TMI Tax Updates - e-Newsletter
January 25, 2023

Case Laws in this Newsletter:

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

Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

2. APPROVED SCHEME OF AMALGAMATION IS BINDING ON THE INCOME TAX AUTHORITIES

   By: DR.MARIAPPAN GOVINDARAJAN

3. Replacement of old machinery with new machinery for improvement in quality/quantity results in ‘Modernisation’ and not diversification

   By: Bimal jain

4. Seller cannot be penalised for mentioning the quantity of goods in pieces instead of weight

   By: Bimal jain

5. Walltop computer to be classified as ‘automatic data processing machine’ under Customs Tariff heading 8471 41 90

   By: Bimal jain

News

1. Large Companies must take responsibility to handhold MSMEs, help them adapt best practices and integrate them into the supply chain ecosystem: Shri Goyal at Fourth Plenary session of B20 India Inception Meeting

2. Auction for Sale (re-issue) of (i) ‘6.89% GS 2025’, (ii) ‘7.10% GS 2029’, (iii) ‘7.41% GS 2036’, (iv) ‘7.40% GS 2062’

Notifications

Companies Law

1. G.S.R. 44 (E) - dated 21-1-2023 - Co. Law

Companies (Management and Administration) Amendment Rules, 2023

2. G.S.R. 45 (E) - dated 20-1-2023 - Co. Law

Companies (Registration Offices and Fees) Amendment Rules, 2023.

3. G.S.R. 37 (E) - dated 20-1-2023 - Co. Law

Companies (Prospectus and Allotment of Securities) Amendment Rules, 2023

4. G.S.R. 36 (E) - dated 20-1-2023 - Co. Law

Companies (Registration of Foreign Companies) Amendment Rules, 2023

5. G.S.R. 35 (E) - dated 20-1-2023 - Co. Law

Nidhi (Amendment) Rules, 2023

DGFT

6. 54/2015-2020 - dated 24-1-2023 - FTP

Amendment in import policy condition of Urea [Exim Code 31021000] in the ITC (HS) 2022, Schedule -1 (Import Policy)

Highlights / Catch Notes

GST

• High Court remands case for GST officer reconsideration due to unclear tax liability and penalty in E-Way Bill issue.

  Case-Laws - HC : Levy of penalty - Detention of petitioner's goods - E-Way Bill does not reflect the name of the consignee but merely mentions the petitioner’s GSTIN number - it is apparent that neither the show cause notice nor the order of demand clearly sets out the reason for imposing the tax liability as well as penalty. - It would be apposite to remand the matter to the concerned GST officer to decide afresh after giving the petitioner full opportunity to address the allegation against him - HC
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• Court Dismisses Petitioner's Request Under Article 226; No Jurisdictional Error Found in Orders u/s 73 CGST/SGST Act.

  Case-Laws - HC : Extension of time limit for issuance of the order - extension of time limit for issuance of show cause notice as well - Section 73 of the CGST/SGST Act - The petitioner has not made out any case for interference under Article 226 of the Constitution of India as it cannot be found that the impugned orders are issued without jurisdiction - petition dismissed. - HC
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• Court Orders Review of Appellant's Risky Exporter Label to Ensure Fairness and Avoid Unjust Export Hindrance.

  Case-Laws - HC : Terming the appellant as a risky exporter and a tag being fixed - The process of adjudication is quite distinct and different from terming a person a risky exporter, which tag cannot be perpetually affixed to an exporter as it would tantamount to interfering with his right to carry on exports based on suspicion. Therefore, the representation dated 10th March, 2022 should be considered by the sixth respondent within the timeline stipulated by this Court. - HC
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• Court Imposes Rs. 25,000 Fine on Department for Improper GST Cancellation and Non-Compliance with Court Directions.

  Case-Laws - HC : Cancellation of GST number issued to the petitioner - The least that was expected of the officer, on realizing that the initial notice on his part was contrary to the directions issued by this Court, was to express apology for repeating this very act and restoring the GST Number, straightway has sought permission of the Court to initiate a fresh action of cancellation. - The cost is quantified to the sum of Rs.25,000/- (Rupees Twenty-Five Thousand) which shall be borne by the department to be paid to the petitioner herein. - HC
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• Jigarthanda Beverage Ingredients Ruled Not a Mixed Supply; Sold Separately Before Retail Mixing Process.

  Case-Laws - AAR : Classification of goods - ready to drink Jigarthanda sold in unit container by the appellant - Various ingredients prepared and packed separately are sold and invoiced to dealers and outlets as “Jigarthanda” in units of liter and the same are mixed at the retail outlet as a cold beverage before sale to customers / consumers. Therefore, various ingredients cannot be classified as such and treated as mixed supply as claimed by the applicant. - AAR
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• Dried coconuts classified as copra under heading 1203, attracting 5% GST, confirms Authority for Advance Rulings.

  Case-Laws - AAR : Classification of goods - dried coconuts (shelled or peeled) used for human consumption - Copra is classified under heading 1203 irrespective of use - Hence, the impugned goods of the Applicant is only Copra and the same shall be classified under Heading 1203 thereby attracting GST rate of 5% - AAR
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• GST Classification: Tanning with Chemical Consumption - Composite Supply or Job-Work? Chapter 41 Clarification and Tax Implications.

  Case-Laws - AAR : Classification of supply - Composite supply or not - Job-Work or not - activity of tanning, with chemical consumption - treatment or processing undertaken on goods owned by other person - If the activity of the Applicant is a service by way of treatment or processing undertaken by a person on goods belonging to another registered person, it is rightly classifiable as processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 - Taxable @5% - Otherwise taxable @ 18% of GST - AAR
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• Bus Body Building on Customer's Chassis Classified as Service Under Schedule II (3) of CGST Act 2017 by AAR.

  Case-Laws - AAR : Classification of supply - Job work - supply of goods or supply of services - activity of Bus Body Building on the chassis - it is evident that the activity undertaken by the Applicant for bus body building on the chassis supplied by the customer is to be classified as job work. As per Schedule II (3) of the CGST Act 2017, the said activity bus body building on the chassis belonging to the customer by the applicant is supply of services. - AAR
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Income Tax

• Expenses from Abandoned Projects Not Allowed as Revenue Expenditure if Previously Written Off by Assessee.

  Case-Laws - AT : Expenses written off - abandoned project - similar project was abandoned during the earlier year - those part of the expenditure incurred during the year which are identical to the earlier year, which have been written off by the assessee as abandoned cannot be allowed as revenue expenditure during the year. - AT
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• Taxpayer Seeks Additional Depreciation for Assets u/s 32(1)(iia) of Income Tax Act for Industrial Growth Incentive.

  Case-Laws - AT : Allowance of additional depreciation - assets purchased after 01/10/2010 - the assessee only claimed 10% of the additional depreciation in the assessment year 2011-12. The balance 10% of additional depreciation was claimed in the year under consideration - additional depreciation allowed u/s.32(1)(iia) of the Act is a one-time benefit to encourage industrialisation, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting the additional allowance. - AT
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• PCIT Identifies Error in Deduction Assessment; Commissioner May Rectify u/s 263's Revisionary Powers.

  Case-Laws - AT : Revision u/s 263 - Deduction u/s 80IB (10) - PCIT found a specific error in the assessment order - The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. - AT
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• Tax Authority Can't Recover Employer's Unpaid TDS from Employee u/s 205 of Income Tax Act.

  Case-Laws - AT : Denial of TDS credit - non-deposit by employer - the Revenue in terms of Section 205 of the Act, is restrained from enforcing any tax recovery against the assessee insofar as the demand with reference to the amount of tax which had been deducted by the employer from the salary accrued to assessee and assuming that the deductor-employer had not remitted the amount after its deduction to the Central Government, the only course open to the Revenue is to recover same from the very person who has deducted the TDS and not from appellant assessee. - AT
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• Capital Gains Tax: Conversion of Private Ltd Company to LLP Excludes Goodwill from Accumulated Profits, No Clause Breach.

  Case-Laws - AT : Capital gain on conversion of a Private Limited Company into LLP - Addition on account of asset being goodwill brought into books of accounts - the condition prescribed relates to the balance of accumulated profits as on date of conversion out of which amount is paid to the partner, however, since the accumulated profits did not include the amount of Goodwill in the books of the predecessor company, there cannot be said to be any violation of clause (f) either. - AT
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• Tax Case: AO to Reassess Long-Term Capital Gains Using Taxpayer's Computation, Not DVO's Stamp Duty Valuation (Section 50C.

  Case-Laws - AT : Long-term capital gain - cost of acquisition - capital gain worked out by the DVO - They have calculated the long-term capital gain simply by taking into consideration the stamp duty valuation by applying section 50C ignoring all other provisions. - AO directed to calculate the capital gain assessable in the hands of the assessee on the basis of computation made by the assessee - AT
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Customs

• Confiscation Demand Denied: DGCA Hasn't Initiated Proceedings, Aircraft Permit Consistently Renewed; Penalties on Executives Unsustainable.

  Case-Laws - AT : Confiscation of imported aircraft - a demand can be made under the Undertaking only when DGCA finds that the use of the aircraft is not in accordance with the permit granted by the DGCA. In the present case, DGCA has not initiated any proceedings against the appellant and in fact has renewed the permit from time to time - Once it is held that the demand could not have been confirmed, the penalties imposed upon the Chairman/Managing Director and the Vice President of the appellant cannot also be sustained. - AT
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FEMA

• Petitioners spared coercive action for late FCRA account opening due to no foreign contributions in 2019-2021.

  Case-Laws - HC : Levy of penalty - Petitioners having opened the FCRA account belatedly - No coercive steps shall be taken against the Petitioners for having opened the FCRA account belatedly, inasmuch as it is the case of the Petitioners is that no foreign contribution has been received by them in the FY 2019-2020 and FY 2020-21. - HC
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• Chennai High Court rules writ petition non-maintainable as entire cause of action occurred in Mumbai. Treasury Dept. presence irrelevant.

  Case-Laws - HC : Maintainability of writ petition before the Chennai High Court - Entire cause of action has taken place at Mumbai and the order has also been passed by the Special Director of Enforcement at Mumbai. Just because the IOB has a Treasury(Foreign) Department at Chennai, that by itself will not become a part of the cause of action. This is yet another ground on which we are not inclined to entertain the present Writ Petition. - HC
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Indian Laws

• Accused Acquitted in Cheque Dishonor Case; Failed to Prove Cheque Issued as Security for Rs. 50,000 Loan.

  Case-Laws - HC : Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - The accused has to establish the nexus between alleged taking loan of Rs.50,000/- and the issuance of signed Cheque as a security for the said transaction. Otherwise, accused cannot take the advantage of complainant admitting that he has received the Cheque as a security as referred above. The onus is on the accused to prove that he has issued signed blank Cheque as a security for the loan - HC
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Service Tax

• Court Rules Petitioners Not at Fault for Bank Delay in Payment u/r 7 of Sabka Vishwas Scheme.

  Case-Laws - HC : Sabka Vishwas (Legacy Dispute Resolution) Scheme - payment after the cut of date - he petitioners have paid the amount from its bank account on 30.06.2020. The petitioners are not at fault for amount not transferred in the account of the Government by the bank on the same day on 30.06.2020 - for all intent and purpose, it cannot be said that the petitioners have failed to deposit the amount as required under Rule 7 of the Rules. - HC
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• No Service Tax Liability for Recognized Players Employed by Franchisees under Business Support Service Category.

  Case-Laws - AT : Levy of service tax - Business Support Service or not - it is abundantly clear that a person who has earned the reputation and recognition as a player is employed by the franchisee and it is not the other way round - the employer-employee relationship cannot be disputed - the Appellants are not liable to service tax under the Business Support Service - AT
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• Service Tax Not Applicable Without Express Agreement for Consideration, Demand Set Aside: Clarification Issued.

  Case-Laws - AT : Levy of service tax - agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act - The Circular emphasizes that there has to be an express or implied agreement to do or abstain from doing something against payment of consideration for a taxable supply to exist and such an act or a situation cannot be imagined or presumed to exist merely because there is a flow of money from one party to another - Demand set aside - AT
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• Service Tax Escapement in Audit Doesn't Imply Fraud; Extended Limitation Period Unjustified Without Intent to Evade Tax.

  Case-Laws - AT : Extended period of limitation - If the audit detected escapement of service tax, it does not establish, in the factual matrix of this case, that the assessee has indulged in fraud or collusion or wilful mis-statement or suppression of facts or violation of legal praising with an intent to evade payment of service tax. It only establishes that the officer tasked with the best judgment assessment has not done his job. This cannot be the ground on which extended period of limitation can be invoked. - AT
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Central Excise

• Extended Limitation Period Inapplicable Due to Regular Statutory Returns; Department Missed Timely Investigation Opportunity.

  Case-Laws - AT : Extended period of limitation - The Show Cause Notice was issued on the basis of audit of records maintained by the Appellant and therefore extended period cannot be invoked by alleging suppression since they are also submitting/filing the statutory returns on a regular basis. The Department was free to further investigate the matter and issue timely Show Cause Notice. - AT
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Case Laws:

• GST

• 2023 (1) TMI 983
  Detention of petitioner s goods - whether there is an error in the E-Way Bill inasmuch as it does not reflect the name of the consignee but merely mentions the petitioner s GSTIN number, or not? - HELD THAT:- Admittedly, there has been no mismatch in the quantity of the goods found in the vehicle and the invoice produced. However, according to the respondents, the goods were not accompanied by an E-Way Bill. Although this is stated in the counter-affidavit, the said fact does not find mention in the order of demand dated 23.10.2020 or the order dated 31.12.2021, passed by the Appellate Authority. The learned counsel for the petitioner also submits that there is an error in the E-Way Bill inasmuch as it does not reflect the name of the consignee but merely mentions the petitioner s GSTIN number. She submits that the E-Way Bill is required to be read with the two invoices one invoice raised by M/s Mahendra Steels addressed to the petitioner and the second raised by the petitioner in the name of S.K. Integrated Consultants. She contends that if these documents are viewed in conjunction with one another, it would be clear that any error in the documents is only a minor error and the petitioner cannot be penalised by imposition of tax on the goods as well as penalty of an equivalent amount. We are unable to accept that the order of demand and penalty is a consent order and the petitioner was precluded from challenging the same. The goods had been detained and it is not disputed that the same would not have been released unless the tax and penalty was paid. We are persuaded to accept that the petitioner had paid the tax and penalty for release of the goods and the said payment was not voluntary - it is apparent that neither the show cause notice nor the order of demand clearly sets out the reason for imposing the tax liability as well as penalty. It would be apposite to remand the matter to the concerned GST officer to decide afresh after giving the petitioner full opportunity to address the allegation against him - Order raising a demand of tax and penalty, is set aside - matter is restored to the file of the concerned GST Officer.

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• 2023 (1) TMI 982
  Extension of time limit for issuance of the order - extension of time limit for issuance of show cause notice as well - Section 73 of the CGST/SGST Act - HELD THAT:- It is clear from a reading of sub-section(2) of Section 73 that, the show cause notice to be issued under sub-section(1) of Section 73 has to be issued at least three months prior to the time limit specified in sub-section(10) for issuance of order. When the time limit for issuance order under sub-section(10) of Section 73 for the financial year 2017-18 has been extended upto 30.09.2023, the only interpretation that can be placed on the provisions of sub-section(2) of Section 73 is that, the show cause notice can also be issued with reference to the date 30.09.2023 and not with reference to any other date. There is absolutely no ambiguity in the provisions requiring this Court to apply any rule of interpretation in favour of the assessee. The petitioner has not made out any case for interference under Article 226 of the Constitution of India as it cannot be found that the impugned orders are issued without jurisdiction - petition dismissed.

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• 2023 (1) TMI 981
  Violation of principle of natural justice - Cancellation of registration of petitioner - non-reasoned order - appellate authority on the ground of its not having powers to condone the delay has chosen not to decide the matter on merit - HELD THAT:- The matter is covered by the decision of this Court rendered in case of AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] where it was held that The assignment of reasons is imperative in nature and the speaking order doctrine mandates assigning the reason which is the heart and soul of the decision and said reasons must be the result of independent re-appreciation of evidence adduced and documents produced in the case. It is further noticed that the issue with regard to the power to condone the delay beyond the statutory time period prescribed under Section 107 is pending before this Court, without opining on that and concluding this issue to be decided at a future date, the show cause notice and the impugned order of the Appellate Authority requires to be quashed and set aside - the show cause notice dated 29.11.2021 and the impugned orders dated 25.03.2022 and 22.09.2022 passed by the respondent-authorities are quashed and set aside. The GST Registration Number of the applicant stands restored forthwith and decide the matter by following the procedure of law.

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• 2023 (1) TMI 980
  Seeking direction upon the respondents to complete the investigation, which has been caused against the appellant - terming the appellant as a risky exporter and a tag being fixed - export consignments of the appellant are either not being allowed to be exported or there is inordinate delay on the alleged ground of verification - HELD THAT:- The risky exporter tag cannot be indefinitely put on valid and precisely for this reason, the Central Board has issued Circular No. 131/1/2020-GST dated 23rd January, 2020 by which strict timelines have been fixed for the authorities to take action. The circular affords an opportunity to such a risky exporter to escalate the matter. If the concerned officer does not take a decision within 14 days, a petition before the Principal Chief Commissioner or Chief Commissioner of Central Tax shall be filed and if such petition is filed, a decision should be taken within 7 working days. The process of adjudication is quite distinct and different from terming a person a risky exporter, which tag cannot be perpetually affixed to an exporter as it would tantamount to interfering with his right to carry on exports based on suspicion. Therefore, the representation dated 10th March, 2022 should be considered by the sixth respondent within the timeline stipulated by this Court. The appeal stands disposed of with a direction to the sixth respondent to consider the representation dated 10th March, 2022 after giving an opportunity of personal hearing to the authorised representative of the appellant and an order be passed on merits and in accordance with law and communicate the same to the appellant within 15 days from the date of receipt of a copy of this judgment and order.

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• 2023 (1) TMI 979
  Cancellation of GST number issued to the petitioner - non-speaking order received from the respondent no.2 intimating him that the GST Registration Number is cancelled - Violation of principles of natural justice - HELD THAT:- The orders of cancellation of registration which were impugned before the Court were even more glaring which lacked even the basic details. Addressing this issue extensively, the Court had noticed that the respondent authority had failed to extend the sufficient opportunity of hearing before passing the order impugned despite of specific request for adjournment, the order was not only non-speaking but cryptic in nature and the reason for cancellation was not decipherable. On all counts, the respondent authority has failed to adhered to the legal position and therefore held that the basic principles of natural justice is violated and the order needed to be quashed. The Court also reflects that on inquiry made with the learned AGP appearing for the respondent authority as to why such vague show cause notice and vague final orders bereft of any material particulars were being passed, the reply was that on account of the technical glitches in the portal, the department is finding difficult to upload the show cause notice as well as the final order of cancellation of registration contenting all necessary details and information. The Court did not find this to be a valid ground nor a sustainable explanation for the purpose of issuing show cause notices and passing of the order finally cancelling the registration of the persons concerned therefore, it directed the department that till this technical glitches are corrected, the show cause notices to be issued shall be manual/physical containing all material particulars and information to enable the dealer to effectively respond to the same. The very officer instead of realizing that this action on the part of the authority is contrary to the directions issued by this Court way back in the month of February, 2022, reiterates that because of some technical glitches of GST portal, the reply of the notice has not been received from the GST portal. Therefore, he declares that he would initiate the fresh cancellation proceedings manually and after it is found satisfactory on receiving the fresh reply, he would restore the GST number of the dealer. The least that was expected of the officer, on realizing that the initial notice on his part was contrary to the directions issued by this Court, was to express apology for repeating this very act and restoring the GST Number, straightway has sought permission of the Court to initiate a fresh action of cancellation. Assuming that this is an initiative out of his bona fide on realizing the mistake, the tenor of the communication does not reflect anywhere remorse of not following the decision. Assuming that it is not in the hands of the officer concerned to make any amendments and changes in the software or on the portal, the least they could have been done is to follow the directions once having realized the same from the averments of the petition. This writ application is being ALLOWED solely on the ground of violation of the principles of natural justice.

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• 2023 (1) TMI 978
  Classification of goods - ready to drink Jigarthanda sold in unit container by the appellant - to be classified as Jigarthanda under description of goods or not - taxable or exempt goods - whether to be classified as Milk and Cream covered under HSN 0402 as claimed by the applicant? - HSN of the product and rate of tax on product. Whether Jigarthanda is goods or not? - HELD THAT:- By analyzing the definition of goods defined under Section 2(52) of CGST Act, 2017 which reads as goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. Jigarthanda manufactured by using various ingredients or inputs is in the form of semi-solid form, as stated by the applicant, satisfies the definition of goods and accordingly, it is held that Jigarthanda is goods. Classification of Jigarthanda - HELD THAT:- The classification of goods under GST regime has to be done in accordance with the Customs Tariff Act, 1975, which in turn is based on Harmonized System of Nomenclature, popularly known as HSN . The rules of interpretation, section notes and chapter notes as specified under the Customs Tariff Act, 1975 are also applicable for classification of Goods under GST regime. However, once an item is classified in accordance with the Customs Tariff Act, 1975, the rate of tax applicable would be arrived at on the basis of notifications issued under GST by the respective Governments. As per the Oxford Dictionary beverage means a type of drink except water. The word beverage though not defined under the CGST Act, 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product `Jigarthanda can be consumed as it is and hence is a beverage with a basis of milk. Further, on conjoint reading of Chapter heading 0402 and 2202 and relevant explanatory notes, it is clear that milk flavoured with cocoa or other substances are specifically excluded from Chapter heading 0402 and included under Chapter heading 2202. Various ingredients prepared and packed separately are sold and invoiced to dealers and outlets as Jigarthanda in units of liter and the same are mixed at the retail outlet as a cold beverage before sale to customers / consumers. Therefore, various ingredients cannot be classified as such and treated as mixed supply as claimed by the applicant. The goods has to be classified on the basis and form in which it is bought and sold in the market and not on the basis of packing for transportation and preservation from being decayed - Jigarthanda, which qualify as goods merit classification under HSN 2202 99 30, is neither finding place in Schedule III of the CGST Act, 2017 as non-supply nor exempted under Notification No.2/2017 CTR dated 28.06.2017. Therefore, it is a taxable goods covered under Notification No.1/2017 CTR dated 28.06.2017 vide serial No.50 of Schedule II as Beverages containing milk attracting CGST of 6% and attracting SGST of 6% vide serial No.50 of Schedule II of G.O. (Ms.) No. 62 dated 29.06.2077 for intra state supply. It attracts 12% IGST vide serial No.50 of Schedule II of Notification No.1/2017 Integrated Tax (Rate) dated 28.06.2017, for interstate supply.

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• 2023 (1) TMI 977
  Classification of goods - dried coconuts (shelled or peeled) used for human consumption - to be classified under Chapter 8, HSN 0801, on which rate of tax is nil or in Chapter Heading 1203 thereby attracting 5% GST? - HELD THAT:- The Applicant has dried all coconuts (copra in trade/common parlance) in their mill yard on black stone under sun. With respect to copra selected for human consumption, soil and dirt are removed manually and other copra are sent to oil mills for extraction of oil. In short, edible copra is physically round, circular cup like finish which is free of dust and dirt and is soft, while other copra which are irregular shape, dusty are sent as milling copra. A dried coconut for human consumption can also be used for milling purpose, therefore the basis of determination of GST rate on the basis of end use is not appropriate in terms of classification of the product. As the Circular 163/19/2021-GST dated 6th October 2021 clearly clarifies that the whole unbroken kernel could be taken out of shell only when it converts to copra. The Applicant takes the copra cuts into half, sun dries and segregates manually based on the round shape of copra, free of dirt/dust and send it as edible copra and the rest of copra which are irregularly shaped, dusty are sent to oil milling units. But as the Circular clearly states, Copra is classified under heading 1203 irrespective of use - Hence, the impugned goods of the Applicant is only Copra and the same shall be classified under Heading 1203 thereby attracting GST rate of 5% vide entry at SI.No. 66 of Schedule I of 1/2017-Central Taxes (Rate) dated 28.06.2017.

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• 2023 (1) TMI 976
  Classification of supply - Composite supply or not - Job-Work or not - activity of tanning, with chemical consumption - treatment or processing undertaken on goods owned by other person - to be chargeable under the item i(e) of the Heading 9988 ie., or Manufacturing Services On Physical Inputs (Goods) owned by Others and if not what would be the applicable tax rate or not? - HELD THAT:- In the instant case, on perusal of the invoices of job work and flowchart of the process submitted by the Applicant, it is clear that hides and skins (Chapter 41) are received from Applicant s customer for the job work of tanning and that certain tanning chemicals are added to assist the tanning process. After various processes, the raw hides and skins (Chapter 41) are converted in to finished leather (Chapter 41) and returned back to the Applicant s customer. The Customer (M/s Century Overseas -who is a registered person-Principal) while transporting the raw hides and skins and receiving the finished product, does not transfer the ownership to the Applicant. This is apparent in the Job Tanning order given by the customer (M/s Century Overseas). The terms and conditions stipulate that Applicant (M/s Zuha Leathers) should return the goods without any damage. Hence, it is clear that the Applicant in the instant case is the job worker, who has to process the raw hide supplied by the Principal and after tanning process (job work) return the same to the Principal. If the activity of the Applicant is a service by way of treatment or processing undertaken by a person on goods belonging to another registered person, it is rightly classifiable as processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and as per (i)(e) (para 6.7) and applicable CGST rate is 2.5% and applicable SGST rate is 2.5%. However, if the activity of Applicant is undertaken on physical inputs (goods) which are owned by persons other than those registered under the CGST Act, then it falls within entry at item (iv) and applicable CGST rate is 9% and applicable SGST rate is 9%.

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• 2023 (1) TMI 975
  Classification of supply - supply of goods or supply of services - activity of Bus Body Building on the chassis supplied by the customer on job work basis - applicable rate of GST and its SAC/HSN code - HELD THAT:- In the instant case, it is observed that the bus body is fabricated and mounted by the Applicant on the chassis owned and supplied by the customer. After completing the work, it is delivered back to the customer, charging a lump sum amount as Job Work Charges. The ownership of the chassis remains with their customers and will not be transferred to the Applicant at any point of time. The consideration is received only towards fabrication services besides some materials involved in the course of fabrication. In the case of IN RE: M/S. TVL ANAMALLAIS ENGINEERING (P) LTD. [ 2021 (8) TMI 732 - AUTHORITY FOR ADVANCE RULING, TAMILNADU ], it was held that the activity of Bus body building undertaken on the chassis supplied by the customers amounts to supply of service as per Schedule II clause 3 of CGST Act 2017. The service rendered was classified under SAC 998881 and the applicable rate will be CGST @ 9% and SGST @ 9% as per entry no.26 of Notification No.11/2017-Central Tax (Rate) dt.28.06.2017(as amended) and Sl.No,26 of Notification No.11(2)/ CTR/532(d- 14)/2017 vide G.O.(Ms)No.72 dated 29.06.2017 (as amended) respectively. - The facts and circumstances of the instant case are similar and there are no reason to deviate from the decision taken in the order. The Bus body building on the chassis supplied by the customer is a service under SAC 998881, Motor Vehicle and trailer manufacturing services and 18% GST as applicable will be charged accordingly - it is evident that the activity undertaken by the Applicant for bus body building on the chassis supplied by the customer is to be classified as job work. As per Schedule II (3) of the CGST Act 2017, the said activity bus body building on the chassis belonging to the customer by the applicant is supply of services.

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• Income Tax

• 2023 (1) TMI 974
  Addition u/s 68 - unaccounted income Introduced in its books in the guise of bogus Long Term Capital Gains - AO has relied upon the details gathered by the Investigation Wing, to conclude that the respondent/assessee had introduced its unaccounted income to purchase and sell shares of REI - HELD THAT:- According to us, the appellant/revenue could not have bifurcated the purchase and sale transactions. Concededly, when the shares were purchased for trading purposes in earlier years, the profits so generated were accepted, and at the point in time, when these scrips were converted into investment and sold during the Assessment Years in issue, they could not be treated as bogus transactions. The fact that shares were traded on stock exchange after paying securities transaction tax, and that money had been received through banking channels only demonstrated that they were not bogus transactions. The statement of another gentleman i.e., Mohan Singh Jadoun, on which reliance was placed before us as well by Mr Vipul Agarwal, who appears for the appellant/revenue, according to the Tribunal, did not lead to an adverse inference. According to us, the aforesaid observations made by the Tribunal are, in effect, findings of the fact. There are concurrent findings of facts returned by the CIT(A) as well as the Tribunal. The proposed questions of law by the appellant/revenue do not state that the findings returned by the Tribunal or the CIT(A) are perverse.

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• 2023 (1) TMI 973
  Expenses written off - abandoned project - similar project was abandoned during the earlier year - Revenue expenditure u/s 37 - employee costs and finance charges etc. incurred for the continuous running of the business - Disallowance of no business activities were taken during the year as well as previous year - HELD THAT:- Opening balance was written off as prior period expenses and not claimed as expenses in the computation of income. However, the part of the same expenses incurred during the year has been treated by the assessee as relating to same business and assessee wants this expenditure to be allowed as revenue expenditure. We find that assessee is taking contradictory stand. As per assessee s own admission, similar expenses incurred in earlier year are written off as abandoned project. Similar expenditure in the current year assessee wants to be treated as revenue expenditure. It is settled law that any party cannot be allowed to approbate and reprobate i.e. accept and reject part of the same nature. In the same year, assessee wants to adopt two system of accounting In the present case, AO has allowed those expenditure which as per AO is necessary for the purpose of managing the status of the company. While the assessee on the other hand claimed that the entire expenditure was meant to preserve the status of the company and was statutory necessity and commercial expediency. In our considered opinion, those part of the expenditure incurred during the year which are identical to the earlier year, which have been written off by the assessee as abandoned cannot be allowed as revenue expenditure during the year. Hence, we deem it appropriate to remit the issue to the file of AO. AO shall examine the nature of expenditure during the year and those of the expenditure which are of similar nature which have been written off as abandoned for earlier period cannot be allowed as revenue expenditure. Needless to add, assessee shall be provided an opportunity of being heard.

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• 2023 (1) TMI 972
  Assessments framed u/s 153C - Computation of limitation period under Section 153C of the Act for the purposes of issuance of notice and assessment thereon - HELD THAT:- As per Section 153A of the Act (in the case of searched persons), the limitation of preceding six years starts from the financial year in which search was conducted. However, in the case of Section 153C of the Act (person other hand searched person), the limitation of preceding six years starts from the date of receipt of seized assets or documents from the Assessing Officer of the person searched as per the erstwhile proviso to Section 153C. We notice here that the reasons for issue of notice under Section 153C r.w. Section 153A of the Act were recorded by the AO of the searched person on 05.03.2014. The satisfaction note was handed over to the AO of the assessee on 21.03.2014. As a corollary, the books of accounts, documents seized etc. were handed over to the Assessing Officer of the assessee. Therefore, the limitation for preceding six years starts from the aforesaid date, i.e., 21.03.2014. Consequently, the Assessment Years 2006-07 and 2007-08 are clearly outside the sweep of exercise of jurisdiction under Section 153C of the Act. The jurisdiction of issue notice under Section 153C are ousted insofar as Assessment Year 2006-07 and 2007-08 are concerned when the date of handing over of satisfaction note dated 05.03.2014 to the Assessing Officer of the assessee on 21.03.2014 is reckoned. Similar view has been expressed in the case of Pr.CIT vs. Sarwar Agency P. Ltd., [ 2017 (8) TMI 733 - DELHI HIGH COURT] - We thus find merit in the plea of the assessee that respective notices issued to the assessee under Section 153C of the Act for assessment years in question, i.e., Assessment Years 2006-07 and 2007-08 are without jurisdiction as these assessment years are beyond the purview of six assessment years in terms of pre-amended provisions of Section 153C of the Act. As a corollary, the assessments passed under Section 153C of the Act as a sequel to invalid notices are also liable to be quashed. In terms of these observations, the respective assessment years for Assessment Years 2006-07 and 2007-08 are set aside and quashed. Appeals of the assessee are allowed.

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• 2023 (1) TMI 971
  Denial of natural justice - CIT(Appeals) deciding on fresh evidence without giving opportunity of being heard to the AO - HELD THAT:- As perusing the orders of the lower authorities wherein the finding of the Assessing Officer was that assessee was asked to produce documentary evidence with regard to cost of improvement claimed but the assessee failed to give any documentary evidence with regard to the said claim. Therefore, we are of the considered opinion that this matter should go back to the AO for proper verification of the evidence in respect of cost of improvement claimed by the assessee. We restore ground Nos. 1 and 2 of grounds of appeal of the Revenue to the file of the AO with a direction for de novo adjudication of cost of improvement claimed by the assessee. Claim of the assessee of cost of improvement - CIT-A held inherited property cost of acquisition as well as the cost of improvement by the previous owner of a capital asset the indexation shall be allowed during the year of acquisition or improvement by the previous owner or the year of inheritance by the person, who sold the property - HELD THAT:- Hon ble Bombay High Court in the case of CIT Vs. Manjula J. Shah[ 2011 (10) TMI 406 - BOMBAY HIGH COURT] affirmed the view of the Tribunal in holding that while computing the capital gains arising on transfer of a capital asset acquired by the assessee under a gift or inheritance the index cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee became the owner of the asset. Similar view has been taken by Arun Shungloo Trust [ 2012 (2) TMI 259 - DELHI HIGH COURT] - We direct the AO to allow the cost of indexation to the assessee keeping in view the principles laid down by the above judgements. Appeal of the assessee is allowed.

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• 2023 (1) TMI 970
  Disallowance u/s 14A r.w.r. 8D(2)(iii) - Assessee has made investments on which it has earned exempt income - HELD THAT:- In the present case, it is an admitted position that the interest-free funds available with the assessee in the form of share capital and reserves are more than the investments from which the assessee earned exempt income. We find that the Hon ble Jurisdictional High Court in CIT Vs. Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] held that if funds are available with the assessee, which are sufficient to meet the investment, then the presumption would arise that the investment is made out of funds so available with the assessee. We find that in Nirved Traders (P.) Ltd. [ 2019 (4) TMI 1738 - BOMBAY HIGH COURT ] has held that disallowance under section 14A of the Act cannot be more than exempt income. Thus, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, ground no.1, raised in Revenue s appeal is dismissed. Allowance of additional depreciation - assessee has purchased new machinery, which was eligible for additional depreciation at 20% u/s 32(1)(iia) after 01/10/2010, the assessee only claimed 10% of the additional depreciation in the assessment year 2011-12. The balance 10% of additional depreciation was claimed in the year under consideration - HELD THAT:- As decided in own case [ 2017 (2) TMI 578 - ITAT MUMBAI ] intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one AY., if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent AY. The Tribunal, in our view, has rightly held, that additional depreciation allowed u/s.32(1)(iia) of the Act is a one-time benefit to encourage industrialisation, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting the additional allowance. We are in full agreement with such observations made by the Tribunal. Thus we hold that the assessee was entitled to claim 10% additional depreciation during the year under appeal. Reversing the order of the FAA, we decide the second ground of appeal in favor of the assessee Allowance of expenditure incurred towards obtaining Certificate of Suitability and filing of Drug Master File ( DMF ) - HELD THAT:- We find that the Co-ordinate Bench of the Tribunal in assessee s own case in ACIT Vs. Aarti Drugs Limited [ 2015 (1) TMI 1486 - ITAT MUMBAI] for the assessment year 2009-10 decided a similar issue in favour of the assessee. Allowance of prior period expenses - claim made by the assessee was denied merely on the basis that the liability pertains to the preceding year and since the assessee maintains its account on the mercantile basis, therefore such liability can be claimed in the preceding year only - HELD THAT:- In the present case, bank charges levied by the bank in the preceding financial year were debited by the assessee in the year under consideration and the same was not added back in the computation of income filed with the return of income. As per the revenue, since the assessee maintains its account on the mercantile basis, therefore any liability which was incurred in the preceding year cannot be allowed in the year under consideration. It is the plea of the assessee that the bank had levied bank charges during the preceding financial year, however, the assessee had not received the debit advice from the bank. As and when the bank advices were received, the same was appropriately debited to the bank charges. The bank charges were received after the finalisation of the account for the year ending 31/03/2011. Therefore, as per the assessee, it could not record the exact bank charges in the assessment year 2011-12 and created a provision for bank charges. Further, the assessee recorded the bank charges in the assessment year under consideration when it receives the bank advices. Thus, as per the assessee, the liability was crystallised in the current year and therefore, should be allowed in the current year only. No material has been brought on record by the Revenue to prove that the liability has also been crystallized in the preceding year. From the perusal of the order passed by the Co-ordinate Bench of the Tribunal in assessee s own case for the assessment year 2009-10 [ 2015 (1) TMI 1486 - ITAT MUMBAI] we find that the Revenue though has raised other issues but did not challenge the order passed by the learned CIT(A) granting relief to the assessee on the similar issue. Hon ble Supreme Court in Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT ] held that while strictly speaking res judicata does not apply to Income-tax proceedings but where the fundamental aspect permeating through the different assessment years has been followed as the fact one way or the other and parties have allowed that position to be sustained by not challenging the order it would not at all be appropriate to allow the position to the change in the subsequent year. - Decided against revenue. Additional ground raised by the assessee - Deduction u/s 80 IA in respect of profit and gains from the generation of steam - AO objected to the claim on the basis that the said claim was neither made in the original return of income nor in the revised return of income and the same cannot be entertained now - HELD THAT:- As it is evident that the AO has not drawn any adverse inference as to the claim of deduction u/s 80IA of the Act on the generation of steam and the method of computation adopted by the assessee. Thus, once the deduction u/s 80IA of the Act has been accepted on merits in remand proceedings, the Revenue cannot raise any grievance now in the present appeal before us. Insofar as the admissibility of the claim at the appellate state for the first time is concerned, we have already found the same to be in conformity with the judicial pronouncements as noted above. Therefore, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, grounds no. 6-8 raised in Revenue s appeal are dismissed. Taxability of incentives received in terms of Foreign Trade Policy towards Focus Market Scheme ( FMS ), Focus Products Scheme ( FPS ), and Status Holder Incentives Scrip ( SHIS ) - Capital or revenue receipt - HELD THAT:- Subsidy granted under the FMS scheme came up for consideration before the Hon ble Rajasthan High Court in PCIT Vs. Nitin Spinners Ltd. [ 2019 (9) TMI 1154 - RAJASTHAN HIGH COURT ] when the objective of the aforesaid subsidies has been admitted to be to encourage industries by providing industrial growth, technological upgradation, and development, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue in treating the amount received by the assessee under the aforesaid schemes as capital receipt. As a result, grounds no. 9-13 raised in Revenue s appeal are dismissed. Claim of education cess as an allowable expenditure - HELD THAT:- We find that Finance Act, 2022 with retrospective effect from 01/04/2005 inserted Explanation 3 to section 40(a)(ii), whereby it has been provided that the term tax shall include and shall be deemed to have always included any surcharge of cess, by whatever name called, on such tax. Hon ble Supreme Court in JCIT Vs. Chambal Fertilisers Chemicals Ltd. [ 2022 (12) TMI 1098 - SC ORDER ] allowed the Revenue s appeal against the Hon ble Rajasthan High Court s decision in Chambal Fertilisers Chemicals Ltd. [ 2018 (10) TMI 589 - RAJASTHAN HIGH COURT ] and held that education cess paid by the respondent-assessee would not be allowed as an expenditure under Section 37 read with 40(a)(ii) of the Act. Thus, respectfully following the decision of the Hon ble Supreme Court cited supra, grounds no. 14-18 raised in Revenue s appeal are allowed.

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• 2023 (1) TMI 969
  Revision u/s 263 - Deduction u/s 80IB (10) - CIT noted violation clause f of section 80IB(10) - HELD THAT:- We note that ld PCIT found a specific error in the assessment order stating that the view taken by the Assessing Officer is not sustainable in law, as it is violation clause f of section 80IB(10) of the Act, as the assessing officer has failed to verify the conditions mentioned in clause f of section 80IB(10) of the Act. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. The jurisdictional precondition stipulated under section 263 of the Act, is that the PCIT must come to the conclusion that the order is erroneous and is unsustainable in law. We hold that order passed by the assessing officer is unsustainable in law, based on the reasons cited above, which makes the assessment order erroneous as well as prejudicial to the interest of Revenue, hence we confirm the findings of ld PCIT and uphold his order. Appeal filed by the assessee is dismissed.

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• 2023 (1) TMI 968
  Gain on sale of land - Agricultural land - Whether a piece of land is agricultural land or not? - exemption u/s. 54B - HELD THAT:- A capital asset, had never been used for agricultural purposes, except, perhaps, sometime in the distant past, of which, again, there is nothing on record to suggest, even as it is not relevant inasmuch as the time of such user prior to the transfer stands clearly defined by law. It would, given its nature, not even fetch the price applicable to an agricultural land. And, further, stands sold as an, urban, vacant piece of land, with, rather, no agriculture potential, which normally a piece of land, unless the soil quality is very poor, has. That is, was not an agricultural land in the recent past nor sold as such. The matter, as continually emphasized herein, is essentially factual and, accordingly, stands decided on the basis of the material on record, taking the entirety of the facts and circumstances thereof into account, as indeed the Tribunal is obliged to, and toward which we may refer to some case law, viz. CIT v. Radha Kishan Nandlal [ 1975 (3) TMI 2 - SUPREME COURT] , Daulat Ram Rawatmull [ 1972 (9) TMI 9 - SUPREME COURT] ; Omar Salay Mohamed Sait [ 1959 (3) TMI 2 - SUPREME COURT] ; Dhiraj Lal Girdharilal [ 1954 (10) TMI 8 - SUPREME COURT] In view of the foregoing, we, setting aside the impugned order, uphold the assessment of capital gains at rs. 248.17 lacs, disallowing the benefit u/s. 54B. The agriculture income returned by the assessee, quantum of which is not available on record, could be, as afore-stated, in respect of his balance agricultural land of 41.74 acres. There is thus no reason to disallow the same, as done by the AO, treating it as nil, even if, as found by him and with which we wholly agree, no agricultural activity has been carried out by the assessee on the land sold during the relevant year. This disallowance has not been disturbed by the ld. CIT(A) even as he finds to the contrary. In fact, the AO s order is also inchoate inasmuch as the income being admitted, if not agricultural income, as returned, the same is liable to be assessed under any other, including the residuary head, i.e., as income from other sources, or even as income from an unexplained source/s.

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• 2023 (1) TMI 967
  Bogus purchase of jewellery - Valuation of stock - statement recorded on oath u/s. 132(4) - HELD THAT:- We are of the considered view that where the assessee has discharged the initial onus cast upon it and has submitted the necessary documentation in support of the purchases so made and such purchases are duly recorded in the books of accounts and forming part of the inventory and such books of accounts and closing inventory being duly accepted and no adverse finding recorded by the AO, mere reliance on statement of Mr. Rajender Jain without allowing an opportunity of cross - examination to the assessee, the purchases so made cannot be held as bogus. We are intrigued by the fact that where the said purchases are equally forming part of inventory and closing stock as not disputed by the AO and in absence of any finding that the purchases are made at an inflated value vis- -vis comparable third party and/or the closing inventory has been shown at a lower value, how the same will lead to understatement of profit as so held by the AO which is not clear from the reassessment order. Addition so made by the AO and upheld by the ld. CIT(A) is hereby directed to be deleted. Ground of appeal no. 4 of assessee s appeal is thus allowed

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• 2023 (1) TMI 966
  Unsecured loan raised u/s. 68 - addition made on the basis of said statement recorded at the back of the assessee - HELD THAT:- Loan taken by the assessee was also repaid. We note that even the assessment has been framed in the case of the lender and no addition was made on account of money lent to the assessee. Shri Sharma, the director of M/s. Fair Plan Vincom Pvt. Ltd. has admitted in the statement recorded u/s. 131 of the Act that he has arranged accommodation entries on various dates to the assessee and charged commission in lieu of arranging accommodation entries for the assessee on commission basis. The said statement was retracted by Mr. Sharma vide affidavit dated 17.02.2017 wherein he has stated that during the course of his attendance before the DCIT, Circle-36, Kolkata his Chartered Accountant was asked to leave the office and he was asked to wait outside his chamber. He further stated that after 3/4 hours of waiting he was called and asked to sign in a statement which was already kept ready. We also note that Mr. Sharma retracted the statement by stating that the loan given to assessee was a genuine loan and no cash was ever given by the assessee in lieu of the said loan. Thereafter, he stated in reply to question Nos. 30 and 31 that loan was in fact given by M/s. Fair Plan Vincom Pvt. Ltd. to M/s. Super Iron Foundry. Considering these facts, we are of the considered view that the addition made on the basis of said statement cannot be sustained. Further, we note that assessee was not allowed cross examination of Shri Sharma despite specific request from the assessee and the AO stated that on the date fixed for cross examination the said person did not turn up and the said cross examination could not happen but this in our opinion is not the excuse for not allowing the cross examination. Therefore, the addition made on the basis of statement of a person which was retracted subsequently without allowing cross examination is bad in law. We note that the assessee has furnished all the evidences before the authorities below but no defect or deficiencies pointed out except the statement of lender which was also withdrawn and retracted as stated above. Thus as assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but neither AO nor Ld. CIT(A) commented on these evidences filed by the assessee - we direct the AO to delete the addition - Decided in favour of assessee.

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• 2023 (1) TMI 965
  Rectification u/s 154 - deduction under section 80IB - HELD THAT:- We observed that any mistake apparent from the record can be rectified under section 154 of the Act. The plain meaning of the word apparent is that it must be something which appears to be ex-facie and incapable of argument and debate. Therefore, we find merit in the submissions of ld DR for the Revenue that deduction under section 80IB is a debatable issue which can not be rectified under section 154 of the Act. Therefore, we agree with the reasoning given by ld CIT(A) that the issue of allowing claim u/s 80IB of the IT Act does not come under the purview of mistake apparent from record which is rectifiable u/s 154 of the IT Act as the disallowance u/s 80IB was made by mentioning of cogent reasons given in the assessment order u/s 143(3) of the IT Act by the AO. There is no mistake apparent from the record in the current case and rectification application was rightly rejected by assessing officer. Facts also indicate that the assessment order passed on 29/08/2011 and first rectification application is claimed to have been filed on 26/08/2015. This shows that the assessee missed the deadline for filing regular appeal and recourse to rectification was taken to bring the issue to back to life for further legal remedy. However, by way of rectification petition, the assessee cannot-raise the issue which could have been taken up in regular appeal only. This way, the ld CIT(A) has confirmed the action of the assessing officer and dismissed the appeal of the assessee.

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• 2023 (1) TMI 964
  Denial of TDS credit - non-deposit by employer - appellant was employed with M/s Nilkamal Lifestyle Limited on a salary and the accrual / receipt of which is offered to tax with the corresponding claim of TDS made u/s 192 of the Act by the employer thereagainst - Failure of deductor-employer to deposit the said amount of TDS to the credit of Central Exchequer and reporting thereof through filing of TDS return viz 24Q - HELD THAT:- There are two methods by which tax liability under the Act can be discharged i.e. direct method where the payment of taxes is made by the assessee-taxpayer directly in the form of advance tax self-assessment tax and indirect method where taxes are deducted paid on behalf of the assessee i.e. through TDS mechanism and it shall not be out of the box to quote from the decision Hon ble Bombay High Court laid in Yashpal Sahni vs Rekha Hajarnavis, ACIT [ 2007 (7) TMI 7 - HIGH COURT , BOMBAY] In the matter of recovery of taxes it s worthy to note that, once the tax liability of the assessee is discharged by indirect method of TDS, then the rule of estoppel by virtue of provisions of section 205 of the Act comes into play, which invariably puts an embargo on the department from enforcing the recovery of taxes from the assessee where tax is deductible at the sources under chapter XVII of the Act from the payment liable for TDS and as such TDS has been deducted therefrom. Thus TDS being one of the two modes of recovery of taxes envisaged in the Act obliterates the assessee from the tax liability and we find that, vide para 33, a similar view found taken by the Hon ble Madras High Court in Ashok Kumar B. Chowatia [ 2021 (5) TMI 37 - MADRAS HIGH COURT] We are of the view that, the Revenue in terms of Section 205 of the Act, is restrained from enforcing any tax recovery against the assessee insofar as the demand with reference to the amount of tax which had been deducted by the employer from the salary accrued to assessee and assuming that the deductor-employer had not remitted the amount after its deduction to the Central Government, the only course open to the Revenue is to recover same from the very person who has deducted the TDS and not from appellant assessee. Thus in the light of aforestated discussion, we concur with the views of Ld. AR, and deem fit to set-aside orders of both the Ld. TAB as contra-legem. Appeal of assessee allowed.

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• 2023 (1) TMI 963
  Assessment u/s 153A - Disallowance on account of provisions made against loss of stock due to damage/obsolete conditions - HELD THAT:- We find that Ld. CIT(A) while deciding the issue has noted that Ld. CIT(A) for the same assessment year in assessee s own case had deleted the addition in the order framed u/s. 153C r.w.s. 153A of the Act. We further find that on identical facts the coordinate bench of the Tribunal while deciding the issue for A.Y. 2003-04 [ 2021 (10) TMI 696 - ITAT DELHI] had held that the obsolete inventories were written off by reducing the carrying cost of inventory and the claim was therefore allowed to the assessee. Late deposit of PF contribution - disallowance made u/s. 43B on account of delayed contribution of PF/ESI dues - HELD THAT:- It is an undisputed fact that the PF/ESIC dues which were disallowed by A.O. were not deposited by the assessee before the due date prescribed under the respective statute. We find that Hon ble Apex Court in the case of Checkmate Services (P.) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] has held that employees contribution is money held by the assessee employer in trust and is its income unless paid into the fund by due date . It has further held that the due date is the date prescribed by the enactment governing the fund in question and it is deductible only if it is deposited in respective fund by that date. In the present case since it is undisputed fact that the amount of contribution of PF/ESI has not been deposited before the due date prescribed under the relevant Acts, therefore following the decision of Hon ble Apex Court in the case of Checkmate Services (P.) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] the same is not allowable. We accordingly, uphold the action of A.O. in disallowing the same. Thus the ground of the Revenue is allowed.

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• 2023 (1) TMI 962
  Excess depreciation on goodwill arising out of demerger - bar to raise legal issues for the first time before ITAT - transfer of assets and liability from the demerged company to the assessee - HELD THAT:- As decided in assessee own case [ 2018 (10) TMI 1036 - ITAT AHMEDABAD ] AO has simply disputed the quantification of eligible depreciation spanning over various financial years on the ground that depreciation is eligible from the appointed date as sanctioned by the Hon ble Gujarat High Court. Thus, on account of such re-working, the assessee has presented a new claim towards depreciation on goodwill in the impugned AY 2009-10 on the ground that all the relevant facts are available on record which are duly admitted by the Revenue. Therefore, the assessee cannot be deprived of the eligible depreciation as computed by the AO himself concerning AY 2009-10. Cross objection filed by the assessee u/s 253(4) - We find ourselves in agreement with the propositions made on behalf of the assessee that in a cross objection, there is no bar to raise legal issues for the first time before ITAT. A cross objection is like an appeal. It has all the trappings of an appeal. It is filed in the form of memorandum and it is required to be disposed in same manner as an appeal. Even where the appeal is withdrawn or dismissed for default, cross objection may nevertheless be heard and determined. Cross objection is nothing but an appeal, a cross appeal at that. This apart, raising of additional ground would only enable the authority concern to correctly assess the tax liability of the assessee. In the present case we observe that where the AO has readjusted the quantum of depreciation in the subsequent assessment year, the assessee is within its legitimate rights to be granted depreciation in AY 2009-10 as per the figures worked by the AO himself. We do not see any perceptible reason for not admitting such claim of the assessee. We also find bonafides in the plea of the assessee for raising new claim on account of depreciation by way of additional ground at this belated stage. Appeal filed by the assessee is allowed.

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• 2023 (1) TMI 961
  Reopening of assessment u/s 147 - denying the claim of deduction u/s. 80IA(4) - HELD THAT:- It is very clear from the original assessment proceedings, AO vide his notice u/s. 142(1) dated 19.01.2011 requested the assessee to submit copy of the stock statement furnished to the bank to avail cash credit facility by the assessee. The assessee submitted the details to the AO vide its reply enclosed the copies of the stock which is clearly mentioning 52.66 lakhs. AO has examined the issue of stock, during the original assessment proceedings and do not find any discrepancy in the stock submitted by the assessee and completed the assessment order u/s. 143(3) of the Act. It is settled principle of law, no assessment can be reopened on the basis of change of opinion - Decided against revenue.

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• 2023 (1) TMI 960
  Addition of interest income - Appellant failed to furnish evidence to show that the aforesaid income has been offered to tax for the Assessment Year 2011-12 - HELD THAT:- The facts on record suggested that the interest income pertained to Assessment Year 2011-12. It was not the case of the AO that the Appellant was following cash basis of accounting in respect of interest income. To the contrary before CIT(A), the Appellant contended that interest income accrued during the previous year relevant to the Assessment Year 2011-12 and the interest income could not be taxed on receipt basis during the Assessment Year 2012-13. The CIT(A) did not deal with this contention and dismissed the appeal holding that the Appellant had failed to produce the loan confirmation and/or the uploaded return. We note that CIT(A) has observed that a loan confirmation filed before ITO-34(3)(5), Mumbai which was forwarded to the Assessing Officer and on the basis of the same reassessment proceedings were initiated. Thus, loan confirmation for the Assessment Year 2011-12 issued by the husband of the Appellant was already on record. Though the Appellant did not file the loan confirmation, the same was available on record. Therefore, to this extent the finding returned by the CIT(A) and Assessing Officer are contrary to material on record. The material on record suggested that the interest income did not pertain to Assessment Year 2012-13. Therefore, the onus shifted on Revenue, and the Revenue failed to bring on record any material to establish that the interest income pertained to Assessment Year 2012-13. Accordingly, we accept the contention of the Appellant that the interest income pertained to Assessment Year 2011-12 and delete the addition made by the Assessing Officer.

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• 2023 (1) TMI 959
  Capital gain on conversion of a Private Limited Company into LLP - Addition on account of asset being goodwill brought into books of accounts after conversion of a Private Limited Company into LLP holding that there is a violation of provisions of section 47(xiiib) - CIT(A) held that the commercial expediency in valuing Goodwill cannot be ignored merely on the theory of presumptions - As per DR if the corporate veil is lifted, one can clearly gather that the assessee has merely adopted a colourable device to avoid tax as whole state of affairs of the assessee LLP have been manipulated per se merely to come out of the conditions stipulated in the provisions of section 47(xiiib) - whether the partners of the assessee LLP had actually benefited either directly or indirectly on conversion of the predecessor company into LLP or not which has been alleged by the Assessing Officer? HELD THAT:- Partners of the assessee LLP and the erstwhile shareholders of the predecessor company can be considered to have obtained any benefit directly or indirectly only if the same fits into the specific conditions prescribed. CIT(A) have duly considered that the clause (c) operates only till the date of conversion i.e. 17/03/2016 and it is clear from the balance sheets pre conversion and post conversion that the shareholders have not received any consideration or benefit directly or indirectly. As regards clause(f) refers to amount paid to the partner of LLP out of the balance of the accumulated profits standing in the accounts of the company on the date of conversion, which in the present case cannot be said to be violative in view of the fact that the commercial expediency explained by the assessee has not been controverted by the AO and who cannot step into the shoes of the assessee to decide and direct as to how the assessee should conduct its state of affairs. Also, the condition prescribed relates to the balance of accumulated profits as on date of conversion out of which amount is paid to the partner, however, since the accumulated profits did not include the amount of Goodwill in the books of the predecessor company, there cannot be said to be any violation of clause (f) either. Hence, merely on presumptions of the AO, additions cannot be sustained which the ld. CIT(A) have categorically dealt with considering all the aspects of the case. Grounds of appeal of the revenue are dismissed

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• 2023 (1) TMI 958
  Validity of assessment - jurisdiction of the Income Tax Officer/AO to issue the notice - HELD THAT:- The issue relating to the pecuniary jurisdiction also came into consideration before the Coordinate Bench of the Tribunal and Others titled as Bhagya Laxmi Conclave Pvt. Ltd. [ 2021 (2) TMI 181 - ITAT KOLKATA ] wherein the Tribunal further relying upon various other decisions of the Coordinate Benches of the Tribunal has decided the issue in favour of the assessee and held that the assessment framed by Assessing Officer who was not having pecuniary jurisdiction to frame such assessment was bad in law. Assessment framed u/s. 143(3) of the Act by the DCIT being without jurisdiction is bad in law and the same is accordingly set aside. Assessee appeal allowed.

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• 2023 (1) TMI 957
  Addition u/s 68 - unexplained income in the nature of cash deposits in the bank accounts of the assessee - HELD THAT:- At this stage, it was not possible for the assessee to obtain confirmation from the friends and relatives after such a long time gap when the assessee has retired from service. In this regard, the assessee also placed on record an affidavit of the assessee which was not controverted by the Department. Therefore, in the absence of any contrary material by the Department, the Bench is of the view from the contents of the affidavit of the assessee that the assessee being an army personnel would not take risk in filing the false affidavit. Hence, the Bench feels that the assessee had received Rs.2,18,100/- from the friends and relatives against repayment of earlier loans. Thus the assessee is entitled for deletion of Rs.2,18,100/- from the total addition of Rs.15,41,749/-. As far as remaining addition assessee in this regard has filed cash flow statement taking opening balance bearing corrections in the factual errors done by previous counsel which has been placed on record - The Bank statements of all the three banks accounts of the assessee for the relevant assessment are also placed on record. Since it was a peculiar case of the assessee that he had withdrawn amounts from his bank accounts, therefore, he has placed on record bank statements of three bank accounts which could be verified by the revenue authorities. Therefore, AO is directed to verify the cash flow statement as submitted by the assessee with transactions carried out in these bank accounts by accepting opening cash balance in the cash flow statement and thus pass afresh order. Assessee is directed to submit the relevant documents/ evidences concerning the issue before the AO. Hence, the issue is restored to the file of the AO for afresh consideration by providing adequate opportunity of being heard to the assessee. Thus the appeal of the assessee is partly allowed for statistical purposes.

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• 2023 (1) TMI 956
  Validity of assessment made by the AO in the wrong hands - HELD THAT:- Assessment was made by the AO in the wrong hands, as the assessee was power of attorney holder of Sh. Sukhdev Singh who was the owner of the disputed land, as per reasons recorded u/s 147 and as per A.O s order. It is seen that assessee received the power of attorney from Sh. Sukhdev Singh English translation and that the appellant sold the land as mentioned in the reasons recorded on behalf of Sh. Sukhdev Singh. Copy of the sale deed is placed on record - It is trite law that no addition can be made in the hands of power of attorney holder and further revenue has not brought on record any material evidence indicating that ownership of the said land belongs to appellant assessee. Therefore, we hold that the assessment order is passed without jurisdiction. We hold that the assessment order is passed by the Assessing Officer without assuming jurisdiction on the assesse and hence such assessment order is held void ab initio and bad-in-law. Appeal of the assessee is allowed.

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• 2023 (1) TMI 955
  Long-term capital gain - cost of acquisition - capital gain worked out by the DVO - Assessee contended that Section 50C contemplates a deeming situation whereby the full value of the sale consideration is to be deemed equivalent to the amount on which stamp duty was paid for the purpose of calculating the capital gain - HELD THAT:- Assessee has brought to the notice of the ld. CIT(Appeals), the report of DVO, his submission which has duly been noticed by the ld. 1st Appellate Authority, but he failed to take cognizance of this report. The reference to the DVO was made during the pendency of the assessment proceeding. In such situation, its cognizance ought to have been taken. Therefore, 1st Appellate Authority failed in its duty to follow the correct procedure required for the disposal of the appeal. Similarly both the authorities have erred in rejecting the calculation submitted by the assessee regarding cost of acquisition. They have calculated the long-term capital gain simply by taking into consideration the stamp duty valuation by applying section 50C ignoring all other provisions. Therefore, we direct the ld. Assessing Officer to calculate the capital gain assessable in the hands of the assessee on the basis of computation made by the assessee (extracted supra). The capital gain will be calculated at Rs.47,77,384/-, out of that assessee has already calculated and shown at Rs.11,22,636/-. The addition is to be restricted to Rs.36,54,748/- instead of Rs.54,84,714/-. To be very specific, the capital gain including the gain disclose d by the assessee is directed to be calculated in the hands of the assessee at Rs.47,77,384/-. The credit of already shown of Rs.11,22,636/- is to be given to the assessee (Rs.47,77,384/- minus Rs.11,22,636/-) = net Rs.36,54,748/-. Appeal of the assessee is allowed.

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• 2023 (1) TMI 954
  Unexplained cash credit as provided in Section 68 - AO who determined the amount of fresh share capital introduced including the premium - HELD THAT:- Since the assessee has placed sufficient documents and materials on record to prove the identity and creditworthiness of the shareholders and the genuineness of the transaction of receiving share capital and share premium, invoking the provisions of Section 68 was not justified in the instant case. We, therefore, reverse the finding of the CIT(A) and delete the addition made u/s 68 of the Act and allow all the grounds raised by the assessee.

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• 2023 (1) TMI 953
  Disallowance u/s 14A - Expenditure incurred on earning exempt income earned in the year - HELD THAT:- As respectfully following the decision of M/s. Redington India Ltd. [ 017 (1) TMI 318 - MADRAS HIGH COURT ] we are of the considered view that disallowance of expenditure u/s. 14A of the Act cannot exceed exempt income and thus, we are inclined to uphold the findings of the Ld. CIT(A) and dismiss the appeal filed by the Revenue.

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• 2023 (1) TMI 952
  PE in India - Dependent Agent Permanent Establishment of the appellant - income earned by the assessee as royalty from India is taxable in India - income from distribution and exhibition of films - The assessee is a tax resident of USA as engaged in export of films from USA, produced either by its group studios or produced by third parties - HELD THAT:- We find that the Tribunal in appeal by Revenue in [ 2011 (12) TMI 195 - ITAT MUMBAI] examined the issue and held that the assessee has no PE in India Tribunal in subsequent assessment years i.e. AY 2007-08 to 2014-15 and 2017-18 to 2018-19 has consistently decided this issue in favour of assessee by following the decision rendered in assessment year 2006-07 [ 2011 (12) TMI 195 - ITAT MUMBAI] We find that DRP of the directions for the impugned AY has recorded the fact that the DRP in assessee s case has considered the issue in AY 2017-18 and the material facts remain the same during year under reference. The only reason for not following the order of Tribunal for preceding years is that the Hon ble Bombay High Court on the issue of existence of PE of the assessee in India has admitted similar question of law in appeal by the Revenue in assessee s case for assessment year 2008-09. No contrary decision was brought to the notice of Bench by the Revenue. In the light of the fact that in the preceding assessment years on same set of facts, the Tribunal has been consistently holding that the assessee has no PE in India. Following the decision of Co-ordinate Bench in assessee s own case ground of the appeal is allowed.

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• 2023 (1) TMI 951
  Reopening of assessment u/s 147 - jurisdiction of the ld. AO related to calculation of capital gain of the assessee without referring the issue to DVO - HELD THAT:- After a thoughtful consideration from all four amended grounds, we found that the assessing authority had passed the order beyond his jurisdiction by calculating the cost of acquisition on basis of his own assumption. So, the entire issue is setting aside to the ld. AO and the issue should be referred to DVO for considering the cost of acquisition of the property before computing the total income. Both the revenue and the counsel of the assessee had not made any objection for remanding back the issue before the ld. AO. Needless to say, that the AO shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings. The evidence/explanation submitted by assessee in its defence shall be admitted by the AO, and adjudicated on merits in accordance with law. We order accordingly.

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• 2023 (1) TMI 950
  TP Adjustment - selection of MAM - TNMM or internal CUP - HELD THAT:- We find that the assessee is in initial year of operations and has adopted TNMM as most appropriate method. However, in subsequent assessment years and from assessment year 2012-13 onwards, it has followed internal CUP method as most appropriate method and claims that TPO has accepted internal CUP method followed by the assessee. If internal CUP method is most appropriate method to be followed to determine ALP of international transactions of the assessee, then why TNMM has been selected as most appropriate method was not explained by the assessee. Facts remains that when the assessee has adopted internal CUP method for assessment year 2012-13, the TPO has accepted claim of the assessee as claimed by the ld. Counsel for the assessee. Therefore, we are of the considered view that one more opportunity of hearing should be given to the assessee to justify its case with internal CUP method and thus, we set aside the issue to file of the AO/TPO and direct the TPO to re-consider the issue of TP adjustment, after giving one more opportunity of hearing to the assessee to justify its case that internal CUP method is most appropriate method.

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• Customs

• 2023 (1) TMI 949
  Illegal smuggling of goods - Seeking grant of Injunction restraining the Respondents, their Agents, Servants and Subordinates from acting and/or taking any action of any nature whatsoever, pursuant to or in furtherance of the Impugned order - HELD THAT:- It is pertinent to note that the Division Bench also considered the contention of the Petitioners therein of entertaining the Petition in writ jurisdiction in light of the grievance of non-granting of cross-examination. After considering this grievance, the Division Bench opined that an Appeal was maintainable and passed necessary orders regarding the filing of an appeal and pre-deposit as stated above. To maintain consistency, since this Court has taken a particular view in the case of other noticees with similar grievance, we are inclined to dispose off the Writ Petition with the same reasoning as in the order dated 6 June 2019. The Writ Petition is disposed off directing that the course of action indicated in paragraphs 7 and 8 of the order dated 6 June 2019 would apply to the case of the Petitioner as well.

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• 2023 (1) TMI 948
  Confiscation of imported aircraft - non-scheduled operator permit (charter) issued by the Directorate General of Civil Aviation [DGCA] - levy of customs duty and penalty under section 112 of the Customs Act - HELD THAT:- Aircrafts and helicopters are classified under Customs Tariff Heading 88 of the First Schedule to the Customs Tariff Act, 1975. The tariff rate of duty till 28.02.2007 on the import of aircraft was 3%/12.5%. Subsequently, pursuant to the proposal made in the Finance Bill 2007, exemption notification no. 20/2009 dated 01.03.2007 was issued inserting Entry 346B and Condition No. 101 in the earlier exemption notification dated 01.03.2002, whereby, the effective rate of duty on import of aircraft for scheduled air transport service was made nil . No exemption was, however, granted to nonscheduled air transport service and private category aircraft. However, with the issuance of the exemption notification dated 03.05.2007, the effective rate of duty on the import of aircraft for non-scheduled air transport service was made nil . The exemption notification dated 03.05.2007 inserted Condition No. 104 which requires at the stage of import, an approval from MCA to import the aircraft for non-scheduled (charter) service and an undertaking by the importer to the customs authority that the aircraft would be used only for non-scheduled (charter) services and that the operator would pay on demand, in the event of his failure to use the aircraft for the specified purpose, an amount equal to the duty payable on the said aircraft but for the exemption under the notification. The customs authority cannot demand duty in the absence of proceedings initiated by DGCA. In the present case, proceedings have not been initiated by DGCA against the appellant and in fact the permits have been renewed time to time - the impugned order also holds that non-revenue flights undertaken by the aircraft carrying Chairman and other employees are private flights and though such flights may be permissible under the Civil Aviation Law but the same cannot be interpreted to be also permissible under the exemption notification. Thus a demand can be made under the Undertaking only when DGCA finds that the use of the aircraft is not in accordance with the permit granted by the DGCA. In the present case, DGCA has not initiated any proceedings against the appellant and in fact has renewed the permit from time to time - Once it is held that the demand could not have been confirmed, the penalties imposed upon the Chairman/Managing Director and the Vice President of the appellant cannot also be sustained. Appeal allowed.

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• 2023 (1) TMI 927
  Seeking release of smuggled confiscated goods - Whether the Tribunal was justified in recording a finding that the fact that seized fabrics might have lost its importance due to storage for more than four years without there being any evidence on record to support that finding? - HELD THAT:- The Appellant is not entitled to succeed even on the re-framed questions of law. Though the learned Counsel for the Appellant has sought to address us as to the various factual aspects, we have to keep in mind the scope of the appeal. Whether the goods seized under a panchanama were validly imported is a question of fact. It is settled that the scope of reversing an order of the Tribunal on a finding of fact is extremely limited and is restricted to ascertaining whether the finding of fact is demonstrably perverse or that it is not possible to reach such a finding and it is contrary to the record on the face of it. It is also settled that if a possible view is taken by the Tribunal based on the analysis of the factual material then a question of law would not arise. In the present case, the Commissioner has undertaken the exercise of tallying the details of the seized goods as per the panchanama and details of the goods as per the concerned Bills of Entry. The Commissioner found that they did not match and there are only six entries that are common between the two and therefore, it is clear that the seized goods are not the same as imported under the two Bills of Entry - Tribunal has taken a particular view on fact, which cannot be stated that as perverse. The endeavour of the Appellant is only to persuade us to take another view upon re-appreciating the same material on record. Once we find that the Tribunal s view cannot be stated to be perverse, no question of law arises for consideration and only questions of facts arise. Appeal dismissed.

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• Corporate Laws

• 2023 (1) TMI 947
  Quantification of time limitation in terms of section 468 of Cr.P.C - Prayer to seek CLB s directions to investigate into the affairs of the respondent companies under Section 237(b) of the Companies Act, 1956 - likelihood of the existence of malpractices envisaged in clauses (i) to (iii) of Section 237(b) of the Companies Act - Whether the period commencing from 26.11.2007 to 03.06.2008 i.e. the date on which the SFIO submitted its report to MCA and the date on which MCA convyed SFIO to file a complaint respectively, is to be excluded for the purposes of counting limitation in terms of Section 468 of the Cr.P.C.? HELD THAT:- Section 242 of the Companies Act prescribes that if from any report made under Section 241, it appears to the Central Government that any person has, in relation to the company or in relation to any other body corporate, whose affairs have been investigated by virtue of Section 239, being guilty of any offence for which he is criminally liable, the Central Government may, after taking such legal advice as it thinks fit, would prosecute such person for the offence and it shall be the duty of all officers and other employees and agents of the company, or body corporate, other than the accused in the proceedings, to give the Central Government all assistance in connection with the prosecution which they are reasonably able to give. It is thus, seen that the Central Government is well within its power to prosecute such person for the offence in relation to the company or in relation to any other body corporate whose affairs have been investigated by virtue of Section 239. There is no hurdle for the Central Government to prosecute such person if it appears to the Central Government that such person is guilty for any offence for which he is criminally liable. It is the discretion of the Central Government to take legal advice as it thinks fit. As per mandate of Section 242 of the Companies Act, the application of mind on the said report and if necessary the legal opinion etc. was required to be completed, so as to ensure that within a period of six months the complaint is presented by authorized person on behalf of the Central Government before the competent court. The Central Government took around six months in taking decision dated 03.06.2008 to authorize SFIO to file the complaint. Firstly, since there was already a valid notification in favour of the officers to file a complaint on behalf of SFIO, there was no necessity to again authorize SFIO to file the complaint - Since the Central Government itself had taken about six months time to take a decision and then the SFIO took time to prepare the complaint to present it in the court, that cannot be a reason to exclude the period between 26.11.2007 to 03.06.2008. The SFIO who is only an authorized person can not claim exclusion of limitation, when it has no separate identity to file the complaint. It is therefore, in the considered opinion of this court that the period between 26.11.2007 to 03.06.2008 cannot be excluded for the purpose of counting limitation for filing of the complaint. Any other interpretation would result in adding words in the legislation, which is not permissible in the interpretative process of the provisions. A perusal of the application for condonation of delay does not explain any reason or steps taken by the Central Government between 26.11.2007 to 03.06.2008. The only reason for condonation of delay sought for is to exclude the period between 26.11.2007 to 03.06.2008, as without any sanction or consent the SFIO could not have filed the said complaint. Since this court has already held that no previous consent or sanction was necessitated in terms of Section 242 read with Section 621 of the Companies Act, therefore, the said period cannot be excluded, and even the period of limitation cannot be extended in the instant case. Application dismissed.

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• Insolvency & Bankruptcy

• 2023 (1) TMI 946
  Recovery of premises being used as Registered Office of the corporate debtor, by the landlord JOML during the subsistence of moratorium after the initiation of CIRP - monthly rent was agreed upon and is payable to the landlord JOML by the corporate debtor, before or during the imposition of moratorium. Whether said premises owned by JOML, situated at Village Tilmapur, Gazipur Road, Ashapur, Varanasi were being used by the corporate debtor prior to the initiation of CIRP of JVL Agro? - HELD THAT:- The said premises were definitely in possession of JVL Agro from 14.2.2018, if not earlier, and was definitely in the possession of the corporate debtor on 25.7.2018 when the CIRP of the corporate debtor was initiated. Whether the insertion of padlocks on the gates of the said premises was permitted in view of moratorium which was in force? - HELD THAT:- The recovery of any property by the owner was expressly prohibited under section 14(1)(d) of the IBC during the period when moratorium was in force. The insertion of padlocks by JOML at the said premises happened on 28.7.2020, which is as is stated in the complaint made by the RP to the Officer In-charge, Sarnath Thana, Varanasi and later to SSP, Varanasi and hence complaints are not disputed by JOML. Thus, this recovery which was done by the owner JOML of the said premises on 28.7.2018, is clearly after the initiation of CIRP on 25.7.2018 and therefore, during the period of enforcement of moratorium and thus, such a recovery is a clear infringement of section 14(1)(d) of the IBC - the said premises, therefore, should have lawfully been with the RP/ corporate debtor and continue in its lawful possession during the continuation of the CIRP of the corporate debtor. Whether any rent was payable to the owner of the said premises JOML by the corporate debtor during the period of subsistence of moratorium? - HELD THAT:- The arguments of the corporate debtor JVL Agro/RP is convincing that no rent was agreed upon to be paid for use of said premises when the said premises were offered to be used as registered office of the corporate debtor nor any rent was paid prior to the initiation of the CIRP of the corporate debtor. Section 14(2-A) of the IBC, also taken note of, which the landlord JOML has placed reliance upon regarding payment of rent during the moratorium period. A plain reading of this provision makes it clear that supply of certain goods and services has to be considered critical by IRP/IP to protect and preserve the value of the corporate debtor. Quite clearly in this case, the IRP/RP has neither recorded such a need nor requested the landlord JOML for continuing the supply of rental services to the corporate debtor. Thus, section 14(2-A) is not attracted in the present case. Moreover, it is already seen how the present case is covered under section 14(1)(d) of the IBC, whereby the recovery of the said premises in the possession of the corporate debtor, though owned by JOML, is expressly prohibited during the moratorium period - no rent is payable to the owner JOML of the said premises by the corporate debtor during the period of moratorium as claimed by JOML. The Adjudicating Authority has gone beyond its jurisdiction in ordering payment of rent by the corporate debtor during the period of moratorium - the Adjudicating Authority did not adjudicate on the prayer made by the RP for restoration of the possession of the said premises, which it should have done to settle the dispute early. In view of the fact that liquidation order with respect to the corporate debtor has already been passed by the Adjudicating Authority, no orders are now necessary in connection with IA 199/2020 in the present appeals. Appeal disposed off.

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• 2023 (1) TMI 945
  Seeking sanction of resolution plan, approved in the meeting of Committee of Creditors - Section 31 of the Insolvency and Bankruptcy Code, 2016 - failure to appreciate the mandatory provision of Section 29-A, Section 24(3)(c) Section 30(2) of the Code - considering ineligible party as Successful Resolution Applicant - HELD THAT:- It is noted that the Adjudicating Authority gave this order on 27.02.2020 and no appeal was preferred against this order, therefore, the order of Adjudicating Authority in CA No. 314 of 2019 has achieved finality and moreover, it is also noted that under Section 24(3)(c) the participation of a representative of the operational creditors does not confer any voting right on the representative of the operational creditors and therefore, nonparticipation of a representative cannot have bearing either in conduct of the CIRP or in the approval of the resolution plan. Thus, we are of the clear view that claim of the Appellant that in not following Section 24(3)(c) the CIRP was conducted with material irregularity is not found to be correct. It is necessary to look at Section 29-A(c) according to which at the time of submission of the resolution plan, the Resolution Applicant or any other person acting jointly or in concert with the Resolution Applicant who has an account which is classified as non-performing asset, and at least a period of one year has lapsed from the date of such classification as NPA till the date of commencement of the CIRP of the Corporate Debtor is ineligible to submit a resolution plan. There is no other document or record submitted by the Appellant or any other party in support of the claim that a connected party of SRA went into insolvency resolution. All that the press note states is that the company Drake and Scull International PJSC, UAE went into Financial Reorganization Process which was accepted by the relevant authority and a Financial Reorganization Committee (FRC) to conduct the financial reorganization process was formed - It is thus clear that even if the financial reorganization process that Drake and Scull International PJSC, UAE is undergoing is taken as an insolvency resolution process, such a financial reorganization process started more than one year after the commencement of CIRP in the present case and not before the commencement of CIRP as is required in Section 29-A(c) in order to make the SRA ineligible to submit a resolution plan. Notably, the resolution plan was submitted in July 2019 by the SRA when its connected party and holding company Drake and Scull International PJSC, UAE was not undergoing financial reorganization process. Thus, we are quite clear that any ineligibility under Section 29-A(c) is not attracted vis a vis the SRA. On the basis of pleadings and documents submitted by the parties that no ineligibility is attached to the SRA as per Section 29-A(c) and 29-A(h) r/w 29-A(i), merely the fact that the SRA is a related party of the CD as per Section 5(24) does not imply that the SRA is ineligible to submit a resolution plan in relation to the insolvency resolution of the CD. The ineligibility of any party to submit a resolution plan has to be seen strictly in the lens of Section 29-A of the IBC and we find that such ineligibility under Section 29-A does not attach to the SRA - it is clear that while the related party aspect between Drake and Scull International PJSC, UAE and the CD has been shown in the documents they do not claim or show any ineligibility of the SRA under Section 29-A to submit a resolution plan. The RP only formed an opinion regarding the eligibility of Passavant Energy and Environment GmbH, Germany to submit a resolution plan. Both the plans were presented in their 13th meeting of CoC where members of Axis Bank and RBL Bank were present and noticeably the CoC members present in the meeting did not raise any issue about the ineligibility of Passavant Energy and Environment GmbH, Germany to submit a resolution plan and two resolution plans submitted by Maa Pahari Mercantiles Pvt. Ltd. and Passavant and Environment GmbH, Germany were considered in detail in the 14th meeting of CoC held on 13.11.2019. The approval of the resolution plan with the shares of the financial creditor and operational creditor as contained therein cannot be faulted on account of any material irregularity - the approval of the resolution plan by the Adjudicating Authority vide order dated 03.12.2020 cannot be faulted. Appeal dismissed.

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• FEMA

• 2023 (1) TMI 944
  Levy of penalty - Petitioners having opened the FCRA account belatedly - Form FC-4 required a FCRA account as on 31st March of the end of financial year - scope of Foreign Contribution Regulation (Amendment) Act, 2020 - HELD THAT:- A perusal of the said form at serial no.7 requires FCRA account says that receipt of foreign contribution as on 31st March of the year ending has to be provided and the bank account has to be in the SBI, Sansad Marg branch. Since the Petitioner No.1 opened its account in August, 2021 and in any case, as on 31st March, 2020, the Foreign Contribution Regulation (Amendment) Act, 2020, had not come into effect, there appears to be some justification in the Petitioners case. Petitioner No.1 having opened its FCRA account in August, 2021 is, accordingly, permitted to fill up the said details of its FCRA account in serial no.7 of the Form FC 4 and submit the same. No coercive steps shall be taken against the Petitioners for having opened the FCRA account belatedly, inasmuch as it is the case of the Petitioners is that no foreign contribution has been received by them in the FY 2019-2020 and FY 2020-21. No penalty shall be imposed upon the Petitioners if the returns for FY 2019-2020 and FY 2020-21 are filed within a period of one month. No further orders are called for by filling in the details of the bank account opened in August 2021, in SBI, Sansad Marg branch.

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• 2023 (1) TMI 943
  Maintainability of writ petition before the Chennai High Court - Availability of alternative remedy - Validity of adjudication order passed by the Special Director of Enforcement in proceeding imposing penalty for the contravention of Section 64(2) of the Foreign Exchange Regulation Act - HELD THAT:- In the instant case, on going through the materials placed before us and after carefully considering the order passed by the Special Director of Enforcement, we find that we have to necessarily deal with a lot of documents and get into disputed questions of fact. To avoid such a scenario, the enactment itself provides for further remedies under Section 19 of FEMA before the Appellate Tribunal and thereafter, under Section 35 of the Act, by way of filing a further Appeal before the High Court against the order passed by the Appellate Tribunal. These remedies have been provided to enable an aggrieved person to contest the order passed by the adjudicating authority, both on facts and on law. These appellate remedies cannot be bypassed and the doors of the High Court cannot be knocked straight away under Article 226 of the Constitution of India. Where the High Court has entertained a Writ Petition and it is pending for a long time, the Writ Petition should not be thrown out on the ground of alternative remedy. However, it is not an absolute rule and there are appropriate cases where the parties will have to be directed to avail an efficacious alternative remedy of appeal. That course can be adopted at any stage and even at the stage of Writ Appeal. In the present case, there is no lack of jurisdiction for the Special Director of Enforcement to pass the impugned order, there is no violation of principles of natural justice and this Court does not find any special circumstances to disregard the alternative remedy and to decide the dispute in this Writ Petition. Apart from these reasons, we have already held that the case requires determination of disputed facts based on documents and it will be fit and proper if this exercise is done before the Appellate Tribunal. Entire cause of action has taken place at Mumbai and the order has also been passed by the Special Director of Enforcement at Mumbai. Just because the IOB has a Treasury(Foreign) Department at Chennai, that by itself will not become a part of the cause of action. This is yet another ground on which we are not inclined to entertain the present Writ Petition. We are not inclined to go into the merits of this case and deal with various factual issues that were raised on either side. The petitioners are permitted to file appeal against the order passed by the Special Director of Enforcement within a period of 45 days from the date of the receipt of copy of this order.

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• Service Tax

• 2023 (1) TMI 942
  Legislative disbarment of levy of tax on goods transport agency service - clearing and forwarding agency service - inclusion of the value thereof in support service of business and commerce - Amalgamation of two services - it was held that The two services are rendered independently even if the transactions of the appellant are with the same recipient and, therefore, is not clearing and forwarding agency service. The treatment of goods transport agency provided after 1st July 2012 continues to remain unchanged and the substitution of support service of business and commerce or of clearing and forwarding agent service with the omnibus service has not altered the delineation to offer any support to the finding in the two impugned orders. HELD THAT:- Issue notice, returnable in four weeks.

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• 2023 (1) TMI 941
  Exemption from service tax - works contract service - applicability of Clause-14 (a) of Mega Exemption Notification No.25/2012 dated 20.06.2012 issued by the Government of India - HELD THAT:- As per Clause-14.3 of the Circular under No.1053/02/2017-CX dated 10.03.2017, at least three opportunities of personal hearing should be granted by the authorities before the final adjudication of a matter. In the present case, only two opportunities were given o n 16.09.2022 and 29.09.2022. Even after communication of the order dated 21.09.2022 via email on 18.10.2022, the respondent No.3 did not provide the third opportunity to the petitioner in an illegal, arbitrary and high handed manner - the impugned order dated 16.11.2022 passed by the respondent No.3, apart from being illegal, arbitrary and without jurisdiction, is apparently perverse and fraught with patent illegality since it was conclusively decided by the respondent No.2 after consulting the relevant laws that the services rendered by the petitioner during the financial year 2016-17 are exempted from the purview of Service Tax, particularly in view of the Clause-14(a) of the Central Government s Mega Exemption Notification No.25/2012 dated 20.06.2012. Hence, the impugned order dated 16.11.2022 as well as the order dated 25.03.2022 are liable to be set aside and quashed. The respondent No.3 while passing the impugned order dated 16.11.2022 has acted without any jurisdiction in view of the admitted position of fact that whatever contractual job was executed by the petitioner during the financial year 2016-17 was under the N.F. Railways within the State of Assam and under the territorial jurisdiction of the respondent No.2 and there was nothing on record to even remotely suggest that any work was executed by the petitioner within the State of Tripura i.e. within the territorial jurisdiction of the respondent No.3. The impugned demand stands set aside since, a non-speaking order has been passed without dealing with regard to the exemption clauses and the notification issued thereunder - the respondents shall consider the explanation in the light of the exemption notification No.25/2012 and then pass a speaking order after giving an opportunity of personal hearing. It is further made clear that till a decision is taken, no adverse action shall be initiated against the petitioner. Petition allowed by way of remand.

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• 2023 (1) TMI 940
  Rejection of Application for condoning the delay in filing an appeal - sale of space or time for advertisement - HELD THAT:- The Petitioner stated that discussions deliberation were made in the Cabinet on the representations of the Railways for exemption from service tax liability and as result of the same, an amendment has been introduced in the Act of 1994 by incorporating section 99 in the Finance Bill-2013. This information was circulated to all the Zonal General Managers of the Indian Railway by the Ministry of Railway through Railway Board by Circular dated 5 March 2013. The Petitioner has stated that thereafter, the Respondents also did not pursue the demand raised by them under the show cause notice presuming that exemption is granted to the Railways for the period in question. When the Petitioner received the demand, the Petitioner informed to the Assistant Commissioner about the amendment and requested to waive the demand with retrospective effect as there was no dues in view of the amendment. The Petitioner has thus stated that the delay is not deliberate but in view of the fact that since the Railways bona fide believed that the liability of service tax for the period from 2006 to 2009 which is the subject matter of demand stood wiped off. Further, either allowing the application for condonation of delay or rejecting the same were not the only options available with the Tribunal. Equities could have been balanced by imposing suitable conditions, which option has not been considered by the Tribunal at all - the equities in the case can be balanced by granting application for condonation of delay, subject to the Petitioner depositing 25% of the principal amount. Petition allowed.

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• 2023 (1) TMI 939
  Sabka Vishwas (Legacy Dispute Resolution) Scheme - declaration of the petitioners rejected by not issuing Discharge Certificate by the Designated Committee under SVLDRS - rejection on the ground that the petitioners did not make payment within the stipulated time as per Rule 7 of the Rules - HELD THAT:- On perusal of the bank statement furnished by the petitioners, it clearly shows that amount of 1,51,15,378/- was debited from the account of the petitioners on 30.06.2020. Therefore, for all intent and purpose once bank account of the petitioners is debited, it amounts to making payment by the petitioners. Even the payment uploaded status provided by the ICICI bank of the petitioners shows that payment was uploaded by the bank on 30.06.2020 at 18:28 hours and 20:23 hours and file status also shows that the same was processed. Therefore, it cannot be said that the petitioners have failed to make payment of amount of Rs. 1,51,15,378/- as determined by the Designated Committee as per Rule 7 of the Rules. Therefore, the petitioners should have been granted benefit of the SVLDRS by the respondent authorities by issuing Discharge Certificate. The petitioners have filed Form SVLDRS-1 to avail the benefit of the scheme as per section 126 of the Finance (No.2) Act, 2019 with regard to the tax dues determined under section 123 to avail the relief as per section 124 of the Act. The Designated Committee after verification of the declaration under section 126(1) issued a statement under section 127 in Form SVLDRS-3 on 16.03.2020 determining the amount of tax payable by the petitioners of Rs. 1,51,15,378/-. Thus the petitioners were found eligible for the benefit of the scheme. Therefore, the petitioners were required to make the payment of Rs. 1,51,15,378/- within 30 days i.e on or before 16.04.2020 which was extended due to Covid-19 pandemic by the Government upto 30.06.2020. From the record, therefore, it emerges that the petitioners have paid the amount from its bank account on 30.06.2020. The petitioners are not at fault for amount not transferred in the account of the Government by the bank on the same day on 30.06.2020. The stand taken by the respondent authorities is therefore, not tenable as once the amount has been debited from the bank account of the petitioners on 30.06.2020, for all intent and purpose, it cannot be said that the petitioners have failed to deposit the amount as required under Rule 7 of the Rules. The respondent authorities ought to have issued the Discharge Certificate to the petitioners without raising any dispute - Petition allowed.

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• 2023 (1) TMI 938
  Levy of service tax - Business Support Service or not - Cirket Player - service tax levied under this head on the ground that Appellant wear the team clothing which bears the brands/ marks of various sponsors and they are also required to participate in promotional /public events of the franchisee thus they are providing Business Support Service - existence of employer employee relationship or not - HELD THAT:- Though in the impugned order the appellants were made liable to pay service tax under the business support service but as, no specific entry as mention in the definition of Business Support service has been shown to be applicable to levy service tax. It is not appearing from the finding of the impugned order as how the activity of appellant covered under the above category of services. The apparel that they had to wear was team clothing, which bears the brand/marks of various sponsors. The Appellants was not providing any service as an independent individual. It cannot be said that the appellants was rendering any services which could be classified as business support services. Appellants are not promoting any particular brand or product or service and also not taking part in any business activity of promoting the sale of any product or service of any entity. The entry for Business Support Service envisages taxing activities which are needed for doing business activities almost in the nature of outsourcing of activities connected with business. The definition of Business Support Service does not specifically cover the activity done by Appellant. Further, on perusal of the agreement title Indian Premiere League Playing Contract it clearly emerges that it is the appellant who is recognized as player first. Clause -2 of this agreement even makes it all the more clear that the franchisee is engaging players as professional cricketer who shall be employed by the franchisee. From this, it is abundantly clear that a person who has earned the reputation and recognition as a player is employed by the franchisee and it is not the other way round - the employer employee relationship cannot be disputed and therefore the decisions relied upon by the Learned Counsel are squarely applicable to the present case. Reliance can be placed in the case of CCE ST, CHENNAI VERSUS L. BALAJI, S. BADRINATH, DINESH KARTHICK, MURALI VIJAY, VIDYUT SIVARAMAKRISHNAN, ANIRUDA SRIKKANTH, SURESH KUMAR, YO MAHESH, HEMANG BADANI, ASHWIN R,C. GANAPATHY, ARUN KARTHIK KB, KAUSHIK GANDHI, PALANI AMARNATH C, ABHINAV MUKUND (VICE-VERSA) [ 2019 (5) TMI 377 - CESTAT CHENNAI] where it was held that A set of services alleged to be falling under BSS by the Revenue is also held to be covered under another set of services namely Brand Promotion Services. Admittedly, the brand promotion service was introduced w.e.f. 01.07.2010 and as observed as having been argued by the Ld. DR in paragraph-6 above of this order, cannot be made use to fit into another service ie., the categorization of the same set of activities under two different services for two different periods is not permissible. Having taxed under BSS, the Revenue should not have changed its stands for a different period when there is no change in the nature of services alleged. Reliance also placed in the case of C.E,C CGT-DELHI VERSUS PIYUSH CHAWLA [ 2018 (7) TMI 1009 - CESTAT NEW DELHI] where it was held that It is settled legal position that services provided by an employee, for the activities undertaken by the employer, for and under the instruction of the employer, cannot be termed as service provided by the employee. Reliance also placed in the case of SHRI KARN SHARMA VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., MEERUT-L [ 2018 (4) TMI 111 - CESTAT ALLAHABAD] where it was held that Hon ble Calcutta High Court in the case of Shri Sourav Ganguly Vs Union of India and Others [2016 (7) TMI 237 - CALCUTTA HIGH COURT] has dealt with an identical issue and held that It was not the intention of the legislature that any and every kind of activity which can loosely be termed as Business would attract service tax. It being a taxing provision, the same must be construed strictly and any benefit of doubt in the matter of interpretation of the provision must go in favor of the assessee. Thus, the Appellants are not liable to service tax under the Business Support Service - the demands of service tax are not sustainable against the appellants - appeal allowed.

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• 2023 (1) TMI 937
  Non-payment of service tax - advances received from clients in relation to the services to be provided - irregular availment of CENVAT credit of in respect of capital goods and utilization thereof - extended period of limitation. Whether the amount of Rs. 6,72,23,160/- received by the appellant from M/s. Indus Towers Ltd. should be treated as an advance, on which service tax is to be levied as contented by the department, or it should be treated as a security deposit which is not susceptible to levy of service tax, as contented by the appellant? - HELD THAT:- Paragraph 6.7 of the Agreement provides that the appellant shall, at its own cost, install, operate and maintain the Hybrid Solar Solution for a period of 10 years for which M/s Indus Tower Ltd. shall 5. Service Tax Appeal No. 52426 of 2019 decided on 22.10.2021 pay an advance in respect of each of the sites which amount shall be calculated as equivalent of two months estimated fee and such advance shall be liable for adjustment with the fees payable for the last two months of the term. The Agreement, therefore, specifically refers to the amount as an advance which would be adjusted with the fees payable for the last two months. There is nothing in the Agreement which may even remotely suggest that the said amount can be treated as a security deposit. This is what has also been held by the Commissioner. Whether the appellant had correctly availed the CENVAT credit on goods which according to the appellant are capital goods? - HELD THAT:- This issue has been decided in favour of the appellant by the Tribunal in PRINCIPAL COMMISSIONER, CGST DELHI SOUTH COMMISSIONERATE VERSUS M/S. AST TELECOM SOLAR (P) LTD. [ 2021 (11) TMI 244 - CESTAT NEW DELHI ] where it was held that an output service provider under Rule 3 of CCR is entitled to take cenvat credit on all such goods without any distinction as to inputs or capital goods for rendering taxable output service. In the present case, items like MS angles, GI sheets, Bolts, Shelter Cabins, Structures of iron steel, MS nuts, fabricated and galvanized structures, have gone into the making of solar system, through which the appellant rendered taxable output service. The appellant, therefore, has rightly availed CENVAT credit on MS angles, GI sheets, Bolts, Shelter Cabins, Structures of iron steel, MS nuts, fabricated and galvanized structures - the Tribunal in AST Telecom Solar entitled to avail CENVAT credit and the Commissioner was not justified in disallowing the credit. Invocation of the extended period of limitation in the show cause notice - HELD THAT:- The Commissioner has recorded a finding that though the Agreement referred to the amount as advance but still the appellant made an attempt to treat it as a security deposit, which clearly shows that there was suppression of facts with an intent to evade payment of tax - there is no error in the finding recorded by the Commissioner in this regard, as indeed the appellant did try to evade payment of service tax by treating the amount as a security deposit when in fact it was clearly an advance, which fact was very specifically mentioned in the Agreement. The intention to evade payment of service tax by suppression of material facts is writ large. The denial of CENVAT credit by the impugned order is set aside but the rest of the order of the Commissioner is maintained - Appeal allowed in part.

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• 2023 (1) TMI 936
  Levy of Service Tax - Business Auxiliary Service - providing service to M/s Vodaphone Essar Digilink Ltd. as their franchisee for sale/distribution and marketing of the SIM cards and recharge coupons - demand of service tax alongwith the penalties - Extended period of limitation. Whether extended period of limitation has been correctly invoked in the show cause when on an identical issue a show cause notice was earlier issued to the appellant by the Department? - HELD THAT:- As per Section 73 of the Finance Act, 1994 demand invoking the extended period of limitation can be issued where service tax was not paid by reason of (a) fraud or (b) collusion (c) wilful mis-statement (d) suppression of facts or (e) violation of act or rules with an intent to evade payment of duty. It is a well settled legal principle that suppression does not mean mere omission but a positive act of suppressing information with an intent to evade payment of service tax. It is undisputed that in this case, the Department was fully aware of the activities of the appellant and had issued a show cause notice on 26.04.2011. Therefore, the Department cannot allege that it was not aware of the activities of the appellant and that the appellant had suppressed any information - the entire demand in this case is beyond the normal period of limitation. According to the appellant it is trading in SIM cards and recharge coupons and, is not rendering any service to the principal. It is buying the SIM cards from it and selling them to others. Such arrangements are made by various telecom operators whereby they appoint distributors to buy and sell their SIM cards. The case of the Revenue is that since the Supreme Court has held in the case of IDEA MOBILE COMMUNICATION LTD. VERSUS CCE. C., COCHIN [ 2011 (8) TMI 3 - SUPREME COURT] , that SIM card is not goods and its value is includible to the value of the service provided by the telecom operator, buying and selling of SIM cards can be considered as rendering business auxiliary service to the principal - it is found that this Tribunal has consistently held that buying and selling of SIM cards and recharge coupons does not amount to providing business auxiliary service to the principal in several cases. In the case of M/S. DEVANGI COMMUNICATIONS, M/S. BOOPALAM ELECTRONICS, INDEPENDENT ASSOCIATES, M/S. SOMAYA MARKETING, M/S. VINAYAKA AGENCIES, M/S. MAGNUM VISION, M/S. BHOOPALAM MARKETING SERVICES PVT. LTD. VERSUS THE COMMISSIONER OF SERVICE TAX, THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-II AND CCE VERSUS SHRI V.M. NAYAK BENNE [ 2018 (8) TMI 960 - CESTAT BANGALORE] , CESTAT has continuously held that telecom operators discharging service tax on the whole MRP value of SIM cards and recharge cards there could be no further service tax liability on the persons who are dealing / selling the said SIM cards or recharge cards to the public. The impugned order cannot be sustained either on merits or on the limitation - Appeal allowed.

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• 2023 (1) TMI 935
  Short payment/nonpayment of service tax under RCM - Tour Operator Services - Event Management Service - Business Auxiliary Service - Business Support Services - extended period of limitation - revenue neutrality - Imposition of penalty under Section 78 and 78 A on the Director - HELD THAT:- The appellant is entitled to and have rightly taken cenvat credit on the invoices addressed to the Bangalore office, and the invoices in the name of the Director, due to business exigency. Further, admittedly the appellant have received services in question and the payments have been made for such services by the appellant/assessee only. Further, the service is qualified as input service. Accordingly, the cenvat credit of Rs.3,01,045/- is allowed. Disallowance alleging short payment of service tax - short payment is due to non-recognition by Revenue of the ST-3 Return for the period April to September, 2015, which was filed manually - HELD THAT:- The ground has been allowed by way of remand for re-quantification of the demand after allowing the abatement. So far the adjustment of tax is concerned, the order is modified to the extent that the appellant shall be entitled for cenvat credit as well as cash. The Adjudicating Authority shall verify the payments made through invoices by the appellant and allow the credit after verifying the same. Disallowance of Rs.12,27,087/- - amount relates to import of package software, which are goods, as defined and has been explained by the Revenue - HELD THAT:- Service tax of Rs.2,150/- in respect of receipt of package software from INVATOMARKET is not taxable being goods. Further, the services received from Cloudinary Ltd. and Amazon Web Services involving service tax of Rs.1,16,063/- and Rs.3,67,045/- are not liable to be taxed as the services have been provided in the nature of immovable property as the server has been located outside India. Accordingly, the demand of Rs.4,85,258/- being not taxable to service tax is set aside - So far the balance demand is concerned of Rs.12,27,087 4,85,769 = Rs.7,41,821/- is concerned, it is found that the appellant have maintained proper books of accounts and transactions were duly reflected in books of accounts and proper vouchers were maintained. Further, situation is wholly Revenue neutral as the appellant was entitled to cenvat credit on the same. Further, admittedly, the appellant have discharged their service tax liability on the taxable services provided by them. Accordingly, the balance demand is also set aside on the ground of Revenue neutrality. Time Limitation - HELD THAT:- The appellants have maintained proper records and earlier also, they were subjected to audit in the month of Feb. March, 2016. In this view of the matter, it is held that the demand upto the period October, 2015 is time barred and extended period of limitation is not available. Imposition of penalty under Section 78 and 78 A on the Director - HELD THAT:- The show cause notice has been issued by way of interpretation and/or change of opinion. The appellant company was set up in the year 2010-2011 and have been availing similar credits and filing ST-3 Returns accordingly from year to year, and in the past, never such dispute was raised by Revenue till the period 31.03.2014. Hence, the show cause notice has been issued by way of change of opinion or change of interpretation at the end of the Revenue - the benefit of extended period of limitation is not available to Revenue. The demand is confirmed only for the normal period. Accordingly, penalties under Section 78 and 78 A (on the Directors) are set aside. Penalty under Rule 15(3) of CCR is also set aside. Appeal disposed off.

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• 2023 (1) TMI 934
  Levy of service tax - business of extraction and selling of coal from open cast mines - declared service or not - amount received by the appellant towards penalty, earnest money deposit forfeiture and liquidated damages - whether this would amount to consideration for tolerating an act on the part of the buyers of coal/contractors, for which service tax would be levied under section 66 E(e) of the Finance Act? - period of dispute in the present appeal is from July 2012 to March 2016. HELD THAT:- Section 65B (44) defines service to mean any activity carried out by a person for another person for consideration, and includes a declared service. Under section 66E (e), a declared service shall constitute agreeing to the obligation to refrain from an act, or to tolerate an act or situation, or to do an act. Section 66 B provides that service tax shall be levied at the rate of 12 per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Section 66D contains a negative list of services, while section 66E contains a list of declared services. A service conceived in an agreement where one person, for a consideration, agrees to an obligation to refrain from an act, would be a declared service under section 66E(e) read with section 65B (44) and would be taxable under section 68 at the rate specified in section 66B. Likewise, there can be services conceived in agreements in relation to the other two activities referred to in section 66E(e). It would also be pertinent to refer to the Circular dated 03.08.2022 issued by the Department of Revenue regarding applicability of goods and service tax on liquidated damages, compensation and penalty arising out of breach of contract in the context of agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act - This Circular emphasizes that there has to be an express or implied agreement to do or abstain from doing something against payment of consideration for a taxable supply to exist and such an act or a situation cannot be imagined or presumed to exist merely because there is a flow of money from one party to another. Appeal allowed.

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• 2023 (1) TMI 933
  Levy of Service tax - deposit insurance service - whether the banks can avail credit of the service tax paid by the banks for the service provided by the Deposit Insurance Corporation? - HELD THAT:- A Division Bench of the Tribunal in M/S. INDIAN OVERSEAS BANK AND SHRI S. CHOCKALINGAM VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, CHENNAI [ 2022 (6) TMI 539 - CESTAT CHENNAI ] followed the decision rendered by the Larger Bench in M/S. SOUTH INDIAN BANK VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX-CALICUT [ 2020 (6) TMI 278 - CESTAT BANGALORE] and held that credit of the service tax paid on premium paid to DICGC is eligible. Appeal allowed.

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• 2023 (1) TMI 932
  Extended period of limitation - Classification of services - Clearing and Forwarding Agent services or not - working as a consignment agent of various oil manufacturers and had been receiving commission for such services - demand alongwith interest and penalties - HELD THAT:- The period of dispute is 2006-2007 to 2008-2009 and the show cause notice was issued on 12.04.2011. During the relevant period, the normal period of limitation was one year. The show cause notice was issued clearly beyond the period of one year and the proviso to section 73 (1) was involved - As may be seen, the demand could only be raised within a period of one year from the date unless the short payment of service tax was by reasons of (a) fraud or (b) collusion or (c) wilful mis-statement or (d) suppression of facts or (e) contravention of any of the provisions of Chapter V of the Finance Act or the rules made thereunder with intent to evade payment of service tax. The detection of any escapement of service tax during audit is not a ground on which extended period of limitation as per section 73. Neither does the fact that the audit was conducted prove that the appellant suppressed, let alone willfully suppressed taxable services. On this ground itself, the demand invoking the extended period of limitation needs to be set aside. As may be seen, if the assessee fails to furnish the returns or having made a return fails to assess the tax in accordance with the provisions of law, the Central Excise officer may require the assessee to produce such accounts, documents or other evidence as he may deem necessary and determine the same payable by the assessee or refundable to the assessee on the basis of such assessments. This is the responsibility of the Jurisdictional Superintendent of Central Excise with whom the return is filed. In this case, the entire basis on which the audit raised the objection was in the books of accounts and documents of the appellant - If the audit detected escapement of service tax, it does not establish, in the factual matrix of this case, that the assessee has indulged in fraud or collusion or wilful mis-statement or suppression of facts or violation of legal praising with an intent to evade payment of service tax. It only establishes that the officer tasked with the best judgment assessment has not done his job. This cannot be the ground on which extended period of limitation can be invoked. The entire demand is time barred - Appeal allowed.

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• Central Excise

• 2023 (1) TMI 931
  Recovery of CENVAT Credit - ineligible duty paying documents - recovery sought on the ground that the invoices does not mention credit registration number of the consignee, registration number of the carrier vehicle and delivery of the goods was made at a place other than the factory - time limitation - HELD THAT:- It is undisputed that the goods covered under the invoices were actually received at the Appellant s factory and those goods were used for manufacture of their final products. It is also undisputed that Excise Duty was paid on those goods which are subject matter of the invoices. In view of the documents submitted by the Appellants, it is found that there is no dispute that the goods have been received in the factory and accordingly the impugned order denying the CENVAT Credit in respect of the invoices is not correct. The substantive benefit cannot be denied on procedural grounds and accordingly the impugned orders cannot be sustained. The Appellants have vehemently fought on the issue of limitation. They pleaded that Show Cause Notice was issued on 01.08.2013 whereas the normal period expired much before that date. Further the Show Cause Notice was issued on the basis of audit of records maintained by the Appellant and therefore extended period cannot be invoked by alleging suppression since they are also submitting/filing the statutory returns on a regular basis. The Department was free to further investigate the matter and issue timely Show Cause Notice. The Appellants have a strong case on limitation and the Show Cause Notice is barred by limitation. Appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (1) TMI 930
  Jurisdiction for re-opening of the assessment under Rule 17 (8) of the CST (O) Rules, 1967 for the years 1986-87 and 1987-88 - transaction of dispatch of goods from Rourkela Steel Plant to different branches outside the State of Odisha according to the Demand Registration Scheme - time bound supply scheme as inter-State sales within the purview of Section 3 (a) of the Central Sales Tax Act (CST Act) - HELD THAT:- Considering that the law itself was amended thereafter with effect from 8th May 2010 by inserting Section 6 (A) (3) of the CST Act, it is obvious that during the time when the reassessment orders were passed in the present case, the AO did not have the power of re-assessment. Consequently, the above question is required to be answered in the negative i.e, in favour of the Assessee and against the Department. In that view of the matter, the impugned reassessment orders of the AO are hereby set aside and the original assessment orders which were interfered with by the Tribunal are restored to file. It must be added here that in the original assessment orders, the AO had accepted the case of the Assessee that the inter-branch transfers were in fact not inter-State sales. Revision petition disposed off.

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• 2023 (1) TMI 929
  Rejection of revisional application - rejection on the ground that the appellant did not appear before the revisional authority on more than two occasions - non-appearance of the appellant on several dates - HELD THAT:- As per the assessment order dated 27th June, 2013, the tax payable was Rs. 7,36,715.58 and the assessing order records that a sum of Rs.7,13,330/- has already been paid by the appellant / assessee and the balance due is Rs.23,385.58. Thus, considering the peculiar facts and circumstances of the case, we are inclined to grant one last opportunity to the appellant to go before the appellate authority and pursue its appeal. However, if the appellant does not appear on the date fixed, the appellate authority shall be entitled to dismiss the appeal for non-prosecution. The order passed in the writ petition is set aside and consequently the order passed by the revisional authority and the order passed by the appellate authority are set aside and the appeal stands restored to the file of the appellate authority, who shall issue notice to the appellant fixing a date for hearing.

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• Indian Laws

• 2023 (1) TMI 928
  Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - whether non-mentioning of date as to when money was given can be fatal to the case of complainant or not? - HELD THAT:- The proviso 269-SS only prescribes the mode of taking or accepting certain loans, deposits and specified sum. The said proviso would speak to the effect that no person shall take or accept from any other person (herein referred to as the depositor). Mode of taking any loan or deposit or any specified sum, otherwise than by an account-payee Cheque or account or accepting payees and draft or use of electronic clearing system through a bank account. The proviso was inserted in the Income Tax Act debarring person from taking or accepting from any other person any loan or deposit otherwise than by account payee cheque or account payee bank draft, if the amount of such loan or deposit or the aggregate amount of such loan or deposit is Rs.10,000/- or more. The amount of Rs.10,000/- was later revised as Rs.20,000/- with effect from 01.04.1989. The said proviso does not prohibit for giving or lending loan, it is only taking and acceptance is prohibited. The acceptance of loan by way of cash in excess of Rs.20,000/- may attract panel provision in terms of Section 271-D. Whether the provisions of Section 269-SS of the Income Tax Act 1961, disentitles the plaintiff from filing recovery suits was directly under consideration by the coordinate bench of this Court in the decision MOHAMMED IQBAL VERSUS MOHAMMED ZAHOOR [ 2007 (7) TMI 711 - KARNATAKA HIGH COURT] , wherein it has been held that The main object introducing the provisions of Section 269-SS of the Income Tax Act is to curb and unearth black money. But the Section does not declare the present transaction which is brought before the court illegal, wide and unenforceable. The accused has to establish the nexus between alleged taking loan of Rs.50,000/- and the issuance of signed Cheque as a security for the said transaction. Otherwise, accused cannot take the advantage of complainant admitting that he has received the Cheque as a security as referred above. The onus is on the accused to prove that he has issued signed blank Cheque as a security for the loan of Rs.50,000/-, which he claims to have repaid with interest amounting to Rs.2,50,000/- by way of DD dated 30.11.2009 drawn on Alahabad Bank - It is for the accused to offer reasonable explanation as to how the interest on Rs.50,000/- works out to Rs.2,00,000/- within a period of 3 years. In the absence of any reasonable explanation of paying such an exorbitant interest on the alleged loan of Rs.50,000/- totally amounting to Rs.2,50,000/-, it cannot be accepted that the accused has probalized his defence that he has issued the Cheque - Ex.P1 as security for the loan of Rs.50,000/-. The trial Court was swayed away by the eye-wash explanation offered by accused in the form of evidence of DW1 and Ex.D1 and has wrongly accepted rebuttal evidence to disprove the presumption available in favour of the complainant in terms of Sections 118 and 139 of N.I. Act. In the present case, the accused by way of rebuttal evidence has failed to probablize his defence to disprove the statutory presumption available in favour of the complainant in terms of Sections 118 and 139 of N.I. Act. The failure of the accused to place rebuttal evidence or the defence being found to be not legally sustainable in law, then it will have to be held that the complainant has proved the charge leveled against the accused for the offence under section 138 of N.I. Act. If the accused is sentenced to pay fine of Rs.2,00,000/- in default of payment of fine shall undergo imprisonment for three months is imposed would meet the ends of justice - Appeal allowed.

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