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TMI Tax Updates - e-Newsletter
October 11, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Anti-Profiteering provisions - Constitutional Validity of Section 171 of the CGST Act, Chapter XV of the CGST Rules - This Court is also of the prima facie view that the post-sale discount has not been granted on account of GST rate reduction and therefore, does not qualify as commensurate reduction in prices as required under Section 171 of the Act. - Petitioner directed to pre-deposit the amount - HC
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Levy of GST - supply or not - charitable activities or not - reimbursement amount received by the Appellant from the Department of Women and Child Development, Government of Maharashtra under the subject “One stop Crises Centre Scheme” - the activities of the Appellant would aptly be construed as services - The said activities undertaken by the Appellant are clearly for the welfare of these destitute women, and thereby, serving the mankind in general. - Cannot be construed as supply in terms of section 7(1 )(a) of the CGST Act - AAAR
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Classification of goods - Paratha - The Parathas supplied by the appellant are different from Plain Chapatti or Roti and cannot be treated as or covered under the Category of Plain Chapatti or Roti and appropriate classification of Parathas would be under Chapter heading 2106. - AAAR
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Classification of goods - rate of GST - Combined Wire Rope used as a part of Fishing Vessel - Combined Wire Rope is not the essential/integral part of fishing vessel but it is must for the fishing net - Thus, the applicant goods Combined wire Rope is not a Part of the fishing Vessel. - AAR
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Classification of goods - rate of GST - HTP (Horizontal Triplex Plunger) kirloskar Power Sprayer (Engine Driven) - The applicant goods are Mechanical Appliances which is used in dispersing and spraying the liquids in various fields as per the requirements - It can therefore be concluded that the product ‘HTP kirloskar Power Sprayer’ merit classification under HSN 8424 89 90 and attract GST tax rate 18% - AAR
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Supply or not - canteen and transport facilities provided to employees - amount deducted from the salaries of its employees - The Provision of Services of transports and canteen facility to its employees is as per the contractual agreement between the employee and the employer in relation to the employment. The provision of the services of transportation and canteen facility cannot be considered as supply of goods or services and hence cannot be subjected to GST. - AAR
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Input Tax Credit - blocked credit - solar power panels procured and installed - electrical energy generated by Solar Panel installed by the applicant is exempted goods supplied to tenants and consequently input tax paid on the Solar Panels are ineligible as credit of input tax on Capital Goods used exclusively for supply of exempted supply are not eligible under Section 17(2) read with Rule 43(a) - AAR
Income Tax
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Accrual of interest income - FDRs made in the name of the respondent-assessee by virtue of a consensual order passed by the Arbitral Tribunal - till the final award was passed by the Arbitral Tribunal determining the ownership of the fixed deposits and interest, it could not be said that the interest income had crystallized in the respondent’s hands - HC
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Reopening of assessment u/s 147 - unexplained cash deposits - Incidentally, a vague statement is made that the cash deposits were in the course of usual business transaction. In the absence of any return of income filed by the petitioner, such a statement cannot be countenanced or accepted. - HC
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Validity of reopening of assessment - This Court is of the view that if the allegations in the order passed under Section 148A(d) of the Act are correct, then the Petitioner’s defence that the transaction had already been subjected to tax is not correct inasmuch as the sale would be treated as unexplained cash credit under Section 68 of the Act and the full value would be liable to tax. - HC
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Addition of interest income - assessee is a resident welfare association (RWA) having status of association of persons (AOP) under the Income-Tax Act - as rightly contended by the learned AR Section 40 (ba) is applicable while computing business income. This clause is not applicable while computing income from other sources. There is no prohibition in Section 57 (iii) under which deduction of interest is eligible to the assessee society.- AT
Customs
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Benefit of nil rate of Basic Customs Duty (BCD) - Free Trade agreement - country of origin - The impugned Notification is a kind of preferential trade arrangement between States of Association of Southeast Asian Nations (ASEAN) and the Republic of India in order to facilitate free movement of trade. If the exemption sought under the applicable rules is denied on one or the other pretext that too based merely on assumptions and presumptions, it will hamper the free movement of trade between agreeing nations. - AT
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Refund of late fees charges - bills of entry presented, but due to Indian Customs EDI system error it could not be uploaded - whether there was delay in filing bill of entry or not - the revenue has not disputed the waiver of the late fee ordered by the Joint Commissioner. In these circumstances I do not find any error in sanctioning refund by the Assistant Commissioner. - AT
Service Tax
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CENVAT Credit - input services - Hotel Accommodation Service - For rendering such service at the site, the staff of the appellant need to be necessary accommodated at hotels situated nearby. Thus, without such accommodation or any alternate accommodation provided to the staff, the taxable output service cannot be rendered - the Hotel accommodation service received by the appellant is an eligible input service under Rule 2(l) of CCR. - AT
Central Excise
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CENVAT Credit - Clean Energy Cess - the intent of legislation is very clear not to allow the cenvat credit of Clean Energy Cess. This is evident as the Central Government is providing for maintaining separate accounts of Clean Energy Cess, to be utilized for specific purposes upon sanction by the Parliament. - AT
Case Laws:
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GST
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2022 (10) TMI 313
Refund of IGST paid on the goods exported by the Petitioners during the transitional period after deducting the differential amount of duty drawback - Constitutional Validity of Paragraph 11(d) read with 12A(a)(ii) of the Notes and Conditions of the Notification dated 31st October, 2016, [as amended by Notifications dated 29th June, 2017 and 26th July, 2017], Circular No. 37/2018 dated 09 th October, 2018 - vires of Section 16 of the IGST Act, 2017 read with Section 54 of CGST Act, 2017 as well as Rule 96 of CGST Rules, 2017 and violative of Articles 14, 19 and 21 of the Constitution of India. HELD THAT:- A perusal of the paper book reveals that the matter in issue is covered by the judgment of Gujarat High Court in M/S AMIT COTTON INDUSTRIES THROUGH PARTNER, VELJIBHAI VIRJIBHAI RANIPA VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS [ 2019 (7) TMI 472 - GUJARAT HIGH COURT ] where it was held that the respondents are directed to immediately sanction the refund of the IGST paid in regard to the goods exported, i.e. zero-rated supplies , with 7% simple interest from the date of the shipping bills till the date of actual refund. Since the facts in the present cases are pari materia to the case in M/s Amit Cotton Industries, the present writ petitions are allowed directing the Respondent authorities to grant refund of IGST paid on the goods exported by the Petitioners during the transitional period, after deducting the differential amount of duty drawback, if the said differential amount has not already been returned by the petitioner, within twelve weeks along with appropriate interest at the rate of 7% p.a. on such refund from the date of the shipping bill till the date of actual refund. Application disposed off.
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2022 (10) TMI 312
Anti-Profiteering provisions - Constitutional Validity of Section 171 of the CGST Act, Chapter XV of the CGST Rules, more particularly, Rules 126, 127 133 of the CGST Rules - vires and violative of Articles 14, 19(1)(g), 265 300A of the Constitution of India or not - HELD THAT:- This Court is of the prima facie view that Section 171 is not a charging or a taxing provision. On the contrary, it is an incidental provision in the CGST/SGST Acts, for the purpose of ensuring that the object of these Acts, namely, eliminating the cascading effect of taxation on the consumer is achieved and any benefit of rate reduction of taxes or input tax credit benefit is passed on to the recipient without the middleman taking advantage of the Governments forgoing their taxes for the end consumer. In that sense, this provision is in the nature of a consumer welfare provision. Further, Section 171 of the CGST Act, 2017 casts an obligation of every supplier of goods and services/registered person to pass on the benefit of rate reduction of GST or the benefit of ITC on every supply and not on some supplies. Consequently, prima facie, a supplier cannot claim that he has passed on more benefit to one customer therefore he could pass less or no benefit to another customer than the benefit which is actually due to that customer - This Court is also of the prima facie view that the post-sale discount has not been granted on account of GST rate reduction and therefore, does not qualify as commensurate reduction in prices as required under Section 171 of the Act. Keeping in view the aforesaid as well as the orders passed by this Court in M/S. SAMSONITE SOUTH ASIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2020 (10) TMI 1031 - DELHI HIGH COURT] , this Court directs the petitioner to deposit the principal profiteered amount after deducting the GST imposed on the net profiteered amount (which has already been deposited by the petitioner with the Department) in six equated instalments commencing 10th October, 2022. The interest amount directed to be paid by the respondents as well as the penalty proceedings and further investigation by NAA in respect of other products sold by the petitioner are stayed till further orders. Application disposed off.
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2022 (10) TMI 311
Seeking grant of Regular Bail - provisional attachment of the plant, machinery, vehicles and stock of the company on the ground that input tax credit was availed by the company by showing fake purchases from bogus/suspicious entities - offence under section 132(1)(c) of the GGST Act CGST Act - section 69 of the CGST Act, 2017 - HELD THAT:- Pre-charge evidence is required to be recorded. It is true that fraudulent ITC claim has created huge liability for the government, but equally it is necessary that the accused gets an opportunity to defend his case. The department during the course of judicial custody of the present applicant has made necessary investigation and collected documentary evidence through the applicant himself and those supported documents has been produced with the complaint before the Chief Judicial Magistrate - The department has already attached the property under section 83 which is valued as Rs.6,17,21,463/-. Further the amount of Rs.50 Lakhs has been paid by the applicant and if necessary under sub- section (1) of section 138 of the Act, the Commissioner would have all the authority to compound the offence on payment being made by the alleged accused. The details of all the fake companies have been recorded. 138 transactions have been found to be suspicious and against that the applicant claims the said to be actual transfer against the payment by RTGS. Both the sides would get an opportunity to prove their case. The applicant is ordered to be released on regular bail on executing a personal bond of Rs.1,00,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions imposed - application allowed.
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2022 (10) TMI 310
Scope of services provided by the applicant to the entities located outside India - covered under Section 13(2) of the Integrated Goods and Services Tax Act. 2017 or not - zero rated supply or not - Section 16 of the Integrated Goods and Services Tax Act, 2017 - HELD THAT:- The appellant in their application made before the GAAR has submitted that the foreign entities send the product samples/goods for R D purposes to the appellant in India; that the appellant is carrying out such R D activity in India on the goods provided to them by the foreign customers and submitting a detailed report to them thereafter. The appellant have also submitted that they have entered into a contract with Hilti Aktiengesellschaft. pursuant to which, the appellant is carrying out R D services on the samples / goods provided by the foreign company, which is located outside India - there has been significant change in the facts of the case presented before the GAAR and now made before this authority by the appellant. They stated during the course of personal hearing that the matter may be remanded back to GAAR for fresh consideration and decision. The appellant has now' presented new facts which have not been placed before the GAAR and the ruling given by the GAAR is thus based on different facts. Further, as the appellant have got the subject advance ruling based on different set of facts, the advance ruling given is not valid in view of the provisions of Section 103(2) and 104(1) of the CGST Act. 2017. The matter is remanded to the Authority for Advance Ruling i.e. the GAAR for fresh decision. The GAAR will take into consideration all aspects of the matter and decide the case afresh following the principles of natural justice.
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2022 (10) TMI 309
Levy of GST - supply or not - charitable activities or not - reimbursement amount received by the Appellant from the Department of Women and Child Development, Government of Maharashtra under the subject One stop Crises Centre Scheme - activities undertaken by the Appellant as an implementing agency of the Government can be construed as services or not - Applicability of N/N. 12/2017-C.T. (Rate) dated 28.06.2017 - HELD THAT:-The GST Law has given a very wide connotation to the term services , which cover any activities other than those which involve goods, money and securities. As the activities undertaken by the Appellant do not entail supply of any goods, money, or securities to their recipient, which in the present case is the Government of Maharashtra, who is compensating for the subject activities undertaken by the Appellant under the said scheme of One stop Crises Centre ', the activities of the Appellant would aptly be construed as services. Whether the subject activities undertaken by the Appellant can be construed as supply in terms of section 7(1)(a) of the CGST Act, 2017 or not? - HELD THAT:- The term consideration shall not include any subsidy given by the Central Government or State Government. Now, we would like to dissect as to whether the reimbursement amount received by the Appellant from the Women and Child Development Department of the Government of Maharashtra can be construed as subsidy or otherwise - Here, it is seen that the term subsidy has not been defined under the CGST Act, 2017 - The term subsidy , it is apparent that any money/amount granted by a government to any private person or company for undertaking any charitable activities, which are beneficial to the public, will be construed as subsidy. In the present case, the Appellant are being granted a fixed amount of money from the Government of Maharashtra under the One stop crises Centre Scheme for taking overall care of the destitute women who are litigating divorce, or homeless, or the victims of domestic violence. The said activities undertaken by the Appellant are clearly for the welfare of these destitute women, and thereby, serving the mankind in general. Since it has been established that the subject activities undertaken by the Appellant will not be construed as supply in terms of section 7(1 )(a) of the CGST Act, 2017, the issue as to whether the impugned activities undertaken the Appellant can be construed as charitable activities in terms of the clause (r) of the definition section of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, need not be interfered, as the determination of the same will have no bearing on the applicability of GST on the impugned transactions/activities.
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2022 (10) TMI 308
Classification of goods - Paratha' i.e. various varieties of Paratha produced by the applicant - merit classification under HSN Code 19059090 or not? - applicability of Sl.No. 99A of Schedule-l of Notification No. 01/2017-CT (Rate) and Notification No. 01/2017-IT (Rate) dated 28-6-17 - HELD THAT:- Parathas supplied by the appellant will not fall under the category of Roti or chappati and will not be classified under Chapter heading 1905 as contended by the appellant. The products supplied by the appellant are thus quite different from plain Roti or Chapatti and are therefore, not eligible for the concessional rate of 5% GST (applicable to Plain Chapatti or Roti), provided under SI.No.99A of Schedule I to Notification No. 1/2017-CT (Rate) dated 28.06.2017 as amended. The Parathas supplied by the appellant are different from Plain Roti or Chapatti and cannot be treated as or covered under the category of Plain Roti or Chapatti. Further the parathas supplied by the appellant will not fall under Chapter heading 1905. The appropriate classification of Parathas would be under Chapter heading 2106 as the subject Parathas require to be cooked before the same can be consumed. The Chapter heading 2106 covers food preparations not elsewhere specified or included and Parathas do not fall under any specific chapter head. Further as per Rule 3(c) of Rules of Interpretation, when goods cannot be classifiable under Rule 3(a) or 3(b) then they shall be classified under the heading which occurs last in numerical order among those which merit consideration. Thus, among the headings 1905 and 2106, latter occurs last in the numerical order and hence heading 2016 would be more appropriate and right classification of appellant's product, even from this consideration. The Parathas supplied by the appellant are different from Plain Chapatti or Roti and cannot be treated as or covered under the Category of Plain Chapatti or Roti and appropriate classification of Parathas would be under Chapter heading 2106.
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2022 (10) TMI 307
Classification of goods - rate of GST - Combined Wire Rope used as a part of Fishing Vessel - Taxable at the rate of 5% in terms of Sr.No.252 of Schedule-1 of Notification No. 1/2017-CTR corresponding notification issued by Gujarat State and Notification No. 1/2017-ITR or not? Whether the Combined Wire Ropes is a part of fishing vessel or otherwise? HELD THAT:- Wire Rope is used in various fields such as Mines, Haulage, General Engineering, lift escalators and Shipping depending upon the requirement and usage of the field. It is observed that Wire Rope is used in Shipping but in the Manual use of Wire Rope in fishing vessel have not been mentioned. This confirms that Wire Rope has no specific/general use in the fishing vessel - Combined Wire Rope is not a part of fishing vessel but it's one side is used to tie the Fishing Net and other side of Wire Rope tied on the vessel. The main use of Combine Wire Rope in fishing is to tie the fishing net with vessel. Therefore, fishermen required such wire rope for fishing purpose and the applicant supply such Combine Wire Rope to them. Further, as per the use of Combine Wire Rope it is amply clear from the above that it has no use in the fishing vessel but it is used to tie the fishing net. The application has submitted that, it is crystal clear that without Rope, fishing net cannot be used for fishing purpose with the Fishing Vessels . The applicant above submission itself explain that fishing net cannot be used without the Rope, it means that Wire Rope is essential for the fishing net which is used for fishing and without wire rope fishing net will not be of any use. Hence Combined Wire Rope is not the essential/integral part of fishing vessel but it is must for the fishing net - Thus, the applicant goods Combined wire Rope is not a Part of the fishing Vessel. Combined Wire Rope is not used as a part of fishing vessel and the impugned goods does not cover under entry No.252 of Schedule-I of Notification No. 1/2017-CT(Rate) dated 28-06-2017 as amended and is not eligible to GST @ 5%.
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2022 (10) TMI 306
Classification of goods - rate of GST - HTP (Horizontal Triplex Plunger) kirloskar Power Sprayer (Engine Driven) - applicability of Tariff Heading 8424 in the Notification No. 11/2017-CT (Rate) dated 28-6-2017 as amended vide Not. No. 6/2018-CT (Rate) dated 25-6-208 at Entry No. I95B or not - HELD THAT:- The product in question is essentially a Mechanical Appliances operated by petrol engine which is used for spraying liquids as per the requirement. There is no dispute to the classification of product, which even as per the own admission of the applicant would be under Chapter Head 8424 of the GST Tariff. HTP kirloskar Power Sprayer based on the use merits classifiable under HSN 8424 89 90. The CBIC vide Circular No. 113/32/2019-GST has clarified that Mechanical Appliances whether or not hand operated for projecting, dispersing or spraying liquids attracted GST @18% [Sr. No. 325 of Schedule III]. The applicant goods are Mechanical Appliances which is used in dispersing and spraying the liquids in various fields as per the requirements - It can therefore be concluded that the product HTP kirloskar Power Sprayer merit classification under HSN 8424 89 90 and covered under Entry No. 325 of Schedule-111 of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 and attract GST tax rate 18%.
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2022 (10) TMI 305
Applicability of Goods and Services Tax - Canteen services - collection of employees' portion of consideration by the appellant - appellant has a manufacturing setup and maintains/manages industrial canteen for providing food and refreshments to its employees - HELD THAT:- The applicant has arranged a canteen facility for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by the applicant whereas the remaining part is borne by its employees. The said employees portion canteen charges is collected by the applicant and paid to the Canteen Service Provider. The applicant submitted that it does not retain with itself any profit margin in this activity of collecting employees' portion of canteen charges also do not charge any mark up therein. The applicant as a part of its HR policy is providing bus transportation facility at subsidized rate to the employees of the company. The applicant is not supplying any bus transportation service to its employees in the instant case. Further Bus transportation service is also not the output service of the applicant since they are not in the business of providing transport service. Rather, this bus transportation facility is provided, to the employees by the third party vendors and not by the applicant. Therefore in the subject case, the applicant is not provider of bus transportation facility to its employees, in fact the applicant is a receiver of such services. The applicant is providing transport and canteen facility to its permanent employees (on payroll) as per contractual agreement between employer employee relationships - The Provision of Services of transports and canteen facility to its employees is as per the contractual agreement between the employee and the employer in relation to the employment. As cited in the referred provisions of scheduled III and the clarification issued vide Circular No. 172/04/2022-GST dated 06-07-22, the provision of the services of transportation and canteen facility cannot be considered as supply of goods or services and hence cannot be subjected to GST.
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2022 (10) TMI 304
Supply or not - subsidized deduction made by the Applicant from the employees who are availing food in the factory/corporate office - levy of GST on the amount deducted from the salaries of its employees - Section 7 of Central Goods and Service Tax Act, 2017 and Gujarat Goods and Service Tax Act, 2017 - HELD THAT:- It clear that the provisions of CGST Act and GGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the GGST Act. M/s Zydus has arranged a canteen facility for its employees, which is run by a Canteen Service Provider. As per their arrangement, part of the Canteen charges is borne by M/s Zydus whereas the remaining part is borne by its employees. The said employees' portion canteen charges is collected by M/s Zydus and paid to the Canteen Service Provider. M/s Zydus submitted that it does not retain with itself any profit margin in this activity of collecting employees' portion of canteen charges. The applicant is providing canteen facility to its permanent employees (on payroll) as per contractual agreement between employer-employee relationship - The Provision of Services of transports and canteen facility to its employees is as per the contractual agreement between the employee and the employer in relation to the employment. The provision of the services of transportation and canteen facility cannot be considered as supply of goods or services and hence cannot be subjected to GST.
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2022 (10) TMI 303
Input Tax Credit - blocked credit - solar power panels procured and installed - Section 17(5) (c) and (d) of CGST/TNGST Act, 2017 - HELD THAT:- Various documents perused and discussed reveal that the applicant procured electricity from TNEB, which includes electricity generated by Solar Power Panels installed at additional place of business and wheeled by TNEB for captive use at the principal place of business of the applicant. The applicant has paid for the net units consumed after deducting energy units generated by Solar Power Plant. However, the applicant has recovered amount through separate invoice, for the gross energy units consumed by the tenants in the building at the rate charged by TNEB, which implies that the energy generated by Solar Power Plant are sold by the applicant to the tenants on their own account. In the instant case as discussed in para 8.5.3 supra, 92184 gross units were consumed and billed by applicant to the tenants. After adjusting 86904 captive generated units by Solar Power Plant and wheeled by TNEB against wheeling charges, the applicant has paid to TNEB for 5280 units supplied by TNEB. The applicant has sold 86904 units of power to the tenants of the building through invoices. Electrical Energy is goods classified under HSN 2706 and exempted by Notification No.02/2017 CT(R) dated 28.06.2017 vide SI. No. 104. Therefore, electrical energy generated by Solar Panel installed by the applicant is exempted goods supplied to tenants and consequently input tax paid on the Solar Panels are ineligible as credit of input tax on Capital Goods used exclusively for supply of exempted supply are not eligible under Section 17(2) read with Rule 43(a) - The Maintenance Agreement provides for upfront payment of expenses by applicant to third parties for various supplies, such as electricity, water, etc and reimbursement of the same proportionately from tenants upon furnishing Bills. Therefore, payment of GST on the electricity charges and other expenses collected from the tenants needs to be examined in the light of Rule 33 dealing with value of services in case of pure agent. The applicant is not eligible for claim of Input Tax Credit, as per Section 17(2) of the CGST /TNGST Act read with Rule 43(a) of CGST / TNGST Rules 2017, on the Goods/Services used in installation of Solar Power Panels, which are considered as Plant and Machinery.
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2022 (10) TMI 302
Scope of jurisdiction of the revenue district of Chennai - units in the Impugned Project with carpet area not exceeding 90 square meters and value not exceeding Rs. 45 Lakhs - location within the revenue district of Kanchipuram - Non-Metropolitan Cities or not - applicability of N/N. 11.2017 - Central Tax (Rate), dated 28.06.2017 r/w Notification 3/2019 CT(Rate) - HELD THAT:- Housing units, up to 90 sq. meters of carpet area and within the value limit of Rs. 45 Lakhs, in cities or towns other than metropolitan cities can be classified as affordable residential apartment, as defined in Notification 11/2017 - Central Tax (Rate), as amended by Notification No. 03/2019 - Central Tax (Rate). Such units are liable to GST Rate of 1.5% on the Value of Supply (and effective rate of 1% of the Total amount Charged). The Census Commission of India defines Metropolitan cities as those Indian cities having a population of more than 4 million. The 74th Amendment to the Indian Constitution defines a metropolitan area as An area having a population of 10 Lakh or 1 Million or more, comprised in one or more districts and consisting of two or more Municipalities or Panchayats or other contiguous areas, specified by the Governor by public notification to be a Metropolitan area. The Metropolitan city is, therefore by inference, defined by the metropolitan area, and whose land use and development etc., are regulated by the Metropolitan Development Authority. It is evident for any development of any land or building, the planning authority shall levy charges (called the development charges) as per the rates prescribed in the Act. The Chennai Metropolitan Development Authority (CMDA) is authorised to regulate real estate development within the Chennai Metropolitan Area (CMA) via the issue of Planning Permissions (PP) issued under Section 49 of the 1971 Tamil Nadu Town and Country Planning Act - Also, from the documents submitted by the applicant, it is inferred that though the Sembakkam Municipality is the 'appropriate local body' for issuing approval order for the building plan, necessary fees towards 'development charges' were collected by the Chennai Metropolitan Development Authority (CMDA). Therefore, the planning authority for the impugned project is CMDA and by extension, the impugned project falls within the ambit of Metropolitan City of Chennai. Thus, the units in the impugned Project is NOT considered as located in city or town other than Metropolitan Cities in terms of Notification No. 11/2017 -Central Tax (Rate), dated 28.06.2017 r/w Notification 3/2019 CT(Rate).
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Income Tax
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2022 (10) TMI 315
Addition u/s 68 - Amount received from shareholders towards allotment of equity shares - whether relevant and detailed enquiry to establish the basic three parameters of identity, genuineness of transactions and creditworthiness of the investor company has not been undertaken both at the assessment level and at the first appellate stage? - HELD THAT:- Prayer made by the ld. Counsel for the assessee as also the observation made by the CIT(Appeals) in respect of proving the source of source, we find it proper to set aside the matter to the file of CIT(Appeals) in the interest of justice and fair play. We direct to pass a speaking order considering the submissions made by the assessee, calling requisite remand report from the ld. AO and after making required enquiries/investigation as deem fit. Needless to say that the assessee be given reasonable opportunity of being heard to substantiate its claim by making any further submissions apart from the documents already placed on record. Since the matter is restored to the file of Ld. CIT(A) for fresh adjudication in terms of our observations herein above, we are not expressing any views on the merits of the case so as to limit the appellate procedure before the Ld. CIT(A). Appeal of the assessee is allowed for statistical purposes.
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2022 (10) TMI 314
Rectification of mistake u/s 154 - Delayed Employees contribution to the Employee Provident Fund and Employee State Insurance Fund - addition u/s 2(24)(x) r/w s. 36(1)(va) - amount being deposited before the due date of filing the return of income u/s. 139 (1) - scope of amendment - Retrospectivity - HELD THAT:- In view of the foregoing, no question of the said Explanations being read as retrospective, so as to apply for the relevant year, sustaining the impugned additions, which therefore fail. This is, however, subject to any decision/s by the Hon'ble jurisdictional High Court, which would, where so, hold, even justifying a rectification u/s. 154/254(2), even where rendered after the date of the order sought to be rectified. See SAURASHTRA KUTCH STOCK EXCHANGE LTD [ 2008 (9) TMI 11 - SUPREME COURT] and SMT. ARUNA LUTHRA. [ 2001 (8) TMI 84 - PUNJAB AND HARYANA HIGH COURT] No such decision has been found, or otherwise pointed out by the parties, as was the case before the Tribunal in Nikhil Mohine [ 2021 (11) TMI 927 - ITAT JABALPUR] any such decision, even if discovered later, may operate to amend this order, or the order giving appeal effect thereto, to bring it in conformity or agreement with the said decision/s, of course, after allowing a fair opportunity of hearing to the assessee. The impugned additions, therefore, could not have been made under the given facts and circumstances of the case, and are directed for deletion. We decide accordingly. Assessee appeal allowed.
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2022 (10) TMI 301
Accrual of interest income - FDRs made in the name of the respondent-assessee by virtue of a consensual order passed by the Arbitral Tribunal - HELD THAT:- As this Court in agreement with the finding of the two Appellate Authorities below that till the final award was passed by the Arbitral Tribunal determining the ownership of the fixed deposits and interest, it could not be said that the interest income had crystallized in the respondent s hands and the same cannot be held to be income of the respondent-assessee under Section 5(1) of the Income Tax Act, 1961 - No substantial question of law arises.
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2022 (10) TMI 300
Disallowance u/s 14A - Scope of expression 'does not form part of the total income' in Section 14A - HELD THAT:- In the opinion of this Court, the present case is covered by the Division Bench judgment in Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] wherein this Court has held that the expression 'does not form part of the total income' in Section 14A of the Act means that there should be an actual receipt of income which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. This Court in Pr. Commissioner of Income Tax (Central)-2 Vs. M/s Era Infrastructure (India) Ltd. . [ 2022 (7) TMI 1093 - DELHI HIGH COURT] has dealt with the issue of amendment made by the Finance Act, 2022 to Section 14A of the Act held that the amendment of Section 14A, which is for removal of doubts cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood. - No substantial question of law.
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2022 (10) TMI 299
Reopening of assessment u/s 147 - unexplained cash deposits - HELD THAT:- As till 21.12.2019, absolutely no submissions have been made on the merits of the matter and the petitioner has been only reiterating his request for documents. For the first time on 27.12.2019, even without filing a return of income pursuant to search conducted in his premises on 22.02.2019, 23.02.2019 and 24.02.2019, he puts forth an explanation for that substantial cash deposits that have been made in the savings bank account, stating that such deposits relate to transaction in connection with the property situated at Vellore Bus stand. Both the replies of the petitioner dated 24.10.2019 and 27.12.2019 are especially incriminating insofar as they refer to the involvement of heavy cash transactions in respect of the vellore property. Incidentally, a vague statement is made that the cash deposits were in the course of usual business transaction. In the absence of any return of income filed by the petitioner, such a statement cannot be countenanced or accepted. Thus, there is absolutely no infirmity in the impugned assessment order, neither in terms of the procedure followed by the authority nor in the conclusion that have been arrived at. WP dismissed.
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2022 (10) TMI 298
Reopening of assessment u/s 147 - as alleged notice issued u/s 148A(b) is that the petitioner has not filed ITR for the assessment year 2018-19 - HELD THAT:- As it is the petitioner s case that all the high value transactions have been reported by the petitioner in its return of income and is willing to place on record the sale/purchase deed before the Assessing Officer, this Court sets aside the impugned order passed u/s 148A(d) of the Act as well as the notice issued under Section 148 and remands the matter back to the AO for a fresh decision in accordance with law. It shall be open to the AO to issue a supplementary notice explaining in detail the transactions, which were allegedly not reported by the petitioner within two weeks. The petitioner is also directed to file the sale/purchase deed as well as a supplementary reply, if required, with the AO within four weeks. AO is directed to pass a fresh order under Section 148A(d) of the Act within four weeks thereafter in accordance with law.
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2022 (10) TMI 297
Validity of reopening of assessment - monetary requirement for reopening assessment - unexplained cash credit under Section 68 - HELD THAT:- This Court is of the view that the condition precedent of an asset in the form of Rs.50 lakhs is not be attracted to the present case, as the notice under Section 148A(b) of the Act had been issued on 17th March, 2022 i.e. within three years of the assessment year sought to be assessed, namely, 2018-19 and Section 148A(d) order as well as Section 148 notice issued on 31st March, 2022 was within prescribed time. The said Section 148 notice and the order passed under Section 148A(d) were set aside by this Court on the petition of the assessee vide order dated 27th May, 2022 and the matter was remanded to the AO to decide the matter in time bound manner. The impugned Section 148 notice dated 23rd July, 2022 has been passed by the Assessing Officer within the time granted by the Court and, therefore, the said notice cannot be considered time barred as sought to be alleged by the Petitioner. This Court is of the view that the issue whether the transaction was executed by the Petitioner with Nitin Trading Company, a proprietorship of Mr. Aman Bhalla or Mr. Dev Narayan, cannot be adjudicated upon in writ proceedings and that too, when the assessment proceedings are pending. This Court is also of the view that if the allegations in the order passed under Section 148A(d) of the Act are correct, then the Petitioner s defence that the transaction had already been subjected to tax is not correct inasmuch as the sale would be treated as unexplained cash credit under Section 68 of the Act and the full value would be liable to tax. The fact that a scrutiny assessment had been undertaken in the present case would not come to the Petitioner s rescue, as the Respondents had subsequently recieved information that one of the parties with whom the Petitioner had transacted was an alleged entry operator-which fact was not known to the revenue when the scrutiny assessment was carried out. WP dismissed.
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2022 (10) TMI 296
Reopening of assessment u/s 147 - violation of the principles of natural justice - Lesser time granted to the Assessee to file the response u/s 148A(b) - HELD THAT:- This Court is of the view that the Petitioner has a right to get adequate time under Section 148A of the Act to respond to the show cause notice. It is pertinent to mention that Section 148A(b) of the Act permits the Assessing Officer to suo moto provide up to thirty days' period to an assessee to respond to the show cause notice issued under Section 148A(b) of the Act, which period may in fact be further extended upon an application made by the Assessee in this behalf. This Court in Meenu Chaufla Vs. ITO [ 2022 (6) TMI 89 - DELHI HIGH COURT ] has held that in such cases the mandate of Section 148A(c) is violated as it casts a duty on the AO, by using the expression shall , to consider the reply of the Assessee in response to notice under Section 148A(b), before making an order under Section 148A(d) of the Act. Consequently, the impugned order and the notice under Section 148 of the Act, both dated 29th July, 2022 for the AY 2017-18 are set aside and the matter is remanded back to the AO for a fresh decision after considering the reply dated 26th July, 2022 filed by the Petitioner within four (04) weeks.
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2022 (10) TMI 295
Capital gain computation - CIT (A) adapting the Jantri value as against taken by assessee in the return of income by applying section 50C - HELD THAT:- Assessee at one point states that Sec. 50C is not applicable at the same time saying that it should be applied in consonance to Sec. 48 of the Act, which are contrary to assessee s stand. Therefore, the CIT(A) rightly observed that the assesse filed objection to the sub registrar, therefore provisions of Section 50C (2) of the Act is not applicable and held that the Assessing Officer rightly adopted the jantri rate. As regards to the claim of Section 54 of the Act, the CIT(A) has allowed the said claim. Hence, there is no need to interfere with the findings of the CIT(A). Assessee appeal dismissed.
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2022 (10) TMI 294
Addition of interest income - assessee is a resident welfare association (RWA) having status of association of persons (AOP) under the Income-Tax Act - HELD THAT:- The issue is squarely covered by the decision of the Tribunal in case of Belaire Condominium Association [ 2018 (5) TMI 240 - ITAT DELHI] there is a direct nexus in earning interest on such fixed deposit with Bank and payment of interest on the security deposit to the flat owners. The interest expenditure has been incurred wholly and exclusively for earning such interest income on Bank deposit. As per the Apartment buyers agreement there is an obligation on every buyer to make security deposit and there is corresponding obligation on the society to pay interest on such deposit. Thus, the contention of the learned AR that this interest expenditure has not been incurred to earn interest income is incorrect. The assessee society has paid interest each one after deducting tax at source. Thus, it is not a case of exemption on the principle of mutuality. Such interest paid by the assessee society is taxable in the hands of the Apartment owner. In view of these facts, we are of the view that interest expenditure is to be set off against the interest income. As regards the AO's contention that interest paid to member is not eligible deduction in the case of AOP under Section 40 (ba), we have perused the said Section. This clause excludes registered society from its applicability. Accordingly, this clause will not be applicable to the assessee society. Moreover, as rightly contended by the learned AR Section 40 (ba) is applicable while computing business income. This clause is not applicable while computing income from other sources. There is no prohibition in Section 57 (iii) under which deduction of interest is eligible to the assessee society. We direct the AO to delete the addition made on account of the interest. Assessee appeal allowed.
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2022 (10) TMI 293
Disallowance u/s.36(1)(va) - late deposit of the Employees share of EPF and ESI - Scope of amendment - HELD THAT:- As Finance Act, 2021 has inserted Explanation 2 below section 36(1)(va) providing that the provisions of section 43B shall not apply for the purpose of determining the due date under this clause w.e.f. 01.04.2021. The effect of this amendment is that if the amount of employees contribution towards EPF, ESI, etc is delayed by an employer beyond the due date under the respective Acts, the disallowance will be called for notwithstanding the fact that it was deposited before the due date u/s 139 of the Act. Memorandum explaining the provisions of the Finance Bill, 2021, provides that this amendment will take effect from 1st April, 2021 and will, accordingly apply in relation to assessment year 2021-2022 and subsequent assessment years. Since the assessment year under consideration is 2019-20, which is anterior to the amendment carried out with effect from A.Y. 2021-22, we hold that the position of law as settled by in CIT vs. Nipso Polyfabriks Ltd. ( 2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT] squarely applies to the facts and circumstances of the instant case, thereby not warranting any disallowance since the amount in question was admittedly deposited before due date u/s 139(1) of the Act. The addition is therefore, directed to be deleted. - Decided in favour of assessee.
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Customs
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2022 (10) TMI 292
Benefit of nil rate of Basic Customs Duty (BCD) - Free Trade agreement - country of origin - Notification No. 046/2011-Cus dated 01.06.2011 - import of goods, declared to be of Indonesia origin - 22 K assorted jewellery (481 pieces) - denial of benefit on the sole ground that incomplete information to the questionnaire has been provided - authenticity of Country of origin Certificate - HELD THAT:- Perusal of the Notification shows that such benefit is available to the importer if the importer proves to the satisfaction of the Deputy Commissioner or Assistant Commissioner of Customs, or as the case may be, that the goods in respect of which the benefit of this exemption is claimed are of the origin from the countries as mentioned in Appendix I or Appendix II, as the case may be], in accordance with provisions of the Customs Tariff Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009, published in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 189/2009-Customs (NT), dated the 31st December 2009. Apparently and admittedly, the Customs Authority while verifying the origin of goods had issued a questionnaire and denied the benefit on the ground that the complete questionnaire was not answered by the appellant creating a doubt about the Country of origin Certificate. The perusal of the condition No. 7 (c), as above makes it clear that in case of such doubt about the authenticity of Country of origin Certificate i.e. in case where the certificate of origin is not acceptable to the Customs Authorities of the importing country, then the certificate has to be returned back to the issuing authority that too within a reasonable period duly informing the grounds for the denial of preferential tariff treatment. Admittedly and apparently, the said procedure has not been followed by the Department. The impugned Notification is a kind of preferential trade arrangement between States of Association of Southeast Asian Nations (ASEAN) and the Republic of India in order to facilitate free movement of trade. If the exemption sought under the applicable rules is denied on one or the other pretext that too based merely on assumptions and presumptions, it will hamper the free movement of trade between agreeing nations. Same is highly uncalled for and would rather render the entire exemption Notification otiose more so when on the face of the record, the Certificate of Origin is otherwise not disputed - the substantial benefit as that of exemption from payment of duty shall not be denied merely on procedural lapse. The sole ground for denying the benefit of duty exemption despite the valid Country of origin Certificate is not sustainable - Appeal allowed.
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2022 (10) TMI 291
Refund of late fees charges - bills of entry presented, but due to Indian Customs EDI system error it could not be uploaded - whether there was delay in filing bill of entry or not - HELD THAT:- There is no dispute in the fact that the appellant has presented the Bill of entry but due to Indian Customs EDI system error it could not be uploaded. Secondly the vessel was arrested by the order of the Hon ble High Court and on release of the vessel by the High Court the appellant filed bill of entry - the period from initial presenting of bill of entry up to the subsequent filing of bill of entry should be reduced from the period prescribed for filing bill of entry, if this be so there is no delay in filing the bill of entry. Moreover if at all there is delay the Learned Joint Commissioner has waived the late fee charges and consequential to the said order the Assistant Commissioner has sanctioned the refund of late fee. There are no error in sanctioning refund by the Assistant Commissioner - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2022 (10) TMI 290
Seeking acceptance of claim as Financial Creditor of the Corporate Debtor - Allowing the Applicant to become a member of the Committee of Creditors during the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor - HELD THAT:- Under the Obligor Undertaking , the Corporate Debtor has not promised in the event of RHGL S default, to perform RHFL S obligation to pay under the Commercial Papers or discharge RHFL S liability - The Obligor undertaking ins a merely a contingent contract, whereby the Corporate Debtor had undertaken inter alia that upon the sale of its or its affiliates shares in RNLAM, It would use the proceedings to use tither purchase the Commercial Papers from the Applicant or infuse funds into RHFL o redeem the Commercial Papers issued by RHFL. This undertaking was not premised on RHFL S default in serving the Commercial Papers, a basic ingredient of a guarantee . In Phoenix ARC(P) Ltd. V. Ketulbhai R. Patel [ 2021 (2) TMI 121 - SUPREME COURT] , an argument was advanced before the Supreme Court that a Pledge Agreement was a guarantee . The Supreme Court negated this contention after analysing and applying the definition of guarantee under Section 126 of Contract Act. It held that the Pledge Agreement was not guarantee since the Corporate Debtor had not entered into a contract to perform the promise or discharge the liability of a borrower in case of his default - The principals in Phoenix ARC s case apply here. The Obligor Undertaking lacks a covenant/promise to perform in case of RHFL (borrower s) in servicing the Commercial paper. It is thus not a guarantee, and it does not attract the definition of financial debt under Section 5(8) of the Code. In the present case, it is an admitted position that there has been no disbursal to the Corporate Debtor for consideration against the time value of money - On going through the facts and submissions of the Applicant and the Corporate Debtor it is concluded that the Applicant has not established that the money was disbursed to the Corporate Debtor and hence the question of default on the part of the Corporate Debtor does not arise. The Applicant does not owed a Financial Debt under the Code. Without proof of disbursement, the said amount cannot be claimed as financial debt, as a disbursement is a sine qua non for any debt to fall within the ambit of the definition of financial debt - Application dismissed.
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2022 (10) TMI 289
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - petition filed beyond period of three years - HELD THAT:- The Corporate Debtor has brought to notice that the present Petition is barred by limitation. The invoice is dated 11.06.2015, which is stated to be the date of default by the Operational Creditor in Part IV of his petition and the present petition is filed on 13.03.2019, which is beyond the period of three years. Hence, the present petition is clearly barred by limitation. Rebutting the same, the Operational Creditor has relied upon the terms mentioned in the contract, however no copy of the contract has been annexed to the petition by the Operational Creditor to establish this very fact. Thus, without going into the merits, it is held that the present Petition is completely misconceived and non-maintainable. Petition dismissed.
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2022 (10) TMI 288
Seeking approval of the Resolution Plan submitted by Consortium - section 30(6) of the Insolvency and Bankruptcy Code, 2016 (Code) read with Regulation 39 (4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- All the requirements of Section 30 (2) are fulfilled and no provision of the law for the time being in force appears to have been contravened. In view of the provision of the Code Letter of Intent dated 28.03.2022, the Applicant called upon the Resolution Applicant to furnish an unconditional and irrevocable Performance Guarantee/Direct Deposit of Rs. 1,78,05,000 - Section 30(6) of the Code enjoins the Resolution Professional to submit the Resolution Plan as approved by the CoC to the Adjudicating Authority. Section 31 of the Code deals with the approval of the Resolution Plan by the Authority, if it is satisfied that the Resolution Plan as approved by the CoC under section 30(4) meets the requirements provided under section 30(2) of the Code. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan as approved by the CoC meets all the requirements. The RP has complied with the requirement of the Code in terms of Section 30(2)(a) to 30(2)(f) and Regulations 38(1), 38(1)(a), 38(2)(a),38(2)(b), 38(2)(c) 38(3) of the Regulations. In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT ] the Hon ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39 (4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law - Application allowed.
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Service Tax
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2022 (10) TMI 287
Levy of Service Tax - Commercial Training or Coaching Service - computer training provided by the appellant to the students - period 21.06.2006 to 30.11.2009 - eligibility for small scale exemption available under the Notification No. 6/2005-ST dated 01.03.2005 - extended period of limitation - penalty - HELD THAT:- There is no dispute that the appellant are franchisee of SITD and the service was also provided to the students by the SITD, therefore the appellant are providing service under the brand name of another person. Therefore, they are not eligible for small scale exemption. The appellant also raised a point that they are eligible for exemption on the vocational training service. In this regard, it is found that Computer Education service has been excluded from the Vocational Training service by Notification No. 19/2005-ST dated 07.06.2005. In this case the period involved is 21.06.2006 to 30.11.2009 therefore, the appellant is not eligible for exemption under the vocational training. Extended period of limitation - HELD THAT:- For the period 21.06.2006 to 30.11.2009, the show cause notice was issued on 03.06.2010 wherein the extended period was invoked. The issue is a neat question of law involving interpretation whether the same is falling under Commercial Training or Coaching Service and it is also observed that the appellant had a bonafide belief being a very small service provider having taxable value of Rs. 1,26,200/- that too in four years, they are eligible for small scale exemption under Notification No. 6/2005-ST. Thus, the issue was also involved an interpretation of notification. Penalty - HELD THAT:- The appellant have not hidden the transaction which was retrieved from their record. Considering the overall facts, the demand for extended period is not sustainable. Consequently, the penalty under section78 is also not imposable. The appellant is liable to service tax only for the normal period and demand for extended period and entire penalty is set-aside - appeal allowed in part.
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2022 (10) TMI 286
CENVAT Credit - input services - Hotel Accommodation Service received by the appellant for rendering the output service of Erection, Commissioning and Installation - HELD THAT:- The appellant have submitted various documents in support of their claim. It is further observed that one to one co-relation is not possible so as to ascertain the correct amount of inadmissible credit. Further, the learned Commissioner (Appeals) while rejecting the appeal have observed that there is no direct or apparent relationship between accommodation service and manufacturing of bus duct. It is further observed that appellant have failed to submit documents/records to the satisfaction of the Audit officers. For rendering the taxable output service of Erection, Commissioning and Installation appellant has to send their employees to the site for rendering the service. For rendering such service at the site, the staff of the appellant need to be necessary accommodated at hotels situated nearby. Thus, without such accommodation or any alternate accommodation provided to the staff, the taxable output service cannot be rendered - the Hotel accommodation service received by the appellant is an eligible input service under Rule 2(l) of CCR. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (10) TMI 285
CENVAT Credit - Clean Energy Cess - levied under Section 83 of Finance Act, 2010 read with Notification No.2/2010-CEC dated 22.06.2010 read with Clean Energy Cess Rules, 2016 - effect of discontinuation of Clean Energy Cess and introduction of a new Cess in the name of Clean Environment Cess w.e.f. 14.05.2016 vide Section 235 of Finance Act of 2016 - denial of credit on the ground that Clean Energy Cess was not specified in Rule 3 (1) of the Cenvat Credit Rules, 2004 - HELD THAT:- A plain reading of Rule 3 of CCR, 2004 shows that it did not provide for Cenvat credit of every duty of excise and cess but only of some, and this list does not include CEC imposed vide Finance Act, 2010. It is the case of the assessee that since CEC is also a form of excise, they are entitled to Cenvat credit even in the absence of an explicit provision under Rule 3 of CCR, 2004 - fiscal statutes must be interpreted strictly as per the letter of word and not the spirit of the law, ignoring any amount of hardship and eschewing any equity in taxation. However, in the event of ambiguity in taxation liability, statute, the benefit should go to the assessee. From a plain reading of Rule 3 of CCR, 2004, there are no ambiguity. Although it is now settled that taxing statutes must be literally interpreted, we have also examined the spirit and purpose of levying the CEC. It is evident from Section 83 of Finance Act, 2010, that CEC has been levied on coal etc. to discourage use of the polluting forms of energy and encourage use of cleaner forms of energy. This is based on the principle of Polluter pays . If the CEC collected by the Government is returned to the assessee through the backdoor in the form of Credit under CCR, 2004, we will be doing a great disservice to the country by replacing the principle of Polluter pays . Under Clean Energy Cess Rules, the cess has to be deposited through cash /PLA and cannot be deposited through debit to cenvat credit account. Further, proviso to Rule 3(4) of Cenvat Credit Rules specifically debars the payment of Clean Energy Cess by use of cenvat credit taken under Rule 3(1) of Cenvat Credit Rules. Thus, intent of legislature is evident that the Clean Energy Cess has been imposed for collection of cess on the polluting fossil fuels, so as to create additional funds for taking measures to reduce the carbon emissions/pollution. Thus, the intent of legislation is very clear not to allow the cenvat credit of Clean Energy Cess. This is evident as the Central Government is providing for maintaining separate accounts of Clean Energy Cess, to be utilized for specific purposes upon sanction by the Parliament. Appeal dismissed - decided against appellant.
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