TMI Tax Updates - e-Newsletter
January 20, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Securities / SEBI Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Common Challenges in Spice MCA Registration and How to Overcome Them

   By: Ishita Ramani

2. E-Invoicing Under GST: Key Guidelines and Compliance Requirements

   By: TUSHAR Malik

3. Domestic transfer pricing: Specified Domestic transaction to exclude payments made u/s 40A(2)(b); Inter-unit comparison of net profit in these GST times

   By: Vivek Jalan

4. General Interpretative Rules for Customs Classification

   By: YAGAY andSUN

5. SCN and Order devoid of required particulars to contest claim of erroneous refund is void

   By: Bimal jain

6. Harmonized Systems of Nomenclature (HSN) Code

   By: YAGAY andSUN

7. Electronic Seal (E-Seal)

   By: YAGAY andSUN

News

1. Budget session of Parliament from January 31 to April 4

2. Govt working on concept of 'Apno Swasth Rajasthan': CM Sharma

3. Jharkhand finance minister emphasises increasing revenue during pre-budget consultation

4. The Economic Times to Host GCC Growth Summit 2025 in Hyderabad

5. Bharat Mobility Expo shows that the Indian auto industry is confident to take on global competition: Shri Piyush Goyal

6. Prime Minster Shri Narendra Modi inaugurates Bharat Mobility Global Expo 2025, recalls the contribution of legends Ratan Tata and Osamu Suzuki, says their legacy will inspire the mobility sector

7. Union Minister of Commerce & Industry Shri Piyush Goyal to visit Brussels from January 18-20, 2025

8. Financial Intelligence Unit (FIU-IND) and National Housing Bank (NHB) sign MoU for enhanced coordination and information exchange

9. IMF sees steady global growth, warns that Trump tariff, tax, deportation plans cloud outlook

10. Ensure nominations in all accounts, lockers: RBI to banks

11. Time apposite to rekindle animal spirits through consumption boost, says RBI Bulletin

12. Use '1600xx' number series to call customers for transactions: RBI to banks

Notifications

Customs

1. 04/2025 - dated 17-1-2025 - Cus (NT)

Notification of ICD, Dhirpur, Kurukshetra, Haryana u/s. 7(1)(aa) of the Customs Act 1962" and it was issued under Section 7(1)(aa) of Customs Act, 1962. - Inland Container Depots for loading and unloading of goods

GST - States

2. 06/2025- State Tax (Rate) - dated 16-1-2025 - Bihar SGST

Amendment in Notification No. 12/2017-State Tax (Rate), dated the 29th June, 2017

3. 05/2025- State Tax (Rate) - dated 16-1-2025 - Bihar SGST

Amendment in Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017

4. 04/2025- State Tax (Rate) - dated 16-1-2025 - Bihar SGST

Amendment in Notification No. 8/2018-State Tax (Rate), dated 25.01.2018

5. 03/2025- State Tax (Rate) - dated 16-1-2025 - Bihar SGST

Amendment in Notification No. 39/2017-State Tax (Rate), dated 18.10.2017

6. 02/2025- State Tax (Rate) - dated 16-1-2025 - Bihar SGST

Amendment in Notification No. 2/2017-State Tax (Rate), dated 29.06.2017

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/IMD/IMD-PoD-2/P/CIR/2025/6 - dated 17-1-2025

Disclosure of Risk adjusted Return - Information Ratio (IR) for Mutual Fund Schemes.

2. SEBI/HO/DDHS/DDHS-PoD-3/P/CIR/2025/007 - dated 17-1-2025

Timeline for Review of ESG Rating pursuant to occurrence of ‘Material Events’

Customs

3. 02/2025 - dated 17-1-2025

Implementation of the Sea Cargo Manifest and Transhipment Regulations (SCMTR)

Highlights / Catch Notes

GST

• Arunachal Cabinet Approves Concessions for Hydro Projects, Medical College, Staff Hirings.

  News : The Arunachal Pradesh cabinet granted SGST reimbursement concessions to the 700-MW Tato II HEP and 1,720-MW Kamala HEP to enhance financial viability. These joint venture projects with CPSUs, entailing Rs. 35,000 crore investment, will generate Rs. 470 crore annual free power and Rs. 79 crore local area development funds. The cabinet approved a policy for restoring terminated large hydropower projects, recommended a 100-seat medical college and 420-bed hospital in Namsai under PPP mode, upgraded 20 junior engineer posts, created 36 posts in the land management department, and approved 32 teaching/non-teaching posts for the Tezu engineering college.
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• Petitioner entitled to reimbursement of additional GST, interest on delayed payments.

  Case-Laws - HC : The HC held that the petitioner is entitled to reimbursement of the additional GST amount and interest on delayed payments. The writ petition was maintainable despite the presence of an arbitration clause, relying on the Division Bench's order in M/S APEX STRUCTURE PVT. LTD. case, wherein the respondent was directed to pay the difference of GST amount with interest within a specified period, failing which interest would accrue.
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• High Court: Regulatory fees collected by CERC and DERC not subject to GST.

  Case-Laws - HC : The HC held that the regulatory fees collected by the Central Electricity Regulatory Commission (CERC) and Delhi Electricity Regulatory Commission (DERC) are not subject to GST. The regulatory functions discharged by these Commissions do not constitute 'supply' under the CGST Act as they are neither supply of goods nor services. Their role is quasi-judicial, regulating and administering electricity distribution, which is a natural resource vesting in the State. The fees received cannot be considered 'consideration' in the course of furtherance of 'business' u/ss 2(17) and 7 of the CGST Act. The regulatory and adjudicatory functions are not distinct under the Electricity Act.
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• Non-speaking order quashed for not considering petitioner's reconciliation report.

  Case-Laws - HC : The HC set aside the non-speaking order of the respondent and remitted the matter back for fresh consideration of the demand in the show cause notice and the petitioner's reply. The respondent failed to consider the petitioner's reconciliation report which showed excess credit of Rs. 1,40,684/- after adjusting IGST, CGST and SGST, violating principles of natural justice. The impugned order did not provide reasons for rejecting the petitioner's explanation. The petition was allowed by way of remand.
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• HC sets aside GST registration cancellation for violation of principles of natural justice.

  Case-Laws - HC : The HC held that while writ petitions under Article 226 are ordinarily not maintainable if statutory remedy is available, exceptions exist for violation of natural justice principles. Failure to grant personal hearing to the petitioner before cancellation of CGST registration violated Section 75(4) of the GST Act and natural justice. Consequently, the impugned order cancelling petitioner's registration was set aside by the HC.
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• Seized goods must be returned within 30 days unless needed for proceedings.

  Case-Laws - HC : Seizure of documents, books, laptops, CPUs, mobile phones permissible u/s 67(2) CGST Act but must be returned within 30 days of issuing notice as per Section 67(3) unless required for proceedings. HC directed Commissioner to provide copies of seized data to petitioners and examine providing additional hard disks for data copy. Matter listed for further hearing.
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Income Tax

• Software migration services receipts not taxable as FTS under India-Singapore treaty.

  Case-Laws - AT : Non-resident corporate assessee's receipts for maintenance, support, training services, and additional services relating to software migration held not taxable as Fees for Technical Services (FTS) under India-Singapore DTAA. Services did not make available technical knowledge or skills to recipient on a recurring basis. Assessee had no PE in India, so business receipts not taxable. ITAT allowed assessee's appeal.
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• Assessee's appeals dismissed; securities losses recovery not taxed in AY 2002-03.

  Case-Laws - AT : Assessee's appeal for rectification dismissed. Tribunal clarified recoveries of securities losses would not be taxed in AY 2002-03 subject to outcome of appeals for AY 1993-94 before HC/SC. Tribunal did not err in remanding transfer pricing issue to TPO for verification of CPA certificate and allocation key as all relevant facts were not available on record. Remand does not constitute mistake apparent on record rectifiable u/s 254(2).
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• Secondment of employees: Korean Company's Activities in India Not Deemed Permanent Establishment Under Tax Treaty.

  Case-Laws - HC : The HC held that the activities of the assessee in India were of the nature specified in Article 5(4) of the DTAA between India and Korea, and consequently there was no PE in India. The HC agreed with the Tribunal's view that the secondment of employees did not create a deemed PE, as the seconded employees were not discharging functions or performing activities connected with the global enterprise of the assessee. Their placement in India was to facilitate the activities of SIEL. The HC found no error in the Tribunal's decision that a deemed PE had not come into being merely due to the secondment of employees.
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• Belated TDS remittance: Interest & late fee upheld despite website info.

  Case-Laws - HC : Petitioner's liability to pay interest and late filing fee upheld for belated TDS remittance under Income Tax Act, 1961. HC held that despite petitioner's contention of BDA being an exempted institution based on website information, petitioner's acts of non-deduction of TDS while paying sale consideration and subsequent belated TDS remittance disentitled reliefs sought. Question framed answered in negative.
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• HC allows deduction u/s 80-IA for captive power unit's profits.

  Case-Laws - HC : The HC held that profits derived from captive consumption of electricity generated by the assessee's power generation unit, being an eligible business, would qualify for deduction u/s 80-IA of the Income Tax Act, 1961. The interpretation of the term 'derived' in light of the Tribunal's finding rendered the assessee's power generation unit eligible for deduction as a separate undertaking u/s 80-IA.
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• Trust's registration rejected as objects not for general public benefit 2(15.

  Case-Laws - AT : CIT(E) rightly rejected registration u/s 12AB as applicant's objects per memorandum not for benefit of general public but specific section of society. Proviso to section 2(15) defining charitable purpose gets imbibed in determining registration u/s 12AB. ITAT dismissed assessee's appeal relying on Truck Operators Association case that association working for interests of its members not charitable activity.
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• Bank deposits treated as unexplained money despite evidence; partly allowed.

  Case-Laws - AT : Assessee partly succeeded. AO made addition u/s 69A r.w.s 115BBE treating bank deposits as unexplained money despite assessee providing details of fixed deposits, bank statements, investments from employment income except one entry of Rs. 63,133. ITAT held once source is explained with supporting evidence, mere doubting genuineness without basis is unjustified. Except Rs. 63,133, no addition u/s 69A can be made for explained credits. Decided in favour of assessee partly.
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• Assessee not liable for penalty u/s 270A on service tax, PF contributions.

  Case-Laws - AT : The ITAT allowed the assessee's appeal and held that no penalty u/s 270A could be levied for non-payment of service tax liability and employees' contribution to PF before the due date. It was an admitted fact that both amounts were already available in the audit report, which formed the basis for disallowance by the AO. Following the Delhi High Court's decision in Prem Brothers Infrastructure LLP, it cannot be considered mis-reporting. The Supreme Court in Price Waterhouse Coopers (P.) Ltd. held that no penalty could be imposed for a mistake disclosed in the tax audit report. Since no adjustment was made in the intimation u/s 143(1), it was not a fit case for levying penalty u/s 270A.
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• Loan/deposit repayments via non-account payee modes breach Sec 269T; penalty u/s 271E deleted for CSA dues adjusted against deposits.

  Case-Laws - AT : Assessee made repayments of loans/deposits through modes other than account payee cheques/drafts, violating Section 269T. Penalty u/s 271E was imposed. ITAT bifurcated transactions into those with related parties and Customer Sales Agents (CSAs). For CSA transactions, outstanding dues were adjusted against security deposits through journal entries, breaching Section 269SS. However, ITAT held this constituted 'reasonable cause' u/s 273B, not attracting penalty u/s 271E, relying on Ajitnath Hi-Tech Builders (P.) Ltd. [2018 (2) TMI 603 - Bombay HC]. Consequently, ITAT set aside CIT(A)'s order and directed AO to delete penalty levied u/s 271E, deciding in favor of assessee.
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• Factory rental income taxable u/s 57, not business income.

  Case-Laws - AT : Assessee computed rental income from factory premises under both "income from house property" and business income incorrectly. ITAT held rental income should be considered under S.57, allowing claim of proportionate expenses against such rental income. AO directed to recompute taxable income under S.57. Assessee's grounds partly allowed.
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• Invoices and documents prove purchases; 10% disallowance deleted after verification.

  Case-Laws - AT : The ITAT dismissed the revenue's appeals and upheld the CIT(A)'s order deleting the additions made by the AO. The assessee provided invoices and documents proving the purchases, which were accepted in the remand report. The 10% disallowance of other expenses was deleted after the AO verified the invoices. The disallowance of foreign exchange loss was rejected, relying on precedents that the revenue cannot question the commercial expediency of business expenditure if the nexus with business is established.
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Customs

• CESTAT order upheld: MIMO-enabled non-LTE products exempt under Notification 24/2005.

  Case-Laws - HC : The HC upheld the CESTAT order, holding that the phrase "MIMO and LTE Products" in Serial No. 13 (iv) of the amended N/N. 24/2005 applies solely to products combining MIMO technology and LTE standards. Consequently, the WAPs imported by the respondent, employing MIMO technology but not LTE standards, qualify for the customs duty exemption under the said notification. The appeal by the Revenue was dismissed.
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• Customs Valuation: CESTAT Quashes Duty, Penalties for Lack of Evidence.

  Case-Laws - AT : The CESTAT allowed the appeal. The department wrongly rejected the declared assessable value of imports under four Bills of Entry. The re-determined value was unacceptable. The differential duty of Rs. 9,60,376/-, order of confiscation, and penalties were set aside. The appellant's statement, allegedly obtained under coercion, could not be solely relied upon to prove undervaluation in the absence of evidence of comparable imports. Principles of natural justice were violated by the ex-parte decision rejecting the declared value without sufficient evidence.
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• Refund claims of CVD remanded for reconsideration, strict compliance with procedures mandated.

  Case-Laws - AT : The CESTAT upheld the remand order for reconsideration of refund claims of CVD paid by respondents. While refund of duty collected without authority of law is permissible, it must be claimed as per the Act. Mere non-uploading of a notification cannot automatically entitle refund without challenging the original assessment orders. Procedural fairness and adherence to natural justice are paramount. The matter is remanded to the Original Authority, leaving all issues open for reconsideration.
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• Customs Appeal: CESTAT remands duty liability, importer status, and limitation period.

  Case-Laws - AT : The CESTAT remanded the matter to the Adjudicating Authority to examine afresh whether the Appellant is an importer, whether the Appellant paid Rs. 31,50,000 to REV, and whether duties paid by REV/SAP India would nullify the Appellant's liability. The CESTAT held that the findings on these points and the question of duties paid by REV in 2013 for an import in 2006 would have a bearing on the correctness of invoking the extended period of limitation and consequent penalties.
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• EOU/EHTP unit eligible for customs duty exemption at debonding under Notification No. 12/2012 /2012.

  Case-Laws - AT : The appellant, an EOU/EHTP unit, is eligible for exemption under Notification No. 12/2012-Cus at the time of debonding of imported goods. The customs duty should be calculated at the effective rate applicable at the time of debonding. The appellant's procedural compliance by furnishing a bond of Rs. 1000 crores is sufficient for claiming the exemption. The exemption can be claimed at debonding, even if not availed at the time of importation. The demand for duty and interest raised in the impugned order is not justified. The CESTAT allowed the appeal, holding that the appellant is entitled to the exemption benefit under Notification No. 12/2012-Cus at debonding.
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• CUSAA 38/2023: MIMO-only WAPs entitled to duty exemption under Notification 24/2005.

  Case-Laws - HC : The HC, in CUSAA 38/2023, interpreted the phrase "MIMO and LTE Products" in Serial No. 13(iv) of the amended Notification No. 24/2005 as applying solely to products combining MIMO technology and LTE standards. Consequently, the WAPs imported by the respondent, employing MIMO technology but not LTE standards, are entitled to the exemption from Basic Customs Duty. The court held that exemption notifications should be interpreted narrowly, and the conjunctive "and" in legal texts typically means a combination rather than alternatives.
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FEMA

• Appellate Tribunal Dismisses Review Petitions on FERA Penalties Non-Compliance.

  Case-Laws - AT : The AT dismissed the review applications filed for waiver of pre-deposit of penalties under FERA. The appellants' failure to comply with the deposit order justified the dismissal of their appeals. The AT found the review petitions failed to meet the conditions under CPC and did not fall within the principles culled out in the Kamal Sengupta judgment after unfavorable orders from higher courts. As held in Ram Kishor Gupta judgment, there was no question of filing reviews of the order affirmed by higher judicial fora. The AT concluded the review petitions had no merit and were dismissed.
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• Proprietor penalized Rs. 5 lakhs for FEMA violation despite lack of mens rea.

  Case-Laws - AT : Appellant applied for rebate of Central Excise Duty by producing fake shipping bills, fraudulently availing rebate. Settlement Commission order stated no immunity granted under FEMA. Findings conclusive - remittances received without actual exports, documents bore appellant's signatures, export proceeds realized by appellant without written arrangement. Delay irrelevant as FEMA violations civil in nature. Appellant responsible as proprietor to ensure export realization. Contravened FEMA by not making shipments within one year of receiving advance remittances. Penalty imposable despite lack of mens rea. Mitigating factors - appeared all documentation completed, later known documents forged, full disclosure to Settlement Commission, paid liabilities. No evidence of active collusion in forgery. Penalty reduced to Rs. 5 lakhs by AT.
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IBC

• Fraudulent CIRP initiation by ineligible 'lenders' dismissed; collusion with promoters.

  Case-Laws - AT : The NCLAT upheld the Adjudicating Authority's order recalling the initiation of CIRP against the Corporate Debtor u/s 65 of the IBC. It found that the Section 7 application was filed fraudulently and with malicious intent by the Appellants for purposes other than insolvency resolution. The Appellants, despite being ineligible, had advanced alleged loans violating Section 186 of the Companies Act, creating a contrived situation of debt and default through collusion with the Corporate Debtor's promoters. The NCLAT dismissed the appeal, holding the findings of fraudulent CIRP initiation were justified based on the totality of circumstances.
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Indian Laws

• India's Growth Rebound on Robust Rural Demand, Public Capex; Sticky Food Inflation a Concern.

  News : India's economic growth poised to rebound as domestic demand regains strength, though stickiness in food inflation warrants careful monitoring, per RBI Bulletin article. Rural demand continues momentum, reflecting resilience in consumption supported by brighter agricultural prospects. Revival in public capex on infrastructure likely to stimulate growth in key sectors. However, rising input cost pressures in manufacturing sector, weather-related exigencies and global headwinds could pose risks to outlook.
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• RBI mandates banks use dedicated mobile number series to curb fraud.

  News : The RBI directed banks to use only the '1600xx' phone numbering series for customer transactions and '140xx' series for promotional purposes to prevent financial fraud. Banks must monitor and clean customer databases, follow TRAI guidelines, utilize the MNRL on DIP, develop SOPs for fraud risk monitoring, update RMNs after verification, and enhance monitoring of accounts linked to revoked mobile numbers. Compliance is mandated by March 31, 2025.
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PMLA

• Bail rejected for key conspirator in rice milling scam money laundering case.

  Case-Laws - HC : The applicant's bail application was rejected as the conditions u/s 45 of PMLA were not satisfied. The HC found substantial material indicating the applicant's involvement as a key conspirator and beneficiary in the money laundering offence related to the alleged custom rice milling levy scam. The economic offence involving deep-rooted conspiracy and huge public loss was viewed seriously. The HC held that the twin conditions u/s 45 obligated it to arrive at a positive finding that the applicant did not commit a money laundering offence, which was not established. The presumption of guilt on the accused under PMLA to disprove involvement in money laundering remained unfulfilled. Consequently, the bail prayer was rejected.
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• Woman gets bail in money laundering case u/s 45(1) PMLA proviso.

  Case-Laws - SC : Woman granted bail in money laundering case. Proviso to Section 45(1) PMLA exempts women from stringent bail conditions under clause (ii). As predicate offence not under NDPS Act and trial unlikely to conclude soon, with no antecedents on record, appellant entitled to regular bail under CrPC/BNSS till trial conclusion with conditions ensuring participation. Appeal allowed.
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SEBI

• Securities law violation compounding: HC orders SEBI to submit all documents considered.

  Case-Laws - HC : The HC set aside the order dismissing the petitioner's application u/s 91 CrPC. It directed SEBI to produce all documents considered by HPAC and WTM while rejecting the petitioner's request for compounding the alleged offense, though in a sealed cover. Regulation 29 of the Settlement Regulation cannot prohibit the court from examining these materials to decide on allowing or rejecting compounding as per Supreme Court guidelines in Prakash Gupta case. The decision on supplying these documents to the petitioner rests with the court.
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Service Tax

• Exemption Notification Scope Amendment Prospective, Profit Inclusion Upheld.

  Case-Laws - AT : Appellant's claim for exemption under 2009 Notification for 2008-2011 disallowed retrospectively as 2011 Notification amending exemption scope intended prospective application without express retrospectivity. Appellant not obliged to follow Rule 6(7B) option available to assessee, not Revenue. Profit on settlement part of taxable value upheld under amended 2011 Notification widening exemption scope. Profit on foreign exchange sale to EEFC account holders non-taxable being separate transactions without consideration flow. Appeal partly allowed by CESTAT.
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• Logistics services ancillary to Cargo Handling, not separate Business Support Services.

  Case-Laws - AT : The appellant provided logistics services ancillary to Cargo Handling Services (CHS), not separate Business Support Services (BSS). The demand for additional service tax under BSS was set aside. The CESTAT held the appellant's services were correctly classified under CHS, not BSS. As the appellant admitted CHS liability, the extended period of limitation was incorrectly invoked. The liability was restricted to the normal period.
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• Appellant's Services Classified as Export, Not Intermediary, Not Liable to Pay Service Tax for 2012-2014.

  Case-Laws - AT : The CESTAT held that the appellant's services could not be classified as intermediary services for the period July 2012 to March 2014. As per Rule 3 of the Place of Provision of Services Rules, the place of provision was the location of the service recipient outside India. Since payment was received in convertible foreign exchange, the services qualified as export of services u/r 6 of the Service Tax Rules, 1994. Consequently, no service tax was leviable, and the demand was set aside. The appeal was allowed.
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• Builder not liable for service tax on flat sales after receiving occupancy certificate: CESTAT.

  Case-Laws - AT : The CESTAT held that the builder is not liable to pay service tax on receipt of entire consideration from the buyer after issuance of 'occupancy certificate' by the Vasai-Virar Municipal Corporation, as it falls under the exception provided in Section 66E(b) of the Finance Act, 1994. The term 'completion certificate' used in the exception includes 'occupancy certificate' issued by the competent municipal authority. The Ministry of Finance clarification dated 26.10.2015 is applicable to all municipal corporations, not limited to BMC. After receiving the occupancy certificate and selling the flats, the builder is not providing declared construction services to the buyers. Hence, the respondent was rightly not liable for service tax on sale of flats where consideration was received after issuance of occupancy certificate. Appeal dismissed.
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• Tribunal Remands Case for Fresh Adjudication on Service Tax on Advances.

  Case-Laws - AT : The CESTAT allowed the appeal by way of remand for de novo adjudication. It held that although sufficient opportunities were granted to the appellant, including personal hearings, the appellant failed to file necessary documents to substantiate its claim that the amounts received were loans against bank guarantees and not taxable advances. The CESTAT observed that service tax is applicable on advances unless adequately proven otherwise. However, in the interest of justice, the matter was remanded to the Commissioner for fresh adjudication.
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Case Laws:

• GST

• 2025 (1) TMI 889
  Dismissal of appeal preferred by the petitioners - hearing as is required under Section 75(4) of the GST Act was not provided - submission of the counsel for the petitioners is that no separate dates were fixed for submission of reply and for hearing which is contrary to the circular - violation of principles of natural justice - HELD THAT:- The said issue was considered by the Division Bench of this Court in the judgment dated 04.03.2024 passed in Writ Tax No. 303 of 2024. The said reasoning is squarely applicable to the facts of the present case. Adopting the said reasoning, the impugned orders are quashed. The respondents would be at liberty to pass a fresh order in accordance with law after giving opportunity of hearing to the petitioners. Petition disposed off.

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• 2025 (1) TMI 888
  Maintainability of petition - availability of alternative remedy - Seeking to release the admitted liability towards the difference of GST amount - interest on the delayed payment of the GST difference - HELD THAT:- Reliance placed on an order Division Bench of this Court in M/S APEX STRUCTURE PVT. LTD. THROUGH ITS POWER OF ATTORNEY HOLDER NEELABH SUGANDHI VERSUS STATE OF M.P. AND OTHERS [ 2024 (12) TMI 928 - MADHYA PRADESH HIGH COURT] wherein it is observed respondent No.2 is directed to pay the difference of GST amount to the petitioner @ 6% from 01.01.2022 to 30.09.2022 with a period of three months from the date of receipt of certified copy of this order, failing which the petitioner shall be entitled for interest @ 6% per annum from the date of entitlement. Conclusion - The petitioner is entitled to reimbursement of the additional GST amount and interest on delayed payments. The writ petition is maintainable despite the presence of an arbitration clause. Petition disposed off.

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• 2025 (1) TMI 887
  Levy of GST - Regulatory fees collected by the Central Electricity Regulatory Commission (CERC) and the Delhi Electricity Regulatory Commission (DERC) - respondents have sought to draw a dichotomy between the adjudicatory and regulatory functions which these two statutory bodies discharge to essentially hold that the revenue earned from the latter would be subject to tax under the CGST and IGST Acts - HELD THAT:- Whilst the supply of goods or services stands comprised in Schedule II, Schedule III to the CGST Act lists out activities which are neither liable to be treated as a supply of goods nor a supply of services. Schedule III assumes significance since one such genre is prescribed to be services rendered by a tribunal established under any law. The fact that an electricity regulatory commission acts as a tribunal cannot perhaps be disputed bearing in mind the judgment rendered by the Supreme Court in PTC India Ltd. v. Central Electricity Regulatory Commission [ 2010 (3) TMI 1209 - SUPREME COURT] and where it was held that the Central Commission is the decision-making authority. Such decision-making under Section 79(1) is not dependent upon making of regulations under Section 178 by the Central Commission. Therefore, functions of the Central Commission enumerated in Section 79 are separate and distinct from functions of the Central Commission under Section 178. The former are administrative/adjudicatory functions whereas the latter are legislative. . The respondents, however, seek to discern a distinction between the adjudicatory function performed by a regulatory commission as distinguishable from what they assert to be the exercise of a power to regulate. According to the respondents, any income or receipts derived by those Commissions in the course of discharge of their regulatory function would be exigible to tax under the CGST Act - It becomes pertinent to note that the CGST Act not only deals with the supply of goods or services per se, it also brings within its ambit composite and mixed supplies in terms of Section 8. Composite supplies are those which are spelt out and enumerated in serial 6 of Schedule II. The supply of services generically is dealt with in serial 5. Undisputedly, the regulatory function discharged by Commissions can neither be said to be akin to renting of immovable property, construction of a complex or building, temporary transfer or permissive use or enjoyment of an intellectual property right, development, design of software, transfer of the right to use goods and which are subjects enumerated in serial 5 of Schedule II. The regulatory power which is wielded by Commissions under the provisions of the Electricity Act would also not fall within the ambit of clause (e) of serial 5 and which speaks of an obligation to refrain from doing an act or toleration of an act or situation. Whether the power to regulate, as exercised, could be said to be an activity akin to trade, commerce, manufacture, profession, vocation, adventure, voyager and which are activities enumerated in Section 2 (17) (a)? - HELD THAT:- The expression local authority is defined by Section 2 (69) to include local bodies such as Panchayats, Municipalities, Municipal Committees, Cantonment Boards or Regional Councils and other authorities which may come to be constituted in terms of Articles 371, 371A, 371J or the Sixth Schedule to the Constitution. A Commission which is constituted under the Electricity Act would undisputedly not fall within the ken of such authorities - The word consideration , in our considered opinion, would necessarily have to draw colour and meaning from Section 2(31) and which speaks of payment made in respect of, in response to or for the inducement of a supply of goods. When we revert to Section 2 (17), we find that the statute defines the said expression to mean any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity irrespective of whether it be for a pecuniary benefit or not. Clauses (b) and (c) of Section 2 (17) are again coupled to clause (a). Clause (d) of Section 2 (17) is concerned with the supply or acquisition of goods, while clauses (e), (f), (g) and (h) would also have no application whatsoever considering the nature of activities which are contemplated therein. The word consideration , in our considered opinion, would necessarily have to draw colour and meaning from Section 2(31) and which speaks of payment made in respect of, in response to or for the inducement of a supply of goods. Suffice it to note that it was not even remotely sought to be contended by the respondents that the payments in the form of fee as received by Commissions were an outcome of an inducement to supply goods or services. More importantly we find that by virtue of Section 7, a supply would necessarily have to be of goods or services not only for consideration but more importantly in the course or furtherance of business. We have in the preceding parts of this decision clearly found that the regulatory function discharged by Commissions would clearly not fall within the scope of the word business as defined by Section 2 (17). Thus, even if the fee so received by such Commissions were to be assumed as being consideration received, it was clearly not one obtained in the course or furtherance of business. We are thus of the considered opinion that the view as expressed by the respondents in the SCNs impugned before us are rendered wholly arbitrary and unsustainable. Role and Functions of Electricity Commission - HELD THAT:- The Electricity Act makes no distinction between the regulatory and adjudicatory functions which it vests in and confers upon a Commission. Those functions are placed in the hands of a quasi-judicial body enjoined to regulate and administer the subject of electricity distribution. Electricity, undoubtedly, is a natural resource which vests in the State. There are no hesitation in observing that the SCNs infringe the borders of the incredible and inconceivable - A notification would neither expand the scope of the parent entry nor can it be construed as taking away an exemption which stands granted under the CGST Act. There cannot possibly be even a cavil of doubt that a Schedule constitutes an integral part and component of the principal legislation. Conclusion - The regulatory function discharged by Commissions would clearly not fall within the scope of the word business as defined by Section 2 (17). Petition allowed.

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• 2025 (1) TMI 886
  Challenge to impugned order - Seeking direction to respondent to reconsider and rectify based on the petitioner s explanation dated 18.11.2024 in the light of the provisions of Section 161 of the Central Goods and Services Tax Act - time limitation - HELD THAT:- After assessment order has been made, Section 161 of the GST Act provides for an application to be made for rectification. Such rectification can be disposed either in favour of the assessee or against him. If any rectification is made as prayed for, the same would get merged into the original order. Just because the rectification application has been rejected, the period of limitation to challenge the original assessment order cannot be said to begin from the date on which the original order was passed, it would only count from the date on which the order of rectification has been passed. In the present case, the original order of assessment was made on 19.08.2024 and the order in rectification was made on 22.11.2024. Therefore, the period of limitation for challenging the order of assessment dated 19.08.2024 shall start ticking from the date of rejection of the rectification application i.e., from 22.11.2024. It is made clear that when the appeal is filed by the assessee as against the original order of assessment, the period of limitation shall be calculated from the date on which the rectification had been dismissed. Petition disposed off.

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• 2025 (1) TMI 885
  Violation of principles of natural justice - lack of proper service of notice to the petitioner - petitioner is ready and willing to pay 25% of the disputed tax and that they may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal, to which the learned Standing Counsel appearing for the respondent does not have any serious objection - HELD THAT:- The petitioner shall deposit 25% of the disputed tax within a period of two weeks from the date of receipt of a copy of this order - On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four weeks from the date of receipt of a copy of this order along with supporting documents/material. Petition disposed off.

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• 2025 (1) TMI 884
  Violation of principles of natural justice - non-speaking order - respondent s failure to consider the petitioner s reconciliation report - HELD THAT:- The petitioner had not responded to the said notice and therefore a reminder was sent on 06.07.2024. The petitioner had sent a reply to the show cause notice on 06.07.2024 through online portal clearly stating that according to the comparison sheet under the GST system between GSTR 3B Vs. GSTR-2A, the petitioner had excess credit of Rs. 1,40,684/-. He had also attached the reconciliation report. A perusal of the reconciliation report clearly shows that after adjusting the amount towards IGST, CGST and SGST, an amount of Rs. 1,40,684/- was still available. This reconciliation statement has not been taken note of by the respondent. On the contrary, the respondent would simply state that the reply is not accepted. The reason for not accepting the explanation has not been spelt out in the impugned order. The impugned order is a one line non-speaking order. Such an order cannot be sustained. The impugned order is set aside and the matter is remitted back to the respondent to consider the afresh the demand in the show cause notice and the reply - Petition allowed by way of remand.

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• 2025 (1) TMI 883
  Challenge to SCN on the premise that jurisdictional fact necessary for invoking Section 122 (1A) of the Central Goods and Services Tax Act, 2017 does not exist - HELD THAT:- To a pointed question as to if there is any provision which mandates that obtaining a statement was a condition precedent for issuance of show cause notice, the learned counsel for the petitioner was unable to point out any provision. In view thereof, it is open to the petitioner to file their objections to the notice within a period of 4 weeks from the date of receipt of a copy of this order. Petition dismissed.

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• 2025 (1) TMI 882
  Maintainability of petition - availability of alternative remedy - Cancellation of petitioner s registration under the CGST Act - Failure to grant personal hearing which according to the petitioner is mandatory in terms of the first proviso to Section 29(2) of the Central Goods and Services Tax Act, 2017 - violation of principles of natural justice - HELD THAT:- This Court is conscious of the fact that writ petitions under Article 226 of the Constitution of India would not be entertained normally if statutory remedy is availed. However, existence of alternate remedy is not an embargo or an absolute bar to exercise power under Article 226 of the Constitution of India but a self-imposed restriction and the following circumstances viz., violation of principles of natural justice or lack of jurisdiction or error apparent on the face of the record are some of the exceptions carved out to the rule of alternate remedy for exercise of discretion under Article 226 of the Constitution of India. Conclusion - This Court is of the view that failure to grant a personal hearing is contrary to the mandate contained under Section 75(4) of the GST Act and also results in gross violation of principles of natural justice. Thus the impugned order dated 16.07.2024 is set aside. Petition disposed off.

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• 2025 (1) TMI 881
  Freezing the bank account - legality of seizure u/s 67 of the Central Goods and Services Tax Act, 2017 during the search and seizure operations - HELD THAT:- In terms of Section 67 (3) of CGST Act, all documents, books or things seized under Section 67 (2) of CGST Act, are required to be returned to the person from whom the same are seized within the period not exceeding 30 days from the date of issuance of the notice. In these circumstances, the Commissioner may retain the documents, records, laptops, CPUS and Mobile Phones which were seized but only till the time, the same are required and in any event not later than 30 days after issuance of notice, as required under Section 67 (3) of the CGST Act, 2017 - In the meanwhile, the Commissioner shall ensure that copies of the documents and data on devices available in the mobile phones, CPUs, laptops and other records, which were seized are made available to the petitioners. It is submitted on behalf of the petitioners that although the petitioners have provided a hard disk of 01 Terabyte, the respondents are compelling the petitioners to give further hard disks - Commissioner is requested to examine this aspect and ensure that the copy of the data is not withheld from the petitioners. List for hearing on the aforesaid aspect on 20.08.2024, the date already fixed.

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• Income Tax

• 2025 (1) TMI 894
  Validity of assessment order passed - Proceedings/directions of the Dispute Resolution Panel pursuant to a Draft Assessment Order - Certain technical glitches which disabled the petitioner to comply with the second requirement of filing an objection with the AO - HELD THAT:- Since the petitioner was disabled from forwarding the objection to the AO, the order has been now passed by the AO without awaiting for the order of the Dispute Resolution Panel. Therefore, the impugned Assessment Order dated 25.11.2021 is liable to be quashed and it is accordingly quashed. Since the Dispute Resolution Panel has rejected the application filed by the petitioner, in view of the impugned Assessment Order dated 25.11.2021, directions of the Dispute Resolution Panel dated 13.06.2022 is also liable to be set aside. Accordingly, the matter is remitted back to the Dispute Resolution Panel to pass a fresh order on merits.

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• 2025 (1) TMI 893
  Income deemed to accrue or arise in India - taxability of receipts towards maintenance, other support and training services and received on account of additional services as Fee for Technical Services (FTS) - assessee is a non-resident corporate entity incorporated under the laws of Singapore - Scope of India-Singapore Treaty DTAA - HELD THAT:- The facts of the present appeal reveal that the assessee is providing identical nature of services year on year basis. Had it been the case that the assessee has made available technical knowledge, knowhow, skill etc. to the service recipient, there would not have been any requirement for the assessee to provide such services on recurring basis. This is so because, once the technical knowledge, know-how skill etc. is made available to the service recipient, it enables the service recipient to independently perform such services without requiring the aid and assistance of service provider. Pertinently, while considering identical nature of dispute in assessee s own case in A.Y. 2018-19 [ 2023 (5) TMI 1043 - ITAT MUMBAI] had examined the nature of services provided by the assessee in terms with the agreement and concluded that the receipts are not in the nature of FTS. Whether the receipts from additional services can be treated as FTS under the Treaty provisions? - assessee provide service relating to migration of software from old to new - HELD THAT:- If the Department seeks to invoke Article 12(4)(b) of the treaty the burden is entirely on the department to demonstrate the fulfillment of make available condition through cogent evidence. Unfortunately, the Department has failed to do so. Allegation of the AO that the assessee has offered similar income to tax in A.Y. 2018-19 does not stand to reason in view of the fact that in A.Y. 2018-19, the assessee offered it as business income in view of the fact that it had a service PE in India. Whereas, it is the assertion of the assessee that in the impugned assessment year there was no PE in India. Even, in the assessment order, there is no allegation by the Assessing Officer regarding existence of PE in India. In that view of the matter, once the receipts are not in the nature of FTS under Article 12(4) of the Treaty, they have to be treated as business receipts and in absence of PE in India, cannot be made taxable. Assessee appeal allowed.

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• 2025 (1) TMI 892
  Rectification of mistake - recovery of securities losses made during the relevant previous year should not be brought to tax in view of the fact that the losses incurred pertained to AY 1993-94 and the issue of deductibility of said losses had not attend finality - HELD THAT:-Tribunal has specifically stated that Ground No. 6 raised by the Assessee is kept open. The directions being sought are clearly dependent upon the outcome of the appellate proceedings before the Hon ble High Court and the Hon ble Supreme Court. Therefore, in order to redress the grievance of the Assessee, it is clarified that subject to judgment/direction of the Hon ble High Court/Hon ble Supreme Court in the appellate proceedings arising from the order, passed by the Tribunal in appeal for the Assessment Year 1993-1994, the recoveries of securities losses would not be taxed during the Assessment Year 2002-2003 in case the Revenue succeeds its appeal for the Assessment Year 1993-94 before the Hon ble High Court/Hon ble Supreme Court and the deduction for securities losses in disallowed. Tribunal erred in directing the verification of the CPA Certificate and allocation key for the TPA related to the Assessment Year 2002-03 - TPO had proposed Transfer Pricing Adjustments on the ground that the Assessee had failed to satisfy the benefit test. Since the TPO had rejected the claim at the very threshold, there was no occasion for the TPO to benchmark the cost allocated by taking into account the CPA Certificate furnished by the Assessee. Further, perusal of Assessment Order clearly shows that the TPO/Assessing Officer had clearly taken a stand that in absence of relevant documents/details the benefit derived from the Indian operations could be determined and therefore, benchmarking of cost allocation could not be done. Thus, we reject the contention of the Assessee that the authorities below had verified the CPA Certificate furnished by the Assessee for benchmarking the cost allocation. We are alive to the fact that the Tribunal being the final fact-finding Authority is required to return finding of fact. However, for doing so all the relevant material/facts should be available on record. In case the material facts/information are not available on record and the Tribunal may, in its discretion, remand the issue back to the file of the authorities below. While it has been submitted on behalf of the Assessee that all materials/fact relevant for adjudication of the issue of transfer pricing adjustment were available on record, the same was rejected. We do not find merit in the aforesaid submission in view of the facts narrated hereinabove. We have already rejected the submission of the Assessee that the authorities below had taken cognizance of the CPA Certificate. In our view, the authorities below did not object to the allocation policy or computation of cost allocation solely for the reason that the contention of the Assessee that the cost allocated resulted in benefit to Indian operations/branch was rejected at the threshold by the authorities below on account of failure of the Assessee to furnish supporting documents. Tribunal had accepted the contention of the Assessee that the entire cost allocation cannot be rejected on account of non-submission of original vouchers and agreement/invoices, and thereby provided another opportunity to the Assessee to establish that the cost allocation was at ALP. Equity also required that Revenue should also be granted opportunity to verify the allocation/computation of the cost said to have been incurred outside India for the purpose of Indian operations. Thus, we reject the contention of the Assessee that the directions issued by the Tribunal in paragraph 56 of the order, dated 15/03/2024, constituted mistake apparent on record. The remand of the issue back to the file of the authorities below can, at best, constitute error of judgment (and not mistake apparent on record as contended by the Assessee) which may be subjected to judicial review in appellate proceedings under Section 260A of the Act and the same does not fall within the ambit of powers vested in the Tribunal u/s 254(2) of the Act to rectify the mistake apparent on record.

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• 2025 (1) TMI 880
  Accrual of income in India - Fixed Place Permanent Establishment [ PE ] in India or not? - DTAA between India and Korea - deemed PE having come into being merely on account of the secondment of employees as per DRP - Whether business decisions such as decisions relating to the product to be manufactured, pricing of the product and decisions relating to launch of new products were being taken in India? - Tribunal held that the activities of the assessee in India were of the nature specified in Article 5 (4) of the DTAA and consequently there was no PE in India. HELD THAT:- As is manifest from the principles that we had identified in Progress Rail, a PE would be deemed to have come into existence if one were to find a Fixed Place through which the business of the enterprise seated in the other Contracting State was being carried out. Those premises must be found to be at the disposal of that enterprise and under its control. We had quoted, with approval, the test formulated by Klaus Vogel who had explained control over premises or space to answer the test of considerable extent and the premises being an instrument (equalling or resembling an operating asset) for his entrepreneurial activity . It is these tests which would qualify the benchmark of virtual projection as evolved by courts. In Hyatt International [ 2024 (9) TMI 1202 - DELHI HIGH COURT-[LB] ] Court had explained that PE itself was a concept based upon an enterprise undertaking economic activity in a particular State irrespective of its residence. The taxability of business profits, we had explained, is itself dependent upon a PE existing in the Contracting State notwithstanding that establishment being a constituent of a larger enterprise which may be domiciled in the other Contracting State. However, and as the Tribunal itself has noticed, the DRP had not concurred with the opinion of the AO that a Fixed Place PE, DAPE or Service PE of the respondent-assessee had come into existence. While the DRP had disagreed with the AO on those aspects, it ultimately came to hold against the respondent-assessee, taking the view that by virtue of secondment of employees, a deemed PE had come into being. It is this view that the Tribunal has proceeded to overturn. We find ourselves in complete agreement with the opinion expressed by the Tribunal, since the secondment of employees has not been found to be for the furtherance of the business or enterprise of the respondent. Those seconded employees were not discharging functions or performing activities connected with the global enterprise of the respondent. Their placement in India was with the objective of facilitating the activities of SIEL. Collection of market information, collation of data for development of products, market trend studies or exchange of information would not meet the qualifying benchmarks of a PE. The secondment of employees which may consist of technically trained personnel or persons with experience is an arrangement not uncommon in today s world of business. What however needs to be considered is whether the deployment of such employees is in furtherance of the business of their formal employer or intended to be utilized for the business of the enterprise with whom they are placed. In the facts of the present case, the weight of evidence which was collated unerringly leans towards their engagement being viewed as one which was for the benefit of SIEL. We thus find no error in the view expressed by the Tribunal in this regard. Tribunal was justified in interfering with the opinion formed by the DRP and which had spoken of a deemed PE having come into being merely on account of the secondment of employees. Absent any material that would have even tended to indicate that the functioning of the seconded employees was concerned with the business or the generation of income of the respondent in India, the decision of the Tribunal cannot be faulted. Decided in favour of assessee.

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• 2025 (1) TMI 879
  MAT/Section 115JB applicability to an electricity generation company - HELD THAT:- By way of judgment M/S TATA POWER DELHI DISTRIBUTION LTD. [ 2025 (1) TMI 822 - DELHI HIGH COURT] we have answered the question of law in favour of the assessee and against the Revenue, and held that Section 115JB of the Act would be inapplicable to an electricity generation company, prior to its amendment by virtue of Finance Act, 2012.

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• 2025 (1) TMI 878
  MAT/Section 115JB applicability on the assessee engaged in the business of electricity generation and distribution - additions made on account of Book Profit u/s 115JB - HELD THAT:- By way of judgment [ 2025 (1) TMI 822 - DELHI HIGH COURT] answered the question of law in favour of the assessee and against the Revenue, and held that Section 115JB of the Act would be inapplicable to an electricity generation company, prior to its amendment by virtue of Finance Act, 2012. We are of the opinion that the order of the ITAT does not suffer from any infirmity or error and, is, therefore upheld.

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• 2025 (1) TMI 877
  Petitioner liability to pay interest and late filing fee for the belated remittance of TDS under the Income Tax Act, 1961 - petitioner has vehemently contended that the information available in the website of the Income Tax Department denotes BDA as an exempted institution - HELD THAT:- The petitioner has paid the entire balance sale consideration to the BDA without deducting any TDS on the ground that the BDA was an exempted institution. However, subsequently, the BDA has sought Form 16B and Form 26QB to complete the registration process and the petitioner has paid the TDS amount to the tax authorities, resulting in the tax authorities issuing the demand dated claiming interest and late filing fee. Hence, it is clear that the petitioner himself having done various acts i.e., non deducting of TDS while making the balance sale consideration and thereafter, belatedly remitting the TDS, the question of favourably considering the reliefs sought for in the present petition does not arise. Question framed for consideration is answered in the negative.

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• 2025 (1) TMI 876
  Rejection of stay application - rejection order shows that it is solely based on CBDT OMs - HELD THAT:- Apex Court had an occasion to consider this aspect in M/s.LG Electronics India Pvt.Ltd., [ 2018 (7) TMI 1905 - SC ORDER] and this Court in APR Jewellers Private Limited[ 2022 (5) TMI 1067 - TELANGANA HIGH COURT] and M/s.Zoos and Parks Authority of Telangana [ 2023 (10) TMI 1139 - TELANGANA HIGH COURT] considered that the Courts opined that respondent No.1 being a quasi judicial authority should apply its independent mind and shall not be bound by the administrative circulars Prayer that the said rejection order may be set aside and respondent No.1 may be directed to decide the stay application afresh within the stipulated time accepted. Stay application is revived. The petitioner shall appear before the appellate authority on 13.01.2025. The appellate authority shall decide the stay application afresh, in accordance with law, within 15 days therefrom.

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• 2025 (1) TMI 875
  Withdrawal of liberty to avail the remedy under the Direct Tax Vivad Se Vishwas Scheme, 2024 (Scheme of 2024) - whether Scheme of 2024 override the Scheme DTVSV of 2020 (Scheme of 2020)? - rejection order handed over captioned as rejection remarks - HELD THAT:- First line of rejection remarks is not happily worded. It is difficult to gather exact meaning of the first line. It is incomprehensible. However, the first line gives an impression as if something is settled pursuant to Scheme of 2020 cannot result into refund of taxes paid. The second reason in the rejection remarks is that the Scheme of 2024 does not override the Scheme of 2020. This reason is also required to be relooked in the light of language employed in Section 90 reproduced hereinabove. In the considered opinion of this Court, the impugned order is too sketchy, too short and too cryptic in nature. The reasons are held to be heart beat of the conclusions . In the absence of reasons, conclusions cannot sustain judicial scrutiny. The Supreme Court in Kranti Associates (P) Ltd. v. Masood Ahmed Khan [ 2010 (9) TMI 886 - SUPREME COURT] emphasized the need of assigning reasons in administrative, quasi-judicial and judicial orders. If the impugned order is tested on the anvil of principles laid down in Kranti Associates (P) Ltd. (supra), it cannot sustain judicial scrutiny because of its cryptic nature and non-disclosure of reasons. Thus rejection remarks in all the matters are set aside. The matters are restored back in the file of respondent No.1, who, shall give personal hearing to the petitioner and pass a fresh order, in accordance with law, without getting mechanically influenced by previous order and counter filed. Accordingly, the Writ Petitions are disposed of, without expressing any opinion on the merits of the case.

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• 2025 (1) TMI 874
  Eligibility for deduction u/s 80IA - determination of term derived - profits derived by assessee s power generation unit - HELD THAT:- As the electricity generation is an eligible business and in light of the interpretation of word derive , the profits and gains generated by the captive consumption of electricity, as involved herein, fall within the purview of eligible deductions u/s 80-IA. Therefore, this Court holds that the finding of the Tribunal that the profits derived by the assessee s power generation unit would be eligible for deduction as a separate undertaking under Section 80-IA of the Act of 1961 is justified.

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• 2025 (1) TMI 873
  Validity of the jurisdiction exercised u/s.154 - disallowance of expenses claimed as a provision for expenses - HELD THAT:- FAA has recorded a categorical factual finding that the provision for expenses was made not on estimate basis, but were made on the basis of the actual estimation of liability. Having recorded a clear factual findings that the provisions were not made on estimate basis, but were made on the basis of actual liability and also the fact that the expenses pertain to the current financial year, the learned first appellate authority could not have treated the expenses as contingent liability. Thus, in our view, not only the exercise of jurisdiction u/s. 154 of the Act is invalid, but on merits also the disallowance made is unsustainable. Therefore, we direct the A.O. to delete the disallowance. Grounds are allowed.

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• 2025 (1) TMI 872
  Rejection of application for grant of 12A(1)(ac)(iii) and also cancelled the provisional registration - no Charitable activity undertaken - HELD THAT:- It is pertinent to note that from the perusal of the objects, it is clear that the applicant/appellant is not working for the benefit of general public at large but to the specific section of the society. The objects as per memorandum of association of the Ahmedabad Engineering Manufacturing Association submitted by the applicant/appellant. CIT(E) has rightly rejected the registration u/s.12AB of the Act. Beside this, the decision submitted by the applicant are also not identical to the present applicant s/appellant s case as in all the other cases, there was a specific object for working towards the welfare of the general public but the same is absent in the clause of the present applicant. A.R. s contention that the proviso to section 2(15) was not invoked by the CIT(A) is not proper as section 2(15) and proviso thereto is a definition clause/section and thus the same get imbibed while deciding the application for registration u/s.12AB as the charitable purpose is the definition and how to deal with the charitable institute has to be determined by section 12AB and registration of the said trust accordingly. The decision relied by the DR in case of Truck Operators Association [ 2010 (8) TMI 210 - PUNJAB AND HARYANA HIGH COURT] is relevant to that effect. Thus, the appeal of the assessee is dismissed.

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• 2025 (1) TMI 871
  Unexplained money u/s. 69A r.w.s. 115BBE - unexplained nature of bank deposits - HELD THAT:- AO himself has categorically mentioned that the assessee has filed copy of fixed deposit summary, copy of bank accounts statements with the HDFC and SBI, copy of investment in time deposit HDFC and copy of SBI life Insurance company and in fact the first remand report has also been reproduced and in the remark column related to the transactions where the assessee has explained the source of the funds. AO has filed bank statements of various accounts and has also given the details of fixed deposits held by SBI and summarized explanation of credit and debit entries in his NRE/NRI held by SBI and HDFC bank. From the remark column thereon it can be seen that only one entry of 63,133/- was not explained but the rest of the entries and the transactions were totally explained and verified by the Assessing Officer. Once, the assessee has submitted all the credit entries along with debit entries and also that of the submission of employment verification letter, doubting the genuinely of the said documents without any basis is not justifiable on the part of the Assessing Officer as well as by the DRP. AO as well as CIT(A) except the entry of 63,133/- should not have made addition u/s. 69A as unexplained money because the assessee has explained all the details of rest of the entries - Decided in favour of assessee partly.

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• 2025 (1) TMI 870
  Penalty u/s. 271BA - failure to file report u/s. 92E of the Act before the due date - HELD THAT: - Assessee has filed form 3CEB before the TPO during the reference once the search took place. Both the requirement of furnishing report appears to be mandatory and filing thereof is a procedure and in fact form 3CEB was obtained by the assessee on 16.10.2016 which is prior to the search in assessee s case i.e. search date under Section 132 is 19.11.2019. AO as well as the CIT(A) has totally ignored the fact that the assessee inadvertently could not file Form 3CEB but the same was already compiled by the assessee as per the procedure of Income Tax Act and Income Tax Rules. Thus, it cannot be said that the assessee has deliberately not filed/furnished the Form 3CEB. Therefore, penalty levied under section 271BA of the Act will not survive. This finding should not be taken as precedent as in the present case the Form 3CEB was prepared prior to the search, only thing the assessee has not furnished the same during the original assessment. Hence, appeal of the assessee is allowed.

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• 2025 (1) TMI 869
  Reopening of assessment u/s 147 - Proceeding initiated beyond four years - interest accrued on fixed deposits as created from compensation amounts due to a legal dispute - HELD THAT:- As per settled law, even if the AO obtains information from external sources, the reassessment proceedings remain valid if they are based on new facts that the assessee failed to disclose. We also observe that while the reasons for reopening referred to Rs. 4,32,36,000/-, the inquiry revealed that Rs. 7,11,37,986/- was interest income accrued on FDs created from the compensation amount. Since this discovery was directly linked to the reassessment inquiry, the addition was incidental to the primary reason and not a new issue unrelated to the recorded reasons. We are guided by the principle that the AO has the jurisdiction to reassess not only the income mentioned in the reasons recorded but also related components that emerge during the course of inquiry. We hold that the reassessment proceedings were validly initiated as the interest income as added by the AO arose from the compensation-related inquiry. The failure of the assessee to file a return and disclose material facts justified the initiation of proceedings beyond four years. Appeal challenging the validity of the reassessment proceedings are dismissed. Exemption u/s 10(37) - interest accrued on the fixed deposits maintained by the Principal Civil Judge formed part of the compensation awarded for the compulsory acquisition of agricultural land or not? - We note that the orders of the AO and CIT(A) do not clearly explain the distribution of the total compensation and its reconciliation with the amounts withdrawn and distributed among the parties involved. The flow of funds particularly the cash withdrawn by the original landowner and the manner in which it was handed over to the assessee requires detailed verification. The question of the taxability of the amounts in the hands of the ultimate recipient must also be examined to ensure the correct determination of taxable income. Given the complexities and the need for proper verification of the reconciliation submitted by the assessee, we are of the view that a fresh assessment is necessary to address these issues comprehensively. We are not expressing any opinion on the merits of the assessee s claim for exemption u/s 10(37) or the alternate claim for a deduction under Section 57(iv) at this stage. AO is directed to: 1. Verify the reconciliation of the compensation and interest amounts, including the cash withdrawals by the original landowner and their subsequent distribution to the assessee and other parties. 2. Assess the nature and taxability of the amounts received by the ultimate recipient in accordance with the provisions of the Act. 3. Ensure that there is no double taxation by cross verifying the assessments of the co-owners and reconciling their respective claims. Appeal of the assessee is treated as partly allowed for statistical purposes.

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• 2025 (1) TMI 868
  Penalty levied u/s 270A - under-reporting of income in consequence of mis-reporting - assessee s failure to add back the service tax liability and late payment of employees contribution to PF in the tax return - HELD THAT:- It is an admitted fact that the audit report contained service tax liability which was not paid on or before the due date. Similarly, the audit report also contained the non-payment of employees contribution towards PF to the government account within the statutory due time. Thus, both the amounts were already available in the audit report which is the basis for disallowance by the AO - Therefore, in view of the decision of Prem Brothers Infrastructure LLP [ 2022 (6) TMI 130 - DELHI HIGH COURT] it cannot be held to be mis-reporting. It is also an admitted fact that there is complete absence of details as to which limb of section 270A of the Act was attracted in initiating the penalty proceedings. We find in the case of Price Waterhouse Coopers (P.) Ltd. [ 2012 (9) TMI 775 - SUPREME COURT] has held that where in tax audit report filed by the assessee, it was indicated that provision towards payment of gratuity was not allowable but assessee failed to add said provision to total income, no penalty could be imposed for such mistake. As in the intimation issued u/s 143(1) no such adjustment on account of non-payment of service tax liability and employees contribution to PF before the due date has been added. Thus, it is not a fit case for levy of penalty u/s 270A - Assessee appeal allowed.

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• 2025 (1) TMI 867
  Penalty u/sec.271E - violating the provisions of sec.269T - Reasonable cause u/s 273B - assessee made repayment of loans/deposits through the mode other than account payee cheques/drafts - transactions in respect of which penalty has been levied can be bifurcated in two parts i.e. transaction with related party and transactions with Customer Sales Agents [CSAs] - HELD THAT:- For transaction with CSAs since the dues are to be recovered from the CSAs on account of sales made to them, the assessee has adjusted the amount of recovery against the security deposits obtained from the said parties through journal entries. Although it has been held that receipts/deposits/loans received through journal entries is in breach of sec.269SS, however, the adjustment of such security deposits against outstandings receivable, in our opinion, will constitute a reasonable cause so as not to attract levy of penalty u/sec.269T. We find in the case of Ajitnath Hi-Tech Builders (P.) Ltd. [ 2018 (2) TMI 603 - BOMBAY HIGH COURT ] while holding that receipt/deposit/loans received through journal entries is in breach of sec.269SS, however, has upheld the decision of the Tribunal cancelling the penalty levied on account of reasonable cause In the present case there is a reasonable cause on the part of the assessee for such violation. We, therefore, set aside the order of the Ld. CIT(A) and direct the AO to delete the penalty levied u/sec.271E - Decided in favour of assessee.

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• 2025 (1) TMI 866
  Validity of reopening of assessment for want of valid approval u/s 151- assessee introduced its undisclosed money through accommodation entries - assessment period is happened to be beyond four years - HELD THAT:- We put up specific question to the department to indicate any such approval granted by the learned prescribed authority after having applied its mind than simply accepting the AO s proposal in mechanical manner which is not sustainable in law as per CIT Vs. S. Goyanka Lime and Chemical Pvt. Ltd. [ 2015 (12) TMI 1334 - SC ORDER ] No such approval has either been discussed or filed in the case file satisfying the foregoing statutory condition of application of mind by the learned competent authority. Further no approval was obtained from Ld. PCIT in terms of Section 151 of the Act in the instant case. AO has admittedly recorded his reopening reasons of the assessee having received accommodation entries from the five above stated entities and it latter turned out in the course of assessment that the said loan amount had come only from one of them, namely, Bay Inland Finance Pvt. Ltd. This being the case, AO s reopening reasons, even if held as carrying valid approval (which is not so in the instant case), hardly satisfies the clinching test of being based on the tangible material and therefore, not sustainable in law going by Indo Arab Air Services [ 2015 (10) TMI 2383 - DELHI HIGH COURT ] We further quote Hindustan Liver Ltd. Vs. R.B. Wadkar [ 2004 (2) TMI 41 - BOMBAY HIGH COURT ] that there is no scope of any addition/deletion or substitution in the AO s reopening reasons and validity thereof has to be decided as they were recorded at the first instance. We accordingly accept the assessee s legal arguments challenging the validity of the impugned reopening and reject the Revenue s stand supporting the same in very terms. Decided in favour of assessee.

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• 2025 (1) TMI 865
  Disallowance of expenses - appeal filing fee, legal and professional charges and payment to the auditors - Whether expenses are essentially relatable to its existence / establishment? - AO was of the opinion that, the assessee has earned income from rent and interest income did not have any income arising out of the business activity and hence disallowed the expenditure - HELD THAT:- As noted from the records that the assessee has computed the rent receipt from the factory premises as income from house property against which standard deduction has been claimed further the expenses has been claimed in the profit and loss account and the rent received is also declared as income from under the head other income, this categorically clear from Schedule-I to the profit and loss account. Assessee computed the rental income received under the income from house property as well as business income which is not the right procedure. No doubt, the rental income received, from the factory premises, amounts to income under the head house property. However, considering the fact that the premises rented out formed part of the fixed Schedule assets, it would be appropriate if the rental income received is considered u/s 57 of the Act, wherein all related expenses incurred by the assessee to keep up the property could be claimed as an expenditure. Decisions relied by the Ld.AR are distinguishable on facts as in those cases the assessee therein re-started its business subsequently on this background Hon ble Courts considered the claim of assessee by allowing expenditure to be claimed u/s 37(1) of the Act. However in the present facts of the case, there is no evidence brought on record by the Ld.AR regarding revival of business activity in subsequent years. AO directed to verify the rental income received by the assessee and compute taxability u/s 57 by considering proportionate expenses against such rental income. AO is directed to re-compute the taxable income of the assessee in the hands of the assessee u/s 57 of the Act as mentioned hereinabove. Accordingly, grounds raised by the assessee stands partly allowed.

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• 2025 (1) TMI 864
  TDS u/s 194C - disallowance u/s 40(a)(ia) - Non deduction of TDS on expenses claimed by way of freight charges and CFS charges - CIT(A) allowed the appeal of the assessee by holding that no TDS was required to be made in respect of statutory payments, as they are not in the nature of contractual payments - Whether the assessee was acting as an intermediary or a principal in the transactions in question? HELD THAT:- AR explained his inability to produce all invoices, payment receipts, etc. as required for fair adjudication of the issue in terms of the findings of the Special Bench. He fairly conceded that this evidences were not asked by the AO in view of the contention raised, the assessee being all along as an intermediary. He further submits that the invoices, receipts, etc. showing the payments to Container Freight Station (CFS) in statutory nature runs into voluminous and prayed to remand the matter to the file of the Assessing Officer for fresh adjudication in terms of the findings of the Special Bench treating the assessee as principal. He further reiterated that the assessee is ready to produce all evidences showing the payments made towards CFS are statutory in nature attracting no TDS. Therefore, taking into account the assessee s inability to produce all the required evidences and also AY being identified as old, we deem it proper to remand the matter to the file of the AO with a direction to adjudicate the issue by treating the assessee as principal taking into account all relevant evidences on record that may be produced by the assessee and pass order in accordance with law. Thus, the ground raised by the assessee is allowed for statistical purposes.

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• 2025 (1) TMI 863
  Disallowance u/s 14A - expenses incurred in relation to earning exempt income - sufficiency of own funds - HELD THAT:- As is clear from the fact that assessee made total investments as against that shareholder fund and reserve and surplus as more than total investment in equity shares as on 31/03/2018. Thus, shareholder fund is sufficient to make investment. Facts of the case are similar to the facts of the case decided in the case of Sintex Industries Ltd [ 2017 (6) TMI 601 - GUJARAT HIGH COURT] as held assessee was already having its own surplus fund and that too to the extent of Rs.1981.55 Crores against which investment was made of Rs. 144.51 Crores, there was no question of making any disallowance of expenditure in respect of interest and administrative expenses u/s 14A therefore, there was no question of any estimation of expenditure in respect of interest and administrative expenses under rule 8D of the Rules. Appeal of the assessee is allowed.

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• 2025 (1) TMI 862
  Addition u/s 69C - bogus purchases - CIT(A) deleted addition - HELD THAT:- As before the First Appellate Authority the assessee provided a complete list of fixed assets added to the BOA during the year under consideration along with their invoices whereupon remand report was called for and in the remand report those documents being the proof of purchase made by the assessee has been accepted. Hence, the issue was decided in favour of the assessee by deleting the addition by the Ld. CIT(A) which in our considered opinion is just and proper so as not to warrant interference. This issue as raised by the revenue, thus, is found to be frivolous and dismissed. Disallowance @ 10% of other expenses - CIT(A) deleted addition - HELD THAT:- Taking into consideration the remand report furnished by the AO where the invoices have been verified on test check basis and found in correct order, the said other expenses has been deleted by the Ld. CIT(A) which is found to be just and proper so as not to warrant interference. Hence this ground of appeal rejected. Disallowance of foreign exchange loss - Addition done for the reason that the said loss was on account of foreign exchange transaction related to import and export transactions and no hedging had been done whereas the assessee s case is this that hedging cost sometime work more than the exchange earning - HELD THAT:- AO has not raised any doubt on the calculation of such foreign exchange loss amount and in that view of the matter relying on the judgment passed in the case SA Builders Ltd. [ 2006 (12) TMI 82 - SUPREME COURT ] and Dalmia Cement (Bharat) Ltd. [ 2001 (9) TMI 48 - DELHI HIGH COURT ] holding that when it has been established that there was nexus between expenditure and the purpose of business, revenue is not justified in claiming to put itself in the armchair of the businessman or in the position of the Board of Directors and assume the role to decide how much is the reasonable expenditure, having regard to the facts and circumstances of the case and no businessmen can be compelled to maximize its profits, CIT(A) found substance in the case made out by the assessee and deleted the addition made by the AO which in our considered view is just and proper so as not to warrant interference. This ground of appeal filed by the revenue is found to be devoid of merit and hence dismissed.

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• 2025 (1) TMI 861
  Income taxable in India or not - Royalty receipts - amount received on account of screening services provided to Indian clients - addition u/section 9(1)(vi) and article 12 of India-US tax treaty - HELD THAT:- As perused the Tribunal order and find that this issue is squarely covered in favour of the assessee and against the Revenue by an order of the co-ordinate bench in assessee s own case for Assessment Years 2019-20 and 2020-21 in [ 2023 (9) TMI 478 - ITAT DELHI] held the consideration received by the assessee under the terms of its agreement with its client is purely towards provision of background screening services and does not include any consideration for use or right to use any copyright or a literary, artistic or scientific work, patent, trademark, design, model, plan, secret formula, or process or information. Thus, the impugned receipts of the assessee from its clients in India cannot be regarded as Royalties under the provisions of Article 13 of the India-UK DTAA. Support may be drawn by the decision of Engineering Analysis Centre of Excellence (P) Ltd.[ 2021 (3) TMI 138 - SUPREME COURT] . Also see [ 2024 (2) TMI 1491 - DELHI HIGH COURT] - Thus, no addition on account of Royalty is warranted in this case. Decided in favour of assessee.

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• Customs

• 2025 (1) TMI 860
  Condonation of gross delay of 130 days in filing the appeal which has not been satisfactorily explained - Classification of imported goods - Small Form-factor Pluggable (SFP)-25G-SR Optical Transceiver - SFP-10G-SRL Optical Transceiver - QSFP-10G-UNIV Optical Transceiver, etc. - classifiable under Customs Tariff Item (CTI) 8517 6290 or not - exemption/ duty concession under Notification No.57/2017-Customs dated 30.06.2017 (Sl. No.20), as amended - it was held by CESTAT that The product under consideration i.e., Small Form-factor Pluggable Optical Transceiver of various models are classifiable under Customs Tariff Item (CTI) 8517 7090, and not under CTH 8517 62 90, as claimed by Revenue. Accordingly, the impugned goods are eligible for exemption/duty concession under Serial No. 5(a) of Notification No. 57/2017-Customs dated 30.06.2017, as amended. HELD THAT:- There are no good reason to interfere with the impugned order dated 22.04.2024 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai. The appeal is, therefore, dismissed on the ground of delay as well as on merits.

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• 2025 (1) TMI 859
  Interpretation of statute - word and in the exclusion entry (iv) of Serial No. 13 of the amended Notification No. 24/2005 - classification of imported goods - Wireless Access Points (WAPs) - whether the WAPs, which work on MIMO technology, imported by the respondent would qualify for an exemption from Basic Customs Duty? HELD THAT:- By way of judgment dated 13.01.2025 delivered today in CUSAA 38/2023 [ 2025 (1) TMI 797 - DELHI HIGH COURT] , the question of law answered in favour of the respondent and against the Revenue, and it is held that the phrase MIMO and LTE Products in Serial No. 13(iv) of the amended Notification No. 24/2005 applies solely to products combining MIMO technology and LTE standards, and thus, the WAPs imported by the respondent, which employ MIMO technology but not the LTE standards, are entitled to the exemption from Basic Customs Duty. Conclusion - The court established that the interpretation of exemption notifications should be narrow and that the conjunctive and in legal texts typically means a combination rather than alternatives. The WAPs imported by the respondent, which employ MIMO technology but not LTE standards, are entitled to the exemption from Basic Customs Duty.

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• 2025 (1) TMI 858
  Interpretation of statute - word and as appearing in CTI 8517 (iv) is to be read in a disjunctive manner and thus be viewed as referring to separate products - whether the WAPs, which work on MIMO technology, imported by the respondent would qualify for an exemption from Basic Customs Duty? - HELD THAT:- It is apposite to note that the present appeal was heard along with captioned Commissioner of Customs Air Chennai-VII Commissionerate v. M/s Ingram Micro India Pvt. Ltd. [ 2025 (1) TMI 797 - DELHI HIGH COURT ], filed by the Revenue, assailing a similar order passed by the learned CESTAT. These appeals were admitted on the same question of law by this Court. By way of judgment delivered today in Commissioner of Customs Air Chennai-VII Commissionerate v. M/s Ingram Micro India Pvt. Ltd. [ 2025 (1) TMI 797 - DELHI HIGH COURT ], the question of law is answered in favour of the respondent and against the Revenue, and it is held that the phrase MIMO and LTE Products in Serial No. 13 (iv) of the amended N/N. 24/2005 applies solely to products combining MIMO technology and LTE standards, and thus, the WAPs imported by the respondent, which employ MIMO technology but not the LTE standards, are entitled to the exemption from Basic Customs Duty. Conclusion - The WAPs imported by the respondent, which employ MIMO technology but not LTE standards, qualify for the customs duty exemption under Serial No. 13 (iv) of the amended N/N. 24/2005. The order of the learned CESTAT does not suffer from any infirmity or error and, is, therefore upheld - Appeal dismissed.

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• 2025 (1) TMI 857
  Violation of principles of natural justice - ex-parte decision by the adjudicating authority - rejection of delared value - evidence presented was sufficient to support the allegations of undervaluation or not - appellant s statement, allegedly obtained under coercion, could be used as a basis for the determination of the value of goods or not - confiscation - penalties. HELD THAT:- Before rejecting the transaction value the department has to find out as to whether there are any import of identical goods or similar goods at a higher price at or around the same time as that of imports in question. It has been clarified by the Hon ble Apex Court in the case of Ganpati Overseas [ 2023 (10) TMI 364 - SUPREME COURT] that unless the evidence is gathered in that regard the question of importing Section 14(1A) of the Customs Act does not arise. Thus casting suspicion on invoice produced by the importer is denied to be sufficient to reject it as the evidence of value of imported goods. It has been categorically held that the under valuation has to be proved that too, in the form of evidence about comparable imports. In the absence thereof, the benefit of doubt must go to the importer. In the present case, admittedly there is no evidence of comparable imports at the relevant time with respect to the value of PVC panels and accessories imported by the appellant. In the absence thereof, there is no basis even to arrive at the re-determined value. The undervaluation of the impugned goods has been confirmed solely on the basis of the statement of the appellant. The said statement is alleged to be recorded under coercion, not only the said statement, but the payment of Rs. 20 lakhs made by the appellant by two demand drafts is also alleged to be involuntary. Indisputably a confession would come within the purview of Section 24 of Indian Evidence Act, 1872. According to which confession is irrelevant except if making the confusion appears to have been caused by any inducement, threat or promise. The statement of the proprietor which has been alleged to be under coercion, the sole evidence is held to have been wrongly relied upon by the department to reject the value of imported goods shown in the invoice attached to the Bill of Entry. More for the reason that the appellant had requested for the copy even of the non relied documents time to file its defense - there are no document on record which may be called as the document of proving the intelligence of DRI officers or which may be the document proving the actual FOB price. Conclusion - The department has wrongly rejected the declared assessable value of the impugned import vide four Bill of Entries. The re-determined value is, therefore, not acceptable. The confirmation of the differential duty of Rs. 9,60,376/- is, therefore liable to be set aside along with the order of confiscation and the order imposing various penalties. Appeal allowed.

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• 2025 (1) TMI 856
  Refund claims for the Countervailing Duty (CVD) paid by the respondents - non-uploading of a relevant notification in the EDI system - HELD THAT:- The respondent has stated that the collection of the duty without the authority of law attracting Art 265 of the Constitution and according the refund of the duty ought to have been paid to them accepting that the said payment and collection was under a mistake. It is true that if no tax can be collected except by authority of law, the same logic would prevail for retention of amounts collected without the authority of law. However, that amount has to be claimed as provided for under the Act. Article 13(1)(a) of the Constitution defines law to include any Ordinance, Order, Bye-law, Rule, Regulation, Notification, custom or usage having in the territory of India the force of law . As stated in Mafatlal Industries [ 1996 (12) TMI 50 - SUPREME COURT] , Article 265 does not itself lay down any criteria for testing the validity of a statute, when it speaks of law , it refers to a valid law but the validity has to be determined with reference to other provisions of the Constitution. Considering the loss of time caused due to the Registry s lapse in not furnishing of our order dated 19.09.2024 to the rival parties, preventing them from responding effectively to the issues raised therein and after hearing the party afresh, the matter can be effectively resolved by remanding the matter to the Original Authority as decided in the impugned order, leaving all issues raised by the parties to this appeal and cross-appeal open. Conclusion - Refund claims are not maintainable without challenging the original assessment orders. Procedural fairness and adherence to natural justice are paramount. The remand order for reconsideration of refund claims upheld. Appeal disposed off by way of remand.

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• 2025 (1) TMI 855
  Demand of differental duty - assignee for the use of software imported by REV - no need for the appellant to separately import a CD or DVD from SAP Germany and enter into an agreement with SAP India - HELD THAT:- Neither party has been able to establish whether or not the payment of Rs.31,50,000 was, in fact, made by the Appellant to SAP India. Further, the Revenue has not considered the effect of the Appellant s contention that duties were paid by REV. The OIO acknowledges that SAP India paid duties too. Therefore, it is necessary to examine whether the Appellant is an importer at all, whether the Appellant in fact paid the sums of Rs.31,50,000 to REV, and whether the duties paid by REV/ SAP India would result in the nullification of the liability of the Appellant. It is deemed appropriate to restore the matter to the file of the Adjudicating Authority for consideration afresh on these points. The findings on these points, as also on the question of the payment of duties by REV (particularly considering that those duties were paid only in 2013 in respect of an import in 2006) will also have a bearing on the correctness of the invocation of the extended period of limitation and the penalties that may thus follow. Conclusion - It is necessary to examine whether the Appellant is an importer at all, whether the Appellant in fact paid the sums of Rs.31,50,000 to REV, and whether the duties paid by REV/ SAP India would result in the nullification of the liability of the Appellant. Matter restored to the file of the Adjudicating Authority for consideration afresh on these points. The appeals are disposed of by way of remand to the Adjudicating Authority.

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• 2025 (1) TMI 854
  Admissibility of Notification No 12/2012 by an EOU/ EHTP in respect of the imported goods at the time of debonding along with the notification No 52/2003 - denial of benefit of Notification No 12/2012 in terms of the condition prescribed by the Notification No 52/2003 - HELD THAT:- In terms of the D O F No 334/7/2016-TRU dated 01.02.2017, JS TRU issued by the JS (TRU) benefit of the exemption as per notification No 12/2012 would be admissible to the EOU/ EHTP subject to fulfillment of the conditions of the notification. The benefit of the said exemption would be available to them at the time of importation of the goods or even at the time of removal of the goods either on debonding or otherwise. The condition 4 of Notification No 52/2003 referred in the impugned order, cannot be reason for denial of the said benefit. Undisputedly the condition prescribed by the said notification had been complied and a bond for Rs 1000 crores was accepted by the jurisdictional authorities on 28.02.2015 as required in terms of IGCR, 1996. From the clarification issued by the TRU referred above, it is evident in case the EOU/ EHTP can claimed the benefit of the said notification at the time of import of the said goods even without seeking fresh registration under Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 or the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016. The said clarification also provides that the benefit of the said Notification will be admissible even without separately comply with the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 for availing the CVD exemption, if the procedure under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule, 2016 is followed by it for availing exemption / concession from BCD on imports of inputs/raw materials. There are no hesitation in holding that at the time of debonding, the value of raw material cleared has to be value at the time of importation and the rate of duty is the effective rate of duty leviable on the imported goods at the time of debonding. Impugned order sought to deny the benefit of said exemption notification to the appellant for the reason that appellant had not claimed the same at the time of importation of these raw materials and hence could not have claimed the same subsequently at the time of clearance from EOU on de-bonding. Interestingly impugned order relies on the decision in case of Priya Blue and other similar cases to deny the claim made by the appellant. Conclusion - i) The appellant is eligible for the exemption under Notification No. 12/2012-Cus at debonding. ii) The customs duty should be calculated at the effective rate at the time of debonding. iii) The appellant s procedural compliance is sufficient for claiming the exemption. iv) The exemption can be claimed at debonding, even if not claimed at importation. v) The demand for duty and interest is not justified. There are no merits in the impugned order - appeal allowed.

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• Securities / SEBI

• 2025 (1) TMI 853
  Compounding of offences - Order passed by Additional Sessions Judge dismissing an application filed by the Petitioner under Section 91 Cr.P.C - Petitioner had filed the said application seeking directions to SEBI to place on record all the statements/findings/documents considered by the High Powered Advisory Committee (hereinafter HPAC ) and the panel of Whole Time Members (WTC) while rejecting the request of the Petitioner herein for compounding the offence alleged in the complaint against the Petitioner herein - HELD THAT:- Regulation 29(1) of the Settlement Regulation provides that these documents cannot be given to public if the same prejudices the Board and/or the applicant. Regulation 29 (2) of the Settlement Regulation provides that these documents cannot be used as evidence before any court or Tribunal. In the opinion of this Court, these Regulations cannot prohibit any Court to look into the material which was placed before the HPAC or the SEBI Board before it comes to the conclusion, to agree for compounding or not to agree for compounding of the offence. Under Regulation 29 of the Settlement Regulation, the decision taken by the Board is not binding on the Court even if HPAC recommends for compounding of the offence. The Court can take a different view and reject the compounding if they do not meet the guidelines as laid down by the Apex Court as laid down in Prakash Gupta [ 2021 (7) TMI 971 - SUPREME COURT ] The materials sought by the Petitioner become exceedingly important for the Court to take a decision as to allow or not allow the compounding application of the Petitioner. This Court is inclined to set aside the Order passed by the Ld. Additional Sessions Judge, Tiz Hazari, dismissing an application filed by the Petitioner under Section 91 Cr.P.C. The SEBI is directed to produce all the documents before the Court. These documents can be given in a sealed cover and it is for the Court to take a decision as to whether these documents should be supplied to the Petitioner or not.

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• Insolvency & Bankruptcy

• 2025 (1) TMI 891
  Maintainability of Section 7 application filed against the Corporate Debtor - whether Section 7 application was filed collusively and with mala-fide intention by the Appellants which was good enough to attract Section 65 of the IBC and consequential recall of the initiation of CIRP of the Corporate Debtor? - Respondent had already transferred its entire share-holding - Respondent not being a share-holder of the Corporate Debtor it had no locus to file the application - HELD THAT:- There are no quarrel with the proposition of the Appellants that in terms of Section 7 of the IBC, what is required to be seen is the existence of a debt and default of the said debt. Once a debt becomes due or payable and there is incidence of non-payment of the said debt in full or part, CIRP may be triggered by the Financial Creditor as long as the amount in default is above the threshold limit. Be that as it may, Section 65 of the IBC is an enabling provision within the statutory framework of IBC whereby even if a Section 7 application has been filed or has been admitted, it vests jurisdiction on the Adjudicating Authority to examine an application under Section 65, if a prima facie case is made out to show that the Section 7 application had been filed fraudulently or with malicious intent and for purpose other than resolution of insolvency or liquidation. In the present case too, there are no error on the part of the Adjudicating Authority to consider the Section 65 application filed by the Respondent No.1 on being prima facie satisfied that the Section 7 application seeking initiation of CIRP proceedings had been filed by suppression of relevant material for purposes other than insolvency resolution. The Appellants have not repelled the allegations on merits but have simply dismissed them by holding them as hyper-technical, irrelevant and obnoxious without adequate substantiation - No justification has also been provided by the Appellants as to how the Appellants inspite of being ineligible to advance the alleged loans had done so. That this tantamount to violation of Section 186 of the Companies Act has also not been denied. While there is no quarrel over the fact that Section 7 vests rights on the financial creditors to initiate CIRP proceedings against the defaulting Corporate Debtor, however, debt and default cannot always be seen in isolation. There will be no unmindful of the fact that the Adjudicating Authority is also required to take care that the provisions of Section 7 of IBC are not misused or abused in any manner either by the financial creditor or the promoters of the Corporate Debtor to take undue advantage at the cost of insolvency resolution. Present is a case where the promoters of the Corporate Debtor and the Financial Creditors in trying to create a non-existent financial debt out of routine business entries, have ended up unwittingly committing lapses which lapses when seen cumulatively points to a web of conspiracy and collusion on their part to create a contrived situation of debt and default. Conclusion - The bonafide of the Appellants in the filing of the Section 7 application is clearly doubtful. Viewed from the angle of the totality of circumstances, the findings of the Adjudicating Authority that the insolvency proceedings resulting in the order dated 17.05.2022 were initiated fraudulently and with malicious intent for a purpose other than the resolution of the insolvency of the Corporate Debtor, is neither dehors the records nor unwarranted. When such fraudulent CIRP proceedings are initiated, the Adjudicating Authority has jurisdiction under the IBC to consider the allegations of fraudulent and malicious initiation of CIRP proceedings in terms of Section 65 and recall the CIRP admission order. There are no good reasons which warrant any interference in the impugned order. The Appeal is found to lack merit and is dismissed.

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• FEMA

• 2025 (1) TMI 852
  Review applications filed for waiver of pre-deposit of penalties under FERA - Whether the appellants failure to comply with the deposit order justifies the dismissal of their appeals? HELD THAT:- Order of this Tribunal has directed deposit of 15 percent of the penalty. The interpretation given in the Review Petition cannot be sustained, in view of the unambiguity in the Adjudication Order. We find that the two Review Petitions fail to meet the conditions of the relevant afore cited provisions of the CPC as well as do not fall within the principles which have been culled out in the Judgment relating to Kamal Sengupta [ 2008 (6) TMI 578 - SUPREME COURT] after having failed to obtain favorable orders from the Hon ble High Court of Punjab Haryana and from the Hon ble Supreme Court, then there is no question of filing the reviews of the Order which has been affirmed by these higher Judicial Fora, as has been held in the Judgment relating to Ram Kishor Gupta [ 2003 (1) TMI 767 - SUPREME COURT] No merit in the Review Applications filed by the Review Petitioners. We therefore dismiss the Review Petitions filed.

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• 2025 (1) TMI 851
  Offence under FEMA - Applied for rebate of Central Excise Duty by producing 15 fake shipping bills, related applications for removal of excisable goods for export (ARE-1s) and other related shipping documents, and fraudulently availed rebate of Central Excise Duty - effect of immunity granted by Settlement Commission under the Customs Act, 1962 HELD THAT:- Oder of Customs and Central Excise Settlement Commission is categorical that no immunity was either sought or provided to the Appellant under FEMA,1999. The immunities so granted under other Acts won t have an impact on the proceedings under FEMA. As held in Vinod Chitalia [ 2012 (5) TMI 157 - BOMBAY HIGH COURT ] that the orders of the Settlement Commission are conclusive of the matters stated therein and cannot be challenged in any other proceeding. The findings of the Settlement Commission in the present case inter alia are that remittance against the exports were received in advance without any actual export of goods, that all the export documents bear the signatures of the appellant and the exports proceeds were also realized by the appellant. There was no written arrangement between the appellant and the Mundra Brothers with reference to the export of goods. These findings have, therefore, become conclusive in light of the Ld. Settlement Commission s order. Whether significant delay was caused as Respondent took almost six years from the date of receiving information from the Excise Department to lodge a Complaint against the Appellant? - The present case, as already noted, is one of FEMA,1999. The penalties prescribed for contravention under FEMA, 1999 are in the nature of technical and procedural lapses. The liability for contravention under FEMA is of a civil nature unlike the erstwhile FERA which it replaced, and also unlike the PMLA, 2002. As such, the ratio of the cases cited by the appellant would not apply to the present case. It is evident from the order of settlement before the Settlement Commission that the remittance against the said exports were received in advance without any actual export of goods. Also, all the export documents bear the signature of the Appellant, the export proceeds were realized by the Appellant and there is lack of any written arrangement between the Appellant and the Mundra brothers w.r.t export of goods. As a result, the Appellant being the proprietor of M/s Siddha Exports, and the exports having been made in the name of the said concern, was responsible to ensure the realization of the export proceeds and cannot evade responsibility for the lapses. The Appellant cannot avoid responsibility for the contraventions of Section 7 of FEMA,1999 r/w Regulation 16 (Advance Payment of Exports of the Foreign Exchange Management (Export of goods and services) Regulation,2000, by not making shipment within one year from the date of receipt of advance remittances amounting to US $ 10,54,310.36 9 (equivalent to Rs. 4,81,29,268). Lack of mens rea - Penalty was clearly imposable in the present case and the appellant cannot escape his liability by laying the blame solely at the door of the Mundra brothers. We do find several mitigating factors in the case. It is not in dispute that to all appearances, all the documentation had been completed as if the export had genuinely been made and the proceeds therefrom had been realized. It is only later that the appellant came to know that the documents had been forged and no export were actually made by the Mundra Brothers. Upon coming to know he approach the Ld. Settlement Commission the order of the Settlement Commission indicates that the applicant (the appellant herein) had made a full disclosure of its duty liability and had also subsequently paid the liabilities as directed by Ld. Settlement Commission. Nothing has been brought had record to indicate that the appellant acted in active collusion with the Mundra Brothers in forging the documents and falsely claiming that exports had been made when no exports had actually been made to his knowledge. Ends of justice would met if the amount of penalty levied is reduced to Rs. 5 Lakhs. It is ordered accordingly.

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• PMLA

• 2025 (1) TMI 850
  Seeking garnt of bail to a woman - Money Laundering - predicate offence - proviso to sub-Section (1) of Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA) exempts women from the stringent bail conditions outlined in clause (ii) of sub-Section (1) of Section 45 or not - HELD THAT:- The first proviso to sub- Section (1) of Section 45 operates as an exception to clause (ii) of sub-Section (1) of Section 45 of the PMLA. Therefore, when a woman applies for bail, the twin conditions in clause (ii) need not be satisfied. Though time is granted to the learned Additional Solicitor General to make submissions in support of the submission that notwithstanding the proviso to sub-Section (1) of Section 45 of the PMLA, rigours of clause (ii) of sub- Section (1) of Section 45 of the PMLA will apply even to a woman, today the learned Solicitor General appears and states that rigours of clause (ii) of sub-Section (1) of Section 45 of the PMLA will not apply to a woman, in view of proviso to sub-Section (1) of Section 45 of the PMLA. As rigours of clause (ii) of sub-Section (1) of Section 45 of the PMLA will not apply, the Special Court ought to have treated the application as the one under Section 439 of the Code of Criminal Procedure, 1973 or Section 483 of the Bhartiya Nagarik Suraksha Sanhita, 2023 (for short, BNSS ). Hence, the first proviso to sub-Section (1) of Section 437 of the Cr.P.C. (the first proviso to sub-Section (1) of Section 480 of the BNSS) will apply. As the predicate offence is not under the Narcotic Drugs and Psychotropic Substances Act, 1985, the maximum sentence can be of 7 years. The appellant is a woman. There is no possibility of the trial concluding in near future, considering the fact that 67 witnesses are to be examined. There are no antecedents of the appellant brought on record. Therefore, a case is made out for enlarging the appellant on bail till the conclusion of the trial. Conclusion - The appellant, being a woman, is exempt from the stringent bail conditions of the PMLA and is entitled to bail under the Cr.P.C. or BNSS, with appropriate conditions to ensure her participation in the trial. Apppeal allowed.

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• 2025 (1) TMI 849
  Money Laundering - grant of bail under Section 483 of the Bhartiya Nagrik Suraksha Sanhita (BNSS) 2023 read with Section 45 of the Prevention of Money Laundering Act (PMLA), 2002 - alleged custom rice milling levy scam - scheduled offence - prolonged pre-trial incarceration - violation of right to speedy trial - HELD THAT:- From the investigation of the ED, it has been revealed that the applicant was one of the key conspirator and main beneficiary of the POC extorted from the rice millers. It has also been revealed that the rice milers were forced for payment of the same under threat that their incentive bills would not be cleared from the MARKFED. As per Section 50 (4) of the PML Act, the statements recorded under Section 50 of the PMLA has evidentiary value as the proceedings under Section 50 (2) and (3) are deemed to be a judicial proceeding within the meaning of Section 193 and 228 of the IPC, 1860. The applicant is closely connected with POC as he had deputed some persons at certain place and the cash was not physically taken by him but it was initially demanded by the applicant and payment, he conveyed it to the rice millers over phone. It has come in the statements of some of the rice millers who have personally handed over the extortion amount as demanded by the applicant. In Y.S. Jagan Mohan Reddy Vs. Central Bureau of Investigation [ 2013 (5) TMI 896 - SUPREME COURT] , it has been observed that the economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of country. The application for bail of the Appellant should be seen at this stage while the Appellant is involved in the economic offence, in general, and for the offence punishable Under Section 4 of the PMLA, in particular. The present case related to grant of bail in connection with the offence registered against the applicant by the ED under various provisions of Sections 3 and 4 of the PMLA (ECIR registered by the ED) respectively. In the context of interpretation of Section 45 of the PMLA, held that the twin conditions obligate the Court to arrive at a positive finding that applicant has not committed an offence under the PMLA. A tentative finding should be recorded on the basis of broad probabilities and detailed reasons are not necessary to be assigned, nor evidence be weighed meticulously. Under PMLA, there is a presumption of guilt on the accused which they have to disprove to get bail. In an older version of the PMLA, the first condition stated that it would be presumed that the accused was guilty of the scheduled offence , and the reversed burden of proof on the accused was to disprove their involvement in the scheduled offence - In Nikesh Tarachand Shah Vs. Union of India [ 2017 (11) TMI 1336 - SUPREME COURT ] a division bench of the court ruled that the first condition was unconstitutional. Right after this in 2018, this condition was amended, and the new version stated that the reversed burden of proof on the accused was now to disprove their involvement in the money laundering offence, and not the scheduled offence . The Court after examining the entire documents found substantial material indicating a strong nexus between the applicant and the other accused persons in the commission of the crime. There were documents and evidences that reflected the involvement of the applicant and he is the key conspirator and beneficiary from the said scam. Thus, the guilt of the accused in the offence of money laundering has been gathered and since, the allegations against the applicant were extremely serious and taking into account, the nature and gravity of the offence and from perusal of the record and in view of the fact that looking to the special and stringent provision under Section 45 (1) of the PMLA for grant of bail, in the considered opinion of this Court, prima facie the money trail has been established by the prosecution and therefore, it is not proper to order release of present applicant on regular bail for the reasons. Conclusion - The conditions specified under Section 45 of the PMLA are mandatory and need to be complied with. Economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously. The applicant s bail application was rejected due to failure to satisfy the conditions under Section 45 of PMLA. The prayer for bail made by the applicant under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 ( BNSS ) read with Section 45 of the PMLA, 2002 for the offences under Section 3 4 of the PMLA, 2002, is hereby rejected.

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• Service Tax

• 2025 (1) TMI 890
  Liability to pay service tax based on the full value Service Tax reflected in 38 invoices - requirement to remit amount collected as Service Tax from the client as per Section 73A - failure to consider CA certificate - extended period of limitation - HELD THAT:- The appellants have been maintaining that the full Service Tax was reflected in the Invoices, but such Invoices were never sent to the client, not they have paid the full Service Tax to the appellant. On the other hand, the appellants have passed rectification entries in their books of account to the effect that the total Tax is to be divided under the heading of VAT and Service Tax. The VAT amounts have been remitted to the concerned authorities. The Chartered Accountant has issued the Certificate on 11.02.2015 clearly showing the way the Invoices which were taken for issue of demand in the Show Cause Notice. The date of this CA s Certificate clarifies that this was obtained before the Personal Hearing and before the impugned Order was passed. The Adjudicating authority has recorded at page 15 of the OIO that the CA s Certificate has been filed. But, instead of going through the details given therein, he has simply ignored the same and has not given any finding whatsoever as to why or how the certificate does not carry the defence of the appellant. It has been held in catena of decisions that once the CA s Certificate is produced before the Adjudicating / Appellate authority, he is required to consider the same and if he is not in agreement with the same, he should rebut with proper reason. The demand with interest an dpenalties set aside. Extended period of limitation - HELD THAT:- The Show Cause Notice issued on 17.10.2014 for the period 2009-10 to 2012-13. The requisite details have been found from the books of accounts maintained by the appellant, which were made available to the Audit team. Even the proper rectification making entries were put up before them, which was not considered by the Audit team. Being a reputed Public Limited Company, the appellants are required to maintain proper books of accounts as well as rectify the mistakes by passing proper counter entries so as to nullify the same. Since they have undertaken all these steps, it is not found that they have indulged in any activity which would point out to suppression on their part. Hence, the confirmed demand in respect of the extended period is time barred. The confirmed demand pertaining to the extended period set aside on account of limitation and allow the appeal even on this ground. Conclusion - It is not open for Revenue to arrive at a conclusion in disregard of the certificate without challenging or controverting the same with cogent evidence and reasoning. The extended period for tax demands requires evidence of intent to evade. The appeal was allowed fully on merits regarding the Service Tax demand and partly on account of limitation concerning the extended period.

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• 2025 (1) TMI 848
  Liability to pay service tax - rent-a-cab service - transactions involving International Travel House Limited (ITH) - demand on Debit Notes raised on other associate enterprises - Extended period of limitation. Rent-a-cab service wherein the demand of Rs. 67,38,390/- has been confirmed - HELD THAT:- ITC Sonar is not retaining any amount from the amount being given by the guests. The entire amount is being given back by them to ITH. From the bills raised by ITH, it is seen that they are charging the Service Tax on the guests. This documentary evidence shows clearly that ITC Sonar has not provided any service either to the guests or to ITH. It is seen that ITH has not made any payment towards any consideration to ITC. Even otherwise, the Show Cause notice only alleges providing of renting a cab service to the guests. From the documentary evidence, it gets clarified that the appellant is not providing the rent-a-cab service to the guests. As a hotel, they may be indicating in their website various facilities being provided to the guests on its own - It is for the jurisdictional authorities to take up the matter and proceed against ITH, in case they are collecting the Service Tax under these bills and not remitting the same to the Department. In view of these factual details and documentary evidence shown, the confirmed demand of Rs 67,38,390 under the rent-a-cab service is not legally sustainable. Debit Notes raised on other associate enterprises wherein the demand of Rs. 28,54,978/- has been confirmed - HELD THAT:- The appellant was registered with the Service Tax department and has been discharging the service tax payments and also they were filing their ST3 returns. Quantification of demand towards rent-a-cab services as well as debit notes raised on associate enterprises have been obtained by the Revenue from the books of accounts maintained by the appellant - it is not seen that the appellant has indulged in any suppression in these matters. Further, the appellant could be carrying bonafide belief that no Service Tax is required to be paid on the rent-a-cab service being actually rendered by ITH. In respect of the debit notes raised on other divisions, the appellant should have carried bona fide belief that since they are all part of the Divisions of the same company, there is no need to pay any Service Tax on such activities. Extended period of limitation - HELD THAT:- The Department has not brought in any documentary evidence or proof to the effect that the appellant has indulged in any suppression so as to evade payment of service tax on these activities. Further, as submitted by the appellant, if service tax was required to be paid on such services, the appellant would be eligible to take the Cenvat Credit which makes the entire exercise as that of revenue neutral - the appellant cannot be fastened with the allegation of suppression with an intent to evade payment of service tax. Conclusion - The court set aside the demands for service tax under both the rent-a-cab service and associated enterprises. The appellant cannot be fastened with the allegation of suppression with an intent to evade payment of service tax. Appeal allowed.

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• 2025 (1) TMI 847
  Effect of Notification of 2011 - retrospective or not - claim for exemption under the Notification of 2009 for the tax periods from 01.04.2008 to 31.03.2011 - Appellant ought to have resorted to the provisions of rule 6(7B) of the Service Tax Rules, 1994 or not - profit on settlement forms a part of the taxable value of services rendered by the Appellant or not - taxability of profit on the sale of foreign exchange to holders of EEFC accounts. Whether the Notification of 2011 would operate retrospectively so as to permit the Appellant s claim for exemption under the Notification of 2009 for the tax periods from 01.04.2008 to 31.03.2011? - HELD THAT:- After the amendment the intention was to confirm the exemption on a wider class of persons. This is what emerges from literal linguistic reading of the amending Notification of 2011. There is no ambiguity or lack of clarity in that Notification which requires us to take recourse to any other principles of interpretation. In our opinion, no two views are possible on this point. Further, the law is well settled that except in matters of procedure, there is a presumption that law operates prospectively unless there is compelling evidence to the contrary, being, inter alia, any express statement to that effect - The intent of the Notification of 2011 is a change in the legislative policy on to whom such exemption must be granted. This change in policy cannot be lightly held to be retrospective, particularly where there are no express words in the Notification that make it retrospective. The question of whether an exemption granted operates retrospectively or prospectively is not one which requires us to choose between a liberal and a strict construction; the plain language of the Notification is perfectly clear and there is no ambiguity at all - there are no infirmity in the impugned order. Whether the Commissioner is right in finding that the Appellant ought to have resorted to the provisions of rule 6(7B) of the Service Tax Rules, 1994 and paid service tax at the rate of 0.25% on the gross amount of currency exchanged? - HELD THAT:- Even if the factual findings of the Commissioner on this point are accurate, such findings are limited to a small number of transactions of the appellant. The revenue has been unable to sufficiently disprove the possibility that this variance could be otherwise justified. In any event, the occurrence of such variance is in a small number of transactions which could be on account of myriad reasons occasioned by particular circumstances. There appears to be nothing forthcoming from the Appellant s submissions to explain the reasons for these differences. The assessee is correct in submission that the option provided under Rule 6(7B) is an option available to it and not to the Revenue. Even if the Revenue was entirely correct, arguendo, in its findings of fact, the proper course of action for the Revenue would have been to determine the quantum of the hidden consideration and charge the same to tax in accordance with the provisions of section 66 and 67. These findings do not permit the Revenue to assign to itself the right to exercise the option under the aforesaid Rule. For these reasons, the contentions of the Assessee agreed in this respect and the relevant grounds of Appeal allowed. Whether the Commissioner is right in finding that the profit on settlement forms a part of the taxable value of services rendered by the Appellant? - HELD THAT:- Notification No. 19/2009 granted exemption in respect of taxable service referred to in S. 65(105)(zm) or Section 65 (105) (zzk), when provided to a scheduled bank by another scheduled bank in relation to enter bank transactions of purchase and sale of foreign currency. Vijay notification 27/2011, the worlds a scheduled Bank by any other scheduled Bank came to be substituted with the words any bank, including a bank located outside India or money changer, by any other bank or money changer - the findings in the impugned order so far as this issue is concerned, is sustained. Whether the profit on the sale of foreign exchange to holders of EEFC accounts is taxable? - HELD THAT:- Transaction of providing foreign currency and the transaction of repayment of proceeds are separate transactions happening at two distinct points of time and hence, the liability has been correctly fastened on the appellant. There is no flow of consideration in terms of money on these transactions since there is no conversion as such and hence, the same would not be taxable. Conclusion - i) The intent of the Notification of 2011 is a change in the legislative policy on to whom such exemption must be granted. This change in policy cannot be lightly held to be retrospective. ii) The option under Rule 6(7B) is an option available to the assessee and not to the Revenue. iii) There is no flow of consideration in terms of money on these transactions since there is no conversion as such and hence, the same would not be taxable. Appeal stands partly allowed.

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• 2025 (1) TMI 846
  Classification of service - Business Support Service or Cargo Handling Services? - logistics services provided by the appellant - extended period of limitation - HELD THAT:- The classification of services is governed by Section 65 A ibid. It is not the case of the department that the appellant did not provide transportation service as a part of handling of cargo. The only reason advanced in the SCN is earning income over and above incurred expenditure on transportation. The Appellant is to provide transportation service and it invoices its customer for transportation service. Hence, the Revenue has failed to provide arny reason in support of its averment that the service is that of logistics and it would be liable for service tax under the classification of business support service . Moreover, under the provisions of section 65A of the Finance Act, 1994 specific description is always preferred over general description. If the Appellant being an ICD has provided service of transportation by road, it cannot be classified under any other entry. The law does not authorize such classification. For providing transportation service, the liability cannot be fixed otherwise than on the recipient thereof in terms of Rule 2(1)(d)(v) of the Service Tax Rules, 1994. Extended period of limitation - HELD THAT:- The period of dispute is from 2007-08 to 2011-12 and Show Cause Notices came to be issued on 19.10.2011 and 10.10.2012 invoking the extended period of limitation - from the facts borne on record that the appellant being an ICD had admitted its liability under the specific classification namely CHS and hence, the Revenue could not have presumed as to the knowledge of the appellant for the taxability of difference between transport income and transport expense as reflected in the books of accounts to be liable to Service Tax under transportation charges , which fact was not alleged even in Show Cause Notice. Hence, at best, the liability could have been restricted to the normal period of limitation. Conclusion - The logistics services provided by the appellant were ancillary to CHS and not a separate BSS. Therefore, the demand for additional service tax under BSS was set aside. Appeal allowed.

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• 2025 (1) TMI 845
  Classification of the service provided by the appellant - to be classified under Construction of Complex Service (CCS) or WCS? - whether the demand of Service Tax on the Appellant under WCS is in order? - HELD THAT:- From the documents placed on record, there is a finding that insofar as the construction of projects was concerned, the Appellant had got itself registered with the State VAT department and paid applicable VAT. The effect is that the construction activity, as a builder, involved both service of construction as well as supply of materials; that being sale, applicable VAT stood remitted. So, the said activity clearly involved a composite contract hence, the service was covered under WCS. Supreme Court in COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] has clearly held that composite contracts where transfer of property in goods is involved shall be classifiable only under Works Contract Service and not under CCS/CICS. Conclusion - The appellant s services were classifiable under WCS, but the demand for differential tax should only apply to the normal period. The penalty under Section 78 was set aside. Appeal allowed in part.

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• 2025 (1) TMI 844
  Classification of service - Business Auxiliary Services (BAS) or intermediary services - business of guiding and advising the foreign parties for bidding and negotiations - benefit of export of services for the period from July 2012 to March 2014 - HELD THAT:- The issue is no more res integra and is squarely covered by the Tribunal in the Appellant s own case [ 2018 (7) TMI 1214 - CESTAT ALLAHABAD ] for the previous period i.e. from April, 2007 to June, 2012. The present proceedings are for the period from July, 2012 to March, 2014. The concept of intermediary becomes relevant for the purpose of determination of the place of provisions of services as per Rule 9 of Place of Provision of Services Rules, 2012. In case of intermediary, it is the location of services provider which is considered as place of provision of services for the purpose of levy of service tax for the period when the appellant is covered by the definition of the intermediary, the place of provision of service, the location of service provider i.e. the taxable territory of India. Hence the benefit of export of services could not be extended to the an intermediary located in India. As per the Rule 3 of the Place of Provision of Services Rules in cases such cases the place of provision of service is location of the service recipient, which in the present case is outside India. Appellant are receiving payment against the provisions of these services in convertible foreign exchange. Thus, these services would qualify to get the benefit of export of services as per Rule 6 of the Service Tax Rules, 1994. Thus for this period there cannot be any levy of service tax and the demand made by the impugned order needs to be set aside. Conclusion - The services provided by the appellant in respect of the sale of goods of associated group companies cannot be said to be services provided by intermediary as defined by said Rules ibid. The benefit of export of services would be available to the appellant. Appeal allowed.

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• 2025 (1) TMI 843
  Levy of service tax - Advances/Mobilization amount received from their customer - whether these amounts were advances or loan against Bank Guarantee from the clients as claimed by the appellant? - opportunity of hearing - principles of natural justice - HELD THAT:- It is not fair on the part of the learned counsel to submit that the impugned order was passed behind their back or without giving opportunity of hearing to them. Sufficient opportunities were granted to the appellant and twice the Manager-Taxation of the appellant also appeared before the said authority and took time for filing reply and necessary documents in support of their claim but nothing was filed. Six times adjournment was granted by the said authority including twice on the request of their Manager Taxation. Although the illness of their Manager-Taxation was genuine ground but in his absence someone ought to have appeared before the adjudicating authority on behalf of appellant. There are no fault on the part of the adjudicating authority for adjudicating the issue ex-parte. Learned counsel also submits that all the documentary evidences have been filed by them in support of their claim. Conclusion - In the present case no personal hearing was sought. Even then in the interest of justice seven personal hearing was granted i.e. adjournments were granted for six times. Service tax is applicable on advances unless adequately proven otherwise. Appeal is allowed by way of remand to the learned Commissioner for denovo adjudication.

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• 2025 (1) TMI 842
  Liability of builder to pay service tax - builder is liable to pay service tax on receipt of entire considerations from the buyer after issuance of occupancy certificate when the term used is Completion Certificate in the exception provided in Section 66E(b) of the Finance Act, 1994 or not - HELD THAT:- The main reason for issuance of clarification by the Ministry of Finance dated 26.10.2015 is that after the issuance of occupancy certificate by the Brihanmumbai Municipal Corporation (BMC) the sale of flats/dwelling etc. is mere transfer of title in immovable property and does not amount to any service and hence falls outside the purview of Section 65B (44) of the Finance Act, 1994. The press release is confined to the cases pertaining to BMC as it has been issued in response to a representation made by the Real Estate Developers of Mumbai to the Ministry of Finance claiming exemption in cases where the Occupancy Certificate were issued by BMC without there being any completion certificate. But the clarification cannot be said to confine only to BMC as it clarifies the provision and hence we have no doubt in holding that the clarification is equally applicable on the Vasai-Virar Municipal Corporation as well, since the said clarification is qua the provision of Finance Act, 1994 which is applicable on everyone whether it is BMC or any other Municipal Corporation. In the case in hand the Occupancy Certificate is not disputed and its issuance by Vasai-Virar Municipal Corporation is also an admitted fact. The Revenue i.e. the appellant herein is not casting any doubt on the said certificate and their only concern is that the said Occupancy certificate has not been issued by BMC but by a different Municipal Corporation, therefore the clarification issued by Ministry of Finance will not be applicable which, in our view, is totally unfounded. The expression used in Section 66E(b) ibid is after issuance of completion certificate which, in our view, can t be limited to only the completion certificate - it can be said that the pre-condition for issuance of occupancy certificate is the completion of building and its inspection by Commissioner of concerned Municipal Corporation being the competent authority or anybody on his behalf. Conclusion - Having received the occupancy certificate from competent authority i.e. Vasai-Virar City Municipal Corporation and having sold the units/flats in issue subsequent to the date of issue of the said occupancy certificate, the appellant is not providing the declared services of construction of complex/building, etc. to any of such buyers and therefore the same falls within the exception provided in Section 66E(b) ibid. The respondent was not liable for service tax on the sale of flats where the consideration was received after the issuance of an occupancy certificate. Appeal dismissed.

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• Central Excise

• 2025 (1) TMI 841
  Maintainability of appeal - appropriate forum - appeal filed under Section 35G of the Central Excise Act, 1944, is maintainable before the High Court or not - taxability of services provided to a Municipal Corporation - HELD THAT:- Sub-section (2) to Section 35L of the Act was inserted with effect from 6.8.2014 by Section 107 of the Finance Act (2) Act, 2014 and that the amendment was clarificatory was accepted by the department. In this regard, the Ministry of Finance, Department of Revenue, Tax Research Unit has issued circular dated 10.7.2014 which refers to the bill introduced in the Lok Sabha by the Hon ble Finance Minister. It has been clarified by the said circular that section 35L is being amended so as to clarify that determination of disputes relating to taxability or excisable of goods is covered under the term Determination of any question having a relation to the rate of duty and, hence, appeal against Tribunal order in which matters would lie before the Hon ble Supreme Court. This decision was followed by the Hon ble Division Bench of the High Court of Punjab and Haryana in the case of COMMISSIONER SERVICE TAX VERSUS DLF GOLF RESORTS LTD. [ 2017 (5) TMI 402 - PUNJAB AND HARYANA HIGH COURT] . In the said decision it has been held that the appeal does not lie before the High Court under Section 35G of the Act but appeal would lie before the Hon ble Supreme Court under Section 35L of the Act. Conclusion - Disputes relating to the taxability of services fall under the jurisdiction of the Supreme Court, not the High Court, as clarified by the amendment to Section 35L of the Central Excise Act, 1944. The appeal is liable to be dismissed on the ground that it is not maintainable under Section 35G of the Act. Appeal dismissed.

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• 2025 (1) TMI 840
  Refund of excess Central Excise Duty paid for the months of November 2015 and December 2015 - rejection of refund claim based on the evidence provided by the appellant - principles of unjust enrichment - HELD THAT:- The appellant had submitted the details of errors in ER-1 returns filed and details of correct figures that should have been considered while verifying the correctness of total duty actually payable and refund claimed vide their letter dated 18.02.2016. They have also submitted the attested copies of invoices issued in relation to clearances made during the period in dispute vide letter dated 03.12.2016 which clearly supports the correct figures as submitted by the appellant vide letter dated 18.02.2016. The excess duty paid by the Appellant has been reflected as Advances and loans in Note 18 of the Annual Accounts of 2015-16. However, the lower authorities have simply brushed aside the accounting entries available in the Annual Accounts for the year 2015-16 without giving any valid finding as to why they are not acceptable - The Appellant has submitted enough evidence to substantiate their claim of excess payment of duty. The documents submitted by the Appellant along with the Chartered Accountant submitted by them establishes that there was an excess payment of duty by the Appellant during the months of November 2015 and December 2015. Principles of unjust enrichment - HELD THAT:- The Appellant has not produced any documents regarding crossing of the bar of unjust enrichment. Accordingly, the matter is required to be remanded back to the adjudicating authority for the purpose of verification of the documents on the eligibility of refund from the unjust enrichment angle. Conclusion - The documents submitted by the Appellant establish that there was an excess payment of duty by the Appellant during the months of November 2015 and December 2015 and the Appellant is eligible for the refund, subject to verification of unjust enrichment . The impugned order is set aside and the issue is remanded back to the adjudicating authority only for the limited purpose of verification of the issue of unjust enrichment before he sanctions the refund claim - Appeal disposed off by way of remand.

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• CST, VAT & Sales Tax

• 2025 (1) TMI 839
  Imposition of condition for stay to the recovery of tax assessed by the Assessing Officer - case of petitioner is that no amount ought to have been directed to be deposited as a condition precedent for granting a stay - HELD THAT:- As far as the preliminary objection is concerned, the same need not detain us any further because the same is covered by a decision of the Division Bench of this Court in the case of M/S. BHAMBHANI SHIPPING LTD. VERSUS THE STATE OF MAHARASHTRA OTHERS [ 2017 (12) TMI 629 - BOMBAY HIGH COURT] . In this decision, a Division Bench of this Court was in fact considering the provisions of Section 27 of the MVAT Act, 2002 and came to the conclusion that an order granting or refusing to grant a stay on conditions, is not an appealable order under Section 27 of the MVAT Act, 2002. This decision is binding. Hence, as far as the objection to the maintainability of the Writ Petition is concerned, the same stands rejected. As far as the decision relied upon the case of RAJ KUMAR SHIVHARE VERSUS ASSTT. DIRECTOR, DIRECTORATE OF ENFORCEMENT [ 2010 (4) TMI 432 - SUPREME COURT] is concerned, the same is clearly distinguishable on facts. First of all, what the Court was considering were the provisions of Foreign Exchange Management Act, 1999. Further, after going through this decision, the fact situation in the case before the Hon ble Supreme Court was completely different from the present case. Conclusion - The Petitioner should not be saddled with any pre-deposit as a condition for stay. Petition disposed off.

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