cash as seized was an undisclosed asset, is rejected. We find no infirmity with the decision of the Income Tax Authorities to issue the impugned requisition. Clearly, it is necessary for the authorities to examine the source of funds seized from the petitioner s premises. Whether the Income Tax Authorities can continue to retain the cash after more than twelve years have expired since the same was seized? - In terms of Section 153B(1)(a) of the Act, the assessment u/s 153A of the Act is required to be completed within a period of twenty-one months from the end of the financial year in which the requisition u/s 132A of the Act was executed. In the present case, the warrant u/s 132A (1) (c) of the Act was executed on 15.12.2016, thus, the Income Tax Authorities are required to complete the assessment within the time period stipulated u/s 153B(1)(a) which was required to be reckoned from 15.12.2016. In the present case, it is contended on behalf of the petitioner that the time period for framing an assessment u/s 153A of the Act has expired. Undisputedly, if the time period for framing an assessment u/s 153A of the Act has expired, and there is no outstanding demand, the Income Tax Authorities would have no justification in retaining the seized cash. This court directs that if no demand has been crystalized against the petitioner as yet, the seized cash be returned to the petitioner within a period of four weeks from date.

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• 2025 (1) TMI 600
  Reopening of assessment u/s 147 - notice was invalid as it had been issued to an entity that was no longer in existence - continuation of proceedings in name of the petitioner as a successor-in-interest - AO issued a notice u/s 148A (b) on the basis of the information to the effect that Tulsi was a beneficiary of accommodation entries provided by one Sh. Joginder Pal Gupta - HELD THAT:-Given the nature of the proceedings u/s 148A we are unable to accept that issuance of a notice u/s 148A (b) in the name of an entity, which had since amalgamated with the petitioner, would be fatal to the AO assuming jurisdiction by issuance of notice u/s 148 of the Act in the name of the petitioner. The nature and object of the said procedure is to enable an assessee to address objections to the information available with the AO on the basis of which it is suspected that the assessee s income had escaped assessment. The decision whether to issue a notice u/s 148 and assume jurisdiction to assess / re-assess the income u/s 147 is required to be taken on the basis of the record available with the AO including the response filed by the assessee. In the present case, the response of the petitioner clearly indicated that Tulsi had merged with the petitioner and therefore, the petitioner as a successor-in-interest would be liable for any dues of Tulsi. Admittedly, the reassessment proceedings of Tulsi s income for AY 2017-18 were now required to be initiated and continued in the name of the petitioner as a successor-in-interest and in terms of the scheme of amalgamation. AO had rightly, based on the material on record, taken a decision to issue notice u/s 148 of the Act in the name of the petitioner. It is also material to note that the petitioner had responded to the information available with the AO on merits. Thus, this is not a case where the petitioner did not have the opportunity to address the information available with the AO. AO had acted on the basis of certain information that was flagged by the Directorate of Income-Tax (System) on the insight portal. Allegations being that Tulsi had received funds in its bank accounts through banking channels from eleven entities controlled by Sh. Joginder Pal Gupta and had paid cash to Sh. Joginder Pal Gupta against the said entries. As noted above, the petitioner had denied that Tulsi had received any amount in its bank accounts from the aforesaid companies and also disclosed that Tulsi s bank accounts, which were in operation during the relevant period. AO proceeded on the basis of the allegations that Tulsi has received accommodation entries from companies controlled by Sh. Joginder Pal Gupta had not been controverted. AO had no material at any time, the AO has not referred to any such information which would substantiate that any amount had been remitted by the entities (eleven in numbers) mentioned in the impugned notice and impugned order to the bank accounts of Tulsi. The information as available was accepted as correct notwithstanding the petitioner s assertion that Tulsi has received no amount in its bank accounts from any of the entities as alleged. Revenue was granted sufficient opportunities to file a counter affidavit to the present petition but had failed and neglected to do so. Even before this court, the Revenue has not produced any material to establish that Tulsi has received any amount in its bank accounts from any of the entities as mentioned in the impugned notice or the impugned order. Clearly, absent any material to establish that the petitioner had received amounts in its bank accounts the fundamental premise on which the allegation that it had received accommodation entries is founded the petitioner s assessment could not be reopened. We are unable to accept that the reassessment can be initiated on the basis of information which is contested as palpably incorrect without examining the material giving rise to the said information. The contention that the AO does not require to take any view as to the correctness of the information available with him would render the provisions of Section 148A of the Act a dead letter and the exercise of conducting an enquiry under Section 148A of the Act an exercise in futility. AO is required to ascertain whether the basic facts on which an assessment is sought to be reopened, are sustainable. An allegation that income has escaped assessment on account of accommodation entries availed by an assessee would be insufficient to reopen a closed assessment if the AO does not have material to establish that in fact there were entries in the bank accounts that could possibly support the said allegations. The AO is not required to conclusively decide whether the entries are accommodation entries. But the AO has to be reasonably certain that the alleged entries exist that could be possibly be accommodation entries. Thus the impugned notices under Sections 148 and 148A (b) of the Act and the impugned order under Section 148A (d) of the Act are set aside.

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• 2025 (1) TMI 599
  Assessment u/s 144C beyond period of limitation - determination of the date on which the directions from the Dispute Resolution Panel (DRP) were received by the AO- whether directions of DRP can be said to be received by the assessing officer on 30.06.2022? - HELD THAT:- A conjoint reading of Section 144C (5) and (13) makes it clear that upon receipt of directions issued under Section 144C(5), it is imperative for assessing officer to complete the proceedings within one month from end of the month in which such a direction is received. Thus, key words used in Section 144C(13) are upon receipt of directions issued under Sub-Section (5) . Thus once such directions of DRP are uploaded on the portal, the DRP lost control over it and date on which it entered the portal, the recipient i.e, the assessing officer comes to know about it. Once originator enters a computer resource outside his control, despatch takes place. Sub-Section 2 (a) of Section 13 of the I.T.Act deals with receipt which makes it clear that receipt occurs at the time when the electronic record enters the designated computer resource. Thus, the meaning of despatch or receipt is elaborately defined in aforesaid Sub-sections of Section 13 of the I.T.Act. The word computer resource is also defined under Section 2(k) of the I.T.Act, which reads thus: In the instant case, parties have taken a diametrically opposite view on the aspect whether the directions uploaded on the portal on 30.06.2022 can be treated to be receipt on the part of the assessing officer. Sri Vijhay K Punna, learned Standing Counsel for revenue contends that receipt will be the date when the e-mail was received by the revenue containing the DRP directions i.e., on 05.07.2020. As per the view taken by the aforesaid three High Courts there is no doubt that when the originator/DRP sends its directions in computer resource outside its control, it amounts to despatch and similarly, receipt takes place when said electronic record enters the computer resource. A conjoint reading of communications dated 30.01.2024 and 05.03.2024 (Annexure P-18) and communication dated 30.06.2022 (Annexure P-19) leaves no room for any doubt that DRP s directions were despatched on 30.06.2022 and also uploaded on the portal on the same date. Thus, the DRP/originator had lost control over it on the date and time the said directions were uploaded on the portal. Hence, same must be treated to be a receipt by the recipient i.e., the assessing officer on the same day i.e., 30.06.2022. See Suman Jeet Agarwal [ 2022 (9) TMI 1384 - DELHI HIGH COURT] where the Delhi High Court poignantly held that the portal of the department is the computer resource in the control of the department . There is no cavil of doubt that assessing officer received the DRP s directions on 30.06.2022 and therefore, the limitation must be counted from that date and not from 05.07.2022. The impugned assessment orders dated 30.08.2022 and 01.09.2022 that were issued counting the limitation from 05.07.2022 in both the Writ Petitions are liable to be set aside as the same are issued beyond permissible period of limitation.

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• 2025 (1) TMI 598
  Validity of order passed by the DCIT - objections filed by the petitioner to notice u/s 153C(1) have been rejected - HELD THAT:- After the order was passed by this Court [ 2024 (8) TMI 1512 - ALLAHABAD HIGH COURT] required the respondents to decide the objection after granting opportunity of hearing to the petitioner, the notice dated 2.9.2024 was issued requiring him to file objection dated 12.11.2023 and other materials within seven days and also required the petitioner to appear and argue the matter through authorized representative. However, apparently no date was fixed for the purpose of arguing the matter. Admittedly, within the given seven days, the petitioner has produced the material on 6.9.2024 and thereafter, the matter was decided on 22.10.2024 and during the said period, the authority before deciding the matter apparently had not given any opportunity of hearing to the petitioner. Apparently the order has been passed by the authority contrary to the directions contained in order dated 28.8.2024 and as such, the same cannot be sustained. Consequently, the order dated 22.10.2024, Annexure-13, is quashed and set aside. The matter is remanded back to the authority to hear the petitioner and decide the matter afresh. The petitioner/his authorized representative shall appear before the authority on 28.01.2025.

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• 2025 (1) TMI 597
  Disallowance of sales promotion expenses - HELD THAT:- Assessee declares certain incentives to its own employees and based on that, employees who achieved the targets were awarded as per the promotional policy promoted by the assessee. Based on that, assessee determines the total liability on such sales promotion expenses. Based on that, assessee records the expenditure on gross basis and settles the vendors on actual basis based on the actual utilisation. Since assessee has to pick the relevant expenditure based on the concept of matching principle and accordingly we observed that assessee has settled about 88% of the gross provision created for this purpose. Whether the expenditure is booked in this year or reversed in the subsequent year, it has effect revenue neutral considering the fact that tax rates are similar for both the years under consideration. Therefore, the assessee has brought on record complete details of creation of provisions as well as actual reversal of provisions and to the portion of unutilized provisions are being reversed in the subsequent assessment year and this is the regularly followed method of accounting, therefore, we do not see any reason to sustain the additions made by the AO. Accordingly, the abovesaid sales promotion expenses claimed by the assessee are allowed on the basis of matching the relevant expenses with the revenue recorded during the year. Allowability of insurance expenditure - AO observed that the assessee has made the payment to National Insurance Company Limited and for what purpose, they could not explain - HELD THAT:- From the receipt, it shows that the assessee has enhanced the sum of insurance during the current year and the insurance amounts for such enhancement were effective from 09.04.2012. The assessee has already made the premium payments of Rs. 6,45,256/- and fresh insurance renewal was taken for the FY 2012-13. Since the assessee has taken an open policy for transportation of goods, the assessee has created a provision as well as claimed expenditure of Rs. 3,20,000/- which is part of the premium policy already paid by the assessee of Rs. 6,45,256/-. Since the payment was made to National Insurance Company Ltd., a part of the policies taken for transportation and the existing policy is being renewed ever year based on the premium it pays. Therefore, the assessee also filed affidavit indicating the above shows that the genuineness of the transaction since the provisions of Rs. 3,20,000/- is part of the actual payment made by the assessee of Rs. 6,45256/-, therefore, it is an allowable expenditure. Grant of interest on delayed payment - payment of interest is treated as part of the business assets and by treating it as capital in nature, the same was disallowed - HELD THAT:- Based on the agreement and factual matrix, we observed that the assessee has utilized the funds and also it is for the assessee s convenience to settle the abovesaid amount in 12 installments. Therefore, it is not part of the principal amount and the payment of interest is in the interest of the assessee, therefore, it can only be an obligation on the assessee. Therefore, it is not connected to the acquisition of any capital asset, it is only a convenient method of settlement and the connected cost of retaining the funds or withholding the amount. Therefore, it is in the nature of revenue. Accordingly, it is an allowable financial charges.

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• 2025 (1) TMI 596
  Denial of Exemption claimed u/s 11 - Assessee not filed Form 10B before filing the said return - HELD THAT:- In the present case, the Assessee filed return of income on 08/10/2022, wherein the Assessee claimed exemption u/s 11 of the Act. Due date for filing the Audit Report in Form No. 10B was 07/10/2022, however, the Assessee uploaded the Audit Report in Form No. 10B dated 23/09/2022 on 21/10/2022. Further, the assessment order came /intimation has been issued by the CPC on 31/03/2023 and as on the date of assessment, the Audit Report was very well filed by the Assessee. The only reason for denying the exemption that the Assessee has filed Audit Report in Form No. 10B beyond the extended due date. We find that similar issue has been considered in the case of CIT Vs. A K S Alloys Pvt. Ltd. [ 2011 (12) TMI 39 - MADRAS HIGH COURT] wherein held that filing of Audit Report along with the Return is not mandatory, but directory and if the Audit Report was filed at any time before framing the assessment, the requirement of the provision of the Act should be held to have been met. Also see M/S SURYA MERCHANTS LTD. [ 2016 (5) TMI 947 - ALLAHABAD HIGH COURT] . Thus, we hold that filing of audit report in Form 10B before the due date for filing of return of income u/s 139(1) is only directory and direct the A.O./CPC to allow exemption u/s 11 of the Act. Accordingly, the Grounds of Appeal of the Assessee are allowed.

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• 2025 (1) TMI 595
  Validity of order passed by the Deputy Commissioner of Income Tax - application filed by the petitioner u/s 154 has been rejected - HELD THAT:- After the order was passed by this Court [ 2024 (8) TMI 1511 - ALLAHABAD HIGH COURT] requiring the respondents to decide the objection after granting opportunity of hearing to the petitioner, the notice dated 2.9.2024 was issued requiring him to file objection dated 19.04.2024 and other materials within seven days and also required the petitioner to appear and argue the matter through authorized representative. However, apparently no date was fixed for the purpose of arguing the matter. Admittedly, the petitioner has produced the material on 10.10.2024 and thereafter, the matter was decided on 22.10.2024 and during the said period, the authority before deciding the matter apparently had not given any opportunity of hearing to the petitioner. Apparently the order dated 22.10.2024 has been passed by the authority contrary to the directions contained in order dated 27.8.2024 and as such, the same cannot be sustained. Consequently, the order dated 22.10.2024, Annexure-11, is quashed and set aside. The matter is remanded back to the authority to hear the petitioner and decide the matter afresh. The petitioner/its authorized representative shall appear before the authority on 30.01.2025.

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• Customs

• 2025 (1) TMI 609
  Seeking issuance of a writ in the nature of mandamus for staying the encashment of the subject bank guarantee - HELD THAT:- A perusal of Circular No. 984/08/2014-CX dated 16th September, 2024 and the clauses extracted above would show that no coercive measures can be taken against the Appellant during the period when the limitation for filing of the appeal has not expired. In addition, if the pre-deposit has already been made the remaining amount cannot be recovered by encashment of the bank guarantee. Either way, the impugned Order-in-Original is of 6th December, 2024 and the period for filing the appeal is three months in terms of Section 129A of the Customs Act, 1962. Conclusion - Considering the fact that a substantial sum has already been appropriated by the Department, the Court is of the view that the encashment of the subject bank guarantee deserves to be restrained subject to the Petitioner keeping the said bank guarantee alive. Petition disposed off.

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• 2025 (1) TMI 608
  Confiscation - penalties - smuggling of Gold - restricted item or not - onus of proof to establish that the seized gold was not smuggled shifts on Department - HELD THAT:- It is clear that at the relevant time, the foreign marked gold was not the prohibited item it was the rather restricted. This is the reason that the same has been released on payment of redemption fine of Rs. 2,00,000/- along with Customs Duty of Rs. 3,23,163/- and the penalty of Rs. 1,00,000/- imposed on the other appellant. While the appellants are not claiming that the gold was not of the foreign origin but they have produced a Bill of Entry of import, the same by Kotak Mahindra Bank and have claimed the purchase, to be legitimate and also duly indicated the same to be reflected in books of accounts and also in the challan while sending and receiving back the gold biscuits from the job worker who could not do the work due to his workers being not available. Onus to prove - HELD THAT:- This Court has considered the fact that last two numbers were not visible has been held against the party which considered this finding to be based on assumption and presumption. This Court finds that even if the department nurtured a doubt despite the import documents having been produced, it should have at least done some further investigation to linked or otherwise the gold biscuits with the import made by the Kotak Mahindra Bank. Instead of this no statement even of the accused (now appellant) has been recorded in the matter and neither has it been brought on record as to why last two numbers became invisible to the department. There is nothing on record to show if the same was erased with the malicious intention and if so they by whom? It is also not on record as to whether such lack of visibility of last two number was on account of any rubbing or corrosion over a period of time. Further the moment, gold is found accounted for the documents (like) Bill of Entry produced, the onus gets shifted on the department - the production of any documents shifts onus on department. This was correct position in law even at the time, when foreign marked gold was a notified item under Section 123 of the Customs Act, 1962. If the gold biscuit was seized in the form in which it was liable to seizure, then why not at the time of ordering its release the same was directed to be released under supervised melting to prevent the possibility of its being resold the market in the form of smuggled gold is removed? - HELD THAT:- This Court is of the view that the matching of first two digits in figure running in thousand also by preponderance of probability shows that the gold was not smuggled, as not only last two digits of the tens were found (each lacking of visibility) but also the receipt of its import by Kotak Mahindra Bank was matching with the first two numbers. The Biscuit was very much of Credit Suisse and matching in other details. The probability that a smuggler will be able to procure the documents i.e. Bill of Entry of import by scheduled bank and that too of the same agency of credit to easy and that two of the matching in first to important digits out of four from smuggling channels is rather remote. Therefore, the onus was clearly shifted on production of the Bill of Entry on the department which has miserably failed in establishing that the gold biscuit was from smuggling channels and the Bill of Entry despite existence of so many co-related details was not of the seized biscuit. Therefore the submission made by the party that department s case is based on rather suspicion and is based on assumption and presumption carries weight in the light of factual peculiarities of the case. In COMMISSIONER OF CUSTOMS (PREV) VS. PUNI DHAPA LOKESWARA RAO [ 2006 (4) TMI 177 - CALCUTTA HIGH COURT ], HON BLE CALCUTTA HIGH COURT held that if the preponderance of probability is not in favour of Customs authorities, the department cannot be said to have proved that gold seized was smuggled into India. In the instant case, therefore, the production of Bill of Entry which in higher probability related to the gold biscuits seized, the non recording of any statement of the relevant persons by the department coupled with finding being based on assumption and presumption makes the confiscation bad in law in the facts of this case. Conclusion - The production of any documents shifts onus on department. This was correct position in law even at the time, when foreign marked gold was a notified item under Section 123 of the Customs Act, 1962. Appeal allowed.

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• PMLA

• 2025 (1) TMI 607
  Obligation to provide the reasons to believe recorded under Section 17(1) of the Prevention of Money-Laundering Act, 2002 (PMLA) to the concerned parties - Adjudicating Authority has denied copy of the reasons to believe recorded under Section 17(1) of the Act of 2002 - HELD THAT:- The appellant insisted for supply of copy of reason to believe recorded under section 17(1) of the Act of 2002. It is not mandated and otherwise according to the Adjudicating Authority, the reason to believe recorded under section 17 of the Act of 2002 by the ED was sent to the Adjudicating Authority in a sealed cover and in the proforma provided under the rules. It is for the perusal of the Adjudicating Authority along with other material to analyze whether any reason exist for causing show cause notice. The order of the Adjudicating Authority has been taken to mean that the reasons to believe recorded under section 17(1) of the Act of 2002 and send in the sealed cover cannot be opened, rather, it is kept in the sealed cover itself. In fact, no such finding has been recorded or direction has been given for it. Conclusion - The ED is not obligated to provide the reasons to believe recorded under Section 17(1) to the appellant. Appeal dismissed.

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• Service Tax

• 2025 (1) TMI 606
  Levy of service tax - Supply of Tangible Goods Service - whether the rights of possession and effective control of the packaging material in this case vest in Volvo or in the Appellant? - HELD THAT:- There is nothing on the record which regulates the manner in which the Appellant may use the packaging material once it has been delivered to the Appellant. By means of the operative data system, it is true that Volvo has information in its position as to the status of the packaging material. However, this information does not appear to rise to the level of conferring upon Volvo either control or possession over the packaging material. Once the packaging material is delivered to the Appellant, the Appellant is free to use such packaging material in such manner as it thinks fit for packing such goods as it thinks fit and for transporting such goods from such places as it thinks fit. It would also appear that there is nothing that saves the Appellant from liability in respect of any damage that occurs to the packaging material when such material is in the use of the Appellant. Therefore, it cannot be said that the Appellant merely has custody over the goods. It has both possession and control over them in addition to the right of use. It is found that a similar view has been taken by a coordinate bench of this Tribunal in comparable facts in the case of CARAVEL LOGISTICS PVT. LTD. VERSUS COMMISSIONER OF GST AND CENTRAL EXCISE, CHENNAI. [ 2024 (7) TMI 1582 - CESTAT CHENNAI] where the five-fold test formulated by the Hon ble Supreme Court in Bharath Sanchar Nigam Ltd. (BSNL) Vs. Union of India [ 2006 (3) TMI 1 - SUPREME COURT] was applied, to hold that the supplier of the containers in that case had transferred possession and control to the recipient thereof. Conclusion - The transactions in question do not constitute the service of the Supply of Tangible Goods as defined in Section 65(105)(zzzzj) of the Finance Act, 1994. Appeal allowed.

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• Central Excise

• 2025 (1) TMI 605
  Rejection of refund claim - time limitation - case of Revenue is that the cause for claiming the refund of the said amount had risen on 28.08.2017 when the tax was deposited under RCM and the refund claim filed on 23.09.2021 was beyond the prescribed time limit of one year, hence the same is time barred - principles of unjust enrichment - HELD THAT:- Though credit is not available as input tax credit under GST law, the credit under the old Credit Rules is eligible to the appellant and such credit has to be processed under Section 142(3) of GST Act, 2017 and refunded in cash to the assessee. Therefore, the appellant is eligible to the said relief and the Department is accordingly directed to process the case of the appellant in accordance with the said decision. Similar view has been taken in the subsequent decision in the case of M/s. Nitin Industries vs. Commissioner of CGST ST, New Delhi [ 2022 (11) TMI 1090 - CESTAT NEW DELHI] that the appellant is entitled to refund in terms of Section 142(3) read with Section 54 read with Section 49(6) of the CGST Act. From the view taken by the various High Courts, it is settled that denial of credit of tax or duty paid under existing law would amount to violation of Articles 14 and 300 A of the Constitution of India. Unutilised credit has been recognized as vested right and property in terms of Article 300 A of the Constitution of India. In Adfert Technologies Private Limited vs. Union of India [ 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT] , the Division Bench of the High Court held that transitional credit being a vested right, it cannot be taken away on procedural or technical grounds. Principles of unjust enrichment - HELD THAT:- There is no question of unjust enrichment in the present case as the amount involved is towards the credit. Conclusion - The provisions of Section 11B(1) which prescribes the limitation for filing the refund claim are not covered under Section 142 (3), therefore, the rejection of the refund claim on the ground of limitation is erroneous and is unsustainable also on the peculiar facts of the present case, where the appellant was eligible to carry forward/transit the Canvat Credit amounting to Rs.2,67,659/- under the transitional provisions of Section 140 of CGST Act. There is no question of unjust enrichment in the present case as the amount involved is towards the credit. Appeal allowed.

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• 2025 (1) TMI 604
  Valuation of Excise duty - Inclusion of pool cancellation charges, pool lifting charges, penalty on dealers and cancellation charges in the assessable value of the motor vehicles - HELD THAT:- The impugned appeals pertain to Show Cause Notices issued for the subsequent to the period for which the issue was decided by this Bench in [ 2024 (7) TMI 545 - CESTAT CHANDIGARH ] where it was held that it is apparent that the pool charges relate to the transaction of sale of additional vehicles, that the appellant has entered into with the dealers. We find that, as rightly held by the Commissioner, as per Section 4 of Central Excise Act, 1944, the transaction value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time. including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty commission or any other matter, but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. Conclusion - The appellants are required to include the pool lifting charges in the assessable value of the vehicles cleared by them. All the demands are sustained and penalties are set aside; cum-duty benefit is ordered to be accorded - Appeal allowed in part.

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• CST, VAT & Sales Tax

• 2025 (1) TMI 603
  Cancellation of the L1 certificate issued under Section 5-G of the A.P.G.S.T Act - late filing of the monthly returns for the period April, 2002 to November, 2002 - challenge to Rule 6-B (2) (iii) of the A.P.G.S.T Act on the ground that the same is contrary under Section 5-G of the A.P.G.S.T Act - HELD THAT:- The impugned order contains an order of assessment as well as an order of cancellation of the L1 certificate. The learned counsel contends that this is not permissible. However, he has not placed any provisions of law, which prohibits the passing of such a combined order. It must be noted that this order has been passed, after the petitioner was put on notice about the proposal to cancel the L1 certificate and also the proposal to tax the turnover under section 5F of the Act. In such a situation there are no reason to hold the impugned order invalid, merely because it is a combined order. Rule 6-B (2) (iii) provides for cancellation of the permission granted for composition of tax, under Section 5-G, if there has been suppression of turnover by the dealer or the dealer fails to pay tax within the specified time or if the dealer contravenes any provision or any of the Rules. This Court does not find any reason to hold that these provisions are in violation of Section 5-G. A perusal of Section 5-G would show that the said provision itself provides that such composition would be granted subject to such conditions as may be prescribed. In this case, the prescription of such conditions is set out in Rule 6-B (2) (iii). The provision of Section 5-G itself empowers the rule making authority to stipulate conditions for grant of composition. In such circumstances, it cannot be said that the conditions stipulated under Rule 6-B (2) (iii) are in any manner ultra vires of Section 5-G of the A.P.G.S.T Act. The impugned assessment order states that the permission for composition, granted under the Form L1 certificate, is being cancelled for contravention of Rule 6-B (2) (iii), because of the late filing of the monthly returns for the period April 2002 to November, 2002 and the late filing of the return, by three days, for the month of March, 2003 - The cancellation of L1 certificate, thus appear to be disproportionate to the contribution of the Act or Rules, however, it would be appropriate that this issue is considered again by the Assessing Authority. Conclusion - i) It cannot be said that the conditions stipulated under Rule 6-B (2) (ii) are in any manner ultra vires of Section 5-G of the A.P.G.S.T Act. ii) The cancellation of L1 certificate, thus appear to be disproportionate to the contribution of the Act or Rules, however, it would be appropriate that this issue is considered again by the Assessing Authority. Petition disposed off by way of remand.

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• 2025 (1) TMI 602
  Violation of principles of natural justice - failure to mention of provisions of Section 21 (5) of A.P. Value Added Tax Act, 2005 - Time limitation of audit assessment proceedings dated 13.10.2020 - whether the impugned order of assessment was passed within the period of limitation or not. In usual course, the period of limitation would be four years from the end of the tax period and the order dated 13.10.2020 is beyond the period of limitation? - HELD THAT:- It is an admitted fact that the petitioner had received all the show cause notices. However, the petitioner chose not to respond to either the initial show cause notice issued in June, 2020 or the subsequent notices. The question of violation of principles of natural justice would arise, if a show cause notice is issued to a person and he responds to such show cause notice, after which additional grounds, which were not raised in the show cause notice are utilized, for passing an adverse order against the notice. In the present case, the petitioner has not responded to any of the show cause notices. In such circumstances, non-mentioning of Section 21 (5) of the Act, in the show cause notice, would not be fatal to the impugned order dated 13.10.2020. The audit assessment dated 13.10.2020 was not barred by limitation due to the application of the extended period under Section 21(5) for tax evasion. Conclusion - i) The omission of Section 21(5) in the show cause notices did not violate the principles of natural justice, given the petitioner s lack of response. ii) The audit assessment dated 13.10.2020 was not barred by limitation due to the application of the extended period under Section 21(5) for tax evasion. Petition dismissed.

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