TMI Tax Updates - e-Newsletter
January 24, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. What is DPT 3 Form and Why is It Important?

   By: Ishita Ramani

2. WHEN ex-parte DECREE SET ASIDE MERE REGISTRATION OF SALE DEED IN EXECUTION PROCEEDINGS WILL NOT CONVEY ANY BETTER TITLE

   By: DR.MARIAPPAN GOVINDARAJAN

3. Prohibition On Imports and Exports

   By: YAGAY andSUN

4. Manufacturer, Import and Export of Technical Grade Chemicals in/into/from India

   By: YAGAY andSUN

5. GST on concession fee leviable from Duty Free Shops as subsequently refund can be claimed of ITC on account of zero-rated supplies making entire transaction revenue neutral

   By: Bimal jain

6. GST refund can be granted under IDS as per the modified formula

   By: Bimal jain

7. Deep Analysis - Export of Precursor Chemical from India.

   By: YAGAY andSUN

8. Types of Containers in International Trade

   By: YAGAY andSUN

News

1. Unemployment, inflation rising due to Modi govt's wrong policies; budget must provide relief: Cong

2. Assam Assembly's budget session to start from Feb 17

3. Economic cost of fragmentation can exceed those 2008 financial crisis, COVID pandemic: WEF report

4. Inclusive growth key pillar of India's economic blueprint: Vaishnaw

5. Rupee's fall all due to dollar's rise, any RBI intervention can harm Indian exports: Rajan

6. Tripura CM thanks PM Modi for revising agar export policy

7. Government of India and Republic of Korea conduct Signing of Exchange of Notes for NCERT’s Technical Cooperation project titled "Strengthening Vocational Education and Training in Mechatronics in India" with KOICA.

8. DRI seizes 32 kg methamphetamine tablets worth around Rs 32 crore in two cases in North East Region; three arrested

9. CBDT notifies amendments in Income-tax Rules, 1962 to prescribe conditions for applicability of presumptive taxation regime for non-resident cruise ship operators

10. Commerce Minister Piyush Goyal sets a target of 10000 GI tags by 2030; committee to be formed to oversee implementation

11. L&T Finance Ltd. Records Consol. Profit After Tax at Rs. 2,007 Cr for 9 Months Ended Dec. 31, 2024, A Growth of 14 percent Over 9 Months Ended Dec. 31, 2023

12. Dubai-based man declared fugitive economic offender in HPZ Token 'fraud' case

Circulars / Instructions / Orders

Income Tax

1. 01/2025 - dated 21-1-2025

Guidance for application of the Principal Purpose Test (PPT) under India's Double Taxation Avoidance Agreements

Customs

2. Public Notice. 21 / 2024 - dated 31-12-2024

BRC Compliance Drive from 06.01.2025 - 31.01.2025 for the submission of pending Bank Realization Certificates ( BRCs ).-reg.

Highlights / Catch Notes

GST

• High Court Approves Input Tax Credit Refund for Compensation Cess on Zero-Rated Supplies Under GST Compensation Act.

  Case-Laws - HC : HC allowed refund of Input Tax Credit for compensation cess on zero-rated supplies, overturning the Additional Commissioner's rejection. The court distinguished between Composition Levy under CGST Act and Compensation Cess under Compensation Cess Act, clarifying that circulars dated July 26, 2017, and November 18, 2019, explicitly permit refund of unutilized Compensation Cess credit for zero-rated supplies under LUT. The court emphasized that while Input Tax Credit of Compensation Cess can only be utilized for payment of cess on outward supplies, the refund claim is valid and supported by administrative circulars. The Additional Commissioner's interpretation restricting refund based on Section 2(62) and 2(63) of CGST Act was deemed unsustainable.
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• GST Registration Cancellation Order Quashed: High Court Rules Lack of Hearing Violates Natural Justice u/s 108.

  Case-Laws - HC : HC quashed the order cancelling petitioner's GST registration and the appellate authority's dismissal due to violation of natural justice principles, as no opportunity for hearing was provided and no reasons were assigned. Given that appellate dismissal precluded revisional powers u/s 108 of GST Act, matter was remanded to Assessing Officer at show cause notice stage. While petition was partially allowed by setting aside both orders, petitioner's registration remains suspended pending show cause notice disposal. Court emphasized procedural fairness requirements in registration cancellation proceedings under GST framework.
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• High Court Remands GST Case After Authority Failed to Consider Input Tax Credit Claims From Deregistered Suppliers u/s 74(9.

  Case-Laws - HC : HC set aside adjudication order u/s 74(9) of WBGST/CGST Act 2017 and remanded for fresh consideration. The adjudicating authority failed to address key submissions regarding input tax credit claims against supplies from deregistered vendors, particularly concerning retrospective cancellation of supplier registrations and proof of goods movement. The court found procedural deficiencies as the assessing officer did not record findings on precedents cited by assessee. Matter remanded for fresh adjudication with directions to consider all factual issues, legal principles, and grant personal hearing. Appellant permitted to submit fresh reply with supporting documentation and judicial precedents.
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• Court Orders Release of GST-Seized Goods u/s 129(3) After Petitioner Proves Ownership Through Valid Invoice Documentation.

  Case-Laws - HC : HC examined validity of detention and seizure notice under GST Act Section 129(3). Referring to government circular dated 31-12-2018 defining ownership of goods through accompanying documents, court found petitioner was legitimate consignee per invoice for goods transported in truck CG 10 AJ 1477. Given established ownership through proper documentation, HC directed release of seized goods and vehicle to petitioner's interim custody subject to fulfillment of prescribed conditions. Court's ruling emphasized importance of documentary evidence in establishing goods ownership for GST detention cases, affirming petitioner's right to custody based on proper invoice documentation.
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• High Court Orders Fresh Notice for ITC Disallowance Under GST Section 17(5) Due to Lack of Specific Clause Citation.

  Case-Laws - HC : HC set aside the order disallowing Input Tax Credit (ITC) u/s 17(5) of GST Act. The revenue authorities failed to specify which clause u/s 17(5) was invoked for ITC disallowance. The court directed authorities to issue fresh notice clearly indicating the applicable clause u/s 17(5), provide reasonable hearing opportunity to the assessee, and proceed according to law. The matter was remanded for fresh consideration with specific instructions to follow proper procedure in determining ITC eligibility. The petition was disposed of with these directions.
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• High Court Orders 90-Day Deadline for State Authorities to Process GST Refund Claims After Verification Under 2020 Guidelines.

  Case-Laws - HC : HC directed State Authorities to process petitioner's GST refund claim after verifying facts and entitlement. The decision stemmed from respondents' inaction despite repeated requests for GST refund collected during contract execution. Court mandated compliance with Central Government orders dated 28.01.2020 and 06.06.2018, along with subsequent relevant orders. The authorities must render appropriate decision within 90 days from order receipt. The disposition emphasizes administrative efficiency in GST refund processing while ensuring proper verification of entitlements under existing governmental directives.
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• Kerala High Court Declines Writ Against GST Fraud Investigation u/s 74, Directs Petitioner to Follow Statutory Remedies.

  Case-Laws - HC : HC declined to intervene in challenge against ITC blocking u/r 86A(1) of Kerala GST Rules and show cause notice u/s 74 of CGST/KSGST Act. Court determined allegations of fraudulent transactions using fake invoices and supply without actual movement of goods involved disputed factual matters unsuitable for writ jurisdiction under Article 226. Petitioner directed to pursue statutory remedies before designated authorities. The existence of specific allegations regarding fraudulent conduct and fake invoices placed the matter outside scope of constitutional writ jurisdiction, necessitating resolution through prescribed administrative channels.
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• High Court Grants Final Hearing on GST Dispute After 90% Tax Payment, Orders 25% Deposit Under GST Act 2017.

  Case-Laws - HC : HC set aside the impugned order dated 26.06.2024 concerning GST tax discrepancies. Despite petitioner having already remitted approximately 90% of disputed taxes, court granted one final opportunity to present objections, adhering to principles of natural justice. Petitioner directed to deposit 25% of disputed tax amount within four weeks from order receipt. Decision balanced statutory compliance under GST Act, 2017 with procedural fairness, ensuring adequate notice and response opportunity. Respondent's counsel raised no objection to this arrangement. Matter concluded with petition disposal, emphasizing administrative law principles of fair hearing and reasonable opportunity.
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Income Tax

• Supreme Court Voids Tax Reassessment u/s 147 As Officer Failed To Prove Income Escaped Original Assessment.

  Case-Laws - HC : HC quashed reassessment proceedings under s.147 initiated after four years. AO's reasons revealed information was derived from original assessment documents, indicating predecessor officer's incorrect assessment. Court found jurisdictional conditions under first proviso to s.147 unsatisfied. AO failed to adequately address petitioner's jurisdictional objections in rejection order, merely citing judgments without specific rebuttals. Though respondents later cited audit objections, these were not mentioned in original reasons or objection order. Court held reassessment notice under s.148 was without jurisdiction, illegal and arbitrary, as reopening must be tested solely on recorded reasons without subsequent additions.
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• ITAT Overturns PCIT's Section 263 Revision on Goodwill Depreciation Claim Following Detailed Assessment Officer Investigation Post-Amalgamation.

  Case-Laws - AT : ITAT ruled in favor of assessee, setting aside revision under s.263 regarding goodwill depreciation claim post-amalgamation. The tribunal found PCIT's jurisdiction exercise erroneous, as evidence clearly showed trade receivables of Municipal Waste Division were never transferred to assessee under NCLT-approved amalgamation scheme. The AO had conducted detailed inquiry regarding goodwill depreciation during assessment proceedings. ITAT determined PCIT's revision was based on misconceived facts and incorrect assumption about transfer of trade receivables, making the s.263 revision order legally unsustainable. The assessee had provided comprehensive documentation including board resolutions and scheme details supporting their position.
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• ITAT Accepts Trust's Late Tax Return, Grants Section 11 & 12 Exemptions After Finding Audit Rules Inapplicable Pre-Registration.

  Case-Laws - AT : ITAT ruled in favor of the trust appellant, reversing denial of exemptions u/ss 11 & 12. The tribunal held that prior to registration on 23/11/2022, mandatory audit requirements were inapplicable to the unregistered trust. The belated filing of income tax return was deemed acceptable, particularly considering the 2023 amendment to section 12A(1)(b) allowing returns filed u/ss 139(1) or 139(4) to satisfy compliance requirements. ITAT noted the trust's existence since 1965 and found the tax demand creation untenable. The tribunal directed acceptance of returned income, granting full relief on grounds of both income return submission and audit report compliance, while dismissing CIT(A)'s divergent reasoning as perverse.
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• ITAT Cancels Transfer Pricing Penalty u/s 271AA Due To Lack Of Specific Documentation Deficiencies.

  Case-Laws - AT : The ITAT ruled against penalty imposition u/s 271AA for failure to maintain transfer pricing documentation u/s 92D read with Rule 10D. The tribunal emphasized that before levying penalties, tax authorities must specifically identify which required documents were not maintained or furnished by the assessee. The AO's penalty order was deemed procedurally deficient due to lack of proper show-cause notice and inadequate hearing opportunity. Moreover, since the Transfer Pricing Officer had already determined the international transactions with Associated Enterprises to be at arm's length, there was no substantive basis for penalty. The perfunctory nature of the assessment and failure to specify particular documentation deficiencies rendered the penalty order legally unsustainable.
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• Educational Trust With Income Under Rs. 5 Crore Wins Tax Exemption Appeal u/s 10(23C)(iiiad) At ITAT.

  Case-Laws - AT : Educational trust's appeal against denial of exemption u/s 10(23C)(iiiad) was allowed by ITAT. The trust, established in 1962, exclusively provides government-recognized educational services with annual income below Rs. 5 crores. ITAT found the institution satisfied all statutory requirements as it existed solely for educational purposes since inception, with no competing activities. The tribunal determined the trust's educational focus was uncontested by revenue authorities and met the criteria for tax exemption. The demand notice was nullified as the trust qualified for relief under 10(23C)(iiiad). ITAT directed revenue authorities to process exemption and withdraw assessment proceedings.
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• ITAT Accepts Transportation Expenses as Valid Business Deductions After AO Failed to Prove Section 37 Violations.

  Case-Laws - AT : ITAT ruled against disallowance of transportation expenses, finding the Assessing Officer failed to establish statutory grounds u/s 37 for rejection. The tribunal emphasized that disallowance requires proving either bogus claims, capital/personal expenditure nature, or illegality of expense. Evidence showed consistent business pattern with progressive GP/NP rates compared to previous years where similar deductions were allowed. AO's summary disallowance without substantiating any Section 37 violations was deemed unjustified. The tribunal vacated CIT(A)'s order sustaining the disallowance, ruling in assessee's favor by accepting the claimed transportation expenses as legitimate business deductions.
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• Tax Appeal Dismissed: 125-Day Late Filing and Repeated No-Shows at Hearings Violate Rule 24 of Appellate Tribunal Rules.

  Case-Laws - AT : ITAT dismissed taxpayer's appeal due to procedural deficiencies. Appeal involved 125-day delay without any condonation application being filed. Taxpayer failed to appear for scheduled hearings and did not submit adjournment requests despite receiving hearing notifications. Tribunal proceeded u/r 24 of Appellate Tribunal Rules, 1963, which permits ex-parte proceedings in cases of non-appearance. Due to dual non-compliance - failure to justify substantial filing delay and absence during proceedings - appeal was dismissed on procedural grounds without addressing substantive merits.
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• Tax Tribunal Approves Bad Debt Deduction for NSEL Trading Losses u/s 36(1)(vii) Following Supreme Court Guidelines.

  Case-Laws - AT : ITAT upheld the allowance of bad debt write-off related to trading losses in NSEL. The assessee's contracts predated Economic Offences Wing's intervention and NSEL's suspension. Despite the Assessing Officer's contention about insufficient recovery efforts, ITAT found that the assessee had legitimately written off the unrecoverable debt, as evidenced by ledger documentation. Following Supreme Court's precedent in TRF Ltd case and CBDT Circular 12/2016, the tribunal concluded that the write-off met statutory requirements for bad debt deduction. The Commissioner of Income Tax (Appeals) order was sustained, and Revenue's appeals were dismissed.
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• Transfer Pricing: Interest-Free Loans, Corporate Guarantees, and Section 80G Deductions Under Review.

  Case-Laws - AT : ITAT addressed multiple issues in a transfer pricing and tax deduction appeal. On interest-free loans to AE, the matter was remanded for verification of surplus funds and nexus with borrowed loans. Corporate guarantee fee was benchmarked at 0.5%. Depreciation on leasehold property rights was remitted following Madras HC precedent. Section 80G deduction for CSR expenses was remanded for de novo consideration. Section 14A disallowance was directed to consider only investments yielding exempt income. TP adjustment on debenture interest was to be benchmarked based on comparable international transactions at 1.76% rather than domestic rates. The appeal was partly allowed with specific directions for reassessment of each issue according to prescribed parameters.
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• Society Denied Tax Exemption for Non-Filing But Gets Depreciation Relief u/s 32(1) After ITAT Ruling.

  Case-Laws - AT : ITAT denied exemption u/ss 11/12 to the society for failing to file income tax return as mandated by section 12A(1)(b). Despite non-filing of return, ITAT directed allowance of depreciation on fixed assets under Explanation 5 to section 32(1), subject to verification of conditions. The tribunal rejected society's claim regarding enhancement of income by CIT(A), holding that using net income/surplus from Income and Expenditure Account for tax computation did not constitute enhancement. The appeal was partially allowed only on depreciation claim while other grounds were dismissed. CIT(A)'s computation methodology using society's disclosed surplus was upheld as valid basis for income determination.
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Customs

• Customs Board Launches Digital Payment System on ICEGATE Platform to Replace Manual TR-6 Challans from December 2024.

  Circulars : CBIC implemented electronic voluntary payment functionality on ICEGATE platform, replacing manual TR-6 payments at Customs stations effective December 31, 2024. The system enables self-initiated challan generation and payments without customs officer approval. Users must register on ICEGATE to access post-login functionality, primarily for past imports/exports settlements. Payment options include Electronic Cash Ledger debits, nine authorized banks via internet banking, NEFT/RTGS through RBI, and payment aggregator modes. Manual TR-6 challans require explicit Commissioner approval post-deadline. The platform supports 26 payment purposes including investigation payments, audit settlements, EPCG compliance, penalties, and pre-deposit appeals. Officers can verify payments through ICEGATE's dedicated portal interface.
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• High Court Invalidates 9-Year-Delayed Customs Show Cause Notice for Violating Section 28(9) Timeline Requirements.

  Case-Laws - HC : HC quashed a Show Cause Notice (SCN) issued by DRI due to unjustified delay in adjudication spanning approximately 9 years. The court emphasized that statutory timelines u/s 28(9) of the Customs Act must be adhered to, and flexibility in timeframes cannot be interpreted as permitting administrative lethargy. While authorities may have valid impediments preventing timely resolution, they must demonstrate genuine hindrances beyond their control. The repeated placement and removal from call book without adequate justification, coupled with unexplained gaps between proceedings, rendered the delay unreasonable. The court determined that such prolonged non-adjudication violated procedural fairness, resulting in the SCN's invalidation.
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• CESTAT Overturns Gold Seizure Under Customs Act as Department Fails to Prove Smuggling Claims u/s 123.

  Case-Laws - AT : CESTAT ruled against absolute confiscation of gold and penalties under s.112(b) of Customs Act, 1962. Officers seized gold based on alleged smuggling from Bangladesh, but failed to establish reasonable belief required under s.123. Evidence showed gold was legally procured through domestic channels, with documentation from jewelers and HDFC Bank confirming legitimate purchase chain. Tribunal held burden of proof remained with department to prove smuggled nature, which they failed to demonstrate. No corroborative evidence supported smuggling allegations. Since underlying confiscation was unsustainable, consequent penalties were also set aside. Appellant successfully established domestic procurement through documented chain of transactions, leading to appeal being allowed.
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• CESTAT Overturns Refund Denial: CA Certificate Proves No Duty Burden Passed and No CENVAT Credit Claimed.

  Case-Laws - AT : CESTAT allowed appeal concerning refund of CVD and ACD. Original authority's rejection was based on contradictory findings - accepting CA certificate showing non-passing of duty burden while simultaneously denying refund on possibility of CENVAT credit claim. Tribunal held that refund cannot be denied on mere apprehension of future credit claims. CA certification confirmed both non-passing of duty burden and non-availment of CENVAT credit. Appellant's counsel affirmed no credit was claimed to date. Rejecting refund based on speculative grounds of potential future CENVAT credit claims was deemed legally unsustainable. Tribunal directed authorities to process the refund claim as per law.
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DGFT

• Chemical Industry Trade Data Shows 20-25% Decline Across Products, With Raw Materials Hit Hardest By Market Weakness.

  Circulars : Based on the trade data provided, chemical and related products experienced significant value declines across multiple categories in the reporting period. Key manufactured goods like polymers, organic chemicals, and pharmaceutical ingredients saw reductions between 15-35%. Raw material commodities including minerals and basic chemicals showed steeper declines of 30-50%. Overall trade volumes decreased by approximately 20-25% year-over-year, with industrial chemicals and intermediates being particularly impacted. The data suggests broader weakness in global chemical manufacturing and industrial activity during this timeframe.
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IBC

• NCLAT Upholds Order Recall After Corporate Debtor Misrepresented Facts About Unit Holders in Section 7 IBC Homebuyers Case.

  Case-Laws - AT : NCLAT affirmed the recall of order dated 04.06.2024 in a Section 7 IBC petition involving homebuyers. The Corporate Debtor had misrepresented facts regarding the number of unit holders and eligibility requirements under the second proviso to Section 7(1) of IBC. While the Corporate Debtor claimed 282 unit holders with only 12 allottees as petitioners, evidence showed the homebuyers had filed compliance affidavits with supporting MAHARERA certificates. The Tribunal held that inherent powers u/r 11 of NCLT Rules could be invoked to prevent abuse of process where orders were obtained through misrepresentation. The recall was justified as the original order was not decided on merits but influenced by distorted facts and procedural irregularities.
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• Bank's Section 7 IBC Application Valid: AGM Authorization and OTS Proposals Keep Claim Within Limitation Despite 2013 NPA.

  Case-Laws - AT : NCLAT dismissed the appeal challenging admission of Sec 7 IBC application. Two key issues were addressed: authorization and limitation period. The Assistant General Manager's filing of Sec 7 application on 28.06.2019 was held valid due to Board's authorization dated 27.06.2019 empowering officers of AGM/DGM rank. On limitation, though NPA was declared on 31.07.2013, multiple OTS proposals between December 2015 to April 2018 kept the claim alive. The application filed in 2019 was within limitation as Corporate Debtor's failure to honor OTS terms extended the limitation period. Both grounds of challenge were rejected, upholding the admission order of the Adjudicating Authority.
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Indian Laws

• State Can Levy Royalty on Brick Earth Mining from Private Land, Rules Supreme Court; Form B Certificate Mandatory.

  Case-Laws - SC : SC held that the State Government's right to levy royalty on brick earth as a minor mineral was valid, regardless of land ownership. The civil court lacked jurisdiction due to available appellate remedy under Mineral Rules. Respondents failed to establish grounds for permanent injunction against royalty collection. While owners of land where excavation occurred were not in exempted category u/r 3 of Mineral Rules, their non-joinder as parties was immaterial. The Court emphasized that quarrying operations require a Form "B" certificate of approval, with mandatory filing of production returns. Assessment appeals u/r 54F remain available. The HC judgment was quashed, restoring trial court's dismissal of suits.
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• Bank Manager's Misconduct in Insurance Account Fraud Results in Pay Cut Instead of Dismissal After Supreme Court Review.

  Case-Laws - SC : Bank Branch Manager found guilty of misconduct involving fictitious debits to crop insurance accounts and unauthorized credits to SKCC accounts. SC held disciplinary inquiry was procedurally fair with adequate evidence, rejecting claims of natural justice violation. Criminal acquittal deemed irrelevant to disciplinary proceedings given different standards of proof. While misconduct was serious for a Branch Manager position requiring high integrity, considering respondent's unblemished career and reimbursement of financial loss, dismissal penalty modified to reduction in pay scale for one year without cumulative effect or pension impact under Regulation 4(e) of Disciplinary Regulations. Appeal partially allowed, upholding misconduct findings but moderating penalty.
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PMLA

• High Court Dismisses PMLA Case Against Developer, Rules Contract Dispute Civil in Nature Due to Substantial Work Completion.

  Case-Laws - HC : HC quashed criminal proceedings under PMLA and IPC sections, finding insufficient evidence of 'proceeds of crime' as defined u/s 2(1)(u) of PMLA. The court determined that M/s. A (developer) had substantially fulfilled contractual obligations, with B (complainant) acknowledging completion of works except for a minor outstanding amount. The dispute was deemed civil in nature, lacking criminal intent required for charges of cheating. The court criticized the ED's allegations regarding non-delivery of services as unfounded, given documented evidence of work completion and corresponding payments. The matter was characterized as a contractual dispute inappropriately converted into criminal proceedings, resulting in dismissal with observations on potential exemplary costs against complainant and ED for harassment.
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Service Tax

• CESTAT Exempts Construction and Transportation Services from Service Tax u/s 65 Due to Classification Issues.

  Case-Laws - AT : CESTAT ruled against service tax demands on multiple construction activities. The tribunal held that pre-negative list period tax demands were invalid without proper service classification. Construction of roads and reservoir tiling were exempt as works contracts for roads and dams u/s 65(105)(zzzza). Transportation services by individual truck owners not issuing consignment notes were deemed non-taxable as they did not qualify as goods transport agencies u/s 65(50a). Consequently, reverse charge mechanism was inapplicable. Associated interest and penalty demands were also set aside. Appeal allowed with complete relief from service tax liability across all disputed services.
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• Security Services to Medical Colleges by Ex-Servicemen Society Exempt from Service Tax under Notification 14/2004-ST.

  Case-Laws - AT : Ex-Servicemen Resettlement Society successfully contested service tax liability on security services provided to medical colleges and affiliated hospitals. CESTAT ruled that security services to educational institutions qualified for exemption under Notification No.14/2004-ST. The Tribunal found that medical college hospitals serve public welfare and provide internship facilities, making them eligible for the exemption. Additionally, the Society's role in ex-servicemen welfare and job placement, where no consideration was retained and payments were direct reimbursements of salary and benefits, fell outside the service tax net. The demand for service tax was set aside as legally unsustainable, recognizing both the educational institution exemption and the non-commercial nature of resettlement activities.
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• Standard Chartered Bank's Head Office Cost Allocation to Indian Branches Not Taxable as Business Support Services Under Finance Act 1994.

  Case-Laws - AT : CESTAT ruled that allocation of head office administrative expenses from SCB-UK to Indian branches does not constitute taxable business support services under Finance Act, 1994. The Tribunal determined no identifiable service provider existed, and cost allocation based on revenue, headcount, or profit parameters did not qualify as consideration for services. For pre-May 2011 period, such activities were outside tax scope. Post-July 2012, mere expense sharing between head office and branch without service agreement cannot be subjected to service tax. The Tribunal emphasized that deductions claimed under Income Tax Act for head office expenses do not automatically constitute taxable services. Following precedents from Tech Mahindra and SAIL cases, CESTAT held that fund transfers were mere reimbursements, not taxable services.
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• CESTAT: Salary Reimbursements During Manpower Supply Services Not Taxable When Acting as Pure Agent u/ss 66-67.

  Case-Laws - AT : CESTAT ruled reimbursement expenses of salary incurred during manpower supply services (2010-13) are not includible in taxable value for service tax purposes when acting as pure agent. The Tribunal emphasized that u/ss 66 and 67 of the Act, only the service component constitutes taxable value, distinguishing between reimbursement and remuneration. The demand was held time-barred as no suppression existed, with records being publicly available and regularly audited. The Tribunal followed precedent establishing that reimbursement expenses are not taxable, only the remuneration component attracts service tax. The appeal was allowed, confirming that salary reimbursements as pure agent are excludible from service tax valuation.
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• CESTAT Allows Input Service Tax Refund Claims, Validates Computation Method Using Gross CENVAT Credit Over Closing Balance.

  Case-Laws - AT : CESTAT overturned the rejection of input service tax refund claims. The Tribunal held that various input services had demonstrable nexus with output services, making them eligible for refund except for 4 services. The computation method using Gross Eligible CENVAT Credit instead of Closing CENVAT Balance was affirmed. Issues regarding reverse charge mechanism payments and foreign currency invoices were resolved. While procedural lapses involving unregistered premises (Rs. 2,03,867) remained contested, the Tribunal directed verification of central registration status. Matter remanded to original authority for fresh adjudication in accordance with findings on service nexus and eligibility criteria.
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Central Excise

• Customs Tribunal Rejects 19-Month Delay Appeal u/s 35(1), Citing Lack of Justification and Recent Supreme Court Guidelines.

  Case-Laws - AT : CESTAT dismissed appeal and application for condonation of delay of 1 year 7 months, finding no sufficient cause established. While courts generally view "sufficient cause" flexibly per Supreme Court guidelines in MST. KATIJI, each day's delay requires proper explanation. Appellant failed to provide even minimal justification for the substantial delay. Tribunal emphasized that condonation powers cannot be exercised mechanically without appropriate reasons. Following recent precedent in AJAY DABRA where SC rejected financial constraints as valid grounds, and considering AP HC's position limiting condonation beyond 90 days u/s 35(1), CESTAT concluded appellant failed to discharge obligation of demonstrating sufficient cause for delay.
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Case Laws:

• GST

• 2025 (1) TMI 1084
  Refund of Input Tax Credit (ITC) for compensation cess leviable under Section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 - the rejection is upheld on the basis that the words input tax defined under Section 2 (62) of the CGST Act would not include Composition Cess - HELD THAT:- It appears that Respondent No. 2 has got confused by equating composition Levy with Compensation Cess. Composition Levy is something that is covered under Section 10 of the CGST Act. Compensation Cess on the other hand is leviable under Section 8 of the Compensation Cess Act. This apart, according to Respondent No. 2, since Compensation Cess is not specifically mentioned in the definition of input tax , the same has been denied to the Petitioner. This issue is squarely covered by two Circulars. The first Circular is dated 26th July 2017. In paragraph 8 of this Circular, it is made clear that the Exporter will be eligible for refund of Compensation Cess paid on goods exported by him (on similar lines as refund of IGST under Section 16 (3) (b) of the IGST Act). This has been further made clear by a subsequent circular of the Central Board of Indirect Taxes and Customs dated 18th November 2019. Once again, by this Circular, in paragraph 42, it is made clear that a registered person making a zero rated supply under LUT may claim refund of unutilized credit including that of Compensation Cess. Of course, it is needless to state that the Input Tax Credit taken for Compensation Cess can be allowed for utilization of Input Tax Credit of Cess only for payment of Cess on the outward supplies, and not any other tax. From these Circulars, it is absolutely clear that the Petitioner is entitled to a refund even of Compensation Cess. These Circulars have been glossed over by the Additional Commissioner in the impugned order. The Additional Commissioner (Respondent No. 2), after setting out the relevant portion of the Circular dated 26th July 2017 merely states that there is no provision for refund of Input Tax Credit other than those defined and included under Section 2 (62) and Section 2 (63) of the CGST Act, which does not include Compensation Cess - this finding, and which is the only finding on which the refund is rejected, is wholly unsustainable in light of the clarifications issued by the aforesaid two Circulars. Conclusion - The refund is allowed. Compensation Cess should be treated similarly to other taxes under the GST framework for the purposes of refund on zero-rated supplies. The circulars issued by the tax authorities are authoritative and provide necessary clarifications that must be adhered to by the adjudicating authorities. Petition disposed off.

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• 2025 (1) TMI 1083
  Violation of principles of natural justice - cancellation of registration of petitioner - failure to provide an opportunity of hearing as well as such order was passed without assigning any reason for cancellation of the registration of the petitioner - violation of principles of natural justice - HELD THAT:- In the present petition, order of cancellation of registration is passed without giving any reason by the respondent authorities, and appeal filed by the petitioner under Section 107 of the GST Act is also dismissed. As the Appellate Authority has dismissed the appeal of the petitioner, the respondent authorities will not be able to exercise the revisional power under section 108 of the GST Act. Therefore, the impugned order passed by the Appellate Authority as well as the order of cancellation of registration are required to be quashed and set aside. Accordingly, the matter is remanded back to the Assessing Officer at the show cause notice stage. This petition is partly allowed by quashing and setting aside the impugned order passed by the Appellate Authority as well as order of cancellation of registration and the matter is remanded to the Assessing Officer at show-cause notice stage, however, the registration number of the petitioner shall remain suspended till such show cause notice is disposed of.

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• 2025 (1) TMI 1082
  Challenge to adjudication order passed under Section 74 (9) of the WBGST/CGST Act, 2017 - appellant claimed input tax credit against supply received form non-existent RTPs whose registration has been cancelled - submissions not considered entirely - violation of principles of natural justice - HELD THAT:- The submissions does not appear to have been considered by the assessing officer as there is no recording of any finding with regard to the decisions which were relied on by the assessee. Two major issues had to be considered by the adjudicating authority, namely, the effect of retrospective cancellation of the registration of the suppliers and the aspect as to whether the purchaser/appellants have proved movement of goods. This exercise appears to have not been done by the adjudicating authority and, therefore, the matter has to be re-adjudicated by taking note of all the factual issues bearing in mind the legal principles laid down in various decisions. Though the reply to the pre-show cause notice dated 6.10.2023 gives the necessary details and the documents which have been annexed, the appellants should submit a fresh reply dealing with all issues with liberty to place the decisions of the various courts on which they seek to place reliance. The order passed in the writ petition is set aside and the order passed by the adjudicating authority under Section 74 (9) of the Act dated 10.07.2024 is set aside and the matter is remanded back to the adjudicating authority for a fresh decision on merits and in accordance with law after affording opportunity of personal hearing to the authorized representative of the appellants. Appeal allowed by way of remand.

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• 2025 (1) TMI 1081
  Detention and seizure of goods and the vehicle by GST officials - validity of notice issued under Section 129(3) of the GST Act - HELD THAT:- Considering the Clause 6 of Annexure P-9 i.e. Circular dated 31-12-2018, issued by the Government of India, by which owner of goods has been clarified, accordingly it shall be decided as per invoice or any other specified document accompanying the goods and instant case Annexure P-2 is an invoice wherein petitioner has been shown as cosigner of the goods, which was being transported in truck bearing Registration No. CG 10 AJ 1477, therefore, the application is to be allowed. It is directed that the seized goods and truck bearing Registration No. CG 10 AJ 1477 shall be given in the interim custody of the petitioner on the fulillment of conditions imposed - application allowed.

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• 2025 (1) TMI 1080
  Challenge to SCN - Cancellation of client s registration under Central Goods and Services Tax Act, 2017 - petitioner is ready and willing to pay the tax, interest, late fee, penalty and any other sum required to be paid for the return form - HELD THAT:- Reliance placed in M/S. MOHANTY ENTERPRISES VERSUS THE COMMISSIONER, CT GST, ODISHA, CUTTACK AND OTHERS [ 2022 (11) TMI 1521 - ORISSA HIGH COURT] where it was held that the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc., due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. Petition disposed off.

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• 2025 (1) TMI 1079
  Challenge to SCN - Cancellation of client s registration under Central Goods and Services Tax Act, 2017 - petitioner is ready and willing to pay the tax, interest, late fee, penalty and any other sum required to be paid for the return form - HELD THAT:- Reliance placed in M/s. Mohanty Enterprises [ 2022 (11) TMI 1521 - ORISSA HIGH COURT] where it was held that the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc., due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. Petition disposed off.

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• 2025 (1) TMI 1078
  Challenge to assessment order - non-constitution of Tribunal - HELD THAT:- There was notification dated 16th August, 2024 made by Central revenue reducing latter deposit to 10%. Now, State revenue has correspondingly notified on 29th October, 2024. In the circumstances, the writ petition be disposed of as covered by order dated 16th February, 2024 with modification for deposit of 10% of remaining disputed tax for impugned order to remain stayed. Petition disposed off.

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• 2025 (1) TMI 1077
  Disallowance of petitioner s claim of Input Tax Credit - ITC sought to be disallowed on the premise that it is ineligible by invoking Section 17(5) of the GST Act - HELD THAT:- To a pointed question as to whether the respondent authority had indicated to the petitioner as to the Clause under Section 17(5) which stood attracted, the learned counsel for the respondent would submit that it appears it was not done. In the circumstances this Court is inclined to set aside the order. It is open to the respondent authority to issue a notice indicating the Clause under Section 17(5) of the act which gets attracted to enable the petitioner to respond and thereafter proceed in accordance with law after affording the petitioner a reasonable opportunity of hearing. Petition disposed off.

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• 2025 (1) TMI 1076
  Challenge to impugned order on the premise that the same was made in violation of principles of natural justice - HELD THAT:- The impugned order dated 24.08.2024 is set aside. The petitioner shall deposit 10% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2025 (1) TMI 1075
  Inaction on the part of the respondents in not refunding the amount of GST collected from the petitioner in the course of the execution of the contract that was awarded to the petitioner - grievance of the petitioner is that in spite of repeated approach being made to the respondents, there is a total inaction on the part of the respondents so far as refund of GST is concerned - HELD THAT:- The writ petition as of now stands disposed of directing the State Authorities to immediately process the claim of the petitioner so far as refund of GST is concerned, after due verification of facts and also the entitlement part of the petitioner is concerned. Let an appropriate decision be taken keeping in view the earlier order of the Central Government dated 28.01.2020 and 06.06.2018 (Annexure-P/2) and all subsequent orders also passed in this regard by the Central Government. Let an appropriate decision be taken within an outer limit of 90 days from the date of receipt of the copy of this order.

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• 2025 (1) TMI 1074
  Blocking the Input Tax Credit (ITC) - Challenge to order issued under Rule 86A(1) of the Kerala State Goods and Services Tax Rules, 2017 - challenge to order issued under Section 74 of the Central Goods and Services Tax/Kerala State Goods and Services Tax Act, 2017 - HELD THAT:- Since the show cause notice specifically alleged that there have been transactions using fake invoices, which were fraudulent in nature, the issue falls within the realm of disputed facts, which cannot be agitated in this proceeding under Article 226 of the Constitution of India. Since the show cause notice as well as the impugned order specifically refers to the alleged instances of fraudulent acts of the petitioner in accepting fake invoices and supply of goods without actual movement of goods, this is not a proper case for exercising the jurisdiction under Article 226 of the Constitution of India, and the petitioner ought to be relegated to pursue the remedy before the statutory authorities. Petition dismissed.

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• 2025 (1) TMI 1073
  Challenge to order which was based on a previously quashed Form GST DRC-01 - violation of principles of natural justice - HELD THAT:- The impugned order founded upon such non-existing show-cause notice cannot sustain judicial scrutiny. Therefore, the impugned order is set aside. Liberty is reserved to the respondents to proceed against the petitioner, in accordance with law. Petition disposed off.

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• 2025 (1) TMI 1072
  Challenge to SCN - Cancellation of client s registration under Central Goods and Services Tax Act, 2017 - petitioner is ready and willing to pay the tax, interest, late fee, penalty and any other sum required to be paid for the return form - HELD THAT:- Reliance placed in M/s. Mohanty Enterprises [ 2022 (11) TMI 1521 - ORISSA HIGH COURT ] where it was held that the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc., due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. Petition disposed off.

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• 2025 (1) TMI 1071
  Challenge to assessment orders - petitioner has not been afforded an opportunity of personal hearing - violation of principles of natural justice - HELD THAT:- It would be appropriate to dispose of these writ petitions setting aside the aforesaid impugned orders and remanding the matter back to the 1st respondent for personal hearing to be given to the petitioner. Petition disposed off.

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• 2025 (1) TMI 1070
  Principles of natural justice - service of notice - petitioner was given adequate notice and opportunity to respond to the discrepancies identified in their tax filings, as required under the Goods and Services Tax Act, 2017 or not - HELD THAT:- Taking into account the peculiar facts of the case, wherein, the petitioner has already remitted more than 25% (almost 90%) of the disputed taxes, this court is of the view that the petitioner may be granted one final opportunity to put forth his objection, which was not objected to by the learned Special Government Pleader for the respondent. The impugned order dated 26.06.2024 is set aside - The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2025 (1) TMI 1069
  Challenge to assessment order - violation of principles of natural justice - opportunity of hearing not provided - availing ineligible Input tax credit under GSTR TRAN-I - petitioner is ready and willing to pay 25% of the disputed tax and that he may be granted one final opportunity before the adjudicating authority to put forth their objections to the proposal - HELD THAT:- The impugned order dated 22.12.2023 is set aside and the petitioner shall deposit 25% of the disputed tax within a period of four 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. If any such objections are filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. Petition disposed off.

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• 2025 (1) TMI 1068
  Violation of principles of natural justice - proceeding challenged on the ground that the impugned order suffers from non application of mind to the reply and the material furnished by the petitioner - HELD THAT:- It is trite law that Court in exercise of its powers of Judicial review under Article 226 of the Constitution of India, would not get into disputed question of fact nor examine adequacy or sufficiency of evidence. In the present case, it is not conclusive that the Input Tax Credit has been availed only in respect of those supplies in respect of which payments have been made within a period of 180 days from the date of invoice given by the supplier. The above being essentially a question of fact unless shown to be perverse, this Court would not interfere but would rather exercise restraint. Further, the adequacy or sufficiency of evidence is normally not to be examined under Article 226 of the Constitution of India. It may also be relevant to to refer to the following judgment of the Supreme Court in the case of THANSINGH NATHMAL VERSUS A. MAZID, SUPDT. OF TAXES DHUBRI [ 1964 (2) TMI 79 - SUPREME COURT] , wherein, the Constitution Bench of this Court made it amply clear that although the power of the High Court under Article 226 of the Constitution is very wide, the Court must exercise self- imposed restraint and not entertain the Writ Petition, if an alternative effective remedy is available to the aggrieved person. There can be no doubt that even though the High Court can entertain a Writ Petition against any order or direction passed / action taken by the State and / or its authorities under Article 226 of the Constitution, it ought not to do so as a matter of course when the aggrieved person could have availed of an effective alternative remedy in the manner prescribed by law. Conclusion - Judicial review under Article 226 should not be exercised when an alternative remedy is available, particularly in matters involving factual disputes and adequacy of evidence. This is a case where it is appropriate for the petitioner to avail the alternate remedy by way of an appeal. Petition dismissed.

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• Income Tax

• 2025 (1) TMI 1067
  Reopening of assessment u/s 147 - reasons to believe - reopening the assessment after four years - HED THAT:- Based on the reasons recorded, it is apparent that the information has been culled out from the documents and submissions made in the course of the regular assessment proceedings. Reasons recorded admits that the predecessor officer has not assessed the income correctly. In our view, based on the reasons as recorded the jurisdictional condition contemplated by the first proviso to Section 147 cannot be said to have been satisfied and, therefore, the impugned proceedings are required to be quashed. Objections raised by the Petitioner regarding the jurisdictional validity of the re-assessment - Petitioner in its objections had raised the jurisdictional objections which is required to be satisfied before re-opening the case. None of these objections has been rebutted by the AO while disposing the order rejecting the objections. The order rejecting objections merely reproduces various judgments. In our view, in the absence of any rebuttal to the objections raised by the Petitioner, it shall be presumed that the Respondents have accepted the objections raised by the Petitioner and, therefore, the impugned proceeding is liable to be quashed. Reliance on audit objections - Respondents have relied on the audit objections to justify the re-opening. It is settled position that the jurisdiction of re-opening has to be tested on the touchstone of the reasons as recorded and nothing can be added or subtracted thereform. Neither in the reasons recorded nor in the order deciding the objections it is stated that the re-opening is done on the basis of audit objections and, therefore, the contentions raised on this count is also to be rejected. Order - Declare that the impugned notice u/s148 are wholly without jurisdiction, illegal, arbitrary and liable to be quashed.

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• 2025 (1) TMI 1066
  Revision u/s 263 - non-consideration of trade receivable has resulted in excess claim of Goodwill to that extent resulting in excess allowance of depreciation - As argued trade receivables were never transferred to the assessee as part of scheme of Amalgamation - HELD THAT:- In terms with a scheme of Amalgamation sanctioned by NCLT, the assessee acquired the assets and liabilities of CBTPL w.e.f 31.03.2017. The part of assets acquired under the scheme of Amalgamation included goodwill. Undisputedly, in the return of income for the impugned assessment order, the assessee had claimed deprecation on goodwill. In response to the query raised, the assessee furnished its reply explaining in detail the scheme of Amalgamation and the assets and liabilities acquired on merger of CBTPL. From the reply furnished before the A.O. on 23.03.2021, it can be seen that the assessee had very clearly stated that as per the scheme of Amalgamation, the assets and liabilities of Industrial Solid Waste business unit of CBTPL were transferred and vested with the assessee. Whereas, post-merger, CBTPL continued with the business of Municipal Solid Waste Management. In support of such contention, the assessee had furnished the scheme of Amalgamation, minutes of board meeting of CBTPL as well as the details of assets and liabilities appearing in the books of CBTPL before demerger. Thus, from the aforesaid facts, it is very much clear that in course of assessment proceeding, the A.O. had enquired in detail regarding the claim of depreciation on goodwill. Facts on record clearly demonstrate that allegation of transfer of trade receivable of Municipal Solid Waste Division to the assessee is totally unfounded and rather contrary to the facts and materials on record. In contrast, the Board Resolution of CBTPL and other facts and materials, clearly establish that the trade receivable pertaining to Municipal Waste Division, was never transferred to the assessee under the scheme of Amalgamation. Thus, in our considered opinion, ld. PCIT has completely misconceived the facts while exercising jurisdiction u/s. 263 of the Act harbouring a wrong notion that the trade receivable relating to Municipal Waste Division has been transferred to the assessee. Also by simply observing that the assessee was able to adduce partial evidence, ld. PCIT has proceeded to revise the assessment order. Thus, in our view, exercise of power u/s. 263 of the Act, in the facts of the present appeal, is unsustainable. Decided in favour of assessee.

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• 2025 (1) TMI 1065
  Denial of claim of credit for Foreign Tax paid - Form No.67 was not filed before the time limit specified u/s.139(1) and filing of Form No.67 is mandatory to claim the benefit of Foreign Tax Credit - HELD THAT:- Admittedly, in the present case, Form No.67 was not filed within the due date for filing of the return of income under the provisions of section 139(1), but Form No.67 was filed on 23.03.2020. CPC, Bangalore had processed the return of income as on 18.02.2021, which means that Form No.67 was very much available with the CPC, Bangalore. CPC, Bangalore cannot deny the claim for credit for foreign tax paid merely because Form No.67 was not filed within the due date specified for filing the return of income under the provisions of section 139(1) of the Act, as it is merely directory in nature. Our view is fortified by the judgment of Hon ble Madras High Court in the case of Duraiswamy Kumaraswamy [ 2023 (11) TMI 1000 - MADRAS HIGH COURT ] wherein it has been held that filing of FTC in terms of the Rule 128 is only directory in nature. The rule is only for the implementation of the provisions of the Act and it will always be directory in nature. We further find support from the decision of this Tribunal in the case of Samiran Arunkumar Dutta [ 2024 (9) TMI 1267 - ITAT PUNE ] where also assessee was employed with same employer but Foreign Tax Credit was allowed even when Form No.67 was filed belatedly. We direct the JAO to allow the alleged Tax Credit by taking into consideration the Form No.67 filed by the appellant but after due verification. Accordingly, the grounds of appeal raised by the assessee stands allowed.

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• 2025 (1) TMI 1064
  Sub-contract payments as non-genuine and bogus - Non Genuineness of Expenses - estimation of the profit at 8% of the gross contract receipts - addition being the payments to sub-contractors made by the assessee on the ground that the assessee could not substantiate with documentary evidence to his satisfaction regarding the genuineness of such huge payments to the sub-contractors - HELD THAT:- We find before the CIT(A) / NFAC, apart from making elaborate submissions the assessee took an alternate ground that making addition to the total income of the assessee declared on a turnover will give net profit ratio of about 40% which is not possible in such line of business especially when the assessee is doing contract work for government departments. We find based on the arguments advanced by the assessee, the Ld. CIT(A) / NFAC directed the AO to estimate the profit at 8% of the gross contract receipts. No infirmity in the order of the CIT(A) / NFAC on this issue. A perusal of the net profit ratio declared by the assessee from assessment year 2015-16 to 2021-22, the details of which are given at para 12 above, gives average net profit rate at 5.37%. Similarly, various contractors operating near the place of the assessee i.e. near Nashik and engaged in similar line of business are also showing the profit rates ranging from 4% to 8% and in one case such profit rate has been shown at 10.24%. Provisions of section 44AD of the Act prescribe profit rate of 8% for civil contractors in unaudited cases where the turnover is less than the prescribed limit. Although in the case of the assessee, the turnover is above the prescribed limit as per the provisions of section 44AD and the accounts are audited, still the provisions of section 44AD can be taken as a parameter for estimating the income. The average net profit ratio for the last four years i.e. from assessment year 2015-16 to 2021-22 is 5.37%, we are of the considered opinion that the order of CIT(A) / NFAC directing the AO to estimate the profit at 8% is justified under the facts and circumstances of the case. We, uphold the order of the Ld. CIT(A) / NFAC on this issue and the grounds raised by the Revenue are dismissed.

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• 2025 (1) TMI 1063
  Denial of exemption u/s 11 12 - filing of Income Tax Return belatedly - HELD THAT:- Upon thoughtful consideration of the matter and granting a dispassionate hearing of the arguments, as apparent that till the date of registration on 23/11/2022, the requirement of compulsory audit did not apply to the assessee appellant, because the status of the trust was unregistered. So the prima facie adjustment is based on hyper technical grounds and is liable to be jettisoned. There is no cavil or doubt that the assessee trust has filed the return of income. Dur view is emboldened by the fact that section 12A(1)(b) of the Act has been amended w.e.f. 01/04/2023, by Finance Act, 2023, to encompass that return of income filed u/s 139(1) or 139(4) of the Act will satisfy compliance of section 139(4A) of the Act. Amendment is a beneficial one and only clarifies the intention of the legislature. Further, there is no further reason to deepdive into the non furnishing of audit report along with the return of income since the registration was granted belatedly with retrospective effect at the behest of the directions from this forum. As excruciating to note that a demand has been created on flimsy grounds as aginst the assessee which is in existence since 1965. For the sake of clarity it is clarified that the assessee trust is successful in assailing the order on twin grounds of submission of return of income as well as submissions of the audit report in tandem with the provisions for the impugned assessment year. As surprising that the CIT(A) had traversed in an altogether different route to sustain the addition which is also perverse and has been noted cryptically by this forum. We are in concurrence with the averments raised before us by the A.R. and hold that the entire addition merits full relief and hence the returned income be accepted. Appeal of assessee allowed.

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• 2025 (1) TMI 1062
  Penalty u/s 271AA - Assessee failed to maintain documents specified u/s. 92D read with Rule 10D of the IT Rules - HELD THAT:- Hon ble Delhi High Court in CIT vs Leroy Somer Controls India (P) Ltd [ 2013 (9) TMI 761 - DELHI HIGH COURT] held that before levying penalty u/s. 271AA of the Act the Revenue must first mention the documents or information which was required to be maintained, but Not maintained or not furnished by the assessee then proceed with penalty proceedings. Penalty u/s. 271AA cannot be levied without specifying the required documents failed to be maintained/furnished by the assessee. Thus the issue is no more res-integra. Further it is noticed that penalty order was passed in perfunctory manner without giving requisite show-cause notice and without affording proper opportunity of hearing to the assessee. AO had merely show caused the assessee to file details/documents maintained as per rule 10D of Income-tax Rules, without specifying any particular clause itself. No merit in levying penalty u/s. 271AA of the Act, holding that the assessee have not maintained proper documents. Even otherwise, international transaction entered upon by the assessee with its AE had been held to be at arm s length by the Ld TPO. Thus, penalty order is not sustainable in law. Decided in favour of assessee.

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• 2025 (1) TMI 1061
  Rectification u/s 154 - applicability of provisions of section 10(23C) - Whether debatable issue is involved? - HELD THAT:-From the facts on record and from the provision of section 10(23C) (iiiad) of the Act, it can be said that the institution is an educational institution existing solely for educational purpose having income less than Rs. 5 crores. The appellant is a charitable trust providing education and awarding degrees to the students who are the participants of its courses and the degrees are duly recognised by the state government. There is no doubt that the trust having education as its main object. In the entire history of the trust since 1962, education is the only activity undertaken by it, the fact of which is not been disputed by the revenue authorities. Hence, the claim of exemption u/s 10(23C) is allowable and the revenue authorities are directed to nullify the demand notice issued. Appeal of the assessee is allowed.

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• 2025 (1) TMI 1060
  Addition u/s 69A - cash deposit in the bank account unexplained - HELD THAT:- Assessee has deposited cash in the bank account not only in this year, but in previous years and subsequent years also. The assessee also deposited cash in bank account before and after the demonetization period, in the same pattern, hence cash deposit in the bank account during the year under consideration should not be doubted. We do not find exceptional or abnormal cash deposit in the bank account. Assessee has furnished plethora of documents and evidences before the AO as well as before the CIT(A), to prove genuineness of the cash deposit in the bank account, which were not appreciated by both the lower authorities. AO has not refuted or discredited these evidences and documents. AO does not mention why he is not accepting these evidences. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence this ground of the assessee is allowed.

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• 2025 (1) TMI 1059
  CIT(A) dismissing the appeal without addressing specific grounds raised by the assessee rendering the order as suffering from a mistake apparent from the record - Validity of assessment - reasons to believe - HELD THAT:- When the assessee had specifically challenged the validity of the jurisdiction that was assumed by the AO for framing the assessment vide his order passed u/s. 143(3) r.w.s. 147 therefore, CIT(A) ought to have adjudicated the said issue by calling for the assessment records. Rather, we find that though the assessee vide his rectification application had, inter alia, relied on the judgment of in the case of CIT (Central), Nagpur Vs. Prem Kumar Arjundas Luthra (HUF) [ 2016 (5) TMI 290 - BOMBAY HIGH COURT] seeking disposal of the appeal vide a speaking order but the first appellate authority by dismissing the said application had allowed his said mistake to perpetuate. We are unable to concur with the view taken by the CIT(Appeals) who had most arbitrarily dismissed the application filed by the assessee vide his order u/s. 154 r.w.s. 250. Accordingly, we restore the matter to the file of the CIT(Appeals) with a direction to re-adjudicate the appeal after affording a reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes

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• 2025 (1) TMI 1058
  Disallowance of transportation expenses which is excessive and unjustified in light of the past history of the appellant s business and the evidence provided - HELD THAT:- Disallowance of an expenditure claimed by the assessee as a deduction as per the mandate of section 37 can only be disallowed in case of satisfaction of either of the conditions set out in the said section, which are required to be spelt out by the A.O in the body of the assessment order, viz. (i) the claim of expenditure raised by the assessee is found to be bogus; (ii) the expenditure is in the nature of a capital expenditure or personal expenditure of the assessee; or (iii) that the expenditure had been incurred for any purpose which is an offence or which is prohibited by law. A.O had failed to place on record any material which would prove to the hilt that the assessee had either raised a bogus claim of expenditure; or that the said expenditure was not incurred wholly and exclusively for the purpose of business; or that the expenditure so claimed as a deduction did not fall within the four parameters of Section 37 therefore, unable to persuade myself to subscribe to the summarily disallowance to the said effect so carried out by the A.O. Similar claim for deduction as was raised by the assessee firm in the preceding year had been allowed by the department, but also the fact that the GP/NP rates of the assessee firm are progressive as in comparison to the preceding year. Thus, vacate the disallowance sustained by the CIT(Appeals). Decided in favour of assessee.

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• 2025 (1) TMI 1057
  Delay of 125 days - non-compliance of the assessee in appellate proceedings and the delay in filing the appeal - HELD THAT:- As the assessee despite having been intimated about the fixation of hearing of the appeal had neither put up an appearance nor any application seeking adjournment has been filed before us, therefore, we are constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963. As stated by the DR, and rightly so, the present appeal involves a delay of 125 days. As the assessee had not filed any application seeking condonation of the delay involved in filing of the present appeal, therefore, we are constrained to dismiss the appeal on the said count itself. Appeal filed by the assessee is dismissed.

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• 2025 (1) TMI 1056
  Correct head of income - income derived from leasing of the property - income from house property or business income - revenue Not granting of deduction u/s 24(a) as claimed by the assessee by computing the income from house property - applicability of section 161 - intimation u/s. 143(1)(a) -assessee s income was assessed at Rs. 6,69,38,890/- as against Nil income by treating the income from house property as business income - HELD THAT:- Since assessee being the owner of the property which was given on rent without any service or any other amenities, therefore, the rent received was declared under the head income from house property and such income from house property has been shown in all the earlier years, and there was never any dispute by the department. It is well settled principle, in view of the judgment of Raj Dadarkar Associates [ 2017 (5) TMI 586 - SUPREME COURT] that rental income derived from leasing of the property is to be assessed under the head income from house property as not a business income . Thus, income was liable to be assessed under the head income from house property only and not as business income. Applicability of section 161 - It is now well settled that if income being taxed in individual hands of beneficiaries, the same cannot be assessed u/s 161 as Representative Assessee s in the hands of the trust. This view is squarely covered by the judgment of Alfred Herbert (I)(P) Ltd. [ 1986 (2) TMI 47 - CALCUTTA HIGH COURT] and Smt. Ushaben Trust [ 1990 (6) TMI 21 - BOMBAY HIGH COURT] . Accordingly, we hold that firstly, income from rental income received from letting out property is to be assessed under the head income from house property ; and secondly, once, the beneficiaries have included the trust income in their individual return of income and paid the tax at higher rate of tax, the assessee trust cannot be assessed at rate of assessee u/s 161. Accordingly, on this issue all the grounds raised by the assessee are allowed. Non granting of credit for TDS deducted from house property to the beneficiaries - Once the TDS has been deducted on the rental income and all the 5 beneficiaries have declared this income in their individual return as income from house property, then income received by the trust is also entitled for proportionate TDS credit in the hands of all the beneficiaries. Appeal filed by the assessee is allowed.

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• 2025 (1) TMI 1055
  Bad debt written off - basis for this claim was due to the stoppage of the trading in National Spot Exchange Limited ( NSEL ) - AO came to the conclusion that the assessee had not produced any documents which shows that the assessee has made any effort for recovery of said bad debts - HELD THAT:- It is an undisputed fact that the assessee entered into the contract prior to the action of EOW and suspension of NSEL. When the contract was finally settled, the assessee could not recover the amount due to it and hence was left with no choice but to write off the same. The assessee has actually written off the debt as is evident from the copy of the ledger account placed in the paper book. In our considered opinion, the assessee satisfies the claim in the light of the decision of TRF Ltd [ 2010 (2) TMI 211 - SUPREME COURT] which has been accepted by the Board vide Circular No.12/2016. No reason to interfere with the findings of the CIT(A). All the appeals filed by the Revenue are dismissed.

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• 2025 (1) TMI 1054
  Unexplained cash credit u/s 68 - source of the cash cannot be accepted and it is held that the assessee has introduced his unaccounted cash during the period of demonetization in the books in the guise of cash sales and proceeds of debtor realization - AO and CIT(A) both have mentioned that the assessee did not produce books of account and assessee has not filed even Cash Flow Statement , only Cash Summaries have been filed. HELD THAT:- The collection from debtors, forming part of opening balance, is miniscule. Even for collection from one debtor M/s Sati Polyweave Ltd., the assessee has filed Ledger A/c and Sale Bills issued under VAT laws. The non-compliance of summon u/s 131 by the said debtor is not a fault of assessee and the assessee cannot be penalized for that. The higher amount of cash balance held by assessee as opening balance is also substantiated from the fact that there was high scale of business during August, 2016 to October, 2016 on account of Diwali festival. Thus, we find that the source of impugned deposits is sufficiently explained by assessee. Also once the AO has rejected books of assessee u/s 145, the addition u/s 68 cannot be made. Their Lordship in Dulla Ram [ 2013 (12) TMI 253 - PUNJAB HARYANA HIGH COURT] have approved this proposition as held as books of accounts were rejected in their entirety, the Assessing Officer could not rely upon any entry in the books of accounts for making an addition Addition made by AO in present case is neither tenable on merit nor on legal provisions of section 68. Decided in favour of assessee.

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• 2025 (1) TMI 1053
  TP Adjustment of Loans to AE - assessee granted interest free loan to its AE M/s Sundaram International Inc., USA - TPO proposed benchmarking the same on LIBOR+200 bps - HELD THAT:- This issue has been adjudicated by Tribunal [ 2016 (3) TMI 1486 - ITAT CHENNAI] Tribunal directed Ld. AO to verify the actual surplus funds available with the assessee. AO was also directed to verify whether there was any nexus between the borrowed loans and advances made to the AE. AO was directed to re-examine the matter in the light of aforesaid observation and re-adjudicate the issue. Since facts are similar in this year, we issue similar directions. The corresponding grounds as raised by the assessee stand allowed for statistical purposes. TP adjustment of Corporate Guarantee - assessee provided corporate guarantee for its AE but did not charge any fees - TPO benchmarked the same @2.55% which was nothing but average rate of guarantee fee charged by the bank - HELD THAT:- This issue has been adjudicated by Tribunal in [ 2024 (11) TMI 1419 - ITAT CHENNAI] . In para-4.2 of the order, the bench directed AO to benchmark the same @0.5%. Facts being pari-materia the same, we direct Ld. AO to adopt benchmarking rate of 0.5%. The corresponding grounds stand partly allowed. Depreciation on right to use leasehold property - depreciation was claimed @12.5% i.e., half of 25% depreciation. The same was on the ground that the rights were shown as intangible assets which would be eligible for 25% depreciation - HELD THAT:- This issue has been adjudicated by Tribunal in [ 2024 (11) TMI 1419 - ITAT CHENNAI] for AYs 2015-16 and 2016-17 considering the order of Hon ble High Court of Madras in assessee s own case [ 2021 (3) TMI 1471 - MADRAS HIGH COURT] the bench remitted this matter back to the file of Ld. AO. Facts being pari materia the same, we issue similar directions to Ld. AO. The corresponding grounds stand allowed for statistical purposes. Claim of Deduction u/s 80G - assessee made CSR expenses - HELD THAT:- As we deem it fit to remit this issue back to the file of Ld. AO for de novo adjudication. AO shall consider the nature of donations as well as subsequent amendment to the law. The various judicial decisions as rendered on this issue may also be reconsidered. It appears that only part of CSR expenditure has been claimed u/s 80G which may also be considered on facts. The assessee is directed to substantiate its claim. Consequently, the corresponding grounds stand allowed for statistical purposes. Disallowance u/s 14A - HELD THAT:- This issue has been adjudicated by Tribunal in [ 2024 (11) TMI 1419 - ITAT CHENNAI] wherein bench directed Ld. AO to compute disallowance u/r 8D(2)(ii) by considering only those investments which have yielded exempt income during this year. Facts being pari-materia the same, we issue similar directions. The amendment, in our opinion is applicable only w.e.f. 01.04.2022 and the same would not have retrospective application. The corresponding ground stand allowed for statistical purposes. The appeal stand partly allowed in terms of our above order. TP adjustment of interest on debentures - HELD THAT:- As the assessee has subscribed to debentures of a UK-based entity and therefore, the ALP rate as applicable to that entity, would be more suitable benchmarking rate. As per facts, the foreign AE was able to raise overdraft facility in independent situation at the rate of 1.76% as against rate of 2.43% as paid to the assessee. In such a situation, we direct Ld. TPO to benchmark the same based on comparable international transactions and not on the basis of comparable domestic transaction. The assessee is directed to provide the requisite data. The corresponding grounds stand allowed for statistical purposes.

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• 2025 (1) TMI 1052
  Validity of reassessment proceeding - non granting approval from the correct authority as mandated by section 151(ii) - HELD THAT:- Accordingly the notice issued on 04.04.2022 by the AO is issued beyond three years and therefore the approval should have been obtained by the authorities as specified under section 151(ii) Principle Chief Commission. As already stated the approval in assessee s case is obtained from CIT(IT) and therefore we are inclined to agree with the contention of the assessee that the notice under section 148 has been issued without obtaining the approval from the correct authority as specified under section 151. As relying on Vodafone Idea case [ 2024 (2) TMI 1408 - BOMBAY HIGH COURT] we hold that the notice issued by the AO under section 148 without obtaining approval from correct appropriate authority is invalid and the assessment done under section 147 r.w.s. 144(13) of the Act is liable to be quashed. Decided in favour of assessee.

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• 2025 (1) TMI 1051
  Rejection of application for registration of trust u/s 12AB and 80G - CIT(E) dismissed the assessee s applications on the ground that supporting documents were not provided - assessee submitted that there was no requisition of supporting documents, hence, assessee could not provide the same, thus prayed an opportunity may be granted to the assessee to provide the necessary documents and submissions before the CIT (E) in the interest of justice - HELD THAT:- As DR did not have any serious objection to the proposition made by assessee, we deem it fit and proper to remit back the issues in both the appeals to the file of the Ld. CIT (Exemption), Lucknow with the directions to decide the same, afresh - Assessee s appeals are allowed for statistical purposes.

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• 2025 (1) TMI 1050
  Undisclosed sale - difference in WIP stock account during the year - addition on account of undisclosed sales on the basis of figures as appearing in respect of opening and closing of WIP for this year vis- -vis the sales as disclosed in the P L account - HELD THAT:- It is a settled position of law that once the method of accounting has been accepted by the Revenue in the earlier years it cannot be rejected in the subsequent year without bringing anything on record to show that the fact was different during that year. No such discrepancy was recognized and brought on record by the Revenue. The accounting method adopted by the assessee was a recognized method of accounting as per the Accounting Standards issued by ICAI and the percentage completion method was consistently followed by the assessee in all the years to recognize its revenue, which was also accepted by the Revenue. AO was not correct in rejecting the method of accounting regularly followed by the assessee and in working out the income on the basis of actual sales made during the year. Revenue cannot be allowed to flip-flop the method of accounting regularly followed by the assessee without pointing out any defect in the accounts of the assessee. As rightly pointed by the assessee, the profit out of the sales were already substantially accounted for by the assessee in the earlier years on the basis of percentage completion method and the addition made in the current year on the basis of actual sales had led to double addition. Hon ble Supreme Court has held in the case of Bilahari Investment P Limited [ 2008 (2) TMI 23 - SUPREME COURT] that every assessee is entitled to arrange its affairs and follow the method of accounting which the Department has earlier accepted. CIT(A) has rightly upheld the method of accounting regularly followed by the assessee and has correctly deleted the addition as made by the AO. The addition made by the AO was not only incorrect but was based on wrong presumption which had led to double addition. As explained by the assessee the work-in-progress credited to P L account comprised of cost-plus profit on percentage completion method and the closing balance of WIP was accordingly disclosed in the accounts. Thus, the profit was already disclosed in closing WIP every year and this fact has not been controverted by the Revenue. Therefore, the Ld. CIT(A) has correctly deleted the addition made by the AO in the current year. Decided against revenue.

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• 2025 (1) TMI 1049
  Rejection of the application for registration u/s 12A on tecnical error - denying the application for approval in Form No.10AB under clause (ii) of first proviso to sub-section (5) of section 80G - HELD THAT:- We find that the assessee trust was required to file the application for registration u/s 12A of the IT Act in Form No.10AB u/s 12A(1)(ac)(iii) of the IT Act but due to typographical error the application was filed in Form No.10AB u/s 12A(1)(ac)(ii) of the IT Act. Respectfully following the decision of Vir Sewa Mandir [ 2024 (9) TMI 1510 - ITAT DELHI] we find force in the arguments of assessee and accordingly deem it appropriate to set-aside the order passed by CIT, Exemption, Pune and remand the matter back to him with a direction to decide the issue afresh after treating the original application as filed by the assessee under correct/desired section i.e. section 12A(1)(ac)(iii) of the IT Act. The assessee is also hereby directed to respond to the notices issued by Ld. CIT, Exemption, Pune in this regard and produce specific documents/evidences desired by CIT, Exemption, Pune in support of application for registration u/s 12A without taking any adjournment. Thus, the grounds of appeal raised by the assessee in this appeal are partly allowed.

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• 2025 (1) TMI 1048
  Denial of exemption u/s 11 12 - whether or not the assessee society per the 1st proviso of sub-section (2) of section 12A of the Act, based on the registration granted u/s 12A is entitled for exemption u/ss. 11/12 for the reason that its application for registration filed u/s 12A was pending prior to the disposal of its appeal by CIT(A)/ NFAC, Delhi, who had disposed of the same vide his order dated 30.05.2024? HELD THAT:- Accordingly, Sec.12A(b) [as was available on the statute during the year under consideration i.e AY 2017-18] had for claiming of exemption u/s 11 or Sec. 12, inter alia, set out a pro- condition, as per which the trust or institution was statutorily required to cumulatively satisfy two conditions, viz. (i) to get its accounts audited by an accountant defined in the Explanation below sub-section (2) of Sec. 288; and (ii). to furnish alongwith the return of income for the relevant assessment year the report of audit in the prescribed form As the present assessee society had not filed any return of income for the year under consideration i.e AY 2017-18, therefore, the pre-condition is not satisfied by it. In fact, it transpires on a perusal of the CIT(A) order that the assessee society had in its written submissions filed before him stated that it had filed its audited financial statements only in the course of the assessment proceedings. As it is a matter of fact borne from the record that the assessee society had failed to file its return of income as required per the mandate of section 12A(1)(b) (as was applicable during the year under consideration), therefore, for the said reason it would stand disentitled for claiming exemption u/s 11 and 12 of the Act. The assessee society is disentitled from claiming exemption u/ss. 11/12 of the Act, therefore, we refrain from looking into the scope of 1st proviso to section 12A. The Ground of appeal No. 1 is dismissed. Entitlement for claim of depreciation on its fixed assets despite the fact that it had not raised a claim for the same in its return of income for the year under consideration i.e AY 2071-18 - HELD THAT:-Though the assessee society is not entitled for claiming exemption under Sec. 11 and Sec. 12 of the Act, but, at the same time, as per Explanation 5 to Sec. 32(1) of the Act, the deduction for depreciation on the fixed assets , though not claimed, ought to be allowed while computing its income in a commercial manner. Accordingly, the A.O is directed to allow depreciation on the fixed assets , though, after verifying satisfaction of the requisite conditions contemplated in Sec. 32(1) of the Act. The Ground of appeal No. 2 is allowed in terms of my aforesaid observations. Enhancement of the income of the assessee society by CIT(A) without affording an opportunity to the assessee to put forth an explanation - We are unable to concur with the same. As the CIT(A) had taken the net income/surplus disclosed by the assessee society in its Income and expenditure account for the subject year for computing its taxable income, therefore, the same cannot be construed as enhancement of income as canvassed by the Ld. AR before me. The Ground of appeal No. 3 of the appeal is dismissed.

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• 2024 (12) TMI 1522
  Denial of Deduction u/s 80G - contribution towards Prime Minister s National Relief Fund - assessee spent an amount towards CSR expenditure but disallowed the same in statement of total income - HELD THAT:- Though deduction has been granted for donation to these funds, however, it has specifically been made clear that any sum spent in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013 towards these funds will not be eligible for deduction from the total income of the donor. We find that there is no such restriction for donation out of CSR funds to Prime Minister s National Relief Fund. We are of the considered opinion that the impugned deduction u/s 80G would be available to the assessee. AR has cited many decisions of Tribunal taking a view favorable to the assessee which include Interglobe Technology Quotient Pvt. Ltd. [ 2024 (6) TMI 8 - ITAT DELHI] as well as Jamnagar Utilities and Power P. Ltd. [ 2024 (7) TMI 1585 - ITAT MUMBAI] - Therefore, we take similar view in preference to view expressed in the earlier decision of Agilent Technologies international P. Ltd. [ 2023 (12) TMI 1090 - ITAT DELHI] Accordingly, we direct Ld. AO to allow impugned deduction u/s 80G. Assessee appeal allowed.

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• 2024 (12) TMI 1521
  Denial of grant of registration u/s.12A and approval u/s. 80G(5) - time allowed to the appellant for compliance is unreasonable - HELD THAT:- As lack of proper and fair opportunity having been granted to appellant trust and the principles of natural justice being fair to both the parties. Considering the same, we are of the view that the appellant was for sufficient cause prevented from prosecuting the appeal effectively, therefore deserves to be given one more opportunity to prove its case on merits. Effective grounds of appeal raised by the appellant are allowed for statistical purposes.

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• Customs

• 2025 (1) TMI 1087
  Classification of goods - Tees and Crosses - HELD THAT:- The Tribunal is correct in holding that Tees and Crosses would be covered under Customs Tariff Heading (CTI) 7307 22 00 - Threaded elbows, bends and sleeves . The heading/entry being specific, it could not be covered by CTI 7307 29 00, which refers to Other . Appeal dismissed.

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• 2025 (1) TMI 1047
  Delay in adjudicating the Show Cause Notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) - HELD THAT:- The issue raised in the petition is no longer res-integra. Section 28(9) of the Act, unamended and amended, have been considered in detail by the Coordinate Benches of this Court in SWATCH GROUP INDIA PVT LTD ORS. VERSUS UNION OF INDIA ORS. [ 2023 (8) TMI 864 - DELHI HIGH COURT] as also M/S. VOS TECHNOLOGIES INDIA PVT. LTD. [ 2024 (12) TMI 624 - DELHI HIGH COURT] where it was held that A statute enabling an authority to conclude proceedings within a stipulated period of time where it is possible to do so cannot be countenanced as a license to keep matters unresolved for years. The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence. Ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act. The impugned SCN, which was issued way back in 2014, due to repeated placing in the call book has not been adjudicated for so long. Repeated placing and removing from the call book is not a valid justification for non-adjudication of the impugned SCN for about 9 years. Moreover, the gaps between the said periods is also inexplicable. Hearing notices have been given to the Petitioners but there is no reason for non-adjudication of the impugned SCN for long period. Conclusion - The statutory timelines for adjudication must be adhered to, and failure to do so without valid justification results in the lapsing of the SCN. The delay in adjudication was unjustified, and the SCN was quashed. Petition allowed.

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• 2025 (1) TMI 1046
  Absolute Confiscation of gold - levy of penalty u/s 112(b) of the Customs Act, 1962 - seizure on the reasonable belief that the said gold was contraband in nature and was smuggled from Bangladesh - burden of proof - Gold was procured legally from domestic sources. Reasonable belief - HELD THAT:- The seizure was effected by a team of officers comprising of the Superintendent (Prev.) Circle Kishanganj and Preventive Officers assisted by SSB officials and G.R.P./R.P.F. personnel on the reasonable belief that the said gold was contraband in nature and was smuggled from Bangladesh. However, in the present case, we observe that no reasonable belief has been formed by the officers that the gold is of smuggled in nature. No evidence has been brought on record by the Revenue to substantiate the allegation that the gold is of foreign origin and smuggled in nature. The seizure of the gold without following the reasonable belief that the gold is of smuggled in nature, is not sustainable. Applicability of Burden of Proof as envisaged under Section 123 of Customs Act,1962 - HELD THAT:- Section 123 of the Customs Act clearly stipulates that a reasonable belief that the gold is of smuggled in nature is mandatory for invocation of the said provision. However, in the present case no reasonable belief has been formed by the officers that the gold is of smuggled in nature and hence the provisions of Section 123 are not applicable in this case and the burden lies on the department to prove that seized gold is of smuggled in nature. However, no evidence has been brought on record by the Revenue to substantiate the allegation that the gold is of foreign origin and smuggled in nature - the provisions of Section 123 are not applicable to indigenously procured gold. Reliance placed upon the decision in the case of BALANAGU NAGA VENKATA RAGHAVENDRA AND BALANAGU VENKATA SIVA KANAKA RATNAM VERSUS COMMISSIONER OF CUSTOMS, VIJAYAWADA [ 2021 (2) TMI 612 - CESTAT HYDERABAD] , wherein it has been held that the burden under section 123 will not shift on the Appellants when the seizure of gold without foreign markings are seized from city. Gold was procured legally from domestic sources - HELD THAT:- The failure to produce documents in respect of the goods carried by a person does not ipso facto prove that the goods are contraband in nature. The allegation of smuggling needs to be proved with cogent reasoning and corroborative evidence thereof. Subsequently, if the appellant could produce documents for its legal purchase, the same cannot be ignored to conclude that the gold is of smuggled in nature. The evidence provided by M/s. Akshay Kripa Jewellers (Pvt.) Ltd. and M/s. Supreme Gold, Delhi, in the course of follow up action indicate that both jewellers purchased and sold gold with the markings Rand Refinery and Credit Swisse which they had acquired from M/s. Atma Ram Amar Nath and M/s. Lawat Jewellers, Delhi, who had acquired the same from the HDFC Bank, Delhi. This fact has been confirmed by HDFC bank vide their letter s dated 3.12.2013 and 18.01.2014 with annexures, which indicate that the imported gold which was indeed sold with the marking Rand Refinery and Credit Swisse during the said period when the appellant dealt with the jewellers viz. M/s. Akshay Kripa Jewellers (Pvt.) Ltd. and Ms. Supreme Gold of Delhi. Conclusion - The burden under Section 123 of Customs Act, to prove that the gold is not smuggled one, does not lie on the appellant, in this case. The onus is on the departmental officers that the gold is of smuggled in nature. However, the officers of the Department could not establish that the gold is of smuggled in nature. Accordingly, the confiscation of the gold is not sustainable. Since the confiscation of the gold is not sustainable, the penalties imposed on the appellant are also not sustainable. Appeal allowed.

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• 2025 (1) TMI 1045
  Refund of Countervailing Duty (CVD) and Additional Customs Duty (ACD) - rejection of refund on the ground that CVD and ACD was recoverable as the appellants have a chance to pass it off or to avail the CENVAT credit of the same - HELD THAT:- The original authority, whose order was upheld by the appellate authority records self-contradictory findings; on one hand, the original authority accepts the Chartered Accountant certificate which shows that the appellants have not passed on the incidence of duty paid by them at the time of release of the goods; on the other hand, the authority seeks to deny the same as the importer-appellant has an opportunity to take credit of the same in their Returns. The refund cannot be rejected on the basis of a mere apprehension. The Chartered Accountant having gone into the accounts of the appellants has certified that the incidence of duty is not passed on. It also implies that CENVAT credit has not been taken. Learned Counsel for the appellant makes a statement before the Bench that such credit has not been taken till date also. In view of the same, a part of refund has been rejected on mere apprehension and therefore such rejection cannot be upheld. Conclusion - Refunds should not be denied based on speculative grounds or potential future actions, such as taking CENVAT credit. Part of refund has been rejected on mere apprehension and therefore such rejection cannot be upheld. Appeal allowed.

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• Insolvency & Bankruptcy

• 2025 (1) TMI 1044
  Maintainability of section 7 petition - powers of the Adjudicating Authority of recall under Rule 11 of NCLT Rules - non-compliance with the requirements under 2nd proviso to Section 7(1) of the IBC - It is the contention of the Appellant that the statutory provisions of the IBC do not permit the Adjudicating Authority to revisit its own findings of fact or law in any order delivered by it. HELD THAT:- It would be useful at this juncture to examine the findings of the Adjudicating Authority as returned in the order of 04.06.2024. A plain reading of the order clearly indicates that only the Counsel for the present Appellant-Corporate Debtor who was present before the Adjudicating Authority on 04.06.2024. The order also records the submission made by the Counsel for the Corporate Debtor that the Marvel Isola J Building Housing Project had 282 unit holders and that there is no record to show that the applicants had complied with the eligibility laid down in the amended provision of the IBC. Basis these submissions made by the Counsel for the Corporate Debtor, the Adjudicating Authority had returned the finding that the Company Petition stands disposed since the Respondents lacked the requisite number/percentage of unit holders to be eligible to continue the Company Petition. After perusing the order of 04.06.2024, there is no ambiguity in mind that the Adjudicating Authority in passing the order on 04.06.2024 had preponderantly relied on the submissions made by the Counsel of the Corporate Debtor on whether the Appellants were compliant with the 2nd proviso to Section 7(1) of the IBC to file the Company Petition No. 4320 of 2019. Per contra, looking at the material on record placed, it is found that the Respondents in the said Company Petition had categorically informed the Corporate Debtor on affidavit that they were in compliance with the 2nd proviso to Section 7(1) of the IBC. The Adjudicating Authority was misled by the present Appellant-Corporate Debtor for they suppressed the fact that the present Appellants-Homebuyers in their Reply affidavit to the Rejoinder filed by the Corporate Debtor had clearly articulated that they were compliant with the eligibility terms laid down in the 2nd proviso to Section 7(1) of the IBC along with supporting documents including MAHARERA certificate to buttress their claim. Instead, the Corporate Debtor wrongfully apprised the Adjudicating Authority during the hearing that the said project consisted of 282 flats and there being only 12 allottees as Respondents, they did not meet the requisite percentage of allottees required to file the Company Petition. A misrepresentation was made to the Adjudicating Authority by the Corporate Debtor for inspite of being aware that their submission before the Adjudicating Authority was not based on correct facts which tantamount to feeding of misleading facts to the Adjudicating Authority - In the present circumstances, where the Adjudicating Authority has been made to rely on distorted facts which the Adjudicating Authority became aware of belatedly, the Adjudicating Authority can always invoke its inherent powers in order to protect itself and to prevent an abuse of its process. Conclusion - Power of recall is not power of the Tribunal to rehear the case to find out any apparent error in the judgment which is the scope of a review of a judgment. Recall of the order dated 04.06.2024 upheld, finding it was not on merits and was influenced by misrepresentation and procedural errors. Appeal disposed off.

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• 2025 (1) TMI 1043
  Admission of Section 7 application filed by Bank of India - no competent authorization to one who had initially filed Section 7 application - application barred by limitation due to the date of default. Proceedings by an unauthorized person - HELD THAT:- The Board on 27.06.2019 has authorized all the officers in the rank of Assistant General Managers and Deputy General Managers to sign/ execute applications, appeals, vakalatnama before NCLTs, NCLATs, High Court and Supreme Court, hence, the application under Section 7 which was filed by Assistant General Manager on 28.06.2019 cannot be said to be without a proper authorization. Hence, there are no substance in the submission of the Appellant that application was not filed by authorized person. Further after the liberty was granted by the Adjudicating Authority, the form was amended with regard to date of default which form was signed by officials who are authorized at relevant time when form was signed which also does not suffer from any infirmity. Application barred by time - HELD THAT:- The letter issued by the Bank asking the Corporate Debtor to deposit overdue amount immediately and regularize the account. On the record NPA was declared only on 31.07.2013 hence, the default can at best be three months before NPA i.e. 30.04.2013. The finding has been returned by the Adjudicating Authority that OTS was given by the Appellant from December 2015 to April 2018, hence, the OTS proposal which was given by the Appellant was within three years from the date of default as is claimed by the Financial Creditor. It is not satisfying that the application was barred by time and ought not to have been admitted. Appellant has given OTS proposal which was also approved by the financial creditor, however, corporate debtor failed on the terms of the OTS which has been noticed by the Adjudicating Authority in paragraph 4 (B). OTS proposal from December 2015 to April 2018 were given and the application was filed by the financial creditor in the year 2019 which cannot be said to be beyond time. Conclusion - i) The application under Section 7 which was filed by Assistant General Manager on 28.06.2019 cannot be said to be without a proper authorization. ii) OTS proposal from December 2015 to April 2018 were given and the application was filed by the financial creditor in the year 2019 which cannot be said to be beyond time. There are no substance in any of the submissions of the Appellant - The Appeal is dismissed.

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• PMLA

• 2025 (1) TMI 1042
  Money Laundering - seeking to set aside the order, principally on the ground that prima facie no offence whatsoever is made out under Sections 406, 418, 420 read with 120B Indian Penal Code, 1860 - HELD THAT:- In the present case, it is seen that case of the Enforcement Directorate (ED) is that Applicant No. 1 on behalf of M/s. Kamala Developers received an amount of Rs. 4,27,16,900/- as proceeds of crime from M/s. Sadguru Enterprises. The second charge of ED to attribute this amount to proceeds of crime is that M/s. Sadguru Enterprises has not delivered any of its services / obligations to the Complainant (Respondent No. 2) under the Renovation Agreement and therefore the amount received from him and routed to M/s. Kamala Developers is alleged as proceeds of crime . Apart from the above two charges there is no other case made out by ED. To understand levy of this charge, one needs to understand what proceeds of crime means under the PMLA. As delineated herein above, Section 2 (1)(u) of PMLA refers to proceeds of crime as any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence . The explanation to this definition provides that such property would include any property relatable to the scheduled offence mentioned in the PMLA. The fallacy in ED s charge / claim is that after receiving the above amount M/s. Sadguru Enterprises has not provided any services to Respondent No. 2. This charge of ED clearly falls flat because Respondent No. 2 has himself clearly acknowledged that M/s. Sadguru Enterprises having delivered its obligations under the said Agreement dated 16.04.2007 for which Respondent No. 2 agreed to pay the amount of Rs. 4,57,84,400/- in three installments on fulfillment of the additional amenities to be specifically provided under its various conditions as agreed between them. Evidence on record acknowledged by Respondent No. 2 clearly shows that save and except an amount of Rs. 30,67,500/- Respondent No. 2 has paid the entire above amount to M/s. Sadguru Enterprises intermittently in three installments for having delivered under the very Agreement as per the schedule of installments when the works under the Renovation Agreement were accomplished and completed by M/s. Sadguru Enterprises. Works to the extent of Rs. 30,67,500/- having remained incomplete, Respondent No. 2 has specifically acknowledged it in his own correspondence and he has withheld this amount under the original Agreement to be given to M/s. Sadguru Enterprises after which a No-claim Certificate is issued to him. In the present case, it is clearly seen that there is no case made out by Respondent No. 2 against M/s. Sadguru Enterprises for non-compliance and breach of the Renovation Agreement except for some works for which he did not pay the balance amount, which was accepted by M/s. Sadguru Enterprises and a No-claim Certificate was issued. It is not his case that there was never any intention since inception not to carry out the Renovation / additional amenities works agreed under the various conditions of the Agreement. Once that is the case, ingredients of cheating are completely non-existent - Rather this is a case of the Complainant himself acknowledging the works done by M/s. Sadguru Enterprises under the said Agreement and only on being satisfied he paid the second and the third truncated installments to complete the payment schedule. According to Complainant s own letter dated 09.07.2007 appended at page No. 407, he has himself admitted that the subject premises were almost ready. This is a fit case for imposition of exemplary costs on the Complainant and ED for invoking criminal action in the present facts and harassing the Developer with criminal action. Conclusion - The civil disputes should not be converted into criminal cases and emphasized the need for clear evidence of criminal intent for IPC and PMLA charges. The criminal proceedings are quashed. Application dismissed.

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• Service Tax

• 2025 (1) TMI 1041
  Levy of service tax - Support Services of Business or Commerce - receipt collected from the clients towards ocean freight - eligible documents under Rule 9 of Cenvat Credit Rules, 2004 or not - imposition of consolidated penalties under Section 76, 77 78 of the Act - extended period of limitation - it was held by CESTAT that the transactions in question were not liable to service tax and that procedural irregularities should not result in the denial of Cenvat credit. HELD THAT:- There are no good ground and reason to interfere with the impugned judgment; hence, the present appeals are dismissed.

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• 2025 (1) TMI 1040
  Taxability - services of construction of road by the appellant as a sub-contractor - construction and fixing of tiles in water reservoir by the appellant as a sub-contractor - service tax under reverse charge mechanism on the transportation service received from individual truck owners - interest - penalty. Services of construction of road by the appellant as a sub-contractor - HELD THAT:- The submission of the appellant that service tax cannot be demanded for the pre-negative list period without classifying the service deserves to be accepted. In fact, the impugned order mentions the service tax as being demanded under construction services/ works contract services. The demand is vague and deserves to be set aside on this ground alone. Construction and fixing of tiles in water reservoir by the appellant as a sub-contractor - HELD THAT:- There is nothing on record in the show cause notice or in the submissions made by the department to establish that these two services were rendered as services simpliciter. It has been held by the Supreme Court in Larsen Toubro [ 2015 (8) TMI 749 - SUPREME COURT ] that the charge of service tax under various heads of section 65 (105) other than section 65 (105) (zzzza) is only a charge of services simpliciter. Therefore, there cannot be any demand of service tax under any head other than under works contract services. There is no specific demand under works contract services - This charging section specifically excludes works contracts in respect of roads as well as the works contracts in respect of dams . Therefore, the demand of service tax either on the construction of roads or on the tiling of the reservoir for dams cannot be sustained. Demand of service under reverse charge mechanism on GTA service - HELD THAT:- Section 65 (50a) defines goods transport agency as any person who provides service in relation to transportation of goods by road and issues a consignment note, by whatever name called. Section 65 (105)(zzq) defines goods transport agency service as a service provided to any person by goods transport agency in relation to transport of goods by road in a goods carriage. Unless the service provider is a goods transport agency , its services are not taxable either at the hands of the service provider or at the hand of service recipient because such services are out of the purview of the charging section. In order for an organisation to be a goods transport agency it must issue consignment notes. It is a well settled legal position that individual truck owners who do not issue consignment notes are not covered by the definition of goods transport agency and the services rendered by them are not exigible to service tax. Interest and penalty - The demand of service tax under reverse charge mechanism on roads transport agency services on the services rendered by the individual truck owners also cannot be sustained. Since the demand of service tax cannot be sustained, the demand of interest and penalty also need to be set aside. Conclusion - The demand of service tax either on the construction of roads or on the tiling of the reservoir for dams cannot be sustained. The demand of service tax under reverse charge mechanism on roads transport agency services on the services rendered by the individual truck owners also cannot be sustained. Since the demand of service tax cannot be sustained, the demand of interest and penalty also need to be set aside. The impugned order is set aside - appeal allowed.

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• 2025 (1) TMI 1039
  Liability of Ex-Servicemen Resettlement Society to pay service tax - no consideration is retained from the bills raised on the clients - exemption from service tax payment in view of the Notification No.14/2004-ST dated 10.09.2004 till 30.06.2012 - HELD THAT:- It is found from the documentary evidence that the Medical Colleges are required to run hospitals which are for the public welfare as well as provide facility of internship to the Medical College students. Therefore, the view of the Revenue not ascribed that the appellant would be eligible for exemption only if the security service is fully or wholly covered by the college. All the above colleges are eligible for exemption and no service tax is required to be paid when the Security Services are rendered to these colleges. The appellant is periodically engaged in the welfare activities of the ex-servicemen and is providing job opportunities coordinating with RSB for such placements. For such activities, they do not get any considerations. The amounts received on actual of salary, PF etc., are directly credited to the accounts of such employees. Conclusion - Services provided to educational institutions, including hospitals, are exempt from service tax. Reimbursements are not subject to service tax. Non-commercial activities of a society aimed at resettlement are not taxable. The confirmed demand of Service Tax is not legally sustainable - Appeal allowed.

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• 2025 (1) TMI 1038
  Taxability - Banking and Financial Services - bank charges paid to foreign banks under reverse charge for the period from July 2012 to March 2013 - HELD THAT:- The very same issue involving the same Appellant was decided in their favour by this Tribunal in M/S. SKM EGG PRODUCTS EXPORT (INDIA) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, SALEM [ 2023 (7) TMI 756 - CESTAT CHENNAI ] wherein it was held the appellant cannot be treated as service recipient and no service tax can be charged under Section 66A read with Rule 2 (1)(2)(iv) of the Service Tax Rules, 1994. Conclusion - The appellant cannot be treated as service recipient and no service tax can be charged under Section 66A read with Rule 2 (1)(2)(iv) of the Service Tax Rules, 1994. Appeal allowed.

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• 2025 (1) TMI 1037
  Levy of service tax - business support services - expenses incurred by the head office of the appellants SCB-UK, which is allocated to the Indian branches are for providing business support service to the appellants - Extended period of limitation. HELD THAT:- It can be seen from the factual matrix of the case that the appellants have been allocated with certain costs towards the general administrative expenses incurred by their head office (SCB-UK) situated at London in United Kingdom - There is no service provider identified by the department, in the present case so as to bring the appellants liable for payment of such services, if any, availed by them through their head office; and to treat the said expenses which are allocated on certain criteria like gross revenue, employee headcount, profits of each branch or other suitable parameters as gross amount charged towards consideration payable for the services received by the appellants. Period prior to 01.05.2011 - HELD THAT:- The Government had clearly stated that the scope of taxable services under Section 65(105)(zzzq) ibid is being expanded and the scope of services to be covered w.e.f. 01.05.2011 are explained as those services which are in the nature of support activities for the ongoing business support functions. As these services are distinct from operational assistance for marketing which was covered earlier under the scope of taxable services, for the limited purpose of understanding and for coming to a conclusion about the date of effect of bringing into tax net the scope of comprehensive services of operational or administrative assistance , we come to the conclusion that such expansion of services were brought under the tax net only with effect from 01.05.2011 and not earlier - the appeal filed by Revenue, for charge of service tax on the disputed activity, prior to 01.05.2011 do not have the support of law and therefore such appeal is liable to be dismissed. Period post 01.07.2022 - HELD THAT:- Post 01.07.2022, services were interpreted to refer any activity carried out by a person for another for consideration, including certain services which is a declared service, provided these services are not covered by certain exclusion provided therein under Section 65B(44) ibid. Hence, it is clear that the nature of services provided to the appellants should fall in the scope of support services of business or commerce , prior to 01.07.2012 in order to specifically cover under the taxable category in terms of Section 65(105) (zzzq) ibid; and after 01.07.2012, generally under the scope of service , to prove that these do not fall outside the scope of taxability of services under Section 66B ibid read with definition clause under Section 65B(44) ibid. In the present factual matrix of the case, the appellants by themselves or the Head office through the appellants have not provided any of the disputed service to their account holders in India. As the appellants have only been shared with the expenses relating head office executive and general administrative expenses apportioned by their headquarters, there is no element of any service involved therein. It is an undisputed fact that the appellants have not entered into any agreement or contract with respect to the said expenses or for receipt of any services - The appellants had only claimed the deduction of head office expenses under the provisions of the Income-tax Act, 1961 while filing its income tax return. Further, in this regard Section 44C of the Income-tax Act, 1961 provides for the permissible limit upto which a deduction can be claimed in respect of the Head-Office expenditure by its branch in India, while computing taxable income for the purposes of computation of income tax - such treatment for the purpose of income tax purposes, per se does not tantamount to the same being treated as gross amount received for provision of services between head office situated abroad and branch office in India, in the absence of any element of service involved therein. It is found that the dispute in respect of similar issue relating to status of overseas office vis- -vis branches/head office and the limitation thereof, the jurisdiction to classify the services under Section 65(105) of Finance Act, 1994, the receipt of business auxiliary service by the assesseeappellant from its branches and the inclusion of reimbursable expenses for computation of gross receipts under Section 67 of Finance Act have been dealt in detail by this Tribunal in the case of M/S TECH MAHINDRA LTD., MILIND KULKARNI VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE - I [ 2016 (9) TMI 191 - CESTAT MUMBAI] . In the aforesaid case, the Tribunal has held that transfer of funds is nothing but reimbursements and taxing of such reimbursement would amount to taxing of transfer of funds which is not contemplated by Finance Act, 1994 and therefore set aside the demand of tax as having been made without authority of law. This Tribunal in the case of M/S. STEEL AUTHORITY OF INDIA LIMITED VERSUS COMMISSIONER OF SERVICE TAX, NEW DELHI [ 2020 (4) TMI 346 - CESTAT NEW DELHI] had held that charging section is Section 66 of the Finance Act, 1994 and not Section 66A ibid. The provision of Section 66A is only to determine whether the provision of service is in India or out of India. Therefore, it was held unless that charge of service tax is proved under Section 66 ibid, there cannot be levy of service tax only on the basis of Section 66A ibid. The Tribunal in the case of HALDIRAM MARKETING PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX, GST DELHI EAST COMMISSIONERATE, NEW DELHI [ 2023 (2) TMI 783 - CESTAT NEW DELHI] have held that sharing of expenditure by associated enterprises cannot be held to be treated as service rendered by one to another. Conclusion - The allocation of head office executive and general administrative expenses by the head office of the appellants situated in London, UK, in the present set of facts cannot be subjected to levy of service tax under the Finance Act, 1994. It would, therefore, not be necessary to examine the contentions of the appellants that the extended period of limitation could not have been invoked in the present case. Appeal dismissed.

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• 2025 (1) TMI 1036
  Recovery of service tax - Manpower Recruitment and Supply Services - reimbursement expenses of salary, incurred by the respondent on behalf of their principal towards the employees/workers supplied thereto by the respondent during the period 2010-11 to 2012-13 - includible in the taxable value for the purpose of service tax or not - pure agent services - extended period of limitation. HELD THAT:- As for the department s assertion with regard to Section 67 of the Act, it is a clear mandate of law that the value of taxable service for levy of service tax has to be in consonance with the provisions of Section 66 of the Act ibid which levies tax only on the value of taxable service per se alone. Thus it is inbuilt in the mechanism of law to ensure that only taxable service component is required to be considered with reference to Section 67 of the Act. Reading Sections 66 and 67 of the Act harmoniously, it would be evident that the valuation of taxable service is nothing more nor anything less than the consideration paid for the service which alone is taxable and leviable to service tax. It is also evident from the combined reading of the two aforesaid sections that only service component provided by the supplier of service can be valued and assessed to service tax - For subjecting the value to tax, it is imperative that a distinction is accorded between reimbursement and remuneration which is a consideration for service delivery. In the case of Union of India vs. Intercontinental Consultants And Technocrats Pvt.Ltd. [ 2018 (3) TMI 357 - SUPREME COURT ], the hon ble apex court in the context of reimbursable expenses had even held Rule 5(1) to be ultra vires. It held that the Gross amount charged has to be ascertained with respect to deliveries for such service . From the facts of this case, it is quite clear that the charges for deliverance of Manpower Service in the present matter are separately indicated and are not contained in the salary i.e. required to be paid to the personnel made available to their clients by the respondent. Slew of cases have evidently held that reimbursement expenses are not taxable and it is only the remuneration component and not reimbursement i.e. required to be subjected to levy of service tax. In the case of Security Guards Board for Greater Bom. Thane Dist. Vs. C.C.E., Thane-II [ 2016 (12) TMI 859 - CESTAT MUMBAI] after a detailed examination of the matter it was held that wages and allowances collected by the Board as an Agency, for payment to concerned persons/authorities were excludible from the value of the Service Tax and the taxable value for the purpose of levy needs to exclude the said charges. Extended period of limitation - HELD THAT:- It is evident that the case has been made out by the department on the basis of public records of the respondent apart. In any case not only was the appellant filing returns and was being regularly audited, even the exercise as contemplated by the department by way of the impugned show cause notice is revenue neutral. Under the circumstances no case of suppression of facts can be substantiated. The figures as available in the books of accounts/other records of the respondent have been in public domain. Under the circumstances, the question of invocation of extended timelines does not arise and demand made out is certainly beyond limitation. Conclusion - Reimbursed expenses, when acting as a pure agent, are not includible in the taxable value for service tax. The distinction between reimbursement and remuneration must be maintained. The demand was time-barred due to lack of suppression. Appeal allowed.

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• 2025 (1) TMI 1035
  Rejection of refund claim - whether various input services, which have been claimed by the appellant as having nexus with their output service are eligible input services and hence eligible for refund? - certain amount of refunds has been rejected on various procedural and technical grounds. Denial on account of not having nexus - HELD THAT:- Various input services have been availed by the appellant in relation to providing the output service and they having used these input services and they would not have been in a position to provide output service within these input services, the Department felt that in the given factual matrix certain services claimed by them having nexus with their output services was not correct. However, it is on record that subsequently, barring 4 services, the Department themselves felt that these services have nexus with their output services - the ground taken by the Department to the extent of these services are no longer tenable and on this ground itself the input services availed in respect of these services would have to be considered as having nexus with their output services and to that extent they are also eligible for refund under the extent rule - the entire rejection on the grounds of not having nexus would not be sustainable. Error in computing the eligible refund, resulting in excess rejection of claim - HELD THAT:- The refund rules and as per the formula, Gross Eligible Cenvat Credit and not Closing Cenvat Balance for this calculation of refund amount. This view is also supported by the case law in Commissioner of CGST C.Ex, Mumbai Vs Morgan Stanley Investment Management Pvt Ltd. [ 2018 (5) TMI 400 - CESTAT MUMBAI ]. Therefore, denial of refund on this account is not tenable. Service Tax paid under Reverse Charge Mechanism - HELD THAT:- Learned Counsel for the appellant informs that the challans/invoices are available and same can be produced before the Original Authority. He also submits that this service is well within the services now held to be eligible input services and this would be proved at the time of submission before the Original Sanctioning Authority. Service Provider (Registered under ST Law)having raised invoices in the foreign currency - HELD THAT:- Learned Advocate informs that this issue is no longer being contested as the Lower Authority/ Original Sanctioning Authority had already allowed refund, which was rejected earlier. Thus, this is a settled issue. Invioces covered under unregistered premises - denial on the grounds that the said premises were not registered on the date on which the invoices were issued or credit taken - HELD THAT:- It is found that it is not a case where the appellants were not having service tax registration and it was only the case of additional premises which was in the process of being added to the central registration and therefore this appears to be a procedural error and it needs to be verified whether the central registration was in existence and there was a process already initiated by the Department for adding the additional premises on the date of those invoices were issued on which service tax has been admittedly paid by the appellant. There appears to be central registration already in existence and the invoices being apparently been issued after the date of central registration. These facts need to be checked. There is an amount of Rs. 2,03,867/- involved in all these appeals on account of procedural lapse. Learned Advocate is not able to explain other procedural lapses and therefore he is not pressing for this amount. Conclusion - i) The entire rejection on the grounds of not having nexus would not be sustainable. ii) The entire rejection on the grounds of not having nexus would not be sustainable. iii) It is informed that the challans/invoices are available and same can be produced before the Original Authority. iv) This issue is no longer being contested as the Lower Authority/ Original Sanctioning Authority had already allowed refund, which was rejected earlier. v) This appears to be a procedural error and it needs to be verified whether the central registration was in existence and there was a process already initiated by the Department for adding the additional premises on the date of those invoices were issued on which service tax has been admittedly paid by the appellant. Appeal allowed by way of remand.

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• Central Excise

• 2025 (1) TMI 1086
  Recovery of Cenvat credit availed on the basis of invalid and improper documents - credit availed on the basis of invoices issued by bank branches and photocopies of invoices - denial of Cenvat Credit on the basis of carbon copy/ extra copy of invoices - invocation of extended period of limitation. Credit availed on the basis of invoices issued by bank branches and photocopies of invoices - HELD THAT:- The head office of M/s Indian bank at Chennai is centrally registered with the service tax department for banking and Financial Services and were complying with the prescribed statutory formalities. As the Appellants submitted the Certificates/Statements of Service Tax collected issued by M/s Indian Bank from its Branches at Coimbatore and Mecheri referring to Centralized Accounting System at their Head Office which contain all the relevant particualrs required in terms of the proviso to Rule 4A of the Service Tax Rules, which are valid documents in terms of Rule 9(1) (f) of the Cenvat Credit Rules, 2004 for availing Cenvat credit., it is opined that the denial of Cenvat Credit is not justified, more particularly when the impugned order had completely ignored provisions of Rule 4A of the Service Tax Rules and the Proviso to Rule 9(2) of the CENVAT Credit Rules, 2004. Availment of Cenvat Credit on the strength of xerox copy of invoice - HELD THAT:- In similar circumstances various courts/ Tribunals have decided the issue in favour of the Appellants and allowed Cenvat Credit - In the case of SHIVAM ELECTRICAL INDUSTRIES VERSUS UNION OF INDIA [ 2018 (2) TMI 816 - JAMMU AND KASHMIR HIGH COURT] it was held that The aforesaid Rule (Rule 9 of CCR) in our considered opinion nowhere provides that Cenvat credit cannot be availed on the basis of photocopy of the documents especially when the respondents have not disputed the correctness of the contents of the photocopies of the invoices produced by the petitioner. From the perusal of the certificate issued by the Superintendent, Customs and Central Excise, Range-III, Division-I, Ghaziabad, it is evident that the excise duty has been duly paid by the petitioner . Conclusion - The documents issued by banking companies containing requisite particulars are valid for availing Cenvat Credit. The Appellant is entitled to avail the Cenvat Credit based on Certificates/ statements issued by M/s. Indian Bank and based on the photocopies of invoices in the facts of this appeal. Appeal allowed.

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• 2025 (1) TMI 1085
  Denial of the benefit of exemption under N/N. 10/97-CE dated 01.03.1997 on for aircraft parts supplied to specified research institutions - goods fall under the specified categories in the notification or not - suppression of facts or not - levy of penalty u/r 25 of CER, 2002 - HELD THAT:- In fact on a perusal of the notification which provides for exemption to specified goods supplied to specified institutions, it is evident that in case of public funded research institution specified in Sl.No.1, when goods of the description provided in column (3) are supplied, condition specified in column (4) at (i) (a) stipulates that if the institution is a public funded research institution under the administrative control of the Department of Space or Department of Atomic Energy or the Defence Research Development Organisation of the Government of India and produces a certificate to that effect from an officer not below the rank of a Deputy Secretary to the Government of India in the concerned department to the manufacturer at the time of clearance of the specified goods. That is to say, if the institution is a public funded research institution under the administrative control of the Department of Space or Department of Atomic Energy or the Defence Research Development Organisation of the Government of India, all that the institutions specified in condition (i)(a) are required to do, is to produce a certificate simplicter from an officer not below the rank of a Deputy Secretary to the Government of India in the concerned department to the manufacturer at the time of clearance of the specified goods, stating that the institution is a public funded research institution under the administrative control of the Department of Space or Department of Atomic Energy or the Defence Research Development Organisation of the Government of India. The Department cannot therefore, without adducing any positive evidence from any subject matter professional or expert stating that the goods in question do not satisfy the description of goods covered under the said notification, arbitrarily reject the claim for exemption duly supported by such certificates issued by the public funded research institutions that are specified in condition (i) (a) of the notification and when such institutions that are specified in condition (i)(b), additionally also certify that the goods are required for research purposes only. In the Appellant s own case, this Bench in M/S. TANEJA AEROSPACE AND AVIATION LTD. VERSUS THE COMMISSIONER OF CGST CENTRAL EXCISE [ 2024 (7) TMI 1586 - CESTAT CHENNAI] has held that It is seen that the Commissioner (Appeals) for subsequent period has considered the very same issue and allowed the exemption observing that the gods which are in the nature of parts of air craft would fall under the category of Engineering Goods . We do not find any grounds to take a different view We hold that the appellant is eligible for the exemption as per Notification No.10/1997-CE . Conclusion - The Department has evidently erred in sitting in judgement over such certification without any proof or evidence to the contrary. The appellants are eligible for the exemption. Appeal allowed.

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• 2025 (1) TMI 1034
  Exemption under Notification 5/2006- CE dated 01.03.2006 (Sl.No.21) - gold bars manufactured in the factory at Hutti - classification of gold bar manufactured in their factory under tariff heading 71081200 of the First Schedule to the Central Excise tariff Act, 1985 - it was held by CESTAT that the Appellant are eligible to the benefit of the Sl. No. 21 of the exemption Notification No. 05/2006 CE dt.01.3.2006 till it has been amended by Notification 25/2011CE dt.24.3.2011. HELD THAT:- There are no good ground and reason to interfere with the impugned judgment/order; hence, the present appeals are dismissed.

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• 2025 (1) TMI 1033
  Waiver of the penalty under Rule 26 of the Central Excise Rules, 2002 - all other noticees on whom penalty was imposed have also settled their case under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - failure of the appellants to file a declaration under the Sabka Vishwas Scheme constitutes a procedural flaw or not - HELD THAT:- The issue that once the main noticees have filed the declaration under the scheme and have deposited the duty required to be paid under the Sabka Vishwas Scheme, 2019 and Discharge Certificate has been issued by the department, thereafter the co-notices are eligible to seek waiver of penalty under the scheme by filing a declaration has been considered in series of decisions by this Tribunal. Reliance placed on the latest decision dated 29.08.2024 in VK Aggarwal versus Commissioner of Central Tax, CGST Central Excise, New Delhi [ 2023 (9) TMI 178 - CESTAT NEW DELHI] where it was held that without considering the directions given in the remand order and allowing cross examination, Commissioner has imposed penalties on the appellant, just for reason that the appellant did not settle the issue along with others under SVLDRS. Such approach of Commissioner cannot be justified. Even if the appellant has not approached under SVLDRS, Commissioner should have adjudicated as directed by Tribunal. No justification for imposition of penalty on reconsideration as per order of Tribunal is forthcoming. The present case is squarely covered by the aforementioned decision as in the said case after the main noticee was issued the discharge certificate under the SVLDR Scheme, 2019 towards the duty liability the co-noticee had not filed the declaration but was held to be entitled to the waiver of penalty as non-filing of the declaration was held to be merely a procedural flaw for which the appellant cannot be burdened with the liability of penalty more so since there was no loss to the revenue - Similarly, the appellant herein have also not filed the declaration after the main noticees have been issued Discharge Certificate towards the duty liability but the fact remains that if the appellant had applied under the SVLDR Scheme, they would have paid nil rate of duty in view of the relief available to them under section 124 (i) (b)of the Finance Act, 1994. Conclusion - The procedural oversights, such as the failure to file a declaration under the Sabka Vishwas Scheme, should not result in penalties if the main noticees have settled their liabilities. The impugned order deserves to be set aside and consequently, no penalty can be imposed on the appellant - Appeal allowed.

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• 2025 (1) TMI 1032
  Clandestine removal of goods - appellant has shown excess usage of electricity which is used by the appellant for excess production of M.S.Ingots which has been cleared clandestinely by the appellant - extended period of limitation - HELD THAT:- As per technical opinion report of IIT, Kanpur, the consumption of electricity ranges between 555 units to 1026 units which means it depends on the various factors i.e. quality of furnace, quality of raw material, quality of workers and efficiency thereof and the said report has been discarded by this Tribunal in the case of R.A. Castings P Ltd. [ 2008 (6) TMI 197 - CESTAT NEW DELHI] which has been affirmed by the Hon ble Apex Court. Therefore, merely on the basis of excess electricity consumption by the appellant demand alleging clandestine manufacture and removal of goods is not sustainable. As it is declared law that on the basis of excess comsumption of electricity demand cannot be raised on the basis of assumption and presumption. The charge of clandestine manufacture and clearance thereof is to be proved by cogent evidence which Revenue failed to do so. Conclusion - The allegations of clandestine manufacture based solely on electricity consumption data are unsustainable without corroborative evidence. Appeal allowed.

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• 2025 (1) TMI 1031
  Condonation of delay of over 1 year and 7 months in filing appeal - sufficient cause for delay or not - clandestine manufacture and clearance of unregistered units - non-production of the finished goods from the other premises - HELD THAT:- The Hon ble Apex Court in the landmark judgement governing condonation of delay in the case of COLLECTOR, LAND ACQUISITION VERSUS MST. KATIJI AND OTHERS [ 1987 (2) TMI 61 - SUPREME COURT ] has laid down a six-point guideline for consideration of the application for condonation of delay. Thus, while it is observed that ordinarily a litigant would not stand to gain from a delayed consideration of the matter, and while it is too well known that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred; however it is equally important that each day s delay in filing the appeal is required to be explained. It is found that not even a weak attempt at such an explanation accounting for the enormous delay of nearly two years (after discounting suo motu limitation free period), accruing in the present matter. Though, time and again, Courts have emphasized that sufficient cause ought to be viewed with flexibility, but the same in the first place needs to be properly accounted for and satisfied with. Just because the Court has power to condone the delay, it cannot be so done mechanically and appeal accepted, but for appropriate and justifiable reasons. The apex Court in the case of AJAY DABRA [ 2023 (1) TMI 1279 - SUPREME COURT] , refused to condone the delay recently where it was alleged that the appellant was short of funds to pay court fee. It held that the appeal could have been filed and defects attended to (could be removed) thereafter. This is to point out that financial conditions are not a potent reason to admit a COD application. The Hon ble Andhra Pradesh High Court in the case of Shanti Alloys Pvt. Ltd. v. Commissioner of C.Ex., Hyderabad [ 1998 (12) TMI 92 - HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYD.] had held that a delay in filing appeal beyond ninety days was not condonable in view of the specific provisions of Section 35(1) of the Act. Conclusion - There are no merit in contentions and submissions put forth in the Affidavit and the application for condonation of delay for delayed filing of the present appeal, as the obligation to show sufficient cause, is on the appellant, applying for condonation of delay. The appeal as well as the COD application are hereby dismissed.

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• CST, VAT & Sales Tax

• 2025 (1) TMI 1030
  Recovery of arrears of tax due for the Assessment Year 2014-15 to 2016-17 - petitioner submits that Form-F which has been filed along with counter statement by the respondents is based on a forged signature of both the writ petitioner and his wife - liability of petitioner and his wife for the tax arrears of the petitioner s estranged son-in-law based on documents alleged to contain forged signatures - HELD THAT:- Form F dated 12.04.2013, has been executed in front of Advocate Notary from Villupuram namely M/s.Lion M.Pandurangan. It bears the notarial seal and signature of the said Notary dated 22.04.2013. The variance in the date of Form-F as 12.04.2013 and the date of the notarial seal and signature as 22.04.2013 indicates that the said documents was not executed in presence of the said Advocate Notary. The signature of the deceased petitioner and his wife are also in variance with the other documents which have been produced before this Court which are stated to be genuine documents where the deceased petitioner and his wife S.Selvi have affixed their signature. The signature in Power of Attorney dated 15.03.1996 bears the signature of the deceased petitioner as a witness. It is in variance with the signature in Form-F dated 12.04.2013 which has been duly notarized on 22.04.2013. Similarly, the signature of Mrs.S.Selvi in the Sale Deed dated 26.06.2018 different from the signature in the Form-F which have been filed along with the documents. The signature in Form-F are clear imitation of the signatures of the deceased petitioner and his wife Mrs.S.Selvi. Therefore, neither the petitioner nor the petitioner s wife can be fastened to tax liability based on the aforesaid documents containing a forged signature of the deceased petitioner and his wife. Conclusion - Liability cannot be imposed based on forged documents. The property cannot be encumbered without a valid legal basis - The procedural inaction in unrelated matters does not justify dismissal of a writ petition. Petition allowed.

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• Indian Laws

• 2025 (1) TMI 1029
  Right to levy royalty - Suits against the appellants for a permanent injunction restraining them from assessing, levying or recovering any amount as royalty from the respondents on account of the use of earth by the respondents for making bricks - Legality of appellants action of assessing royalty and sending notices for recovery - Jurisdiction of Civil Court to entertain the suit in view of Rule 54F of the Mineral Rules, which provides a remedy of appeal against orders of assessment of royalty. HELD THAT:- The High Court, in the impugned judgment, held that the presumption under sub-Section (2) of Section 42 of the Land Revenue Act would not apply. The reason is that at the relevant time, brick earth was not declared as a minor mineral - the High Court has missed the real issue. As far as the ownership of the said lands is concerned, admittedly, respondents were not the owners. The respondents claimed that they had taken the said lands on lease from the real owners. The persons claiming to be the real owners were not parties to the suit. Most importantly, the Trial Court did not frame any issue on the ownership of the land in question. The District Court did not frame the point for determination on this aspect. Even if a person owns the land, he cannot undertake quarrying or mining operations therein unless he holds a certificate of approval in Form B . A person to whom the certificate is issued is required to file returns showing the production and disposal of mines or minerals. The royalty is determined as provided in sub-Rule (1) of Rule 54C - once it is accepted that brick earth was a minor mineral under the Mineral Rules, the first appellant the State Government, gets the right to levy royalty on the production and disposal of minor minerals. An appeal is provided under Rule 54F of the Mineral Rules against an order of the assessment of royalty. This remedy is an efficacious remedy available to challenge the levy of royalty. The three Courts have unnecessarily gone into the issue of ownership of the said lands or minerals therein. The issue was about the right of the first appellant the State Government to levy royalty. Once it is shown that under the Mineral Rules, the first appellant State Government was entitled to levy royalty on the activity of mining of brick earth, the issue of ownership of the said lands becomes irrelevant. The reason is that the owners of the said lands in which the excavation is made are not in the exempted category specified in Rule 3 of the Mineral Rules. Though, for different reasons, the Trial Court and the First Appellate Court were right in dismissing the suits. Conclsuion - i) The State Government has the right to levy royalty on brick earth as a minor mineral. ii) The Civil Court lacks jurisdiction due to the appellate remedy under the Mineral Rules. iii) Land ownership is irrelevant to the royalty issue, and the nonjoinder of landowners does not affect the outcome. iv) The respondents did not make out a case for the grant of a decree of permanent injunction restraining the appellants from recovering royalty from the respondents. However, on the quantum of royalty, an appeal under Rule 54F is always available. The impugned judgment dated 19th September 2007 of the High Court is hereby quashed and set aside, and the decrees of the dismissal of suits passed by the Trial Court are restored - Appeal allowed.

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• 2025 (1) TMI 1028
  Violation of principles of natural justice - challenge to disciplinary inquiry against the respondent (Bank Branch Manager) - abuse of position by making fictitious debits to crop insurance account narrating the credit to various Syndicate Kisan Credit Cards (SKCC) accounts - fair inquiry conducted or not - no documentary evidence to arrive at a correct decision - Penalty of dismissal. HELD THAT:- It is well settled that an acquittal in a criminal case is no ground to exonerate a delinquent in disciplinary proceedings as the standard of proof differs in these proceedings. It is well settled that the adequacy of the evidence adduced during disciplinary inquiry cannot be gone into in writ jurisdiction. In the case of BC. CHATURVEDI VERSUS UNION OF INDIA AND OTHERS [ 1995 (11) TMI 379 - SUPREME COURT] , this court held The disciplinary authority is the sole judge of facts. Where appeal is presented, the appellate authority has coextensive power to reappreciate the evidence or the nature of punishment. In a disciplinary inquiry, the strict proof of legal evidence and findings on that evidence are not relevant. Adequacy of evidence or reliability of evidence cannot be permitted to be canvassed before the Court/Tribunal. It is well settled that the Bank officers are expected to maintain a higher standard of honesty, integrity, and conduct. In view of the respondent s admissions and the fact that documentary evidence was on record, it cannot be said that it was a case of no evidence. The principles of natural justice were followed during the disciplinary inquiry. The respondent thoroughly cross-examined the officer examined as a witness. The respondent did not apply for leading any evidence. Therefore, the finding that the disciplinary inquiry was not fair or was in breach of the principles of natural justice cannot be accepted as correct. The entire premise on which the High Court had interfered is without basis - It is well settled that the exercise of powers by the disciplinary authority is always subject to principles of proportionality and fair play. In the facts of the case, the financial loss caused to the appellant was reimbursed. The respondent, at every stage, fairly accepted his mistakes. Penalty of dismissal - HELD THAT:- The penalty of dismissal was disproportionate to the misconduct established against the respondent and his unblemished career for a long time. However, fact remains that the misconduct alleged and proved against the respondent was of a serious nature considering the fact that a very high standard of conduct is expected from a branch manager of a Bank. Considering the facts of the case, we are of the view that a minor penalty, as provided in Regulation 4(e) of the Disciplinary Regulations, would be appropriate. The penalty will be of reducing the respondent to a lower stage in the time scale of pay for a period of one year, without cumulative effect and not adversely affecting his pension. Conclusion - i) The disciplinary inquiry was fair. ii) The findings of misconduct were supported by evidence. iii) The penalty was modified to a minor one. iv) The criminal acquittal was irrelevant to the disciplinary proceedings. Appeal allowed in part.

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