Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 15, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI Short Notes
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Refund of unutilised Input Tax Credit (ITC) - Barred by time limitation or not - The relevant date is the date of receipt of payment in convertible foreign exchange, as per Explanation (2) to sub-section (14) of Section 54. Even as regards FIRCs issued in April 2018, if the benefit of the above notification is extended to the petitioner, the refund application dated 04.09.2020 would be within the two year period, which is to be computed from the relevant date, as per sub-section (1) of Section 54 of the CGST Act. - Refund directed to be granted - HC
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Validity of show cause notices - SCN in the nature of an adjudicatory order or not - Upon examining the notices in Form DRC-01, the replies thereto and the impugned notices, this case does not fall within the limited category of cases in which a show cause notice may be assailed in a proceeding under Article 226 of the Constitution of India. - HC
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Bunching of show cause notices - Scope of section 73 - SCN is to be issued for each financial separately or bunching for 5 years is valid - Applicability of period of limitation - Direction issued for disposal of the representation of the petitioner to split up the show cause notices for each year separately. - HC
Income Tax
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Revision u/s 264 - Claiming benefit of DTAA - refund of Dividend Distribution Tax (DDT) which was paid wrongly - This was not a case where a deduction was made u/s 195 towards tax on payments made to a non-resident and the parties had agreed that the deducting resident entity would bear the tax liability by compensating the non-resident by a proportional top up. Therefore, Section 248 is clearly inapplicable. The second ground on which the revision petition was rejected is also consequently unsustainable. - Pr.CIT directed to reconsider the matter u/s 264 - HC
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Interest on refunds u/s 244A - whether the assessee was responsible for the delay? - after the petitioner requested the respondents to enable the petitioner to provide the SWIFT code and IBAN, the delay in processing the refund cannot be attributed to the petitioner. - If the delay is not attributable to the assessee, Section 244A provides for refund at the rate of ˝% per month or 6% per annum. - HC
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Validity of Reopening of assessment - notice issued u/s 148A(d) entirely on the basis of information obtained from the Insight Portal in accordance with the risk management strategy of the Income Tax Department - Unless an assessee's response to the show cause notice is duly considered before a decision is taken to issue notice u/s 148, the statutory mandate of a prior show cause notice would be reduced to an empty formality. - The said order is hereby quashed. - HC
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Condonation of delay of 5318 days in filing the appeal - The reasons set out in the affidavit filed in support of the petition to condone the delay of 5318 days i.e., nearly 14 years are unconvincing and do not furnish any cause much less "sufficient cause" for condoning the delay in filing the appeal, instead reveal a callous attitude and a casual approach in availing the right of appeal. - HC
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If certain expenditures, on day to day basis for running the distributorship and employees network were not in proper vouchers formats or signed, that alone cannot be a justification for disallowance on ad hoc basis to extent of 30%. - AT
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Reopening of assessment u/s 147 - ‘reasons to suspect’ or ‘Reasons to believe’ - The manner in which the reasons have been recorded make it appear that the assessing officer without actually applying his mind to the information made available by the investigation Wing proceeded to open the cases of all beneficiaries of alleged entries from Pradeep Kumar Jindal group of companies by recording reasons in same template/format and included assessee also as a beneficiary while assessee was a company of Pradeep Kumar Jindal and assessee is providing accommodation entries to the beneficiaries. - AT
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TDS u/s 192 - failure to deduct TDS on the perquisite value of accommodation - though Ld. CIT(A) has fallen in error in holding that assessee falls in status of Central Government for the purpose of Section 17(2) of the Act, the impugned order of Ld. CIT(A) still deserves to be upheld as Ld. AO has fallen in error by straightaway invoking Rule 3 for computing value of the perquisite and treat assessee in default in deducting tax at source on said value, without first recording a finding as to whether there is 'concession' and the case is covered by Section 17 (2) (ii) of the Act. - AT
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Penalty u/s 271D - loan in cash otherwise than an account payee cheque or draft - Assessee has placed on record only the ledger account, from that it is not clear whether the said transactions are considered as loan or the accommodative transactions or sales. It is also not clear whether the employer has received the cheque amount as sales consideration or as the amount as loan to employee in the books of the employer. This basic finding of the fact is not emanating from the records made available. - Matter restored back - AT
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Unexplained cash credit - addition u/s 68 - - CIT(Appeals) has held that it is for the businessman to decide how it wants to use its funds. The subscribers have not borrowed the money for making investment with the assessee-company. The group concern might have decided to start some activity on substantial basis in the assessee-company, therefore, it could be a support from the group concern. - CIT(A) rightly deleted the addition - AT
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Claim of setoff of unabsorbed depreciation carried forward from earlier year - Assessing officer directed to allow the claim of setoff of unabsorbed depreciation carried forward from earlier year against the income from short term capital gains. - AT
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Penalty u/s. 271AAB - The assessees’ sole substantive grievance appears to be that the AO’s corresponding show cause notices dated 29.12.2017 (supra) had not been validly issued. We find no merit in the assessees’ stand once it has come on record that the impugned penalty has been levied @ 10% since falling in the first and foremost limb u/sec. 271AAB(1)(a)(i) to (iii) of the Act in the specified circumstances. - AT
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Allowability of business expenditure incurred towards purchase of sugarcane from member farmers' u/s 37(1) - the payment of additional sugarcane price, with the approval of the managing committee of the assessee for payment of sugarcane is not distribution of profit. - AT
Customs
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Whether penalty is to be imposed when the appellant has accepted the classification and paid the entire duty along with penalty much before the issuance of the show cause notice? - Held No - AT
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Liability of Duty-Free Shop to pay duty - case of appellant is that they are not liable to pay duty under Section 72 but the duty needs to be collected from the passengers - Demand of duty with interest confirmed - penalty set aside - AT
IBC
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Whether the appellant's claim can be classified as a Financial Debt or Operational Debt under the Insolvency and Bankruptcy Code, 2016.
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Scope of Approval of resolution plan - Allegations of undervaluation of the Corporate Debtor's assets. - Appellant's Locus to Challenge
Service Tax
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Demand of differential service tax - From the SCN it is evident that all facts and figures were in the appellant’s records but they were belatedly scrutinized by auditors and investigating officers and the jurisdictional central excise officer has either not scrutinized the returns or having scrutinized, not issued a demand under section 73 - the demand for extended period of limitation and the penalties under section 78 set aside. - AT
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Seeking refund of service tax wrongly paid on ocean freight under reverse charge mechanism - the issue involved in the present case is no more res-integra and the Appellant cannot be fastened with any service tax liability on ocean freight. - Refund allowed - AT
Case Laws:
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GST
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2024 (1) TMI 627
Blocking of Input Tax Credit (ITC) - supplier/selling dealer was found to be non-existent at his disclosed place of business - HELD THAT:- Perusal of Annexure no.7 to the writ petition clearly indicates that the said M/s Pushpendra Singh had applied for amendment of core field in registration particulars, including as to the place of business - to be amended and changed from Hapur to Ghaziabad. That change was applied for on 06.10.2023 i.e. four days prior to the impugned communication. On 31.10.2023, GSTN recorded that change and issued due communication to M/s Pushpendra Singh to record the change of address of his principal place of business from Hapur to Ghaziabad. At present, it does appear, for reason of time consumed in processing the application dated 06.10.2023, that change of address of M/s Pushpendra Singh may not have been known to the respondent no.3 when he passed the order dated 10.10.2023. In view of such facts, since the order dated 10.10.2023 is wholly ex-parte, no useful purpose would be served in keeping the present petition pending or calling for counter affidavit at this stage. Petition disposed off.
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2024 (1) TMI 626
Numerous adjudication proceedings have been initiated by different jurisdictional authorities against the registered persons who had purchased the goods from the petitioner - HELD THAT:- Neither those/other proceedings have been challenged in this writ petition nor the petitioner may have locus to challenge those/other proceedings. The petitioner is not seen to be a person aggrieved as adjudication proceedings have arisen upon violation etc. being noted by the competent authorities. What facts exist in those proceedings may not engage the Court at this stage as it would be purely speculative. Petition dismissed.
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2024 (1) TMI 625
Violation of principles of natural justice - opportunity of hearing was not provided - HELD THAT:- Since in the present cases, both tax and penalty are imposed against the petitioners and admittedly, an adverse decision is contemplated against the petitioners, therefore, under Section 75(4) of the Act of 2017, an opportunity of hearing was mandatorily required to be given by the department to the petitioners and merely marking the same as NO in the option cannot entitle the department to pass an order without giving any opportunity or even without waiting for the petitioners to appear on the date fixed. This Court has already taken a similar view in M/S MOHINI TRADERS VERSUS STATE OF U.P. AND ANOTHER [ 2023 (6) TMI 531 - ALLAHABAD HIGH COURT] . All the writ petitions are allowed on the sole ground of opportunity of hearing and the orders impugned in all four writ petitions are quashed.
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2024 (1) TMI 624
Blocking of ITC in exercise of the power under Rule 86A of Uttar Pradesh Goods and Services Tax Rules, 2017 - HELD THAT:- On similar facts, by a separate order passed today [ 2024 (1) TMI 627 - ALLAHABAD HIGH COURT] . The present writ petition is disposed of with the direction, subject to the petitioner filing an application before respondent no.3/Assistant Commissioner (Special Investigation Branch), State Tax, Range-B, Ghaziabad to recall the order dated 10.10.2023.
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2024 (1) TMI 623
Refund of unutilised Input Tax Credit (ITC) - Barred by time limitation or not - HELD THAT:- The N/N. 13/2022-C.T. dated 05.07.2022 clearly specifies that the period running from 01.03.2020 to 28.02.2022 is required to be excluded for computation of the period for limitation for filing a refund application under Section 54 of the CGST Act. The relevant date is the date of receipt of payment in convertible foreign exchange, as per Explanation (2) to sub-section (14) of Section 54. Even as regards FIRCs issued in April 2018, if the benefit of the above notification is extended to the petitioner, the refund application dated 04.09.2020 would be within the two year period, which is to be computed from the relevant date, as per sub-section (1) of Section 54 of the CGST Act. Apart from concluding that the claim is barred by limitation, no other reason has been mentioned in the appellate order for rejecting the refund claim of Rs. 7,34,732/-. For reasons set out, the said conclusion in the appellate order is unsustainable. Hence, the impugned order is quashed and, as a corollary, the 1st respondent is directed to refund the sum of Rs. 7,34,732/- to the petitioner within a period of two months from the date of receipt of a copy of this order. The writ petition is allowed.
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2024 (1) TMI 622
Violation of principles of natural justice - Cancellation of registration of petitioner - whether the petitioner was provided a reasonable opportunity before the drastic order of cancellation of registration was issued? - HELD THAT:- From the show cause notice, it appears that such notice was digitally signed by the Goods and Services Tax Network. When the said show cause notice is read with the impugned order, it is quite evident that the whole process has been undertaken mechanically. As pointed out by learned counsel for the petitioner, lines 1 and 2 of the impugned order are undoubtedly contradictory. Since such impugned order has resulted in great prejudice to the petitioner without the petitioner being provided a reasonable opportunity to respond, the impugned order calls for interference. The order dated 23.01.2023 cancelling the petitioner's GST registration is quashed - Petition allowed.
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2024 (1) TMI 621
Validity of show cause notices - SCN in the nature of an adjudicatory order or not - classification of transportation services - to be classified under SAC 996601 or under SAC 996511? - HELD THAT:- In exercise of discretionary jurisdiction, there are limited circumstances in which a show cause notice may be interfered with. The foremost of such circumstances is if the show cause notice was issued without jurisdiction. A show cause notice may also be interfered with if no case is made out even assuming that the statements made in the show cause notice are correct - In the case on hand, the dispute revolves around the classification of services provided by the petitioner. In the impugned notices, the respondent has taken the view that the services provided by the petitioner qualify as rental services which are classifiable under the SAC 996601 because of the extent of control exercised by the person availing of the services. Upon examining the notices in Form DRC-01, the replies thereto and the impugned notices, this case does not fall within the limited category of cases in which a show cause notice may be assailed in a proceeding under Article 226 of the Constitution of India. Petition disposed off.
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2024 (1) TMI 620
Maintainability of petition - availability of alternative remedy - exemption on supplies made to the Government or Government Authority - supplies like loading, unloading, storage or warehousing including those of renting and leasing - HELD THAT:- Admittedly, the petitioner has an efficacious and alternative remedy to file appeal. The said fact is also mentioned in the impugned order to the effect that an appeal lies against the impugned order before the Appellate Joint Commissioner (ST), Tirupathi. In that view of the matter and also in view of the decision in Assistant Commissioner (CT), Kakinada vs. Glaxo Smith Kline Consumer Health Care Ltd s case (Supra 1) [ 2020 (5) TMI 149 - SUPREME COURT ] wherein the Hon ble Apex Court held that the High Court ought not to have entertained the writ petition when an efficacious and alternative remedy of appeal is available to the petitioner, without expressing any opinion on the merits of the petitioner s case, it is deemed apposite to give liberty to the petitioner to file an appeal against the impugned order. The writ petition is disposed of giving liberty to the petitioner to file an appeal against the impugned order dated 10.07.2023 passed by the 2nd respondent before the concerned Appellate Authority within four (4) weeks from the date of receipt of a copy of this order, in which case, the Appellate Authority shall admit the appeal and after affording an opportunity of hearing to both parties, pass an appropriate order on merits in accordance with governing law and rules expeditiously.
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2024 (1) TMI 619
Bunching of show cause notices - Scope of section 73 - SCN is to be issued for each financial separately or bunching for 5 years is valid - Applicability of period of limitation - Seeking issuance of Writ of Mandamus directing the first respondent to consider and pass orders on the representation dated 25.10.2023 submitted by the petitioner before proceeding with the adjudication of show cause notice dated 28.09.2023 - HELD THAT:- Issuing bunching of show cause notices is against the spirit of provisions of Section 73 of the Act and the Constitution Bench of the Hon'ble Apex Court in the decision reported in State of Jammu and Kashmir and Others v. Caltex (India) Ltd [ 1965 (12) TMI 125 - SUPREME COURT ] has held that where an assessment encompasses different assessment years, each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods. The said law was laid down keeping in mind that each and every Assessment Year will have a separate period of limitation and the limitation will start independently and that is the reason why the Hon'ble Supreme Court has held that each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods. The said principle would apply to the present case as well. There are no force in the submission made by the learned Senior Standing Counsel appearing on behalf of the respondents - there are fault in the process of issuing of bunching of show cause notices and the same is liable to be quashed. However, since the petitioner has made an representation before the authorities concerned for splitting up of the show cause notices and pass separate adjudication order, directions issued for disposal of the representation of the petitioner to split up the show cause notices for each year separately. petition disposed off.
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2024 (1) TMI 618
Seeking release of goods seized with vehicle - grievance of petitioner is that the petitioner may be permitted to make representation before the Appellate Authority to decide the same - HELD THAT:- As the respondent Authority has made a statement through learned AGP to pass a fresh order with regard to the pre-deposit, the petition is disposed of - The petitioner is also permitted to make an application before the First Appellate Authority for release of the vehicle on suitable conditions which may be imposed by the First Appellate Authority in accordance with law. The petition is accordingly disposed of.
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2024 (1) TMI 617
Seeking release of vehicle - HELD THAT:- There is a prima facie case in favour of the petitioner for release of the vehicle being KA-01-AE-8397 on payment of Rs.2,97,703/- before the respondent authority within a period of one week from today. The usual undertaking shall also be filed within the said period before the respondent authorities. Rule. Mr. Raj Tanna, learned AGP waives service of notice of rule on behalf of respondents.
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Income Tax
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2024 (1) TMI 616
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 - Taxation on contracting state - Revenue s case is payments made to the US Company for marketing services take the character of FTS and chargeable to tax in India - as decided by HC [ 2023 (3) TMI 422 - KARNATAKA HIGH COURT] operations were not in India and expenses towards maintenance and repairs payments were made for the purpose of earning outside India - HELD THAT:- Following the order passed in M/s AD2PRO Media Solutions Pvt. Ltd [ 2024 (1) TMI 560 - SC ORDER] this special leave petition also stands dismissed.
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2024 (1) TMI 615
Stay of recovery - Validity of tax liability imposed on the petitioner - undisputed between the parties that the petitioner is a Development Authority enjoying the status of the charitable institution within the meaning of that term as defined under Section 2(15) - petitioner claims no recovery and/or adjustment of refund may have been made in excess of 20% of the disputed demand. Yet, much higher amounts have been adjusted - HELD THAT:- While learned counsel for the petitioner initially prayed for stay of recovery for the A.Y.s 2017-18, 2018-19 and 2020-21 which has been opposed with equal vehemence by learned counsel for the revenue, on the suggestion of the Court, both parties agree that the cause of action giving rise to the present petition may stand better addressed, if the appeals filed by the petitioner being are dealt with and decided on their own merits, expeditiously. Accordingly, in the interest of justice, writ petition is disposed of with the direction, let the Appeal be heard and decided by the Appeal Authority within a period of three months from today.
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2024 (1) TMI 614
Revision u/s 264 - Claiming benefit of DTAA - refund of Dividend Distribution Tax (DDT) which was paid wrongly - revision application was rejected on the grounds that the petitioner could have filed a revised return or an appeal u/s 248 of the Income Tax Act - petitioner declared and paid dividend to its holding company which became aware that, as per Section 90 it is entitled to the benefit of the Double Taxation Avoidance Agreement (DTAA) between India and Mauritius - HELD THAT:- The rejection is not on the merits of the application but on the grounds that the petitioner could have filed a revised return or presented an appeal under Section 248 of the Income Tax Act. As regards the option of filing a revised return, learned counsel for the petitioner pointed out that the time limit for filing such revised return expired. In any event, when a statute prescribes a remedy, the petitioner cannot be denied the benefit of availing of such remedy merely because an alternative remedy may be available. This can, no doubt, be done if the remedy is discretionary but not if the remedy is statutory. Therefore, the first ground of rejection in the impugned order is untenable. On examining Section 248 of the Income Tax Act, it is evident that it applies to a case where the tax deducted on payments made u/s 195 of the Income Tax Act to a non-resident, other than by way of interest, is required to be borne by the person by whom the income is payable (i.e. the person making the payment) as per contract or arrangement between the parties and the person making the deduction claims that tax was not payable. The case on hand pertains to the declaration and distribution of dividend by the petitioner, a company, to its shareholders and the tax payable thereon. This was not a case where a deduction was made u/s 195 towards tax on payments made to a non-resident and the parties had agreed that the deducting resident entity would bear the tax liability by compensating the non-resident by a proportional top up. Therefore, Section 248 is clearly inapplicable. The second ground on which the revision petition was rejected is also consequently unsustainable. Thus the impugned order is quashed and the matter is remanded for reconsideration on merits by the Principal Commissioner of Income Tax.
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2024 (1) TMI 613
Interest on refunds u/s 244A - whether the assessee was responsible for the delay? - HELD THAT:- Assessee submitted its return of income in respect of the AY 2021-22 and provided information relating to an account with the Comerica Bank in the USA. The income tax return discloses that the IBAN was provided but not the SWIFT code. After the assessment order was issued, since the refund was not made, the petitioner raised grievances through the CPC. The grievance raised on 22.04.2022 is of particular relevance. The petitioner specifically called upon the respondents to enable the petitioner to update the bank account details of its foreign bank account by inputting the SWIFT code and IBAN. In response, the respondents called upon the petitioner to retry. Significantly, the respondent did not inform the petitioner that only a bank account with an Indian bank is eligible for receipt of refund. In any event, the press release dated 24.07.2017 of the CBDT enables a non-resident to provide a foreign bank account for purposes of refund. Therefore, after the petitioner requested the respondents to enable the petitioner to provide the SWIFT code and IBAN, the delay in processing the refund cannot be attributed to the petitioner. Even allowing for a reasonable time of about seven days for the respondents to respond appropriately to the request to enable the portal, the refund should have been processed. Instead, the respondents appeared to have orally informed the petitioner that bank account in an Indian bank is necessary for purposes of refund. In those circumstances, such bank account was opened in January 2023. Such account was validated in July 2023 and the refund was made in October, 2023. If the delay is not attributable to the assessee, Section 244A provides for refund at the rate of % per month or 6% per annum. The petitioner has provided a calculation memo in which credit has been given for interest already paid for the period running from 01.04.2021 to 31.03.2022. As regards the period subsequent thereto, the documents on record indicate that the petitioner endeavoured to input the SWIFT code and IBAN in April 2022. Therefore, the petitioner is entitled to interest for the period from 01.05.2022 until the date of receipt of refund. This writ petition is therefore disposed of by directing the respondents through the Central Processing Centre to pay interest on the sum of Rs. 2,27,20,180/- at the rate specified in Section 244-A from 01.05.2022 to 05.10.2023. The refund shall be made within a maximum period of two months from the date of receipt of a copy of this order.
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2024 (1) TMI 612
Validity of Reopening of assessment - notice issued u/s 148A(d) entirely on the basis of information obtained from the Insight Portal in accordance with the risk management strategy of the Income Tax Department - immovable property was purchased for the sale consideration less than guideline value on which stamp duty was paid - whether there is direct or live link between the information obtained from the Insight Portal and the income allegedly escaping assessment? - HELD THAT:- As show cause notice did not contain any reference to the difference between the guideline value and the sale consideration and call for an explanation. Instead, skeletal information regarding the purchase of the relevant immovable property was provided under the first two entries. On this basis, it cannot reasonably be expected of the noticee to provide an explanation with regard to the difference. While the impugned order refers to the lack of documentary evidence with regard to the gifts received from the petitioner's mother, although necessary information was provided by the petitioner, there is no discussion or evidence of consideration of the income tax returns of the petitioner's mother so as to test the veracity of the petitioner's explanation. Moreover, the explanation provided by the petitioner with regard to the receipt of a home loan of Rs. 93,75,000/- from Sundaram BNP Paribas, which formed the alleged principal source for the purchase, has not been dealt with in the impugned order. Unless an assessee's response to the show cause notice is duly considered before a decision is taken to issue notice under Section 148, the statutory mandate of a prior show cause notice would be reduced to an empty formality. Therefore the impugned order calls for interference and the said order is hereby quashed.
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2024 (1) TMI 611
Delay of 5318 days in filing the appeal - sufficient cause for the delay - addition of Rs. 50 Lakhs as undisclosed income - HELD THAT:- The impugned order dated 09.05.2008 was challenged by the petitioner by way of review and rectification petition before the Tribunal and the same were disposed of as early as on 04.11.2010 and 27.09.2013. No attempt was made thereafter to file the Tax Case Appeal, instead the petitioner has chosen to file a rectification petition before the First Appellate Authority and on its rejection, once again filed an appeal before the Tribunal. The complacency in the approach of the petitioner does not inspire confidence, but reflects apathy and lack of bona fide . Thus, we do not find any convincing reason set out in the affidavit filed in support of the condone delay petition. It is trite law that where a case has been presented in the court beyond limitation, it is for the applicant to explain that there was sufficient cause for the delay. It had been consistently held that sufficient cause would mean that the party should not have acted in a negligent manner or there was a want of bona fide on its part, but must have acted diligently and not remained inactive. It is clear that the discretion to condone the delay ought to be exercised judiciously based on facts and circumstances of each case. If it is found that the party has been negligent, not vigilant and lacking bona fide, the Court would not come to rescue of such litigants. We had already found that the conduct of the petitioner lacks bona fide and the reasons adduced do not satisfy the test laid down for constituting sufficient cause . The reasons set out in the affidavit filed in support of the petition to condone the delay of 5318 days i.e., nearly 14 years are unconvincing and do not furnish any cause much less sufficient cause for condoning the delay in filing the appeal, instead reveal a callous attitude and a casual approach in availing the right of appeal. Hon'ble Supreme Court in the case of Pundlik Jalam Patil v. Executive Engineer, Jalgaon Medium Project [ 2008 (11) TMI 611 - SUPREME COURT ] has categorically observed that the Courts help those, who are vigilant and do not slumber over their rights . Therefore, we are not inclined to condone the inordinate delay of 5318 days in filing the appeal.
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2024 (1) TMI 610
Addition u/s 68 - unexplained money - AO has observed that the amount in question has been received in the bank account of the assessee company from the account of two persons and thus, in absence of any other material found that the credit entry is remained unexplained - ITAT deleted addition - HELD THAT:- One of the offshoot proceedings in connection with the present transaction has reached to this Court by way at the instance of the Revenue against Ambe Tradecorp (P). Ltd. [ 2022 (11) TMI 22 - GUJARAT HIGH COURT] This Court had an occasion to consider almost an identical proposed substantial questions of law and the said appeal was at the instance of the Revenue came to be dismissed on 11th July 2022. In the said judgement, the assessee therein has received money from the present assessee company once the source of fund in the hands of above company was held as explained by learned CIT(A) then amount received by the assessee from that company cannot be held as unexplained under section 68 of the Act in the absence of contrary information. Likewise, there cannot be addition of one item in the hands of two different person. Keeping in mind the aforesaid decision as well as keeping in mind that Smt. Hansaben Manilal Patel has already been substantially taxed and Ramesh G. Thakor s addition also deleted by the learned CIT(A) as the source was clearly proved by the assessee. In our considered opinion, the appellate authority as well as the Income Tax Appellate Tribunal concurrently reversed the findings of the Assessing Officer on the said count, and thus, it could not be said that any question much less any substantial question of law arises.
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2024 (1) TMI 609
Disallowance on account of non-maintenance of proper Bills and Vouchers - HELD THAT:- Learned tax authorities without actually pointing out any deficiency in the books of account have inferred that the expenses are excessive and unreasonable so as to disallow to the extent of 30%. The order of learned tax authorities does not indicate if the financials of the assessee were otherwise questioned on any account. The assessee has shown revenue from operation as on 31.03.2017 at Rs. 576,98,65,384. The same has been accepted by the Revenue and even when the scrutiny was taken up, for analyzing low income in comparison to high loans etc. and high revenue from operations, but except for observing that there was non-maintenance of proper bills and vouchers to disallow expenses @ 30% on ad hoc basis, no other conclusion was drawn with regard to profit calculation reflected in the financials. The orders of learned tax authorities make it apparent that on observing that the expenses have been booked under various heads are not supported with proper bills and vouchers and vouchers are not signed by receivers, bills are not in proper format, ad hoc disallowance was made. Tax Authorities were supposed to consider the nature of the business of the assessee being in distribution business of very competitive project like mobile phones through distributors in the States of Bihar, Jharkhand and Uttrakhand and on that account if certain expenditures, on day to day basis for running the distributorship and employees network were not in proper vouchers formats or signed, that alone cannot be a justification for disallowance on ad hoc basis to extent of 30%. The prayer of learned DR that issue should be restored to AO is also not considerable as it is not established that assessee is relying anything which was not otherwise before the learned tax authorities below. All that is established is that without pointing out anything specific defect on wholesome basis certain part of the expenses has been discarded on estimate basis. Same is not sustainable under the law. Assessee appeal allowed.
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2024 (1) TMI 608
Reopening of assessment u/s 147 - reasons to suspect or Reasons to believe - Addition u/s 68 - Share application money and Commission Charges unexplained - AO has relied the information received from the investigation Wing, where cases of the beneficiaries who had received accommodation entries from Pradeep Kumar Jindal (entry operator), were to be reopened - HELD THAT:- At the stage of recording reasons assessing officer had not shown any indulgence of his own. It appears that the assessing officer had blindfolded himself to rely the investigation Wing report and made the same foundation of recording the reasons for the reopening. The manner in which the reasons have been recorded make it appear that the assessing officer without actually applying his mind to the information made available by the investigation Wing proceeded to open the cases of all beneficiaries of alleged entries from Pradeep Kumar Jindal group of companies by recording reasons in same template/format and included assessee also as a beneficiary while assessee was a company of Pradeep Kumar Jindal and assessee is providing accommodation entries to the beneficiaries. In case in hand the issue was of accommodation entries from numerous companies of one operator and for that assessing officer, while recording reasons the ld. AO should have justified that he has traveled the distance between reasons to suspect and Reasons to believe . Which he failed and CIT(A) has erroneously sustained the reasons to believe, by very general discussion holding that reason are based on specific information. The information as narrated in the reasons may have been specific qua Pradeep Kumar Jindal, but not as against the assessee. Decided against revenue.
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2024 (1) TMI 607
TDS u/s 192 - assessee in default u/s 201(1)/201(1A) - assessee failure to deduct TDS on the perquisite value of accommodation provided to the employees at the rate of 15 percent of salary - As per Ld. AO, the perquisite on accommodation provided to the employees of the Respondent was to be computed in accordance Section 17(2)(ii) - HELD THAT:- We are of the considered opinion that Indian Institute of Science, case [ 2022 (10) TMI 242 - SC ORDER] squarely applies upon the assessee and mere fact that assessee is a Institution which has come into existence by an Act of Parliament and the various clauses of the IIT Act and the IIT Statues, relied by the Ld. AR, which establish that there is some control of the Central Government, does not elevate the status of assessee of Central Government. Thus we are of considered view that Ld. CIT(A) has fallen in error to hold that assessee falls in category of Central Government. Rather Ld. CIT(A) has fallen in error in relying the Guwahati Bench order in case of IIT, (supra), as in that case the Tribunal had not directly dealt with the issue if IIT, falls in status of Central Government for the purpose of Rule 3 but had given benefit to that assessee for not being considered assessee in default u/s 201(1) of the Act, as there was a bonafide explanation with the department. The Delhi Bench in the case of Superintendent (DDO) versus ITO [ 2012 (8) TMI 644 - ITAT, DELHI ] has taken into consideration judgement of Hon ble Supreme Court of India in the case of Arun Kumar [ 2006 (9) TMI 115 - SUPREME COURT ] and held that without first establishing that assessee employer had provided accommodation to the employees at concessional rates, the assessing officer cannot straightaway invoke Rule 3 for computing value of the perquisite and treat assessee in default in deducting tax at source on said value. Therefore, we are of the considered view that though Ld. CIT(A) has fallen in error in holding that assessee falls in status of Central Government for the purpose of Section 17(2) of the Act, the impugned order of Ld. CIT(A) still deserves to be upheld as Ld. AO has fallen in error by straightaway invoking Rule 3 for computing value of the perquisite and treat assessee in default in deducting tax at source on said value, without first recording a finding as to whether there is 'concession' and the case is covered by Section 17 (2) (ii) of the Act. Decided against revenue.
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2024 (1) TMI 606
Unexplained investment - contention of the assessee is that the land owner cancelled the initially registered sale agreement-cum-GPA (dated 08/07/2003) by executing a registered cancellation deed dated 29/11/2005 before the SRO on the ground that he has not received any sale consideration under the original sale agreement-cum-GPA, thus the question of passing of any sale consideration by the assessee does not arise - contention of the Revenue is that any registered instrument can be cancelled only by way of a Decree of the Civil Court and it cannot be cancelled arbitrarily by either of the parties of the registered agreement and cannot get registered with the SRO unless there is a direction by way of Decree from the Civil Court - whether the land owner can himself execute and cancel the agreement of sale-cum-GPA and register the cancellation deed arbitrarily with the SRO? HELD THAT:- There is no Decree obtained from the Civil Court by the Land Owner with regard to cancellation of the earlier agreement and therefore, the registered cancellation of the sale deed with the SRO is not valid in the eye of law. Further, on perusal of the material available on record, it is clear that there is no cogent material before me to evidence and suggest that without passing the consideration, the land owner registered an agreement of sale-cum-GPA in favour of the assessee. But, the recitals are very clear that the vendor has received the sale consideration and executed the document. Therefore simply cancelling the registered agreement of sale-cum- GPA by way of a registered deed of cancellation is not enough to come to a conclusion that the assessee has not paid the consideration to the land owner. Moreover, the assessee himself admitted before the Ld. AO for making an addition whatsoever the reason, and therefore the assessee is precluded to say that he has not paid any amount to the land owner and hence there is no any unexplained investment made by the assessee. Moreover, the Ld. AO has considered the creditworthiness of the 30 investors and the assessee got relief to the extent of Rs. 63,03,790/-. Apart from this, the assessee has also failed to establish the creditworthiness of the 30 investors. In these circumstances, no merit in the argument of the Ld. AR and at the same time the arguments of the Ld. DR holds good. Therefore, as per the discussion in the foregoing paragraphs of this order, I am of the considered opinion that there is no infirmity in the order of the Ld. AO as well as the Ld. CIT(A) and hence no interference is required in their orders. Thus, all the grounds raised by the assessee are dismissed.
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2024 (1) TMI 605
Penalty u/s 271(1)(c) - addition for delayed payment of Employees contribution to PF/ESIC - HELD THAT:- Invocation of the same is either that of filing inaccurate particulars of income or concealment of income or both the limbs are present in respect of assessee s return of income before the Assessing Officer. But, in the present case, the Hon ble Supreme Court s decision in case of Checkmate came [ 2022 (10) TMI 617 - SUPREME COURT] after the assessment proceedings as well as after the penalty proceedings. The issue was debatable at both the stages and in fact the assessee through his details of income has shown the dates upon which the contribution to PF ESI was made. Thus, there was no concealment or furnishing of inaccurate particulars of income as those details were very much before the AO as well as before the CIT(A). Therefore, there is no element of either furnishing inaccurate particulars or concealment of income. Since the issue was debatable, the assessee has taken the benefit of decision of other Hon ble High Courts which were in favour of the assessee. Thus, Section 271(1)(c) of the Act does not attract in the present case. Appeal of the assessee is thus allowed.
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2024 (1) TMI 604
Excess Stock of gold and silver jewellery and Cash found in Survey u/s 133A - deemed income u/s 69-69A or business income - HELD THAT:- When we analyze the facts of the assessee s case with reference to requirements of Section 69 of the Act, it is observed that admittedly, the investment in the purchase of 5246.335 gms gold and 16.3793 kg Silver is not recorded in the books. The assessee has not offered any satisfactory explanation for the impugned investment. Thus the requirement of Section 69 are fulfilled in this case. Hence, we are of the opinion that the Assessing Officer has rightly invoked section 69 of the Act for the impugned investment in the purchase of 5246.335 gms gold and 16.3793 kg Silver. Therefore, we uphold invocation of section 69 of the Act by AO. Accordingly ground number 2 of the assessee regarding impugned stock is dismissed. Excess cash found during the survey - Assessee has not offered any specific explanation with reference to excess cash found during the survey. Therefore, we are of the opinion that the AO has rightly invoked section 69A. Invokation of provisions of Section 115BBE - Section 115BBE is specifically applicable where income of the assessee includes any income under section 69, 69A of the Act. As per the Income tax Act , once income of assessee includes any income referred in section 69,69A the Tax has to be calculated as per provisions of Section 115BBE. In this case we have already held that section 69 and 69A was rightly invoked by the AO. Therefore, since income of the assessee contains income referred u/s 69, 69A, provisions of Section 115BBE are applicable in the case of the assessee. Sub-clause 2 of Section 115BBE specifically states that no deduction in respect of any expenditure, allowance under any provision of this act in computing income referred under subclause 1 of section 115BBE means income referred u/s 69, 69A of the Act. Therefore, the AO was right in disallowing the assessee s claim of Partner s Salary on the impugned unexplained investment taxed u/s 69 and 69A of the Act. Accordingly the ground of appeal number 3 of the assessee is dismissed.
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2024 (1) TMI 603
Penalty u/s 271D - assessee had accepted loan in cash otherwise than an account payee cheque or draft, the amount of loans exceeded the limit prescribed u/s 269SS - HELD THAT:- There is no evidence that the assessee has not violated the provisions of section 269SS of the Act and therefore, there is no factual error on the part of the lower authority. But as regards the contention of assessee that these transactions are not loan and accommodative transactions between the assessee and his employer. But the bench noted that on issue there is not material evidence made available by assessee. Assessee has placed on record only the ledger account, from that it is not clear whether the said transactions are considered as loan or the accommodative transactions or sales. It is also not clear whether the employer has received the cheque amount as sales consideration or as the amount as loan to employee in the books of the employer. This basic finding of the fact is not emanating from the records made available. Therefore, bench feels that the ld. AO in the interest of justice bring necessary evidence as to whether the transaction are on account of sales or on account of loan recorded will decide the applicability of the provision of section 269SS of the Act. It is also not clear as to whether the provision of section 269T is initiated at the other hand or not. Thus, fasting the liability on the assessee without bringing all the relevant facts on record is not correct and therefore, we are of the considered view that let the ld. JCIT should after giving proper opportunity to the assessee to decide the issue afresh but by providing adequate opportunity of being heard. The assessee is also directed not to take unnecessary adjournment on frivolous ground and submit the documents concerning the issue in question. Thus the appeal of the assessee is allowed for statistical purposes. Validity of penalty order on limitation - On being consistent to the view so taken in Seetharama Lakshmi Rice Groundnut Oil Mill Contractors [ 1977 (3) TMI 20 - ANDHRA PRADESH HIGH COURT] we are of the considered view that looking to the present set of facts and circumstances the provision of section 275(1)(a) will apply so we see no merits in the arguments advanced by the ld. AR of the assessee and therefore, the ground no. 2 raised by the assessee stands dismissed.
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2024 (1) TMI 602
Unexplained cash credit - disbelieving the receipt of share capital along with share premium - addition u/s 68 - AO observed that against the face value of Rs. 1/- each share, the assessee has received the subscription money at Rs. 50/-, in other words, it received 49 rupees as premium - area of difference between the assessee and the ld. Assessing Officer is as to why the subscriber will invest in a Company, who is making losses - CIT(A) deleted addition - HELD THAT:- CIT(Appeals) has held that it is for the businessman to decide how it wants to use its funds. The subscribers have not borrowed the money for making investment with the assessee-company. The group concern might have decided to start some activity on substantial basis in the assessee-company, therefore, it could be a support from the group concern. The ld. 1st Appellate Authority has also examined whether, this excess premium paid by the subscribers is to be construed as a gift to the assessee within the meaning of section 56(2)(vib) of the Income Tax Act but held that this provision is applicable from A.Y. 2013-14 and not in A.Y. 2012-13. On due consideration of the order of ld. CIT(Appeals), we are of the view that it does not call for any interference at our end. Accordingly, the appeal of the Revenue is dismissed on merit.
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2024 (1) TMI 601
Claim of setoff of unabsorbed depreciation carried forward from earlier year against the income from short term capital gains - AO was not satisfied with the explanations and has dealt on the provisions of Section 32 section 70 to 72 of the Act is of the opinion that the setoff claim cannot be allowed - AR emphasized on the provisions of Section 71 72 of the Act and the methodology adopted in setoff of current year losses and carried forward/brought forward business loss and unabsorbed depreciation - HHELD THAT:- As relying on Bond Safety Belts [ 2023 (10) TMI 138 - BOMBAY HIGH COURT] unabsorbed depreciation carried forward from earlier years to set off against the short term capital gains. Accordingly, fallow the judicial precedence, and set aside the order of the CIT(A) and direct the Assessing officer to allow the claim of setoff of unabsorbed depreciation carried forward from earlier year against the income from short term capital gains. AO is directed to compute interest u/sec 234D u/sec 244A of the Act in accordance with the provisions of the Act. And the grounds of appeal are allowed in favour of the assessee.
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2024 (1) TMI 600
TDS u/s 194C - assessee society paid External Development Charges(EDC) to Greater Mohali Area Development Authority(GMADA) without deduction of tax - assessee society submitted the details of the payment and submitted that TDS provisions are not applicable on the payment made to GMADA as the latter was not working as contractor on behalf of the assessee - HELD THAT:- As compared to case of M/s H.P. Singh and Others [ 2022 (11) TMI 1439 - ITAT CHANDIGARH] instant case, identical fact pattern exist wherein the payment of EDC charges has been made to GMADA by the assessee society, we are of the considered view that the provisions of section 194C are not attracted on payment of EDC charges to GMADA and thus, the demand raised u/s 201(1) read with Section 201(1A) of the Act are hereby set aside. Decided in favour of assessee.
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2024 (1) TMI 599
Nature of receipt - receipt of compensation - capital receipt or income from other sources - assessee submitted that he has received certain sum from the developer as the shifting compensation - compensation received by the assessee which is the corpus amount payable by the developer a compensation payable by the developer to the individual members to meet the expenses for shifting / re-shifting and compensation to the individual members to meet the cost for temporary transit accommodation to be arranged by the individual members during the period of construction of the proposed building HELD THAT:- It is fact on record that assessee has entered into development agreement through the society and only due to the fact that the assessee being member and consigning party to the re-development Agreement, assessee was compensated with the shifting compensation for personal belongings as well as accommodation for an initial period of 24 months including corpus amount. It clearly shows that the above payments made by the developer only to compensate the assessee towards the shifting as well as the additional burden on the corpus funds. Therefore, it clearly shows that it is a compensation towards hardship faced by the assessee. As relying on Smt Delilah Raj Mansukhani [ 2021 (3) TMI 252 - ITAT MUMBAI] we are inclined to agree with the submissions of the Ld. AR of the assessee and hold that the above receipt of compensation for hardship is in the nature of capital receipt. Further, we observe that assessee has submitted that the corpus fund received by her was already declared as additional income subsequently on receipt basis in A.Y. 2015-16. Therefore, we direct the AO to verify the same and if it is found proper, the addition on corpus fund may be deleted. Accordingly, the addition made by the AO is deleted. Ground raised by the assessee is allowed.
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2024 (1) TMI 598
Foreign tax credit - claim denied as assessee failed to file Form No. 67 within the prescribed time as per Rule 128 of the Income Tax Rules, 1963 - Assessee furnished copies of Form 67 belatedly and sought remand of the case to the AO for reconsideration of the claims of the assessee - HELD THAT:- It is our considered opinion that the AO should consider the claims of the assessee for FTC afresh. Accordingly, we set aside the order of the ld. CIT(A) dated 07-07-2023 as well as the AO, CPC s order dated 08-04-2020 and direct the AO, CPC to consider the case of the assessee afresh after providing reasonable opportunity of being heard to the assessee. At the same time, we direct the assessee to substantiate his claims before the AO, CPC. Assessee appeal allowed for stattistical purposes.
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2024 (1) TMI 597
Penalty u/s. 271AAB - undisclosed income representing their tuition fee in various educational institutions - HELD THAT:- As come on record that this is indeed an instance of both these assessees having derived their undisclosed income in above terms u/sec. 271AAB Explanation-(c) (i)(A) of the Act representing their tuition fee in various educational institutions. And also that the department had come across the corresponding seized material during the course of search herein dated 05.08.2015 which made these assessees to admit additional income of Rs. 41 lakhs 2 coming to Rs. 20.50 lakhs each which stood declared in their respective returns. The assessees sole substantive grievance appears to be that the AO s corresponding show cause notices dated 29.12.2017 (supra) had not been validly issued. We find no merit in the assessees stand once it has come on record that the impugned penalty has been levied @ 10% since falling in the first and foremost limb u/sec. 271AAB(1)(a)(i) to (iii) of the Act in the specified circumstances. Their identical contention therefore, that the AO ought to have specified corresponding limb(s) to this effect fails to cut any ice before us. Faced with the situation and primarily for the reason that these assessees have been found to have derived their undisclosed income as per the seized incriminating material followed by their search admission(s), we find no reason to interfere with the learned lower authorities action invoking sec. 271AAB penalties in their respective cases. These assessees fail in their respective grounds therefore.
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2024 (1) TMI 596
Allowability of business expenditure incurred towards purchase of sugarcane from member farmers' u/s 37(1) - whether additional sugarcane price paid to the cane growers wholly and exclusively for the purpose of business? - HELD THAT:- As keeping in view of the decision of U.P Cooperative Cane Federations Vs West UP Sugar Mills Association and others [ 2004 (5) TMI 533 - SUPREME COURT] we find convincing force in the submissions of assessee that as per clause 3(2) of Sugar Cane control order prohibits everyone from selling or purchasing sugar cane at the lower than fixed under clause 3(1). Further it is clear FRP which was earlier known as SMP fixed by the Central Government every cursing year is to safeguard the interest of the farmers and is the lower limit only. We are also convinced that it is always open to the party to negotiate to pay a price higher than the minimum price on commercial consideration and it is not open to the revenue to disallow it difference on the ground difference was not in law. As in the present case the purchases are made by the assessee, which is the cooperative society of its sugar cane grower. Thus, the case of assessee is falls under sub-clause (b) of clause 5 of Sugar Cane Control order, which empowered them to pay to the producer of sugar cane, in addition to the fair and remunerative of sugar cane fixed under clause-3(1), as an additional price in accordance with first schedule. Thus, the additional price of payment of sugar cane to the grower, for purchase of raw material (sugarcane) which was approved by the managing committee of the assessee, who is also having representation of State Government as per the statutory provision of State Cooperative Society Act, cannot be termed as a distribution of profit. Such additional payment is made to the members of the Co-operative society who are the supplier of sugarcane and to none other persons. Such payment was made for the purpose of business against the payment of raw material and not for any other purpose. As in a recent decision in Kolhapur Zilla Sahkari Dudh Utpadak Sangh Ltd. [ 2023 (6) TMI 1143 - SC ORDER] while affirming the decision of Solapur District Co-op Milk Producers Process Union Ltd. [ 2009 (4) TMI 19 - BOMBAY HIGH COURT] held that the addition could not be made by treating the amount paid as final rate difference as distribution of profits. It was also held that additions could not be made by treating amount paid as a final rate difference as a distribution of profit among members of the society. We find that Bombay High Court while giving such judgment followed the decision of Mehsana District Co-operative Milk Producers Union Ltd [ 2005 (2) TMI 25 - GUJARAT HIGH COURT] thus the decision of Hon ble Gujarat High Court substantially stand approved by the Hon ble Apex Court. We find that in Mehsana District Co-operative Milk Producers Union Ltd. (supra) while considering the question of law as to whether a claim for deduction was allowable either under section 28 or section 37(1) HC held that the assessee claimed that additional payment was made towards the price of the milk. The High Court noted the legal position as to when accrual of profits can be said to have accrued. It considered the case of CIT Vs Ashokbhai Chimanbhi [ 1964 (10) TMI 11 - SUPREME COURT] and noted that the words accrue and arise are used to contradistinguish the word 'receive'. Income is said to be received when it reaches the assessee. When the right to receive the income becomes vested in the assessee, it is said to accrue or arise. The Court also noted that the profits to be assessed have to be the real profits and are required to be determined on the ordinary principles of commercial trading and commercial accounting - expenditure in question cannot be termed to be application of income in absence of any evidence as to accrual of profits in light of settled legal position; the payment of additional/final price made on the last day of the accounting year is allowable u/s 28 of the Act being a necessary deduction for ascertaining the real profits on principles of commercial accounting and the payment in question is alternatively allowable under section 37 of the Act having been incurred wholly and exclusively for the purpose of business carried on by the assessee in light of the evidence which has come on record. Hon ble Apex Court in S.A. Builder ( 2006 (12) TMI 82 - SUPREME COURT ) held that the expression commercial expediency is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure, if it was incurred on grounds of commercial expediency. The Apex Court also refereed the decision of Dalmia Cement (Bharat) Ltd. [ 2001 (9) TMI 48 - DELHI HIGH COURT] wherein it was held that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize its profit. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. Thus we find that the payment of additional sugarcane price, with the approval of the managing committee of the assessee for payment of sugarcane is not distribution of profit. In the result, the grounds of appeal raised by the assessee are allowed.
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2024 (1) TMI 595
Assessment u/s 153A - Unexplained investment - Addition made as incriminating documents seized during the course of search prove that the cash loan transactions are unexplained investment of the assessee - HELD THAT:- There is no incriminating material in order to fasten the liability of the assessee. The AO has proceeded against the assessee under section 153A of the Act. When there is no incriminating material then how the assessee can be proceeded against under section 153A of the Act. For argument sake even if it is assumed that there is incriminating material against the assessee then assessment ought to be framed under section 153C of the Act. Furthermore, it is admitted fact on record that the evidence relied upon the by the AO in this case was collected in case of search of a third party. No doubt subsequent search was conducted at the premises of the assessee on 18.12.2017 but no material was found or seized. Para 5.14 of the assessment order apparently proves that the alleged incriminating materials viz. promissory note etc. brought on record as Annexure A-16 and A-17 was seized in case of search on a third party and not the assessee and in these circumstances assessment proceedings were required to be initiated under section 153C and not 153A as has been done in this case. No incriminating evidence against the assessee from the material seized from the premises of Mr. Nilesh Bharani and in these circumstances the Ld. CIT(A) has validly and legally deleted the addition made by the AO under section 69 56 of the Act. Decided in favour of assessee.
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Customs
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2024 (1) TMI 594
Seeking opportunity to deposit 10% of the disputed duty amount before the appellate tribunal - HELD THAT:- The petitioner M/s. Rishabh Exports should be granted an opportunity to deposit 10% of the disputed duty amount before the appellate tribunal within a period of one month from today. On the said deposit being made, the appeal/petition filed by the petitioner will stand revived and will be taken up for consideration on merits. SLP disposed off.
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2024 (1) TMI 593
Imposition of penalty - non-submission of the documents as per Regulation 5 of the Customs (Provisional Duty Assessment) Regulation, 2011 - HELD THAT:- From the records it is seen that the appellant has imported coal through 8 (eight) Bills of Entry and the same were provisionally assessed for want of documents. The appellant has already submitted documents in respect of 7 (seven) Bills of Entry and the corresponding Bills of Entry were finally assessed. In respect of the remaining 1(one) Bill of Entry, there was a delay in submission of documents. Accordingly, the department has initiated proceedings for imposition of penalty under Regulation 5 of the said Regulations 2011. The appellant has already submitted the documents necessary for finalization of the provisional assessment while submitting their reply to the show cause notice. Thus, it is found that the penalty of Rs.5,000/- imposed by the Assistant Commissioner would be sufficient to meet the ends of justice. It is also found that the Commissioner(Appeals) has not given adequate reason for enhancing the penalty from Rs.5,000/- to Rs.50,000/-. In view of discussions, the enhanced penalty is not warranted in this case. Accordingly, the same is set aside. The enhanced penalty is set aside - the appeal filed by the appellant is allowed.
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2024 (1) TMI 592
Levy of penalty under Section 114A of CA - Suppression of facts or not - whether penalty is to be imposed when the appellant has accepted the classification and paid the entire duty along with penalty much before the issuance of the show cause notice? - HELD THAT:- It is an admitted fact that the goods were correctly described in the relevant documents except for the classification being inadvertently mentioned as 9031 instead of 9016. It is also a fact that till 2007, the rate of duty under both the Headings was same. The documents including the invoices from the foreign supplier which were placed before the Customs Authorities also contained correct description namely precision balances of sensitivity of 5 cg declared as parts of weighing equipment . It is also on record that without contesting the classification, the appellant had immediately paid the entire differential duty along with interest much prior to the issuance of the show cause notice. Therefore, the question of alleging suppression in the present case does not arise. The decision relied upon by the authorities in the case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT] is not applicable inasmuch as that was the case of clear suppression of facts. In the present case, as already discussed, description of goods was not suppressed. In the present case, the appellant had paid the differential duty in 2009 and the notice was issued only in 2011 to appropriate the amounts and impose penalty. The Hon ble High Court of Karnataka in the case of CC VERSUS POWERICA LTD. [ 2011 (9) TMI 665 - KARNATAKA HIGH COURT] held that If in law there is a prohibition for initiation of the proceedings to recover the duty and penalty after it is paid before the issue of show cause notice, certainly in such a proceedings which is not maintainable, question of imposing penalty would not arise. In other words, if duty and penalty is paid even before the issue of show cause notice and the said fact is informed to the proper officer, he shall not initiate any proceedings to recover the duty and interest, much less for imposition of penalty. The penalty set aside - appeal allowed.
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2024 (1) TMI 591
Liability of Duty-Free Shop to pay duty - Clearnce of goods from private bonded warehouse - case of appellant is that they are not liable to pay duty under Section 72 but the duty needs to be collected from the passengers and hence, demand against them is liable to be set aside - HELD THAT:- The licensee of the Duty-Free Shop is liable to pay duty, if the provisions of Sections and the Procedures laid down therein, are violated and therefore, the question of passengers paying duty does not arise. This has also been affirmed by the Tribunal in the case of Alpha Future Airport Retail P. Ltd. [ 2017 (10) TMI 1198 - CESTAT NEW DELHI ] which has been upheld by the Supreme Court in AIRPORT RETAIL PVT. LTD. Versus COMMR. OF CUSTOMS (AIR CARGO EXPORTS) , NEW DELHI [ 2021 (10) TMI 998 - Supreme Cour ]. The Tribunal has clearly held that the provisions of Section 72 are applicable to the appellant and they are liable for duty along with interest. In view of the above, the duty along with interest is upheld. With regard to penalty as rightly observed by the Original Authority, there is no intention to evade payment of duty and the fact that the officers are also to verify the vouchers and countersign the sale vouchers, the fact of awareness by the officers cannot be ignored and hence, the penalty is set aside. The duty demanded along with interest is upheld and the penalty is set aside - Appeal allowed in part.
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2024 (1) TMI 590
Change of classification of goods imported by the appellant - Non-declaration of MRP - Applicability of Notification 9 of 2010 CE (NT) dated 27.02.2010 which amends notification no. 49/2008 Central Excise NT dated 24.12.2008 - Suppression of facts or not - penalty - extended period of limitation - HELD THAT:- On perusal of the nature of goods show that radiator, evaporator, condenser or compressor or all essential ingredients refrigeration system and can by no means the called accessories. The decision of Banco Products India Ltd. [ 2009 (2) TMI 101 - CESTAT AHMEDABAD] is different sides of facts. In the said case the goods in dispute were not essential ingredients of the final product. Penalty - suppression of facts or not - HELD THAT:- There was no mis-declaration of description. He argued that in these circumstances, penalty should not be imposed. We find that penalty of Rs.50,000/- has been imposed under section 114 AA of the Customs Act, 1962. The penalty of Rs. 50,000/- has been also imposed under section 112(a) of the Customs Act, 1962. Extended period of Limitation - HELD THAT:- The show cause notice has been issued on 13.04.2018 whereas, the bill of entries are dated 26.07.2016 to 13.08.2016. It is seen that all the data required for the notice except the MRP was available in the bill of entry filed by the appellant. In these circumstances, there are no reason to hold that anything was suppressed by the appellant for the purpose of evasion. The description of the goods the heading in which classification has been claimed and the rate of duty for the purpose of CVD and the value for the purpose of CVD are all available on the bill of entries - it is not found that revenue has been able to establish the case for revocation of extended period of limitation. The extended period of limitation could not have been involved in the instance case. This appeal is therefore allowed on the ground of limitation.
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Corporate Laws
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2024 (1) TMI 589
Professional Misconduct - Failure to evaluate the management's assessment of the entity's ability to continue as a Going Concern - Failure relating to Revenue Recognition - Failures relating to Audit Documentation - Failures relating to Audit Evidence for inventory - Failure to give an appropriate audit opinion - Lapses in fulfilling duties related to Engagement Quality Control (EQC) Reviewer - Failure to determine Materiality - Failure to plan the audit of Financial Statements - Failures relating to communication with Those Charged With Governance - Failures relating to communicating deficiencies in internal control to TCWG and Management - Failures relating to identifying and assessing the risks of material misstatement - Failure to report non-compliances with provisions of the Companies Act 2013 - penalties and sanctions. HELD THAT:- The EP issued audit opinion on the Financial Statements without any basis. We also conclude that the EP has committed Professional Misconducts as defined under section 132 (4) of the Companies Act 2013 in terms of Section 22 of the Chartered Accountant Act 1949 (CA Act) as amended from time to time, and as detailed below: i. The EP committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 7 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he does not exercise due diligence or is grossly negligent in the conduct of his professional duties . This charge is proved as the EP failed to conduct the audit in accordance with the SAs and applicable regulations as well as due to his failure to report the material misstatements and non-compliances of the Company in its Financial Statements, as explained in the paras 24 to 93 above. ii. The EP committed professional misconduct m terms of Section 132 (4) of the Companies Act, read with Section 22 and clause 8 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he ''fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion . This charge is proved as the EP failed to conduct the audit in accordance with the SAs and applicable regulations as well as due to his failure to report the material misstatements and non-compliances of the Company in the Financial Statements, as explained in the paras 24 to 93 above. iii. The EP committed professional misconduct as defined by Section 132 (4) of the Companies Act, read with Section 22 and clause 9 of Part I of the Second Schedule of the Chartered Accountants Act 1949 (as amended from time to time), which states that an auditor is guilty of professional misconduct when he ''fails to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances . This charge is proved since the EP failed to conduct the audit in accordance with the SAs (as explained in paras 24 to 93 above), but falsely reported in his audit report that the audit was conducted as per SAs. Therefore, it is concluded that the charges of professional misconduct enumerated in the SCN dated 16.06.2023 stands proved based on analysis of the evidence in the Audit File, the Audit Report issued by auditor, the submissions made by auditor, and other materials available on record. Penalties and sanctions - HELD THAT:- Considering the proved professional misconducts and keeping in mind the nature of violations, principles of proportionality and deterrence against future professional misconduct, we, in exercise of powers under Section 132(4)(c) of the Companies Act, 2013, hereby order imposition of monetary penalty of INR 3,00,000/- upon CA Pankaj Kumar. In addition, CA Pankaj Kumar is debarred for 3 years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of Financial Statements or internal audit of the functions and activities of any company or body corporate. This debarment shall run concurrently with Penalty Order dated 21.04.2023 in respect of audit of M/s. SRS Ltd. issued against CA Pankaj Kumar.
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Securities / SEBI
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2024 (1) TMI 588
Issue of the Non-Convertible Debentures (NCDs) without complying with the listing provisions - Liability of directors - 'officer in default' - HELD THAT:- Learned counsel for the appellants have made an attempt to distinguish the role as assigned to the appellants as Directors. But at present, we are not influenced by such submissions. In view of the above, the civil appeals stand dismissed. Pending applications stand disposed of.
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Insolvency & Bankruptcy
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2024 (1) TMI 587
Maintainability of SLP - applicability of Section 10-A of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Section 10-A of the Insolvency and Bankruptcy Code, 2016 (IBC) was applicable. Hence, no reason for interference is made out in exercise of jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed.
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2024 (1) TMI 586
Nature of transaction between the parties as is reflected in the Agreement - Refusal of the IRP to admit the claim as Financial Debt - seeking direction to the IRP to claim as Financial Debt - Resolution Professional rejected the claim of the Appellant as Financial Creditor and categorised the claim of the Appellant as Operational Debt - HELD THAT:- It is clear that the opening part of the Agreement clearly stated that Whereas parties of the first part as well as party of the second part have entered into an agreement (White Sugar Supply Agreement) as per which the party of the second part confirms and agrees to sell and deliver to the party of the first part 5200 M.T's of white crystal sugar S-30 grade packed in P.P. bags of 50 KG's net weight at a fixed price of 3215/- per quintal inclusive of excise duty and cess (i.e. 3020 + 195) by and before 20.11.2016 (hereinafter referred as due date). . Thus, the transaction between the parties emanates from the White Sugar Supply Agreement. All the clauses in no manner reflect that transaction between the parties was a financial transaction and the debt due is a financial debt. Adjudicating Authority has rightly come to the conclusion that the claim which was filed by the Appellant was a claim of operational debt and the Resolution Professional has rightly treated the claim as operational debt. It is further to be noticed that the Appellant itself has filed Section 9 Application being CP No.469 of 2020 on 29.01.2020 by which time CIRP was not even commenced against the Corporate Debtor. Learned Counsel for the Appellant submits that there is no estopple against law. The factum of filing Section 9 application by the Appellant itself indicate that the Appellant itself considered it as Operational Creditor since it filed Section 9 application which got dismissed due to initiation of the CIRP against the Corporate Debtor by order dated 23.03.2023. The said conduct of the Appellant fully supports the stand taken by the Resolution Professional that the claim of the Appellant is operational debt. Thus, no error has been committed by the Adjudicating Authority in rejecting application filed by the Appellant. Appellant s claim has rightly been held to be operational debt - there are no error in the impugned order. The Appeal is dismissed.
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2024 (1) TMI 585
Approval of the Resolution Plan - Difference between resolution plan value and liquidation value - locus standi of appellant to challenge the Order of the approval of the Resolution Plan - Appellant is the suspended Director whose locus ends once the affairs of the Corporate Debtor are handed over to the IRP - HELD THAT:- It is seen from the record that Federal Bank had transferred its debt to Edelweiss but did not chose to file any Claim pursuant to the public announcement in Form A in accordance with Regulation 6 of CIRP Regulations, 2016. Having not exercised its right in the form of filing a Claim, the Appellant cannot have any grievance that Edelweiss was not included in the CoC. It is pertinent to mention that the Appellant / Promotor did not raise any objections regarding the constitution of the CoC, having had the Notice and the opportunity to do so as he had the locus to attend the CoC meetings. The only reason given by the Learned Counsel for the Appellant for not raising the objection regarding the constitution of CoC at the appropriate time is that the Appellant was unwell. This cannot be a substantial ground as it is an admitted fact that the Appellant had sufficient opportunities to attend the meetings and raise his grievances. The Hon ble Supreme Court in a catena of Judgements, most recent being Kalparaj Dharamshi Anr. vs. Kotak Investment Advisors Ltd. Anr [ 2021 (3) TMI 496 - SUPREME COURT ] has observed that the commercial wisdom of CoC must be adhered to unless the Adjudicating Authority is not satisfied that the requirement of sub-section (2) of Section 30 of the Code has been complied with. In the instant case, the approval of the Resolution Plan below the Liquidation value is within the commercial wisdom of the CoC as the Code does not expressly bar that the Resolution Plan value should be over and above the Liquidation value. Hence, there is no material irregularity. As regarding the contention of the Learned Counsel for the Appellant that the Operational Creditor Kerala Ayurvedic Limited was getting an amount lower than the Liquidation value and hence the Plan is discriminatory is untenable, keeping in view that the very same Operational Creditor had voluntarily agreed to accept an amount lower than the Liquidation value. Locus of the Appellant challenging the approval of the Resolution Plan - HELD THAT:- It has been held in Ravi Shankar Vedam vs. Tiffins Barytes Asbestos and Paints Limited and Others [ 2023 (6) TMI 1250 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI ] that the Promoter / Shareholder of the Corporate Debtor Company has no locus to challenge the Plan, after its approval. There are no considerable grounds to entertain this Appeal and hence, this Appeal is dismissed
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Service Tax
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2024 (1) TMI 584
CENVAT Credit - exempted service - providing onsite development of software services to the branch office situated abroad - availing Cenvat credit of Service Tax paid on common input services used for providing taxable as well as exempted services - failure to maintain separate accounts for receipt and use of input services used for providing exempted services and taxable output services - liability to pay an amount equal to six per cent of the value of exempted services provided by them, as per Rule 6(3)(i) of the Cenvat Credit Rules, 2004. HELD THAT:- The issue has been considered by the Tribunal in the appellant s own case and has set aside the demand M/S. COGNIZANT TECHNOLOGY SOLUTIONS INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF GST CENTRAL EXCISE [ 2023 (7) TMI 62 - CESTAT CHENNAI] holding that There is no allegation in the Show Cause Notice that CTS USA was only a front company for services rendered by CTS India in the USA. This being so no taxable service has been rendered by CTS India in USA with respect to the impugned figures disclosed in their Income Tax Form 3CEB for the Financial Year 2012-13 and 2013-14. This entry was the trigger for the allegations in the show cause notice that culminated in the impugned order. Once no service was rendered by the appellant in USA, which is exigible to tax under the Finance Act 1994, all charges under the said Act against the appellant must fail. Thus, following the decision in the appellant s own case, the demand, interest or penalties cannot sustain and requires to be set aside - the impugned order set aside - appeal allowed.
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2024 (1) TMI 583
CENVAT Credit - proper document under Rule 9(g) of CENVAT Credit Rules read with Rule 4A(2) of Service Tax Rules, 1994 or not - ISD themselves did not have proper proof of payment to the service provider - Extended period of Limitation - HELD THAT:- When the availment of services and admissibility of credit are not questioned at the end of the appellant or the ISD, CENVAT credit cannot be denied; substantive benefit of CENVAT credit cannot be denied just because there were some procedural infractions. Learned Commissioner seeks to confirm the demand on the basis of the finding that the appellants have not provided further requisite information. However, ongoing through the records of the case, it is found that audit was conducted on 26.04.2010, 27.04.2010 and 25.08.2010; Department sought certain clarifications vide letter dated 01.10.2010 and the appellants have submitted the same vide letter dated 22.12.2010.Thereafter, the Department did not conduct any enquiries for three long years and have issued a show-cause notice dated 12.08.2013. It was open to the Department to collect whatever information that was required to satisfy themselves before the issuance of show-cause notice. The Department requires to prove the inadmissibility of credit or any lapses on the part of the appellant in a positive proactive manner rather than on the averment that the appellants failed to supply the requisite information. However, as the admissibility of CENVAT credit not being in dispute, the same cannot be denied for procedural inadequacies, more so, when Department neither disputed the documents submitted by the appellants nor conducted any further verification. Time limitation - HELD THAT:- The audit was conducted on 26.04.2010, 27.04.2010 and 25.08.2010; Department sought certain clarifications vide letter dated 01.10.2010 and the appellants have submitted the same vide letter dated 22.12.2010; thereafter, for three years, Department did not take any action and the show-cause notice was issued on 12.08.2013; the appellants have been regularly submitting the ST-3 Returns. Moreover, keeping in view the fact that the appellants are a PSU, it is found that no mala fide intention can be attributed to the appellant. The appeal is allowed both on merits and limitation.
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2024 (1) TMI 582
Levy of Service Tax - Works Contract Service - construction of EWS quarters by the appellant - Residential Complex Service - construction of railway platform and laying of railway track to ply toy train by the appellant for an amusement park - Onus to prove on appellant (shifting burden) - construction of drain (Nallah) by the appellant - abatement is available under N/N. 01/2006-ST dated 01.03.2006 - composite rate under Work Contract Services - Extended period of limitation. Whether the construction of EWS quarters by the appellant is covered under definition of Residential Complex Service , are liable to Service Tax under Works Contract Service? - HELD THAT:- The services were not commercial nor for industrial purposes but for discharge of the sovereign function of the said government. Hence the impugned Works Contract Service/Construction of Residential Complex Service is not liable to tax - the decision relied upon by the department in the case of M/S MODI MODI CONSTRUCTIONS VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD - II [ 2019 (10) TMI 171 - CESTAT HYDERABAD] is held not applicable to the facts of the present case because in the said case an approach called Nilgiri Homes was being constructed by the service provider having all common facilities within the complex. Resultantly, it was held to be clarified as a residential complex. Similar is the fact for the case Isha Homes (I) Pvt. Ltd. Both these cases have different facts from the present one hence is distinguishable. This issue therefore decided in favour of the appellant s against the department. Whether the construction of railway platform and laying of railway track to ply toy train by the appellant for an amusement park is liable to service tax under Works Contract Service under Section 65(105) (zzzza) or excluded from its scope? - Onus to prove on appellant - HELD THAT:- The exclusion clause cannot be made applicable for the toy train installed in an amusement park for the public. Hence have no reason to differ from these findings of the adjudicating authority. The amusement park and any activity therein for the public cannot be called as sovereign function. Resultantly, onus was on the appellant-assessee to prove that this activity of the government was not for commerce but there is no such evidence produced on record. Resultantly, the findings upheld under this issue that the impugned activity was a taxable Works Contract Service. Whether the construction of drain (Nallah) by the appellant is liable to service tax under Works Contract Service under Section 65(105) (zzzza) or excluded from its scope? - HELD THAT:- The services of constructing of drain system has been provided by the appellant to the State of Rajasthan under a government scheme called Jawaharlal Nehru National Urban Renewal Mission (JNNURM). The clause has already been referred under issue no. 2. Perusal makes it abundantly clear that the provision does not excluded construction of drain/nallah/sewerage system. However subsequent Notification No. 25/2012-ST dated 20.06.2012 exempts civil structure or any other regional work pertaining to scheme under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Rajiv Aawas Yojna. The original authority has denied the benefit of this notification on the ground that the appellant was awarded the contract of construction of drain by UIT vide work order dated 16.08.2008 and 20.12.2010. The work was undertaken in the year 2009-10, 2010-11 and 2011-12 i.e. prior the issuance of the Notification No. 25/2012. Hence this activity is denied to be an exempted activity. In light of the above observations about no mention of drains in (65) (105) (zzzza), there are no reason to differ from the findings in Order-in-Original/Order under challenge. If tax is payable, whether abatement is available under Notification No. 01/2006-ST dated 01.03.2006 and service tax can be paid at composite rate under Work Contract Services? - HELD THAT:- The appellant would have been held entitled for the benefit of composition scheme. However, the appellant cannot gain both the benefits i.e. of abatement as well as of composition for rendering Works Contrat Service. Since appellant is held entitled for abatement of 60% of tax amount on the amount received for rendering the Work Contract Services, composition scheme cannot simultaneously been applied. However, issue stands decided in favour of the appellant holding him entitled for the abatement in terms of Notification No 01/2006 dated 01.03.2006. Invocation of Extended period of limitation - onus on the department to produce evidence to prove a positive act - HELD THAT:- The non-payment of service tax is not intentional. The appellant had not even got himself registered due to the said bona fide belief. In light of the said belief the onus was of the department to produce evidence to prove a positive act on the part of the appellant that the evasion of duty was intentional or mala fide, but there is no such evidence - the present can be a case nothing more than that of negligence on the part of the appellant, extended period should not have been invoked by the department. The demand raised for providing Works Contract Service for laying the railway tracks and for constructing a drain is confirmed but for the normal period with the benefit of abatement at the rate of 67% in terms of Notification No. 01/2006. The demand under Construction of Residential Complex Service is also hereby set aside. The entire demand for the extended period is hereby set aside - Appeal allowed in part.
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2024 (1) TMI 581
Demand of differential service tax - installation of towers by denying the benefit of abatement under notification no. 1/2006-ST dated 1.3.2006 along with equal amount of penalty under section 78 - demand under Rule 6(3) being 6%/8% of the value of exempted services rendered in the state of Jammu and Kashmir - denial of CENVAT credit - levy of penalty u/s 78 - extended period of limitation - penalty of Rs. 5,00,000/- imposed on the appellant under Rule 26(2) of the Central Excise Rules, 2002 and penalty u/s 78. Denial of abatement under notification no. 1/2006-ST and consequential demand - HELD THAT:- So far as the inclusion of the value of the towers is concerned, the Explanation to entry no. 5 of the notification relevant to this case states that the gross amount includes the value of the plant, machinery and equipment and parts and any other material sold during the course of providing erection, commissioning or installation service. Since the towers are sold separately under a separate invoice and not during the course of providing the service, we find that the value of the tower need not be included. However, as the appellant had, undisputedly, availed CENVAT credit of input services, it cannot avail the benefit of the abatement under this exemption notification. The CBEC s Circular relied upon by the appellant does not carry its case any further as it was issued clarifying the scope of another exemption notification and it does not help the appellant s case - The appellant made an alternative claim that its service should be classified as works contract service under section 65(105)(zzzza) and it should be allowed to pay tax under Rule 2A (1) (ii) (A) of the Service tax (Determination of value) Rules, 2006 which the Commissioner had not considered. As the appellant s service was classified as erection, commissioning and installation service under section 65(105) (zzd) and it claimed exemption notification accordingly. The classification cannot change because the appellant s claim to an exemption notification was not accepted - this question is answered in favour of the Revenue and against the appellant. Demand under Rule 6(3) of the CCR - HELD THAT:- Evidently, the services rendered in J K were not taxable at all as the provisions of service tax did not extend to that State. In other words, it was beyond the taxable territory. The appellant had wrongly taken CENVAT credit of input services of the service tax wrongly paid by its sub-contractor. Once this amount of Rs. 3,02,408/- is reversed, the requirement under Rule 6(1) of CCR is fully met and therefore, Rule 6(3) will not apply. According to the appellant, CENVAT credit of this amount has already been denied to it as a part of CENVAT credit of Rs. 13,45,364/-. Therefore, the demand of an amount under Rule 6(3) therefore, needs to be set aside - Needless to say that the appellant could not have taken credit of an amount paid under mistake of law because CENVAT credit can only be taken of the service tax paid and not of any amount paid. If service tax is not chargeable, what was paid was not service tax and there is no provision under the CCR to allow credit of any amount paid as service tax. If the amount was paid by the sub-contractor under the mistake of law or fact, it can claim refund of such an amount. Wrong availment of CENVAT credit - HELD THAT:- CENVAT credit of an amount which is not service tax but erroneously deposited under mistake of law or fact is not service tax and credit of such an amount is not available under CCR. CENVAT credit on the invoices where the address of the head office or wrong address is mentioned cannot, be a ground to deny CENVAT credit. Where the service tax registration code is not mentioned in the invoices, the appellant claims to have cured this defect and therefore, it is not found that CENVAT credit can be denied. However, where the original copies of the invoices are not available, CENVAT credit cannot be allowed on the strength of photocopies because photocopies of invoices are not valid documents under Rule 9 of CCR to allow CENVAT credit. Allowing such a credit can result in utter chaos because several copies of any invoice can be made and credit can be taken on them - CENVAT Credit of the amount deposited by the sub-contractors for the services rendered in J K and the CENVAT credit on photocopies of invoices are not admissible is not admissible. Rest of the CENVAT Credit is admissible. Invoking extended period of limitation and imposition of penalty under section 78 of the Finance Act, 1994 - HELD THAT:- Since the appellant had not disclosed the facts which were found from the appellant s own records when audited and investigated and since the appellant has been a long established company, the presumption of wilful suppression of facts was drawn in the impugned order. It is found that no legal basis for such a presumption. The appellant is only required to disclose such facts as are required in the ST-3 returns. If these returns require aggregate values of say, services rendered and service tax paid, there is no scope for the appellant to disclose more facts which to the department in its returns. The scheme of the service tax law is clear. The appellant is required to self-assess service tax, pay it and file returns. The central excise officer with whom the return is filed is required to scrutinize it. If no return is filed but the return is filed and the self assessment is not done correctly, the officer can make his best judgment assessment under section 72 and raise a demand. For this purpose, the officer can call for any records, etc. and the assessee is bound to provide them - From the SCN it is evident that all facts and figures were in the appellant s records but they were belatedly scrutinized by auditors and investigating officers and the jurisdictional central excise officer has either not scrutinized the returns or having scrutinized, not issued a demand under section 73 - the demand for extended period of limitation and the penalties under section 78 set aside. Penalty under Rule 26(2) of Central Excise Rules, 2002 - HELD THAT:- This penalty was imposed by the Commissioner on the ground that the Faridabad office of the appellant tampered with the addresses to facilitate availment of CENVAT credit by the appellant s Rajasthan unit. As the CENVAT credit allowed on these invoices, the penalty under Rule 26(2) is set aside. Appeal allowed in part.
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2024 (1) TMI 580
Maintainability of appeal - monetary limit involved in the appeal - Short payment of Service Tax - Setting aside the appropriation of the refund amount - wrongly availing the Cenvat credit and utilising the same towards payment of service tax liability - HELD THAT:- The question referred does not fall in any of the category of substantial questions referred in the instructions as exceptions whereby an appeal would be maintainable even if the monetary limit involved is lower than the prescribed limit. It is not that the present appeal by the Department where the revenue involved is less than what has been fixed for filing an appeal to CESTAT would be maintainable and hence the same needs to be dismissed on that ground itself. The appeal dismissed for low tax effect, leaving the question of law, if any, open.
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2024 (1) TMI 579
Classification of service - works contract service or erection, commissioning and installation service? - SCN alleged that the appellant was providing erection, commissioning or installation, but the demand has been confirmed under work construction service by the Commissioner (Appeals) for the period post 01.06.2007 - Extended period of Limitation - HELD THAT:- The impugned order, therefore, deserves to be set aside for this reason alone since the demand made under a particular category of service found to be incorrect in a subsequent proceeding, cannot be sustained. The Commissioner (Appeals) proceeded to confirm the demand under works contract service for the period post 01.06.2007 even though the show cause notice had proposed the demand under the category of erection, commissioning or installation service - the order passed by the Commissioner (Appeals), therefore, deserves to be set aside on this ground alone. Extended period of Limitation - HELD THAT:- It would not be necessary to examine whether the extended period of limitation could have been invoked in the facts and circumstances of the case. The order dated 28.03.2018 passed by the Commissioner (Appeals) is, accordingly, set aside and the appeal is allowed.
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2024 (1) TMI 578
Seeking refund of service tax wrongly paid on ocean freight under reverse charge mechanism - rejection of refund on the ground that since bill of entry was filed in the name of the Appellant, hence the Appellant is the service recipient - HELD THAT:- The constitutional validity of Notification No.15/2017-ST dated 13.04.2017 and Notification No.16/2017-ST dated 13.04.2017 making the importer as a person liable to pay service tax on services by way of transportation of goods by a vessel from a place outside India up to the custom station of clearance in India, even in case of C.I.F contracts, was challenged before Hon ble Gujarat High Court in MESSRS SAL STEEL LTD. 1 OTHER (S) VERSUS UNION OF INDIA [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] . The validity of Circular No.206/4/2017-ST dated 13.04.2017 was also challenged in the said writ petition, where it was held that The Notification Nos. 15/2017-ST and 16/2017-ST making Rule 2(1)(d)(EEC) and Rule 6(7CA) of the Service Tax Rules and inserting Explanation-V to reverse charge Notification No. 30/2012-ST is struck down as ultra vires Sections 64, 66B, 67 and 94 of the Finance Act, 1994; and consequently the proceedings initiated against the writ applicants by way of show cause notice and enquiries for collecting service tax from them as importers on sea transportation service in CIF contracts are hereby quashed Thus, the issue involved in the present case is no more res-integra and the Appellant cannot be fastened with any service tax liability on ocean freight. By respectfully following the dicta laid down in SAL Steel Ltd., the appeal filed by the Appellant is allowed.
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Central Excise
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2024 (1) TMI 577
Clandestine removal - clearance of plywood and block board evading Central Excise duty - allegation only on the basis of the alleged supply of one of the raw materials as per the weighment slips recovered from Shri Ashok Aggarwal - HELD THAT:- Department did not find it convenient to investigate the actual receipt of formaldehyde by the appellants from Shri Ashok Aggarwal, leave alone the establishment of purchase of other raw materials, consumption of electricity, deployment of labour, manufacture of excisable goods, clandestine removal, sale of excisable goods and receipt of sale proceeds etc. Department argues that a case of clandestine removal cannot be and need not be established with a mathematical precision. A serious charge like clandestine removal cannot be levelled on the basis of a mathematical calculation i.e just by calculating a quantum of plywood that could have been manufactured using the alleged receipt of formaldehyde. The Department has not made out any case of clandestine removal against the appellants and therefore, the impugned order is not sustainable and is liable to be set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2024 (1) TMI 576
Refusal to grant the input tax credit - Section 28(2)(i) U.P. VAT Act - levy of Entry Tax - HELD THAT:- The High Court, without issuing notice to the respondent, proceeded to set aside the judgment of the Tribunal and remanded the matter back to the Assessing Authority. The High Court ought not to have passed such an order without giving an opportunity to the respondent. The appellant has right to be heard if the order of the Tribunal standing in its favour is to be set aside. At the same time, the High Court is under a duty to provide an opportunity to the affected party. Appeal allowed.
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