TMI Tax Updates - e-Newsletter
January 8, 2025

Case Laws in this Newsletter:

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

Articles

1. Co-owner consent is not required for availing GST registration

   By: Bimal jain

2. Legal Responsibilities and Duties of an Auditor

   By: Ishita Ramani

3. 55TH GST COUNCIL: NEW CBIC CLARIFICATIONS

   By: Dr. Sanjiv Agarwal

News

1. EC to tell cabinet secretary no Delhi-specific provision can be made in Union Budget: CEC Kumar

2. Taiwan holds military drills as concerns rise over possible defence budget cut

3. Pre-Budget consultation meetings for the forthcoming Union Budget 2025-26 conclude in New Delhi

4. FM Nirmala Sitharaman concludes month-long stakeholder consultations for FY'26 Budget

5. Budget 2025: NAREDCO pitches for hike in deduction on housing loan interest payment

6. FIRST ADVANCE ESTIMATES OF GROSS DOMESTIC PRODUCT, 2024-25

7. Manmohan’s economic policies formed basis of India’s growth: TN CM

8. Auction for Sale (re-issue) of (i) ‘6.64% GS 2027’ and (ii) ‘7.34% GS 2064’

9. FIU-IND and IRDAI sign MoU for enhanced coordination and information exchange

Notifications

GST

1. S.O. 95(E) - dated 6-1-2025 - IGST

Appointment of Nodal Officer for GST Intelligence Under Section 14A(3) of IGST Act, 2017

Income Tax

2. 06/2025 - dated 6-1-2025 - IT

Tax Collection at Source (TCS) - Unit of International Financial Services Centre shall not be considered as ‘buyer’ for the purposes of sub-section (1H) of section 206C of the IT Act 1961

Circulars / Instructions / Orders

Customs

1. ADDENDUM TO PUBLIC NOTICE NO. 78/2017 - dated 14-12-2024

Processing of shipping bills in manual mode at JN, amendment to Public Notice No. 01/2011, dated 04.01.2011, issued by JNCH, Mumbai Zone-II-reg.

2. PUBLIC NOTICE No. 90/2024 - dated 21-10-2024

Clarification regarding debiting of Restricted License for import of IT Hardware-reg.

Highlights / Catch Notes

GST

• Co-owner's GST registration cancellation application rightly rejected, consent letter not required for non-sole owners.

  Case-Laws - HC : Co-owner's application for cancellation of GST registration granted to another co-owner rejected. HC held clause (a) governing ownership document sufficed; clause (c) requiring consent letter inapplicable where not sole owner. Petition dismissed.
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• Penalty imposed by corporation for violating guidelines not subject to GST, rules Supreme Court.

  Case-Laws - HC : HC held that respondent Corporation cannot demand GST from petitioners on penalty imposed for non-attendance of leakage complaint as there was no "supply of goods/services" by Corporation to petitioners. To demand GST, it must be proved that there is "supply of goods/services" by person collecting tax to person from whom tax is recovered. Here, no service was supplied by Corporation to petitioners while imposing penalty. Amounts sought were not for tolerating an act but for not following terms of agreement/guidelines framed by Corporation as deterrent against future breach. Petition dismissed.
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Income Tax

• Title: Assessee's claim of agricultural income rejected as authorities found land plotted, not cultivated based on evidence.

  Case-Laws - HC : The HC upheld the addition u/s 69A rejecting the assessee's claim of agricultural income. The authorities found based on evidence that the land was plotted and not used for cultivation. The assessee failed to rebut the evidence and establish agricultural operations. The HC cannot interfere with findings of fact unless perverse.
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• Property transfer valid if adequate consideration paid without tax liability notice.

  Case-Laws - HC : The HC held that as per the proviso to Section 281, if the transfer is made for adequate consideration and without notice of the tax dues or pending proceedings by the Income Tax Department, the transfer cannot be deemed void. The petitioners had purchased the property through a court auction for adequate consideration, without knowledge of the tax proceedings against the previous owner. The attachment by the Income Tax Department was on a larger extent, while the petitioners purchased only a portion. Relying on precedent, the HC ruled that the petitioners' claim should be allowed, and the Income Tax Department cannot proceed against the bona fide purchasers.
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• Tax Authority Can Revise Assessment Order Based on Audit Objections Despite Assessee's Explanation.

  Case-Laws - HC : CIT allowed to invoke Section 263 to revise assessment order due to AO's failure to verify assessee's explanation regarding investment in mutual funds/shares despite audit objections raised after assessment, as per SC ruling in CIT vs. P.V.S. Beedies Pvt. Ltd. allowing reopening based on audit party's factual objections; HC overruled ITAT's reliance on B&A Plantation case regarding scope of Section 263 inquiry.
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• Reassessment Notice Beyond 3 Years Invalid Due to Lack of Proper Approval; ITAT Quashes Notice Favoring Assessee.

  Case-Laws - AT : The ITAT held that the notice u/s 148 of the Income Tax Act was invalid and quashed it. For the relevant assessment year 2017-18, the time limit of three years lapsed on 31.03.2021. As per the amended provisions read with TOLA, the specified authority for granting approval beyond three years is the Principal Chief Commissioner or higher officials. However, the approval was obtained from the Principal Commissioner, which was contrary to the statutory requirement. Following the Supreme Court precedents in Ashish Agarwal and Rajiv Bansal cases, the ITAT ruled that since the specified authority's sanction was not obtained as mandated, the notice u/s 148 issued beyond three years was invalid and bad in law. The decision was in favor of the assessee.
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• High Court allows ASK Re's appeals on transfer pricing and disallowance u/s 14A.

  Case-Laws - AT : M/s. ASK Re Ltd., Hong Kong held as Associated Enterprise u/s 92A(2)(j). CUP method accepted as Most Appropriate Method, rejecting TNMM and TP adjustment. Disallowance u/s 14A read with Rule 8D deleted as no exempt income earned by assessee, relying on Era Infrastructure and Maxivision Eye Hospital cases. Assessee's appeals allowed on TP and 14A issues.
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• Charitable Trust Serving Army Widows Denied Exemption for Not Filing Returns - Matter Remanded for Reassessment.

  Case-Laws - AT : The ITAT remitted the matter back to the AO to re-assess the income after considering documents and submissions made by the assessee, a charitable institution serving widows and dependants of army soldiers. Despite having 12A registration, the assessee failed to file returns to claim exemption u/s 11, losing the benefit. The AO is directed to redo the assessment as per law after providing proper opportunity of hearing to the assessee regarding term deposits, renewals, cash deposits from schools and other activities. The Revenue's appeal is allowed for statistical purposes.
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• Lack of evidence leads to partial disallowance of indexation cost and LIC premium deduction.

  Case-Laws - AT : AO disallowed entire cost of indexation claimed by assessee for lack of documentary evidence. ITAT held denial unjustified, directed AO to allow 50% of indexation amounting to Rs.24,42,262/-. Balance disallowance of Rs.24,42,262/- confirmed. Deduction u/s 80C towards LIC premium allowed as per AO's remand report. Ground no.5 & 6 partly allowed.
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• Unexplained Cash Used for Credit Card Purchases Treated as Income u/s 69A Due to Lack of Evidence.

  Case-Laws - AT : Assessee purchased credit cards using unexplained cash payments. AO made addition u/s 69A as assessee failed to explain source of cash. CIT(A) confirmed addition since no evidence was filed by assessee. ITAT upheld CIT(A)'s order applying s.69A deeming unexplained cash as income, deciding against assessee for non-compliance with statutory notices and not substantiating cash source.
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• Cash deposits during demonetization explained as regular sales by authorized dealer; no unexplained money.

  Case-Laws - AT : The ITAT held that the addition made by the AO u/s 69A read with Section 115BBE is unjustified. The assessee, an authorized dealer of TVS Motor Co. Pvt. Ltd., had duly recorded the cash sales in its books, and the alleged cash deposits were from the available cash in hand maintained in the regular books of accounts. The books were not rejected, and quantitative details were maintained. In the absence of evidence of any unrecorded sales and considering the assessee's dealership with a reputed company, the ITAT concluded that the assessee successfully explained the source of cash deposits during the demonetization period as arising from regular cash sales. Consequently, the impugned addition was deleted.
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Customs

• Automated Out of Charge for AEOs Expedites Customs Clearance, Reducing Dwell Time for Compliant Traders.

  Circulars : The Chennai Customs Zone announced the roll out of Automated Out of Charge for AEO T2 and T3 clients where there is no requirement of CCR verification. Eligible Bills of Entry meeting criteria like no examination/scanning required, assessment complete, and OTP authentication will be allowed Auto-OOC on risk basis. However, the option to override Auto OOC is provided for intelligence purposes. The facility aims to facilitate genuine trade and reduce dwell time, effective 1st January 2025.
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• Importer allowed to amend Bill of Entry to rectify excess customs duty paid due to mistake.

  Case-Laws - HC : Petitioner's request for amending Bill of Entries to rectify mistaken payment of 20% customs duty allowed. HC held Bill of Entry can be modified by appeal before Appellate Authority or other relevant provisions. As per M/S. NEYVELI LIGNITE CORPORATION INDIA LIMITED v. COMMISSIONER OF CUSTOMS [2022 TMI 1374 - MADRAS HC], amendment permissible if requirements satisfied with documents existing at import time. Importer can amend Bill of Entry under Customs Act Sections 149 or 154. Writ Petitions allowed, directing respondents to re-examine u/s 149 within 3 months.
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• Importer sold goods at higher MRP than declared, evading customs duty; quantification of differential duty upheld.

  Case-Laws - AT : The appellant failed to declare the actual MRP before Customs and sold the imported goods at a higher MRP, evading appropriate customs duty. The CESTAT remanded the matter for quantifying the differential duty payable. The Adjudicating Authority exceeded its jurisdiction by considering issues already decided by the CESTAT. However, it correctly quantified the differential duty based on evidence of higher sales MRP after providing sufficient opportunity to the appellant. Selling goods at higher MRPs than declared to Customs constitutes a violation, warranting differential duty and penalties. The CESTAT allowed the appeal in part by setting aside the Adjudicating Authority's contrary findings while upholding the quantification of differential duty demand.
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• Areca Nuts Classified Under 0812 Based on Provisional Preservation for Transport/Storage, Overriding 0802 Mention.

  Case-Laws - AAR : The AAR held that provisionally preserved areca nuts (whole and split), being unsuitable for immediate human consumption, are more specifically covered under CTH 0812 90 90 due to the Chapter Note applying Heading 0812 to fruits and nuts treated solely for provisional preservation during transport or storage, rendering them unsuitable for immediate consumption, despite areca nuts being mentioned under 0802.
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• Customs Broker License Revocation Overturned: HC Upholds Limited Role in Import Clearance.

  Case-Laws - AT : The HC set aside the order revoking the appellant's Customs Broker license and forfeiture of security deposit. It held there was no violation of Regulations 10(b), 10(d), and 10(n) of the Customs Brokers Licensing Regulations, 2018. The role of a Customs Broker is limited to facilitating clearance of goods, not responsible for subsequent actions by the importer. Verification of documents through official sources fulfills regulatory requirements. The revocation was unjustified.
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• Mandatory Pre-Deposit for Customs Appeal Can't Be Waived Despite Financial Hardship, Legislative Intent Must Prevail.

  Case-Laws - HC : The HC dismissed the petition, holding that it cannot grant relief by waiving the mandatory 7.5% pre-deposit requirement u/s 129-E of the Customs Act, 1962 for maintaining an appeal. The HC lacks jurisdiction under Article 226 to act contrary to the legislative intent merely on grounds of financial hardship. Granting such waivers would defeat the statutory scheme and consequent amendments.
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DGFT

• Exports of organic products require certification, labelling per national standards, accompanied by Transaction Certificate.

  Circulars : The DGFT notified the procedure for export of certified organic products. Products can be exported as "Organic" only if produced, processed, packed and labelled per NPOP standards certified by NAB accredited bodies and accompanied by a Transaction Certificate. The 8th NPOP edition is effective 180 days from notification, superseding previous notices.
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• Synthetic Fabric Imports Face Minimum Import Price Hurdle, Exemptions for Certain Entities.

  Notifications : Import of certain synthetic knitted fabrics under ITC(HS) codes 60063100, 60063200, 60063300, 60063400, 60069000, 60019200, 60041000, 60049000, 60053600, 60053790, 60062200 and 60064200 is restricted. However, import is free if CIF value is $3.5 or above per kg. Minimum Import Price condition is exempted for imports by Advance Authorisation holders, EOUs and SEZ units for inputs not sold in DTA. DGFT notification extends MIP condition from 01.01.2025 to 31.03.2025 under FT(D&R) Act and FTP 2023.
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IBC

• Finality of Approved Resolution Plan Upheld, Settlement Proposal Rejected After Approval Stage.

  Case-Laws - AT : NCLAT dismissed the appeal challenging the impugned order rejecting the one-time settlement (OTS) proposal. It held that the adjudicating authority rightly rejected the OTS proposal as the resolution plan had already been approved. Reopening the proceedings to consider a subsequent settlement proposal would be impermissible after the finality of the approved resolution plan, unless compelling reasons existed, which was not the case here. The appeal against the impugned order was found unmerited.
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Indian Laws

• Consent decree doesn't require registration or stamp duty when asserting pre-existing rights.

  Case-Laws - SC : The SC held that the compromise decree acquired by the appellant through the suit did not require registration u/s 17(2)(vi) of the Registration Act, 1908, as it pertained to the subject matter of the suit. The consent decree did not operate as a conveyance to attract stamp duty under Article 22A of Schedule 1A of the Indian Stamp Act, 1899, as the appellant merely asserted pre-existing rights without creating new rights. Consequently, the appellant was entitled to possession of the subject land without interference from Respondent No.2 and to get his name recorded in revenue records. The appeal was allowed.
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SEBI

• Mandatory Settlement of Inactive Clients' Funds Revised: Entire Credit Balance to be Returned on Monthly Settlement Date.

  Circulars : SEBI has revised the requirement for mandatory settlement of client funds who have not traded in the last 30 calendar days. Such clients' entire credit balance shall now be returned by the Trading Member on the upcoming settlement dates of the monthly running account settlement cycle as notified by Exchanges, instead of within three working days after 30 days of inactivity. However, if the client trades before the upcoming monthly settlement, the settlement shall continue as per the client's preference for quarterly/monthly cycle. The provisions are effective immediately to facilitate ease of doing business while safeguarding investor interests.
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• Mandatory NISM Certification for Investment Advisers, Principal Officers, Associated Persons & Partners.

  Notifications : SEBI notifies that individual investment advisers, principal officers of non-individual investment advisers, associated persons providing investment advice, and partners of investment adviser firms engaged in providing investment advice shall obtain NISM certifications - Series X-A (Level 1), Series X-B (Level 2) for fresh certifications, and Series X-C (Renewal) for renewals before expiry of existing certifications. The notification rescinds previous notifications on the subject while preserving past actions. It comes into force on the date of publication in the Official Gazette.
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Service Tax

• Employee's Provident Fund dues: HC orders reconsideration after deposit, allows addressing procedural issues.

  Case-Laws - HC : The HC quashed the impugned order and remitted the case to the respondents to pass a fresh order on merits after the petitioner deposits Rs. 50,00,000 to secure revenue's interest. The HC allowed the petitioner to address procedural and time-bar issues comprehensively, considering the disputes pertained to the period from April 2008 to June 2017 and the petitioner provided clearing, forwarding, and goods transport services.
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• Taxable value of works contract excludes value of goods sold; service tax only on service portion.

  Case-Laws - AT : The CESTAT held that service tax cannot be levied on the value of goods sold during execution of a works contract. The taxable value is the value of services rendered, determined as per Section 67 of the Finance Act, 1994 read with Rule 2A of the Service Tax (Determination of Value) Rules, 2006. The Department failed to identify the nature of services and discharge its onus before confirming the demand. Out of the total consideration, the amount pertaining to sale of goods was excluded from the taxable value. Service tax was payable only on 40% of the remaining amount as per the specified percentage. As no tax remained unpaid, no penalty u/ss 78 or 77(2) was imposable. The appeal was allowed.
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Central Excise

• Cenvat Credit Rules Don't Restrict Credit on Stock Transfers Between Units of Same Entity.

  Case-Laws - AT : CESTAT held that Rule 9(1)(b) of Cenvat Credit Rules, 2004 restricting Cenvat credit is applicable only for sale transactions, not stock transfers between units of same entity. Since transaction involved stock transfer and not sale, denial of Cenvat credit to appellant on supplementary invoice for duty paid on stock transfer was without authority of law. Appeal allowed.
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Case Laws:

• GST

• 2025 (1) TMI 333
  Challenge to orders imposing penalty, appellate orders, as also the Marketing Discipline Guidelines, 2018 (MDG) under which the penalty is imposed - non-attendance of a leakage complaint - HELD THAT:- So as to demand GST, it is to be proved that there is supply of goods/services by the person collecting the tax to the person from whom the tax is sought to be recovered. In the case at hand, it is the respondent Corporation who is claiming that there is supply of services to the petitioners herein. However, a perusal of the documents would show that no supply of service is effected by the respondent Corporation to the petitioners herein while imposing penalty by the impugned orders. Unless and until there is any such supply of goods/services, the question of demanding GST does not arise at all. There is no dispute that there is no such agreement between the petitioners and the respondent Corporation. There is no case for the respondent Corporation that the petitioners and the respondent Corporation have entered into such an agreement/contract for a consideration . Such an agreement cannot be presumed to exist between the parties also. Here, the amounts sought to be collected from the petitioners towards penalty are not towards tolerating an act/situation. Instead, the amounts sought to be recovered are for not following the terms of the agreement/MDG framed by the respondent corporation. In fact, the amounts are sought to be recovered as a deterrent against future breach of contract between the petitioners and the respondent Corporation. The amounts sought to be recovered are under no stretch of imagination being collected towards tolerating the violation of the terms of the MDG. The respondents are not entitled to collect GST from the petitioners herein. Conclusion - Unless and until there is any such supply of goods/services, the question of demanding GST does not arise at all. Petition dismissed.

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• Income Tax

• 2025 (1) TMI 332
  Addition u/s 68 - Assessee argument entries cannot be said to be the income for the previous year as it was wrongfully entered and reversed immediately on the next day - as decided by HC [ 2024 (5) TMI 1503 - PUNJAB HARYANA HIGH COURT] assessees may make fictitious entries and return the same on the next day for taking tax benefits. There may be cases where the entries in the books of accounts may not be reflected in the bank account as the entries may be made in cash or in cheque which may not be ultimately encashed. Also actual income of the assessee which accrues to him during the financial year, if there is an entry of any amount in the books of accounts as on 31st March, the same would be included as income of the assessee, even if he/ she may not have encashed the cheque on that day HELD THAT:- Having heard the learned Senior counsel appearing for the petitioner and having gone through the materials on record, we see no good reason to interfere with the impugned order passed by the High Court. Special Leave Petition is, accordingly, dismissed.

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• 2025 (1) TMI 331
  Maintainability of appeal on low tax effect - Delay filling SLP - As decided by HC [ 2024 (1) TMI 1415 - PUNJAB HARYANA HIGH COURT] appeal is not maintainable keeping in view Circular No.3 of 2018 dated 11.07.2018 of the Central Board of Direct Taxes since the tax effect is below the limit - HELD THAT:- There is a gross delay of 164 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner. Even otherwise, we see no reason to interfere with the impugned order passed by the High Court of Punjab and Haryana at Chandigarh. Special Leave Petition is, accordingly, dismissed on the ground of delay as well as on merits.

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• 2025 (1) TMI 330
  Addition u/s 69A - addition of amount returned by the assessee as an agricultural income - HELD THAT:- The Inspector of Income Tax deputed by AO for spot enquiry has reported after visiting the land that the same has been marked into plots and is not used for cultivation. The material collected by AO during the course of the enquiry was forwarded to the assessee and his comments were sought for. However, the assessee did not offer any explanation. CIT(A) has taken into account the letters issued by Executive Officer, Hayathnagar Mandal, Ranga Reddy District and Deputy Collector and Mandal Revenue Officer, Hayathnagar Mandal, Ranga Reddy District respectively, in which it is stated that no crops were grown on the land and the same was shown as plots in the land revenue records. The Income Tax Appellate Tribunal has also found that the assessee has failed to establish that the land in question was under cultivation. Thus, the authorities under the Act, on the basis of meticulous appreciation of evidence on record have found that the land in question was already plotted and no agricultural operations were carried out by the assessee. Therefore, the claim of agricultural income is not tenable. It is well settled in law that this Court in exercise of powers u/s 260A of the Act cannot interfere with the finding of fact until and unless the same is demonstrated to be perverse. (see Syeda Rahimunnisa vs. Malan Bi by LRs [ 2016 (10) TMI 1233 - SUPREME COURT] and Softbrands India Private Limited [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] - Decided against assessee.

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• 2025 (1) TMI 329
  Attachment of Property by the Income Tax Department - Seeking release of property attached by the Income Tax Department for the tax dues of the previous owner/ 2nd respondent - property was purchased by the petitioners in a court auction - HELD THAT:- As per proviso to Section 281 it is evident that, if the transfer is made for an adequate consideration and without notice of the pendency of the proceedings by the Income Tax Department or without notice of such tax due from the assessee, the transfer cannot be deemed to be void. There is nothing to indicate that the proceedings initiated by the Income Tax Department was known to the petitioners-the purchasers in the court auction. It is also relevant to mention at this juncture that, pursuant to the auction held on 14.01.2009, petitioners had deposited an amount far in excess of the decree amount. They had to deposit Rs. 59,000/- over and above the decree amount with the court to be appropriated to the judgment debtor. Thus, it is evident that the petitioners had purchased the property in the court auction for adequate consideration and that too, without notice of the pendency of the proceedings initiated by the Income Tax Department. Since, the purchase of the property in a court auction was a bona fide transaction as evident from the sequence of events mentioned above, it is explicit that the proviso to Section 281 (1) will apply in respect of the property purchased by the petitioners. The attachment effected by the Income Tax Department is in respect of 51 cents of property, while the petitioners had purchased only 6 cents out of the said extent. It is submitted across the Bar that a multi-storied building is even existing on the remaining extent of property and therefore, no prejudice would befall the Income Tax Department, if they proceed against the remaining extent. In the decision in S. Mathews v. The Secretary Ambalappuzha North Grama Panchayath and others [ 2022 (7) TMI 1565 - KERALA HIGH COURT] had, in a similar situation, observed that, in the facts of the said case, since the sale was without notice of the proceedings initiated by the Income Tax Department, the benefit of proviso to Section 281 of the Income Tax Act, 1961 ought to be accorded to the petitioner therein. Thus, claim petition put forth by the petitioners ought to have been allowed and the Income Tax Department could not have proceeded against the bona fide purchaser of the property covered by Ext. P2 sale certificate issued in favour of the petitioners.

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• 2025 (1) TMI 328
  Revision u/s 263 - scope of inquiry u/s 263 - no verification done by the AO during the assessment proceedings relating to the explanation to be forwarded by the assessee - audit party Opinion - HELD THAT:- Sine-qua non for interference by the CIT u/s 263 of the Act to the assessment order passed by the AO is of satisfaction of certain conditions as noticed above i.e. that the order passed by AO is erroneous and secondly that the order results in prejudice to the revenue. In the present case, it is an admitted position that after the assessment order was passed, audit objections were raised with regard to inquiry said to have been conducted by the AO and the audit - party recorded several major audit objections with respect to the investment made by the assessee in mutual funds/shares. There was no verification done by the AO during the assessment proceedings relating to the explanation to be forwarded by the assessee. We, therefore, are satisfied that the order passed by the CIT un/s 263 of the Act in the facts and circumstances of the case cannot be said to be such which was to be interfered with by the ITAT. The view taken by the ITAT based on the judgment passed in B A Plantation and Industries Ltd. and another.[ 2006 (12) TMI 101 - GAUHATI HIGH COURT] cannot be said to be correct interpretation of Section 263 of the Act and the record relating to any proceedings under the Act available at the time of examination by the Commissioner would also include the audit objections. In CIT vs. P.V.S. Beedies Pvt. Ltd. [ 1997 (10) TMI 5 - SUPREME COURT] held that there can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law. Decided in favour of revenue.

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• 2025 (1) TMI 327
  Revision u/s 263 - case of assessee was reopened u/s 147 - bogus purchases - HELD THAT:- We find that it is not a case lack of enquiry or inadequate enquiry even if there is inadequate enquiries that could not by itself, the occasion of PCIT to pass order u/s 263 merely because he has different of opinion on the matter as recorded above, AO duly examined the fact and formed opinion that no addition is necessary. In case of Mukesh Chand Mal Pitti [ 2023 (10) TMI 1064 - GUJARAT HIGH COURT] held that where cash deposits made by assessee during demonetization period were specifically verified during original assessment proceedings wherein assessee produced all necessary documents as asked for by AO, it was not a case where no enquiry was made by AO during course of assessment proceedings regarding cash deposits, and therefore, impugned revision proceedings u/s 263 was to be quashed. We further find that in Rajmal Kanwar [ 2016 (2) TMI 1317 - ITAT JAIPUR] also held that where AO has made sufficient enquiry, considered survey record and surrender made by assessee and after considering submissions of assessee completed assessment proceedings u/s 143(3), assessment order could not be held to be an erroneous order which was prejudicial to interest of revenue. We also find merit in the contention of assessee that similar assessment order for assessment year 2016-17 wherein similar transaction has been accepted by AO and same is not revised on the ground of same issue. We find that once the explanation/reply of assessee was found acceptable by AO and no addition was made he has taken a plausible view which is otherwise legally sustainable view supported with various evidence furnished by assessee, which cannot be considered as erroneous. Thus, the twin condition for exercising jurisdiction u/s 263 is not fulfilled in the present case. In our view, when the transaction of assessee with Unique Polypack was examined by the AO in accepting the impugned transaction, PCIT was not justified in invoking the provisions of section 263. Therefore, the order passed by PCIT is not legally sustainable and the same is set aside. Grounds of appeal raised by the assessee are allowed.

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• 2025 (1) TMI 326
  Validity of reassessment proceedings - non-compliance of taking prior approval by the specified authority required u/s. 151 - Scope of by whom in procedural compliance for issuance of notice u/s.148 - amended provisions under the Act read with TOLA - notice u/s.148 has been issued beyond three years - HELD THAT:- In the present case, the relevant Assessment Year is 2017-18 and the time limit of three years lapsed on 31.03.2021 which falls between 20.03.2020 and 31.03.2021 during which provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) would apply. Accordingly, the amended provisions under the Act read with TOLA extended the time limit for granting of approval till 30.06.2021 by the specified authority. Thus, in the present case, since the notice u/s. 148 and order u/s. 148A(b) have been issued beyond the period of three years from the end of the relevant Assessment Year, case of the assessee falls within the provisions of section 151(ii) of the amended law whereby the specified authority for grant of approval is specified as Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Contrary to this requirement, the approval obtained is by Principal Commissioner of Income Tax-17, Mumbai. Accordingly, since a proper sanction by the specified authority had not been obtained for issue of notice u/s.148 under the applicable provisions of law, said notice is invalid and bad in law. Referring to judicial precedent in the case of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] and Rajiv Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] we hold that sanction by specified authority has not been obtained by the Assessing Officer in accordance with the provisions contained in section 151 of the Act under the new regime, since notice u/s.148 has been issued beyond three years from the end of the relevant Assessment Year. Accordingly, the said notice issued is invalid and thus quashed. Decided in favour of assessee.

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• 2025 (1) TMI 325
  TP Adjustment - upholding M/s. ASK Re Ltd., Hong Kong as Associated Enterprises as per Section 92A - HELD THAT:- M/s. ASK Re Ltd., Hong Kong is controlled jointly by relatives of controlling shareholder of the assessee-company and falls u/s. 92A(2)(j) of the Act. Selection of MAM - rejecting the CUP and applying TNMM as MAM and making adjustment in respect of purchases from the AE - HELD THAT:- TPO has rejected the CUP methods giving the reason that the assessee has neither used internal CUP nor external CUP and questioned the markup of 1.09% but we are not in agreement to TPO and Ld. DRP as the price at which assessee has purchased the goods from AE is comparable to price at which third party have sold goods and if price from independent party is available, CUP is the most appropriate method to bench mark the transaction. CUP method is the MAM and the adjustment made by the TPO/Ld. DRP is uncalled for. Thus, these grounds of appeal of the assessee are allowed. Disallowance u/s. 14A r/w Rule 8D - assessee has made investment which is capable of earning income exempt from tax - AR has argued that the assessee does not have any exempt income and the A.O has made the disallowance without recording any reason - HELD THAT:- It has been consistently held by the court disallowances u/s 14A cannot exceed the exempt income. As decided in the case of Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] that subsequent amendment made by Finance Act, 2022 for Section 14A of the Act by inserting non-obstante clause and explanation cannot be presumed to have a retrospective effects. Also in the case of M/s Maxivision Eye Hospital Pvt. Ltd. [ 2022 (7) TMI 1450 - ITAT CHENNAI] since the assessee has not earned any exempt income, no disallowance can be resorted by invoking the provisions of section 14A of the Act read with Rule 8D(2) of the Rules. Decided in favour of assessee.

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• 2025 (1) TMI 324
  Addition u/s 69A r.w.s.115BBE - Assessee qualifies for exemption u/s 10(23AA) - as submitted that in the case of the assessee, assessee has already incurred more than 85% of the income towards the charitable purposes, therefore, no addition is called for - HELD THAT:- Assessee is a charitable institution and had granted for 12A registration by CIT, Delhi-II, New Delhi on 26.07.1975. No doubt, assessee was granted registration u/s 12A of the Act and it is also a fact on record that assessee has not filed its return of income even though notice u/s 148 was issued by the AO based on the financial informations available with him with regard to various deposits and renewal on time deposits. Assessee has prayed that the case of the assessee falls u/s 10(23AA) of the Act. As per the provisions of section 139(4)(a) of the Act, it is obligation on the part of the assessee who were claiming the benefit u/s 11 of the Act has to file its return of income u/s 139 to claim the benefits. Even though the assessee who has got registration u/s 12A of the Act, in order to get the benefit it has to file its return of income. Therefore, in the given case, it is fact on record that assessee has not filed its return of income, therefore, assessee loses the benefit of claiming exemption u/s 11 of the Act. Therefore, the case of the assessee has to be assessed on the basis of commercial terms as in AOP. We observed that the AO has assessed the income after considering gross receipts and relevant expenditure. In our considered view, CIT (A) has given the relief without considering this aspect on record. We observed that since there was no representation on the part of the assessee before the AO and CIT (A) has granted the relief based on various documents submitted before him without giving opportunity to the AO. Therefore, considering the nature of charitable institution which serves the widows and dependants of army soldiers, we deem it fit and proper to remit this issue back to the file of AO to consider various documents and redo the assessment as per law and consider various submissions made by the assessee before the CIT (A) with regard to term deposits and renewal of the same and also cash deposits which has generated by the assessee out of schools and other activities. We also direct the AO to redo the assessment as per above direction after giving proper opportunity of being heard to the assessee. Appeal filed by the Revenue is allowed for statistical purposes.

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• 2025 (1) TMI 323
  Capital gain computation - Disallowance towards the cost of indexation claimed by the assessee - no documentary evidence was filed in support of the claim of expenses incurred on construction/ renovation expenses in respect of the property on which indexation was claimed - HELD THAT:- Denial of the entire expenditure incurred towards as cost of construction by the AO cannot be held to be justified even if the assessee did not submit satisfactory bills/vouchers in support of her claim towards the cost of construction. It is also a fact that the AO in his remand report stated that an amount for the FY 2009-10 was paid for Stamp Duty, MCD Map fee and MCD Development charges and this amount was allowable as these expenditures were paid to the Government department. This further reinforces the fact that the building that was sold was constructed on which expenses were definitely incurred. We hereby direct the AO to allow 50% of the indexation claimed. We also clarify that there will be no further allowance of indexation of Rs. 3,94,860/- as allowed by the CIT(A) as the same in our estimation is also included in the 50% of the indexation amounting to Rs. 24,42,262/- allowed by us. The balance disallowance of Rs. 24,42,262/- claimed towards indexation by the assessee by the AO is confirmed. Ground no.5 6 of the appeal are partly allowed. Disallowance of deduction claimed u/s 80C towards payment of LIC premium - Above claim was stated to be allowable by the AO in his remand report, addition is deleted.

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• 2025 (1) TMI 322
  Addition u/s 69A - cash payment towards credit card purchases unexplained - HELD THAT:- Where the assessee is found be the owner of any money, bullion, jewellery or other valuable articles and such money etc. are not recorded in the books of account, if any, maintained by him of any source of income and the assessee offers no explanation about the nature and source of acquisition of the money etc., or the explanation offered by him, is not satisfactory, in the opinion of AO, the money and the value of bullion, jewellery or other valuable articles may be deemed to be the income of the assessee for such year. In the present case, assessee has purchased the credit cards by making cash payments. It is, therefore, clear that assessee was owner of money (cash) which was used to make credit card purchases. However, he has not explained the nature and source of acquisition of such money, being cash - AO has added the same u/s 69A of the Act due to non-compliance by assessee to the statutory notices as well as the show cause notice. CIT(A) has rightly confirmed the addition because assessee did not attend before him or filed any written submission in support of the grounds raised before him. Before us also, the assessee has not filed any written submission in support of the grounds raised by him. Provisions of section 69A of the Act are clearly attracted to the facts of the instant appeal - Decided against assessee.

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• 2025 (1) TMI 321
  Cash deposits during demonetization period - AO has made the addition u/s 69A r/w section 115BBE - HELD THAT:- Addition made by the AO is merely on surmises and conjunctures because the assessee has duly recorded the cash sales in its books and the alleged cash deposit is from the available cash in hand in the regular books of accounts. Assessee is regularly making cash sales from past many years. Books of accounts are not rejected Quantitative details are maintained, because, as being an authorized dealer of TVS Motor Co. Pvt. Ltd., the purchases are duly recorded and the sales if any made in cash are also recorded in the quantitative details and VAT returns. Therefore, in absence of any evidence of any unrecorded sales placed by the Revenue authorities and considering the fact that the assessee is a dealer of a reputed company i.e. TVS Motor Company Ltd., we fail to find any merit in the finding of both the lower authorities and are inclined to hold that the assessee has successively explained the source of cash deposits in the bank account during 9th November, 2016 to 31st December, 2016, which are from regular cash sales and therefore, impugned addition u/s 69A read with section 115BBE is uncalled for. The finding of the ld. CIT (A) is set aside and the impugned addition stands deleted. Effective ground raised by the assessee is allowed.

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• Customs

• 2025 (1) TMI 320
  Revocation of Customs Broker license - forfeiture of security deposit - levy of penalty - violation of Regulations 10 (b), 10 (d), and 10 (n) of the Customs Brokers Licensing Regulations, 2018. Partial violation of Rule 10 (b) - allowing Sh Babu Ithape to approach the Docks officer for examination of goods - HELD THAT:- A plain reading of the said Regulation, it is apparent that the Customs Broker is required to transact the business at the Customs Station either personally or through his authorized employer. That requirement stands fulfilled as Sh Dilip Shelar, who handled the documents was an employer of the appellant. Further, it has been submitted that his responsibility ended with filing of documents which stands corroborated by the statement of Imran Sheikh. Hence, the conclusion arrived at by the adjudicating authority that the appellant has unintentionally or intentionally violated 10 (b) is not correct. Consequently, there is no violation of Regulation 10 (b). Violation of Regulation 10 (n) - HELD THAT:- The impugned order has concluded that the appellant was not clear whether the B/E had been filed under Section 69 or Section 59 of the Customs Act. This cannot be the reason for revoking the CB license. The appellant filed the B/E as per procedure and same has been subsequently cleared by the Customs Department. It is noted that as per section 146 of the Customs Act, the role of a Customs Broker is related to the business of import or export of the goods. The obligation of the appellant was only to facilitate clearance of goods for warehousing at the Customs port. Admittedly, the appellant was not responsible for the deposition of the goods to the warehouse. It is also noted that the persons controlling the importer firm had acted on their own accord to defraud the revenue, and there is no allegation or evidence that the appellant had advised or aided their nefarious activity. In this context, support taken from the Supreme Court s judgment in Collector of Customs, Cochin vs Trivandrum Rubber Works Ltd., [ 1998 (11) TMI 127 - SUPREME COURT ] wherein the Hon ble Court held that the Customs Broker is an agent for only limited purpose of arranging release of goods and once the goods are cleared, he has no further function and he is not liable for any action of the importer. Accordingly, there was no violation of Regulation 10 (n) of CBLR, 2018. In the instant case, the KYC documents submitted by the appellant are all valid documents. There is no other requirement under Regulation 10 (n) which remains to be fulfilled by the appellant. Conclusion - The role of a Customs Broker is limited to facilitating the clearance of goods, and they are not responsible for subsequent actions by the importer. Verification of documents through official sources fulfills the regulatory requirements. The appellant did not violate Regulations 10 (b), 10 (d), or 10 (n) of the CBLR, 2018. Consequently, the revocation of the Customs Broker's license was not justified. The impugned order is set aside - appeal allowed.

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• 2025 (1) TMI 319
  Rejection of request of the petitioner for amending the respective Bill of Entries under which the goods were cleared from the petitioner for clearing the goods from SEZ units - petitioner had by mistake paid 20% of the Customs duty - HELD THAT:- Not only a Bill of Entry can be modified by way of an Appeal before the Appellate Authority but also other relevant provisions of the Act. This Court has considered the same in the case of M/S. NEYVELI LIGNITE CORPORATION INDIA LIMITED VERSUS THE COMMISSIONER OF CUSTOMS, THE ASSISTANT COMMISSIONER OF CUSTOMS (IMPORT) [ 2022 (4) TMI 1374 - MADRAS HIGH COURT ]. In para 16, the Madurai Bench of this Court has taken note of the decision of the Hon'ble Supreme Court referred to supra and has ultimately concluded ' As long as the petitioner is able to satisfy the requirements for amendment of the document namely, the subject Bill of Entry with the documents, which were in existence at the time of import, the benefit of amendments cannot be denied.' Conclusion - There is no doubt that an importer or a person filing a bill of entry can amend the bill of entry by any of the three methods prescribed under the Customs Act, 1962 namely by way of an appeal or by filing an application under section 149 or Section 154 of the Customs Act, 1962. These Writ Petitions are allowed by directing the respondents to re-do the exercise under Section 149 of the Customs Act, 1962, within a period of three months from the date of receipt of a copy of this order.

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• 2025 (1) TMI 318
  Waiver of mandatory pre-deposit of 7.5% of the disputed amount for maintaining an appeal - amendment to Section 129-E of the Customs Act, 1962 - Jurisdiction of High Court to waive the mandatory pre-deposit requirement under Article 226 of the Constitution of India. HELD THAT:- It appears that the issue was also considered in the context of the provisions of the Finance Act, 1994 by a learned Single Judge of this court in SANTHOSH KUMAR K, PROPRIETOR, M/S. SWATHI CONSTRUCTIONS VERSUS THE COMMISSIONER CENTRAL GST AND CENTRAL EXCISE, THE CHIEF COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [ 2022 (4) TMI 134 - KERALA HIGH COURT] , where this court held ' When the Statute does not provide for waiver of a predeposit, it is impermissible for this Court to act contrary to the legislative intention merely on the plea of financial hardships. If such pleas are entertained, and directions are issued for waiving the pre-deposit, there will be no end to such demands. Further if orders are issued, contrary to the Statute the same will destroy the very scheme of the Statute including the consequent amendment.' The petitioner in these cases cannot be granted any relief in exercise of jurisdiction vested in this court under Article 226 of the Constitution of India - Petition dismissed.

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• 2025 (1) TMI 317
  Evasion of Customs Duty - failure to declare MRP before the Customs and sold the goods at higher MRP - scope of its jurisdiction of Adjudicating Authority in terms of the remand order - sufficient opportunity of hearing not granted to appellant - violation of principles of natural justice. Scope of its jurisdiction of Adjudicating Authority in terms of the remand order - HELD THAT:- There are no hesitation in saying that the Adjudicating Authority has exceeded its jurisdiction in considering the issue in respect of the live consignment and the goods lying in the godown of the appellant as they have already been decided by the Tribunal and the same were binding on the Adjudicating Authority being a subordinate authority. Reference made to the decision of the Apex Court in UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. [ 1991 (9) TMI 72 - SUPREME COURT] laying down that the principles of judicial discipline require that, the orders of the higher Appellate Authorities should be followed unreservedly by the subordinate authorities unless its operation has been suspended by competent court. The order of the Appellate Collector is binding on the Assistant Collector working within his jurisdiction and the order of the Tribunal is binding on the Assistant Collectors and the Appellate Collectors, who function under the jurisdiction of the Tribunal . Sale of goods on much higher MRP after changing the MRP label - HELD THAT:- The Tribunal has categorically observed that there is clear violation of the provisions of the Customs Act, which calls for demand of differential duty as well as penal action. Since the quantification of the differential duty was made in a summary manner based on certain illustrative evidences, the Tribunal had remanded the limited issue for quantification of differential duty by detailed verification. Whether sufficient opportunity has been granted to the appellant during the remand proceedings? - HELD THAT:- Personal hearing was given for 24.09.2018 but nobody appeared, and accordingly the case was taken up for adjudication on the basis of the available records and the invoices submitted by the appellant. Hence, it cannot be said that the principles of natural justice has not been followed and sufficient opportunity has not been granted to the appellant, however, it is the appellant who failed to co- operate and deliberately avoided the hearing. As per the Revenue, on examination it was revealed that MRP/RSP were neither affixed on individual packs nor on cardboard cartons and later, it was found that these goods were sold at much higher price than the MRP declared for assessment purposes thereby evading the payment of appropriate CVD - There are no merits in the submissions at this stage as the Revenue had not challenged these findings of the Tribunal in the earlier round of litigation. Quantification and its consideration by the Adjudicating Authority - HELD THAT:- Even during the course of arguments, the learned counsel for the appellant had no further documents to substantiate the contention that the sale price higher than the declared MRP comprised only a small percentage and therefore there are no reason to differ from the findings of the Adjudicating Authority. Conclusion - i) Selling goods at higher MRPs than declared constitutes a customs violation warranting differential duty and penalties. ii) The duty demand on the live consignment was set aside. The duty demand on goods in the godown was set aside. The need for quantification of differential duty on goods sold at higher MRPs was upheld. iii) The Adjudicating Authority's jurisdictional overreach was rectified by setting aside its contrary findings. iv) The quantification of differential duty was affirmed based on available evidence. Appeal allowed in part.

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• 2025 (1) TMI 316
  Classification of goods intended to be imported - Provisionally Preserved Areca Nut (Whole) and Provisionally Preserved Areca Nut (Split) - to be classified under Chapter Heading 0812 90 90? - HELD THAT:- The provisionally preserved betel nuts are not fit for immediate human consumption and they are more specifically covered under Chapter Heading 0812 due to following Chapter Note. The Heading 0812 applies to fruit and nuts (whether or not blanched or scalded) which have been treated solely to ensure their provisional preservation during transport or storage prior to use (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions) provided they remain unsuitable for immediate consumption in that state. Though areca nuts are separately mentioned under 0802, nuts provisionally preserved but unsuitable in that state for immediate consumption, as the areca nuts in the present case, will get covered under Heading 0812 which occurs later in the schedule and accordingly, the nuts that are provisionally preserved and not fit for immediate consumption need to be classified more specifically under the CTH 0812 90 90. Conclusion - The Provisionally Preserved Areca Nut (whole) and Provisionally preserved Areca nut (split) merit classification under Custom Tariff Heading 0812 specifically under sub-heading 0812 90 90 of the First Schedule of the Customs Tariff Act, 1975.

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• Insolvency & Bankruptcy

• 2025 (1) TMI 315
  Challenge to Impugned Order - failure to consider the changed circumstances - failure to appreciate that the OTS offer stood to benefit the stakeholders more than the approved Resolution Plan - HELD THAT:- It is to be kept in mind that the submission of the one-time settlement proposal as prayed for in the Interlocutory Application being IA (IBC) No. 1862/2024, could not be considered by the Learned Adjudicating Authority for the reason being that, on earlier three occasions, the OTS proposals had already stood rejected and also because of the fact that Resolution Plan as of now has already been approved on 07.12.2023. Therefore, with regard to the instant OTS proposal submitted on 03.09.2024, by virtue of IA No. 1862/2024, there was no scope open for the said proposal to be considered to be accepted and consequentially the Impugned Order that was passed thereon, holding that the OTS proposal as prayed for in IA (IBC) No. 1862/2024, could not be considered and is not maintainable as the Resolution Plan has already been approved, cannot be faulted. The view expressed by the Learned Adjudicating Authority in the Impugned Order of 12.09.2024, holding OTS proposal to be not maintainable due to the fact of the Resolution Plan already having been approved cannot be faulted of in any manner whatsoever, as new chapter cannot be permitted to be opened, when the Appellant himself has failed on three earlier occasions to get his OTS proposals approved and because of the fact that the Resolution Plan as of now has already been approved. In these circumstances, the application being IA (IBC) No. 1862/2024, could not have been considered by the Learned Adjudicating Authority and the same has been rightly rejected by the Impugned Order, which does not call for any interference in the exercise of the Appellate jurisdiction by this Appellate Tribunal under Section 61 of I B Code, 2016. Conclusion - The view expressed by the Learned Adjudicating Authority in the Impugned Order of 12.09.2024, holding OTS proposal to be not maintainable due to the fact of the Resolution Plan already having been approved cannot be faulted. The finality of an approved Resolution Plan in insolvency proceedings is paramount, and subsequent settlement proposals cannot be entertained unless there are compelling reasons. Appeal dismissed.

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• Service Tax

• 2025 (1) TMI 314
  Levy of service tax - expenses incurred by the petitioner as a pure agent for its customers - mandatory requirements of pre-consultation hearing / pre-notice consultation before the issuance of the Show Cause Notice complied with or not - violation of principles of natural justice - HELD THAT:- Since the reply of the petitioner is in adequate and is bereft of factual details to explicate that the petitioner had indeed incurred expenses as pure agent on behalf of the customers / clients, the decision of the 2nd respondent in the Impugned Order-in-Original 16-21/2021 vide DIN No.20211059TK0000555CB8 dated 26.10.2021 will not warrant any interference. However, the fact remains that the petitioner is providing Clearing and Forwarding Services and that of a Goods Transport Agent (GTA) / Goods Transport Operator (GTO). Therefore, to balance the interest of the petitioner and the respondents and considering the fact that the disputes pertains to the period starting from April 2008 ending with 2017 i.e., 30.06.2017, this Court is inclined to quash the Impugned Order and remits the case back to the respondents to pass a fresh order on merits. However, the petitioner shall deposit a sum of Rs. 50,00,000/- to secure the interest of the revenue. Conclusion - The Impugned Order is quashed and the case remanded back, allowing the petitioner to address procedural and time-bar issues comprehensively. Petition disposed off by way of remand.

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• 2025 (1) TMI 313
  Invocation of extended period of limitation for recovery of service tax under proviso to Section 73(1) of Chapter V of the Finance Act, 1994 - entitlement to exemption under N/N. 25/2012-ST dated 20.06.2012 on the services provided to various Government Department - HELD THAT:- This Court has already answered the issue partly against the contractors in the writ petition that were filed before this Court. However, liberty has been granted to the assessee to participate in the proceedings, if they had not filed any reply. Since the notice was issued during the Covid 19 pandemic and the personal hearing also held during the Covid-19 pandemic, Court is inclined to set aside the impugned order and remits the case back to the first respondent to pass a fresh order on merits. Needless to state, the petitioner shall be heard before final orders are passed. The first respondent shall pass a final orders on merits and in accordance with law preferably within a period of 6 months from the date of receipt of a coy of this order. Conclusion - The extended period of time limit for recovery of Service tax under proviso to Section 73(1) of the Finance Act 1994 read with Section 174 of the CGST Act, 2017 is invokable. Petition allowed.

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• 2025 (1) TMI 312
  Quantification of service tax - whether the amount reflecting in Income Tax return for the year 2014-15 is taxable value of services or it includes non-taxable amount also? - penalty. HELD THAT:- The learned Commissioner (Appeals) in the impugned order has placed reliance on the Statement/ 26AS to hold that services rendered by the Appellant were taxable services and service tax was chargeable on whole consideration received during impugned period 2014-15. As per Statement/ 26AS, TDS was deducted under Section 194C of the Income Tax Act. As per the learned Commissioner (Appeals), under Section 194C of the Income Tax Act, TDS is deductible when services namely Works Contract Service, Construction of Commercial Complex Service, Construction of Residential Complex Service, Repair Maintenance, Erection, Commissioning Installation Services are provided. For charging service tax, valuation of every service specified in Section 194C requires specific method and specific abatement. Onus lies on the Department to identify the nature of service provided on which demand of service tax is being raised. In the case of COMMR. OF C. EX., CHANDIGARH VERSUS ARPIT ADVERTISING [ 2011 (5) TMI 702 - CESTAT, NEW DELHI ], the Tribunal has held that without identifying the nature of the Service provided by way of proper investigation, demand of service tax cannot be raised on the basis of Balance Sheet and other financial statements. Similarly, Hon ble Madras High Court in the case of M SUGANTHI, THIRUMURTHY BUS TRANSPORT AND K MAHALINGAM VERSUS ASSTT COMMISSIONER OF CENTRAL EXCISE, POLLACHI [ 2011 (4) TMI 11 - HIGH COURT OF MADRAS ] held that the Department exercising power under fiscal statute while passing order bringing someone under taxing net, requires specific finding as to the liability. In this case, the Department failed to discharge the onus upon it to identify nature of service before confirming demand. The impugned order is not proper and justified. In accordance with provisions of Section 67 of the Finance Act, 1994 read with Rule 2A of the Service Tax (Determination of Value) Rules, 2006 no service tax was chargeable on the value of goods sold during execution of work contract. Ld. Commissioner (Appeals) has erred to confirm the demand of service tax on the value of goods also. Section 67 of the Finance Act, 1994 provided to charge service tax on the value of service only. Rule 2A of the Service Tax (Determination of Value) Rules, 2006 provided that value of service in works contract would be less by the value of goods supplied. Thus, no service tax was chargeable on value of goods amounting to Rs.33,00,650/-. It was observed by the Ld. Commissioner (Appeals) that no sale tax was paid on the supply of goods. Hence, the value of goods was taken as value of service. Reference is drawn to the decision of the Hon ble Supreme Court in the case of Bhayana Builders Pvt. Ltd. [COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT ] where the Apex Court has observed that a plain meaning of the expression gross amount charged used in Section 67 of the Finance Act, 1994 for charging service tax by the service provider would lead to obvious conclusion that value of goods even if provided free of cost would not be included for arriving at gross amount . It shows that value of goods even if there is no sale would not be part of value of service. It also shows that there would be no VAT/ sale tax as no sale element exists, even then no service tax would be payable on value of material. Thus, no service tax would be demanded on the value of goods sold. Out of total consideration of Rs.57,68,440/- for 2014-15, an amount of Rs.33,00,650/- pertains to sale of goods and the remaining amount of Rs.24,67,790/- pertains to provision of services of erection, assembling and installation against the works contracts as certified by the Chartered Accountant and submitted by the Appellant. The Appellant raised Invoice No.13 dated 19.08.2014 to M/s Par Techno Heat Pvt. Ltd., for fabrication, erection and commissioning work of ESP including cost of material against contract dated 18.01.2013. The invoice is a composite invoice. The contract was Works Contract. Service Tax @12.36% was payable on the forty percent of the said value of Rs.24,67,790/- as per Rule 2A(ii) (A) of the Service Tax (Determination of Value) Rules, 2006 - In accordance with above N/N. 30/12-ST dated 20.06.2012, service tax liability on the Appellant comes to Rs.61,004/- (50% of Rs.1,22,008/-) which was already discharged vide challan No.22394 dated 30.03.2015 along with interest before issuance of the instant SCN. Thus, no demand of service tax is sustainable. Penalty - HELD THAT:- In case no demand is sustainable, no penalty is imposable. In the SCN, penalty under Section 78 of the Finance Act, 1994 was proposed and subsequently vide the impugned order penalty under the said Section was imposed - As in the present case, there is no short payment of Service Tax, no penalty is imposable under Section 78. Penalty imposed under Section 78 is, therefore, liable to be quashed. Penalty under Section 77(2) was also imposed which is a residuary penalty but in the SCN and subsequent order, nothing was discussed for imposition of residuary penalty. Hence, no penalty is imposable under Section 77(2). As regards, demand of late fee for filing ST-3 Return for the period from Oct, 2014 to Mar, 2015 belatedly, she submitted that as there was no tax liability during that period, non-filing or late filing of return was not chargeable to any late fee in view of Board s Circular No.97/08/07-ST dated 23.08.2007 which has clarified the requirement of filing returns when service tax liability is nil. Conclusion - Service tax cannot be levied on amounts received for the sale of goods. Proper investigation is required to determine the taxable value of services. Appeal allowed.

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• 2025 (1) TMI 311
  Levy of service tax service tax based on discrepancies between ST-3 Returns and Income Tax Returns - entire demand is based on difference in ST-3 Returns and Income Tax Returns and that the demand is raised without examination of the books of accounts - time limitation - HELD THAT:- The Revenue should have established that the said transactions were in respect of provision of services. Further, the Authorities knowing well about the activities of the Appellant since 2008, Appellant filed returns for the year 2013-14 onwards and nil returns were filed from 2015-16 and 2016-17. In the circumstances, there is no reason to invoke extended period of limitation in the absence of any ingredient with an intention to evade payment of service tax. Thus, show cause notice issued under the provisions of Section 73(1) of Finance Act, 1994 is unsustainable in law. Accordingly, the notice is hit by bar of limitation. This Tribunal and other Co-ordinate Benches, in catena of decisions continuously hold that solely on the basis of Income Tax Returns, demand cannot be sustainable. Therefore, it is essential to establish that the value on which such service tax is calculated is the value under Section 67 and the same is derived from the consideration received by the appellant out of the activity which has to satisfy definition of Service under Sub-section (44) of Section 65B of Finance Act, 1994. Such type of examination of the facts and arriving at the prima facie view that the appellant had received the consideration by providing service is missing in the show cause notice. Thus,t the said show cause notice dated 31.12.2020 is not sustainable in law. Conclusion - Service tax demands cannot be based solely on discrepancies between tax returns without corroborating evidence. The burden of proof lies with the Revenue to establish receipt of consideration for services. Appeal allowed.

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• 2025 (1) TMI 310
  Levy of service tax - discrepancies identified between the values reported in the ST-3 Returns and Income Tax Returns filed by the Appellant for the year 2016-17 - demand raised without examination of the books of accounts - time limitation - HELD THAT:- The Revenue should have established that the said transactions were in respect of provision of services. Further, it is found that the Authorities knowing well about the activities of the Appellant since 2012, Appellant filed returns for the year 2012-13 onwards. In the circumstances, there is no reason to invoke extended period of limitation in the absence of any ingredient with an intention to evade payment of service tax. Thus, show cause notice issued under the provisions of Section 73(1) of Finance Act, 1994 is unsustainable in law. Accordingly, the notice is hit by bar of limitation. Further, it is found that this Tribunal and other Co-ordinate Benches, in catena of decisions continuously hold that solely on the basis of Income Tax Returns, demand cannot be sustainable. Therefore, it is essential to establish that the value on which such service tax is calculated is the value under Section 67 and the same is derived from the consideration received by the appellant out of the activity which has to satisfy definition of service under sub-section (44) of Section 65B of Finance Act, 1994. Such type of examination of the facts and arriving at the prima facie view that the appellant had received the consideration by providing service is missing in the show cause notice. Thus the said show cause notice dated 12.10.2021 is not sustainable in law. Conclusion - Demands based solely on discrepancies in tax returns without examining books of accounts are unsustainable; show cause notices require a factual basis. Appeal allowed.

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• 2025 (1) TMI 309
  Short payment of service tax - Wrongful availament of abatement of 60% as per SI.No. 10 of N/N. 26/20120ST dated 20.06.2012 as amended - HELD THAT:- The appellant have vehemently argued that the service on which the present demand was confirmed itself was not taxable, this claim was made by the appellant before the adjudicating authority, however, the adjudicating authority has not given the relief on the ground that at the time of payment of service tax they have not claimed the exemption from service tax from the service in question therefore at this stage they cannot make their claim. The adjudicating authority on this contention is disagreed as it is a settled law that any benefit available under the law can be claimed at any stage by an assessee. Therefore, if the appellant s service is exempted or non taxable the present demand will not sustain however, it is not examined whether the exemption claimed by the appellant is admissible to them or not and the same is left open for the adjudicating authority to reconsider the matter. Conclusion - It is a settled law that any benefit available under the law can be claimed at any stage by an assessee. Appeal allowed by way of remand to the adjudicating authority for passing a fresh order.

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• 2025 (1) TMI 308
  Liability to pay interest on the Cenvat Credit wrongly availed in terms of Rule 14 of Cenvat credit Rules, 2004 read with Section 75 of the Finance Act, 1994 - HELD THAT:- This appeal is involving limited issue of demand of interest amounting to Rs. 7,43,063/- on the ground that the appellant have wrongly availed the credit. It is found that since the appellant have not utilised the credit and kept in separate account and not in the Cenvat account the same will not amount to wrong availment of credit unless or until the same is transferred to the Cenvat account and utilized the same. Therefore in this fact till the appellant have utilized the amount for payment of service tax neither it is a case of availment of credit nor any interest liability arise. Accordingly, in the facts of the present case the appellant is not liable to pay any interest hence the demand of interest is set aside. Conclusion - The appellant is not liable to pay any interest. Appeal allowed.

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• 2025 (1) TMI 307
  Application for rectification of mistake - Classification fo services - service provided to the Governmental authority for distribution/transmission of power to GETCO - HELD THAT:- It is found that though in the impugned order the classification of service was made separately under commercial or industrial construction services as well as under works contract service there is an apparent error in the order which needs to be corrected, accordingly the paragraph starting from From the above decision it is settled law, accordingly the demand in the present case is not sustainable on this ground itself is deleted. Having rectified the order as above we agree with the submission of the learned counsel for the assessee that entire service was provided to GETCO and Patan Municipality therefore firstly the service provider is not in the nature of commercial or industrial service accordingly the same is not taxable. Moreover, the service provided to GETCO being in relation to transmission of electricity were exempted in terms of Notification No. 45/2010-ST dated 20.07.2010 for the period of 20.07.2010 and for the period from 20.07.2010 vide Notification No. 11/2010-ST dated 20.07.2010 and the same services are not taxable from 01.07.2012 in view of negative list of services under Section 66(b) of Finance Act, 1994. Therefore for this reason also the services not liable to service tax. Conclusion - It is settled law that show cause notice has not proposed the demand under the correct category of the service the demand shall not sustain. The ROM application is disposed of.

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• Central Excise

• 2025 (1) TMI 306
  Error in allowing the appeal of the respondent when the respondent has liable to pay the duty under Section 3A of the Central Excise Act, 1944 but paid in terms of Section 3 of the Central Excise Act or not - permission granted by the erstwhile Commissioner to pay duty under Section 3 have any statutory value when admittedly the respondent is liable to pay duty under Section 3 of the said Act - issuance of Show Cause Notice is time barred when the respondent has not disclosed their liability to pay duty under section 3A - HELD THAT:- The issue involved in this appeal is covered by order passed by the Tribunal in assessee s own case [ 2023 (4) TMI 708 - CESTAT KOLKATA ]. Apart from the Learned Tribunal had rightly noted that the Commissioner had granted permission vide letters dated 29-3-1997 and 20-4-1998. This aspect of the matter is not in dispute as it has been admitted in the order passed by the Commissioner dated 29-12-2017, wherein the Commissioner would observe that permission was granted by the Commissioner in response to the request made by the assessee and in the interest of revenue to eliminate the inconvenience in practical operation with the condition that concession would be reviewed at the end of the final order on the basis of the revenue performance of the assessee. There is nothing on record to indicate that there was a review of the matter and the permissions granted by the department vide letters dated 23-9-1997 and 20-4-1998 remained intact. The Learned Tribunal granted relief to the assessee taking note of the undisputed facts. With regard to notification of the extended period of limitation, the facts clearly show that the issue with regard to payment of duty under Section 3 of the Act had attained finality after the order of the Learned Tribunal dated 27-2-2023 and in such circumstances, the question of applying the extended period of limitation under the Rules would not arise. Consequently, the penalty is also not imposable. Conclusion - There is nothing on record to indicate that there was a review of the matter and the permissions granted by the department vide letters dated 23-9-1997 and 20-4-1998 remained intact. Appeal dismissed.

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• 2025 (1) TMI 305
  Method of valuation - clearance of excisable goods made to related parties - to be governed under Rule 8 of Central Excuse Valuation Rules, 2000 or not - personal penalties imposed under Rule 26 on certain individuals. Demand of differential duty on the issue of valuation - HELD THAT:- There is no dispute on the fact that the goods are sold to the related as well as un related buyers and the appellant have applied the transaction value which is charged to the un related buyers also in respect of clearances made to the related parties. In this case , the valuation of the goods cleared to the related buyers was correctly made by applying the transaction value at which the goods are sold to unrelated buyers. This issue has been considered by the larger bench of the CESTAT in the case of ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [ 2007 (2) TMI 5 - CESTAT, MUMBAI-LB] where it was held that ' the provisions of Rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944.' Thus, valuation of goods cleared to related parties which is based on the transaction value at which the goods are sold applied to unrelated buyers is absolutely correct. Therefore, in this regard demand is not sustainable. Hence, duty demand of Rs. 5,36,540/- is set aside. Personal penalties imposed on various persons - HELD THAT:- Since the major demand which is on the issue of valuation has been set aside, the personal penalty under Rule 26 is not sustainable considering the over all facts of the case. Therefore, the penalties imposed under Rule 26 are set aside. Conclusion - Rule 8 applies only when the entire production is captively consumed and not sold. Rule 4 is preferred for valuation when goods are sold to both related and unrelated parties. Penalties imposed under Rule 26 are set aside. Appeal allowed in part.

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• 2025 (1) TMI 304
  CENVAT Credit - duty paying documents - whether the availment of Cenvat Credit by the appellant on the supplementary invoice in respect of the duty paid on the stock transfer can be denied invoking Rule 9(1)(b) of Cenvat Credit Rules, 2004? - suppression of facts or not - HELD THAT:- From the plain reading of the above Rule 9(1)(b) it is clear that the restriction for Cenvat Credit provided in the Rule 9(1)(b) is applicable only in such cases where the transaction of input is of sale. In the present case admittedly the good were received by the appellant from their own unit therefore the transaction is not for sale but only stock transfer. It is also observed from the invoice copy that invoices for stock transfer and no VAT tax has been paid therefore in the present case transaction being of stock transfer and not of sale, Rule 9(1)(b) is not applicable and on that basis denial of Cenvat Credit is without authority of law. Similar issue has considered by this tribunal in the case of M/S ESSAR OIL LTD. VERSUS CCE RAJKOT [ 2014 (2) TMI 766 - CESTAT AHMEDABAD ] wherein it was held that 'The word Challan and any other similar document evidencing payment of additional CVD, mentioned in Explanation to Rule 9 (1)(B), will thus mean those situations where duty is paid under a challan by an importer/dealer of imported goods who has sold the cenvatable goods.' Conclusion - In the present case transaction being of stock transfer and not of sale, Rule 9(1)(b) is not applicable and on that basis denial of Cenvat Credit is without authority of law. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (1) TMI 303
  Challenge to Assessment Orders - despite earlier writ petitions were filed and the petitioner had secured orders quashing the Assessment Orders that were passed earlier, now the present Impugned Orders have been passed - tax demanded and the penalty imposed together with interest recovered from the petitioner - lack of consideration of the petitioner's submissions and evidence - violation of principles of natural justice - HELD THAT:- It is noticed that the orders passed are stereotype orders. They have merely recorded that having considered the submissions of the petitioner, the submissions of the petitioner were not acceptable and therefore the demands have been confined in the Impugned Assessment Orders. Conclusion - Since the reply of the petitioner has not been considered properly and there is no discussion in the order, the Impugned Assessment Orders are liable to be quashed as arbitrary. The Impugned Assessment Orders are quashed. The respective cases are remitted back to the respondent to pass a fresh orders on merits and in accordance with law within a period of 6 months from the date of receipt of a copy of this Order - Petition allowed by way of remand.

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• Indian Laws

• 2025 (1) TMI 302
  Requirement to implead a Foreign Registration Officer appointed under Rule 3 of the Registration of Foreigners Rules, 1992 in the bail application filed by a foreigner within the meaning of the Foreigners Act, 1946 - HELD THAT:- Under clause (b) of Section 3(2) of the Act, there is a power vested in the Central Government to issue an order generally or with respect to any particular foreigner or class of foreigners that they shall not depart from India or shall depart subject to observance of such conditions on departure as may be prescribed. The Rules do not impose any such restriction on departure from India. However, according to clause 5(1)(b) of the Order, no foreigner shall leave India without the leave of the Civil Authority having jurisdiction. When a foreigner s presence is required in India to answer a criminal charge, permission to leave India must be refused. Under the Order, the Civil Authority can impose restrictions on the movements of a foreigner. Therefore, once a foreigner is released on bail, he cannot leave India without the permission of the Civil Authority, as provided in clause 5 of the Order. Under clause 11 and other clauses of the Order, various restrictions can be imposed on a foreigner while he is in India. The said power is wholly independent of the power to grant bail. Conclusion - There are no propriety in issuing a direction that either the Civil Authority or the Registration Officer should be made a party to a bail application filed by a foreigner or a notice of the bail application be issued to the said authorities. The reason is that the authorities under the Act and the Order have no locus to oppose bail application filed by a foreigner unless bail is sought where the allegation is of the offence punishable under Section 14 of the Act. The impleadment of the Civil Authority or Registration Officer in all bail applications filed by foreigners may result in unnecessary delay in deciding the bail applications. Appeal disposed off.

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• 2025 (1) TMI 301
  Requirement of registration of the document - Determination of stamp duty under Article 22A of Schedule 1A of the Indian Stamp Act, 1899 - collusion between the appellant and Respondent No.2 and the Civil Suit was instituted only with an intent to evade the payment of stamp duty. Requirement of registration of the document - Section 17 of the Registration Act, 1908 - HELD THAT:- Section 17(1) of the Act, 1908 specifies the documents for which Registration is compulsory. Sub-section (2) of Section 17 carves out the exceptions. The documents/instruments enumerated in sub-section (2) of section 17 are not compulsorily registerable. The exemption for decree or order of the Court is covered under section 17(2)(vi) of the Act, 1908 with a rider. Under the said provision, any decree or order of a Court (except the decree or order expressed to be made on compromise and comprising immovable property other than that which is the subject-matter of the suit or proceedings) would not require compulsory registration - To avail the exemption from the mandate of compulsory registration of documents conveying immovable property of a value of more that Rs 100/-, the compromise decree arrived must be only in respect of the property that is the subject-matter of the suit. The compromise arrived at before the Lok Adalat and the award passed by the Lok Adalat thereto assume the character of a decree passed under Order XXIII Rule 3 and would also come within the ambit and purview of sub-section (2) of section 17 of the Act, 1908. The appellant is entitled to possession of the subject land and the Respondent No.2 shall not interfere with the same; and the appellant is entitled to get his name recorded in the revenue records in respect of the subject land in the place of the Respondent No.2. Pertinently, it is to be pointed out that the said compromise decree has not been challenged by the Respondent No.1 before any Court of law and hence, the same attained finality and is binding on the parties. Though the Respondent No.1 alleged that the suit was filed by the appellant in collusion with the Respondent No.2 and within a short time from the date of initiation of the suit, the parties compromised the matter in order to evade payment of stamp duty, no concrete evidence was placed before this court to substantiate that the same. That apart, it is not the case of the Respondent No.1 - State that the suit itself was collusive as the property was not in possession of the appellant and that it belongs to any other third party - There is no finding of collusion between the parties in entering into the compromise by any Court as on date. Indisputably, the property is the subject matter of the suit. Thus, the appellant has satisfied the conditions enumerated in section 17(2)(vi) of the Act, 1908 and hence, the subject land acquired by him by way of compromise decree, requires no registration. Payment of stamp duty for mutation of the subject land - it is the specific plea of the appellant that consent decrees / decrees are not chargeable with stamp duty under the Indian Stamp Act, 1899 as applicable to the State of Madhya Pradesh - HELD THAT:- The stamp duty is not chargeable on an order/decree of the Court as the same do not fall within the documents mentioned in Schedule I or I-A read with Section 3 of the Indian Stamp Act, 1899. Though the Collector of Stamps determined the stamp duty for the subject land as per Article 22 of Schedule IA of the Indian Stamp Act, 1899, which states about conveyance, in this case, we have already held that the compromise decree does not fall under the instruments mentioned in the Schedule and that it only asserts the pre-existing rights. Therefore, in the facts of the case, the consent decree will not operate as conveyance as no right is transferred and the same does not require any payment of stamp duty. Since the appellant has only asserted the pre-existing right and no new right was created through the consent decree, the document pertaining to mutation of the subject land is not liable for stamp duty. Conclusion - i) The appellant has satisfied the conditions enumerated in section 17(2)(vi) of the Act, 1908 and hence, the subject land acquired by him by way of compromise decree, requires no registration. ii) Since the appellant has only asserted the pre-existing right and no new right was created through the consent decree, the document pertaining to mutation of the subject land is not liable for stamp duty. Appeal allowed.

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