Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 16, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Attachment of Bank account of petitioner - it is the Petitioner to blame for not taking recourse to Rule 159(5) of the Rules early - The contention of the Petitioner that the authority will not be able to decide the issue of jurisdiction is not correct as if the Petitioner demonstrates that the action taken under Section 83 of the Act is not proper in law and on facts, the concerned Authority can only release the attachment as per the said provision. - HC
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Principles of natural justice - no notice of hearing - The order impugned dated May 25, 2022 was passed without hearing the assessee and without affording the assessee an opportunity of being heard. Since the nature of the order was such that the assessee’s participation was necessary prior to the same being made, the order impugned dated May 25, 2022 is set aside and the position is set back to the stage of the show-cause notice - HC
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Scope of Advance Ruling application - In the instant case, the application seeking advance ruling was filed on 17.03.2022 before the RAAR with respect to supplies already being undertaken, GST being paid and GST returns has been submitted. Hence, the case is out of the purview of the Advance Ruling. - AAR
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Exemption from GST - pure services or not - Project Development Service provided by the applicant to the recipient under the Contract from District Urban Development Agency which is District Level Agency of State Urban Development Agency (SUDA) and the Project Management Consultancy services under the Contract for PMAY - Such services would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) - exempt from the payment of GST - AAR
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Refund of CGST - Section 54 of CGST Act - Export of Goods - they did not have Letter of Undertaking and the refund sought for is qua zero rated sales made to overseas purchases (exports) - respondent directed to consider, process and make orders in the refund application - HC
Income Tax
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Validity of proceedings u/s 153A - Before this Court also the Revenue has not been able to demonstrate that there exists in the records of the Revenue a valid search warrant authorizing the searches that were conducted in the premises of the Respondent-Assessee - De hors such search warrant, validly issued to authorize the search, the question of initiating proceedings u/s 153A simply did not arise. - HC
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Reopening of assessment u/s 147 - Reason to believe - change of opinion - the reassessment is being resorted to only on account of ‘change of opinion’ of the Assessment Officer without there being any fresh tangible evidence for reopening the assessment proceedings. - Notice quashed - HC
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Levy of penalty u/s. 271B - Non compliance requirement in respect of special audit u/s. 142(2A) - when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the person interested had no control, the circumstances will be taken as a valid excuse. - No penalty - AT
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Revision u/s 263 - AO did not initiate penalty proceedings u/s. 271(1) (c) - No hesitation in holding that the CIT is not correct in assuming jurisdiction u/s 263 of the income tax act where the learned assessing officer has failed to initiate penalty proceedings and also does not record any satisfaction of furnishing of inaccurate particulars or concealment of income in the assessment order. - AT
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TP Adjustment - international transactions u/s. 92B or not - In absence on any such agreement, the first and primary condition of holding the transaction in question as an international transaction remains to be fulfilled. As the assessee cannot be held liable for expenses incurred on advertising marketing and promotion as an international transaction of AMP, the consequent benchmarking by the Ld. TPO is also not justified. - AT
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Additions against fixed deposit in the name of family members and interest income - Admittedly, the amount of fixed deposit in the name of family members can adequately be sourced from the income offered by the assessee. Even otherwise, said addition cannot be made in the hands of the assessee as the fixed deposits are not in the name of the assessee and it is a search case and the assessment has to be done as per the evidence found during the course of search and fixed deposits are in the name of family members. - AT
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Residential Status of Individual - permanent home test - habitual abode - number of days of stay in India - Income deemed to accrue or arise in India - No doubt the tie-breaker questionnaire having importance in determining the residency of a person, but cannot be exclusively taken into consideration as a base for deciding the residency. The permanence of home can be determined on qualitative and quantitative basis. It is not in controversy that the Appellant for the period under consideration has shown the income earned in Singapore and paid the taxes in Singapore. Therefore, as per Treaty, he cannot be subjected to tax in India in order to avoid double taxation. - AT
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Denial of depreciation on goodwill arising from scheme of amalgamation - on one hand in the remand proceedings, the AO for the first time raised doubts about the valuation report, however, on the other hand AO has allowed depreciation on intangible assets @ 25%, which were also acquired by the assessee and were also revalued in the books of the assessee upon amalgamation. - AO directed to grant depreciation on goodwill arising on account of amalgamation of subsidiary company with the assessee. - AT
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TP Adjustment - where the Tribunal has accepted the international transaction to be at Arm’s Length Price in the hands of AE, then the international transaction that the assessee had with the AE’s to be also at Arm’s Length Price and therefore no adjustment was warranted in the facts and circumstances of the case. - AT
Customs
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Seeking provisional release of goods - If the goods are confiscated and allowed redemption on payment of fine such fine has to be recovered from the appellant and some security is necessary to cover it if the goods are to be released provisionally before adjudication itself. Considering the overall factual matrix of this case we modify the impugned order reducing the amount of bank guarantee to 5% of the value of the goods. - AT
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Absolute Confiscation of re-imported goods - petroleum coke - As per para 1.05 (Clause B) of Chapter 1 of FTP 2015-2020, provides that in case of change of policy from free to restricted/prohibited etc. the imports or export already made before the date of such regulation/restrictions will not be effected. Admittedly, the export in this case was made through shipping bill dated 01.12.2017, which is before the date of restriction imposed vide aforementioned Notifications - the re-import by the appellant of the rejected goods, has to be treated as freely importable under the Foreign Trade Policy. - AT
IBC
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Initiation of CIRP - Financial creditors - application dismissed primarily on the ground of limitation - existence of the outstanding debt and default - whether deduction of TDS is sufficient to prove that interest amount have been paid? - Reliance on the Note in the Balance Sheet - There is no acknowledgement or acceptance of the debt within that period - Appeal dismissed - AT
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Demand of lease amount during moratorium period - whether the Adjudicating Authority has rightly applied the explanation under Section 14(1)(d) of the Code for the purpose of directing the Appellant to pay the lease premium amount and the lease rent to the Respondent (NOIDA)? - The impugned order is patently illegal and deserves to be set aside - AT
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Initiation of CIRP - Financial debt or not - application dismissed by the NCLT - The definition of debt and default which is the only thing required for the purpose of maintaining the application under Section 7 of the Code, is satisfied - the Adjudicating Authority has committed a patent error in misreading and mis-appreciating the evidence available on record while dismissing the application, filed by the Appellant for the initiation of CIRP of the Corporate Debtor/Respondent. - AT
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Liquidation of the Corporate Debtor / Company - Aggrieved Person - Members of the suspended Board of Directors - Considering the fact that the Appellant / Petitioner who was a Promoter / Shareholder, invested in the Equity Shares at Rs.10/- each of the Corporate Debtor / Company (431840 Equity Shares), he is not an Aggrieved Person, in stricto sensu under Section 61 of the I & B Code, 2016, especially, in the light of Committee of Creditors, having passed a Resolution for Liquidation of the Corporate Debtor - AT
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Validity of Approval of Resolution Plan - Litigation regarding dispute over land is pending before Civil Court on behalf of third party - Land belong to corporate debtor or not - in compliance of Regulation 38 of the CIRP Regulations, 2016 or not - this Tribunal does not have jurisdiction to decide the title of the land more so when a Civil Suit has already been preferred by the ‘Appellant’ herein and they have already opted for seeking a remedy before the Civil Court. - Appeal dismissed - AT
Service Tax
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Benefit of SVLDRS - Revenue filed the appeal after the expiry of limitation of Scheme - the appeal of the Department has been filed after the expiry of period of limitation prescribed under Section 86(3) of the Finance Act as the said provision provides a period of limitation of three months which has expired on 14.04.2020. Thus, it transpires that in the opinion of the respondent filing of the appeal has led to change in the category of petitioner from “arrear category” to “litigation category” which view is beyond the letter and spirit of the scheme. - Benefit of SVLDRS extended - HC
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Extended period of limitation - Business Auxiliary Service or not - sharing of revenue - the appellant had a bona fide belief in non payment of Service Tax. The appellant also submitted that this case is falling under the principle of revenue neutrality in as much as the tax payment if any made by the appellant is available as the Cenvat credit to the contractor who has used the premises of the appellant. - The demand is set aside on the ground of limitation itself - AT
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CENVAT Credit - input services or not - The appellant has successfully established that these three zonal offices are integral part and parcel of the appellant only and the fact that they are located separately hardly makes any difference. Therefore, the appellant is justified in availing Cenvat Credit in respect of input services availed by its Zonal Training Centre, Zonal Office and Zonal Audit Office (ZAO) in terms of Rule 2(l) of Cenvat Credit Rules, 2004 and the services received by these zonal offices fall under the definition of ‘input service’ as provided by Rule 2(l) ibid. - AT
Case Laws:
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GST
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2023 (1) TMI 581
Input tax credit - time limitation - constitutional validity of Rule 117 of Jharkhand Goods and Services Tax Rules, 2017 - authorisation of rule-making authority to prescribe a time limit within which such FORM GST TRAN-1 is to be filed in order to claim such input tax credit (ITC) - transitional credit - HELD THAT:- As per the request made by learned counsel for the petitioner the writ petition has become infructuous. The petitioner has already filed revised TRAN-I during window period granted by the Hon'ble Supreme Court in the case of Union of India and another versus Filco Trade Centre Pvt. Ltd. and another [ 2022 (7) TMI 1232 - SC ORDER] . Having regard to the fact that the grievance of the petitioner has already been redressed in view of the judgment rendered by the Apex Court in the case of Filco Trade Centre Pvt. Ltd. and another, writ petition is disposed of.
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2023 (1) TMI 580
Attachment of Bank account of petitioner - Section 83 of the Maharashtra Goods and Services Act, 2017 - HELD THAT:- The Division Bench of this Court in the case of M/S. JAYCHEM ENTERPRISE PVT. LTD. VERSUS ADDITIONAL DIRECTOR GENERAL, NAGPUR ZONAL UNIT ORS. [ 2021 (7) TMI 430 - BOMBAY HIGH COURT ] dealt with a challenge to an action taken under Section 83 of CGST Act, where it was held that Since the petitioner has not taken to recourse to subrule (5) of Rule 159 of the said Rules, we decline interference at this stage. However, we grant the petitioner a week s time to approach the Additional Director General under the said provision and if such an approach is made, a reasoned order shall be passed after extending an opportunity of hearing. We find no reason, nor we are shown any, as to why we should not take the same view as taken in the case of Jaychem Enterprise Pvt. Ltd. and ask the Petitioner to approach the concerned authority under Rule 159 (5) of the GST Rules for revocation of the attachment - The contention of the Petitioner that the authority will not be able to decide the issue of jurisdiction is not correct as if the Petitioner demonstrates that the action taken under Section 83 of the Act is not proper in law and on facts, the concerned Authority can only release the attachment as per the said provision. The grievance of the Petitioner that the bank account has remained attached for a long period of time, is to be noted but partially it is the Petitioner to blame for not taking recourse to Rule 159(5) of the Rules early - Be that as it may, since the bank account is attached in April 2022, we direct if the Petitioner approaches the authority under Rule 159 (5) of the Rules within one week, the concerned Authority will make an endeavour to take a decision thereupon as per law - petition disposed off.
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2023 (1) TMI 579
Violation of principles of natural justice - fair opportunity of hearing not provided - ex-parte order - HELD THAT:- This Court, notwithstanding the statutory remedy, is not precluded from interfering where, ex facie, it is opined that the order is bad in law. This is for two reasons- (a) violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case; (b) order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences. All issues of fact and law ought to have been dealt with, even if the proceedings were ex parte in nature. Impugned order set aside - petition disposed off.
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2023 (1) TMI 578
Principles of natural justice - case is that no notice of hearing before passing the impugned order was issued to or received by the petitioning assessee - HELD THAT:- Since the order impugned dated May 25, 2022 was founded on the basis that the assessee had due notice and knowledge of dates of hearing fixed but the assessee had failed to be represented in course thereof, and it now appears that the assessee may not have received any of the three notices said to have been issued by email in April, 2022, the order impugned may not have any legs to stand on. The Department maintains that the email address to which the three notices of April, 2022 were sent was furnished by an authorised representative of the assessee, but there is no document to indicate the same and it is submitted on behalf of the Department that such information was furnished verbally. The affidavit-in-reply filed by the assessee has robustly denied that the relevant email address to which the three notices of April, 2022 were issued belonged to the assesse or that such address had been furnished by any authorised officer of the assesse. It is apparent that the Department has failed to discharge the burden of proving that the notices for hearing had been served on the assessee for the assessee to be penalised for not availing of the opportunity of hearing. The order impugned dated May 25, 2022 was passed without hearing the assessee and without affording the assessee an opportunity of being heard. Since the nature of the order was such that the assessee s participation was necessary prior to the same being made, the order impugned dated May 25, 2022 is set aside and the position is set back to the stage of the show-cause notice - Petition allowed.
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2023 (1) TMI 577
Scope of Advance Ruling application - Classification of supply - supply of goods or supply of services - rate of GST - supply of food and beverages by the eating joints - Dine In - Take Away - Delivery - HELD THAT:- The applicant filed their application before the Rajasthan Authority for Advance Ruling (RAAR) on 17.03.20221.e. much later from the discharging his GST liability on restaurant services supplied by him. The clarification vides Circular No. 164 /20 /2021-GST dated 6.10.2021has already been issued by the Government and Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 as amended is very much clear on the issue. The applicant is well awared about the notification and circular and discharging his tax liability in accordance to them - applicant motto is to find out whether the mechanism opted by him for payment of GST on said service is right or wrong, which is against the spirit of advance ruling. The scope of the ruling for Authority for Advance Ruling (AAR) is limited to the transactions being undertaken or proposed to be undertaken on the matters which are not sorted out - In the instant case, the application seeking advance ruling was filed on 17.03.2022 before the RAAR with respect to supplies already being undertaken, GST being paid and GST returns has been submitted. Hence, the case is out of the purview of the Advance Ruling.
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2023 (1) TMI 576
Exemption from GST - pure services or not - Project Development Service provided by the applicant to the recipient under the Contract from District Urban Development Agency which is District Level Agency of State Urban Development Agency (SUDA) and the Project Management Consultancy services under the Contract for PMAY - activity in relation to function entrusted to Panchayat or Municipality under Article 243G or Article 243 W respectively, of the Constitution of India or not? - applicability of serial number 3 of Notification No. 12/2017-Central Tax (Rate) dated 28 June, 2017, as amended (S. No. 3A) by Notification No. 2/2018- Central Tax (Rate) dated 25 January, 2018 issued under Central Goods and Services Tax Act, 2017 (CGST) or not - HELD THAT:- The District Urban Development Agency is subordinate district level office of SUDA as such, DUDA also falls under Government category. As per the organizational structure of DUDA as available on the website upsuda.org, the District Magistrate of the district concerned will be the ex-officio chairman of DUDA. Project director and project officers are also appointed by the U.P. government. DUDA utilizes the fund which is released by the SUDA - Further, as per website of Pradhan Mantri Awas Yojana-Housing for All (Urban), Ministry of Housing and Urban Affairs, the PMAY is a Scheme to provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for Rehabilitation of existing slum dwellers using their land as a resource through private, participation, and affordable Housing in Partnership. As per the details available on website SUDA is the state level nodal agency for PMAY(U) in the state of Uttar Pradesh. Functions entrusted to Panchayats/Municipalities - HELD THAT:- The Consultancy services rendered by the Applicant under the contract with DUDA, and for PMAY are in relation to functions entrusted to Municipalities/Panchayats under Article 243W / 243G of the Constitution of India. Whether such services provided by the Applicant would qualify as Pure services? - HELD THAT:- The services mentioned in the contract would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods) as provided in serial number 3 of Notification No. 12/2017- Central Tax (Rate) dated 28 June. 2017 issued under Central Goods and Services Tax Act, 2017 ('CGST') and corresponding Notifications No. KA.N.I.-2-843/X1- 9 (47) / 17-UP. Act-1 - 2017 - Order - (10) - 2017 Lucknow, dated June 30, 2017 issued under Uttar Pradesh Goods and Service Tax Act, 2017. Thus, the Services rendered by the appellant to the State Urban Development Agency, Uttar Pradesh (SUDA), and for PMAY are in relation to functions entrusted to Municipalities under Article 243 W and to Panchayats under Article 243G of the Constitution of India and such services would qualify as Pure Service (excluding works contract service or other composite supplies involving supply of any goods).
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2023 (1) TMI 559
Refund of CGST - Section 54 of CGST Act - Export of Goods - they did not have Letter of Undertaking and the refund sought for is qua zero rated sales made to overseas purchases (exports) - HELD THAT:- It will suffice to say that the aforementioned refund application dated 01.06.2019 was followed by as many as four reminders dated 19.07.2019, 29.07.2019, 05.12.2019 and 31.10.2022. It is rather intriguing that a simple refund application under Section 54 Central Goods and Service Tax Act, 2017 has been kept pending for such length of time. The captioned writ petition is disposed of with a directive to the sole respondent to consider, process and make orders in the refund application of writ petitioner dated 01.06.2019 as expeditiously as the business of the sole respondent would permit and in any event within four weeks from today i.e., on or before 10.02.2023.
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Income Tax
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2023 (1) TMI 575
Reopening of assessment u/s 147 - Reason to believe - change of opinion - reassessment proceedings after a period of 4 years - HELD THAT:- Reasoning assigned by the ITO for reopening the proceedings on the ground that the material facts were not fully and truly disclosed by the petitioner and thus, his income escaped assessment, is absolutely unfounded. A clear perusal of the proviso to Section 147 makes it clear that reassessment proceedings after expiry of four years from the end of the relevant assessment year can only be initiated in case, there is tangible material with the AO to show that the assessee had failed to fully and truly disclose all material facts necessary for his assessment for that assessment year. This Court, after analysis of material facts available on record, is of a categoric opinion that the assessee disclosed all material facts truly and fully while furnishing the return for the Assessment Year 2013-14 and hence, there was no justification for invoking the proviso to Section 147 so as to initiate reassessment proceedings after a period of 4 years. Reassessment notice is definitely time barred. In addition thereto, the reassessment notice has been issued only on account of change of opinion , plain and simple, without any tangible fresh material being available to the ITO for reopening the assessment proceedings. Resultantly, the impugned notice is declared to time barred and cannot be saved by proviso to Section 147 of the Income Tax Act. In addition thereto, the reassessment is being resorted to only on account of change of opinion of the Assessment Officer without there being any fresh tangible evidence for reopening the assessment proceedings. Hence also, the impugned notice u/s 148 runs foul of the Kelvinator of India Limited [ 2010 (1) TMI 11 - SUPREME COURT ] and thus, the same cannot be sustained and is liable to be struck down. - Decided in favour of assessee.
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2023 (1) TMI 574
Validity of proceedings u/s 153A - Whether no search warrant at all issued preceding the search conducted in the residential and office premises of the Respondent? - HELD THAT:- As far as the present cases are concerned, this Court in the first round of litigation accepted the legal position that without there being a valid search warrant authorizing the search in the premises of the Assessee u/s 132 question of initiating proceedings under Section 153A of the Act did not arise. The matter had been remanded to the ITAT only for determining the factual aspect of the existence of a valid search warrant. Before this Court also the Revenue has not been able to demonstrate that there exists in the records of the Revenue a valid search warrant authorizing the searches that were conducted in the premises of the Respondent-Assessee on 9th and 10th August, 2005. De hors such search warrant, validly issued to authorize the search, the question of initiating proceedings u/s 153A simply did not arise. Since the issue has turned purely on facts, the Court is unable to find any error having been committed by the ITAT in concluding that the entire assessment proceedings under Section 153A of the Act against the Respondent-Assessee were invalid. Court is unable to be persuaded to frame the question as urged by the Revenue in these appeals.
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2023 (1) TMI 573
Levy of penalty u/s. 271B - Non compliance requirement in respect of special audit u/s. 142(2A) - AO noted during the course of search, various incriminating documents/information were seized / impounded - HELD THAT:- The issue in these present appeals before us was elaborately dealt in another set of appeals in the case of Ashesh Agrawal [ 2022 (12) TMI 1223 - ITAT LUCKNOW] though in respect of penalty imposed u/s. 271(1)(b) of the Act. The reasonable cause as stated u/s. 273B considered in those stated appeals relating to penalty imposed u/s. 271(1)(b) exists and applies in the present set of appeals also. As this case of Ashesh Agrawal was also part of the same group of Rich Udyog Net Worth Ltd., the observations and findings given by us in the case of Ashesh Agrawal (supra) applies mutatis mutandis in the present set of appeals before us wherein held relevant ledgers for all the years under consideration were impounded by the Ld. AO in the course of assessment itself which has prevented the assessee in making compliance to the requirements of the special auditors for getting the special audit u/s. 142A of the Act completed. Law does not compel one to do that which one cannot possibly perform. Where the law creates a duty or charge and the party is disabled to perform it, without any default in him and has no remedy over it, there the law will, in general, excuse him. Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the person interested had no control, the circumstances will be taken as a valid excuse. Assessment proceedings furnished by the Ld. Counsel, it is evidently demonstrated that there exists a reasonable cause within the meaning of section 273B of the Act which prevented the assessee in meeting the compliance requirement in respect of special audit u/s. 142(2A) of the Act. - Levy of penalty directed to be deleted.
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2023 (1) TMI 572
Deduction u/s 80P denied - Assessment u/s 143 - denial of natural justice - grievance of assessee that the principles of natural justice are not extended to the assessee inasmuch as without seeking and considering any explanation of the assessee, the deduction under section 80P is denied to the assessee at the stage of 143(1) and ends of justice would be met, if the matter is restored to the file of learned Assessing Officer for verification of such a claim, after giving an opportunity to the assessee - HELD THAT:- The very same course is adopted by the Co-ordinate Bench in the case of Shri Nava Ujala Seva Sahakari Mandali Ltd. [ 2022 (11) TMI 128 - ITAT RAJKOT ] wherein the Bench thought it fit to restore the issue for fresh adjudication on merits to the learned CIT(A). However, since the learned Assessing Officer did not consider the merits of this issue, we deem it just and proper to restore it to the file of learned Assessing Officer instead of learned CIT(A). With this view of the matter,restore the issue to the file of learned Assessing Officer for considering the allowability of section 80P of the Act on merits. We make it clear that we did not pronounce any finding in respect of applicability or otherwise of Section 80AC clause (ii) of the Act. Appeal of the assessee is treated as allowed for statistical purposes.
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2023 (1) TMI 571
Revision u/s 263 - PCIT has directed the AO to initiate penalty proceedings u/s. 271(1) (c) on disallowance u/s 37 (1) - HELD THAT:- Decisions relied upon by the PCIT are with respect to when the order dropping the penalty proceedings are passed by the learned assessing officer whether they are subject to revision u/s 263 of the act or not. This is not the issue before us, the issue before us is whether when the AO has failed to record any satisfaction about the concealment or furnishing of the particulars of income and fails to initiate penalty proceedings u/s 271 (1) (C) of the act, whether such an order can be revised u/s 263 of the income tax act. Therefore, those decisions do not apply to the facts of the case. No hesitation in holding that the CIT is not correct in assuming jurisdiction u/s 263 of the income tax act where the learned assessing officer has failed to initiate penalty proceedings and also does not record any satisfaction of furnishing of inaccurate particulars or concealment of income in the assessment order. Assessee appeal allowed.
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2023 (1) TMI 570
Ex-parte order passed by NFAC - Violation of Principles of Natural Justice - Addition u/s 56 (2)(viib) AND Disallowance under section 40A(2)(b) - portion the shares are issued to a non-resident and to a venture capital company/fund - HELD THAT:- It is evident that order passed by the Ld. CIT(A) is in violation of the principles of natural justice and therefore, we feel it appropriate to restore this matter back to the file of the Ld. CIT(A) for passing a reasoned order after taking into consideration submission of the assessee. The grounds of appeal of the assessee are accordingly allowed for statistical purposes.
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2023 (1) TMI 569
TP Adjustment - international transactions u/s. 92B - Absence of prior agreement (formal or informal) - adjustment in respect of excess AMP expenditure - HELD THAT:- As per the definition of international transactions u/s. 92B of the Act means a transaction between two or more associated enterprises, either on both of whom are non-residents, in the nature of purchase, sale, etc. or other transactions having bearing on profit, income or loss of such enterprises. The international transaction also include a mutual agreement or arrangement for allocation or apportionment or any contribution to, any cost or expenses incurred or to be incurred in connection with a benefit, service or facility provided or to be provided by any one or more of such enterprises. As per section 92B(2) of the Act the transaction entered into between two associated enterprises shall be deemed to be an international transaction if there exists a prior agreement in relation to the relevant transaction between such other person and the associated enterprises. In the case under consideration, the AO/TPO did not bring on record exists of any formal or informal agreement between the assessee and AE to share/reimburse AMP expenses incurred by the assessee in India. In absence on any such agreement, the first and primary condition of holding the transaction in question as an international transaction remains to be fulfilled. As the assessee cannot be held liable for expenses incurred on advertising marketing and promotion as an international transaction of AMP, the consequent benchmarking by the Ld. TPO is also not justified. As relying on assessee own case [ 2020 (10) TMI 924 - ITAT MUMBAI] we uphold the finding of the Ld. CIT(A) that AMP expenditure is not an international transaction. The grounds of the cross-objection of the assessee are accordingly allowed. Since, we have already held that AMP expenditure is not an international transaction therefore, adjustment to said transaction for arm's length price is rendered infructuous and no adjustment could have been made. The ground of appeal of the Revenue is accordingly dismissed.
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2023 (1) TMI 568
Adjustment u/s 143 (1) - Reduction in Carry forward losses - violating the principles of natural justice - claim of carry forward of the loss has been reduced by an amount without being provided an opportunity to the assessee - HELD THAT:- DR was asked to file copy of any notice or intimation issued by the Assessing Officer prior to adjustment to the amount of carry forward of loss by the assessee. DR expressed his inability in producing the said record. CIT(A) has also not adjudicated issue raised by the assessee in the appeal. From para seven of the written submission of the assessee also we find that this case was subsequently selected for scrutiny and order under section 143 (3) of the Act has been passed. Assessee has apprised as of the fact that the Assessing Officer has till date not responded to the rectification application filed by the assessee. Thus the grievance of the assessee has neither been attended by the Assessing Officer nor by the CIT(A). We feel it appropriate to restore the matter of amount of loss for which the assessee is eligible for carry forward to the file of the AO for avoiding multiplicity of the proceedings, because rectification proceeding of the assessee are already pending before the AO. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.
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2023 (1) TMI 567
Additions towards fixed deposit in the name of family members - Addition of interest income on such FDs - fixed deposits found during the course of search - assessee has admittedly shown higher income in its computation of income and consequently, CIT(A) has deleted the disallowance but has enhanced the assessment by directing the AO to bring to tax the income offered by the assessee in its computation of income - HELD THAT:- We are live to the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] wherein, it has been clearly held that in the absence of a revised return being filed, only the Appellate Authority can direct the Assessing Officer to consider the assessment on the basis of the computation of income, which is filed in the course of appellate proceedings. A perusal of the order of the Ld. CIT(A) clearly shows that the Ld. CIT(A) has called for the remand report and the Assessing Officer has accepted that the assessee has the source for the fixed deposit of Rs. 5 crores. Admittedly, the amount of s. 1.5 crores of fixed deposit in the name of family members can adequately be sourced from the income offered by the assessee. Even otherwise, said addition cannot be made in the hands of the assessee as the fixed deposits are not in the name of the assessee and it is a search case and the assessment has to be done as per the evidence found during the course of search and fixed deposits are in the name of family members. Coming to the issue of interest, admittedly, the assessee has shown actual interest income in the computation of income and the CIT(A) has directed for taxing for the actual interest income. This being so, we find no error in the findings of the Ld. CIT(A), which is hereby confirmed. Appeal of the revenue and the cross objection of the assessee are dismissed.
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2023 (1) TMI 566
Income deemed to accrue or arise in India - Residential Status of Individual - permanent home test - habitual abode - number of days of stay in India - resident of India for Global Taxation purposes and for the purpose of provisions of India-Singapore DTAA - Appellant have permanent home in India - whether the appellant is liable to be taxed in India qua the income earned during that period in Singapore - appellant sought exclusion of the income earned from 15th December, 2014 to 31st March, 2015 in Singapore, mainly on the ground that the Appellant resided in India for a period of 182 days or more and therefore, as per section 6(1)(a) of the Act, the Appellant has to be considered, as to be a resident of India - HELD THAT:- Case of the appellant is that the he is resident of both India and Singapore and have Tax Residency Certificate from Singapore Revenue Authorities for the calendar Year 2014-15. Also, the appellant is having Singapore Driving License and Overseas Bank Account and house in India was not available to the Appellant during Singapore assignment period, as the same was on rent. Therefore, the permanent home test for the period i.e. 6th December, 2014 to 31st March, 2015 goes in favour of the appellant. Further vital interest of Appellant was also lying in Singapore, because he shifted there with his family and started employment and earnings and savings there from. Accordingly, the Appellant qualified as ultimate Tax Resident of Singapore from 15th December, 2014 onwards as per Article 15(1) of the Treaty. Tie-Breaker Questionnaire, the Appellant specifically mentioned to have apartment on rent in Singapore as well and his wife and two daughters were also living along with him in the country of assignment, i.e., Singapore. The Appellant also held Driving License in both the countries and both the countries have been shown as country of residence on various official Forms and documents for the period from December, 2015 to June, 2016, further paid taxes in Singapore while working there from. Further mentioned that all income which will be paid in future (i.e., bonus for period Jan. 2016 to June 2016) for the work period in Singapore, will be taxable in Singapore. No doubt the tie-breaker questionnaire having importance in determining the residency of a person, but cannot be exclusively taken into consideration as a base for deciding the residency. The permanence of home can be determined on qualitative and quantitative basis. It is not in controversy that the Appellant for the period under consideration has shown the income earned in Singapore and paid the taxes in Singapore. Therefore, as per Treaty, he cannot be subjected to tax in India in order to avoid double taxation. Commissioner on the basis of tie-breaker questionnaire held that there is no doubt that even the centre of vital interest of the appellant are with India only and not with Singapore, as the majority of the savings, investments and personal bank accounts are in India, whereas it is a fact that the appellant has worked in Singapore during the period under consideration and stayed therein only. Therefore, his personal and economic relations (Centre of vital interests) at that particular time/period cannot be brushed aside, as the Appellant went to Singapore along with his family for earning income and consequently his personal and economic relations remained in Singapore only. As per Article 4(2)(b), habitual abode is also available for consideration in deciding the residency of a person. Habitual abode does not mean the place of permanent residence, but in fact it means the place where one normally resides. During the period under consideration, the Appellant resided in Singapore and had habitual abode therein only. Therefore, on this reason as well, the Appellant could be treated as resident of Singapore. Sub-section (4) of section 90 of the Act prescribes, an Appellant, not being a resident, to whom an agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless a certificate of his being a resident in any country outside India or specified territory outside India, as the case may be, is obtained by him from the Government of that country or specified territory. It is not the case here that the provisions of section 90(2) of the Act are not applicable to the instant case and the provisions of the Treaty and actions of the Appellant are contrary to the laws of the land and the Appellant has failed to produce the Tax Residency Certificate issued by the Singapore Authorities and not paid the relevant taxes in that country for the income earned during the period under consideration. On the aforesaid deliberations and analyzations and in the cumulative effects, we are unable to sustain the addition under challenge. Consequently, the addition is deleted and the Assessing Officer is directed to accept the revised return of income filed by the appellant.
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2023 (1) TMI 565
Revision u/s 263 - Deduction u/s 80P - assessee had earned interest from fixed deposits with banks which is not eligible for deduction u/s 80P - HELD THAT:- AO was correct in giving deduction u/s 80P to the assessee qua the impugned interest income. That also brings us to conclude that the assessment-order passed by Ld. AO is neither erroneous non prejudicial to the interest of revenue and therefore the PCIT was not justified in invoking the revisionary-action u/s 263. Being so, we quash the revision-order passed by Ld. PCIT and restore the original assessment-order passed by Ld. AO. Appeal of assessee allowed.
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2023 (1) TMI 564
Exemption u/s 80P(2)(a)(i) - assessee registered under Karnataka Souharda Sahakari Act, 1997 - HELD THAT:- Assessee registered under Karnataka Souharda Sahakari Act, 1997 - HELD THAT:- As in the case of Swabhimani Souharda Credit Cooperative Ltd. vs. Government of India [ 2020 (1) TMI 831 - KARNATAKA HIGH COURT] that a cooperative society registered under Karnataka Souharda Sahakari Act, 1997 within the meaning of section 2(19) of the Act should be considered a cooperative society placing reliance on the decision in the case of Government of India, Ministry of Finance vs. Karnataka State Souharda Federal Co-operative Ltd. [ 2022 (1) TMI 540 - KARNATAKA HIGH COURT] Therefore, the reasoning of the CIT(A) that the appellant society is not a cooperative society, cannot be accepted. Therefore, the income earned by the appellant society from its members on the credit is exempt from tax u/s 80P(2)(a)(i) of the Act. As regards income earned on advance income with nominal members, nominal members are treated as members of co-operative society in view of decision of the Hon ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] . Thus, this ground of appeal nos.2 3 stands allowed. Exemption of income earned from another cooperative society - This issue is no longer res integra as the issue was decided by the Co-ordinate Bench of the this Tribunal in the case of The Ugar Sugar Works Kamgar [ 2021 (11) TMI 1117 - ITAT PANAJI] in favour of the appellant society. -Decided in favour of assessee.
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2023 (1) TMI 563
Denial of deduction u/s. 54F - assessee did not invest a new property within stipulated time and denied exemption u/s. 54F - HELD THAT:- Admittedly, the assessee s share at 21% of profit from housing project i.e. Shriram Residency which is evident from para 4 of the assessment order. Therefore, there is no dispute with regard to capital gain arising from housing project i.e. Shriram Residency. Therefore, the assessee is entitled to proportionate deduction to the extent investment made in a new property up to the filing of return of income. AO disallowed entire claim made u/s. 54F of the Act to the extent of Rs.25,00,000/- which was confirmed by the CIT(A). Therefore, in terms of the decision in the case of Humayun Suleman Merchant [ 2016 (9) TMI 70 - BOMBAY HIGH COURT ] that the assessee is entitled to claim proportionate deduction as evident from receipts which are payments made towards new property and also the said payments were made before filing of return of income. Admittedly, the return of income was filed on 31-07-2014 which is evident from para 1 of the impugned order. Thus, the assessee is entitled to get deduction of Rs.11,00,000/- u/s. 54F of the Act as against the entire disallowance of Rs.25,00,000/-. Thus, ground Nos. 3 and 4 raised by the assessee are allowed. Denying exemption u/s. 54B - enhancement made by the CIT(A) - disallowance made on account of having purchased agricultural land in individual - THAT:- Hon ble High Court of Delhi in the case of Ravinder Kumar Arora [ 2011 (9) TMI 343 - DELHI HIGH COURT ] held that the provisions of section 54 of the Act are the beneficial provision which should be interpreted liberally in favour of the deduction to the taxpayer and deduction should not be denied on hyper technical ground. There is no dispute with regard to reinvestment on agricultural land by the assessee in his individual capacity, the provisions u/s. 54 of the Act being the beneficial provision which should be interpreted liberally in favour of the assessee seeking deduction u/s. 54B - Therefore, following the order of Babubhai Arjanbhai Kanani (HUF) [ 2021 (7) TMI 976 - ITAT SURAT ] hold that the assessee is entitled to claim deduction u/s. 54B of the Act and enhancement made by the CIT(A) is not justified. Thus, the order of AO is restored in allowing deduction u/s. 54B of the Act - Thus, ground No. 5 raised by the assessee is allowed.
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2023 (1) TMI 562
TP Adjustment on account of technical know-how fees - DRP granted partial relief to the assessee by directing to exclude the service tax competent from the amount of TPO s adjustment computed on this issue - HELD THAT:- Similar findings were also rendered by the coordinate bench of the Tribunal in assessee s own case in Merck Specialties Private Ltd [ 2019 (11) TMI 705 - ITAT MUMBAI] and [ 2019 (12) TMI 1628 - ITAT MUMBAI] - DR could not show us any reason to deviate from the aforesaid orders and no change in facts and law was alleged in the relevant assessment year. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for preceding assessment years. Thus, respectfully following the orders passed by the coordinate bench of the Tribunal in assessee s own case cited supra, we uphold the plea of the assessee and direct the AO/TPO to delete the transfer pricing adjustment in respect of payment of technical consultancy fees. Ground in assessee s appeal is allowed. Disallowance of depreciation on intangible assets - assessee is availing depreciation on intangibles at the rate of 25% on the various items appearing in the balance sheet in schedule of fixed assets of the assessee company - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case [ 2019 (11) TMI 705 - ITAT MUMBAI] remand this issue to the file of AO for de novo adjudication on similar lines as was directed in earlier assessment years. Denial of depreciation on goodwill arising from scheme of amalgamation - HELD THAT:- In the present case, the AO as well as learned DRP did not entertain the claim of the assessee in view of decision of Goetze (India) Ltd.[ 2006 (3) TMI 75 - SUPREME COURT] however, it is now well settled that there is no bar on the appellate authority to entertain a fresh claim of the assessee, if the relevant fact for deciding such issue are available on record. Further, it is pertinent to note that on one hand in the remand proceedings, the AO for the first time raised doubts about the valuation report, however, on the other hand AO has allowed depreciation on intangible assets @ 25%, which were also acquired by the assessee and were also revalued in the books of the assessee upon amalgamation. We find merit in the claim of the assessee and accordingly we direct the AO to grant depreciation on goodwill arising on account of amalgamation of subsidiary company with the assessee. As a result, ground No. 4 raised in assessee s appeal is allowed. Charging of interest u/s 234A - HELD THAT:- We deem it appropriate to remand this issue to the file of AO for de novo adjudication after necessary examination of the fact whether the return of income was filed by the assessee within the prescribed time under the Act. As a result, ground raised in assessee s appeal is allowed for statistical purpose.
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2023 (1) TMI 561
TP Adjustment - Adjustment to procurement cost of the appellant (Mirror Transaction Approach) - determination of Arm s Length Price (ALP) of the transactions between the PE with TICB and EDTICB which come within the ambit of International transaction as defined u/s 92B - HELD THAT:- Payments made by the assessee PE to its AE s i.e. assessee with TICB and EDTICB were held to be at Arm s Length by this Tribunal [ 2013 (12) TMI 126 - ITAT MUMBAI] ; and since the same international transaction of the instant assessee s procurement cost (being sub-contracting income for the AE s i.e. of assessee viz TICB and EDTICB) has been accepted as Arm s Length for the AE s and the same being mirror transaction cannot be considered excessive in the hands of the assessee/appellant. Therefore, on the same reasoning/ratio of the decision of the Tribunal (Banglore) in UE Development India Pvt. Ltd. [ 2017 (6) TMI 1381 - ITAT BANGALORE] which has been upheld by Hon ble High Court [ 2018 (8) TMI 2104 - KARNATAKA HIGH COURT] we hold that where the Tribunal has accepted the international transaction to be at Arm s Length Price in the hands of AE, then the international transaction that the assessee had with the AE s to be also at Arm s Length Price and therefore no adjustment was warranted in the facts and circumstances of the case. So we allow the ground of the assessee s appeal and direct deletion of Arm s Length Price made as per the impugned order.
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2023 (1) TMI 560
TP Adjustment - comparable selection - rejection of companies of high turnover of more than 200 crores - HELD THAT:- Respectfully following the consistent view taken by this Tribunal in various decisions, we direct the Ld.AO to exclude L T Infotech Ltd., Persistent Systems Ltd., Tata Elxsi Ltd., Infosys Ltd., Nihilent Technologies Ltd., Cybage Software Pvt. Ltd. from the final list of comparables. AR has submitted that Wipro has a turnover of Rs.43063.8 Crores, Sasken Technologies Ltd. has turnover of Rs.421.40 crores, Exilant Technologies Pvt. Ltd. has turnover of Rs.332.10 crores. These comparables are also to be excluded based on the same principles as observed by Coordinate Bench of this Tribunal in the above referred cases. Respectfully following the view taken hereinabove, we direct these comparables to be excluded from the final list for failing the turnover filter. Incorrect computation of certain comparables - We direct the Ld.AO to correct the margins and consider the claim of assessee in accordance with law. Accordingly, these grounds raised by assessee stands allowed for statistical purposes.
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Customs
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2023 (1) TMI 558
Maintainability of petition - availability of alternative remedy - seeking to quash levy of penalty under Section 114 (iii) of the Customs Act, 1962 - appealable under Section 128 of Customs Act, 1962 - HELD THAT:- In the present case, personal hearing was not granted to the petitioner before passing the impugned order, even the authority without invoking Section 113 of the Customs Act, went-on to pass order under Section 114 of the Customs Act. The value of goods was not assessed or determined before passing the impugned order - In such a situation, the order passed in W.P. No.11973/2022 and connected cases are not applicable to the facts and circumstances of the present cases. The writ petitions could not be dismissed on the ground of alternative remedy. So far as delay in deciding the issue is concerned, sufficient reasons have been assigned for the same. Learned counsel for the respondents relied on the judgment of Apex Court in the case of Hindustan Coca Cola Beverage Private Limited vs. Union of India and others [ 2014 (9) TMI 585 - SUPREME COURT] in which it is held that when the statute provides for statutory appeal, the said remedy is to be availed by the litigating parties. In Hameed Kunju vs. Nizam [ 2017 (7) TMI 1414 - SUPREME COURT] the Apex Court held that any petition under Article 227 of Constitution of India should be dismissed in limine when there is statutory provision of appeal. In another case Ansal Housing and Construction Limited vs. State of Uttar Pradesh and others [ 2016 (3) TMI 1435 - SUPREME COURT] it is held that when there statutory appeal is provided, then the said remedy has to be availed. Looking to the fact of availability of an efficacious alternative remedy, it is not deemed proper to entertain these petitions - petition dismissed.
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2023 (1) TMI 557
Seeking provisional release of seized goods - import of consignment of mobile parts - difference in the description and quantity of consignment - HELD THAT:- The issue is decided in the case of M/S. NORTH AND SOUTH TRADING COMPANY, M/S. ALAMS MOBILES VERSUS THE ADDITIONAL COMMISSIONER OF CUSTOMS (GR. 5A) , THE DEPUTY COMMISSIONER OF CUSTOMS (GR. 5A) [ 2023 (1) TMI 396 - MADRAS HIGH COURT ] where it was held that On instructions learned Solicitor goes on to submit that Additional Commissioner of Customs, Air Cargo Complex, Meenambakkam, Chennai-600 027 is the 'Adjudicating Authority' for the purposes of Section 110A read with Section 2 (1) of said Act, he would pass orders afresh qua provisional release sought for by the writ petitioners under Section 110A and the orders would be served under due acknowledgement in an acceptable mode to writ petitioners within two working days from today i.e., on or before 06.01.2023. Petition is disposed off with similar order as mentioned above.
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2023 (1) TMI 556
Seeking provisional release of goods - reduction in bank guarantee for provisional release of the seized goods to 10% of the value of goods - mis-declaration in terms of value and also in terms of percentage of polyvinyl chloride (PVC) - HELD THAT:- There was allegation of mis-declaration of the value of the goods which has been admitted to by the appellant in letters and statements. The SCN demanded differential duty which the appellant has already deposited. The SCN has also proposed confiscation of the goods under Sections 111(l) and 111(m). After adjudication, if the goods are held liable for confiscation, they may be released on payment of redemption fine. The present case of provisional release of goods needs to be seen in this context. If the goods are confiscated and allowed redemption on payment of fine such fine has to be recovered from the appellant and some security is necessary to cover it if the goods are to be released provisionally before adjudication itself. Considering the overall factual matrix of this case we modify the impugned order reducing the amount of bank guarantee to 5% of the value of the goods. The appeal is partially allowed and the impugned order is modified to the extent that the bank guarantee for provisional release of the goods will be 5% of the value of the goods.
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2023 (1) TMI 555
Absolute Confiscation of re-imported goods - petroleum coke - imposition of penalty under Section 112(b) of the Customs Act - rejection of the goods by the Buyer, and were accompanied with re-export invoice - HELD THAT:- The learned Commissioner (Appeals) have recorded the findings that the appellant had purchased the goods for export and on being rejected by the buyer in Saudi Arabia, the goods have been re-imported and admittedly, appellant have not availed any export benefit on the impugned goods - both the identity of the goods is also established and also that the appellant had genuinely exported the goods to the user buyer in Saudi Arabia. Further, on rejection by the buyer, the appellant was obligated to re-import the goods to mitigate his loss. Further, admittedly, the re-imported goods have been found to be CPC. The minor variation in weight is normal variation in the weight of the goods, due to normal loss in transit. As per para 1.05 (Clause B) of Chapter 1 of FTP 2015-2020, provides that in case of change of policy from free to restricted/prohibited etc. the imports or export already made before the date of such regulation/restrictions will not be effected. Admittedly, the export in this case was made through shipping bill dated 01.12.2017, which is before the date of restriction imposed vide aforementioned Notifications - CPC was free for export-import on the day of export, the re-import by the appellant of the rejected goods, has to be treated as freely importable under the Foreign Trade Policy. Appeal allowed.
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Corporate Laws
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2023 (1) TMI 554
Suit for specific performance of a contract - Seeking to transfer and register the land in the name of the Applicant Firm as it has duly purchased and paid total sale consideration - HELD THAT:- It is apparent that no suit or legal proceedings shall be commenced or proceeded with, except by leave of the court and subject to such terms as the court may impose. This court is of the considered opinion that the contents of IA No.2785/2017 partake of the nature of civil suit for specific performance of a contract. A detailed reply and two additional replies have also been filed by the Official Liquidator as also the rejoinder and photocopies of many documents have also been relied upon by the both the parties, whose veracity cannot be checked only on affidavits and arguments. In such circumstances, when various disputed questions of facts and laws are also involved, this court does not find it to be a fit case to decide in a summary manner, and thus, is of the considered opinion that the applicant firm can be asked to file a civil suit before the court of competent jurisdiction where the parties can lead evidence in support of their respective claims. Application allowed in part.
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Insolvency & Bankruptcy
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2023 (1) TMI 553
Initiation of CIRP - Financial creditors - application dismissed primarily on the ground of limitation - existence of the outstanding debt and default - whether deduction of TDS is sufficient to prove that interest amount have been paid? - Reliance on the Note in the Balance Sheet - HELD THAT:- The Respondent has nowhere admitted that this amount of Rs. 10 Lakh was paid towards part payment of the amount due nor the Appellant has set up a case in the pleadings that the said amount has been paid as part payment on 27.09.2017, during the currency of the period of limitation and thus the period of limitation has further extended for the period of three years from the said date. Moreover, it is argued by Counsel for Respondent that Section 19 of the Limitation Act. 1963 talks of the effect of the payment on account of debt when acknowledged is in writing and signed. The Appellant has miserably failed to prove that the amount of Rs. 10 Lakh, reflected in the ledger account was paid by the Respondent towards the part payment of the amount due (in question) in order to extend the period of limitation of three years from the said date i.e. 27.09.2017 specially in the absence of the evidence of any writing in this regard or otherwise an admission of the Respondent who has categorically denied the same in its reply - second contention of the Appellant in respect of extension of period of limitation is hereby rejected. Acknowledgement of the debt in the balance sheet of the Respondent - HELD THAT:- There is no acknowledgement or acceptance of the debt within that period when the application would have been within the period of limitation because the same is not unequivocal. The Appellant cannot take the advantage of the note for the purpose of bringing the application filed under Section 7 within the period of limitation. The contention of the Appellant in this regard as well is hereby rejected - the application filed under Section 7 by the Appellant was barred by limitation and has rightly been dismissed by the Adjudicating Authority on this ground.
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2023 (1) TMI 552
Demand of lease amount during moratorium period - whether the Adjudicating Authority has rightly applied the explanation under Section 14(1)(d) of the Code for the purpose of directing the Appellant to pay the lease premium amount and the lease rent to the Respondent (NOIDA)? - HELD THAT:- Section 14 of the Code deals with the moratorium and Section 14(1)(d) of the Code says that there would be a prohibition from the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor. However, explanation appended to Section 14(1) (d) says that with the prohibition of recovery of any property by an owner or lessor, a license, permit, registration, quota, concession, clearance or a similar grant or right either given by the Central Govt., State Govt. local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency but there would be a condition for its continuation if there is no default in payment of the dues of such license, permit, registration, quota, concession, clearance or a similar grant or right during the moratorium period. The similar grant or right has to be read in respect of the licence, permit, registration, quota, concession, clearance but it cannot be read as the premium amount or lease rent which has been so ordered by the Adjudicating Authority to be paid by the Appellant to the Respondent. The impugned order is patently illegal and deserves to be set aside - Appeal allowed.
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2023 (1) TMI 551
Initiation of CIRP - Financial debt or not - application dismissed on the ground that the Appellant has failed to establish the terms of advancing the money, the repayment of money and default by the Respondent - existence of debt and dispute or not - HELD THAT:- There is no denial of the fact that the parties to the lis entered into an agreement dated 31.08.2012, as per which the Respondent as an owner asked the Appellant as a developer, to develop a piece of land in a residential area. The owner was to get Rs. 4 Crores in the form of a non-refundable deposit, 42% of the total sales from saleable area whereas the developer was to get 58% of the total sales from saleable areas. There is a clause of loan in the said agreement as per which the developer was to provide additional loan of Rs. 11 Crores to the owner which shall carry interest @24% per annum. The owners have represented that the said loan shall be used for acquisition of additional land and decided to pay monthly interest failing which compounding interest of loan was to be adjusted by the developer through the escrow account till such time the entire interest is repaid/adjusted out of the owner share of revenue of the saleable areas - The evidence is there on record of the transfer of the amount in question from the account of the developer to the account of the owner and also the payment of interest by the owner to the developer. It is also a fact on record that the owner stopped the payment of interest and as a matter of fact the amount advanced by the Appellant to the Respondent, used for the purpose of purchasing the land by the owner in its name and the project has not been started at all because the owner failed to take necessary licence for change of land use, triggered the application filed under Section 7 of the Code for resolution of the amount of Rs. 6 Crores advanced as a loan and Rs. 1 Crores as refundable security. The definition of debt and default which is the only thing required for the purpose of maintaining the application under Section 7 of the Code, is satisfied - the Adjudicating Authority has committed a patent error in misreading and mis-appreciating the evidence available on record while dismissing the application, filed by the Appellant for the initiation of CIRP of the Corporate Debtor/Respondent. Appeal allowed.
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2023 (1) TMI 550
Liquidation of the Corporate Debtor / Company - Aggrieved Person - Section 60 (5) of the I B Code, 2016, read with Rule 11 of NCLT Rules, 2016 - Appellant / Petitioner submits that the Appellant / Petitioner and the other Members of the suspended Board of Directors , are the most affected party and the severe hardship and prejudice, will be caused to them, in case of Liquidation of the Corporate Debtor . - HELD THAT:- Before the Adjudicating Authority in Ivn.P(IBC)/1(CHE)/2022 in IA/(IBC)/1213/CHE/2021 in IBA/883/2019, the Appellant / Petitioner / Proposed Respondent, had averred that the Claim, of the State Bank of India, was assigned in favour of an Asset Reconstruction Company Viz. Prudent ARC Limited, for a sum of Rs.154.30 Crores, by virtue of an Assignment Agreement dated 30.09.2021, and hence, there is a scope of Restructuring and Revival. Also, the Appellant / Petitioner, had averred that he can always submit a Scheme of Arrangement / Settlement, despite, the fact that there is a prohibition for him to be ineligible to act as a Resolution Professional, as per Section 29A of the I B Code, 2016. The well accepted principle is that, an Adjudicating Authority (Tribunal) and the Appellate Tribunal are not to displace the cementing principles of the I B Code, 2016. The inbuilt framework, provided under I B Code, 2016, is not to be tinkered and tampered with, either by the Adjudicating Authority or by an Appellate Tribunal. No wonder, all, the basic tenets of the ingredients and the aim and objective of the Code, are to be preserved and maintained, by an Adjudicating Authority, as well as by the National Company Law Tribunal. Considering the fact that the Appellant / Petitioner who was a Promoter / Shareholder, invested in the Equity Shares at Rs.10/- each of the Corporate Debtor / Company (431840 Equity Shares), he is not an Aggrieved Person, in stricto sensu under Section 61 of the I B Code, 2016, especially, in the light of Committee of Creditors, having passed a Resolution for Liquidation of the Corporate Debtor, and keeping in mind that the Adjudicating Authority, had ordered for Liquidation of the Corporate Debtor, he is not entitled to get himself impleaded, in a Creditor s Regime, under the Code, as held by this Tribunal (not withstanding the fact that although the Appellant, is not a Member of Committee of Creditors, and no Right, to Vote, yet, he is entitled to take part in each and every meeting, held by the Committee of Creditors, and to discuss with the other Members of the Committee of Creditors, in respect of the Resolutions projected, in terms of the ingredients of Section 25 (2) (i) of the Code). Appeal dismissed.
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2023 (1) TMI 549
Validity of Approval of Resolution Plan - Litigation regarding dispute over land is pending before Civil Court on behalf of third party - Land belong to corporate debtor or not - in compliance of Regulation 38 of the CIRP Regulations, 2016 or not - HELD THAT:- It is seen from the record that the first FIR No. 140/2021 was lodged on 04.02.2021 and, therefore, it cannot be said that the Appellant was not in knowledge of the subject case. It is also seen from the record that two more FIRs were lodged by the Resolution Professional against the Appellant and their agents for their attempts to enter the premises of the Corporate Debtor. The Resolution Plan was approved by the Adjudicating Authority vide an order dated 03.01.2022 which is almost a year after the lodging of the initial FIR. Be that as it may, this Tribunal does not have jurisdiction to decide the title of the land more so when a Civil Suit has already been preferred by the Appellant herein and they have already opted for seeking a remedy before the Civil Court. Having regard to the fact that the main issue raised in this Appeal is with respect to the Dispute regarding the Title of the Subject Land which the Appellant claims was erroneously included in the assets of the Corporate Debtor by the Resolution Professional, which subject matter is already seized by the Civil Court, this Appeal is dismissed as devoid of merits. Appeal dismissed.
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2023 (1) TMI 548
Seeking encashment of the Bank Guarantees issued by the Appellant and Central Bank of India, during moratorium under Section 14 of IBC - It is contended that the Corporate Debtor has illegally promised to keep the BG s issued by the Appellant alive for full value on its own, without any concurrence from the Appellant Bank - HELD THAT:- Having regard to the findings in the Arbitration Award referring to the same BGs and encashment thereof and the observation of the Hon ble Arbitral Tribunal that there was no reason to interfere with the encashment of ABGs by IOCL and that there was no injustice or harm caused to it by the encashment, we do not see any substantial ground to delve into the issue of any breach of terms of the contract or any alleged fraud between IOCL and the Corporate Debtor - It is also pertinent to note that the Appellant Bank had not taken any action with respect to the issue of fraud raised by them. Bank Guarantees are outside the scope of the moratorium under Section 14 of the Code and Section 3 (31) specifically excludes Performance Bank Guarantees (PBGs). The Hon ble Supreme Court in M/S. DYNEPRO PRIVATE LIMITED VERSUS V. NAGARAJAN [ 2019 (3) TMI 2013 - SC ORDER] , upholding the decision of this tribunal has held that NCLT has no jurisdiction to decide the question of disputes and claims/counter claims. Thus, an irrevocable and unconditional Bank Guarantee can be invoked even during moratorium period in view of the amended provision under Section 14 (3) (b) of the Code - appeal dismissed.
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Service Tax
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2023 (1) TMI 547
Monetary amount involved in the appeal - Para-2 of the Circular dated 17th August, 2011 - Whether the expression Monetary limit would essentially refer to the excise duty involved and would not include the penalty or interest amount? - appropriate forum - HELD THAT:- Para-2 of the Circular dated 17th August, 2011 clarifies that the expression Monetary limit would essentially refer to the excise duty involved and would not include the penalty or interest amount. Since the basic duty involved is below Rs.1Crore, the appeal is certainly below the monetary limit. Further, whether the service carried out by the Appellant is Cargo Handling Services or mining service is essentially a classification dispute. Consequently, following the Judgment of the Karnataka High Court in COMMISSIONER OF SERVICE TAX VERSUS SCOTT WILSON KIRKPATRICK (INDIA) (P.) LTD. [ 2011 (4) TMI 500 - KARNATAKA HIGH COURT] , the Court holds that the appeal against the order of the CESTAT would lie if at all only to the Supreme Court of India. The Court declines to interfere in the present appeal, leaving it open to the Department if it so chooses to avail any other remedy available to it in accordance with law. The appeal is disposed of.
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2023 (1) TMI 546
Benefit of SVLDRS - Revenue filed the appeal after the expiry of limitation of Scheme - Rejection of declaration filed by the petitioner under Section 125 (2) of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 , in Form SVLDRS-1 - jurisdiction of Designated Committee in terms of Section 126 of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 - extension of benefit by issuance of Discharge Certificate to the petitioner after accepting the amount which the petitioner is liable to deposit under the Scheme of 2019. HELD THAT:- It appears that from bare perusal of Section 126 as well as Section 127 of the SVLDRS Scheme and its corresponding Rules being Rule 6 of SVLDRS Rule, it would transpires that the Designated Committee constituted under the Scheme was only required to verify the correctness of the declaration filed by the declarant and estimate the amount payable by such declarant for availing the benefit of the said Scheme, Thus, Designated Committee has not been vested with any jurisdiction to deny the benefit of the Scheme to a declarant on the sole ground that department has taken for filing an Appeal against the Order in Original. The impugned order passed by respondent no.2 is wholly without jurisdiction and beyond its power conferred under the Scheme of 2019. The Designated Committee travelled beyond the purview of the Scheme and acted in a wholly illegally and arbitrary manner by denying the benefit of the Scheme to the petitioner. The crux of the case revolves around the category i.e. arrears or litigation under which the case of the Petitioner will fall. From bare perusal of the aforesaid provisions of Scheme, it would transpire that the nature of cases falling under Section 121(c) is categorized under arrears category . Section 123(a), 123(b) and 123(c) deals with cases falling under litigation category for determining tax dues under the Scheme. The said provisions of Section 123 are not applicable to the case of the Petitioner, as admittedly, no Appeal was pending as on 30. 06.2019 and the show cause notice was received by the Petitioner on 10.08.2019 i.e. after the cut off date of 30.06.2019 - Further, no enquiry or investigation or audit was pending against the Petitioner as on 30.06.2019. Thus, calculation of Tax payable under Section 124(1)(a) by the Designated Committee is unwarranted. As on the date of filing of the declaration form by the Petitioner, no Appeal was filed and/or pending before the Appellate Forum. Indeed for the purpose of determination of tax dues, the case of the petitioner does not fall under Section 123 of the scheme of 2019 as Department had not preferred an Appeal against the Order in Original as on the said date - It further appears that the appeal of the Department has been filed after the expiry of period of limitation prescribed under Section 86(3) of the Finance Act as the said provision provides a period of limitation of three months which has expired on 14.04.2020. Thus, it transpires that in the opinion of the respondent filing of the appeal has led to change in the category of petitioner from arrear category to litigation category which view is beyond the letter and spirit of the scheme. The impugned Order wherein the Declaration filed by the petitioner under Section 125 (2) of SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019, in Form SVLDRS 1 has been rejected, is quashed - Application allowed.
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2023 (1) TMI 545
Invocation of extended period of limitation - sum and substance of the objection raised by the appellants is that for the financial years 2011-2012 to 2014- 2015, show cause notice was issued, which culminated in an order of adjudication and the matter is now pending before the Tribunal at the instance of the appellants and in such circumstances, for the very same allegation for the subsequent period, i.e 2015-2016 to 2017-2018 extended period of limitation could not have been invoked. HELD THAT:- Once a preliminary objection is raised on the question of jurisdiction, it is but appropriate for the adjudicating authority to deal with the said issue as first amongst the several issues while passing the order of adjudication. However, the adjudicating authority has adopted a reverse process by deciding the merit first and then dealt with the question of limitation / jurisdiction. This legal issue can be decided only after the affidavit in- opposition is filed by respondents in the writ petition. In the interregnum, if the order of adjudication dated 27th July, 2022 is given effect to, then the appellants would be put to prejudice. Therefore, the order of adjudication dated 27th July, 2022 shall remain stayed till the disposal of the writ petition.
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2023 (1) TMI 544
Levy of Service tax - Business Auxiliary Service or not - sharing of revenue - giving property for temporary rent to generate income to boost its charitable activities - principles of Revenue Neutrality - extended period of limitation - HELD THAT:- The Service Tax was demanded on the sharing of receipt from the total receipt of the contractor. The contractor provided the service of Mandap keeper to his client in the premises of the appellant. Therefore, out of the Mandap keeper service as per their understanding sharing of the appellant was given. As regard the issue that whether the Service Tax is payable on mere sharing of consideration towards service will not prima facie amount to provision of any service on the part of the appellant - the appellant had a bona fide belief in non payment of Service Tax. The appellant also submitted that this case is falling under the principle of revenue neutrality in as much as the tax payment if any made by the appellant is available as the Cenvat credit to the contractor who has used the premises of the appellant. Extended period of limitation - HELD THAT:- The suppression of fact and mala fide cannot be attributed against the appellant. Accordingly, the demand is hit by limitation as extended period could not have been invoked in the fact of the present case. The demand is set aside on the ground of limitation itself - appeal allowed.
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2023 (1) TMI 543
Refund of Service Tax paid for export of goods under Notification No. 17/2009-ST - Foreign Agent Commission - Banking and Financial Services - failure of appellant to produce the original invoices - refund of service tax is paid on Banking and Financial Services have been denied on the ground that the appellant have failed to correlate the said services availed by them with the export of goods - HELD THAT:- The admissibility of refund on Foreign Agent Commission has been examined by Tribunal in the case of M/S VST INDUSTRIES LTD. VERSUS CCE, C ST, HYDERABAD [ 2017 (10) TMI 24 - CESTAT HYDERABAD ] wherein it was held that The procedures prescribed in the notification are to facilitate verification of the claims. Since there is no dispute with regard to the export made or the service tax paid, the non-fulfilment of the conditions is condonable, the non-fulfilment of the conditions is only a procedural lapse and can be condoned - thus, refund of Service Tax on Foreign Agent Commission cannot be denied. Rejection of refund in respect of CHA services - appellant failed to provide the original copy of invoices - HELD THAT:- The Commissioner has observed that due to statutory requirement of rule 4A of the Service Tax Rules, 1994, the Invoice/ bill/ challans, on which the refund is sought, has to be mandatorily signed by the person providing taxable service or by a person authorized by him in respect of such taxable service. Therefore, it can be clearly inferred that the invoices are to be submitted in original - Learned Counsel argued that they had produced this circular before the lower authority but no findings have given. It is seen that the observations of Commissioner (Appeals) are in contradiction with the directions of CBIC. The order of Commissioner (Appeals) on this count is set aside and matter remanded to the original adjudicating authority with directions to follow the Circular of CBIC in this regard. Denial of refund of Service Tax paid on Banking and Financial Services - appellant has failed to correlate the services availed with the exports of goods - HELD THAT:- All the business of the appellant was export of goods, therefore, no co-relation was necessary as all the services were availed for export of goods. It is seen that the Commissioner (Appeals) has not taking note of this observation. If the said assertion is correct then no co-relation may be required for claiming the refund. However, since this fact has not been examined by the lower authority. The order of this account is set aside, the matter remanded to the Adjudicating authority. Appeal allowed in part and part matter on remand.
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2023 (1) TMI 542
CENVAT Credit - input services or not - input services availed by its Zonal Training Centre (ZTC), Zonal Office (ZO) and Zonal Audit Office (ZAO) in terms of Rule 2(l) of Cenvat Credit Rules, 2004 - Reverse charge mechanism - whether the services received by Zonal Training Centre, Zonal Office and Zonal Audit Office falls under the definition of input service as provided by Rule 2(l) ibid? - HELD THAT:- Admittedly the centralized registration has been obtained by the appellant in terms of Rule 4(2) of Service Tax Rules, 1994. The said rule provides that if a person is providing any taxable service and using one or more separate premises, which are assisting directly or indirectly in providing such taxable services and has centralized billing/accounting system, then the service tax registration for such separate premises can be obtained under the centralized service tax registration. This is irrespective of the fact that such other separate premises are providing any taxable service on their own or not. It is the case of the appellant that these Zonal Training Centre (ZTC), Zonal Audit Office (ZAO) and Zonal Office (ZO) are assisting the appellant in the provision of its taxable services and have centralized accounting/ billing system. Since generally training centre and audit office are considered as integral part of any establishment therefore, there are force in the submissions of learned Counsel that these offices are integral part of the appellant and play an important role, directly or indirectly, in providing output service by the appellant smoothly. These offices are inevitable for the working of the appellant. Although they are not providing any taxable services on their own but are assisting the appellant in providing its output services efficiently. The appellant has successfully established that these three zonal offices are integral part and parcel of the appellant only and the fact that they are located separately hardly makes any difference. Therefore, the appellant is justified in availing Cenvat Credit in respect of input services availed by its Zonal Training Centre, Zonal Office and Zonal Audit Office (ZAO) in terms of Rule 2(l) of Cenvat Credit Rules, 2004 and the services received by these zonal offices fall under the definition of input service as provided by Rule 2(l) ibid. Therefore, the demand raised in the show cause notice is not sustainable and once the demand has been set aside, there is no question of any interest or penalty. Appeal allowed.
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2023 (1) TMI 541
Liability of sub-contractor to pay service tax even if the main contractor had paid the service tax - invocation of extended period of limitation - HELD THAT:- When the Commissioner had not decided the issue of limitation for the reason that the demand on merits was not being confirmed, in the normal course the Tribunal would have remanded the matter to the Commissioner to take a decision. However, in the present case it is noticed that the dispute relates to the period from 2006-07 to 2008-09; the show cause notice was issued on 22.10.2010; the Commissioner decided the matter on 27.11.2013; and the appeal was filed before the Tribunal in 2014. In such circumstances, it is considered appropriate to examine this issue instead of remitting the matter to the Commissioner for taking a decision. It cannot be disputed that prior to the issuance of the show cause notice and the Master Circular dated 23.08.2007, sub-contractors were not discharging their service tax liability because of decisions of the Tribunal and this fact has also been noticed by the Larger Bench while referring to the decision of this Tribunal in URVI CONSTRUCTION VERSUS COMMISSIONER OF SERVICE TAX, AHMEDABAD [ 2009 (10) TMI 97 - CESTAT, AHMEDABAD ]. The Larger Bench also referred to a number of decisions which had taken view that a sub-contractor was not required to discharge service tax liability if main contractor had discharged the liability. Such being the position, it is clearly a case where the sub-contractor was under a bona fide belief that he was not required to discharge service tax liability. In view of the decision of the Tribunal in Vinoth Shipping Services [ 2021 (8) TMI 1117 - CESTAT CHENNAI ], it is clear that in such a situation the extended period of limitation could not have been invoked. The service tax demand for the aforesaid work performed by the sub-contractor, could not have been confirmed for the extended period of limitation. The appeal filed by the Department, therefore, deserves to be dismissed and is dismissed.
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CST, VAT & Sales Tax
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2023 (1) TMI 540
Suo motu revision of assessment orders passed by the Sales Tax Officer and Assistant Sales Tax Officer - delegation of authority to the Assistant Commissioner of Sales Tax - HELD THAT:- The suppression of purchases has been established by due examination of the material on record and consideration of evidence produced by the petitioner during the course of proceedings. The Revenue Authorities were justified, therefore, in varying with the percentage of profit as stated to have been added by the petitioner for many years due to special circumstance that is obtained during the Assessment Years in question. This Court is not, therefore, inclined to interfere with the impugned Orders which have been passed on facts. Each assessment year is a separate and self-contained unit of assessment and the accounts of each year must be judged with reference to material pertaining to that assessment year. Merely because the accounts of the preceding year were rejected was no ground for rejecting the accounts for the assessment year in question. A resort to best judgment assessment can only be made if the account books produced were incomplete or otherwise unreliable and there is material to show that the assessee has suppressed such sales. In the instant case, certain material was seized on search being conducted by the Vigilance and such seized material was found to be relatable to the years in question. Said material was used during the course of assessment with confrontation. The fact-situation in the impugned Assessment Years being not identical to the earlier years, the contention of the petitioner that the percentage of profit as added to the purchase turnover to arrive at taxable turnover is liable to be repelled. Admittedly, in the present case, no additional material was adduced by the petitioner to show that the finding of the Assistant Commissioner of Sales Tax in suo motu proceedings as affirmed by the Commissioner of Sales Tax, Odisha in Appeals was perverse. This Court finds that sales tax revision itself is not entertainable against orders passed by the Commissioner of Sales Tax in exercise of power under Section 23(4)(c)(ii) of the OST Act - no ground has been made out by the petitioner-assessee in the instant revision petitions to invoke jurisdiction under Section 24 of the OST Act. The sales tax revisions are dismissed.
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