Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 17, 2024
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Highlights / Catch Notes
GST
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Cancellation of GST registration - 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. - GST registration directed to be restored - HC
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Maintainability of petition - Keeping in view the conduct as such of the petitioner who chose to sit back and has not responded to the show cause notices, it is not required to exercise extra-ordinary writ jurisdiction to examine whether the notices are without jurisdiction at the hands of a luxurious litigant who chose not to respond to the notice and now seeks to invoke the jurisdiction of this Court. - HC
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Input Tax Credit (ITC) will be available to the applicant on GST charged by the service provider in respect of canteen facility provided to its employees other than contract employees working in their factory - ITC on the above is restricted to the extent of the cost borne by the applicant for providing canteen services to its employees, but disallowing proportionate credit to the extent embedded in the cost of goods recovered from such employees. - AAR
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Valuation - work contract service - The applicant, in terms of the contract, is liable to provide the goods [supplied on HSS basis] and hence the submission that this value is not to be included in the transaction value in respect of works contract service is legally not tenable more so since the applicant is contractually bound/liable to supply both the goods and the services. - AAR
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Levy of GST on High Sea Sale - The transaction of sale of goods on high seas sale [HSS] basis by the applicant to IOCL in terms of Contract No. 44AC9100-EPCC-1 as has been held supra, is covered under entry 8(b) of Schedule III of the CGST Act, 2017 and is therefore the HSS supply is neither a supply of goods nor a supply of services. - AAR
Income Tax
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Penalty u/s 271(1)(c) - Defective notice u/s 274 - failing to tick mark the limb or non-striking of second limb - The Court observed that such violation will not result in nullifying the orders passed by statutory authorities. It was observed that if the case of the assessee is that the assessee was put to a prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. It was observed that on facts, the Court could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee “clearly understood” what was the purport and import of notice issued under section 274 read with Section 271 of the Act. The principles of natural justice cannot be read in abstract. - HC
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Expenditure incurred on Employee Stock Option Scheme - revenue expenditure or capital expenditure - Tribunal was correct in holding that the ESOP expenditure is revenue in nature and the assessee is entitled for deduction. - HC
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Refund of excess Dividend Distribution Tax - additional income tax payable by the domestic company shall be at the rate mentioned in section 115-O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. - wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any - AT
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Depreciation on new aircraft purchased during the year - Actual use for less than 180 days - The aircraft certainly was not allowed to fly to carry passengers or cargo in the absence of this certification by the competent authority, but, that did not stop the assessee from holding it in its own name for the purpose of its business. The phrase, ‘used for the purpose of business’ in section 32 of the Act does not mean that the use should be by way of generating revenue only. - AT
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Penalty u/s 271F - Failure to file the ITR before the due date - No doubt, the assessee has failed to furnish the return of income u/s 139(1) of the Act, but when the assessee received the notice u/s 148 of the Act, the assessee duly filed the return of income. But the assessee has not given any reason as to why he has not filed original return of income u/s. 139(1) of the Act on or before 31.03.2016. Therefore, the assessee is liable to pay the penalty u/s. 271F of the Act. - AT
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Revision u/s 263 - Deduction u/s 80P(2)(d) - Where the AO has allowed the claim of the assessee under section 80P(2)(d) of the Act after due examination of the facts of the case, he has rightly followed the dicta laid down by the Hon’ble Jurisdictional High Court and therefore, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of Revenue. - AT
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Capital gain computation - applicability of the provisions of section 50C - Relevant date - the provisions of section 50C of the Act adopting the value for stamp duty purposes as on the date of sale deed could not be applied but the value as on the date of the agreement / date of receipt of advance has to be applied. - AT
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Scope of rectification u/s. 154 - The issue of disallowance u/s. 40A(3) and prior period expenses are beyond the scope of rectification u/s. 154 of the Act when the Ld.AO has thoughtfully considered these expenses and has made an ad-hoc disallowance of 10% while framing the original assessment. - AT
Customs
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Revocation of Customs Brokers License The provisions of the regulations cast special obligations on the Customs broker to ensure proper conduct of his employees - The appellant has miserably failed to supervise the working and the conduct of his employee in terms of Regulation 13(12) and is, therefore, liable for all the acts and omissions of his employee. - The appellant cannot escape the liability by putting the entire burden on his employee and say that nothing was in his knowledge. - AT
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Classification of imported goods - Software License imported in paper form - the supplementary notes under Chapter 49 and the description at sl.No.157 of Notification 21/2002 clearly show that the documents which convey the right to use the software are rightly classifiable under CTH 49. - AT
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Classification of imported goods - goods imported by the appellants for providing support services in respect of telecommunication networking equipment - The impugned goods under consideration would appropriately be classifiable under CTH 8517 70 and not under CTH 8517 62 90, as claimed by Revenue - AT
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Levy of penalty u/s 114(i) of the Customs Act - abetment in smuggling - It is settled law that for imposition of penalty, it is necessary to establish a positive role on the part of the concerned person or the establishment of mens rea on part of such a person is a must. Vague allegations and negligence, if any, howsoever grave cannot be assumed to mean abetment so as to invoke penal action. For any penal action to be enforced, the establishment of an active role on the part of the accused is imperative. - AT
Benami Property
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Provisional attachments made by the Initiating Officer u/s 24(3) of the Prohibition of Benami Property Transactions Act - Till a decision is taken on the show cause notice issued under Sec.24(1) of the Act, the property which might face confiscation in an eventuality of final adjudication enabling it, the property must be secured for purposes associated with the working of the Act. It will be silly for an initiating authority to let an alienation of a benami property even as it tries to fix responsibility on the suspects. - HC
Indian Laws
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Dishonour of Cheque - discharge of legal liability or cheque issued towards the security - it was duly proved that the cheque was issued in discharge of the legal liability which was dishonoured due to insufficient funds and the accused failed to make the payment despite the receipt of a valid notice of demand; hence, the complainant had succeeded in proving its case beyond the reasonable doubt. - HC
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Dishonour of Cheque - compounding of offence - the financial condition of the petitioner, as he is a poor person - since the competent Courts can reduce the compounding fee with regard to the specific facts and circumstances of the case, the petitioner is directed to deposit token compounding fee of Rs.10,000/- (rupees ten thousand) only with the H.P. State Legal Services Authority, Shimla, H.P., within four weeks from today. - HC
Service Tax
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Levy of service tax - tour operator service - It is the hotel that has provided the service of short-term accommodation to the customers, and the appellant has merely acted as a facilitator between the hotel and the customer for the provision of short-term accommodation service by the hotels to the customers. The appellant is thus not a hotel. The appellant cannot, therefore, be said to be the provider of short-term accommodation service to the customers. - AT
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Refund claim - pre-deposit made by the assessee is hit by unjust enrichment or not - The expenses incurred subsequently in form of deposit made during the course of investigation are shown as revenue expenditure in the balance sheet of the respondent - Refund cannot be denied - AT
Central Excise
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Clandestine production and removal - onus to prove - The submission of the revenue that by the recovery of the notebooks, they have discharged the burden and the onus to prove thereafter shifts on the assessee is erroneous as it has been repeatedly observed that merely on seized records, the charge of clandestine removal is not sustainable unless the same is corroborated by other substantive and independent evidence. The seized record from the residence of Sri S.V.S. Sarma cannot be related to the business accounts of NIPL. - AT
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It is a settled position of law that once the duty has been paid considering the process undertaken resulting into manufacture and attracting duty, Cenvat Credit cannot be denied on inputs/input services if subsequently it is found to be not amounting to manufactured and hence, not excisable. - AT
Case Laws:
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GST
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2024 (1) TMI 710
Violation of principles of natural justice - 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 31.01.2023 cancelling the petitioner's GST registration is quashed - Petition allowed.
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2024 (1) TMI 709
Petitioner s bank guarantees are being threatened to be invoked for non-payment of remaining amount - Levy of penalty u/s 129 of CGST Act - petitioner has already deposited 25% of the penalty assessed by the Assessing Officer at the time of approaching the 1st appellate authority - HELD THAT:- Let there be an interim order and the respondents are directed not to invoke the bank guarantee of the petitioner with the 5th respondent till disposal of this writ petition subject to the petitioner depositing further 10% of the assessed penalty within a period of two weeks from today. Petition disposed off.
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2024 (1) TMI 708
Maintainability of petition - desirous of availing statutory remedy of appeal - non-constitution of the Tribunal - petitioner is prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112 - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to nonconstitution of the Tribunal by the respondents themselves - the writ petition is disposed off.
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2024 (1) TMI 707
Violation of principles of natural justice - certified copy of the Order-in-Original not furnished to petitioner - HELD THAT:- It is not necessary to proceed further with the writ petition, save and except giving a direction to the petitioner to appear before the respondent no. 3 on 18.01.2024 and a direction to the respondent no. 3 to supply a certified copy of the Order-in-Original dated 03.06.2022 to the petitioner when the petitioner appears before him on 18.01.2024. It is accordingly directed. Petition disposed off.
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2024 (1) TMI 706
Maintainability of petition - efficacious remedy of appeal or revision - tax-payer has not provided any response to the show cause notice issued within the time prescribed and neither the tax-payer appeared for personal hearing - HELD THAT:- Keeping in view the conduct as such of the petitioner who chose to sit back and has not responded to the show cause notices, it is not required to exercise extra-ordinary writ jurisdiction to examine whether the notices are without jurisdiction at the hands of a luxurious litigant who chose not to respond to the notice and now seeks to invoke the jurisdiction of this Court. Resultantly, the present writ petition is dismissed with the liberty to the petitioner to avail of his alternate remedy of appeal before the concerned authorities.
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2024 (1) TMI 705
Condonation of delay in filing the revocation application - HELD THAT:- The delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. Writ petition disposed off.
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2024 (1) TMI 704
Error of jurisdiction - Recovery of differential duty - validity of final order passed by the respondent No.2 u/s 50 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The demand is towards the differential amount as well as the interest and penalty thereon. Since the entire dispute as raised by the petitioner is with reference to the interest and penalty thereon, there is no impediment for the respondents to recover the differential amount from the petitioner. It is found just and appropriate to stay the impugned order 31.08.2023 issued by respondent No.5 and order dated 22.11.2023 issued by respondent No.4 except to the extent of differential amount of Rs.16,55,642/- until further orders. The respondents are entitled to recover the same from the petitioner which shall be subject to further orders of this Court. Application disposed off.
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2024 (1) TMI 703
Supply or not - subsidized deduction made by the applicant from the employees who are ultimate recipient of canteen facility provided in factory/corporate office - valuation of GST - eligibility to take ITC for the GST charged by the CSP for canteen services, where the canteen facility is mandatory in terms of section 46 of the Factories Act, 1948. Whether the deduction of nominal amount made by the applicant from the employees who are availing food in the factory premises would be considered as a supply under the provisions of section 7 of the CGST Act, 2017? - HELD THAT:- In terms of Section 7 of the CGST Act, 2017, supply means all forms of supply of goods/services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. The exception being Schedule I, which includes the activities made or agreed to be made without a consideration and Schedule III, which includes activities which shall be treated neither as a supply of goods or services. In terms of Circular No. 172/04/2022-GST, it is clarified that perquisites provided by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same are provided in terms of the contract between the employer and employee - it is found that factually there is no dispute as far as [a] the canteen facility is provided by the applicant as mandated in Section 46 of the Factories Act, 1948 is concerned; and [b] the applicant has provided a sample copy of the HR Manual [only one page] reproduced supra. In view of the foregoing, we hold that the deduction made by the applicant from the employees who are availing food in the factory would not be considered as a supply under the provisions of section 7 of the CGST Act, 2017. Valuation of GST - HELD THAT:- Since the answer to the above is not in the affirmative, the ruling sought in respect of the second question is rendered infructuous. Whether the Company is eligible to take the ITC for the GST charged by the CSP for canteen services, where the canteen facility is mandatory in terms of section 46 of the Factories Act, 1948? - HELD THAT:- Input Tax Credit will be available to the appellant in respect of food and beverages as canteen facility is obligatorily to be provided under the Factories Act, 1948, read with Gujarat Factories Rules, 1963 as far as provision of canteen service for employees is concerned. It is further held that the ITC on GST charged by the CSP will be restricted to the extent of cost borne by the appellant only.
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2024 (1) TMI 702
Valuation - work contract service - transaction of sale of goods by Tecnimont Pvt. Ltd. (TCMPL) to Indian Oil Corporation Ltd. (IOCL) on High Seas Sale basis would be covered under Entry No. 8(b) of Schedule III of the CGST Act or not - to be excluded from the value of work contract service for charging GST or not - Levy of GST on the goods sold on high seas sale basis to IOCL - applicable rate of tax on such goods supplied. Whether the transaction of sale of goods by Tecnimont Pvt. Ltd. (TCMPL) to Indian Oil Corporation Ltd. (IOCL) on HSS basis in terms of Contract No. 44AC9100-EPCC-1 would be covered under Entry No. 8(b) of Schedule III of the CGST Act? - HELD THAT:- In terms of Schedule III, read with section 7(2) of the CGST Act, 2017, supply on High Sea Sale basis, is treated as neither a supply of goods nor a supply of services. Thus, the question of levy of GST on such supply does not arise. Whether sale of goods by Tecnimont Pvt. Ltd. (TCMPL) to Indian Oil Corporation Ltd. (IOCL) on HSS Sale basis in terms of the contract shall be excluded from the value of works contract service for charging GST? - HELD THAT:- The applicant, in terms of the contract, is liable to provide the goods [supplied on HSS basis] and hence the submission that this value is not to be included in the transaction value in respect of works contract service is legally not tenable more so since the applicant is contractually bound/liable to supply both the goods and the services. Therefore, in terms of section 15, ibid, the value of such imported goods would form a pan of the transaction value for payment of GST - the value of the imported goods would form a part of the Transaction value under section 15, ibid, for computing the value of work contract service for charging GST and that it cannot be excluded under the guise of free supply, as is being canvassed by the applicant. Whether the transaction of sale of goods on high seas sale basis by the Applicant to IOCL in terms of Contract No. 44AC9100-EPCC-1 would be treated as works contract and whether Applicant is liable to charge GST on the goods sold on high seas sale basis to IOCL? If yes, what will be the applicable rate of tax on such goods supplied? - HELD THAT:- The transaction of sale of goods on high sea sale basis by the applicant to IOCL in terms of contract No. 44AC9100-EPCC-1 would fall under schedule -III, as mentioned supra, at the time of supply of imported goods which as we have already held is not leviable to GST.
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Income Tax
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2024 (1) TMI 701
Penalty u/s 271(1)(c) - Defective notice u/s 274 - failure to tick mark the limb or non-striking of second limb - allegation of breach of principles of natural justice - whether an alleged defect in the notice issued to the appellant u/s 271(1)(c) r.w.s. 274 in regard to which the appellant had never raised an objection from the very inception, that is since last 30 years (from 19 August, 1993), can now be permitted to be raised, in the absence of any prejudice being caused to the appellant - assessee? - HELD THAT:- It is clear that the Assessing Officer in the present case had taken into consideration both the limbs of Section 271(1)(c) as both the limbs were attracted and they were so understood by the assessee. It is on such backdrop, the penalty proceedings which were initiated against the assessee, were also responded/contested. Thus, in our opinion, what has been held in Ventura Textiles Ltd. [ 2020 (6) TMI 305 - BOMBAY HIGH COURT] in the first part would become applicable, on which the Division Bench turned down the case of the assessee on the question of law no. D. There was no question of any issue of breach of the principles of natural justice, for want of a proper notice being raised before the tribunal by the assessee. The tribunal having allowed the revenue s appeal by the impugned order dated 30 October, 2001, the present appeal was filed on 17 April, 2002 and the appeal came to be admitted vide an order dated 14 September, 2004 on the substantial question of law as framed which also does not admit the appeal on any issue on the notice under Section 271(1)(c) being defective. It is after about 20 years of admission of the appeal, the issue has been raised merely because in the meantime, there were certain decisions rendered by the Courts to hold that the Assessing Officer would be required to tick mark the relevant ground as falling under Section 271(1)(c) of the IT Act being attracted for levy of penalty, namely either the first limb of concealment of particulars of income or the second limb of furnishing inaccurate particulars of such income . It is for such reason, on a technical plea, it was contended that the case would stand covered by Ventura Textiles Ltd [ 2020 (6) TMI 305 - BOMBAY HIGH COURT] . It is a settled principle of law that any breach of the principles of natural justice cannot be addressed by a straight jacket formula. Any complaint of breach of principles of natural justice would be required to be considered in the facts of the case. When the facts of the case would demonstrate it, to be an undisputed position, that no real prejudice was caused to a party aggrieved by an order, being alleged to be breach of the principles of natural justice, the Court would certainly not interfere. Such complaint and/or a genuine grievance of the breach of principles of natural justice accompanied with the prejudice it would cause, is required to be made with utmost promptness. Any delay in making such complaint or raising a grievance would give rise to a position that such grievance is either not genuine or is belated and/or a technical plea being agitated. In Natwar Singh vs. Director of Enforcement Anr. [ 2010 (10) TMI 156 - SUPREME COURT] Supreme Court while observing on the test of real prejudice, observed that there is no such thing as technical infringement of natural justice , as what is necessarily to be seen is that there must have been caused some real prejudice to the complainant. It was observed that the requirements of natural justice must depend inter alia as involved in the facts and circumstances of the case and the nature of the inquiry, etc - In the present case, applying such principles of natural justice, the assessee at no point of time, had discharged the basic burden of prejudice being caused to it. It is well settled that in judging the validity of an adjudicatory order, when the complaint is of non compliance of the principles of natural justice or in cases where the attack is not on the ground of bias, a distinction is required to be drawn between cases of no notice or no hearing, and cases of no fair hearing or no adequate hearing. If the defect is of the former category, it will automatically make the order invalid but if the defect is of a latter category, it will have to be further examined whether the defect has resulted in prejudice and failure of justice and it is only when such a conclusion is reached that the order may be declared invalid. See Municipal Corporation, Ludhiana vs. Inderjit Singh Anr. [ 2008 (10) TMI 732 - SUPREME COURT] . We may also refer to the decision of the Division Bench of the Madras High Court in Sundaram Finance Ltd. [ 2018 (5) TMI 259 - MADRAS HIGH COURT] in which interpreting the provisions of Section 271(1)(c) read with provisions of Section 274, the Court observed that in the facts of the case, the assessee s objection in regard to any defect in the notice could not be entertained in the appeal, as such an objection, can never be a question of law in the assessee s case, as it was purely a question of fact. It was observed that the assessee at no earlier point of time had raised a plea that on account of a defect in the notice, that the assessee was put to any prejudice. The Court observed that such violation will not result in nullifying the orders passed by statutory authorities. It was observed that if the case of the assessee is that the assessee was put to a prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. It was observed that on facts, the Court could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under section 274 read with Section 271 of the Act. The principles of natural justice cannot be read in abstract. In the light of the above discussion, we reject the contention as urged on behalf of the assessee that the proceedings would stand covered by the decision of this Court in Ventura Textiles Ltd. vs. Commissioner of Income-tax (supra). To answer the question of law as initially framed, the proceedings would be required to be heard by the regular Court.
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2024 (1) TMI 700
Validity of assessment order was passed u/s 147 r.w.s.144 and 144B - petitioner submits that the e-mail id registered with the department ie. [email protected], was created by an outsider and therefore the petitioner did not receive the notices issued to him and therefore, he could not file reply to the said show cause notices and the assessment order has been finalised - HELD THAT:- On the e-filing portal of the asssessee, the only email id registered is [email protected]. The communications and notices have been sent to the registered email id of the petitioner-assessee. From the records available on the system/ITBA, it can be seen that, all communications including statutory notices and show causes in connection with the assessment proceedings for the assessment year 2017-18 were served through the registered e-mail id of the petitioner. Assessment under Section 147 r.w.s.144 and 144B of the Act was completed in the case by Ext.P3 order dated 26.04.2023. Assessee appeal dismissed.
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2024 (1) TMI 699
Nature of expenses - royalty paid by the assessee towards the use of logo - revenue or capital expenditure - Whether royalty is to be treated as intangible asset of capital nature and consequently the royalty payment is a capital expenditure? - HELD THAT:- As decided by a common judgment dated 30.06.2022 passed by this court in T.C.A.No.755 of 2009 etc. batch in respect of the assessee's own case [ 2022 (6) TMI 1428 - MADRAS HIGH COURT] . Every expenditure incurred to acquire some right over intangible asset, cannot be ipso facto termed as capital expenditure. The nature of the assets, right, information or technical know-how that is transferred, must be such that without which the transferee could never commence the business. As rightly contented by the learned senior counsel appearing for the assessees, the benefit granted by the licensor is not enduring in nature in the present cases. AO without appreciating the terms of the licence agreement and ascertaining the nature of the expenditure incurred by the assessee companies, disallowed the deduction of royalty payment and allowed the depreciation at 25% treating it as capital expenditure. Appellate authorities, while deleting the disallowances made by the assessing officer, have rightly treated the royalty payment as revenue expenditure. Once the payment of royalty is treated as revenue expenditure, automatically, it goes without saying that the assessees would be entitled to 100% deduction. Therefore, we need not interfere with the orders passed by appellate authorities. Decided in favour of assessee. Expenditure incurred on Employee Stock Option Scheme - Whether allowable as revenue expenditure? - HELD THAT:- The issue involved herein is squarely covered by the decision of this court in CIT v. PVP Ventures Ltd. [ 2012 (7) TMI 696 - MADRAS HIGH COURT] which was followed by the Tribunal while passing the orders impugned herein. In the said decision, this court held the order of the Tribunal allowing the deduction of ESOP expenditure, as an ascertained expenditure. Tribunal was correct in holding that the ESOP expenditure is revenue in nature and the assessee is entitled for deduction. Accordingly, the orders passed by the Tribunal in deleting the disallowances of ESOP expenses by the assessing officer, do not require any interference. No substantial questions of law arises.
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2024 (1) TMI 698
Validity of Reopening of assessment - denial of natural justice - petitioners have given their response to the notice issued under Section 148A(b) and in the response petitioners have not given complete reply, but have asked for certain documents which have not been furnished - HELD THAT:- The impugned orders are unsustainable as the petitioners have not been given adequate opportunity to respond to the notices issued u/s 148A(b) of the Income Tax Act, 1961. Considering the same, the impugned orders are quashed and the cases are remitted back to the respondent for passing a fresh order on merits. The respondent shall furnish documents and details called for by these petitioners within a period of four (4) weeks from the date of receipt of a copy of this order. The petitioner shall respond to notices issued under Section 148A(b) of the Income Tax Act, 1961, by way of reply / additional representation within a period of four (4) weeks thereafter.
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2024 (1) TMI 697
Refund of excess Dividend Distribution Tax - whether as per Double Avoidance Taxation Agreement ( DTAA ) between India and Germany, the liability of tax on dividend received by the German resident does not exceeds 10% of the dividends? - HELD THAT:- As decided in Total Oil India Pvt. Ltd. [ 2023 (4) TMI 988 - ITAT MUMBAI (SB)] where dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts Additional Income-tax (Tax on Distributed Profits) referred to in sec.115-O of the Act, such additional income tax payable by the domestic company shall be at the rate mentioned in section 115-O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. Nevertheless, we are conscious of the sovereign's prerogative to extend the treaty protection to domestic companies paying dividend distribution tax through the mechanism of DTAAs. Thus, wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. we hereby dismiss Ground Nos. 6 to 9 of the assessee s appeal. Disallowance of reimbursement of expenses u/s 37 - assessee had reimbursed a sum to Schaeffler Technology GMBH and CO KG, Germany on account of professional services rendered by E.Y. Germany in lieu of Agreement entered with Schaeffler Germany - HELD THAT:- We are of the considered view that in the interests of justice the matter may be restored to the file of the Ld. A.O. so as to allow the assessee to produce relevant documents / evidences in support of claim of deduction of the aforesaid expenses under Section 37 of the Act. TP Adjustment - MAM selection - benchmarking of Royalty using CUP Method instead of TNMM Method - HELD THAT:- We observe that ITAT Ahmedabad in assessee s own case for A.Y. 2002-03 [ 2014 (11) TMI 552 - ITAT AHMEDABAD] has held that TNMM may be used for determination or Arm s Length Price for Royalty payments. Further, we observe that even the AO / TPO in the remand proceedings have given a specific findings that if TNMM is taken to be the most appropriate method, the transactions is at Arm s Length Price. Accordingly, in view of the decision of ITAT Ahmedabad in assessee s own case on this issue, we are of the considered view that Ld. CIT(A) has not erred in facts and in law in deciding this issue in favour of the assessee. TP Adjustment Management Fees - TPO held that assessee has not produced any details in respect of determination of payment made by the assessee to it s AEs at the time of entering into the Agreement alongwith the basis thereof, cost benefit analysis carried out by the assessee, the comparability analysis in respect of the payment etc., at the time of making the aforesaid payments, thus concluded that the Arm s Length Price of the services provided to the assessee by both the Associated Enterprises towards management fee, is to be taken at NIL and accordingly, recommended adjustment of the entire amount - HELD THAT:- We are of the considered view that Ld. CIT(A) has not erred in facts and in law in holding the determination of Management Fees to be at Arm s Length Price. In our considered view, Ld. CIT(A) has correctly observed that the aforesaid activities / services do not qualify as stewardship / shareholder activity. Notably, in assessee s own case for A.Ys. 2013-14 and 2014-15, the TPO has not made any TPA in respect of aforesaid services and accepted the payment of Management Fees to be at Arm s Length Price. We also observe that Ld. CIT(A) has made a detailed comparison between the decision rendered by ITAT, Pune Bench in the case of a group company (INA Bearings) in respect of management services and after a detailed comparison and looking into the facts of the assessee s case, has held that the assessee has correctly determined the Arm s Length Price in respect of the aforesaid Management Fees by using TNMM method. Accordingly, looking into the instant facts, we are of the considered view that Ld. CIT(A) has not erred in facts and in law in deciding this issue in favour of the assessee.
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2024 (1) TMI 696
Nature of expenditure - capital or revenue expenditure - Depreciation on new aircraft purchased during the year - assessee had claimed that this aircraft was purchased during the year and put to use while the ld. AO taking into consideration the certificate of airworthiness, issued by the Director General of Civil Aviation, concluded that the aircraft was put to use for a period of less than 180 days and, thus, instead of depreciation @ 40%, the assessee was allowed depreciation @ 20% only - HELD THAT:- AR has established the fact that this aircraft was acquired by the assessee company in July, 2012 and it was brought to India at the owner s base at New Delhi, after due clearances and a ferry flight in this regard was arranged for which even insurance cover was taken from the New India Assurance Company Ltd., on 06.08.2012. AR has submitted that invoice dated 04.08.2012 was raised for 6650 USD for pilot fee for three days, SIC fees for 3 days and professional service charges for Titan Aviation for providing ferry pilot support services to the assessee between 5th August to 7th August, 2012. As submitted that these expenses are allowed by the AO. We are of the considered view that this establishes that even before the certificate of airworthiness was issued by the Director General of Civil Aviation on 21.09.2012 for a period from 18.10.2012 to 17.10.2015, the assessee was de facto and de jure owner of the aircraft. The aircraft certainly was not allowed to fly to carry passengers or cargo in the absence of this certification by the competent authority, but, that did not stop the assessee from holding it in its own name for the purpose of its business. The phrase, used for the purpose of business in section 32 of the Act does not mean that the use should be by way of generating revenue only. The use here is in the context of the direct connection of the asset with the purpose of business which is initiated in the relevant year. AR is right to point out that the expense which were incurred for making the aircraft functional and ready to use during the year from India, when stand allowed, the same also establish that the certificate of airworthiness issued by the Director General of Civil Aviation, was only for the statutory compliances and to avoid legal liability, which is part of the business activity. As decided in Essar Shipping [ 2005 (8) TMI 582 - ITAT MUMBAI] the 'user' of an asset need not be an 'active user' of the asset. The courts have held in a number of cases that it is sufficient that the assessee makes the asset ready for putting it to use. The Delhi High Court in the case of Capital Bus Service (P.) Ltd. [ 1980 (2) TMI 69 - DELHI HIGH COURT] has held that where an assessee puts assets ready for use that amounts to passive user and in such a case depreciation must be allowed, if claimed by the assessee. The Supreme Court has held in R.B. Jodha Mal Kuthiala [ 1971 (9) TMI 2 - SUPREME COURT] that the term 'owner' has different meaning in different contexts and in certain circumstances, even a lessee may be considered as the owner of the property leased to him The Court has held that allowance for normal depreciation does not depend upon the actual working of the machinery. It is sufficient that the machinery in question is employed by the assessee for the purpose of the business and for no other purpose and has kept ready for actual use of the profit-making apparatus, the moment a need arises. Decided in favour of assessee. Deferred revenue expenditure incurred on account of leased aircraft engine improvement, repair and overall check up - As in the case of the assessee for AY 2012-13 [ 2020 (10) TMI 136 - ITAT DELHI] wherein the issue has been restored to the AO for re-examining the same. Prior period expenses - AR has pointed out that while referring to invoice dated 12.04.2012 for an amount maintenance fee royalty was payable to Delhi International Airport Pvt. Ltd. and the bill for the same was received in the relevant assessment year and, as the same were crystallized in the present year, it is not a prior period expense - HELD THAT:- We do not agree with the findings of the CIT(A) that there was no material on record and the CIT(A) had erroneously concluded that the assessee had accepted that these are prior period expenses without appreciating that the same had crystallized in the present year. Thus, this issue is restored to the files of ld.CIT(A) to give a fresh opportunity of hearing to the assessee and consider the evidences of the assessee establishing that bills were received in the relevant assessment year and payments were made in the present assessment year. Disallowance on account of expense of repair and maintenance for which the AO has observed that supporting invoice were not filed - HELD THAT:- CIT(A) has also observed that in the absence of supporting evidence, no interference is called for in the findings of the AO. In this regard also the ld.AO has relied on the bills made available at page 71 of the paper book being submissions before the AO wherein it is mentioned that original invoices are being produced in support of the claim. At assessee has brought on record the invoice and the copy of cheque showing the payment against this invoice. In the light of the aforesaid facts, we are of the considered view that the ld.CIT(A) has fallen in error in not sustaining the argument of the assessee that relevant evidences were filed before the AO which he had failed to take into consideration. Accordingly, this issue is also restored to the files of the ld.CIT(A) for taking into consideration the evidences of the assessee, after giving an opportunity of hearing and decide the issue afresh. Disallowance on account of interest on TDS - HELD THAT:- As nothing substantial was argued by the ld. AR. We find that ld. CIT(A) observed that before the AO the assessee had surrendered this amount submitting that the interest on TDS has not been disallowed in the computation of income. It is also settled proposition of law that interest on TDS is not an allowable expenditure and, thus, there is no error in the findings of ld. tax authorities below. The ground is decided against the assessee.
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2024 (1) TMI 695
Unaccounted profit from business - Addition on account of sale of flat - survey action u/s 133A in the business premise of the assessee - HELD THAT:- It is seen from record, there is no any other incriminating document except the piece of loose paper found during the course of survey. The value of the flat and to determine the Fair Market Value, the A.O. ought to have referred the matter to the prescribed authority namely District Valuation Officer u/s. 55A of the Act. But the A.O. has merely relied upon the report given by his Inspector and determined the fair market value of the flats and pent houses, which is against the provisions of the Act. The Inspector attached to the A.O. is not an expert to determine the fair value of the flats and Duplex Pent houses. When the A.O. summoned the various purchasers of the flats and recorded their statements u/s. 131 of the Act, None of the purchasers having said to have paid on-money to the developer/assessee, except to having agreed the prices entered with the developer. AO do not find any infirmity in the books of account maintained by the assessee, thereby he has not rejected the books of account. Thus in the absence of any incriminating evidence found during the course of survey, the additions made by the Ld. A.O. based only on Inspector s report is not sustainable in law. Therefore the addition made by the Assessing Officer on this count is liable to be rejected and we do not find any infirmity in the order passed by the Ld. CIT(A). Thus Ground No. 1 raised by the Revenue is liable to be rejected. Sale of Duplex Pent Houses merely based on Inspector s report - During the course of survey, there is no unaccounted money found and seized by the Authorities in the business premises of the assessee. The assessee submitted confirmation of accounts from various buyers and the Ld. A.O. could not find any defect in those records. However based on loose paper information and without corresponding evidences, the entire addition is made which is not permissible in law. It is appropriate to place on record the Hon'ble Supreme Court decisions in the case of Omar Salav Mohamed Sait [ 1959 (3) TMI 2 - SUPREME COURT] where it is held that no addition can be made on the basis of surmises, suspicion and conjectures. In the case of CIT(Central), Kolkata vs. Daulat Ram Rawatmull [ 1972 (9) TMI 9 - SUPREME COURT] held that, the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences, which would directly prove the fact of bogusness or establish circumstance unerringly and reasonably raising an interference to that effect. In the case of Umacharan Shah Bros. [ 1959 (5) TMI 11 - SUPREME COURT] held that suspicion however strong, cannot take the place of evidence. No hesitation in deleting the additions made by the Assessing Officer on account of on-money received by the assessee on the sale of duplex pent house. Appeal filed by the Revenue is hereby dismissed.
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2024 (1) TMI 694
Penalty u/s 271F - assessee has filed return of income in response to the notice u/s 148 and not f iled original return of income u/s. 139(1) - HELD THAT:- It is pertinent to note that the assessee failed to furnish return of income as required under sub-section (1) of Section 139 of the Act; but the penalty was initiated after passing of assessment order u/s. 147 of the Act. AO has initiated the penalty u/s. 271F of the Act after the completion of assessment order u/s 147 of the Act. Though there is no time limit prescribed under the Act, it has to be within the stipulated or reasonable time that the penalty should have been initiated. No doubt, the assessee has failed to furnish the return of income u/s 139(1) of the Act, but when the assessee received the notice u/s 148 of the Act, the assessee duly filed the return of income. But the assessee has not given any reason as to why he has not filed original return of income u/s. 139(1) of the Act on or before 31.03.2016. Therefore, the assessee is liable to pay the penalty u/s. 271F of the Act. The appeal of the assessee is dismissed.
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2024 (1) TMI 693
Revision u/s 263 - Deduction u/s 80P(2)(d) - interest income received by the assessee cooperative society on deposits placed with Yamuna Nagar Central Co-op Bank Ltd. - HELD THAT:- In the present case, there is no dispute that the assessee is a Co- Operative Society. There is also no dispute that Yamuna Nagar Central Co-op Bank Ltd. is also a Co-operative society. Further, during the course of assessment proceedings, we find that the AO while examining the claim of the assessee under Section 80P observed that out of total claim of Rs 76,77,246/-, the assessee has claimed Rs 50,25,234/- under section 80P(2)(d) of the Act. AO noted that said claim under section 80P(2)(d) consist of dividend income from KHRIBHCO, IFFCO and HAFED, interest income on deposits placed with HDFC Bank, ICICI Bank, AXIS Bank and Yamuna Nagar Central Co-operative Bank Ltd and referring to the provisions of section 80P(2)(d) of the Act, a show-cause was issued as to why claim of deduction in respect of interest income on deposits placed with HDFC Bank, ICICI Bank, AXIS Bank should not be disallowed and thereafter, after considering the submissions of the case, has returned a finding that such interest income has not been earned from any other Cooperative society but from Scheduled commercial banks and the deduction so claimed from Scheduled commercial banks was denied and while doing so, the AO has allowed the claim of deduction in respect of Yamuna Nagar Central Cooperative Bank Ltd, being the deduction in respect of interest income on deposits with any other Co-operative Society. We therefore find that the AO has duly examined the facts of the present case and has allowed the deduction in respect of interest income received from the Yamuna Nagar Central Co-op Bank Ltd. as being in compliance with the provisions of Section 80P(2)(d) of the Act. Where the facts in the present case and legal position is not in dispute, we therefore don t understand how the ld PCIT in the same breath hold that the assessee shall not be eligible for claim of deduction under section 80P(2)(d) of the Act. In the instant case, we therefore find that it is not relevant to examine whether interest income is earned from any specified co-operative activity or it is a case of deployment of surplus funds by the assessee society so long as the interest income is earned from deposits placed with a co-operative society. Where the AO has allowed the claim of the assessee under section 80P(2)(d) of the Act after due examination of the facts of the case, he has rightly followed the dicta laid down by the Hon ble Jurisdictional High Court and therefore, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of Revenue. We find that there is no legal and justifiable basis to invoke the provisions of section 263 by the ld PCIT and therefore, the order so passed u/s 263 is hereby set-aside and that of the AO who has rightly allowed the deduction u/s 80(P)(2)(d) is sustained. Decided in favour of assessee.
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2024 (1) TMI 692
Capital gain computation - applicability of the provisions of section 50C for the impugned assessment year - AR pleaded that as on the date of agreement, wherein a substantial amount of sale consideration has been partly received by the assessee, the SRO value, as per the provisions of section 50C of the Act, on the date of registration of the sale deed cannot be applied in the instant case - DR argued that the limited scrutiny includes the value to be adopted for the purpose of the provisions of section 50C of the Act and it is required to re-compute the capital gains - HELD THAT:- From the bare reading of the section 50C(1) of the Act, and the first and second provisos, in the instant case, the date of agreement fixing the amount of consideration and the date of registration for transfer of the capital asset are not the same. The value adopted for the stamp duty valuation purposes as on the date of agreement shall be taken for the purpose of computing the full value of consideration for such transfer. Further, the second proviso also stipulates that where the amount of sale consideration, or a part thereof has been received by an account payee cheque or through banking channels, the first proviso to section 50C(1) shall be applied in those cases. In the instant case, we find that the agreement has been entered into on 30/12/2015 and the part consideration has been received on 14/8/2014. Therefore, we find merit in the argument of the Ld. AR that the provisions of section 50C of the Act adopting the value for stamp duty purposes as on the date of sale deed could not be applied but the value as on the date of the agreement / date of receipt of advance has to be applied. We are therefore of the considered view that the provisions of section 50C(2) 50C(3) of the Act cannot be applied in the instant case. Therefore, we direct the Ld. AO to adopt the actual sale consideration declared and accepted on the date of agreement entered into by the assessee to compute the capital gains. Grounds No.2 3 raised by the assessee are partly allowed.
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2024 (1) TMI 691
Scope of rectification u/s. 154 - Disallowance of freight charges u/s. 40A(3) and disallowance of prior period expenses - HELD THAT:- In original assessment order passed u/s. 143(3) of the Act has disallowed a sum on an ad-hoc basis considering that the assessee has mostly incurred these expenses in cash and has produced only self-made vouchers. We find that the Ld. AO, on examining the Tax Audit Report filed by the assessee, made further disallowance by considering the amount as disallowance u/s. 40A(3) and disallowance of prior period expenses. The contention of the Ld. AR is that these expenses incurred by way of cash and prior period expenses have already been produced before the Ld. AO wherein it is deemed that the Ld. AO after considering the same has made an ad-hoc disallowance of 10% on the total expenses claimed by the assessee. We are of the opinion that when an ad-hoc disallowance of 10% has been made by the Ld. AO, no further specific disallowance can be made under any other provisions of the Act. We therefore find merit in the argument of the Ld. AR on this issue of disallowance u/s. 40A(3) and prior period expenses are beyond the scope of rectification u/s. 154 of the Act when the Ld.AO has thoughtfully considered these expenses and has made an ad-hoc disallowance of 10% while framing the original assessment. We therefore direct the Ld. AO to delete the additions made in the rectification order passed u/s. 154 of the Act. Thus, all the grounds raised by the assessee are allowed.
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2024 (1) TMI 689
Initiation of Revision proceedings by issuing Show Cause Notice and passing revision order without quoting DIN - DIN No. was subsequently communicated to the assessee - HELD THAT:- We do not find that none of the exceptional circumstances as mentioned in Para 3 (i) to (v) of this Circular No. 19/2019 has arisen for non-quoting of DIN both in the SCN as well as Revision order passed by Ld. PCIT. As per Paragraphs 3 5 of the Circular, in case of manual communication to be issued, prior written approval from the Chief Commissioner/Director General of Income-tax was to be obtained by the PCIT, since DIN was generated and communicated to the assessee to the very next date of issuance of the show cause notice and Revision order. Thus in our considered view, the Office of the PCIT has literally not followed CBDT Circular No. 19/2019. Further the office of the PCIT has not justified in not quoting of DIN even in the Revision order, where the same mistake was committed by it while issuing SCN to the assessee. Therefore Communication namely SCN dated 02.03.2022 and Revision order dated 30.03.2022 are not in conformity with Paragraphs 2 3 of this Circular No. 19/2019 issued by CBDT. Therefore the entire Revision proceedings is to be treated as invalid and shall be deemed to have never been initiated. It is appropriate to quote herein the well settled law that Circular issued by CBDT in exercise of its power u/s. 119 of the Act are binding on the Revenue as held by the Hon ble Supreme Court Judgment in the case of K.P. Varghese Vs. ITO [ 1981 (9) TMI 1 - SUPREME COURT] Hon ble Delhi High Court in the case of CIT Vs. Brandix Mauritius Holdings Ltd. [ 2023 (4) TMI 579 - DELHI HIGH COURT] given the language employed in the 2019 Circular, there is neither any scope for debate not is there any leeway for an alternate view. Therefore in our considered opinion, the initiation of Revision proceedings by issuing Show Cause Notice without DIN and passing Revision order without DIN are invalid in law. Appeal filed by the Assessee is hereby allowed.
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2024 (1) TMI 688
Disallowance u/s 10AA - AO disallowed the part of claim by taking a view that the assessee has not charged any interest on capital contribution and remunerations to its partner - AO worked out the disallowance of interest on capital of partner and remuneration and restricted the claim of deduction u/s 10AA subtracting on account of remuneration to partners and interest on capital contribution by partners - HELD THAT:- The only objection of ld. CIT-DR for the revenue was that before the Assessing Officer, the assessee claimed notarized supplementary deed. On such objection, we directed the ld. AR of the assessee to show the original or supplementary partnership deed. Supplementary partnership deed was brought before the Bench and copy thereof was provided to the ld. CIT-DR for the revenue. On perusal of such supplementary partnership deed, we find that before assessing officer, the assessee has filed copy of said partnership deed attested by Notary Shri M.S. Ratnu, advocate, Jodhpur. On comparing the contents of supplementary partnership deed with copy thereof on record, original was returned to the assessee s counsel. We are of the considered view that the grounds of appeal raised by assessee are covered in favour of assessee. Hence, the disallowance of interest capital and remuneration from the allowable profit under Section 10AA, is deleted. Accordingly, the Assessing Officer is directed to allow full relief to the assessee. Hence, grounds No. 1 to 4 of the appeal are allowed.
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Benami Property
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2024 (1) TMI 687
Provisional attachments made by the Initiating Officer u/s 24(3) of the Prohibition of Benami Property Transactions Act - HELD THAT:- There are two facts: (a) the Judicial Custody of the petitioners, who are also the directors of the company based on the case registered and (b) the order of provisional attachment made by the initiating authority on 03.02.2023, when they were still in judicial custody, which makes alienation impossible on the date the order of attachment was passed. The respondents step into the scene only after the registration of the case but they are not the investigating agency. And it is not in dispute that these petitioners were arrested some two years after the registration of the said criminal case. Where were they during the interregnum? Were they absconding then? Maybe, or may not be, which is not very pertinent for the present. The point is whether the initiating officer knew that the petitioners were in judicial custody when Sec 24(1) show cause notice was issued, and provisional attachment under Sec.24(3) was made? There is nothing on record to indicate it. What is the extent to which the initiating authority may have to travel for forming his opinion, and what is the extent to which he should spell out the grounds there for when an order of provisional attachment is made? - The scheme of the Prohibition of Benami Transaction Act is looked into, it makes benami transaction a crime, and besides providing for the confiscation of the property found to be held benami, it also provides that both the benamidars and the beneficiary are liable for criminal prosecution u/s 53 of the Act. An attachment of the property till an order of confiscation is made is only a preliminary step in that direction, and all that is required at that point in time is the existence of a suspicion that the property could be involved in a benami transaction. Here is a situation where a FIR is laid against the petitioners in Cr.No:.92 of 2020 on 23.11.2020, the Income Tax Department has taken a couple of years to believe that that the property could be involved in a benami transaction. When a show cause notice under Sec.24(1) is issued, it is based only on this prima facie suspicion, and this suspicion is sufficient for the initiating authority to form an opinion on provisional attachment. Set in the context, Sec.24(1) notice does not conclude anything as to affect the right of the petitioners. Indeed, the Act provides lots of checks and balances within its scheme in order to ensure that right to property of the citizen is not invaded and trampled upon by the statutory functionaries. At the first stage, it issues a show cause notice u/s 24(1), and waits for the response of the suspected benamidar and the beneficiaries. They have ample opportunity to show cause and to establish that there is no basis for the initial suspicion of these authorities. Till a decision is taken on the show cause notice issued under Sec.24(1) of the Act, the property which might face confiscation in an eventuality of final adjudication enabling it, the property must be secured for purposes associated with the working of the Act. It will be silly for an initiating authority to let an alienation of a benami property even as it tries to fix responsibility on the suspects. A provisional order of attachment needs to be understood in that context. It is not same as an order of attachment before judgement under Order XXXVIII Rule 5, 6 CPC. There the attachment is made not with any intent to secure it for a possible confiscation for the benefit of revenue administration of the State, but only to secure the interest of a creditor-plaintiff. Therefore, the standard required for an order under Order XXXVIII Rule 5,6 CPC are more stringent since it neither involves a crime, nor it involves the interest of the State. The provisional attachment made by the initiating officer cannot be termed as bad in law. He has done that which the statute contemplates. And, this attachment is only provisional. Admittedly, the matter is now pending before the Adjudicating Authority. The petitioners have all the opportunities to approach the adjudicating officer and explain why the provisional order of attachment is bad. To conclude, this Court does not find merit in these petitions and hence, all the writ petitions stand dismissed.
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Customs
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2024 (1) TMI 711
Classification of imported goods - Oil contained in the Bunker Tanks in the Engine Room/Outside Engine Room of Vessel imported for breaking up - to be assessed independently of the vessel under CTH 2710 or with the Vessel imported for breaking up under CTH 8908 00 00? - HELD THAT:- This Court by order dated 05.04.2023 [ 2023 (4) TMI 1250 - SC ORDER] has disposed of the appeals filed by the revenue by observing that oil is to be assessed as part of the Ship. The present appeal which arises out of same common order would not survive for consideration - appeal disposed off.
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2024 (1) TMI 690
Classification of imported goods - Software License imported in paper form - to be classified under CTH 49070030 or under CTH 85238020? - HELD THAT:- From the chapter headings it is very clear that documents such as manuals which are meant to be the instructions to activate the software are to be classified under Chapter 49. Therefore, the Commissioner was right in disregarding the fact that only because the value is high cannot be the criteria for classification of the product as software. The only ground on which appeal is filed is that the license has an intellectual value and the software and the license should be considered as a set fails in as much as the classification depends upon the description of the product at the time of import. Moreover, the supplementary notes under Chapter 49 and the description at sl.No.157 of Notification 21/2002 clearly show that the documents which convey the right to use the software are rightly classifiable under CTH 49. There are no reason to interfere with the impugned order and accordingly the appeal is dismissed.
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2024 (1) TMI 686
Levy of penalty under Section 112(a) of the Customs Act, 1962 - Import confectionary items - Evasion of customs duty by under-invoicing the goods and mis-declaring the transaction value and the retail sales price - it was held by High Court that The learned Tribunal has rightly rejected the said contention on the ground that the show cause notice issued to the appellant was not under Section 28(4) of the Customs Act - HELD THAT:- The impugned judgment and order passed by the High Court, need not be interfered with - Hence, the Special Leave Petition is dismissed.
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2024 (1) TMI 685
Revocation of Customs Broker License - Forfeiture of security deposit - levy of penalty - no fresh material on record and no substantial evidence against him to establish the contravention of the provisions of the Regulations - HELD THAT:- In terms of the aforesaid provisions of regulation 10(n) it is an admitted position that KYC norms were not verified before filing the bill of entry. Shri Shashikant Maruti Pol also admitted that he did not know the IEC holder of M/s. Pacific Imports as the work of import clearances were accepted from Shri Mehul Shah without even knowing him. Therefore, there is a clear violation by the Customs broker to know the antecedents, correctness of the IEC number, the identity and functioning of his client at the declared address as per the obligation cast on him under regulation 10(n). Even at the time of revocation of the suspension order, the Commissioner had also observed that there is prima-facie contravention of the provisions of Regulation 11(n) of CBLR, 2013. The appellant along with his representation dated 22.02.2017, had supplied copies of documents, KYC, reflecting the identity and antecedents of the importer, procured by the client and some of the documents such as authorisation letter dated 1.11.2016 for appointment of CHA, by the importer, M/s Pacific Imports, IEC copy of the importer, TIN, registration of the importer (State), TIN registration of the importer(Central) and proprietor s PAN was submitted at the time of personal hearing on 1.06.2019. The issue of submitting the KYC documents belatedly has been dealt in Multi Wings Clearing Forwarding P.Ltd Vs. C.C. (General),New Delhi [ 2019 (4) TMI 1189 - CESTAT NEW DELHI] , which was also a case of misuse of CB license in imports claiming to be the employee of the assessee and submission of KYC documents belatedly, the Tribunal observed, the fact that the appellant produced the required KYC to the Department at the later stage to the licensing issuing authority and not to the investigating agency suggests that the necessary KYC documents were actually not present with the appellant when the investigating agency visited and asked them to produce the KYC documents of the importer firm. It is an admitted position that the entire work of handling the import clearances was done by Shri Shashikant Maruti Pol, the employee of the appellant, and hence he is responsible for his conduct in not complying with the provisions of the regulations which cast special obligations on the Customs broker. The appellant has miserably failed to supervise the working and the conduct of his employee in terms of Regulation 13(12) and is therefore liable for all the acts and omissions of his employee. Penalty - HELD THAT:- The regulations provide for various penalties which can be imposed on the customs broker for violation of the provisions thereof. Regulation 17 provides for revocation of the license of a customs broker and for forfeiture of whole or part of the security. Regulation 18 provides for imposing penalty on the customs broker not exceeding Rs.50,000/-. The punishment of revocation of license has been held to be a very harsh punishment as it takes away the livelihood of a person on absolute basis. The Commissioner in the impugned order has taken a very fair and balanced view in refraining to order for revocation of licence and merely ordered for forfeiture of the security amount and imposing penalty of Rs.50,000/-, which would act as a deterrent to the appellant to be more cautious and diligent in executing his work. The impugned order does not call for any interference and deserves to be upheld - Appeal dismissed.
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2024 (1) TMI 684
Revocation of Customs Brokers License - forfeiture of security deposit - levy of penalty - casual approach in supervising the employees - submission of forged/fabricated documents by the CB before the customs officer to avoid assessment of imported goods - whether the charges under the regulations are maintainable and the punishment imposed on the Customs Broker is justified? HELD THAT:- The reason for fabrication has been admitted by all three in their statements under section 108 of the Act and the same are admissible in evidence as per the settled law and needs no citation in this regard. The fact that Shri Aman Jain and Shri Rajneesh Kumar have accepted that there was a need for fast clearance of the goods, shows that Prashant Jain had acted as per the instructions of the appellant. The admission by the appellant thus connects him to the act of his employee and hence he is responsible for the contravention of the Regulations. Having discussed that the actual fabrication was done by the CB representative to avoid the shed appraiser who keeps vigil over undervaluation cases in RMS and the fact that the goods in the bill of entry in question were found to be under-valued and in that view the importer had paid the differential duty with interest and penalty suo-moto, the entire modus-operandi of fabricating and forging the document was at the behest of the Customs broker which was implemented by Prashant Jain being the H-Card Holder of the CB - irrespective of whether any benefit had accrued to the appellant or not, he is guilty for such forgery/fabrication of the document thereby violating Regulation 10(j). It is an admitted position that the entire work of handling the import clearances was done by Shri Prashant Jain, the G-Card Holder of the appellant. The appellant cannot escape the liability by putting the entire burden on his employee and say that nothing was in his knowledge. Consequently, we hold that the appellant is vicariously liable and responsible for the conduct of Prashant Jain being his employee in fabricating the document. The provisions of the regulations cast special obligations on the Customs broker to ensure proper conduct of his employees - The appellant has miserably failed to supervise the working and the conduct of his employee in terms of Regulation 13(12) and is, therefore, liable for all the acts and omissions of his employee. Penalty - HELD THAT:- It was noted that the appellant therein did not have any role in what was done by Shri Vipin Kumar and his team and that the lapse found is supervisory lapse assumes importance and that is how the punishment of revocation of license was set aside and the forfeiture of security deposit was only confirmed. In M/s Ashiana Cargo Services [ 2014 (3) TMI 562 - DELHI HIGH COURT] , the Delhi High Court observed that only proved infraction on record is of the issuance of G cards to non-employees as opposed to the active facilitation of any infraction or any other violation of the CHA Regulations and therefore the revocation of the license was set aside being dis-proportionate to the violation. On the issue of imposing punishment under the Regulations it is opined that such action of forging and fabricating public document has to be seriously viewed and does not warrant any kind of leniency. The appellant being well educated (M.Tech) cannot plead ignorance as to what his employee was doing, more so when the said employee is not an old reliable employee but one who had joined the appellant firm only in November 2017. The submission of the appellant that there is no mens-rea and hence the impugned order imposing the punishment for revocation of the license, forfeiture of security deposit and imposition of penalty needs to be set aside - the punishment imposed in the present case by the impugned order does not call for any interference and is hereby upheld. Appeal dismissed.
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2024 (1) TMI 683
Classification of imported goods - goods imported by the appellants for providing support services in respect of telecommunication networking equipment - whether, the goods merits classification as parts under CTH 8517 70 as claimed by the appellants; or, is it classifiable as apparatus under CTI 8517 6290 as contended by the Department - eligibility for exemption under the Notification No. 11/2014 Customs dated 11.07.2014 for deciding on the appropriate levy of customs duty. HELD THAT:- It is obvious that as the impugned goods in this case relates to reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing function, for providing services of telecommunication networking equipment, the classification is feasible either under the second single dash entries or classification under third single dash entry as parts . The classification under first single dash entry is not relevant for the impugned goods, as these are for telephony. The appropriate classification of the imported goods at Serial No.1 of Table at paragraph 12, would be under Customs Tariff Item 8517 70 10 covering Populated, loaded or stuffed printed circuit boards and for other impugned goods at Serial No. 2 to 13 of Table at paragraph 12, under Customs Tariff Item 8517 70 90 of the First Schedule to the Customs Tariff Act, 1985. Reliance placed in the Co-ordinate Bench of the Tribunal in the case Reliance Jio Infocomm Ltd. [ 2022 (6) TMI 1051 - CESTAT MUMBAI ] where the issue of classification of goods of similar nature such as Optical Transponder, Optical Amplifier, Mux Ponder, Multiplexers etc., being parts of Ciena 5430 model Packet Optical Switch Platform was decided by holding that the goods are appropriately classifiable as Parts under CTH 85177010. Since the products under the present dispute are different from antenna forming part of Basic Transmission Station dealt in that pending case, and that the factual matrix of both cases are different, the argument made by AR cannot be agreed upon that the decision of Hon'ble Supreme Court in a similar case of Reliance Jio Infocomm Ltd. [ 2023 (1) TMI 1297 - SC ORDER] should not be followed. Accordingly, these arguments do not have any force, in determining the classification of the goods, in the present case. Scope of exemption contained in the relevant entry in the N/N. 11/2014-Customs dated 11.07.2014 - HELD THAT:- On careful examination of the exemption entry at serial No. 13, at notifications dated 01.03.2005, 30.12.2006 and amendment introduced on the said exemption entry on 11.07.2014 indicate clearly that the exemption initially extended to All goods covered under the heading 8517 was restricted in its scope of coverage to All goods of heading 8517, other than the specified goods at (i) to (iv) above namely, (i) soft switches and Voice over Internet Protocol (VoIP) equipment, namely, VoIP phones, media gateways, gateway controllers and session border controllers; (ii) optical transport equipments, combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS), Optical Transport Network (OTN) products, and IP Radios; (iii) Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching-Transport Profile (MPLS-TP) products; (iv) Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products. Thus, the aforesaid specified products are not eligible for exemption under the above Serial No.13 after the amendment vide notification dated 11.07.2014. However, in terms of the exemption entry at Serial No.40, newly introduced with effect from 11.07.2014, the parts of all the goods which are excluded from the scope of entry at Serial No.13, have been made eligible for basic customs duty exemption, which enables domestic manufacture of such goods, by allowing the parts of such goods to be imported under the duty exemption to encourage capacity building in indigenous production of such goods - thus, all parts of such goods at serial No.40, irrespective of its classification under any chapter of the First Schedule to Act of 1975, would be eligible for basic customs duty exemption. Inasmuch as, firstly the impugned goods needs to be classified under appropriate CTI and thereafter eligibility to exemption benefits has to be determined, we find that the impugned order had not followed this properly in terms of legal provisions of Customs Act, 1962 and the Customs Tariff Act, 1985. Further, inasmuch as All goods of heading 8517, other those specified goods in (i) to (iv) above are exempt from payment of basic customs duty (BCD), and in the absence of any conclusion that the impugned goods are of those category, which are specifically excluded by drawing proper classification and testing by authorised agencies in the form of test report or other evidences, it cannot be said that the impugned goods are excluded from availing the said duty exemption. Thus, the impugned goods under consideration would appropriately be classifiable under CTH 8517 70 and not under CTH 8517 62 90, as claimed by Revenue - the impugned orders passed by the learned Additional Director General (Adjudication) cannot be sustained on merits. Appeal allowed.
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2024 (1) TMI 682
Levy of penalty u/s 114(i) of the Customs Act - smuggling - red sander woods logs of Nepal Origin - omission or the commissioning of action/act, performed/non-performed by the present appellant - HELD THAT:- It be noted that in terms of the obligations under the CHALR, no case remains any further in view of the said proceedings, having attained finality. It is the expressly incumbent on the department to have pointed out the role played by the individual/appellant herein for imposition of penalty on them under Section 114(i) of the Customs Act - it is also noted that there is no finding by the adjudicating authority to indicate any beneficial consideration having been passed on to the appellant by way of a monetary reward or otherwise for his assumed role for which the appellant has been penalised by the adjudicating authority. There is nothing to impute by way of a categorical assertion the conspiring of, or an express omission or commission, leading to the fraud on the part of the appellant. There is nothing in the findings of the learned Commissioner to assert a positive role or to impute abetment on the part of the appellant in the attempt to smuggle out Red Sanders. Thus, in view of anything specific on the part of the appellant being brought out on record, it would be completely inappropriate to subject the appellant to penal provisions under Section 114(i). The fact that in so far as this Custom Brokerage firm was concerned, Tribunal has categorically held that though the appellant was found wanting in discharge of his obligations under Regulation 13 (a), (b) and (o) of CBLR, 2004, they cannot be penalized in perpetuity and though had accordingly upheld the order of the learned Adjudicating Authority issued under Regulation 20(1) of the CBLR, it had however restored the same. The order passed by the adjudicating authority is based largely on conjectures and assumptions. It is also noted that in respect of Nepal origin exports to third countries transiting through India, the Indian CHA s function is limited to processing the Border endorsed CTD at Customs House, Kolkata, taking the EF no. and to get the seals on the containers inspected and to take allow order from Customs for export through Kolkata port. In the instant case, we find that the appellant did not have any chance to verify the seal of the containers before interception by the DRI and to inform the Customs accordingly. Further, as stated above it is not within the express scope of activities of the CHA to escort the consignment from the Indo-Nepal border and oversee physical transit of the cargo or for any acts of omission/commission of the transporter/freight forwarder as alleged. The learned Adjudicating Authority erred in not appreciating that the export documents in respect of the Nepalese export consignment were received from the Nepalese exporter. Also it is not in the scope/mandate of the CHA firm or his representative to collect KYC of transporter or freight forwarder or other intermediaries. It is settled law that for imposition of penalty, it is necessary to establish a positive role on the part of the concerned person or the establishment of mens rea on part of such a person is a must. Vague allegations and negligence, if any, howsoever grave cannot be assumed to mean abetment so as to invoke penal action. For any penal action to be enforced, the establishment of an active role on the part of the accused is imperative. The departments case falls woefully short of substantiating the invocation of penalty under Section 114(i) of the Customs Act. The impugned order is liable to be set aside - Appeal allowed.
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Service Tax
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2024 (1) TMI 681
Levy of service tax - tour operator service - providing short-term accommodation service or not - entitlement to abatement of 90% on the gross amount charged under the Abatement Notifications in respect of service of a tour operator - invocation of Section 73A of the Finance Act - penalties. Whether the appellant is providing short-term accommodation services? - HELD THAT:- The show cause notice and the impugned order have placed reliance upon clauses of the Privilege Partnership Agreement entered into between the appellant and the hotels. The show cause notice nor the impugned order mention that the appellant is a hotel. The appellant is merely a booking agent and not an agent of the hotel, as is evident from Privilege Partnership Agreement and the User Agreement entered into between the appellant and the customers. It is the hotel that has provided the service of short-term accommodation to the customers, and the appellant has merely acted as a facilitator between the hotel and the customer for the provision of short-term accommodation service by the hotels to the customers. The appellant is thus not a hotel. The appellant cannot, therefore, be said to be the provider of short-term accommodation service to the customers. Whether the appellant is entitled to, as a tour operator, ninety percent abatement under the Abatement Notifications? - HELD THAT:- A tour operator can provide for a host of services, including booking of accommodation, transportation and food facility. However, when a person, otherwise is qualified as a tour operator but provides only booking of accommodation service, then such a tour operator would be entitled to ninety percent abatement. What is required is the qualification of a tour operator itself (qua the person), and not as the services rendered (qua transaction). It is, therefore, not possible to accept the contention of the learned special counsel for the department that each transaction relating to the service that is provided has to be examined. Thus, as the appellant is a tour operator it would be entitled to claim abatement under the Abatement Notifications. Whether the demand proposed under section 73 can be confirmed? - HELD THAT:- The appellant is providing tour operator service and is entitled to claim abatement of ninety percent. The demand under section 73 of the Finance Act has been confirmed holding that the appellant is providing short-term accommodation service. The demand that has been confirmed under section 73A of the Finance Act, therefore, deserves to set aside. Whether the provisions of section 73A would be applicable? - HELD THAT:- The taxes collected by the appellant from customer has been paid to the hotel and the appellant has also discharged has service tax liability by paying service tax on the amount collected by from the customer after availing the benefit of the Abatement Notifications as a tour operator. The appellant had not collected any amount, which was not required to be collected, from any person, in any manner as representing service tax. Section 73A of the Finance Act would, therefore, not be attracted - Reliance can be placed on the judgment of the Supreme Court in RS. JOSHI, SALES TAX OFFICER, GUJARAT VERSUS AJIT MILLS LIMITED AND ANOTHER (AND ANOTHER CASE) [ 1977 (8) TMI 140 - SUPREME COURT] , wherein the Supreme Court held that the word collected can only refer to cases where a person collects an amount from another with an intention to retain the said amount - Thus, the provisions of section 73A of the Finance Act could not have been resorted to by the department. Whether the demand under section 73A can be confirmed? - HELD THAT:- The demand under section 73A of the Finance Act could not have been proposed. The confirmation of demand, therefore, deserves to be set aside - What is also important to notice is that the impugned order has confirmed the demand of service tax under section 73 of the Finance Act on the gross amount collected by the appellant from the customers, which included the amount remitted to the hotels as well. The impugned order has also confirmed the demand made under section 73A of the Finance Act on the same gross amount. There is, therefore, duplication of the demand. Penalties - HELD THAT:- The penalties imposed upon the Vice President and the Director of the appellant that have been assailed in Service Tax Appeal No. 51845 of 2021 and Service Tax Appeal No. 51846 of 2021, therefore, cannot also be sustained. Appeal allowed.
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2024 (1) TMI 680
Levy of Service Tax - construction of residential/commercial complex service in a case of composite contract which includes services as well as the material prior to 01.06.2007 - HELD THAT:- This issue is no more res integra and has been settled by the Honble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ]. Reference made to the decision of the Real Value Promotors Pvt Ltd [ 2018 (9) TMI 1149 - CESTAT CHENNAI] wherein coordinate Bench of the Tribunal has discussed all the provisions regarding construction of complex service residential/complex and Works Contract service which was introduced w.e.f. 01.06.2007 and has held that only those contracts which were service simpliciter (not involving supply of goods) would be subject to levy of service tax under CICS/CCS/RCS prior to 1.6.2007 and after. The impugned orders are not sustainable in law and thereafter, the same is set aside - appeal allowed.
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2024 (1) TMI 679
Levy of service tax - Management, Maintenance or Repair Service - providing services to the customers during warranty period through third party arrangement - compensation received from OEMs on replacement of defective parts - invocation of Extended period of limitation - penalty. Service provided by the appellant during the warranty period - HELD THAT:- There are no merit inasmuch as in the absence of consideration for providing any service, the determination of value in terms of Rule 3 holding such value being not ascertainable be determined in the manner provided under clause (a) or clause (b) of the said sub-rule is fallacious and misunderstanding of the very concept of levy of service tax. It is an incorrect approach of the adjudicating authority that the consideration be determined by resorting to valuation when no such consideration is received from the customers for providing services during warranty period. It is not the case of the department that the Appellant though received value of the services but the same could not be quantified or ascertained, hence resort to the method of valuation becomes necessary. It is a case of non-receipt of any consideration for the service rendered - Since no consideration has been received the service provided by the appellant during the warranty period, hence confirmation of service tax under the taxable service of Management, Maintenance or Repair cannot be sustained. Compensation received by the appellant from the OEMs during the relevant period on the defective parts replaced by them from their stock warehouse on the advice of the service engineers during the course of repair of equipment during the warranty period - HELD THAT:- The issue is no more res integra and covered by the judgement of this Tribunal in the case of M/S. T.A.F.E ACCESS LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, COIMBATORE [ 2023 (5) TMI 1154 - CESTAT CHENNAI ]. In the said case, the Tribunal, following the principle laid by the Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT ], held that reimbursable expenses cannot be included in the taxable value. Following the said judgment and the principles laid down by the Supreme Court, the confirmation of demand of service tax Rs.5,78,742/- on reimbursement of cost of defective parts replaced during the warranty period cannot be sustained. The impugned order set aside - appeal allowed.
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2024 (1) TMI 678
Refund claim - appellant had not deposited service tax - Housing Board had deposited 50% of service tax payable by them on such construction - reserve charge mechanism as per N/N. 20.06.2012 and the same was deducted by them from bills issued by the appellant - exemption as per Serial No. 14 (b) of the Notification No. 25/ 2012-ST dated 20.06.2012 - HELD THAT:- The Tribunal, ultimately in the decision dated 27.02.2023 [ 2023 (3) TMI 1273 - CESTAT NEW DELHI ], held that The contention of the appellant is that independent residential houses were built, each having a separate entry with separate electricity and water connection and a single building did not have more than twelve residential units. It is for this reason that the appellant contends that the houses constructed by it for the Rajasthan Housing Board will not be covered by the definition of a residential complex and, therefore, would not be taxable as the contract executed with the Housing Board was not in relation to construction of a complex. Impugned order set aside - appeal allowed.
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2024 (1) TMI 677
Levy of Service Tax - reimbursement amount incurred for the service recipient - appellant had paid service tax on the amount received towards agency charges while providing clearing and forwarding agent service - HELD THAT:- The Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] noticed the various reimbursable claims which were included in the gross value. The Supreme Court noted that rule 5 does bring within its sweep the expenses which are incurred while rendering the service and are reimbursed and, therefore, what was required to be decided was whether section 67 of the Act permits subordinate legislation to be enacted as was done by rule 5. It needs to be noted that prior to 19 April, 2006, in the absence of a rule, the valuation was required to be done as per the provisions of section 67 of the Act. The Supreme Court noticed that the charging section 66 provides that there shall be levied service tax @ 12% of the value of taxable services referred to in the sub-clauses of Section 65 and collected in such manner as may be prescribed. Thus, the service tax is on the value of taxable services and, therefore, it is the value of the services which are actually rendered which has to be ascertained for the purpose of calculating the service tax. It is for this reason that the Supreme Court observed that the expression such occurring in section 67 of the Act assumes importance - The Supreme Court, therefore, held that the value of material which is supplied free by the service recipient cannot be treated as gross amount charged as that is not a consideration for rendering the service. The appeal filed by the Department was, therefore, dismissed. In view of the decisions of the Supreme Court and the Delhi High Court in Intercontinental Consultants, the amount of reimbursement could not have been included in the taxable value of the service under rule 5(1) of the 2006 Rules - Impugned order set aside - appeal allowed.
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2024 (1) TMI 676
Levy of service tax - amount deducted by the appellant from the vendors towards liquidated damages - failure to supply the goods/execute the work within the stipulated time - demand of service tax both for the period prior to 01.07.2012 and post 01.07.2012 - HELD THAT:- For the period prior to 01.07.2012 collection of amount towards liquidated damages was not included in any of the specified taxable services under any of the clauses of sub-section (105) of section 65 of the Finance Act, 1994 [the Finance Act ] . Thus, no service tax could have been levied on the amount of liquidated damages so collected - For the period w.e.f. 01.07.2012, the impugned order has observed that as the appellant received the amount as consideration for the failure on the part of the contractors to honor the terms of the contract or violating the conditions of the contract, it would be taxable under clause (e) of section 66E of the Finance Act. In M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI ], the Tribunal held that liquidated damages recovered on account of breach or non-performance of contract are not consideration in view of any service but are in the nature of deterrent imposed so that such a breach or non-performance is not repeated. It is, therefore, not possible to sustain the demand - The order dated 16.11.2018 passed by the Commissioner, therefore, deserves to be set aside - Appeal allowed.
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2024 (1) TMI 675
Refund claim - pre-deposit made by the assessee is hit by unjust enrichment or not - HELD THAT:- It is settled position in law that amounts which were deposited during the course of investigation were paid subsequently by the provider of the service, hence, could not have been based on to the service recipients. The expenses incurred subsequently in form of deposit made during the course of investigation are shown as revenue expenditure in the balance sheet of the respondent, as this amount has been shown as revenue expenditure in the balance sheet the same would justify the claim of the respondent. In case of M/S JAGETI CO. VERSUS CST AHMEDABAD [ 2011 (12) TMI 111 - CESTAT, AHMEDABAD ] tribunal has held In any case, it has been paid under protest and the expenditure is booked. This does not mean that what was paid before issue of Show Cause Notice was subsequently collected from the customers. Hon ble Allahabad High Court in the similar situations in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S ADVANCE STEEL TUBES LTD. [ 2018 (3) TMI 627 - ALLAHABAD HIGH COURT ] has held The department was not justified in applying the bar of unjust enrichment to the remaining amount of ₹ 10,34,880/- without there being any cogent material or evidence to support it and without the department having considered the cost structure of goods for that amount. Since the issue is squarely covered by the above referred decision of Hon ble Jurisdictional High Court, there are no merits in this appeal filed by the revenue - appeal dismissed.
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2024 (1) TMI 674
Recovery of service tax alongwith interest and penalty - Operation Maintenance of Telecom/Mobile towers - Services provided included Diesel Filling services - HELD THAT:- The issue involved in the matter is covered on all fours with decision rendered by CESTAT in case of M/S GANPATI ASSOCIATES, M/S MUNSHI LAL DURGA PRASAD VERSUS COMMISSIONER OF CENTRAL EXCISE CENTRAL GOODS AND SERVICE TAX, JAIPUR [ 2019 (5) TMI 1233 - CESTAT NEW DELHI ]. Tribunal in this case was considering a similar issue with supply of similar services under a similar contract. Though this order is for the period prior to the amendments made in Section 67 in 2015 as consequence of the decision of the Hon ble Delhi High Court in case of Intercontinental Consultants [ 2012 (12) TMI 150 - DELHI HIGH COURT] , enunciated in the said order are applicable to facts of the present case, where it was held that Even if diesel is considered to be free of cost supplied by the service recipient to the service provider, no service tax can be levied on it in view of the decision of the Supreme Court in Bhayana Builders [ 2018 (2) TMI 1325 - SUPREME COURT] . Appeal allowed.
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Central Excise
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2024 (1) TMI 673
CENVAT Credit - inputs - goods were not received by the appellant and only invoices were moved and on the basis of invoices - investigation was not conducted at the stage of first stage dealer/second stage dealer by the Revenue - HELD THAT:- As appellant has received goods from first stage dealer/ second stage dealer on payment of duty and have produced transport receipt evidencing transportation of goods from first stage dealer/second stage dealer to their factory, in that circumstances, the appellant has complied with the conditions to Rule 9 of Cenvat Credit Rules, 2004 which enables appellant to take Cenvat credit on the strength of invoices which mentions duty has been paid on the goods in question. It is also a fact on record no investigation was not conducted at the stage of first stage dealer/second stage dealer by the Revenue. Moreover, only it is coming out from the investigation that since January 2013 manufacturer has not paid duty, but it is not a fact on record when the manufacturer stopped manufacturing and since when manufacturer is non-existent. As investigation to this question with regard to this extent is silent, in that circumstances, benefit of doubt goes in favour of the appellant. Further, Revenue has also failed to establish if the appellant has not received goods against the invoices, in question, in that circumstances, from where the appellant has procured the inputs which has been in manufacturing of final products on which duty has been paid by the appellant. Therefore, the appellant is entitled to take Cenvat credit on the invoices issued by first stage dealer/second stage dealer which showing the details of manufacturer of goods and payment of duty. Therefore, the impugned order deserves no merits, accordingly, the same is set aside. The appeal is allowed.
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2024 (1) TMI 672
Clandestine production and removal - demand based on so-called third-party or private records were collected from the Director of the Company (4 notebooks recovered from the residential premises) - onus to prove (shifting burden) - burden to disapprove shifts on the respondents - HELD THAT:- The issue of clandestine removal of goods have been considered by the Tribunal in the case of M/S ARYA FIBRES PVT. LTD., M/S NOVA PETROCHEMICALS LTD. AND OTHERS VERSUS CCE AHMEDABAD-II [ 2013 (11) TMI 626 - CESTAT AHMEDABAD] , laying down the parameters to prove clandestine removal of goods where it was held that What one could, however, say with some certainty is that inferences cannot be drawn about such clearances merely on the basis of note books or diaries privately maintained or on mere statements of some persons, may even be responsible officials of the manufacturer or even of its Directors/partners who are not even permitted to be cross-examined, as in the present case, without one or more of the evidences referred to above being present. There is absolutely no evidence that NIPL had received unaccounted raw material from the parties whose names have been mentioned in the various charts drawn by the Department or any details about the transportation of the said raw material or that the payments were made either to the suppliers of unaccounted material or to the transporters. Similarly, there is no evidence on record that NIPL had supplied unaccounted finished goods to various parties or about the receipt of the unaccounted payments from these buyers of the unaccounted finished goods. Nor there is any evidence of transportation of the unaccounted finished goods - in the absence of any such evidence, the allegations of clandestine removal are unsustainable. Private /Third Party Records - sole basis of allegations of clandestine clearance of goods have been made on the notebooks recovered from the residential premises of Sri Sarma - HELD THAT:- On comparative assessment of the entries made in the notebooks with the entries made in the statutory records, the department raised the demand of duty on the basis that the entries in the notebooks were not matching with the entries in the statutory records which according to them were unaccounted purchase of raw materials or sale of finished goods leading to the inference of clandestine clearance. The fact is that the entries in the notebooks would not match with the statutory records as they were not actuals but were fabricated or hypothetical as admitted by the writer of these notebooks Sri Sarma. Moreover, no investigation has been made by the department to verify the correctness of the entries. It was obligatory on the department to establish the truthfulness of the entries made in the notebooks by bringing on record independent evidence showing receipt of unaccounted raw material from various parties and also of sale of unaccounted finished goods - The law on the issue is well settled that onus to prove clandestine removal must be discharged by sufficient, cogent and unimpeachable evidence. The contention of the respondent agreed upon that the notebooks are not reliable piece of evidence as the revenue failed to investigate so as to corroborate the entries in the private records. Statement retracted - HELD THAT:- On the basis of the statement and cross examination of Sri Sarma, the adjudicating authority rightly concluded that during the period under consideration he was only a paid director in NIPL on salary of Rs. 25,000/ per month and not a promoter director. While working as director, he used to look after work of accounts of incoming of raw materials, verification of sales invoices and banking related matters but there was no permission to him by the company to take the account books at home - In Commissioner of Central Excise, Delhi vs. Vishnu Company Pvt. Ltd, [ 2015 (12) TMI 593 - DELHI HIGH COURT ] , the Delhi High Court was faced with a situation where the department relied on the statements made by third parties, which were subsequently retracted or relied from and it was held that it becomes necessary for the department to produce other evidence, which is of an independent nature, which corroborates the retracted statements. No Proper Investigation By Revenue - HELD THAT:- In Commissioner of Central Excise, Delhi vs. Vishnu Company Pvt. Ltd., [ 2015 (12) TMI 593 - DELHI HIGH COURT] , Delhi High Court reiterated the principle that it was for the department to explain why the entries in the documents were not further investigated by them and why someone in a responsible position in the company was not examined to establish the link between such evidence and the respondent there. Having held that the department did not carry its investigation to their logical end, the Court concluded that the charge against assessee was not proved. Burden to proof - HELD THAT:- It is a settled principle of law that the burden to prove the allegations of clandestine removal lies on the department as the charge of clandestine removal is a grave charge. The submission of the revenue that by the recovery of the notebooks, they have discharged the burden and the onus to prove thereafter shifts on the assessee is erroneous as it has been repeatedly observed that merely on seized records, the charge of clandestine removal is not sustainable unless the same is corroborated by other substantive and independent evidence. The seized record from the residence of Sri S.V.S. Sarma cannot be related to the business accounts of NIPL. In Plama Boards Pvt. Ltd. vs. CCE, Mangalore [ 2010 (8) TMI 811 - CESTAT BANGALORE] , the Tribunal was dealing with a Pocket Diary of the accountant of the assessee and it was observed that diary itself is not an official record of the assessee as it is a private diary and contains personal details including private transactions engaged in by Sri Ashraf, which is not acceptable without corroboration. Thus, it was incumbent on the revenue to have conducted further investigation as per the parameters laid down in various decisions to unearth reliable evidence to corroborate the contents of the notebooks and in the absence thereof the burden is still on the revenue and has not been shifted to the respondents - since the department has failed to discharge its burden to prove the allegations of clandestine removal by any corroborative evidence, the demand is unsustainable. The Adjudicating Authority has dealt in detail the entries made in the statutory records with the private records relating to purchase of Coal, Iron Ore, the basic raw material without which excess quantity of Sponge Iron M.S. Ingots could not have been manufactured and sold and thereby concluded that no inference can be drawn against the respondents - Needless to say, excise duty is chargeable on the manufacturing activity and liability to pay is on the person, who is carrying out the activity of manufacture. Consequently, the demand cannot be raised jointly and severally and hence the same has been rightly set aside by the impugned order - Thus, no reliance can be placed on the statement of Sri Sarma which he retracted later on and also in view of his cross examination - the impugned order is hereby upheld. Appeal of Revenue dismissed.
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2024 (1) TMI 671
CENVAT Credit - iron fines emerging during the process of manufacture of sponge iron ore - case of the Revenue is that the iron ore fines are not excisable and no excise duty is paid on them - non-maintenance of separate records for manufacture of sponge iron and iron ore fines in terms of Rule 6(1) of the Cenvat Credit Rules, 2004 - HELD THAT:- The case of the Respondent is that it does not manufacture the iron ore fines at all and they emerge as a by-product in the manufacture of its main product, namely, sponge iron and, accordingly, Rule 6 of the Cenvat Credit Rules would not apply - this issue is no longer res integra and in the respondent s own case in M/S GHANKUN STEELS PRIVATE LIMITED. VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE, RAIPUR. [ 2019 (5) TMI 1998 - CESTAT NEW DELHI] it has been held by this Tribunal that the Respondent need not deposit the amount equal to 6% under Rule 6(3) of the CCR. The amendment made by way of explanation to Rule 6 makes no difference because the question is not if the goods are non-excisable or excisable but exempted but whether the iron ore fines are manufactured or not and this Tribunal has consistently held that the iron ore fines are not manufactured but only emerge during the process of manufacture of sponge iron - there are no force in the appeal by the Revenue. The appeal is, accordingly, dismissed and the impugned order is upheld.
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2024 (1) TMI 670
Recovery of CENVAT Credit alongwith interest and penalties - iron fines emerging, during the process of manufacture of sponge iron ore - iron ore fines are not excisable and no excise duty is paid - failure to maintain separate records - HELD THAT:- This issue is no longer res integra and in the respondent s own case M/S GHANKUN STEELS PRIVATE LIMITED. VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE, RAIPUR. [ 2019 (5) TMI 1998 - CESTAT NEW DELHI] it has been held by this Tribunal that the Respondent need not deposit the amount equal to 6% under Rule 6(3) of the CCR. The amendment made by way of explanation to Rule 6 makes no difference because the question is not if the goods are non-excisable or excisable but exempted but whether the iron ore fines are manufactured or not and this Tribunal has consistently held that the iron ore fines are not manufactured but only emerge during the process of manufacture of sponge iron. Accordingly, there are no force in the appeal by the Revenue. The appeal is, accordingly, dismissed and the impugned order is upheld.
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2024 (1) TMI 669
Wrongful availment of inadmissible credit - medicaments manufactured by the appellant cleared on payment of duty without availing the benefit of Notification No. 4/2006-CE dated 01.03.2006 - HELD THAT:- Going through the said Notification No. 4/2006-CE dated 01.03.2006 and 12/2012-CE dated 17.03.2012, similarly worded, we find that to avail the benefits of said Notifications, it is necessary to fulfill the conditions viz. (i) formulation means medicaments processed out of or containing one or more bulk drugs, with or without the use of any pharmaceuticals aids (such as diluent, disintegrating agents, moistening agent, lubricant, buffering agent, stabilizer or preserver) which are therapeutically inert and do not interfere with therapeutical or prophylactic activity of the drugs, for internal or external use, or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals; and (ii) it shall not include any substance to which the provisions of Drugs and Cosmetics Act, 1940 do not apply. Therefore, the finding of the ld. Commissioner that the said exemption Notification is absolute one, is incorrect. The appellant during the relevant period discharged appropriate duty on the formulations manufactured and cleared from their factory. It is a settled position of law that once the duty has been paid considering the process undertaken resulting into manufacture and attracting duty, Cenvat Credit cannot be denied on inputs/input services if subsequently it is found to be not amounting to manufactured and hence, not excisable. There are no merit in the impugned order - appeal allowed.
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2024 (1) TMI 663
Method of valuation - Demand of differential duty - clearance of clinkers of 4136661 .31 MTs to the sister units against the miniscule sale of 6018.19MTs to independent buyers - applicability of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or Rule 4 read with Rule 11 of Central Excise Valuation Rules, 2000? - period March 2011 to November, 2013 - Extended period of Limitation - HELD THAT:- The appropriate rules for determination of the assessable value of the goods for the transferred clinkers to sister units will be Rule 4 read with 11 of the Central Excise Valuation Rules, 2004 rather than Rule 8 of the Central Excise Valuation Rules, 2000 for the period in question - This issue has been considered by the Larger Bench of the Tribunal in ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [ 2007 (2) TMI 5 - CESTAT, MUMBAI-LB] and their lordships after noting the Circulars issued by the Board in this regard where it was held that the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers. Extended period of limitation - HELD THAT:- The appellant has been declaring the assessable value adopting Rule 8 of the Central Excise Valuation Rules, 2000 and discharging duty during the relevant period. All these facts are recorded in their ER-1 returns and periodically filed with the department; no objection has been raised by the Department on such method of assessment. Therefore, alleging suppression or mis-declaration of facts with intent to evade payment of duty cannot be sustained - In the appellant s own case for the Gujarat Unit, this Tribunal has considered the issue of invocation of larger period of limitation reported as M/S ULTRATECH CEMENT PVT. LTD. VERSUS CCE BHAVNAGAR [ 2013 (8) TMI 682 - CESTAT AHMEDABAD] . Analysing the facts more or less similar to the present one for the period March 2008 to March 2010, though the method of assessment was held to be not correct, it is held that extended period of limitation cannot be invoked. The impugned order is accordingly modified and appeal is partly allowed setting aside demand for the extended period of limitation and remand the matter to the adjudicating authority to re-determine the assessable value applying the principle of Rule 4 read with Rule 11 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and compute the differential duty, interest, if any, accordingly.
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CST, VAT & Sales Tax
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2024 (1) TMI 668
Seeking issuance of issuance of a writ of certiorari - calling for the records leading to Exhibits P7, P8 P9 orders issued by the 3rd respondent - seeking to declare that the Multi-Function Printer traded by the petitioner, falls under Entry 69(22)(c)(i) of the 3rd Schedule to the KVAT Act, 2003, attracting tax @ 4%/5% as applicable in the respective year - penalties - HELD THAT:- It is not in dispute that the Customs authorities had accepted classification of the machines under HSN Code 8443 3100 under the head 'Digital Multifunctional Device' under the provisions of the Customs Act and the Customs Tariff Act, which is corresponding to Entry 69(22) (c)(i) of the Third Schedule to the KVAT Act. The importer-seller itself had classified the said products under Entry 69(22)(c)(i) of the Third Schedule to the KVAT Act with HSN Code 8443 3100 under the Customs Act and the Customs Tariff Act. When the importer-seller had classified its machine under HSN Code 8443 3100, which falls under Chapter 84 of the Customs Tariff Act corresponding to Entry 69(22)(c)(i) of the Third Schedule to the KVAT Act, the petitioners herein being re-sellers of the machines purchased from the importer-seller could not adopt a different classification. In the present cases, when the importer- seller had classified the said machines as 'Digital Multifunctional Devices' with HSN Code 8443 3100 under the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 at the time of import and the said HSN Code is identical to Entry 69(22)(c)(i) of the Third Schedule to the KVAT Act, the petitioners cannot be said to have wilfully classified the machines under a wrong head with the intention to evade payment of correct/higher rate of tax at 13.5%. The penalty proceedings has to be initiated when there is wilful or contumacious act on the part of the assessee to evade payment of correct tax. The petitioners had reason to adopt the said classification as 'Digital Multifunctional Devices', as they being re-sellers could not have classified the machines to a different classification. The initiation of penalty proceedings against the petitioners are not justified and therefore, the penalty orders impugned in these cases are hereby set aside. Petition allowed.
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Indian Laws
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2024 (1) TMI 667
Liability to pay the amount of the sum assured on the death of the assured - date from which the policy becomes effective - whether it would be the date on which the policy is issued or the date of the commencement mentioned in the policy or it would be the date of the issuance of the deposit receipt or cover note? - HELD THAT:- In the present case, period of 12 months from 16.07.2012 will complete on 15.07.2013. It would be the last day of 12 months as from the next day, i.e., 16.07.2013 the next month will start. Unfortunately, the incidence of suicide is on 15.07.2013, the last day of 12 months. The date of proposal cannot be treated to be the date of policy until and unless on the date of proposal, initial deposit as also the issuance of policy happens on the same date where, for example, the premium is paid in cash then, immediately, the policy could be issued. Merely, tendering a cheque may not be enough as till such time the cheque is encashed, the contract would not become effective. The drawer of the cheque may, at any time, after issuing, stop its payment or there may not be enough funds in the account of which the cheque is issued and there could be many other reasons for which the cheque could be returned without being encashed. Relying upon the above judgment in the case of Dharam Vir Anand [ 1998 (10) TMI 534 - SUPREME COURT] , this Court again in the case of Life Insurance Corpn. of India vs. Mani Ram [ 2005 (8) TMI 747 - SUPREME COURT] , reiterated the same view and held that the date of issue of policy would be the relevant date even if there was backdating as has been done in the case of Dharam Vir Anand - In the present appeals, there are no issue of back dating but the date of issuance of the policy would be the relevant date for all the purposes and not the date of proposal or the date of issuance of the receipt. In view of the above, the stand taken by the appellant is approved. The impugned orders are thus liable to be set aside. The orders passed by the District Forum, the State Commission, and the National Commission are set aside and the claims of the respondent are rejected - Appeal allowed.
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2024 (1) TMI 666
Dishonour of Cheque - insufficient funds - discharge of legal liability or cheque issued towards the security - HELD THAT:- The accused admitted in his statement recorded under Section 313 of Cr.P.C. that the cheque was dishonoured due to insufficient funds . Therefore, this fact is not in dispute otherwise also Amrander Kumar (CW2) stated that cheque No.713405 was dishonoured due to insufficient funds and it was returned to the collecting bank with the memo. He admitted in his cross-examination that he was not posted in the bank at the time of the receipt of the cheque. However, that is not material because there is a presumption under Section 146 of the Negotiable Instrument Act regarding the correctness of the memo of dishonour. The accused has not disputed this fact in his statement recorded under Section 313 Cr.P.C. and the presumption has not been rebutted; therefore, it was duly proved that the cheque was dishonoured due to insufficient funds. The complainant stated that he had not received the notice. Learned Trial Court had rightly pointed out that the person, who claimed that he had not received a notice as to pay the amount within 15 days from the receipt of the summons of the Court. It was laid down in CC. ALAVI HAJI VERSUS PALAPETTY MUHAMMED [ 2007 (5) TMI 335 - SUPREME COURT ] that the person who claims that he had not received the notice has to pay the amount within 15 days from the date of the receipt of the summons from the Court and in case of failure to do so, he cannot take the advantage of the fact that notice was not received by him. The accused has not paid any money to the complainant, and it was duly proved that the accused had failed to pay the money despite the receipt of the notice - Thus, it was duly proved that the cheque was issued in discharge of the legal liability which was dishonoured due to insufficient funds and the accused failed to make the payment despite the receipt of a valid notice of demand; hence, the complainant had succeeded in proving its case beyond the reasonable doubt. In the present case, the amount awarded by the learned Trial Court as affirmed by the learned Sessions Judge is inadequate but in the absence of any appeal regarding the enhancement of sentence, no interference is required with the same. The present revision fails and the same is dismissed.
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2024 (1) TMI 665
Dishonour of Cheque - funds insufficient - compounding of offence - amicable settlement arrived at between the parties - HELD THAT:- Having taken note of the fact that the matter has been amicably settled between the parties under One Time Settlement Scheme and the complainant-Bank has also issued No Dues Certificate in favour of the petitioner and the account stands closed, this Court sees no impediment in accepting the prayer made on behalf of the accused petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT ], wherein the Hon ble Apex Court has held A bare reading of this provision would lead us to the inference that offences punishable under laws other than the Indian Penal Code also cannot be compounded. However, since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a non obstante clause. In K. SUBRAMANIAN VERSUS R. RAJATHI REP. BY P.O.A.P. KALIAPPAN [ 2009 (11) TMI 1013 - SUPREME COURT ], it has been held by the Hon ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has amicably settled the matter with the complainant-Bank under One Time Settlement Scheme, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon ble Apex Court. Accordingly, the present matter is ordered to be compounded - Taking into consideration the law laid down by the Hon ble Apex Court and the financial condition of the petitioner, as he is a poor person, since the competent Courts can reduce the compounding fee with regard to the specific facts and circumstances of the case, the petitioner is directed to deposit token compounding fee of Rs.10,000/- (rupees ten thousand) only with the H.P. State Legal Services Authority, Shimla, H.P., within four weeks from today. Petition disposed off.
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2024 (1) TMI 664
Non-payment of subsistence allowance in view of an unfulfilled condition stipulated by the Respondent Company in the suspension order - whether the act of the Respondent Company is in consonance with the provisions of Section 10(A) of the Industrial Employment (Standing Orders) Act, 1946? - HELD THAT:- Section 10(A) refers to payment of subsistence allowance during the period of suspension. From reading Section 10(A) of the said Act, it appears that the provision is a beneficial enactment to take care of employees who are placed under suspension and they are required to be paid the prescribed 50% wages as contemplated for the period under suspension. In the present case, the Respondent - Company has argued that it is a long standing customary practice of the Respondent - Company to require marking of attendance at the factory gate because of which subsistence allowance is denied to Mr. Natubhai Patel - A customary practice cannot be equated as a provision under any law or a provision under any other law and the provisions of Section 10(A) of the said Act clearly supervene in relation to the payment of subsistence allowance over the alleged customary practice followed by the Respondent - Company. Once it is found that the said customary practice is in clear conflict with the provisions of Section 10(A) of the said Act, the claim of the employee being entitled to subsistence allowance cannot be permitted to be defeated on the basis of a customary practice followed by the Respondent - Company. What is required under the law is for the suspended employee to inform the employer that he is not gainfully employed elsewhere and nothing more. Once the statutory provisions does not provide for requiring marking of attendance everyday such introduction of a stipulation as per customary practice is illegal in law, no matter what the concerned employer desire from introducing such a condition. In the present case, the said restrictive condition cannot be made a precondition to the extent of claiming that it was for ensuring that the employee was not gainfully employed during the period of suspension. Such an interpretation and argument deserves to be rejected and dismissed in the first instance itself. Such a stipulation is unreasonable and cannot be within the four corners of the statutory provisions. The impugned Award dated 13.08.2014 is quashed and set aside and it is declared that Mr. Natubhai Patel, the concerned employee is entitled to payment of subsistence allowance from the date of suspension till the date of his termination alongwith interest @ 10% per annum (simple interest) from the date on which each payment was due and payable till the same is paid over to him - It is directed that Petitioner shall compute the details of payment and inform the same to the Respondent - Company alongwith an authenticated copy of this judgment within a period of one week from today - The Respondent Company is directed to pay the entire amount as computed and entitled to alongwith interest to the concerned employee Mr. Natubhai Patel within a period of one week thereafter. Petition disposed off.
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