TMI Tax Updates - e-Newsletter
January 6, 2024

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. PENALTY FOR NON FILING OF MGT-6 FORM BY THE COMPANY

   By: DR.MARIAPPAN GOVINDARAJAN

2. CBDT redefines ‘intra-group loans’ and amends safeharbour norms for MNC group transactions

   By: Vivek Jalan

3. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

4. Refund Application is not deficient when conditions stated under Rule 89(2) of the CGST Rules are fulfilled

   By: Bimal jain

News

1. Shri Piyush Goyal unveils logo and booklet for Mega Mobility show, "Bharat Mobility Global Expo 2024”

Notifications

Customs

1. 01/2024 - dated 4-1-2024 - Cus (NT)

Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession Notification No. 93/2023-Customs(N.T.), dated 21st December, 2023

GST - States

2. 01/2024 - dated 4-1-2024 - Bihar SGST

Amendment in Notification No. 1/2017- State Tax (Rate), dated the 29th June, 2017

3. 38/1/2017-Fin(R&C)(01/2024-Rate)/3975 - dated 4-1-2024 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(1/2017- -(Rate) dated the 30th June, 2017

4. F.12 (1) FD/Tax/2024-69 - dated 4-1-2024 - Rajasthan SGST

Seeks to amend notification no. F.12(56)FD/Tax/2017-Pt-I-40 dated 29.06.2017 in order to bring a technical change whereby HSN code for Liquefied Petroleum Gas (LPG) is harmonised with the updated HSN code for LPG

Income Tax

5. 05/2024 - dated 4-1-2024 - IT

Corrigendum - Notification No. 89/2023 dated 13-10-2023

6. 04/2024 - dated 4-1-2024 - IT

Central Government notifies activity of investment in a financial product by the non-resident

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/1 - dated 5-1-2024

Framework for Short Selling

FEMA

2. 13 - dated 5-1-2024

Risk Management and Inter-Bank Dealings – Hedging of foreign exchange risk

Highlights / Catch Notes

GST

• GST Registration Cancellation Overturned Due to Defective Show Cause Notice Lacking Specificity.

  Case-Laws - HC : Cancellation of GST registration of petitioner - defective SCN - Non-specification of reason for proposing cancellation of the petitioner’s GST registration - It is settled law that the Show Cause Notice must clearly set out the reasons for proposing an adverse action. This is to enable the noticee to meet the said allegations. Clearly, the impugned SCN was incapable of eliciting any meaningful response in the absence of any specific allegation. - SCN quashed - HC
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• GST Registration Cancelled Retroactively Without Proper Notice; Effective Date Adjusted to Align with Return Filing.

  Case-Laws - HC : Cancellation of GST registration of petitioner with retrospective effect - the SCN did not indicate that the petitioner’s GST registration was proposed to be cancelled with retrospective effect. Thus, the petitioner had no effective opportunity to contest the retrospective cancellation of its GST registration - It is considered apposite to direct that the impugned order shall take effect from 31.12.2021, which is till the date the petitioner has filed its returns - HC
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• Release of Seized Goods: Court Modifies Conditions Due to Disputed Valuation Concerns and State's Objections.

  Case-Laws - HC : Release of the goods seized - Validity of conditions imposed by the Ld. Single Judge for relase of goods - The concern of the State that the valuation of the petitioner being defective and actual valuation being much higher cannot be ignored though the aspect of valuation is also a matter for adjudication. - Conditions of the release order modified. - HC
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• GST Registration Canceled Due to Residential Use; High Court Dismisses Writ Petition, Suggests Appellate Remedy.

  Case-Laws - HC : Cancellation of petitioner's GST registration - registered premises - Authorities found that it is a residential house and there is no business running - Petition may avail the statutory appellate remedy - writ petition dismissed - HC
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• GST Registration Canceled Due to Residential Premises; Business Activity Evidence Requires Different Legal Venue.

  Case-Laws - HC : Cancellation of petitioner's GST registration - registered premises - Authorities found that it is a residential house and there is no business running - If the petitioner’s case is contrary, that the business was being run at the registered address and if the petitioner has evidence to prove that, as submitted by the learned counsel for the petitioner, the appropriate forum to reappraise the evidence to determine finding of fact, is not in the writ petition under Article 226 of the Constitution of India. - HC
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Income Tax

• Income from Hotel Operations in India Not Royalty, Classed as Business Income Due to Permanent Establishment.

  Case-Laws - HC : Income taxable in India - PE in India - Assessee was not required to manage day-to-day operations of the Hotel. - The Assessee was also required to broadly oversee the implementation of its policies. - Hyatt India was required to implement the strategic policies as set out by the Assessee. - It is clear that the said fee is not a consideration for use of or the right to use any process or for information of commercial or scientific experience. - Thus the consideration received by the Assessee in terms of SOSA cannot be termed as Royalty under Article 12 of the DTAA. It is clearly in the nature of business income. - Assessee had a PE in India in the form of a fixed place through which it carried on its business. - HC
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• Loan Transaction Validity Under Income Tax Act Examined; Lender's Deregistration Complicates Documentation.

  Case-Laws - HC : Addition u/s 68 - genuineness of the loan transaction - The submission that the AO should have issued notices to the lender i.e., GWPL does not impress us. The reason being that if the appellant/assessee was unable to produce the requisite material since the lender i.e., GWPL had been struck off from the Register of Companies, it would have been equally futile if notices had been issued by the AO. - HC
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• Reconsideration Ordered for Penalty Case After Misclassification of Book Entries as Cash Transactions.

  Case-Laws - HC : Stay of demand / waiver of pre-deposit - Penalty u/s 271E - Allegation of cash transactions - whereas there were adjustments by way of book entries - When such being the case, initiation of proceedings against the petitioner appears to have been made under an wrong assumption that there was cash transaction. - Appellate authorities directed to consider the case afresh without insisting pre-deposit - HC
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• Assessment Valid Despite Unpaid Tax; Section 139(1) Return Counts for Section 153A Notice, Not Deemed Defective.

  Case-Laws - AT : Assessment completed u/s 144 - defective return - Return filed in response to the notice issued u/s 153A it has been stated that the return filed u/s 139(1) of the Act is to be treated as return filed in response to notice issued u/s 153A of the Act and when the original return is a valid return though the assessee has not made payment of tax as declared in the return, the return filed in response to section 153A of the Act cannot be treated as defective return. - AT
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• Land Registration Charges for Leased Property Classified as Revenue Expenditure, Not Capital.

  Case-Laws - AT : Nature of expenses - land registration charges - land taken over rent / lease - revenue or capital expenditure - The assessee cannot enjoy that property forever under a rent agreement/lease. The assessee may have to vacate that property before efflux of time depending on the business conditions of that particular place. Therefore, we are of the view that the lower authorities erred in treating the registration fees incurred by the assessee as capital expenditure. - AT
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• Assessment Order for Deceased Invalid; No Legal Heir Notified, Deemed Non-Existent and Quashed.

  Case-Laws - AT : Assessment in the name of the deceased assessee - liability of legal heir - After the death of the assessee, his legal heir was not brought on the record and no notice was issued in the name of the legal heir. Therefore, the assessment order framed in the name of the deceased assessee is non-est in law and hence is quashed. - AT
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• High Court Rules PCIT Misused Section 263 Powers in Revising Share Premium Case; AO's Inquiry Was Adequate.

  Case-Laws - HC : Revision u/s 263 - Issue of shares at premium - It is abundantly clear that an enquiry was, indeed, made by the AO with regard to the subject shares being issued at high premium. This was not a case of no enquiry. The PCIT, in our opinion, had committed an error in exercising the powers under Section 263 of the Act. - HC
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• Claiming Relief u/s 54F: Investment and Post-Dated Cheques Considered Despite Unutilized Capital Gain Account.

  Case-Laws - AT : LTCG - Deduction u/s 54F - Assessee has failed to deposit the unutilized amount in the Capital Gain Account out of the total investible/exempted amount - Assessee has invested the amount - Unclreated post dated cheques - Merely because the sale deed had not been executed or that construction is not complete, and it is not such a watertight condition to be fulfilled and does not disentitle the assessee to claim section 54F relief. - AT
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• Reassessment Initiated for Cash Deposits; Additions u/s 68 Deleted Due to Lack of Merits.

  Case-Laws - AT : Reopening of assessment u/s 147 - addition u/s 68 - information received from Investigation Wing, Kolkata that the assessee is a beneficiary of circuitous transaction of cash deposits through various layers and bank accounts - it is also well settled that the sufficiency or correctness of the material is not a thing to be considered at the stage of recording the reasons. - Re-assessment proceedings sustained - However, on merits the additions made u/s 68 stands deleted - AT
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Customs

• Court Balances Revenue Protection with Expedited Goods Clearance in Bill of Entry Dispute.

  Case-Laws - HC : Seeking unconditional release of goods - Provisional assessment of Bill of Entry - certificates of origin - By taking into consideration the revenue interest in ensuring that duty exemption is not availed of, except in genuine cases, and the petitioner's concern that the goods be cleared expeditiously, an appropriate balance should be struck. - HC
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• Refund of Excess Duty Due to Bill of Entry Reassessment and Amendment in Imported DAP Quantity.

  Case-Laws - AT : Refund of Excess duty paid - re-assessment of bill of entry - amendment in the quantity of DAP imported in the Bill of Entry - It can be seen that the clearance of goods can only be said to have happened on 21.06.2018 when the bills of entry was finally assessed. From that perspective the documents presented by the appellant namely the police report dated 15.06.2018 was indeed available prior to the clearance of the goods and was infact submitted prior to clearance of the goods i.e. on 19.06.2018. - the amendment to the bill of entry should have been allowed in terms of section 149. - AT
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• Provisional Release Ordered for Seized Garlic Imports; Origin Undetermined, Conditions Applied for Perishable Goods.

  Case-Laws - AT : Seeking provisional release of seized garlic imported - In the instant case, the goods have been cleared by the jurisdictional Customs Authorities after satisfying themselves about the conditions of import and the same were seized by DRI at a later date; the goods are of perishable nature and the exact origin of the goods is yet to be ascertained. - Goods directed to be released subject to conditions - AT
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• Rusted Pipe Import Dispute: Confiscation and Value Enhancement Deemed Unjustified Due to Bona Fide Intent.

  Case-Laws - AT : Valuation of imported goods - secondary quality rusted pipes - The request for mutilation of the goods would show bonafides of the appellant that they intended only to import scrap and not pipes which are to be reused. - Thus, the confiscation of goods as well as enhancement of value cannot be justified - AT
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• Wireless Access Points with MIMO and LTE Excluded from Customs Duty Exemption per Notification No. 57/2017-Cus.

  Case-Laws - AT : Benefit of exemption from duty of customs - Classification of Wireless Access Points - the word ‘and’ in the impugned entry means that those products which contain both MIMO technology and LTE standards are excluded from the benefit of exemption of duty given to the goods classifiable under Chapter 8517 in view of the said entry no. 13 of Notification No. 57/2017-Cus. - AT
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• Customs Notification Effective Date Dispute: Duty Increase Not Applicable from Notification Date.

  Case-Laws - AT : Effective date of N/N. 46/2015-Cus dated 17.09.2015 - whether effective from the date of notification i.e. 17.09.2015 or the date when it was offered for sale i.e. 21.09.2015? - the notification is effective from 21.09.2015 therefore, the appellant are not required to pay 5% increase in duty. - AT
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• Valuation of Imported Goods: No Justification for Increased Assessable Value Due to Royalty Charges.

  Case-Laws - AT : Valuation of imported goods - enhancement of transaction/assessable value - There is no technical know-how fees attributable towards post import related/associated acts and activities. Thereby no case arises for scaling up the assessable value with the inclusion of the royalty charges. In fact the preamble clause of the Confidentiality Agreement supra clearly brings to fore its purpose, completely unrelatable to any post import functioning. - AT
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Benami Property

• Assets Provisionally Attached for Benami Transactions Despite No Business Activity; Appeal Dismissed.

  Case-Laws - AT : Benami properly - Provisional Attachment Order - The appellant has failed to show any business activities of the appellant companies in the year 2013-14 and subsequently to get corporate shareholders on premium. The inducement of funds was itself through Benami Transactions, otherwise Corporate Share would not have been given on higher premium of a Company having no business activity. The money induced therein was used to purchase shares of BIL and other Companies. - Appeal dismissed - AT
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Indian Laws

• Judges must limit summoning government officials to respect separation of powers; frequent calls need just cause.

  Case-Laws - SC : Separation of powers - practice of frequently summoning government officials to court - Courts must refrain from summoning officials as the first resort. While the actions and decisions of public officials are subject to judicial review, summoning officials frequently without just cause is not permissible - The SOP is set out - SC
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IBC

• Supreme Court: Set-off Rights Need Formal Assertion During Corporate Insolvency, Not Automatic with RP Control.

  Case-Laws - SC : CIRP - Right to claim set-off in the Corporate Insolvency Resolution Process, when the RP proceeds to take custody and control of all the assets of the corporate debtor - The argument that insolvency set-off is automatic and self-executing rejected - SC
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• Application Dismissed: Insufficient Evidence of Debt and Default in Interest-Free Unsecured Loan Case.

  Case-Laws - AT : Dismissal of section 7 application - existence of debt and default - interest-free unsecured loans given by the shareholder to the company - the Adjudicating Authority has rightly concluded that it was not satisfied with the evidence produced before it by the financial creditor to prove that a debt had crystallized beyond doubt and that a default has occurred. - AT
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SEBI

• Supreme Court dismisses negligence claim against SEBI based on unverified third-party report regarding Adani group investigation.

  Case-Laws - SC : Adani group - The Hindenburg Report - The reliance placed by the petitioner on the OCCPR report to suggest that SEBI was lackadaisical in conducting the investigation is rejected. A report by a third-party organization without any attempt to verify the authenticity of its allegations cannot be regarded as conclusive proof. - SC
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Service Tax

• Service of Processing Third-Party Data Classified Under Business Support, Not OIDAR, Affects Tax Obligations.

  Case-Laws - AT : Classification of service - Activity of providing digitized, abstracted and indexed data out of raw data received from third parties - Online Database Access and Retrievable (OIDAR) Services - The services rendered by appellant are therefore broadly covered under the category of Business support services or telecommunication services using tools of information technology, and shall not be covered under the category of OIDAR services. - AT
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VAT

• Goods Sale for Power Project in Rajasthan Ruled as Intra-State, Subject to Rajasthan VAT, Not Inter-State Transaction.

  Case-Laws - HC : Inter state sale or intra state sale - In the present case, the goods claimed to be sold by the assessee to be part of inter-state sales were not sold to the RVUNL as goods, but utilized in erection of the thermal power project. Since the erection of thermal power project in the state of Rajasthan can only be termed as an intra-state transaction, the property in goods used in such erection, whether as goods or as some other form, would constitute an intra-state sale and accordingly be subject to RVAT. - HC
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Case Laws:

• GST

• 2024 (1) TMI 238
  Cancellation of GST registration - validity of SCN - SCN did not show any details of the alleged wrongful availment or utilization of input tax credit - principles of natural justice - HELD THAT:- The show cause notice ex facie is defected as the same does not contain any details quantum of wrongful availment of Input Tax Credit or any refund claimed on the said account or reasons. Further it is noted that the order of cancellation of registration dated 18.04.2022 makes a reference to a reply of the petitioner dated 27.04.2022 and then states that no reply to show cause notice has been submitted. Further, order dated 28.06.2023 rejecting the application for revocation of cancellation also states that no reply has been received within time. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. The show cause notice and the impugned orders are quashed being bereft of requisite details and reasons. The petition is allowed.

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• 2024 (1) TMI 237
  Cancellation of petitioner s GST registration with retrospective effect - impugned order does not indicate any reason for cancelling the petitioner s GST registration except mentioning that no reply has been received to the SCN - HELD THAT:- In the present case, the petitioner had indicated that she closed the business w.e.f 01.04.2020. Thus, not filing returns, thereafter, cannot be a ground to cancel the registration in respect of the period while petitioner was carrying on the business in compliance with the provisions of the law. The SCN proposing to cancel the petitioner s GST registration is flawed. The impugned order cancelling the petitioner s GST registration is also liable to be set aside as it is bereft of any reason. It neither specifies the reason for cancelling the GST registration nor gives any clue as to why it was cancelled with retrospective effect. It is considered apposite to allow the present petition and direct that the cancellation of the petitioner s GST registration shall take effect from 29.05.2020, being the date of the application filed by the petitioner seeking cancellation of the GST registration - petition allowed.

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• 2024 (1) TMI 236
  Violation of principles of natural justice - Rejection of refund of excess tax paid - HELD THAT:- The authority, while rejecting the application appears to have been convinced that the appellant is entitled to the benefit of the order passed by the Hon ble Supreme Court by which the period of limitation under the various statues stood extended. However, the claim was rejected on a new ground, which was not forming the part of the showcause notice dated 7th June, 2022 stating that the appellant has not shown the excess payment in either the monthly return i.e. GSTR-3B or annual return i.e. GSTR 9. This ground appears to have not been specifically mentioned in the show-cause notice dated 7th June, 2022 and therefore, the rejection of the application for claim for refund on the said ground is in total violation of the principles of natural justice - That apart, the appellant had also made a request for postponing the personal hearing by adjournment request dated 14th June, 2022, which has also not been considered. The application for refund made by the appellant has to be reconsidered in accordance with law after affording an opportunity of hearing to the appellant - the order of rejection of the refund application dated 25th July, 2022 is set aside and the matter stands remanded back to the authority for fresh consideration - Appeal allowed by way of remand.

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• 2024 (1) TMI 235
  Cancellation of petitioner s GST registration with retrospective effect from 01.01.2019 - it is the petitioner s case that it closed its business on 08.02.2021, accordingly, the GST registration was required to be maintained for the period with effect from 01.01.2019 to 08.02.2021 - HELD THAT:- It is settled law that an authority which is charged with performing a statutory duty has to independently satisfy itself of the reasons for taking such decisions. It is trite law that such authority cannot act on the dictation of another authority. In the present case, the impugned order does not indicate any reason for cancellation of the petitioner s GST registration with the retrospective date, that is, from 01.01.2019. More importantly, the SCN also did not mention that the petitioner s GST registration was proposed to be cancelled with retrospective effect from 01.01.2019. Thus, the petitioner was provided no opportunity to contest the cancellation of the GST registration with retrospective effect. Since, the petitioner had filed an application for cancellation of its GST registration, it was not averse to cancellation of its GST registration prospectively, and, therefore, had no reason to contest the SCN. There is also no material on record to indicate that the petitioner was non-existent as on 01.01.2019 or at any time prior to 08.02.2021. This Court considers it appropriate to direct that the impugned order cancelling the petitioner s GST registration be effective from 08.02.2021 - Petition disposed off.

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• 2024 (1) TMI 234
  Cancellation of GST registration of petitioner - defective SCN - Non-specification of reason for proposing cancellation of the petitioner s GST registration - HELD THAT:- A plain reading of the impugned SCN indicates that it is bereft of any specific reason for proposing cancellation of the petitioner s GST registration. It does not provide any particulars as to the alleged fraud committed by the petitioner. It also provides no clue as to the wilful misstatement made or the facts allegedly suppressed - It is settled law that the Show Cause Notice must clearly set out the reasons for proposing an adverse action. This is to enable the noticee to meet the said allegations. Clearly, the impugned SCN was incapable of eliciting any meaningful response in the absence of any specific allegation. There is merit in the petitioner s contention that the impugned SCN is liable to be set aside - Petition disposed off.

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• 2024 (1) TMI 233
  Validity of provisional attachment order - it is submitted that the petitioner may be permitted to operate the bank account in IDBI Bank only for the purpose of payment of GST alone and not for anything else - HELD THAT:- As far as the petitioner s bank account in IDBI Bank, Neelankarai Branch is concerned, the petitioner is permitted to operate the said bank account only for the purpose of payment of GST alone. Therefore, to that extent, the provisional attachment order is ordered to be lifted. As far as the petitioner s bank account in Kotak Mahindra Bank, Nasik Thatte Nagar Road Branch is concerned, subject to the petitioner furnishing of the bank guarantee to an extent of sum of Rs. 5.7 Crores, the attachment order is ordered to be lifted. With regard to operation of IDBI Bank account is concerned, the petitioner is directed to remit a sum of Rs. 50,00,000/- out of the balance in IDBI Bank Account with regard to pending GST dues against which the proceedings are pending within a period of two weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2024 (1) TMI 232
  Cancellation of GST registration of petitioner with retrospective effect - non-filing of return for a continuous period of six months - HELD THAT:- Absent anything more, this would not be sufficient ground to cancel the petitioner s registration even for the period during which the petitioner had filed its returns. Non-filing of returns for a period of six months or more cannot lead to the conclusion that the petitioner s GST registration is required to be cancelled even for the period while it was carrying on its business and duly filing its returns. In the present case, it is also important to note that the SCN did not indicate that the petitioner s GST registration was proposed to be cancelled with retrospective effect. Thus, the petitioner had no effective opportunity to contest the retrospective cancellation of its GST registration - The petitioner has stopped carrying on its business with effect from 19.10.2021 and, as noted above, had made a request for cancellation of its GST registration from that date. It is considered apposite to direct that the impugned order shall take effect from 31.12.2021, which is till the date the petitioner has filed its returns - ptition disposed off.

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• 2024 (1) TMI 231
  Release of the goods seized - Validity of conditions imposed by the Ld. Single Judge for relase of goods - Legality and validity of restatement and reappraisal of transaction value - HELD THAT:- The concern of the State that the valuation of the petitioner being defective and actual valuation being much higher cannot be ignored though the aspect of valuation is also a matter for adjudication. However, it would be appropriate to put the petitioner on terms by ensuring that the valuation of the goods as determined by the revenue is realizable if the validity of the proceedings under section 130 of the Act are upheld. Conditions of the release order modified. The appeals are disposed off in terms of the modifying the orders of the learned Single Judge dated 25.09.2023.

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• 2024 (1) TMI 230
  Maintainability of petition - appealable order - violation of principles of natural justice or not - HELD THAT:- It is found that even if the copy of the information received was not supplied but the contents thereof were disclosed in the show-cause notice, there would be no violation of the principles of natural justice as the material was disclosed to the petitioner. The petitioner had also submitted the reply to the show-cause notice on 07.07.2023. On consideration of the petitioner s reply, the impugned order was passed. The petitioner had no justifiable reason for not appearing for personal hearing on the date fixed. If a person does not avail the opportunity of personal hearing, he cannot later on complain about the same. On this aspect also, it is found that there is no violation of principles of natural justice. The petitioner has got the statutory alternative remedy of appeal. If so advised, the petitioner can seek such alternative remedy in accordance with law - petition dismissed.

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• 2024 (1) TMI 229
  Time limitation - rejection of appeal for reason of delay of five days - HELD THAT:- The difficulty insofar as its application to the petitioner s case is the date on which the proper officer, being the Assessing Officer, having passed the order which was challenged in appeal, on 27.04.2023. The notification which was brought out on 02.11.2023 only permits appeals to be filed from orders passed by the proper officer on or before 31.03.2023, in cases in which it was not instituted in time or within the time permitted for a delayed appeal, and in cases where such delayed appeals beyond the stipulation in 107(4) has been rejected. The petitioner would not squarely fall under the notification. There are no rationale for the date fixed of 31.03.2023, as a cut off date. It is noticed that the notification itself was brought out on 02.11.2023 and in such circumstances any order passed in at least three months before that date; the time provided for filing an appeal, ought to have been considered for such beneficial treatment. The petitioner also can be allowed to comply with the conditions in Notification No. 53 of 2023 upon which the order passed in appeal would stand set aside and a fresh consideration will be made by the first Appellate Authority. If the petitioner fails to fulfill the criteria as stated in the notification, then the impugned order will operate. Petition allowed.

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• 2024 (1) TMI 228
  Maintainability of petition - availability of alternative remedy - Cancellation of petitioner s GST registration - non-submission of reply to SCN - HELD THAT:- The question if the petitioner was carrying on his business at the registered address or not at the relevant point of time, is a question of fact. The finding recorded in the order of cancellation of GST registration and in the order rejecting the application for revocation, that the petitioner was not running business at the registered address is a finding of fact, which prima facie is based on some material in the form of the field inspection report. If the petitioner s case is contrary, that the business was being run at the registered address and if the petitioner has evidence to prove that, as submitted by the learned counsel for the petitioner, the appropriate forum to reappraise the evidence to determine finding of fact, is not in the writ petition under Article 226 of the Constitution of India. Undisputedly, the petitioner has got the statutory alternative remedy of appeal. If the petitioner so chooses or advised, the remedy of appeal may be availed as per the law. Petition dismissed.

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• 2024 (1) TMI 227
  Maintainability of petition - availability of alternative remedy - Cancellation of petitioner s GST registration - non-submission of reply to SCN - HELD THAT:- The question if the petitioner was carrying on his business at the registered address or not at the relevant point of time, is a question of fact. The finding recorded in the order of cancellation of GST registration and in the order rejecting the application for revocation, that the petitioner was not running business at the registered address is a finding of fact, which prima facie is based on some material in the form of the field inspection report. If the petitioner s case is contrary, that the business was being run at the registered address and if the petitioner has evidence to prove that, as submitted by the learned counsel for the petitioner, the appropriate forum to reappraise the evidence to determine finding of fact, is not in the writ petition under Article 226 of the Constitution of India. Undisputedly, the petitioner has got the statutory alternative remedy of appeal. If the petitioner so chooses or advised, the remedy of appeal may be availed as per the law. Petition dismissed.

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• 2024 (1) TMI 226
  Detention and confiscation order - arecanut - perishable goods - HELD THAT:- The impugned order passed by the learned Single Judge, who has exercised his discretion by directing release of perishable arecanut goods in favour of respondent, cannot be said to suffer from any illegality or infirmity warranting interference by this Court in the present appeal. Accordingly, there are no merit in the appeal and same is hereby disposed of without interfering with the impugned order passed by the learned Single Judge. Appeal disposed off.

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• Income Tax

• 2024 (1) TMI 225
  Disallowance of Notional Forex Loss - Validity of CBDT Circular No.3/2010 dated 23rd March, 2010 - HC held [ 2022 (9) TMI 659 - DELHI HIGH COURT] assessee had entered into derivative contracts in order to hedge its exchange risk in respect of export proceeds receivable by it in foreign exchange. Forward contracts entered into by the assessee were not by way of trading per se in foreign exchange derivatives. Consequently, CBDT Circular No.3/2010 dated 23rd March, 2010 has no application to the facts of the present case - HELD THAT:- Delay condoned. No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is, accordingly, dismissed.

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• 2024 (1) TMI 224
  Unrealized gains on revaluation of forward contracts as the bank accounts - depreciation in value of investment in HTM Securities - disallowances made u/s 36(1) (viia) - disallowance made u/s 14A - disallowances on account of AFS and HFT category of investments by relying upon the decisions which has not reached finality and even when the assessing authority rightly disallowed the depreciation on investment of Available for Sale (AFS) and held for trading (HFT) category investment and added to the taxable income - Condonation of delay in filing this petition - HELD THAT:- There is gross delay of more than 261 days in filing this special leave petition. SLP (C) [ 2023 (12) TMI 659 - SC ORDER] arising from the same common order has also been dismissed on the ground of delay. Following the same, this special leave petition also stands dismissed on the ground of delay keeping open the questions of law, if any, which arises in the matter.

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• 2024 (1) TMI 223
  Additions made u/s 40(a)(ia) - Assessee in default u/s 201(1) - assessee credited lease rent to one Kerala State Co-operative Hospital Complex and Centre for Advanced Medical Services Ltd and appellant did not deduct tax for the amounts under Chapter XVII-B of the Income Tax Act, 1961 - Whether the Tribunal erred in not deleting the additions made under Section 40(a)(ia), since the second proviso introduced by Finance Act, 2012 read with the first proviso of sub-Section (1) of Section 201 absolved the assessee from being treated as an assessee in default for reason of the payment of tax by the resident, who received the said amounts? - as decided by HC [ 2018 (3) TMI 1022 - KERALA HIGH COURT] admittedly, resident-receiver to whom the assessee paid or credited the lease rent has filed a return belatedly and not paid any tax due on the income declared. When there is no tax paid on the income declared; even if for reason of a loss return, there cannot be any claim raised by the assessee in default to absolve him from the consequences flowing from Sections 201(1) and 40(a)(ia). He will then be treated as an assessee in default and would be liable to pay the amount of TDS with interest as also subject to the expenses being disallowed - HELD THAT:- SLP dismissed.

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• 2024 (1) TMI 222
  Scope of of Sections 44BB(1) and 44BB(2) - computation of the presumptive taxable income of the assessee - whether the service tax collected by the assessees in the course of provision of services and facilities in connection with, or supply of plant and machinery on hire, in the prospecting for, or extraction or production of, mineral oils in India, was liable to be included in the amount paid or payable for the purpose of computation of the presumptive taxable income of the assessee? - as decided by HC [ 2022 (11) TMI 385 - UTTARAKHAND HIGH COURT] amount reimbursed to the assessee (service provider) by service recipient representing the service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in Clauses (a) and (b) of sub-section (2) of Section 44 BB. HELD THAT:- There is gross delay of 294 days and 303 days in filing SLPs As stated at the Bar that this Special Leave Petition could be disposed of in terms of the order of this Court passed in [ 2023 (11) TMI 90 - SC ORDER] Following the said order arising out of proceedings against the same Assessee, the special leave petitions are dismissed both on the ground of delay as well as on merits.

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• 2024 (1) TMI 221
  Income from other sources - interest free refundable security deposit for due completion of the project by the developer - argument of the Standing Counsel is that the said amount was received by the MD on behalf of the petitioner and retained by him though it was stated to be the sum held as security deposit against the construction of commercial complex and which work has not yet started - HELD THAT:- As discernable from the Development Agreement that the disputed amount of Rs. 50.00 lakhs is only an interest free security deposit lying in the hands of the petitioner. The Department, it appears, proposes to treat it as a revenue receipt on the main ground that the said amount was not shown by the petitioner in its accounts as a liability. However, the Department does not appear to challenge the genuinity of the Development Agreement. Considering all these aspects, we are of the view that it is not apposite on the part of the Department to treat the aforesaid amount of Rs. 50.00 lakhs as receipt for the AY 2019-20 to impose tax. Accordingly, this Writ Petition is allowed with a direction that the petitioner shall hereafter show the amount of Rs. 50.00 lakhs as interest free security deposit in its books of accounts till the same is refunded to the builder viz., M/s. Royal Mindz Infra Pvt. Ltd. and respondent Department is directed to drop the proceedings against the petitioner to collect tax in respect of the said amount.

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• 2024 (1) TMI 220
  Income taxable in India - PE in India - as per ITAT service charges received by the Appellant under the various SOSA Agreements were taxable as royalty - SOSA [Strategic Oversight Services Agreements] entered into in respect of the Hotel (the hotel located at Delhi - Hyatt Regency) as Assessee agreed to provide strategic planning services and Know-How to ensure that the Hotel is developed and operated as an efficient and a high quality international full-service hotel. AO held that the Assessee s activities constituted (i) business connection under Section 9(1)(i) of the Act; (ii) PE under Article 5 of the DTAA; (iii) royalties and FTS u/s 9(1)(vi)/(vii) of the Act; and, (iv) royalties under Article 12 of the DTAA. The AO did not accept that the Assessee did not have a PE in India - Tribunal held that the amounts received by the Assessee were royalties - whether the Assessee s income receipts from SOSA are liable to be taxed as royalties? HELD THAT:- In terms of Section 7 of Article III, it was agreed that the Assessee would identify, recruit and assist in appointing any non-local employees of the Hotel including General Manager, key personnel and Executive Committee Members for and on behalf of the Owner. However, it was also specified that the same would be in consultation with the Owner and it would have the right to approve such appointments. It is apparent from the plain reading of Article III and other provisions of SOSA that the Assessee had an overarching role in the management of the Hotel albeit at the policy level, with further right to oversee its implementation to ensure that the Hotel is operated as an upscale Hotel commensurate with the standards of the Hyatt chain of hotels Hyatt Operating Standards. It is also amply clear that the policies and procedures framed by the Assessee covered every aspect of the management of the Hotel. It is material to note that the Assessee was not required to manage day-to-day operations of the Hotel. It is apparent that the day-to-day affairs of the Hotel were required to be managed by Hyatt India (an Indian Company affiliated to the Assessee) in terms of the HOSA. But Hyatt India was required to implement the strategic policies as set out by the Assessee. The Assessee was also required to broadly oversee the implementation of its policies. The Assessee was called upon to provide the job description of various employees deputed during the Previous Year for rendering assistance for operation of the Hotel (as well as the hotel in Mumbai). In consideration of the host of services to be provided in terms of the SOSA, the Assessee would be entitled to fee (strategic fee as well as incentive fee) as set out in SOSA. It is clear that the said fee is not a consideration for use of or the right to use any process or for information of commercial or scientific experience. The fees payable is in consideration of providing the services as set out in SOSA and as highlighted above. We are unable to accept the Revenue s contention that the fee received by the Assessee in terms of SOSA could be termed as consideration for use or for right to use any design, model, process and also for information concerning commercial and scientific experience. Indisputably, in terms of the SOSA, the Assessee had agreed to provide access. However, such access is only incidental to the services agreed to be provided by the Assessee. The obligation to grant access to information, knowledge and software is solely to certain information, written knowledge, skill and experience in furtherance of the service provided by the Assessee under SOSA and for operating the Hotel. Merely because the extensive services rendered by the Assessee in terms of the SOSA also included access to written knowledge, processes, and commercial information in furtherance of the services, cannot lead to the conclusion that the fee received by the Assessee was in the nature of royalty as defined under Article 12 of the DTAA. Thus the consideration received by the Assessee in terms of SOSA cannot be termed as Royalty under Article 12 of the DTAA. It is clearly in the nature of business income. It is relevant to note that the Assessee had contended before the authorities that the amount received under SOSA was Fees for Technical Services (FTS). We are unable to accept the same. This is also inconsistent with the submissions advanced before this Court. The fee received is not fees for technical services but in consideration for wide range of services as discussed above. Since, the Assessee is in the business of providing such services for management of Hotels, the income is required to be classified as income from business. The first question is, thus, answered in the affirmative in favour of the Assessee and against the Revenue. Permanent establishment in India within the meaning of the DTAA - Whether the Assessee had sufficient control over the premises of the Hotel for the same to be construed at its disposal for carrying on its business.? - In terms of paragraph (1) of Article 5 of the DTAA, the term Permanent Establishment would mean a fixed place of business through which business of an enterprise is wholly or partly carried out. According to the Revenue, the Hotel premises constituted a fixed place through which the Assessee carried on its business in part. According to the AO, the Assessee had access to the chambers of the General Manager of the Hotel and the same could be construed as Assessee s fixed place of business. There is no cavil that the Hotel premises has all attributes of being a fixed place. The only issue is whether the Hotel was at the disposal of the Assessee through which it carried on its business. In Formula One World Championship Ltd. [ 2017 (4) TMI 1109 - SUPREME COURT ] decided it is sufficient that the enterprise exercises an effective degree of control over its business activity. The extent of control required for the fixed place of business to be construed as the PE depends on the business activity carried on by the taxpayer. It is recognized that whilst certain activities may require a lesser degree of control over the place of business and yet be construed at the disposal of the enterprise, certain other activities may require a higher degree of control. It is well accepted that an enterprise would be recognized as controlling the fixed place of business if it can use it at its discretion. There is no dispute that it is not necessary that an enterprise has a legal and exclusive control in respect of the fixed place of business for the same to be construed at its disposal. The plain test is to determine whether de facto the enterprise had sufficient control over the fixed place for the purpose of carrying on its business. It is relevant to note that SOSA was one amongst other agreements that were entered into contemporaneously. Whereas the SOSA was for providing overarching strategic services for management of the Hotel, the HOSA was for day to day management of the Hotel. The term of the SOSA was twenty years and it could be extended by a further period of ten years. Section 3 of Article III of SOSA expressly provided that the Assessee had no obligation and was not expected to assign any of its employees to India on a permanent basis. However, it did have the sole discretion to assign any one or more of its employees or employees of its affiliates to India on occasional basis. As noted above, the Assessee had the discretion to send its employees at its will without concurrence of either Hyatt India or the Owner. This clearly indicates that the Assessee exercised control over the premises of the Hotel for the purposes of its business. Thus, the condition that a fixed place (Hotel Premises) was at the disposal of the Assessee for carrying on its business, was duly satisfied. There is also little doubt that the Assessee had carried out its business activities through the Hotel premises. Admittedly, the Assessee also performed an oversight function in respect of the Hotel. This function was also carried out, at least partially if not entirely, at the Hotel premises. Assessee is correct in its submission that there is no provision in the SOSA, which entitled the Assessee to carry on any activity or business in respect of any other hotel from the premises of the Hotel. However, there is no specific bar that proscribed the Assessee s employees from making decisions or issuing policies in respect of management of other hotel while they were stationed or visiting the Hotel Premises in connection with rendering services under the SOSA. Since the Hotel premises were at the disposal of the Assessee in respect of its business activities, we find no infirmity with the Arbitral Tribunal s decision holding that an Assessee had a PE in India in the form of a fixed place through which it carried on its business. Given the nature of the Assessee s business, it is difficult to accept that the Assessee s senior employees deputed in India would completely be insulated from addressing the issues of other hotels under the management of the Hyatt Group, while they were at the Hotel. Question no.(ii) is answered in the affirmative. Whether the findings recorded by the Tribunal, in paragraphs 56, 57 and 59 are perverse and contrary to the terms of the Strategic Oversight Services Agreement (SOSA)? - Insofar as the Tribunal s finding that the Assessee has a fixed place of business in India as it has sufficient control over the operations of the Hotel, this Court finds no infirmity with the same. It is not necessary to examine whether the Assessee has a PE under Para 2 of Article 5 of the DTAA as the Tribunal has proceeded on the finding that the Assessee has a PE in terms of Article 5(1) of the DTAA. This is apparent from the Tribunal s conclusion in Paragraph 58 of the impugned order. Insofar as the Tribunal s finding that the payments made are in the nature of royalty under Article 12 of the DTAA is concerned, we are unable to concur with the conclusion of the Tribunal as set out in paragraph 60 of the impugned order. The question no.(iii) is answered accordingly. Is Article 7(1) of the DTAA at all applicable to the Appellant, having regard to the fact that it has incurred losses in the relevant financial years? - We note that the Tribunal had also given an opportunity to the Assessee to submit its working regarding apportionment of revenue, losses etc. on a financial year basis so that the profits attributable to the PE can be determined judicially. We confirm the said direction. Obviously, this is subject to the determination in respect of question no. (iv). We direct that this order be placed before the Acting Chief Justice for referring the said question to a Larger Bench in view of our reservations in regard to the earlier decision of this Court in Commissioner of Income Tax (International Taxation)-2 v. M/s Nokia Solutions and Networks [ 2022 (12) TMI 700 - DELHI HIGH COURT ]

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• 2024 (1) TMI 219
  Validity of reopening of assessment u/s 147 as time barred - window available to the respondents/revenue for issuance of fresh notices, under the new regime available only between 01.04.2021 and 30.06.2021 - HELD THAT:- Although opportunity was given to file a counter-affidavit, both on 23.05.2023 and thereafter, no counter-affidavit has been filed on behalf of the respondents/revenue. Respondents/revenue, has not brought on record anything that would demonstrate that the impugned issued under Section 148 of the Income Tax Act, 1961 was dispatched on the same date. As indicated what is on record is an email dated 16.07.2021, which is clearly suggestive of the fact that the aforementioned impugned notice was transmitted on the said date to the petitioner. Furthermore, a perusal of the impugned notice dated 30.06.2021 shows that it does not bear the time-stamp or the digital signature of the concerned Assessing Officer (AO). The obvious conclusion that one can arrive at is that the impugned notice was not dispatched on 30.06.2021. Given this position, revenue cannot but accept that the reassessment proceedings are time-barred. The AO could have issued a fresh notice, albeit under the new regime, only between 01.04.2021 and 30.06.2021. Clearly, the circumstances obtaining in the present case are that the impugned notice was issued after 30.06.2021, resulting in the proceedings being rendered time-barred.

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• 2024 (1) TMI 218
  Addition u/s 68 - AO doubted the genuineness of the loan transaction and hence added the amount to the income of the appellant/assessee - loan agreement is titled unsecured term loan agreement - HELD THAT:- According to us, the loan agreement entered into by the appellant/assessee with the lender i.e., GWPL, raises more questions than answers as to what was the reality. Strangely, this agreement did not impose any burden on the appellant assessee i.e., the borrower, with regard to interest. The loan, apparently, could be repaid after four years in three annual installments, albeit on mutually agreed terms. Since the lender was a private limited company, it was perhaps open to the appellant/assessee i.e., the borrower, to produce the erstwhile directors to establish the genuineness of the loan agreement. None of these steps were taken by the appellant/assessee. Appellant/assessee, on the other hand, tried to shift the onus onto the respondent/revenue. The submission that the AO should have issued notices to the lender i.e., GWPL does not impress us. The reason being that if the appellant/assessee was unable to produce the requisite material since the lender i.e., GWPL had been struck off from the Register of Companies, it would have been equally futile if notices had been issued by the AO. In any event, in our opinion, the initial onus was not discharged by the appellant/assessee. Besides this, the argument advanced that since there was remission of liability Section 41(1) of the Act would apply and not the provisions of Section 68 of the Act, as rightly held by the Tribunal, is an untenable submission. Since the genuineness of the loan transaction was doubted, no liability, in law, fructified requiring remission. Decided against assessee.

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• 2024 (1) TMI 217
  Addition on protective basis - ITAT sustained CIT(A) order who deleted the addition made by AO, albeit on protective basis, on the ground that a substantive addition was being made against the company in which the respondent/assessee was a director and a sole shareholder - The record shows that comapany Everbez was being proceeded under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 HELD THAT:- Appellant states that the best way forward would be to close the instant appeal, with liberty to the appellant/revenue to approach the Court, in case the appellant/revenue were to fail in the proceedings taken out against the respondent/assessee, concerning Everbez under the 2015 Act. We tend to agree with this above. Accordingly, the appeal is closed with liberty as prayed for. The registry will dispatch a copy of the order to the respondent/assessee via all modes, including email.

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• 2024 (1) TMI 216
  Recourse to an appropriate remedy as Claim lodged with the Resolution Professional (RP) rejected - HELD THAT:- The fact remains that respondent no. 2 is undergoing the Corporate Insolvency Resolution Process before the National Company Law Tribunal, Delhi Bench [ NCLT ]. We were also informed on the previous date i.e., 11.09.2023, respondent no. 2, that the petitioner/revenue did not respond to the public announcement made by the Interim Resolution Professional (IRP). At present, what cannot be denied is the fact that the moratorium u/s 14 of the Insolvency and Bankruptcy Code, 2016, is operative. Therefore, according to us, no purpose will be served in progressing the writ petition any further. Writ petition is accordingly closed, with liberty to the petitioner/revenue to approach the court, if deemed appropriate, albeit as per the law, for reviving the petition, depending on the outcome of the proceedings pending before the NCLT.

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• 2024 (1) TMI 215
  Stay of demand / waiver of pre-deposit - Penalty u/s 271E - Allegation of cash transactions - whereas there were adjustments by way of book entries - appeal has been filed by the petitioner along with an application for stay, however, the respondent/Appellate Authority directed the petitioner to pay 20% of the demand - HELD THAT:- With regard to the grant of loan by the petitioner to M/s. Shakti Sugar Ltd. and repayment of the same made by M/s. Shakti Sugar Ltd. to the aforesaid three entitiled based on the instructions of the petitioner and as regards the discharge of liabilities, suitable enteries have been made both in the books of account of the petitioner as well as M/s. Shakti Sugar Ltd. and in a similar way, the same was reflected in the audited books of account. When such being the case, initiation of proceedings against the petitioner appears to have been made under an wrong assumption that there was cash transaction. However, all these aspects have not been dealt with by the Assessing Officer and the same can be gone into by the Appeallate Authority in an Appeal pending before him. Therefore, this Court, prima facie is of the view that the entire penalty proceedings passed under Section 271-E of the Act is liable to be set aside. Accordingly, this Court directs the Appeallate Authority concerned to to take the petitioner s Appeal on file without insisting upon any pre-deposit and consider the issues that were discussed by this Court in this order and thereafter, shall dispose the appeal in accordance with law, within a period of eight (8) weeks from the date of receipt of a copy of this order.

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• 2024 (1) TMI 214
  Deduction u/s 10A - Allocation of general corporate expenses between the STPI and non STPI units - assessee has maintained separate books of accounts - On the query from the bench on the consistency of methodology adopted by the assessee, the AR submitted that the assessee has been following this system of allocation in the earlier year and subsequent years - AR submitted that the allocation was made to STPI units on the basis of STPI turnover to total turnover and in case of Non STPI units, the basis adopted being domestic turnover to total turnover and the Ld.AR demonstrated the chart on the allocation of expenses - HELD THAT:- Considering the facts, circumstances and evidences filed on consistency adopted by the assessee, the action of the assessing officer is not tenable. Further the revenue could not explain the basis of reallocation of expenses. Whereas the assessee has complied with the accounting principles and policies and has been scientifically allocating the expenses between STPI Non STPI Units based on the Audited books of Accounts maintained separately. The revenue has accepted the methodology of allocation of expenses adapted by the assessee in the assessment u/sec 143 (3) of the Act for A.Y. 2008-09 to 2012-13. Therefore, the order of the CIT(A) is set aside and direct the assessing officer to accept the methodology adopted by the assessee in allocating the expenses. Decided in favour of assessee.

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• 2024 (1) TMI 213
  Assessment completed u/s 144 - treating the return of income filed in response to the notice issued u/s 153A of the Act as a defective return - HELD THAT:- We have no hesitation in following the order of the Tribunal in case of M/s. Shobha City [ 2021 (4) TMI 1154 - ITAT BANGALORE] and to hold that return filed by the assessee for these assessment years cannot be considered as defective return by invoking the clause (aa) to explanation to sub-section (9) of section 139 of the Act since the assessee has not paid the complete tax before filing the return of income in response to notice issued u/s 143 of the Act. Without prejudice to the above findings, we are of the opinion that once original return is processed u/s 143(1) of the Act, and thereafter assessee in response to notice u/s 153A of the Act to file the return of income, it has been stated that the return filed u/s 139(1) of the Act is to be treated as return filed in response to notice issued u/s 153A of the Act and when the original return is a valid return though the assessee has not made payment of tax as declared in the return, the return filed in response to section 153A of the Act cannot be treated as defective return. We are of the opinion that the returns cannot be treated as a defective return by invoking the deleted clause (aa) to explanation to sub-section (9) of section 139 of the Act. This ground of the assessee is allowed. Levy of interest u/s 234A of the Act from the date of filing return of income till the date of passing assessment order and computing the interest u/s 234B - HELD THAT:- We have heard both the parties and perused the materials available on record. These grounds are not emanated from the order of the ld. CIT(A). As seen from the impugned orders of the CIT(A) in these two cases in these three assessment years i.e. 2010- 11, 2012-13 2015-16, there was no ground on this issue by assessees before CIT(A). Hence, we are refrained to adjudicate these grounds as it is not emanated from the impugned orders of ld. CIT(A). These grounds of appeal in both assesses cases are dismissed. Disallowance u/s 36(1)(iii) - Whether assessee is having sufficient own funds? - HELD THAT:- This issue came for consideration before this Bench in [ 2023 (9) TMI 1420 - ITAT BANGALORE] assessment year 2013-14 assessee is not able to explain the sources to make interest free advance to the parties. Hence, it should be considered that assessee has used the borrowed funds to advance these parties on which assessee claimed interest in its profit loss account in the assessment yaer under consideration which cannot be allowed u/s 36(1)(iii) of the Act, since the loan has been borrowed for the purpose of business and not satisfy the conditions laid down in section 36(1)(iii) of the Act. Accordingly, the disallowance made by the lower authorities is justified. Disallowance of loss - Addition being the business loss incurred by the assessee holding that the same was merely a paper loss - contention of the assessee is that he has been in Real Estate business and involved in buying and selling of properties and he was the confirming party to sale deed between SIDPL MDPL - existence of contractual obligation - HELD THAT:- AO agreed in his order that this is a genuine contractual obligation imposed on the assessee and as such loss suffered in this transaction cannot be considered as a fictitious or paper loss in the hands of assessee. Once the ld. AO observed that this was the genuine contractual obligation imposed on assessee and there was no doubt with regard to registration value of the property with the sub-registrar, the ld. AO thereafter cannot hold that the loss of Rs. 8.62 crores is only the paper transaction or bogus. The ld. AO must not look at the matter from his point of view but that of a prudent business man. This is the contractual obligation imposed on the assessee and he has to discharge the same in the interest of his business. No business man can be compelled to maximize his profit. The revenue authorities must put themselves in the shoes of the assessee and see how a prudent business man would act. The assessee, being a prudent business man to keep up his promise, he incurred this liability. As he is able to find out a new party i.e. MDPL the sale was at the value fixed by State Government for the purpose of payment of stamp duty in respect of that impugned property and in that course of action, the loss suffered by the assessee to be allowed as a genuine business loss and accordingly, we direct the ld. AO to allow this loss while computing the income of the assessee. This ground of assessee is allowed. Addition u/s 28(iv) - Search u/s 132 in the case of M/s Reddy Veeranna Construction (P) Ltd (RVCPL), wherein the assessee was a Managing Director wherein physical cash balance was found less as compared to books of account reflecting cash - RVCPL claimed that it had placed the differential amount at the disposal of its MD (the assessee) for the purpose of identifying land for a project and it had accordingly reduced an amount from outstanding amount due towards him - AO concluded that the said amount as given by the RVCPL to the assessee was for the benefit to its MD - HELD THAT:- Physical cash shortage found in the hands of the custodian of that cash belong to a company cannot be treated as income of that person who kept the cash i.e. the present assessee and also it cannot be considered as income from other sources in his hands as the assessee has an obligation to make good this loss to the company whose cash assessee is holding as a trustee and it cannot be brought to tax in the hands of assessee as an income. This ground of appeal of the assessee is allowed.

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• 2024 (1) TMI 212
  Nature of expenses - land registration charges - revenue or capital expenditure - HELD THAT:- It is our considered opinion that the registration charges incurred by the assessee while executing the agreements for taking business premises on rent are revenue expenditure. Because, lease is not a permanent transfer of immovable property. It is for a specific period only and terminable as per terms and conditions of the agreement even before the expiry of the period of the lease by both the parties. Secondly, the assessee has incurred that registration expenses in connection of his business. Assessee needed premises in order to carrying on the business in various places and accordingly, the assessee taken property on rent. The period of the agreement perhaps is more than one year and attracted the compulsory registration of the agreement. The assessee cannot enjoy that property forever under a rent agreement/lease. The assessee may have to vacate that property before efflux of time depending on the business conditions of that particular place. Therefore, we are of the view that the lower authorities erred in treating the registration fees incurred by the assessee as capital expenditure. Accordingly, we decide this issue in favour of the assessee. Payment of service tax - CIT(A) has directed the Ld. AO to verify the claim and allow if found proper. Therefore, the Ld. AO shall comply the direction given by the Ld. CIT(A). Disallowance u/s 14A - AO during the assessment proceeding, CIT(A) confirmed this addition by observing that no submission was made by the assessee to substantiate his claim - HELD THAT:- We observe that the assessee failed to participate in the 1st appellate proceedings before the Ld. CIT(A) and therefore, the Ld. CIT(A) disposed of the appeal ex-parte. Secondly, the Ld. AR sought remand of the matter and the Ld. DR also has no objection for remanding of the issue. Accordingly, we set aside the order of the Ld. CIT(A) to the extent of the issue of disallowance u/s 14A of the Act and remand this issue to the Ld. CIT(A) for fresh consideration. It is needless to add here that the Ld. CIT(A) shall provide a reasonable opportunity to the assessee to substantiate his claim on the issue and thereafter dispose of the matter. We, at the same time direct the assessee to substantiate his claim before the Ld. CIT(A) accordingly.

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• 2024 (1) TMI 211
  Assessment in the name of the deceased assessee - liability of legal heir - HELD THAT:- Undoubtedly as per section 159 of the Act, where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. However, undisputedly in the present case, after the death of the assessee, his legal heir was not brought on the record and no notice was issued in the name of the legal heir. Therefore, the assessment order framed in the name of the deceased assessee is non-est in law and hence is quashed. Appeal by the assessee is allowed

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• 2024 (1) TMI 210
  Stay on recovery of outstanding demand - DRP directions issued to the assessee does not contain a Documents Identification Number (DIN) - reopening of assessment u/s 147 challenged as in course of proceedings before the Dispute Resolution Penal, though, assessee has furnished various evidences, however, neither the DRP nor the assessing officer properly examined them. Further, as submitted, the DRP directions issued to the assessee does not contain a Documents Identification Number (DIN) - HELD THAT:- We find that at the draft assessment stage, assessee did not appear resulting in completion of assessment to the best of judgment. Of course, in course of proceedings before the DRP, the assessee did furnish additional evidences. However, it is the allegation of the assessing officer that during the remand proceedings, assessee did not comply to various queries raised by him. Considering the prima facie case, balance of convenience and various other factors including the fact that the assessee is a non-resident having no assets in India, to secure the interest of the revenue, we direct the assessee to furnish a bank guarantee covering 20% of the outstanding demand. The bank guarantee shall be furnished by the assessee before the assessing officer on or before 31st October 2023. Subject to furnishing of bank guarantee, recovery of the outstanding demand shall remain stayed for a period of 180 days from the date of this order or till the disposal of the corresponding appeal, whichever is earlier. We make it clear that bank guarantee shall remain in force till disposal of the corresponding appeal. Considering the request of the learned counsel appearing for the assessee for fixing early date of hearing in the appeal, which was not opposed by the learned Departmental Representative, we direct the Registry to fix the appeal for hearing on 12.10.2023, on an out of turn basis. Paper books, if any, must be filed by the parties sufficiently ahead of the date of hearing of the appeal. Since, the date of hearing of appeal was announced in open court in presence of both the parties, separate notice of hearing need not be issued to the parties. It is made clear, in case of any adjournment being sought by the assessee without compelling reasons, there is likelihood of vacation of this order.

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• 2024 (1) TMI 209
  Penalty proceedings u/s. 271(1)(c) - addition made by applying GP rate of alleged bogus purchases - As argued AO has not specified the charge under which limb penalty is to be levied in the notice u/s. 274 r.w.s. 271(1)(c) - HELD THAT:- We find that before the ld. AO not only during the course of assessment proceedings but also during the penalty proceedings assessee had submitted the explanation that all the purchases were from the books and payments have been made through account payee cheques and ultimately addition has been sustained on purely adhoc estimate of gross profit rate. From the perusal of the records, it is seen that the assessee has submitted the quantitative details of purchases alongwith stock register entry and corresponding export sales which was also verified from the customer appraisal report. Once, the source of payment of purchases have been made through books of accounts and through account payee cheques and there is corresponding sales, then merely because some adhoc GP rate has been applied on such alleged bogus purchases to factor in suppression of alleged gross profit, no penalty can be levied for furnishing of inaccurate particulars of income or concealing particulars of income, which ld. AO has held in his penalty order that penalty is being levied under both the limbs, which itself shows his satisfaction is vague. Accordingly, penalty levied on such adhoc estimate cannot be sustained in the present case and hence same is deleted. Appeal of the assessee is allowed.

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• 2024 (1) TMI 208
  Revision u/s 263 - Issue of shares at premium - assessee had issued 28,729 shares to two closely held companies - PCIT s view that valuation, as required u/s 56(2) (viib) had not been carried out - whether the AO had carried out an enquiry with regard to the shares issued at a premium to Experience and Sankalp - Tribunal concluded that the PCIT s view that the AO had not made an enquiry about the shares issued to Experience and Sankalp at high premium, was flawed. HELD THAT:- According to us, the Tribunal has returned findings of fact with regard to the enquiry made. As is evident from the impugned order, notices were issued to assessee and explanations were sought with regard to the issuance of shares at high premium. Inter alia, the explanation given by assessee was that the high premium was paid by Experience and Sankalp, having regard to the underlying asset that the assessee had, which was the immovable property located at Prithviraj Road. According to the respondent/assessee (as computed by the registered valuer), the worth of the said property was pegged at Rs. 17.5 Crores. In our view, having regard to the findings of fact returned by the Tribunal, it is abundantly clear that an enquiry was, indeed, made by the AO with regard to the subject shares being issued at high premium. This was not a case of no enquiry. The PCIT, in our opinion, had committed an error in exercising the powers under Section 263 of the Act. No substantial question of law arises for consideration. Decided in favour of assessee.

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• 2024 (1) TMI 207
  Rectification u/s 154 - period of limitation - Deduction available u/s 10(10AA) - HELD THAT:- The fact that the assessee did not make any claim in his return of income is undisputed. It is true that after the judgment of the Tribunal in the case of Ram Kanwar Rana [ 2016 (6) TMI 687 - ITAT DELHI] the assessee became aware of the eligibility of the deduction available u/s 10(10AA) of the Act but that was on 16.06.2016 and the rectification application has been moved on 28.07.2020. Considering from all possible angles the application of the assessee is barred by limitation u/s 154 of the Act. Most importantly on the date of the processing of the return, there was no mistake apparent from record which could be rectified u/s 154 of the Act. The decisions relied upon by the Counsel are on a different set of facts mostly on the eligibility of the claim of deduction u/s 10(10AA) but the case of the assessee is the claim u/s 154 of the Act which according to our considered opinion is barred by limitation. We decline to interfere with the finding of the CIT(A). Appeal of the assessee is dismissed.

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• 2024 (1) TMI 206
  LTCG - Deduction u/s 54F - Assessee has failed to deposit the unutilized amount in the Capital Gain Account out of the total investible/exempted amount - agreement produce in the paper book no details or post dated cheque has been furnished - As the assessee has not paid full amount the ld. AO called for proof of deposit of unutilized amount in capital gain account - AO contended that proof of payment toward investment in house property before the date of filing the return of income is not conclusive. The assessee also did not deposit the money in the capital gain account scheme. HELD THAT:- Merely the cheque details not mentioned in the agreement or in the certificate of the builder will not change the ultimate purpose of making the investment by the assessee and the assessee has placed on record the relevant evidence that the payment has been made and there is a requirement to make the payment in installments. The bench noted that the intention of the Legislature was to encourage investments in the acquisition of a residential house and completion of construction or occupation is not the requirement of law. The words used in the section are purchased or constructed . Here in this case, there is no doubt that the assessee has fulfilled the condition precedent for claiming benefit under section 54F is that the capital gain should be parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. Merely because the sale deed had not been executed or that construction is not complete, and it is not such a watertight condition to be fulfilled and does not disentitle the assessee to claim section 54F relief. To reach this conclusion the bench has considered the circular no. 471 dated 15.10.1986 and circular no. 672 dated 06.10.1993. The bench also considered the various judicial precedents cited by the assessee in the written submission. So, conspectus of the facts suggest that the assessee is entitled for deduction u/s. 54F of the Act as claimed, merely the postdated cheque was not cleared or the details thereof for an amount not mentioned in the agreement will not disentitle the assessee to claim the investment amount. Not only that, the bench noted that the assessee has paid 28,00,000/- and the balance amount was sufficiently available to be invested by the assessee therefore the reasons to denied the benefit was not in accordance with the provision and intention of the law. Based on these observations the ground no. 1 to 3 raised by the assessee is allowed.

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• 2024 (1) TMI 205
  Reopening of assessment u/s 147 - addition u/s 68 - information received from Investigation Wing, Kolkata that the assessee is a beneficiary of circuitous transaction of cash deposits through various layers and bank accounts and has received unaccounted money after layering of funds through bank channels of various non-existing and shell companies - HELD THAT:- It is undisputed that the original return of income filed by the assessee was merely processed under section 143(1) of the Act and there was no scrutiny assessment of the return filed by the assessee and its books of accounts. Further, the only data available with the AO was the data provided along with the income tax return. Therefore, we are of the considered view that the information received subsequently from the Investigation Wing, Kolkata constitutes new and tangible material for initiating the reassessment proceedings in the case of the assessee, and on the basis of the aforesaid information, the AO initiated proceedings under section 147 of the Act and issued a notice under section 148 Therefore, if there is relevant material on the basis of which a reasonable person can form a requisite belief that income chargeable to tax has escaped assessment, then proceedings under section 147 of the Act can be validly initiated. In the present case, as noted above, on the basis of information received from the Investigation Wing, reassessment proceedings in the case of the assessee were initiated. Further, it is also well settled that the sufficiency or correctness of the material is not a thing to be considered at the stage of recording the reasons. As a result, we find no infirmity in the reassessment proceedings initiated by the AO under section 147 of the Act, and the same are upheld. Addition u/s 68 - Unaccounted money through various layers and bank accounts of non-existing and shell companies - We find that additions on the basis of similar allegations also came for consideration in another decision in ITO v/s Supergold Properties Private Limited [ 2020 (11) TMI 46 - ITAT MUMBAI] wherein the addition made under section 68 was deleted by the coordinate bench of the Tribunal - We also find that in ITO v/s Nextgen Construction Private Limited [ 2020 (6) TMI 634 - ITAT MUMBAI] assessee has discharged the primary onus to demonstrate fulfilment of primary ingredients of Sec.68 and it was incumbent upon revenue to dislodge the assessee s claim by bringing on record, cogent material to establish that the assessee s unaccounted money was routed in its books of account in the garb of unsecured loans. However, we are unable to find any such material except for the fact that additions were made merely on suspicious, conjectures and surmises. Therefore, no infirmity could be found, in the impugned order, in this regard. DR could neither bring any material on record to controvert the findings of the coordinate bench of the Tribunal rendered in a similar factual matrix in Nextgen Construction Private Limited (supra) and Supergold Properties Private Limited (supra) nor could bring any material on record to controvert the aforesaid distinction drawn by the assessee. Thus the impugned order passed by the learned CIT(A) is set aside and the addition made under section 68 of the Act is directed to be deleted. Assessee appeal is partly allowed.

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• 2024 (1) TMI 204
  Validity of assessment order u/s 153C/143(3) - period of limitation - assessment within block of six assessment years - HELD THAT:- As the present AY 2011-12 does not fall within the block of six assessment years therefore the Assessing Officer had no valid jurisdiction to issue notice u/s. 153C of the Act and to frame assessment order for AY 2011-12. Thus, respectfully following judgment of Hon ble jurisdictional High Court of Delhi in the case of Server Agency [ 2017 (8) TMI 733 - DELHI HIGH COURT ] and the order of the coordinate Bench, as noted above, we are inclined to hold that the impugned assessment order passed u/s 153C r.w.s. 143(3) of the Act, dated 30.12.2018, for AY 2011-12 is invalid being passed by the Assessing Officer without having valid jurisdiction as per mandate of section 153C of the Act. Accordingly, we quash the same along with all consequent proceedings and orders - Decided in favour of assessee. Assessment u/s 153C - validity of incriminating material noted by the AO in the satisfaction note - recording requisite satisfaction as per law - HELD THAT:- We are inclined to hold that the alleged incriminating material noted by the Assessing Officer in the satisfaction note had to pertain to assessment year under consideration and when the documentary evidence seized and relied by the Assessing Officer did not establish any co-relation, document wise with the any of assessment year under consideration then the notice u/s. 153C of the Act, and consequent assessment order passed u/s. 143(3) r.w.s. 153C of the Act deserve to be quashed. Therefore respectfully following the preposition rendered in the case of PCIT vs. Singhad Technical Education Society ( 2011 (4) TMI 871 - ITAT, PUNE ) notice u/s. 153C of the Act and all consequent proceedings and orders including impugned assessment order 30.12.2018 for AY 2012-13 are quashed. Accordingly, grounds no. 1 to 3 of assessee are allowed.

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• Benami Property

• 2024 (1) TMI 203
  Prohibition of Benami Property Transactions - transfer of shares prior to the Amending Act of 1916 - Adjudicating Authority has confirmed the Provisional Attachment Order - a contest was made for the respondents who submitted that if anyone is holding a property after the amendment by the Amending Act, 2016 though transfer of property is prior to 01.10.2016, such a transaction would fall in the definition of Benami Transaction as given under section of 2 (9) (A) of the Act of 2016 - HELD THAT:- Detailed finding on each issue has been given. Thus, it is not correct to state that the respondent failed to prove benami transaction rather it is the appellant Companies failed to show and prove the financial sources or the source of inducement of finances after the year 2013-2014 other than by co-appellant. It is also submitted that appellant Companies rightfully invested in the shares of B.I.L. and otherwise they were investing in other shares also. The argument aforesaid was made without clarifying as to from where the finance came in the Companies because inducement of finance in the Companies in rightful manner could not be proved by the appellants to show their innocence, but they utterly failed in doing so. A company having no business activity could get corporate finance on higher premium. M/s Futurage Corporate Care Private Limited has shown wholesale business but had no activity of purchase and sale for wholesale to carry out the activities. No expenses were shown to have incurred towards salaries/wages, payment of indirect taxes, electricity, rent etc. They were mere paper companies. The clear conclusion from the survey and subsequent investigation was that control over the two appellant companies was acquired in the year 2014-15 and finances were infused into the companies at the instance of Shri Suresh Bhageria for the purpose of engaging in benami transactions in the shares of B.I.L. and other group companies of the Bhageria group. In fact, the two companies had no activity other than investment in B.I.L. and other Bhageria group companies. In view of the above, we do not find the respondent failed to prove Benami transaction as per the provision of PBPT Act. The appellant had disclosed the sources with relevant information and was accepted by the Tax Authorities. Thus, inducement of funds said to be in the shape of corporate shares on a higher premium could not have been questioned. We find that assessment of income by the income tax authority remain on different footing. They remain concerned about the income and tax payment. The Tax Authorities conducted survey subsequently to detect benami transaction. The assessment of income does not regularize benami transaction, rather it will take its own course. If income of someone is assessed and thereupon found to be out of benami transaction, the action under the Act of 1988 can be taken. All the facts on record are surrounding and pointing towards active role of Suresh Bhageria to first induce the funds into the Companies and then to get purchase of shares of B.I.L. apart from other companies of the group and thereby, it could not be inferred that Initiating Officer was predetermined to make out a case. The appellant had further referred to the statement of Director of Erstwhile shareholder of the company during course of survey. It was submitted by the counsel for the appellant that they ceased to be shareholder at the time of survey in December, 2018. Thus, their statements could not have been relied upon. According to the appellant, the statement of Erstwhile shareholder was irrelevant whereas, we find it be relevant. It is to find out the financials of the two appellant Companies from the year 2013-2014 onwards and to draw conclusion about the Benami Transaction. The statements of the then Directors were relevant and rightly relied by the respondents. In fact, the material available on record and perused by us is sufficient to show close connection between Suresh Bhageria, the promoter of B.I.L. group with M/s Prism Scan Express Pvt. Ltd. and M/s Futurage Corporate Care Private Limited and reason of investment in shares of B.I.L. and other companies as benamidars. The appellant has failed to show any business activities of the appellant companies in the year 2013-14 and subsequently to get corporate shareholders on premium. The inducement of funds was itself through Benami Transactions, otherwise Corporate Share would not have been given on higher premium of a Company having no business activity. The money induced therein was used to purchase shares of BIL and other Companies. We are unable to accept the argument of the appellant that the inferences have been drawn on extraneous consideration. In the instant case, there was transfer of shares prior to the Amending Act of 1916, but such shares were held by the appellant Companies even after the amendment and therefore it would fall within the definition of Benami Transaction . In the instant case, the Director of appellant Company, i.e. M/s Prism Scan Express Pvt. Ltd. and M/s Futurage Corporate Care Private Limited have denied knowledge about their shareholding or even interest in the Company and thereby the respondent have rightly applied section 2 (9) (A) (C ) of the Act. At this stage, it was submitted that initially show cause notice was not issued in reference to sub-section A rather it was under sub-section (B) and (C ) of section 2 (9). The show cause notice can be given by referring to a particular provision but after appropriate proceedings, if a case is made out under other provision then an order passed thereupon would not be illegal. Thus, we do not find any substance in any of the arguments. As further submitted that despite a mandate of section 24 (1) of the Act of 1988, the reasons to believe recorded in writing was not supplied to the appellant. We have gone through the record and find that a copy of the reasons to believe was not only supplied to the appellant but it has been enclosed with the appeal. In view of the above, the argument for alleged violation of Act is not made out. The argument has been raised that Rule 5 of Rules, 2016 was not complied for attachment. It provides the manner of attachment. We find arguments to be of no substance as the attachment of the property was made after following the rules and therefore the appellant failed to specify specific rule, alleged to have violated for attachment of the property. Thus, even the last argument raised by the appellant cannot be accepted.

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• Customs

• 2024 (1) TMI 202
  Maintainability of appeal - monetary limit involved in the appeal - Classification of imported goods - Mitsubishi brand Air Conditioner-Outdoor units and Air Conditioner-Indoor units of more than two ton capacity - HELD THAT:- Considering the quantum of tax effect, this appeal not entertained and the same is dismissed.

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• 2024 (1) TMI 201
  Provisional assessment of Bill of Entry - seeking consequential direction for the unconditional release of goods imported under the mentioned Bill of Entry - certificates of origin - import of goods under free trade agreement from Sri Lanka - HELD THAT:- The admitted position is that the Bill of Entry was issued on 24.06.2023. As such, more than six months have lapsed since the goods were brought into India. In the counter of the respondents, at paragraph 9, there is reference to the DRI having noticed manipulation of certificates of origin by unscrupulous importers. However, there is nothing to indicate that the petitioner indulged in manipulation of the certificate of origin relating to the present Bill of Entry or any other bill of entry. It should be recognized that areca nuts have a limited shelf-life and the risk of contamination and deterioration of goods increases over time. By taking into consideration the revenue interest in ensuring that duty exemption is not availed of, except in genuine cases, and the petitioner s concern that the goods be cleared expeditiously, an appropriate balance should be struck. The first respondent is directed to conclude the verification within a maximum period of thirty days from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (1) TMI 200
  Change of classification of goods imported by the appellant - GTL Light Paraffin - SCN issued to the appellant alleging that the appellant had imported light diesel oil in the garb of light paraffin in the vessel MT Hanyu Camellia and also in the vessel MT Eva Hongkong - HELD THAT:- The appellant had made imports and declared the goods as liquid paraffin. The investigation were started in respect of imports made by the appellant in vessel MT Hanyu Camellia and MT Eva Hongkong In both the cases, the goods were tested by CRCL Kandla where no discrepancy was found. In both the cases, the samples were retested at the behest of DRI by CRCL Vadodara. It was found that CRCL Vadodara report was different from the report of CRCL Kandla. The report of CRCL Vadodara came to the conclusion that the imported goods were LDO. The only difference between the imports made by the appellant vide vessel MT Hanyu Camellia and MT Eva Hongkong is that in the case of MT Hanyu Camellia retest report was available whereas in the case of appellants made by MT Eva Hongkong, the retesting request was ignored by Revenue despite repeated requests made by the appellants - it is apparent that the goods were not tested against the parameter DIN EN 15940:2019 by CRCL Vadodara. The test against the standard of DIN EN 15940:2019 by the CRCL was useful for determination of the actual character of the goods as per the CRCL New Delhi. It appears that the said standard for testing was ignored by the CRCL Vadodara and therefore the reports of CRCL Vadodara were at odds with the report of CRCL New Delhi. It is seen that the failure to allow retest of samples creates a serious doubt in the original test reports - It is also found that original test reports of CRCL have not factor in the standards required DIN EN 15940:2019 as per the test report of CRCL New Delhi. In these circumstances, the test report of CRCL Vadodara cannot be relied for initiating action against the appellant. There is no mis-declaration established by Revenue and therefore, there can be no question of rejection of declared value and revaluation of goods. The impugned order cannot be sustained - The impugned order is set aside - Consequently the penalties on co-noticees also cannot be sustained and are therefore, set aside - Appeals are allowed.

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• 2024 (1) TMI 199
  Suspension of Customs Broker License - time limitation - it is argued that in the present case action was initiated 7 years from the date of alleged offence - continuation of suspension - HELD THAT:- It is seen that the Commissioner in his order has observed that the appellant has failed to verify the antecedents of the exporters whereas there is a clear assertion on the part of the exporter that they had conducted the KYC on the basis of documents submitted by the exporter. There is no requirement under CBLR for the custom broker to physically verify the address. In these circumstances, there are no merit in the observations of the Commissioner on the basis of which the suspension was ordered to be continued. The impugned order is therefore set aside - appeal is allowed.

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• 2024 (1) TMI 198
  Refund of Excess duty paid - refund arising as a consequence of re-assessment of bill of entry - amendment in the quantity of DAP imported in the Bill of Entry - HELD THAT:- Section 149 of the Customs Act permits amendment to the document filed before the proper officer however it is subject to the condition that no amendment of bill of entry or shipping bill or bill of export, ship authorization to be amended after the import of goods have been cleared for home consumption or deposited in warehouse or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported as the case may be. In the instant case, the document was cleared for home consumption on 11.06.2018. The goods were infact unloaded from the ship by the stevedoring agent, therefore, it is clear that no document was available prior to 11.06.2018. It can be seen that the clearance of goods can only be said to have happened on 21.06.2018 when the bills of entry was finally assessed. From that perspective the documents presented by the appellant namely the police report dated 15.06.2018 was indeed available prior to the clearance of the goods and was infact submitted prior to clearance of the goods i.e. on 19.06.2018. In these facts and circumstances, the amendment to the bill of entry should have been allowed in terms of section 149. Appeal allowed.

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• 2024 (1) TMI 197
  Seeking provisional release of seized garlic imported - availing the benefit of Notification No.99/2011-CUS dated 09.11.2011, applicable to the imports under South Asia Free Trade Area Agreement (SAFTA) - HELD THAT:- The goods are of perishable nature and it will not be anybody s gain to keep the goods rotting under seizure. It is found that, prima facie, the evidence available with the Department is in the form of transcripts of messages and the investigation is in progress and the Department is yet to negate the certificate issued by the authorities in Afghanistan. Understandably, the enquiry as per the procedure laid down under the Notification regarding the rules of origin is likely to take some time. Therefore, there is nothing wrong in releasing the goods provisionally as has been ordered by the competent authority. However, the only difference of opinion lies in the quantum of Bond and Bank Guarantee to be furnished for such release. In the instant case, the goods have been cleared by the jurisdictional Customs Authorities after satisfying themselves about the conditions of import and the same were seized by DRI at a later date; the goods are of perishable nature and the exact origin of the goods is yet to be ascertained. Therefore, considering the facts and circumstances of the case, we find that the following conditions would suffice in the interest of justice: (i) The importers shall furnish a Bond covering the full value of goods and bind themselves to pay the differential duty along with fine, penalty and interest that may be levied on adjudication of the case. (ii) The importers shall furnish Bank Guarantee equal to 30% of the alleged differential duty. Petition disposed off.

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• 2024 (1) TMI 196
  EOU - Short shipment of goods - mistake committed in supplier s invoice - HELD THAT:- The Department has taken up the matter as an appeal before the Commissioner (Appeals) contending that the decision of adjudicating authority is premature. There are no finding rendered by Commissioner (Appeals) that the case put forward by the appellant regarding short shipment of goods and mistake in supplier s invoice to be not genuine. Again, it requires to be noted that on 04.04.2011 itself the appellant has approached the officers informing the short shipment. The immediateness in making such request by the appellant draws a strong inference that there is short shipment of goods and it is a mistake in supplier s invoice. The appellant cannot be called upon to pay duty on goods which he has not received. Thus, the order passed by Commissioner (Appeals) cannot be sustained - impugned order is set aside and the order passed by original authority is restored - appeal allowed.

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• 2024 (1) TMI 195
  Valuation of imported goods - secondary quality rusted pipes - rejection of declared value - enhancement of value - Department was of the view that these rusted pipes are serviceable and cannot be considered as scrap . Whether the 22 MTs of goods imported as scrap is liable for confiscation or not? - HELD THAT:- From the impugned order, it is seen that the department has concluded that the goods are not scrap and are in the nature of serviceable pipes only on visual examination. The Commissioner (Appeals) has observed that the department has not adduced any documentary evidence in the nature of expert opinion so as to arrive at the conclusion that the goods are not scrap. When there is such categorical finding by the Commissioner (Appeals) and the Department has not adduced any evidence to show that the goods imported are not scrap but are serviceable pipes, the confiscation is not justified. Further, it is also seen that the appellant had requested for mutilation of the said quantity of goods before home clearance. The said request has not been considered by the department. The request for mutilation of the goods would show bonafides of the appellant that they intended only to import scrap and not pipes which are to be reused. It is also seen that the value of 22 MTs of goods has been enhanced by the original authority from USD 370 per MT to USD 600 per MT which is incorrect as department has not established that the goods are not scrap. Thus, the confiscation of goods as well as enhancement of value cannot be justified - the impugned order is modified to the extent of setting aside the enhancement of value of 22 MTs of goods as well as confiscation of the same - redemption fine and penalty imposed are also set aside - appeal allowed in part.

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• 2024 (1) TMI 194
  Classification of Wireless Access Points - eligibility for exemption under Notification No. 24/2005-Cus dated 01.03.2005, as amended by Notification No. 11/2014-Cus dated 11.07.2014. Whether the exclusion from duty exemption clause of the said notification, as amended, also covers products having only MIMO technology and not working on LTE standard and vice-versa or just the products having both the technologies? HELD THAT:- A bare perusal of the exclusion clause (iv) under Sl. No. 13 of notification shows that it covers MIMO and LTE products. Said exclusion Clause uses the conjunction and and, therefore, it can be urged that the scope of clause (iv) can be restricted to those products that have MIMO and LTE both and that the product that only has MIMO technology may, therefore, may not be excluded from the scope of duty exemption benefit given at Serial No. 13 of the impugned notification as amended. The contention of the Department is that and in clause (iv) should be read as or so that it would cover MIMO products or LTE products as well. The contention advanced on behalf of Ingram Micro is that since the exclusion clause (iv) uses the conjunction and its scope would be restricted to those products that have both MIMO as well as LTE technology. Thus, a product that has only MIMO technology would be out of the scope of the exclusion clause and at Serial No. 13 (iv) of the impugned notification and should be available with the customs duty exemption benefit given under said notification. It is observed that in the Serial no. 13(iv) of the Notification No. 57/2017-Cus. as amended the word products is used only once. It is not used with Multiple Input/Multiple Output (MIMO) as well as Long Term Evolution (LTE). Whereas it is used once after both the products are being mentioned, same is not true for the other entries of the same notification. Products being the common factor for both, MIMO technology and LTE standard, again corroborates that expression and as used in the impugned entry has been used in a conjunctive way. From the above discussion it is held that and used between Multiple Input/Multiple Output (MIMO); Long Term Evolution (LTE) is a conjunctive joining of both the said terms (MIMO/LTE). Hence it can reasonably be interpreted that the word and in the impugned entry means that those products which contain both MIMO technology and LTE standards are excluded from the benefit of exemption of duty given to the goods classifiable under Chapter 8517 in view of the said entry no. 13 of Notification No. 57/2017-Cus. Thus, it becomes clear that in the clause (iv) of Sl. No. 13 of Notification No. 57/2017-Cus. which amended clause (h) of Sl. No 20 of Notification 02/2019-Cus. and is a conjunctive. Hence the goods imported by the appellant since admittedly works on the MIMO technology only but do not support the LTE standard, they are held to be out of the scope of the impugned exclusion clause and thus are held eligible for the exemption from whole of the customs duty under Serial no. 13(iv) of the notification. The similar issue has earlier been deal with by this Tribunal vide Final Order No. 50831/2022 dated 12.09.2022 in the case titled as COMMISSIONER OF CUSTOMS (AIR) CHENNAI VII COMMISSIONERATE VERSUS M/S. INGRAM MICRO INDIA PVT. LTD. [ 2022 (9) TMI 594 - CESTAT NEW DELHI] . There are no infirmity in the order under challenge. The department appeal is therefore dismissed.

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• 2024 (1) TMI 193
  Redemption Fine - penalty - rejection of declared value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- It is the settled position of law that the imposition of redemption fine cannot be disproportionate or arbitrary and, in any case, the same cannot exceed the market value of the product in question itself less the duty payable. Hence, it is clear that the quantum of levy insofar as redemption fine is concerned is just the discretion. On considering the impugned order, the adjudicating authority s logic has been clearly defied when the first appellate authority has felt it proper to reduce both the redemption fine and penalty, which is not challenged by the adjudicating authority/Revenue. Having reduced the redemption fine, the first appellate authority should have taken note of the provisions which prescribe the guidelines insofar as the levy of redemption fine is concerned. The Order-in-Original is passed in 2014 and hence, it is found unnecessary to remand the matter back, for the reason that there is no challenge to the valuation, rather the challenge is only to redemption fine and penalty - the ends of justice would be met if the redemption fine is pegged at Rs.3,00,000/-. Penalty - HELD THAT:- The action of the appellant in shooting the letter dated 26.02.2014 before the adjudicating authority itself is an indication, which prompted the adjudicating authority to pass the Order-in-Original assuming that the import, primarily, was improper. The appeal is partly allowed. The redemption fine alone is reduced.

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• 2024 (1) TMI 192
  Effective date of N/N. 46/2015-Cus dated 17.09.2015 - whether effective from the date of notification i.e. 17.09.2015 or the date when it was offered for sale i.e. 21.09.2015? - HELD THAT:- Considering the judgment in appellant own case, in the present case since notification was offered for sale on 21.09.2015 i.e. a date when the Notification No. 46/2015-Cus came into force. The decision in the appellant s own case is directly applicable in the facts of the present case. In view of the observation in the appellant s own case on the identical issue and law point in the present case the notification is effective from 21.09.2015 therefore, the appellant are not required to pay 5% increase in duty. Accordingly, the appellant are eligible for re-assessment of bills of entry on the basis of un-amendment Notification No. 46/2015-CUS at the rate of 7.5% duty. The impugned order is set aside and appeal is allowed with consequential relief.

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• 2024 (1) TMI 191
  Validity of continuation of suspension of the appellant s licence - Regulation 17(1) of the CBLR, 2018 - HELD THAT:- The impugned order of continuation of suspension was dated 03.02.2021 whereas the inquiry report is dated 03.11.2021. The Inquiry Officer has categorically held that with the information made available from the Department as well as the appellant, he is unable to hold against the appellant. Moreover, Regulation 17(7) mandates the passing of such order as deemed fit, either revoking the suspension of the licence or revoking the licence of the Customs Broker, within ninety days from the date of submission of the report by the Deputy Commissioner under sub-regulation (5). Here, in the case on hand, there are no order on record as a compliance with Regulation 17(7) till date, even though the inquiry report is dated 03.11.2021 which is fatal to the issue. It is also noted that the Inquiry Officer himself was unable to draw conclusions against the appellant - there are no material or legal compliance made to punish the appellant by keeping the CBLR Licence under suspension. There are no merit in the impugned order and therefore, the same deserves to be set aside - appeal allowed.

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• 2024 (1) TMI 190
  Valuation of imported goods - enhancement of transaction/assessable value, at the time of finalization of provisional assessment by inclusion of lumpsum payments under know how agreement, as being related to the imports made, as a condition of sale of equipments, imported under the supply agreement - whether the license fee and designing charges were a part thereof and whether charges of knowhow agreement were required to be added to the assessable value of the imported goods in terms of Customs Valuation Rules, 1988 Rule 9(1)(c) and Rule 9(1)(e)? HELD THAT:- Viewed in the backdrop of the law as propounded by the Hon ble apex court in the case of COMMISSIONER OF CUSTOMS (PORT), KOLKATA VERSUS JK CORPORATION LTD. [ 2007 (2) TMI 1 - SUPREME COURT] , it is found that the contract, as entered into by the appellant with their overseas buyers are on identical terms. There was no obligation to bind the appellants to any post import act/activity and thus render it as a condition of sale for procurement of the imported goods. It is also noted that there is no technical know-how fees attributable towards post import related/associated acts and activities. Thereby no case arises for scaling up the assessable value with the inclusion of the royalty charges. In fact the preamble clause of the Confidentiality Agreement supra clearly brings to fore its purpose, completely unrelatable to any post import functioning. The order of the Tribunal in the case of TDT. COPPER LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2000 (7) TMI 273 - CEGAT, NEW DELHI] relied upon by the adjudicating authority, is completely at variance as far as facts of the present case are concerned as Article 10 of the agreement therein provided for inclusion of various fees, charges and cost of technical services and were clearly a condition of sale. In the said case as relied by the learned Adjudicating Authority, the importer was required to pay US dollars 15 lakh towards engineering and servicing charges unlike in the present case where there is no such condition imposed on the appellant importer, by way of any of the above referred contracts entered into. In view of the findings that there is nothing in the contract entered into by the two sides, to impute the additional costs, towards the sale of imported goods or as a condition of sale, it is opined that the order of the learned Commissioner (Appeals), is without merits and is therefore liable to be quashed. The impugned order set aside - appeal allowed.

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• Corporate Laws

• 2024 (1) TMI 189
  Oppression or Mismanagement - equal rights were denied to equal inheritors - Lifting of corporate Veil - Invoking the just and equitable standard - Appellant s rights as a shareholder of R1 Company - Restructuring of the boards - Legitimate Expectation - Buyout of Shares. Equal rights were denied to equal inheritors - HELD THAT:- The principles of quasi-partnership and legitimate expectation, if at all applicable, can be invoked only when there is an agreement or an understanding for a Joint management or a specific promise for Board representation at the time of incorporation or inducement for investment in the Company, which in the present facts, admittedly do not arise. It is not the case of the Appellant that the Appellant s mother had claimed any such legitimate expectation during her lifetime. Be that as it may, a family held Company cannot be ipso facto be treated as a quasi-partnership. There was no pre-existing partnership prior to incorporation of the 1st Respondent Company nor was there any existence of promise to offer Directorship to any Appellant who had become a Shareholder only by inheritance and not by inducement. It is seen from the record that the 1st Respondent Company was incorporated as a Private Company on 22/12/1938 long before the Appellant had become a Shareholder. There is no claim of partnership by the Appellant or his mother or any other Shareholder subsequent to his becoming a Shareholder in 1974 - The contention of the Appellant that this Family Company be viewed as a quasi-partnership concern cannot be sustained. Lifting of corporate Veil - HELD THAT:- It is a settled law that Holding Company and its Subsidiaries are incorporated Companies each having a separate Legal identity, and each, a separate Corporate Veil. The Corporate Veil between the Holding Company and the Subsidiary Companies remains in the absence of which they would all be construed as one Company and one Corporate Personality, which within the framework of law, they cannot be so. It is the case of the Respondent that the Appellant had given up the issue of lifting of the Corporate Veil and therefore, the NCLT had not dealt with the specific issue - In the instant case, the contention of the Learned Senior Counsel for the Appellant that the Holding Company and the Subsidiaries constitute a single economic unity and therefore, the question of lifting the Corporate Veil does not arise, is untenable. The Holding and the Subsidiary Companies cannot be treated as a single economic unit and that the Corporate Veil which was required to be lifted keeping in view the nature of the Companies and specifically the direction of the Hon ble Supreme Court, was not adhered to. Invoking the just and equitable standard - HELD THAT:- The Appellant has not entered into any partnership argument or understanding with the other shareholders of the first Respondent Company or any other Company in the Group. The Amalgamation group of Companies cannot be considered as a Partnership in the light of the complex Shareholding pattern, independent management of each Company, Management participation from domestic / foreign investors and specifically in the absence of any kind of understanding between the Shareholders. This Tribunal is of the considered view that the equitable considerations can only flow from the fact if the Company had originally been started as a Partnership concern or if there was an Agreement or understanding that all or some of the Shareholders should participate in the conduct of the business. In the facts of the attendant case, there is neither any agreement nor understanding of any such nature and therefore, the question of the Respondent Company being viewed as a Partnership Concern, does not arise. Appellant s rights as a shareholder of R1 Company - HELD THAT:- There is an absence of an element of lack of probity or fair dealing in the matter of his proprietary rights as a Shareholder. The Rights of a Shareholder include voting on Resolutions at Meetings of the Company; electing Directors and participating in the management of the Company; enjoying the profits of the Company in the shape of dividends as and when declared by the Company; applying to the Court/Tribunal for relief in case of Oppression and Mismanagement; and in the case of winding up a share in the surplus - In the facts of the instant case, having regard to the fact that the lack of confidence of the Appellant is grounded on the personal conduct of the Directors rather than a lack of probity in the conduct of the Company s affairs, it is opined that the Appellant s proprietary rights as a Shareholder are not affected in any manner. Restructuring of the boards - HELD THAT:- In the absence of any provision in the Articles of Association or any Agreement , the Appellant cannot be made a Director unless there is approval of the majority of the Shareholders, or the Articles provide for proportionate representation - also the Appellant does not have the Locus to seek restructuring of the Boards of the Subsidiaries where he is not a Shareholder . Legitimate Expectation - HELD THAT:- The legitimate expectation for any participation in the Board cannot arise under Corporate Law without the mutual consent of the Shareholders and can be inferred only if it is founded on the sanction of law or custom or a precedent followed in regular sequence, which is not so in the instant case as the Appellant is unable to establish that there was any promise of any position of Directorship in the Board, to construe that having such an expectation is justifiable and legitimate . The Appellant s grievance that he has been unjustly treated by his family members, which cannot strictly constitute Oppression and Mismanagement as defined under Section 397 and 398 of the Companies Act, 1956 or under Section 241 and 242 of the Companies Act, 2013 - The Appellant s Claim for Office of Profit is promised of Legitimate Expectation , being a Member of the family. But at the same time, the Appellant is a Shareholder of only the first Respondent Company and hence, the Claim for such an Office of Profit in the other Subsidiary Companies, does not arise as the appointments in the Subsidiary Companies are controlled by the respective Board of Directors in accordance with their respective Articles of Association and any inheritance of Shares does not automatically entitle any of the family members to automatic post of Directorship and therefore any Legitimate Expectation by the Appellant, in the facts of this situation, whether he is not a Shareholder in the Subsidiary Companies, cannot be justified. Buyout of Shares - HELD THAT:- This Tribunal is satisfied that the just and equitable proposition cannot be made applicable in this case, where there is no irretrievable breakdown in trust and confidence, leading to a functional deadlock . In the absence of any contractual right to demand any proportional representation in the Board, an Order in this direction is not justifiable. Moreover, facts arising subsequent to the filing of the Petition cannot be relied upon and the validity of the Petition will be judged on the facts existing at the time of the presentation of the Petition - there are no substantial grounds for concluding that there was any Oppression or Mismanagement and therefore, the question of passing any Order directing buyout of shares, bringing to an end any matter complained of, cannot be done in the facts of this case. There is no case made out by the Appellant to exercise any equitable jurisdiction to grant such relief. Appeal dismissed.

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• Securities / SEBI

• 2024 (1) TMI 188
  Violation of Rule 19A of the Securities Contracts (Regulation) Rules 1957 - failure to disclose transactions with related parties and other relevant information which concerns related parties to SEBI - Precipitate decline in investor wealth and volatility in the share market due to a fall in the share prices of the Adani Group of Companies. Adani group - situation was purportedly caused by a report which was published on 24 January 2023 by an activist short seller , Hindenburg Research about the financial transactions of the Adani group. The Hindenburg Report and certain newspaper reports allege that some Foreign Portfolio Investments FPIs in Adani group stocks in the Indian stock market are owned by shell companies based outside India, which have close connections with the Adani group. Such investments in Adani stocks allow the Adani group to maintain financial health and artificially boost the value of stocks in the market, in violation of Indian law; Adequacy of SEBI s investigation - scope of judicial review over SEBI s regulatory domain - transfer of investigation from SEBI to another agency or to an SIT - Whether SEBI has prime facie conducted a comprehensive investigation? - Allegations of conflict of interest against members of the Expert Committee - petitioner s case appears to rest solely on inferences from the report by the OCCRP, a third-party organization involved in investigative reporting . The petitioners have made no effort to verify the authenticity of the claims. Whether there is no apparent regulatory failure attributable to SEBI? - petitioners have submitted, based on the Hindenburg Report and other newspaper reports, that the FPIs investing in Adani group stocks in the Indian stock market are shell companies outside India owed by the brother of the Chairperson of the Adani group HELD THAT:- In a consistent line of precedent, this Court has held that when technical questions arise particularly in the financial or economic realm; experts with domain knowledge in the field have expressed their views; and such views are duly considered by the expert regulator in designing policies and implementing them in the exercise of its power to frame subordinate legislation, the court ought not to substitute its own view by supplanting the role of the expert. Courts do not act as appellate authorities over policies framed by the statutory regulator and may interfere only when it is found that the actions are arbitrary or violative of constitutional or statutory mandates. The court cannot examine the correctness, suitability, or appropriateness of the policy, particularly when it is framed by a specialized regulatory agency in collaboration with experts. The court cannot interfere merely because in its opinion a better alternative is available. The power of this Court to enter the regulatory domain of SEBI in framing delegated legislation is limited. The court must refrain from substituting its own wisdom over the regulatory policies of SEBI. The scope of judicial review when examining a policy framed by a specialized regulator is to scrutinise whether it violates fundamental rights, any provision of the Constitution, any statutory provision or is manifestly arbitrary. No valid grounds have been raised for this Court to direct SEBI to revoke its amendments to the FPI Regulations and the LODR Regulations which were made in exercise of its delegated legislative power. The procedure followed in arriving at the current shape of the regulations does not suffer from irregularity or illegality. The FPI Regulations and LODR Regulations have been tightened by the amendments in question. SEBI has completed twenty-two out of the twenty-four investigations into the allegations levelled against the Adani group. Noting the assurance given by the Solicitor General on behalf of SEBI we direct SEBI to complete the two pending investigations expeditiously preferably within three months - This Court has not interfered with the outcome of the investigations by SEBI. SEBI should take its investigations to their logical conclusion in accordance with law; The facts of this case do not warrant a transfer of investigation from SEBI. In an appropriate case, this Court does have the power to transfer an investigation being carried out by the authorized agency to an SIT or CBI. Such a power is exercised in extraordinary circumstances when the competent authority portrays a glaring, willful and deliberate inaction in carrying out the investigation. The threshold for the transfer of investigation has not been demonstrated to exist. The reliance placed by the petitioner on the OCCPR report to suggest that SEBI was lackadaisical in conducting the investigation is rejected. A report by a third-party organization without any attempt to verify the authenticity of its allegations cannot be regarded as conclusive proof. Further, the petitioner s reliance on the letter by the DRI is misconceived as the issue has already been settled by concurrent findings of DRI s Additional Director General, the CESTAT and this Court; The allegations of conflict of interest against members of the Expert Committee are unsubstantiated and are rejected. The Union Government and SEBI shall constructively consider the suggestions of the Expert Committee in its report detailed in Part F of the judgment. These may be treated as a non-exhaustive list of recommendations and the Government of India and SEBI will peruse the report of the Expert Committee and take any further actions as are necessary to strengthen the regulatory framework, protect investors and ensure the orderly functioning of the securities market and SEBI and the investigative agencies of the Union Government shall probe into whether the loss suffered by Indian investors due to the conduct of Hindenburg Research and any other entities in taking short positions involved any infraction of the law and if so, suitable action shall be taken. Before concluding, we must observe that public interest jurisprudence under Article 32 of the Constitution was expanded by this Court to secure access to justice and provide ordinary citizens with the opportunity to highlight legitimate causes before this Court. It has served as a tool to secure justice and ensure accountability on many occasions, where ordinary citizens have approached the Court with well-researched petitions that highlight a clear cause of action. However, petitions that lack adequate research and rely on unverified and unrelated material tend to, in fact, be counterproductive. This word of caution must be kept in mind by lawyers and members of civil society alike. We are grateful to all the members and the Chairperson of the Expert Committee for their time, efforts, and dedication in preparing their erudite, comprehensive, and detailed report in a time-bound manner. Subject to the consent and availability of the members and Chairperson of the Expert Committee, SEBI and the Government of India may draw upon their expertise and knowledge while taking necessary measures pursuant to the recommendations of the Committee.

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• Insolvency & Bankruptcy

• 2024 (1) TMI 187
  CIRP - Right to claim set-off in the Corporate Insolvency Resolution Process, when the Resolution Professional proceeds in terms of clause (a) to sub-section (2) of Section 25 of the Insolvency and Bankruptcy Code, 2016 to take custody and control of all the assets of the corporate debtor - HELD THAT:- The IBC is a complete code relying upon the opening part of the enactment and Sections 238 and 243 takes care and nullifies the argument raised by the appellant Airtel entities that they are entitled to statutory set-off or insolvency set-off, in the Corporate Insolvency Resolution Proceedings under Chapter II Part II of the IBC. Regulation 29 of the Liquidation Regulations does not apply to Part II of the IBC. The legislation or even the legislative intent permits neither statutory set-off, nor insolvency set-off. Subsection (2)(b)(ii) to Section 30 does not support the contention of the Airtel entities. Sub-section (2) to Section 30 deals with the resolution plan and the quantum of payment required to be made when considering a resolution plan under Chapter II Part II of the IBC. The provision requires that the Resolution Professional shall examine each resolution plan received by him to confirm that each plan provides for payment of debts of the operational creditor in the manner as may be specified by the Board. The Board has not specified the manner in which payment of debts to the operational creditor shall be made. However, the stipulation that the payment of debts to the operational creditor shall not be less than the amount that the operational creditors are entitled to in terms of the order of priority in sub-section (1) to Section 53 of the IBC is mandatory. The section does not make Chapter III Part II, that is, Section 36(4)(e) or Regulation 29, applicable to the Corporate Insolvency Resolution Process under Chapter II Part II of the IBC. Secondly, clause (ii) to Section 30(2)(b) deals with the amounts to be paid to the creditors and not the amount payable by the creditors to the corporate debtor. Thirdly, clause (ii) to Section 30(2)(b) has appliance when the resolution plan is being considered for approval. Fourthly, and for the reasons elaborated earlier, and in view of the specific legislative mandate as incorporated and reflected in Chapter II Part II of the IBC, it is held that the provisions of the IBC relating to Corporate Insolvency Resolution Process do not recognise the principle of insolvency set-off. We would reject the argument that insolvency set-off is automatic and self-executing. Self-execution may be acceptable in cases of contractual set-off, as held above. On the aspect of mutual dealings and also equity, it is to be noted that adjustment of the inter-connect charges are under a separate and distinct agreement. The telephone service providers use each other s facilities as the caller or the receiver may be using a different service provider. Accordingly, adjustments of set-off are made on the basis of contractual set-off. These are also justified on the ground of equitable set-off. The set-off to this extent has been permitted and allowed by the Resolution Professional. The transaction for purchase of the right to use the spectrum is an entirely different and unconnected transaction - Moratorium under Section 14 is to grant protection and prevent a scramble and dissipation of the assets of the corporate debtor. The contention that the amount to be set-off is not part of the corporate debtor s assets in the present facts is misconceived and must be rejected. There are no merit in the present appeals and the same are dismissed.

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• 2024 (1) TMI 186
  Whether the amendments made in the substantive portion of Section 30(2), in terms of Explanation 2 will be applicable when the first appeal was heard by the NCLAT - HELD THAT:- Explanation 2(ii) clearly states that an appeal preferred under Section 61 or 62, when it is not barred by time under any provision of law, shall be heard and decided after considering the amended Section 30(2)(b) under the Amendment Act. In fact, Explanation 2(i) states that the amended clause shall also apply to the CIRP of the corporate debtor where a resolution plan has not been approved or rejected by the adjudicating authority. Explanation 2(iii) states that the amended Section 30(2)(b) shall also apply where legal proceedings have been initiated in any court against the decision of the adjudicating authority. Clauses (i), (ii) and (iii) of Explanation 2 reflect the wide expanse and width of the legislative intent viz. the application of the Amendment Act, whether proceedings are pending before the adjudicating authority, the appellate authority, or before any court in a proceeding against an order of the adjudicating authority in respect of a resolution plan. Only when the resolution plan, as approved, has attained finality as no proceedings are pending, that the amendments will not apply to re-write the settled matter. A three Judge Bench of this Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] , has observed that Explanation 2 applies to the substituted Section 30(2)(b) to pending proceedings either at the level of the adjudicating authority, appellate authority or in a writ or civil court. Referring to several decisions, it is observed that no vested right inheres in any resolution applicant who has plans approved under the Code. Interpretation of Section 30(2)(b)(ii) of the Code - HELD THAT:- As per Section 30(2)(b)(ii), the dissenting financial creditor is entitled to payment, which should not be less than the amount payable under Section 53(1), in the event of the liquidation of the corporate debtor. The provision recognises that all financial creditors need not be similarly situated. Secured financial creditors may have distinct sets of securities - the resolution plan accepted by the requisite creditors/members of the CoC upon voting, is enforceable and binding on all creditors. The CoC can decide the manner of distribution of resolution proceeds amongst creditors and others, but Section 30(2)(b) protects the dissenting financial creditor and operational creditors by ensuring that they are paid a minimum amount that is not lesser than their entitlement upon the liquidation of the corporate debtor. The provisions of Section 30(2)(b)(ii) by law provides assurance to the dissenting creditors that they will receive as money the amount they would have received in the liquidation proceedings. This rule also applies to the operational creditors. This ensures that dissenting creditors receive the payment of the value of their security interest. The contention on behalf of the respondent that there is conflict between sub-section (4), as amended in 2019, and the amended clause (b) to sub-section (2) to Section 30 of the Code does not merit a different ratio and conclusion. Section 30(4) states that the CoC may approve the resolution plan by a vote not less than 66% of the voting share of the financial creditor. It states that the CoC shall consider the feasibility and viability, the manner of distribution proposed, which may take into account the order of priority amongst creditors under sub-section (1) to Section 53, including the priority and value of the security interest of the secured creditors, and other requirements as may be specified by the Board. These are the aspects that the CoC has to consider. It is not necessary for the CoC to provide each assenting party with liquidation value - The conflict with sub-clause (ii) to clause (b) to sub-section (2) to Section 30 does not arise as it relates to the minimum payment which is to be made to an operational creditor or a dissenting financial creditor. A dissenting financial creditor does not vote in favour of the scheme. Operational creditors do not have the right to vote. It is felt appropriate and proper if the question framed at the beginning of this judgment is referred to a larger Bench. The matter be, accordingly placed before the Hon ble the Chief Justice for appropriate orders.

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• 2024 (1) TMI 185
  Dismissal of section 7 application - case of debt and default in the context of IBC which deserved admission of Section 7 application filed by the Appellants or not - HELD THAT:- The Adjudicating Authority has recorded the finding that the Facility Agreement relied upon by the Appellants in support of their debt is un-dated and hence discounted the same to be credible evidence to prove the existence of debt. More importantly, if the email of 07.02.2022 from the Respondent to the Appellants sharing the FFA is perused as has been placed at page 231 of the Appeal Paper Book (APB), it is found that it is only a draft agreement seeking comments/observations of the Appellants. Furthermore, it is noticed that the FFA which has been placed on record at Annex A-5 of the APB does not have the signature of the Respondent but it is the Appellant No. 6 who has signed for the Corporate Debtor as may be seen at page 270 of the APB - there are no mistake on the part of the Adjudicating Authority in not relying on the FFA to prove the existence of debt. The other ground to prove existence of doubt which has been adverted to by the Appellants is that the financial debt is also disclosed in the provisional balance sheet dated 03.03.2022 as shared by the Respondent themselves vide their email dated 04.03.2022 - The Respondent failed to repay the said credit facilities and hence this is a clear case of debt and default. The Adjudicating Authority in the impugned order has noticed that the Appellants had sold their shareholding to OMAT by executing the SPA on 03.02.2022 after payment of a lumpsum amount settled between the two parties. The Adjudicating Authority after perusal of the SPA has further noted that Schedule 1A and 1B of the SPA shows that the new management of the Respondent had settled the deal with all the shareholders at a lumpsum amount of Rs.10.62 crore - the Adjudicating Authority has rightly concluded that it was not satisfied with the evidence produced before it by the financial creditor to prove that a debt had crystallized beyond doubt and that a default has occurred. The Adjudicating Authority has rightly dismissed the Section 7 application filed by the Appellant - the impugned order does not warrant any interference. There is no merit in the Appeal - Appeal dismissed.

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• Service Tax

• 2024 (1) TMI 184
  Levy of service tax - Supply of Tangible Goods Service - legal right of possession and effective control has been transferred by the appellant to WTCPL or not - HELD THAT:- Merely because VAT is not paid, it cannot be said that the nature of transaction has changed. Payment of VAT or otherwise can only be an indicator, however the conclusion regarding transfer of right of possession and effective control can only be derive from the terms of agreement. It is seen that the terms and conditions are in the nature of the owner protecting his property and legal rights to ownership. These terms and condition by no stretch of imagination can be understood to mean that the appellant did not transfer the possession and effective control of the plant and machinery. The clause 5 of the agreement relates to the proper use of machinery and clause 6 is intended to protect the title of the appellant in the leased property. None of the clauses cited by the Commissioner indicate retaining of possession or effective control of the plant and machinery. Without any evidence to hold that effective control and possession has not been transferred, it could not held that any service in the nature of Supply of Tangible Goods has been provided. There are no merit in the impugned order, the same is set aside and appeal is allowed.

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• 2024 (1) TMI 183
  Classification of service - Online Database Access and Retrievable (OIDAR) Services or not - place of provision of service - period from July 2012 to November 2016 - time limitation - suppression of facts - HELD THAT:- Appellant has not maintained any website or electronic network to provide services which are essentially automated or involving minimal human intervention for public in exchange for any consideration. The Appellant is providing digitized, abstracted and indexed data out of raw data received from third parties using the internet or electronic means of communication just to communicate resultant digitized or converted data, which are input services for their customers who may utilize the data for providing services under the category of OIDAR service (main service) by putting them on the internet for public/clients or for their personal use. The services rendered by appellant are therefore broadly covered under the category of Business support services or telecommunication services using tools of information technology, and shall not be covered under the category of OIDAR services. The instant case is wholly covered by the decision of this Tribunal in the case of State Bank of India Vs. Commissioner of Service Tax, Mumbai-II [ 2014 (11) TMI 310 - CESTAT MUMBAI ] wherein SBI had entered into a contract for providing Virtual Private Network (VPN) which enabled SBI and its branches to retrieve data from the data centre maintained by the applicants in different countries abroad and demand was made under OIDAR service - the Appellant is not liable to service tax on the services under the category of OIDAR services. Time Limitation - suppression of facts or not - HELD THAT:- The Appellant was under a bona fide belief that its activity was not liable to service tax and further, the Appellant has maintained proper records of its activity and has been making compliances with various laws including Income Tax Act, Companies Act, and had been filing ST-3 returns under service tax, filing refund claims on quarterly basis in respect of service tax paid on input services used in the services exported out of India - the issue in dispute involves interpretation of statute, and as such no mala fide can be attributed to the Appellant. Accordingly, it is held that extended period of limitation cannot be invoked in the facts of the present case. The impugned order cannot be sustained and is accordingly, set aside - Appeal allowed.

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• 2024 (1) TMI 182
  Levy of Service Tax - Supply of Tangible Goods for Use of Service - renting of Earth Moving Equipment - deemed sale - right to possession and effective control of such equipment transferred to the lessee - HELD THAT:- From the decision in M/S. GIMMCO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, NAGPUR (VICE-VERSA) [ 2016 (12) TMI 394 - CESTAT MUMBAI] , it can be seen that the terms and condition in the above case are identical to the terms and condition of the contract in the present case, and it is also fact that the appellant have paid the VAT on the transaction being a deemed sale in terms of Article 366 (29A) of Constitution of India. Therefore, the renting of the equipment does not fall under the category of supply of tangible goods for use service . Following the above decision in the appellant s own case - the impugned order set aside - appeal allowed.

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• 2024 (1) TMI 181
  Refund of Service Tax paid - denial of refund/rebate on the ground that difference between amount of rebate under the prescribed procedure is less than 20% of the rebate available - arguments of appellant escaped detailed scrutiny - principles of natural justice - HELD THAT:- It was the contention of appellant that in the instant matter, they were claiming benefit under condition para 3 of the proviso to the notification and the computation indicated by them which is part of the show cause notice under para 5 indicated that they were entitled to rebate of 2,80,506/- in any case. However, this factum is not been considered and pronounced upon by the lower authority and the whole claim amounting to Rs. 3, 07,119/- was rejected in Toto. On the ground that para 2 is required to be considered by the customs authority and not the Central Excise. The appellant on the other hand also maintained that they were claiming under para 3 and in any case there is no constraint to claim either through customs or excise authorities in the notification. It therefore is clear that the argument advanced by them has escaped detail scrutiny by the lower authorities and are required to be pronounced in the light of the stated position. Considering that there is no constraint as has been highlighted, of either the matter being required to be dealt with by the customs authority or Excise and also there is nothing to show that para 3 under which the appellants are claiming the refund in the instant case is not applicable, on prima facie considerations, the matter deserves to be remitted back to the original authority. Appeal allowed by way of remand.

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• Central Excise

• 2024 (1) TMI 180
  CENVAT Credit - general insurance service related to building, plant and machinery, equipment, computers, workmen compensation, group accident policy, transit insurance etc. - HELD THAT:- It is found that the cenvat credit on general insurance service availed by the manufacturing unit has been considered time and again in various judgments. Reliance can be placed in COMMISSIONER OF CENTRAL EXCISE, BANGALORE VERSUS MILLIPORE INDIA (P.) LTD. [ 2011 (4) TMI 1122 - KARNATAKA HIGH COURT ] where it was held that It is to discharge a statutory obligation, when the employer spends money to maintain their factory premises in an eco-friendly, manner, certainly, the tax paid on such services would form part of the costs of the final products. In those circumstances, the Tribunal was right in holding that the service tax paid in all these cases would fall within the input services and the assessee is entitled to the benefit thereof. Reliance also placed in M/S HINDUSTAN ZINC LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2014 (7) TMI 485 - CESTAT NEW DELHI] where it was held that Group insurance of the employees against accident or sickness is the requirement of Section 38 of the Employees State Insurance Act, 1948, which a manufacturer has to comply with and accordingly, this service would have to be treated as a service used in or in relation to the manufacture of final products whether directly or indirectly, as a manufacturer would not be allowed to carry on manufacturing operations unless he complies with the requirements of Section 38 of the Employees State Insurance Act, 1948. From the above judgments it can be seen that in many cases the identical issue has been considered and it has been consistently held that the service tax paid on the general insurance service is admissible as cenvat credit as the service is directly or indirectly related to manufacture of the final product in the appellant s factory. Accordingly, the issue is no longer res integra. The demand is not sustainable - Therefore the impugned order is set aside - Appeal is allowed.

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• 2024 (1) TMI 179
  Levy of Clean Energy Cess - whether CEC is payable on the stock of coal lying with the appellant as on 30.06.2017 which stock was removed on or after 01.07.2017? HELD THAT:- In Radhakrishna Ramnarain Limited vs. R. Parthasarathy other [ 1980 (4) TMI 116 - HIGH COURT OF BOMBAY ], the Bombay High Court also observed that the taxable event is the removal of goods and not the manufacture. It is useful to refer to a decision of the Bombay High Court in Commr. of Income Tax, Pune-III vs. Loknete Balasaheb Desai S.S.K. Ltd. [ 2011 (6) TMI 48 - BOMBAY HIGH COURT ]. The issue that arose before the Bombay High Court was regarding the excise duty liability incurred on the manufacture of sugar in the light of the provisions of section 145A(b) of the Income Tax Act, 1961 - The Bombay High Court held that the expression incurred in section 145A(b) must be construed to mean liability that was actually incurred by the assessee. The issue that arose for consideration before the Bombay High Court was whether in a case where excisable goods are manufactured and lying in stock on the last day of the accounting year, the manufacturer has incurred liability to pay excise duty on the manufactured goods. The Bombay High Court held that though the date of manufacturer may be the relevant date for dutiability, the relevant date for duty liability is the date on which the goods were cleared. Thus, in respect of excisable goods manufactured and lying in stock, the excise duty liability would get crystallized on the date of clearance of goods and not on the date of manufacture. The appellant was not required to pay CEC on repeal of the 2010 Finance Act on goods removed on or after 01.07.2017 even though they were lying in stock as on 30.06.2017. The impugned order dated 20.04.2022 passed by the Commissioner, therefore, cannot be sustained and is set aside - Appeal allowed.

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• 2024 (1) TMI 178
  Denial of refund of education cess and secondary and higher education cess which was paid along with excise duty in terms of Notification No. 56/2002-CE dated 14.11.2002 as amended - HELD THAT:- This issue has been considered by this Tribunal in bunch of appeals and this Tribunal in the case of M/S IND SWIFT LABS LTD, SHREE BALAJI ALLOYS VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-II AND HOWCO PETROFER LIP, J K PIGMENTS LTD, PBI METALS PRIVATE LIMITED VERSUS CCE ST- JAMMU KASHMIR [ 2023 (9) TMI 962 - CESTAT CHANDIGARH] has rejected the appeal of the appellant by relying upon the decision of the Hon ble Apex Court in the case of M/S. UNICORN INDUSTRIES VERSUS UNION OF INDIA OTHERS [ 2019 (12) TMI 286 - SUPREME COURT] where it was held that a notification has to be issued for providing exemption under the said source of power and that in the absence of notification containing an exemption to such additional duties in the nature of education cess and secondary and higher education cess, they cannot be said to have been exempted. Thus, refund rightly rejected - there are no infirmity in the impugned order which is upheld by dismissing the appeal of the appellant - appeal dismissed.

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• CST, VAT & Sales Tax

• 2024 (1) TMI 177
  Inter state sale or intra state sale - Validity of directions beyond the scope of the questions framed and referred - goods of special importance under Section 14 of the CST Act - deletion of penalty despite of the fact that the assessee has created documents to convert the local sale into interstate transaction with the intention to evade/avoid tax. Whether the sale of goods involved in the present case were inter-state sales or intra-state sales? HELD THAT:- In the considered opinion of this Court, the RTB, after careful consideration of the entire record, had rightly concluded the contract to be a composite and indivisible EPC works contract on turnkey basis. The observation by the RTB, are in content and form, flawless and thus this Court has no hesitation in affirming the view taken by RTB in this regard. The contract was a composite and indivisible EPC works contract. In the simplest of terms, RVUNL was to receive the final thermal power project which was to be erected by the assessee for which the assessee was to receive a fixed consideration. It is not a case where there was sale of individual goods to the RVUNL. Though the goods were specially designed to be used in the power project, the point of transfer of such goods is what is relevant for determining whether the title to the goods transferred to RVUNL during movement of goods from one state to another. The assessee contends that the title to the goods transferred to the assessee outside the State of Rajasthan, upon issuance of MDCC or other like documents - In the case in hand, the pre-dispatch inspection and issuance of MDCC, in view of terms of contract, did not serve the purpose of transfer of goods. This unequivocally establishes that there was no transfer of title of goods after their inspection and/or issuance of MDCC or any like document. The intent of the parties is quite clear. The clauses of Final Handing Over , Project Schedule , Liquidated Damages , Warranty , Insurance , Completion of Contract , the project import certificate letter dated 06.07.2009, etc. clearly reveal that under the present works contract, the complete unit/power project would be transferred by assessee to RVUNL. Further, as per SOG Act, the goods are said to be transferred only when they are put into deliverable state by the contractor as per the terms and conditions of contract. The transfer in the case was of entire thermal power project. The title to the goods involved in the execution of works contract also, accordingly, only transferred to RVUNL upon completion of contract and upon final handing over of the project as the goods had been subjected to some process to be accommodated in the power project - In the present case, the goods claimed to be sold by the assessee to be part of inter-state sales were not sold to the RVUNL as goods, but utilized in erection of the thermal power project. Since the erection of thermal power project in the state of Rajasthan can only be termed as an intra-state transaction, the property in goods used in such erection, whether as goods or as some other form, would constitute an intra-state sale and accordingly be subject to RVAT. The assessee has relied on several judgments, however none of those judgment deals with EPC works contract where there is a transfer of entire project. The judgment of COMMISSIONER, DELHI VALUE ADDED TAX VERSUS M/S. ABB LTD. [ 2016 (4) TMI 534 - SUPREME COURT] , being on different facts, has rightly been distinguished by the RTB with sufficient reasons and it is not deemed necessary to reproduce those reasons here again. The questions of law framed are answered in favour of the Revenue and against the assessee.

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• 2024 (1) TMI 176
  Maintainability of petition - availability of statutory alternative remedy - Validity of assessment order - levy of penalty - specific stand of the respondents is that the order is passed in consonance with the principles of natural justice of following statutory provisions by serving the notices to which the dealer did not respond - HELD THAT:- It is evident from Rule 64 of the Andhra Pradesh Value Added Tax Rules, 2005, that a notice required or authorized under the Act or the Rules to be served shall be considered as sufficiently served, if it is sent by registered post to such place of residence, office or business or to the person s usual or last known address in the State. Clause (c) of Rule 64 (1) provides for sending the notice through E-mail. In view of Rule 64, and Para 5 of the counter affidavit which shows sending of the notices by Post or/and E-mail, it shall be considered in law that the dealer was sufficiently served. Anything to the contrary has not been brought on record - under sub- section (1), shall be considered as sufficiently served is not dependent upon the certificate of service under sub-section (2). Besides, the averments of Para 5 of the counter affidavit having not been controverted on oath, the question of proof by certificate of service in evidence, does not arise in the present case - there are no force in the submission of the learned counsel for the petitioner that the orders impugned have been passed in violation of the principles of natural justice for the argument of no service of the notices before passing the impugned orders. The petitioner has the statutory alternative remedy. Without prejudice to that right, but subject to the due process of law and the law of limitation, the petitioner is at liberty to avail statutory remedy, on such grounds as may be open, other than the one dealt with in this judgment, if so advised, this writ petition is dismissed. Petition dismissed.

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• 2024 (1) TMI 175
  Maintainability of petition - availability of alternative remedy - whether the petitioner has not disclosed the sales to the 3rd respondent in its books of account - Violation of principles of natural justice - HELD THAT:- The particulars of the report were already mentioned in the show cause notice and the petitioner did not challenge the same. More so, the contents of the report are not new to the petitioner as those contents relate to the sales effected by the petitioner to the 3rd respondent for a specific period. Therefore, the contents of the report cannot be said to contain altogether unknown facts without which the petitioner cannot give an effective reply. Therefore, the petitioner s plea cannot be accepted. Availability of efficacious alternative remedy of appeal against the impugned Assessment Order - HELD THAT:- On this ground also the writ petition is not maintainable. The writ petition is dismissed.

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• Indian Laws

• 2024 (1) TMI 174
  Separation of powers - exercise of criminal contempt jurisdiction - practice of frequently summoning government officials to court - Seeking an increase in the allowance granted to former judges of the High Court for domestic help and other expenses. Whether the High Court had the power to direct the State Government to notify Rules proposed by the Chief Justice pertaining to post-retiral benefits for former Judges of the High Court? - HELD THAT:- The High Court, acting on the judicial side, could not compel the State Government to notify Rules proposed by the Chief Justice in the purported exercise of his administrative powers. Policymaking by the government envisages various steps and the consideration of various factors, including local conditions, financial considerations, and approval from various departments. The High Court cannot use its judicial powers to browbeat the State Government to notify the Rules proposed by the Chief Justice. As the Rules were promulgated by the Chief Justice without competence, at best, they amounted to inputs to the State Government. The State Government was free to constructively consider the desirability of the Rules within its own decision-making apparatus. Therefore, the High Court acted beyond its jurisdiction under Article 226 by frequently summoning officers to expedite the consideration of the Rules and issuing directions to notify the Rules by a fixed date, under the threat of criminal contempt. Whether the power of criminal contempt could be invoked by the High Court against officials of the Government of Uttar Pradesh on the ground that the application for recall was contemptuous ? - HELD THAT:- In the present case, the State of Uttar Pradesh was availing its legitimate remedy of filing a recall application. From a perusal of the record, it appears that the application was filed in a bona fide manner. Not only had the Finance Department raised its concerns regarding the competence of the Chief Justice before the High Court but its previous conduct, including file notings of the department and letters to the Central Government, indicate that this objection had been raised by them in the past. The legal position taken by the Government in the recall application was evidently based on their desire to avail their legal remedy and not to willfully disobey the First Impugned Order. The objections raised by the Government of Uttar Pradesh with regard to legal obstacles in complying with the First Impugned Order were never adjudicated by the High Court. Instead, the High Court regarded the objection as an attempt to obstruct justice, without even a cursory attempt to provide reasons. Applying the standards delineated above, it is clear that the actions of the government of Uttar Pradesh did not constitute even civil contempt let alone criminal contempt . The circumstances most definitely did not warrant the High Court acting in haste, by directing that the officials present before the court be taken into custody. This summary procedure, although, permitted under Section 14 of the Contempt of Courts Act cannot be invoked as a matter of routine and is reserved for only extraordinary circumstances. The invocation of criminal contempt and taking the government officials into custody was not warranted. Summoning of Government Officials before Courts - HELD THAT:- Courts must refrain from summoning officials as the first resort. While the actions and decisions of public officials are subject to judicial review, summoning officials frequently without just cause is not permissible. Exercising restraint, avoiding unwarranted remarks against public officials, and recognizing the functions of law officers contribute to a fair and balanced judicial system. Courts across the country must foster an environment of respect and professionalism, duly considering the constitutional or professional mandate of law officers, who represent the government and its officials before the courts. Constantly summoning officials of the government instead of relying on the law officers representing the government, runs contrary to the scheme envisaged by the Constitution. Standard Operating Procedure (SOP) on Personal Appearance of Government Officials in Court Proceedings, prescribed. The impugned orders are set aside - appeal disposed off.

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