Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 15, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
GST
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New GST forms for waiver of interest/penalty. Apply using SPL-01, file reply with SPL-04, get order via SPL-05/06/07.
The key points covered in the legal document are: 1. It introduces new forms (GST SPL-01 to GST SPL-08) for taxpayers to apply for waiver of interest and penalty u/s 128A of the GST Act. 2. Form GST SPL-01 is for making an application to seek waiver, providing details of the order, tax periods, and amount of tax, interest, and penalty demanded. 3. Form GST SPL-03 is a notice issued by the tax officer seeking clarification or raising objections on the application filed in SPL-01. 4. Form GST SPL-04 is for the taxpayer to file a reply to the notice issued in SPL-03. 5. Form GST SPL-05 is the order issued by the tax officer approving or partially approving the waiver application. 6. Form GST SPL-06 is the order issued by the appellate authority approving or partially approving the waiver application in case of an appeal. 7. Form GST SPL-07 is the order rejecting the waiver application filed in SPL-01. 8. Form GST SPL-08 is an undertaking to be provided by the taxpayer to not file an appeal against the appellate order in SPL-06 for restoration of the original.
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TDS now mandatory for metal scrap supplies between registered businesses from Oct 2024.
This notification amends the Central Goods and Services Tax Act, 2017 to mandate tax deduction at source (TDS) compliance for supply of metal scrap between registered persons. It inserts a new clause (d) specifying that any registered person receiving supplies of metal scrap falling under Chapters 72 to 81 of the Customs Tariff Act, 1975 from another registered person will be subject to TDS provisions. The third proviso is also amended to exclude the newly added clause (d) from the exemption granted to supplies between specified persons u/s 51(1). The notification comes into effect from October 10, 2024.
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Metal scrap suppliers need GST registration despite reverse charge from 10-10-2024.
The notification amends the earlier Notification No. 5/2017-Central Tax to exclude persons engaged in the supply of metal scrap falling under Chapters 72 to 81 of the Customs Tariff Act, 1975 from the exemption from GST registration if their entire supply is under reverse charge mechanism. The amendment comes into force from 10th October 2024. It mandates GST registration for metal scrap suppliers, irrespective of the applicability of reverse charge mechanism on their supplies.
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Registration Cancellation Saga: Petitioner Wins, But ITC Utilization Restricted For Fair Proceedings.
The Central Goods and Services Tax (CGST) Authority accepted the petitioner's voluntary application for cancellation of registration with effect from 8th May 2023. However, the subsequent orders revoking the registration cancellation were passed contrary to the principles of natural justice. Consequently, all proceedings initiated thereafter were quashed. The petitioner's conduct of overlooking the show cause notice was not approved. To balance interests, the petitioner will be restrained from utilizing the Input Tax Credit (ITC) for a reasonable period during which the respondents must conclude proceedings. The orders dated 20th February 2024, 8th March 2024, and 9th May 2024 were quashed, restoring the position as of 8th May 2023, the date of acceptance of the petitioner's application for registration cancellation. The petition was disposed of accordingly.
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Exporter challenges detention order; court allows provisional release on showing zero-rate export sale in GSTR-1.
In the case of a detention order u/s 129(3) of the Central Goods and Services Tax Act, 2017, the petitioner challenged the order on the grounds that the goods were meant for export and thus qualified for Zero Rate Sale, rendering any levy of tax or penalty without jurisdiction. The High Court held that considering the peculiar facts of the case, where the goods relate to export treated as zero rate u/s 16 of the IGST Act, the petitioner shall submit a copy of GSTR-1 before the appropriate respondent. If GSTR-1 reveals the transaction as a zero rate export sale, integrated taxes ought to be paid or the goods must be exported under Bond or Letter of Undertaking in accordance with Section 54 of the Act. If the petitioner can demonstrate the transaction's inclusion in GSTR-1, the goods shall be provisionally released. However, the petitioner can question the impugned proceedings dated 23.08.2024 by filing an appeal before the appropriate appellate authority u/s 107 of the Central Goods and Services Tax Act, 2017, subject to compliance with conditions like payment of pre-deposit. If such an appeal is filed, it shall be disposed of within four weeks from the date of filing. The petition was disposed of accordingly.
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GST registration cancellation order set aside for lack of reasoning, violating natural justice principles.
Order cancelling GST registration quashed due to lack of reasons and violation of principles of natural justice. While SCN proposed cancellation citing incorrect form, impugned order merely reproduced provisions of Sections 29 and 30 without specifying grounds for cancellation. Failure to provide reasoning renders order unsustainable, entitling petitioners to succeed. Petition disposed accordingly.
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Allegations of tax suppression; statutory remedies advised over writ petition for factual disputes. Rectification plea rightly rejected after due process.
Petitioner failed to establish grounds for invoking Section 74 of CGST/SGST Acts regarding suppression allegations. Disputed questions of fact cannot be adjudicated through writ petition under Article 226. Petitioner directed to pursue statutory remedies for adjudication. Rectification application was properly rejected after providing opportunity. Limitation period for appeal against original order excluded from date of rectification application till disposal of writ petition.
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Wrongly availed GST credit recovery: Unregistered branches' claims scrutinized.
The High Court examined the recovery of wrongly availed credit with penalty for wrongful availment during transition to GST regime. The petitioner's branches were not registered, and there was no correlation between invoices and claims made. The Court analyzed the registration status u/r 9 of Central Excise Rules, 2002, which allows exemption granted through a 2010 notification. The petitioner produced a centralized registration certificate covering various branches. The correlation between claims and invoices was remanded to the original authority for verification after setting aside the orders. The authorities were directed to determine credit eligibility after verifying branch registration coverage. The writ petition was disposed of through remand.
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Blocking Input Tax Credit Without Due Process Invalidated; Cross-Utilization Disallowed; Rs. 2.44 Cr Credit Unblocked.
Tax authority's action of blocking input tax credit in electronic credit ledger without following due process held untenable. Cross-utilization of credit between CGST and SGST not permissible. Respondents directed to unblock credit of Rs. 2,44,05,567 in petitioners' electronic credit ledger. Utilization of remaining credit disallowed till show cause notice issued under relevant provisions of GST Act. Petition allowed.
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Tax liability imposed without show cause notice & documents, violating natural justice.
Non-service of show cause notice violated principles of natural justice. Respondent imposed tax liability without providing opportunity and documents to petitioner for defense. Court remanded matter to respondent for fresh consideration after petitioner pays 10% of disputed tax amount, setting aside earlier order to maintain consistency with previous cases allowing petitioner to present defense. Petition allowed by way of remand for reconsideration after partial tax payment by petitioner.
Income Tax
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Deadline extension for trusts/institutions to file audit reports in correct form for FY 2023-24.
This order issued by the Central Board of Direct Taxes (CBDT) u/s 119 of the Income Tax Act, 1961, grants an extension for certain trusts/institutions/funds to furnish audit reports in the applicable Form No. 10B/10BB for the assessment year 2023-24. Previously, a circular allowed such entities to file the audit report in the incorrect form by March 31, 2024. However, some entities could not comply. To avoid genuine hardship, the CBDT now allows them to submit the audit report in the correct form on or before November 10, 2024. This extension aims to provide relief and facilitate compliance for the affected trusts/institutions/funds.
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Protective addition deleted due to lack of substantive addition in related party's case.
Protective addition made by Assessing Officer was not sustainable as substantive addition did not survive in concluded assessment proceedings of related party. CIT(A) rightly deleted protective addition as per settled law that if substantive addition does not survive, protective addition also does not survive, as held in Pr. CIT (Central)-2 vs. Electrical and Electronic India Ltd. Revenue's appeal dismissed as no interference warranted with CIT(A)'s order deleting protective addition in absence of incriminating material and substantive addition in related party's case.
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Distinct Scope: Income Tax Act vs Black Money Act on Undisclosed Foreign Assets/Income.
The summary highlights the key difference between the scope of total income under the Income Tax Act and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA). While the Income Tax Act covers all income from whatever source derived, the BMA only considers undisclosed assets located outside India and undisclosed foreign income and assets. Section 4(3) of the BMA explicitly states that income included as undisclosed foreign income and assets shall not form part of the total income under the Income Tax Act. Additionally, Section 65 of the BMA prohibits reopening assessments or claiming set-offs under the Income Tax Act for declared undisclosed assets. The summary emphasizes that the findings under the Income Tax Act proceedings have guiding value but no binding effect on BMA proceedings due to the different scopes of income. It also highlights the distinctions between the deeming provisions of Sections 68 and 69 of the Income Tax Act and the definitions u/ss 2(11) and 2(12) of the BMA. Ultimately, the summary concludes that the assessee is not obliged to disclose overseas assets/income in Income Tax Returns for the relevant assessment years when no specific column existed, as the declaration under the BMA can be made after its commencement date.
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Cash loan penalty requires AO's satisfaction, mere referral insufficient.
The High Court held that for levying penalty u/s 271D for violation of Section 269SS, the Assessing Officer must record satisfaction that the provisions were violated. Mere referral by the Assessing Officer to the Joint Commissioner without recording such satisfaction is insufficient. The Court relied on the Supreme Court's decision in Jai Laxmi Rice Mills, setting aside the penalty order u/s 271D as the Assessing Officer did not record any finding of violation of Section 269SS during assessment proceedings. The Court drew a presumption that the department accepted the assessee's explanation denying cash loan, precluding levy of penalty.
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Cash deposit treated as unexplained income due to unsatisfactory explanation - burden on assessee.
Ex-parte assessment u/s 144 treated unexplained cash deposits as undisclosed and unexplained income, added to the assessee's total income u/s 68 read with Section 69A. Where sums are credited in the assessee's books, the same may be charged as income if the assessee's explanation is unsatisfactory, creating prima facie evidence against the assessee. The burden is on the assessee to rebut the presumption of income receipt. In this case, despite notices, the assessee did not appear or furnish explanations before the authorities. The belated explanation of amounts collected as a recovery agent was found unreasonable. The AO, CIT(Appeals), NFAC, and ITAT concurrently concluded that the assessee failed to rebut the presumption u/s 68 read with Section 69A. Following the Supreme Court's decision in Vijay Kumar Talwar, the ITAT's finding based on records is correct, and no substantial question of law arises. The appeal is dismissed at the admission stage without notice to the other side.
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Personal liability of MD for withheld amount + interest upheld; review dismissed due to limited grounds.
The review petition challenges the order imposing interest liability over the withheld amount and cost on the Managing Director. The court held that reviewing an order is limited and can only be done under specific conditions laid down by the Supreme Court. Regarding the interest liability, the court found no ambiguity as it was based on the applicable regulations. Challenging this would amount to an appeal rather than a review. As for the cost imposed on the Managing Director, the court held that even if it was a wrong consideration, it cannot be a ground for review but an appeal. If the Managing Director was not a party, his individual liability cannot be questioned by others. Applying the principles for reviewing orders, the court dismissed the review petition.
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Cash withdrawals legitimized demonetization deposits, but forex conversions rejected for lack of proof.
Cash withdrawals from ICICI and SBI bank accounts were treated as the source for deposits made during demonetization, as evidence showed the withdrawn funds were not used for other purposes. The burden of disproving availability of withdrawn cash for deposits lies with the Department. However, the claim of deposits originating from USD conversion was rejected due to lack of forex receipts and documentation from authorized money exchangers. As a result, an addition of Rs. 3,70,000/- was sustained u/s 69A for unexplained income. The penalty u/s 271AAC and interest u/ss 234A, 234B, and 234C will be recomputed based on the revised assessed income by the Assessing Officer. The Appellate Tribunal's decision was based on judicial precedents and evidentiary requirements for regulated foreign exchange transactions.
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Pharmaceutical firm's R&D costs not allocated to tax-exempt units due to lack of direct link to current products &DExpenses.
The assessee, a pharmaceutical company, claimed deduction u/s 80-IE for its units located in Sikkim. The Assessing Officer (AO) allocated the Research and Development (R&D) expenditure incurred by the assessee among the 80-IE units and non-80-IE units based on the percentage of sales. The Commissioner of Income Tax (Appeals) [CIT(A)] held that the AO's allocation was incorrect as the assessee had produced evidence that the R&D expenditure was unrelated to the products manufactured in the 80-IE units. The Tribunal observed that the R&D activities were focused on future products and innovations, not the current products manufactured. The products developed in R&D undergo a process of 6-10 years before manufacturing, involving testing and approvals. Thus, the R&D expenditure during the year was not directly related to the products manufactured in the eligible units that year. The Tribunal upheld the CIT(A)'s decision to delete the allocation of R&D expenditure to the 80-IE units, ruling in favor of the assessee.
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Cash deposits in savings account of a contractor - Revenue failed to rebut presumptive income u/s 44AD.
Addition u/s 69A - AIR information revealed cash deposits in assessee's savings bank account - assessee applied Section 44AD of the Act on business income. Held: Assessee was a contractor before appointment, and Revenue did not dispute this. Section 44AD allows computing business profits on presumptive basis for eligible businesses at 8% of turnover. Assessee's business fell under eligible category. AO did not provide evidence that cash deposits were not from business. In absence of contrary evidence, assessee's business was eligible u/s 44AD, and cash deposits were from business. 10% profit offered by assessee u/s 44AD accepted. CIT(A)'s order failed, assessee's grounds allowed.
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Accountant's salary below TDS threshold, no tax deduction required.
Salary paid to an accountant at Rs. 12,000 per month is not liable for tax deduction at source u/s 194J as it is a salary expenditure, not payment towards professional or technical services. The total salary amount paid is below the taxable limit, hence no TDS obligation arises u/s 192. Consequently, the disallowance u/s 40(a)(ia) for non-deduction of tax at source u/s 194J is deleted as the payment is towards salary and not professional fees. The Appellate Tribunal set aside the findings of the CIT(A) and allowed the assessee's appeal on this issue.
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Mining firm compensates farmers for rights acquisition; deduction allowed over years.
The assessee claimed deduction for compensation paid to farmers for acquiring mining rights, which was an allowable expenditure. The Assessing Officer allowed the expenditure over 20 years and made an addition. The CIT(A) allowed the assessee's appeal, relying on the Supreme Court's decision in M/s Reliance Petro Products Pvt. Ltd., holding that it was not a case of furnishing inaccurate particulars of income, and penalty u/s 271(1)(c) of the Income Tax Act was not leviable. The assessee did not furnish inaccurate particulars, and the expenditure was allowed on a deferred basis. The ITAT, in Simplex Pharma (P) Ltd. and Onicra Credit Rating Agency of India Ltd., had deleted the penalty levied u/s 271(1)(c) on deferred revenue expenditure. The ITAT concurred with the CIT(A)'s findings and dismissed the revenue's ground.
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Deductions for interest income disallowed, but appeals court allows it if solely for earning interest.
Deduction u/s 57 was disallowed for interest income from savings bank account and interest from Thangamayil Jewellery Limited, classified under "other sources". The issue was whether a direct nexus existed between the loan borrowed and loan given. The names on loan documents did not match the assessee's name, and deductions u/s 57 were denied as the loans were for specific purposes like home and agriculture. However, relying on ACIT vs. Nishith Desai, the Tribunal allowed interest expenditure deduction u/s 57, as it was wholly and exclusively for earning interest income, following CIT vs. Rajendra Prasad Moody. Lack of evidence like bank statements showing loan credit to Thangamayil Jewellery Limited necessitated remanding the matter to the Assessing Officer for fresh examination. The assessee was directed to file evidence for the claim u/s 57. The appeal was allowed for statistical purposes.
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CIT(A) shouldn't dismiss appeals ex-parte without adjudicating merits. Proper notice, inquiry into firm status, true facts needed.
The Income Tax Appellate Tribunal observed that the Commissioner of Income Tax (Appeals) dismissed the assessee's appeal ex-parte without deciding issues on merits, which is not in consonance with Section 250(6) of the Income Tax Act, 1961. The CIT(A) is required to adjudicate issues arising in the appeal on merits by stating points for determination, decision thereon, and reasons. The CIT(A) has power to make inquiries u/s 250(4). The notice of hearing was not properly served on the assessee as required u/s 282 read with Rule 127. The assessee claimed business closure since 2018 but did not intimate the revenue as required u/s 176(3). The assessee is a partnership firm, and Section 189(4) applies in case of discontinuance or dissolution after assessment proceedings commenced. Complete inquiry is required regarding the firm's status, and the assessee must furnish true and correct facts before the CIT(A). The appellate order is set aside, and the matter is restored to the CIT(A) for de novo adjudication, providing proper opportunity to both parties. The assessee must comply with notices; otherwise, an ex-parte order on merits may be passed.
Customs
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Incorrect adjudicating officer's order can't be challenged via contempt, but through proper legal channels.
The adjudicating officer's order dated 15 May 2024, made after complying with the principles of natural justice, cannot be challenged through contempt proceedings, even if it is incorrect. The correctness of the order can be examined in appropriate proceedings. The non-entertainment of the contempt petition is without prejudice to the petitioner's right to challenge the adjudicating authority's orders before the appropriate court. The contempt petitions are disposed of.
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Customs tariff classification: Motorcycle parts rightly taxed, confiscation overturned.
Imported goods classified under Customs Tariff Item (CTI) 8714 10 90 or 8714 91 00 - General Rules of Interpretation applied for classification - Goods rightly classified under 8714 10 90 as parts of motorcycle frames, not entitled to exemption under Notification No. 50/2017-CUS - Confiscation of goods u/s 111(m) and redemption fine set aside as classification by importer during self-assessment differing from officer's view not ground for confiscation - Penalties u/ss 112 and 114AA on appellant and employee set aside for lack of evidence of false declaration - Appeal disposed.
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Licensing authority's appeals against customs brokers not maintainable for CBLR violations.
This case pertains to the maintainability of appeals by the Committee of Chief Commissioners u/s 129D of the Customs Act, 1962, concerning breaches of regulation 10 of the Customs Brokers Licensing Regulations (CBLR), 2018. The Tribunal, relying on the Delhi High Court's decision in a similar case, held that such appeals by the licensing authority are not maintainable. Consequently, the Tribunal dismissed the appeal, stating that it was initiated without legal authority.
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Importers denied duty exemption on fraudulent scrips; penalty waived for lack of knowledge.
The appellants imported goods by utilizing DEPB scrips which were later found to be fraudulently obtained, though the appellants were unaware of this fact. The key issues were the validity of such DEPB scrips for duty exemption and the imposition of penalty u/s 114A of the Customs Act, 1962. The Supreme Court has held that exemption benefit cannot be availed on forged/fake DEPB licenses/scrips, even if purchased from the open market. Therefore, the demand for duty was upheld as per the impugned order. However, since the appellants were unaware of the fraud, the penalty was set aside. The appeal was allowed in part by the CESTAT.
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Broker's licence revoked for using another's credentials to illegally import prohibited goods, violating multiple customs regulations.
Customs broker licence revocation - importer engaged appellant to file import bill of entry but appellant used another broker's credentials instead of its own - imported goods prohibited - violations of multiple regulations under Customs Broker Licensing Regulations 2018 including failure to obtain authorization, non-compliance advisory, withholding import prohibition information, improper records maintenance - intentional facilitation of prohibited imports using another's identity - revocation and penalties proportionate to grave violations involving attempt to illegally clear prohibited goods by misusing another's broker licence instead of acting transparently under own licence - no leniency warranted given intentional illegal actions to profit from facilitating prohibited imports - appeal dismissed upholding revocation order.
DGFT
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Easing procurement of Acetic Anhydride for Advance Authorization holders from SEZ units.
The policy circular clarifies that the requirement of obtaining a 'No Objection Certificate' from the Drug Controller and Narcotics Commissioner of India, as stipulated in Paragraph 4.08(ii) of the Handbook of Procedures 2023, will not be applicable for Advance Authorisation holders procuring Acetic Anhydride from units located in Special Economic Zones (SEZs). This exemption is granted provided the Acetic Anhydride is manufactured by a unit operating within the SEZ and the procurement is against a Certificate of Supplies. The circular aims to facilitate ease of doing business for Advance Authorisation holders while ensuring compliance with relevant regulations.
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Govt restricts import of parts for refillable & non-refillable pocket gas lighters under HS code 96139000.
The notification amends the import policy for HS code 96139000 (parts of lighters) under Chapter 96 of the ITC (HS) 2022. The import policy for parts of pocket lighters, gas fuelled, non-refillable or refillable is revised from 'Free' to 'Restricted' with immediate effect. The amendment is issued under the Foreign Trade (Development & Regulation) Act, 1992, and the Foreign Trade Policy 2023, by the Directorate General of Foreign Trade, Ministry of Commerce & Industry, Government of India.
IBC
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Extended deadline for liquidators' form submission in voluntary liquidations under IBC 2016.
The Insolvency and Bankruptcy Board of India has extended the deadline for liquidators to file forms related to voluntary liquidation processes under the Insolvency and Bankruptcy Code, 2016, and its regulations. Initially, the deadline was set for September 30, 2024, as per Circular No. IBBI/LIQ/74/2024 dated June 28, 2024. However, due to representations from liquidators and Insolvency Professional Agencies citing technicalities and issues in form submission, the Board has extended the last date for submission of forms until November 30, 2024. This extension is issued under the powers conferred by sub-section (1) of section 196 of the Insolvency and Bankruptcy Code, 2016.
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Deadline extended for liquidators to file forms for insolvency cases until Nov 30, 2024 by IBBI.
The Insolvency and Bankruptcy Board of India (IBBI) has extended the deadline for liquidators to file forms related to liquidation processes under the Insolvency and Bankruptcy Code, 2016, and its regulations. Initially, the deadline was set for September 30, 2024, but due to representations from liquidators and Insolvency Professional Agencies citing technicalities and issues, the IBBI has extended the last date for submission of forms until November 30, 2024. This circular is issued under the powers conferred by sub-section (1) of section 196 of the Insolvency and Bankruptcy Code, 2016.
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Bankruptcy court approves resolution plan, govt demands for pre-plan period extinguished.
Upon approval of the Resolution Plan by the NCLT, it is binding on all creditors, including the Central and State Governments, u/s 31 of the Insolvency and Bankruptcy Code. The demands raised against the Petitioner-Company pertaining to the period prior to the Plan Effective Date stand automatically extinguished. The Opposite Parties are directed to revise the demands by limiting them to the period from the Plan Effective Date onwards and raise them afresh against the Petitioner-Company in accordance with the law. The impugned letters raising demands covering the period up to the Plan Effective Date are set aside as unsustainable in law.
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Debt revival by acknowledgment upheld, restructuring revocation allowed on default, malice unproven, liability reinstatement clause valid.
Debt acknowledgment prior to limitation expiry, legal exercise of restructuring revocation upon default, compliance with circulars substantiated, unsubstantiated allegations of malice, explicit restructuring clause allowing liability reinstatement, discretion exercised per Supreme Court precedents, admitted facts and evidence upholding CIRP initiation order, appeal dismissed.
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Govt Allowed to Encash Bank Guarantees Despite Insolvency if Due Process Followed.
The NCLAT upheld the legality of invoking a Performance Bank Guarantee (PBG) by the Nominated Authority during the moratorium period. It relied on the Supreme Court's judgment in Standard Chartered Bank vs. Heavy Engineering Corporation Limited, which established that a bank is obligated to honor an unconditional and irrevocable bank guarantee, subject to exceptions like fraud or irretrievable harm. In the present case, the Corporate Debtor's default was established, and the Nominated Authority followed due process by issuing a show cause notice, considering the Scrutiny Committee's recommendation, and invoking the PBG as per the agreement's terms. The NCLAT found no error in the Adjudicating Authority's refusal to set aside the invocation letter, as subsequent letters were consequences of the earlier appropriation order. The Corporate Debtor's notice of dispute was disposed of, upholding the invocation decision. The NCLAT dismissed the appeal, finding no grounds for interference.
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Appellant's inconsistent stance on debt vs investment leads to dismissal of IBC appeal & cost imposition.
Dismissal of Section 7 application under IBC by Adjudicating Authority upheld. Appellant argued amount of interest could be claimed u/s 7, but failed to notify Adjudicating Authority about alleged bonafide mistake in Section 9 application where it averred amount was an investment instead of loan. Appellant paid principal amount but pursued appeal for interest. Held, filing Section 7 petition after taking contrary stance in Section 9 application is an abuse of process. Appellant's conduct deprecated as unacceptable practice of changing stance as per convenience, dragging respondent into unnecessary litigation. Appeal dismissed with cost of Rs. 1 lakh imposed on appellant, payable to respondent within 30 days.
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Lack of locus standi to challenge admission order for Rs. 300 cr loan default against corporate debtor.
The appellant lacked locus standi to challenge the admission order passed by the Adjudicating Authority on a Section 7 application filed by SREI Equipment Finance Limited against the corporate debtor for default in repayment of a Rs. 300 crore loan. The appellant's case was based on a Share Purchase Agreement with two shareholders of the corporate debtor, which could not be implemented due to the Enforcement Directorate's attachment of the land. The appellant had agreed to repay the corporate debtor's loan amount through a Settlement Award. However, the debt and default were not denied by either the corporate debtor or the appellant. Since the debt and default were admitted facts, the Adjudicating Authority did not err in admitting the Section 7 application. The appeal was dismissed.
Indian Laws
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Cheque dishonour case - Accused failed to rebut presumption, evidence undisputed. Courts upheld conviction.
Dishonour of cheque case - petitioner-accused failed to deposit the amount despite existence of legally enforceable debt/liability. No evidence led to rebut presumption u/ss 118 and 139 of Negotiable Instruments Act. Both lower courts meticulously dealt with all aspects. Factum of cheque issuance and signature undisputed. Defence of borrowing only Rs. 2,00,000/- and returning it not probablized through cogent evidence. Presumption rightly invoked as no probable defence raised despite opportunity. Complainant's evidence not contested regarding Rs. 6,50,000/- borrowed. Supreme Court's ruling in Laxmi Dyechem case applied - accused neither established probable defence nor contested legally enforceable debt/liability, attracting statutory presumption. No illegality in invoking Sections 118 and 139. Well-reasoned judgments by lower courts upheld based on evidence appreciation. Revision petition dismissed, petitioner directed to surrender and serve sentence if not already served.
PMLA
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Money laundering charges stick - accused must prove innocence in trial.
Money laundering offences encompass various processes and activities related to dealing with proceeds of crime, directly or indirectly, beyond just the final act of integration into the formal economy. Mere possession of proceeds of crime is sufficient to invoke the Prevention of Money Laundering Act (PMLA). Section 3 has a wider scope, covering various circumstances to curb economic offences. Section 24 places the burden of proof on the accused, who must prove their innocence during trial unless the contrary is established. The authorities' presumptions, investigations, and collected documents are sufficient to proceed under PMLA. The High Court upheld the Trial Court's rejection of the discharge petition, finding no infirmity or perversity in its opinion that the petitioner failed to make out a prima facie case for discharge.
SEBI
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Faster securities settlement: 3:30 PM payout, direct demat credit on T+1.
Securities payout timing revised from 1:30 PM to 3:30 PM under T+1 rolling settlement. Clearing Corporations to credit securities directly to client demat accounts on settlement day instead of one working day later. Stock Exchanges, Clearing Corporations and Depositories to amend relevant bye-laws, rules and regulations accordingly. Circular issued under SEBI Act 1992, Securities Contracts (Regulation) Act 1956 and Depositories Act 1996 to protect investor interests and regulate securities market.
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Tightening due diligence norms for AIFs to curb regulatory arbitrage, ensuring compliance across investor segments.
This circular specifies due diligence requirements for Alternative Investment Funds (AIFs) to prevent circumvention of regulatory frameworks. Key points include: AIFs designated as Qualified Institutional Buyers (QIBs) must conduct due diligence per Standard Setting Forum (SFA) standards when investor(s) contribute 50% or more to a scheme's corpus, before availing QIB benefits. Similar due diligence is required for AIFs as Qualified Buyers investing in security receipts issued by Asset Reconstruction Companies. For schemes with RBI-regulated investors/sponsors contributing 25% or more, due diligence must ensure indirect exposures comply with RBI norms. Schemes with 50% or more corpus from investors in countries sharing land borders with India require due diligence, and investments over 10% in Indian companies must be reported. Existing investments not meeting due diligence standards must be reported to custodians by specified dates. Custodians must report compiled information to SEBI. Implementation standards by SFA must be adopted.
VAT
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Toll Road Construction Deemed Works Contract, Tax Liability Upheld.
The High Court dismissed the petition challenging the assessment orders levying commercial tax under the Commercial Tax Act and Entry Tax Act. The key points are: The Build, Operate and Transfer (BOT) contract executed by the petitioner for constructing a bypass road amounted to a works contract. The petitioner was authorized to collect toll from vehicles to recover the construction cost, which is a deferred payment mode. The court held that the contract falls within the definition of a works contract under the relevant laws. The petitioner's contention that it did not execute a works contract was rejected. The court relied on its previous Full Bench decision in Viva Highways case, which clarified the scope of works contract. Consequently, the petition was dismissed as devoid of merit and substance.
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Entry Tax Upheld on Crude Soybean Oil for Refining into Refined Oil in Madhya Pradesh.
The petitioner challenged the imposition of entry tax on crude soybean oil brought into Madhya Pradesh for manufacturing/refining soybean refined oil under the MPCT Act and Entry Tax Act. The petitioner argued that if refining crude soybean oil is considered manufacturing, then crude oil being a raw material would be exempt. The court held that refining crude oil into refined soybean oil constitutes a manufacturing process, resulting in a new consumable product. Despite the notification excluding refining from manufacturing under the MPCT Act, entry tax is leviable under the Entry Tax Act for consumption/use or sale in the local area. The court dismissed the petitions, upholding the tax authorities' orders imposing entry tax on crude soybean oil brought for refining into refined soybean oil.
Service Tax
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ATM Interchange Fees & Notional Consideration: No Double Taxation for Associate Banks.
Levy of service tax on ATM interchange fees received by State Bank of Hyderabad from SBI for deploying its ATMs in the shared network, and on notional consideration for free ATM services provided to other associate banks and SBI. It holds that since SBI paid service tax as an agent for associate banks, service tax cannot be demanded again from associate banks. The demand for service tax on ATM interchange fees received from SBI is set aside. Regarding notional consideration for free ATM services, it states that no fee was charged as per the contractual understanding, and hence no service tax is leviable. The extended period of limitation u/s 73(1) of the Finance Act was correctly invoked as there was no willful suppression of facts with intent to evade tax. Consequently, the appeals filed by State Bank of India are allowed.
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Tribunal affirms no service tax on income from sale of flat allotment rights & related charges.
Noticee earned income from selling allotment rights of flats, which was not exigible to service tax as it involved transfer of rights in immovable property, excluded from the definition of 'service'. The amount charged as 'demand survey' was rightly excluded as it was adjustable against property price or refundable. Cancellation charges and miscellaneous income were not for any service provided, hence not leviable to service tax. Extended period of limitation, penalty, and interest were rendered inconsequential as the main issue was decided in favor of the noticee. The Tribunal affirmed the impugned order, dismissing the Revenue's appeal.
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Hired Cabs Leasing Liable for Service Tax, No Contract Carriage Exemption.
Appellant registered for providing cab operator's service rented vehicles to clients for transporting their employees, charges levied on kilometer basis inclusive of taxes and insurance for long periods like 11 months. Agreements indicated renting out cabs, not point-to-point transportation. Liable for service tax under 'rent-a-cab services' as per case laws. Ineligible for exemption under Notification 25/2012-ST as conditions for contract carriage not fulfilled. No evidence produced for abatement under Notification 1/2006. Entitled to cum-duty benefit as per case law. Extended period rightly invoked due to non-payment of collected service tax establishing intent to evade. Interest compensatory in nature upheld. Penalty u/s 77(2) upheld. Demand to be recalculated allowing cum-duty benefit, penalty u/s 78 modified accordingly. Appeal allowed for recalculation of demand.
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Software Support Services Face Tax Liability Despite Claims of Export.
The appellant's services cannot be classified as "Business Auxiliary Service" under the Export of Service Rules, 2005, and hence are not exempt from service tax. The services provided by the appellant relate to maintenance, repair, commissioning, installation, training, testing, certification, and IT software, which are not marketing or sales promotion services. Since the services are provided and used in India, they do not qualify as export of services. The extended period of limitation was rightly invoked as the audit revealed suppression of correct valuation. The penalty u/s 78 and interest on delayed payment are upheld. The appellant's services do not fall under "Commission Agent" in "Business Auxiliary Service" as per Section 65(19) and are not entitled to export service exemption as they are not used outside India. The Tribunal affirmed the impugned order, dismissing the appeal.
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GST
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2024 (10) TMI 610
Revovation of voluntary application for cancellation of registration accepted by the Central Goods and Services Tax (CGST) Authority - subsequent cancellation of registration with retrospective effect - HELD THAT:- The CGST Authorities accepted the Petitioner's application for registration cancellation with effect from 8th May 2023. Since the orders revocating registration cancellation on the Petitioner s application were passed contrary to the principles of natural justice, all the subsequent proceedings initiated thereafter, which are consequential, also have to be quashed. The Petitioner should have checked his email when the Respondent sent the show cause notice dated 26 February 2024, which the Petitioner has submitted has been inadvertently overlooked. The Petitioner's conduct not approved on this count. The learned counsel for the respondents expressed an apprehension that the petitioner may utilise the ITC to its credit up to 8 May 2023 and try to render the further proceedings infructuous. In the facts of the present case, the Petitioner will have to be restrained from utilising this ITC for some reasonable period during which the respondents would have to conclude their proceedings. This would balance the interests of both the parties. The Orders dated 20 February 2024, 8 March 2024 and 9 May 2024 passed by CGST Authorities are quashed and set aside - The Position as of 8 May 2023 is restored being the date of acceptance of the application of Petitioner for cancellation of registration - Petition disposed off.
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2024 (10) TMI 609
Input service distributor entitled to transition the credit from the past indirect tax regime to the GST Regime under Section 140 of the CGST Act or not - HELD THAT:- It would be proper to direct the relevant proper officer under the CGST and SGST Acts to deal with the Finance (No. 2) Act, 2024 coming into force on the date specified in N/N. 17/24 dated 27 September 2024 in accordance with law and after taking cognisance of The Finance (No. 2) Act, 2024. This petition is disposed of.
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2024 (10) TMI 608
Detention order under Section 129 (3) of the Central Goods and Services Tax Act, 2017, dated 23.08.2024 - Challenge to order on the premise that the goods were meant for export and thus qualified for Zero Rate Sale and thus any levy of tax or penalty is without jurisdiction - HELD THAT:- In view of the peculiar facts of the case, viz., the goods relate to export which is treated as zero rate under Section 16 of IGST Act, this Court is of the view that the petitioner shall submit a report a copy of the GSTR-1 before the appropriate respondent, inasmuch as GSTR-1 would reveal if the subject transaction is disclosed as a zero rate sale, an export transaction once disclosed in Form GSTR-1, integrated taxes ought to be paid or must be exported under Board or Letter of Undertaking in accordance with Section 54 of the Act. In view there of, if the petitioner is able to demonstrate that the transaction is included in the GSTR-1 Return, the goods shall be released provisionally. However, insofar as the impugned proceedings dated 23.08.2024, it is always open to the petitioner to question the impugned proceedings by way of an appeal before the appropriate appellate authority under Section 107 of the Central Goods and Services Tax Act, 2017, subject to complying with all other conditions including payment of pre-deposit if any such appeal is filed, the same shall be disposed within a period of four weeks, from the date of filing of the appeal. Petition disposed off.
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2024 (10) TMI 607
Cancellation of registration granted to the petitioners - SCN proposing cancellation is issued in Form GST REG - 31, whereas it should have been issued in Form GST REG - 17 - order of cancellation does not give any reason for cancellation and is merely a reproduction of certain provisions of Section 29 and Section 30 of the CGST / SGST Acts - violation of principles of natural justice - HELD THAT:- The petitioners are entitled to succeed on the ground that the order cancelling the registration does not spell out any reason for cancelling the registration except making reference to the provisions of Sections 29 and 30 of the CGST / SGST Acts. The impugned orders cancelling the registration are marked as Ext.P2 in both the writ petitions. Without going into question as to the reference to the wrong Form in the show cause notices is a defect in the proceedings, it is required to set aside the orders produced as Ext.P2 (in both the writ petitions) on the ground that they do not spell out any reason for canceling the registration of the petitioners - petition disposed off.
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2024 (10) TMI 606
Finalization of proposals/demand against the petitioner - just cause or reason to invoke the provisions of Section 74 of the CGST / SGST Acts or not - intent to evade tax or not - HELD THAT:- The petitioner has not made out any case for grant of the relief sought for in the writ petition. A perusal of the show cause notice would indicate that there are several instances of suppression which have been pointed out in the show cause notice as a justification for invoking Section 74 of the CGST / SGST Acts. While the petitioner may have raised several contentions to show that the allegations are not correct to reach a conclusion the adjudication of disputed questions of fact will be necessary. It is for the petitioner to get his claim adjudicated by the statutory authorities under the CGST / SGST Acts. The procedure under Article 226 of the Constitution of India cannot be invoked to determine disputed questions of fact especially on account of the procedure adopted in this Court in respect of writ petitions under Article 226 of the Constitution of India. The petitioner has no case that the alternate remedy available to the petitioner is not effective including for adjudicating the question as to whether there was just cause or reason for invoking the extended period of limitation (under Section 74) in the facts and circumstances of this case. A reading of the Ext.P10 order indicates that though not within the scope of rectification, the Officer had called for further details from the petitioner and the petitioner failed to produce any further details for the purpose of considering the contentions taken in the application for rectification. For all these reasons, the writ petition fails and will stand dismissed. Considering the fact that Ext.P5 order was issued on 10.12.2023 and the petitioner had filed Ext.P6 application for rectification on 22.01.2024 and the fact that the rectification application was rejected only on 08.05.2024 and this writ petition was filed in the month of August 2024, the period from the date of filing of the rectification application till today can be excluded for the purpose of determining any period of limitation within which the petitioner had to file an appeal against Ext.P5 order. Petition disposed off.
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2024 (10) TMI 605
Recovery of wrongly availed credit, with penalty for wrongful availment of credit - credit on transition to GST regime - stock transfer vouchers not issued by duly registered dealers - petitioner's branches not registered - no correlation between the invoices and the claims made by the petitioner. Registration status of the petitioner's branches under Rule 9 of the Central Excise Rules, 2002 - HELD THAT:- Rule 9, which requires registration also provides for an exemption under Rule 9(2). Such exemption had been granted, by way of the Notification of the Central Government dated 01.03.2010, which has been extracted above. The certificate of registration produced by the petitioner, before this Court, shows that a centralized registration under Rule-9 had been issued to the petitioner. The annexure has also been filed along with the certificate showing the various branches of the petitioner which are said to be covered under the said registration. Correlation of the claim of the petitioner with the invoices produced by the petitioner - HELD THAT:- The said issue can only be resolved by the respondent authorities by looking at the documents produced by the petitioner. It appears that at the original stage, documents were rejected on the ground that they have not emanated from the registered entity or branch. At the appellate stage, the appellate authority while affirming this finding of the original authority had taken an additional ground that there was no correlation. The Order-in-original dated 02.07.2021 passed by the 2nd respondent and the Appellate order dated 31.03.2022 passed by the 1st respondent are set aside - The present dispute is remanded back to the 2nd respondent-Original Authority for determining whether the credit claimed by the petitioner is in accordance with the Rules and Law after verifying whether the registration certificate of the petitioner covered the branches at Mumbai, Tamil Naidu and Telangana etc. The writ petiiton is disposed off by way of remand.
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2024 (10) TMI 604
Withdrawal of negative blocking of ITC in the electronic credit ledger of the Petitioners - Jurisdiction and authority under Rule 86A of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- As per the eventualities provided in clauses (a) to (d) of Sub-rule (1), the Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the Electronic Credit Ledger has been fraudulently availed or is ineligible after reasons to be recorded in writing, is authorised not to allow the debit of an amount equivalent to such credit in Electronic Ledger for discharge of any liability under section 49 of the GST Act or for claim of any refund of any unutilised amount. After referring to Circular No. 4 of 2021 dated 24.05.2021 issued by the Office of the Commissioner of State Tax, State Goods Services Tax Department, Kerala with regard to blocking of the credit, it was observed that if there is Nil or insufficient balance in a particular tax head in the Electronic Credit Ledger, then the balance in another tax head can be blocked only if the cross-utilization from such head is permissible in law. But such cross-utilization between CGST and SGST is not permissible and therefore, the SGST credit ledger cannot be blocked if sufficient credit balance is not available under the CGST head and vice versa. The issues raised in this petition are already answered in favour of the petitioner as there cannot be any blocking of the credit in Electronic Credit Ledger if there is no sufficient balance available. The respondents are directed to withdraw the negative block of the Electronic Credit Ledger at the earliest to the extent of Rs. 2,44,05,567/- and whatever balance remained in the Electronic Credit Ledger after the removal of the balance of the negative figure, the same shall not be utilised by the petitioner till the show cause notice is issued, if any, under sections 73 or 74 respectively of the GST Act. Petition allowed.
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2024 (10) TMI 603
Principles of natural justice - non-service of SCN - seeking that an opportunity should be given to the petitioner to defend themselves along with all the relevant documents - HELD THAT:- In the instant case, it is seen that notice was issued by the respondent but however, the petitioner did not receive the same. On going through the impugned order, it is seen that a total tax liability of Rs. 7,31,116/- , including interest and penalty, Rs. 8,04,226/- has been imposed against the petitioner. The petitioner has come up with a clear case that there are sufficient materials/documents to substantiate the defense of the petitioner to the effect that there was no mismatch between GSTR2A and GSTR3B. This Court had an occasion to deal with a similar issue in SRI GANESA ENGINEERING ENTERPRISES, VERSUS THE DEPUTY STATE TAX OFFICER, (FORMERLY KNOWN AS DEPUTY COMMERCIAL TAX OFFICER) , CHENNAI [ 2024 (10) TMI 125 - MADRAS HIGH COURT] . This Court wanted to afford an opportunity to the petitioner therein by putting the petitioner on terms. In order to maintain consistency, a similar order can be passed in this Writ Petition also. The impugned order passed by the respondent in Reference Number in GSTIN: 33AAEPE7427R1ZE/2017-18 dated 29.12.2023, is hereby set aside. The matter is remanded back to the file of the respondent for fresh consideration on condition that the petitioner will pay 10% of the disputed tax amount to the respondent within a period of four weeks from today - Petition allowed by way of remand.
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2024 (10) TMI 602
Seeking grant of bail - offence under Section 69 of Central Goods and Service Tax Act, 2017 read with Sections 132 (1) (b), 132 (1) (c), 132 (1) (f) of the CGST Act, 2017 - HELD THAT:- This Court is inclined to grant bail to the petitioner in terms of the paragraph-15 of the judgment and order dated 23.11.2023 passed in BLAPL No. 9999 of 2023 [ 2023 (11) TMI 1156 - ORISSA HIGH COURT] , where it was held that 'This Court is inclined to grant the prayer for bail made by the petitioner subject to such stringent terms and conditions imposed.' The BLAPL is disposed of accordingly.
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Income Tax
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2024 (10) TMI 601
TDS u/s 195 - Royalty or FTS or business profits - payment made to NTOs is towards interconnectivity charges - Assessee is an ILD license holder and responsible for providing connectivity to calls originating/terminating outside India - as decided by HC [ 2023 (7) TMI 1164 - KARNATAKA HIGH COURT ] an assessee is entitled to take the benefit under a DTAA between two countries. Hence, the ITAT s view that DTAA cannot be considered in proceedings under Section 201 of the Act is tenable. Assessee is not obliged to do the impossible. As facilities are situated outside India and the agreement is with a Belgium entity which does not have any presence in India. Therefore, the Tax authorities in India shall have no jurisdiction to bring to tax the income arising from extra-territorial source. HELD THAT:- During the course of submissions, we realised that this petition is covered by the judgment of this Court in Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] which has been followed in other cases also. When this fact was brought to the notice of petitioners, it was pointed out that in similar matters, this Court has issued notice. The submission of that there is a Review Petition pending before this Court and notice issued was in order. That is no reason for entertaining any subsequent matter having regard to the Explanation of Order XLVII Rule 1 of the Code of Civil Procedure, 1908. Respondent has brought to our notice order passed in GE India Technology Private Limited Etc . [ 2024 (4) TMI 1168 - SC ORDER] whereby a three-Judge Bench of this Court had dismissed the said Review Petitions both on the ground of delay as well as on merits. Special Leave Petition is dismissed on merits following the aforesaid judgment/order.
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2024 (10) TMI 600
Penalty u/s 271D - violation of the provisions of Sec. 269SS - non-recording any satisfaction in contemplating levy of penalty - HELD THAT:- A presumption can be drawn, in the absence of a finding by the AO to the effect that the petitioner has violated the provisions of Sec. 269SS of the Act, that the department has accepted the explanation furnished by the petitioner denying allegation of loan in cash. Therefore, it can unhesitatingly be said that, having satisfied with the explanation of the assessee, the AO did not record any satisfaction in the assessment order to the effect that the provisions of Section 269SS of the Act, are violated and did not contemplate levy of penalty u/s 271D of the Act. In our view, the satisfaction of the AO is required to be recorded because the officer, who passed the assessment order would not be levying the penalty u/s 271D of the Act, unless it is recorded in the assessment order, he cannot refer the file to superior officer i.e., Joint Commissioner, for initiating levy of penalty. Unless the AO who is the primary authority, based on the material before it, during assessment proceedings, arrives at a finding that there has been a violation of the provisions, like in the present case, of Section 269SS, there will not be any occasion to the Joint Commissioner, who is not the AO to exercise his jurisdiction to levy Penalty u/s 271D. Following the decision of the Hon'ble Supreme Court in the case of Jai Laxmi Rice Mills [ 2015 (11) TMI 1453 - SUPREME COURT] we set aside the order passed under Sec. 271D of the Act.
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2024 (10) TMI 599
Validity of notice issued u/s 143 (2) by an officer, who is not a 'prescribed income-tax authority - Period of limitation - also contended that even if it is assumed that the authority issuing the notice dated 23.06.2024 is a prescribed income-tax authority, he cannot issue a notice but can merely serve a notice - HELD THAT:- A plain reading of Section 143 (2) of the Act clearly indicates that either of the two authorities either the 'Assessing Officer or 'the prescribed income-tax authority can issue a notice u/s 143 (2) - The expression 'as the case may be also indicates the same. In the present case, the CBDT had issued a notification dated 12.05.2022 and 28.05.2022, in exercise of powers under Rule 12E of the Rules, and had authorised the Assistant Commissioner of Income Tax/ Deputy Commissioner of Income Tax (International Taxation), Circle-1(1)(1) Delhi to act as the 'prescribed income-tax authority for the purpose of issuance of notice u/s 143 (2) In the present case, the impugned notice u/s 143 (2) has been issued by the Assistant Commissioner of Income Tax/ Deputy Commissioner of Income Tax (International Taxation), Circle-1(1)(1), Delhi. In view of the above, the contention that the said Income Tax Officer did not have the jurisdiction to issue a notice under Section 143 (2) of the Act, is devoid of any merit. The contention that other than the AO, only the authorised Income Tax Officers of the National Faceless Assessment Centre (NaFAC) can issue a notice u/s 143 (2) of the Act as the same would be in furtherance of automation of such process, is also unmerited. This proposition is not supported by the plain language of Section 143 (2) of the Act or Rule 12E of the Rules. Rule 12E of the Rules does not confine the power of the CBDT to authorise only the Income Tax Officers of the NaFAC as the prescribed authority for the purposes of Section 142 (1) of the Act. The contention that the prescribed income tax authority can only serve a notice u/s 143 (2) of the Act but cannot issue it, is insubstantial. We are unable to accept that the AO did not have the jurisdiction to issue the impugned notices dated 10.07.2024, 06.09.2024, 17.09.2024 u/s 142 (1) of the Act or that the same are beyond the period of limitation. Once it is accepted that the AO has the jurisdiction to issue a notice u/s 143 (2) of the Act which is also the contention of the petitioner in this case the AO cannot be faulted for proceeding to complete the assessment.
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2024 (10) TMI 598
Ex-parte assessment u/s 144 - unexplained cash deposits treated as undisclosed and unexplained income and it was added to the total income of the assessee u/s 68 r/w Section 69A - HELD THAT:- Where any sum is found credited in the books of an assessee maintained for any previous year, same may be charged to income-tax as the income of the assessee of that previous year, and if the explanation offered by the assessee about the nature and source of sums found credited in the books is not satisfactory, in such cases, there is, prima facie, evidence against the assessee, viz., the receipt of money, and then the burden is on the assessee to rebut the same, and if he fails to rebut, it can be held against the assessee that it was a receipt of an income nature. In the instant case, despite number of notices having been issued by the AO to explain and to furnish the nature and source of the cash deposits in the bank account of the appellant herein / assessee, the appellant chose not to appear and did not furnish any explanation either before the AO or before the appellate authority i.e. the CIT (Appeals), NFAC, however, the appellant has furnished some explanation in shape of additional documents holding that it is the amount of M/s. Shriram Transport Finance Company Limited stating that the amount was collected by him (appellant/assessee) as a recovery agent from its borrowers who were located in naxal affected areas and deposited in his account. However, this explanation, for the reasons mentioned in the shape of affidavit, has not been found to be the reasonable explanation and the ITAT has rightly come to the conclusion that the assessee has failed to substantiate the nature and source of the cash deposits in his bank account. In our considered opinion, the AO CIT (Appeals), NFAC; and the ITAT, all, have concurrently and correctly concluded that the assessee did not produce any evidence to rebut the presumption drawn under Section 68 r/w Section 69A and in light of the decision of the Supreme Court in Vijay Kumar Talwar [ 2010 (12) TMI 2 - SUPREME COURT] we are of the considered opinion that the finding of the ITAT is the correct finding of fact based on record and the appellant has failed to demonstrate any substantial question of law in this appeal and as such, no substantial question of law arises from the order of the ITAT requiring formulation for consideration. This appeal stands dismissed at the admission stage itself without notice to the other side.
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2024 (10) TMI 597
Review petition - removal of interest liability over the withheld amount and cost imposed upon the Managing Director of the respondents - whether the order which is being sought to be reviewed can be reviewed on the grounds upon which the present review has been filed for which settled position of law for the purpose of exercising the power of review? - HELD THAT:- Since the law is settled that to review the order passed by the Court is very limited and order of review can only be passed in the circumstances of availability of certain conditions as has been held by the Hon'ble Apex Court in the recent judgment rendered in Sanjay Kumar Agarwal Vrs. State Tax Officer (1) Anr. [[ 2023 (11) TMI 54 - SUPREME COURT ], wherein while interpreting the provision of Order 47 Rule 1 of the C.P.C. which is pari materia to Rule 203 of the Jharkhand High Court Rules, wherein, the proposition has been laid down to entertain the review. It is also settled that order is not to be reviewed in the garb of the appeal. Further settled position of law is that if the fact has been taken into consideration by the Court may be wrong consideration by the Court but the same cannot be a ground for review rather the same will be a ground to prefer an appeal before the higher forum, if available. The ground of review are two folds that there is vagueness in paragraph-18 wherein the liability of interest has been imposed upon the total amount but from which date the interest is to be accrued on the total amount is not there. The second ground is that the Managing Director has been saddled with cost of Rs.5 lakhs which has been passed by the Court by putting liability in not acting with due diligence and the third ground has been taken that the Managing Director was not a party to the proceeding and as such, saddling of cost of Rs.5 lakhs as under paragraph-22 of the order sought to be reviews is contrary to the principles of natural justice. The first ground which has been taken that the quantum of interest has not been decided but this Court on consideration of paragraph-18 has found that this Court has passed the order holding the writ petitioner entitled for interest over the withheld as per clause 10.7.4 of the Regulation, 2015. As evident from the said clause that if the consumer has paid any excess amount, it shall be refunded to the consumer within 15 days or, if consumer opts, be adjusted within two subsequent bills. The Distribution Licensee shall pay to the consumer interest charges at the rate equivalent to the delay payment surcharge as per tariff on the excess amount outstanding on account of such wrong billing from the date of payment till the date of refund or adjustment in subsequent bills. Co-ordinate Bench of this Court while passing the order, has taken into consideration the said clause wherein in case of excess payment, the amount is to be refunded and on that count, the interest will have to be paid to the consumer which will be at the rate equivalent to the delay payment surcharge as per tariff on the excess amount outstanding on account of such wrong billing from the date of payment till the date of refund or adjustment in subsequent bills which means there is no ambiguity in the direction so passed of casting liability to pay interest as under paragraph-18 since the same is based upon the consideration of the provision made in clause 10.7.4 of the Regulation, 2015, as such, the same cannot be a ground for review rather the same will be a ground to challenge the finding so recorded by the original court before the higher forum. If the contention of the learned standing counsel for the review petitioner will be accepted, then the same will be nothing but exercising the power of appeal in the garb of review. The second and third ground is casting liability by saddling cost of Rs.5 lakh upon the Managing Director who has not been impleaded as party to the proceeding. This Court has considered in the light of the provision of clause 10.7.4 of the Regulation, 2015 and due to non-adherence of the said clause by the competent authority in not refunding the amount and if in that pretext, personal liability has been imposed upon the Managing Director by saddling cost of Rs.5 lakh, the same cannot be said that there is no consideration of the issue in the light of the statutory provision applicable rather there is consideration which might be said to be wrong consideration, for which the remedy available is not of review but of appeal.It has also been submitted that the Managing Director was not a party. This Court is of the view that if the Managing Director was not a party and when the Managing Director has been saddled with cost of Rs. 5 lakh then, it is his individual liability and nobody can be allowed to question the individual liability rather the same can only be questioned by the Managing Director by directly approaching to the Court. This Court, as per the aforesaid reason and relying upon the judgment passed by the Hon'ble Apex Court in Sanjay Kumar Agarwal Vrs. State Tax Officer (1) Anr. [ 2023 (11) TMI 54 - SUPREME COURT ] as also taking into consideration the ground which is to be applied in review of the order, is of the view that the instant civil review is fit to be dismissed.
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2024 (10) TMI 596
Unexplained income u/s 69A - penalty proceedings u/s 271AAC - HELD THAT:- We conclude that the cash withdrawals from ICICI and SBI were sufficiently documented. There is no evidence on record that the withdrawn funds were used for any other purposes, and the Department has not provided contrary evidence. Therefore, the Tribunal concludes that the withdrawals from these accounts should be treated as the source of the deposits during demonetization. Judicial precedents, such as, judgement of Shailesh Rasiklal Mehta [ 2008 (9) TMI 950 - GUJARAT HIGH COURT] support this conclusion by establishing that once cash withdrawals are demonstrated, the burden shifts to the Department to disprove their availability for subsequent deposits. Claim of the deposits came from USD conversions - We concur with the CIT(A) s findings that the absence of forex receipts is a critical flaw. We cannot accept the assessee s claim without documentary evidence from an authorized money exchanger. The conversion of foreign currency to INR is a highly regulated process, and the failure to provide documentation creates a significant evidentiary gap. Thus, we conclude that the addition has been satisfactorily explained through documented cash withdrawals. The remaining amount claimed to be sourced from USD conversion, is sustained u/s 69A of the Act due to the lack of dependable evidence and explanations. Penalty u/s. 271AAC and Interest Charged u/s. 234A, 234B, and 234C - As the addition has been reduced to Rs. 3,70,000/-, the penalty under Section 271AAC of the Act and the interest under Sections 234A, 234B, and 234C of the Act will be recalculated based on the revised assessed income. The AO is directed to re-compute the penalty and interest accordingly.
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2024 (10) TMI 595
Addition made on protective basis - substantive addition has been deleted - Assessment u/s 153A - Validity of additions made in the absence of incriminating material in concluded assessment proceedings - HELD THAT:- We find that AO has made protective addition which shows that he is convinced that substantive addition is required to be made in the hands of other persons. On the basis of details available on record, no substantive addition appears to have been made. Under these circumstances, protective addition cannot be made as per settled law. We note that revenue in the grounds of appeal had reiterated that substantive additions were made in the hand of Rajyog Buildtech Pvt Ltd for AY 2013-14 and AY 2014-15 and year involved in the present appeal of the assessee is AY 2012-13 and thus it cannot have relation with AY 2013- 14 and AY 2014-15. However, even in AY 2013-14 and AY 2014-15, the additions made in the hand of Rajyog Buildtech Pvt Ltd has not survived as the CIT(A) as well as ITAT has deleted the additions in the matter of DCIT VS. Rajyog Buildtech Pvt. Ltd. [ 2022 (7) TMI 1552 - ITAT DELHI] wherein, the Tribunal has dismissed the appeals of the Revenue. Thus it is abundantly clear that substantive addition has not survived. It is a settled law that if the substantive addition does not survive, the protective addition also does not survive. To support this view, we refer the decision in the case of Pr. CIT (Central)-2 vs. Electrical and Electronic India Ltd [ 2023 (11) TMI 657 - DELHI HIGH COURT] wherein, it has been held that addition made on protective basis does not survive where the substantive addition has been deleted. In our considered view, CIT(A) has rightly deleted the addition made by the AO on protective basis, which does not need any interference on our part, hence, we affirm the action of the ld. CIT(A) and accordingly the grounds raised by the Revenue are rejected. Appeal by the Revenue is dismissed.
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2024 (10) TMI 594
Deduction u/s 80-IE - allocation of Research and Development (R D) expenditure to the units - CIT(A) held that allocation of R D expenditure by the AO among 80IE units and non 80IE units on the basis of percentage of sales of respective units to the total sales - as per revenue no evidence was produced by the assessee company to justify that expenditure incurred on R D had no nexus with the products manufactured in the 80IE units HELD THAT:- As per the assessee, its corporate policy requires it to spend about 5% of its gross revenue on R D for the purpose of development of new ideas and drugs. Further, its R D units are housed in separate buildings and are standalone, independent units having separate financial statements. As per the assessee, its R D activities are not directly related to its manufacturing units as the R D division is working on future products and future innovations and launches, not present products manufactured by the manufacturing units. Hence, the R D expenditure has no relevance to the working of the qualifying undertakings during the year under consideration. As is evident from the record, the Revenue did not agree with the submissions of the assessee and treated the R D expenditure to be inextricably linked with the business of the assessee including the business relating to the products that are manufactured in the unit for which deductions were claimed under section 80-IE of the Act. In order to substantiate its claim that the products developed in its R D units are different from the products manufactured in the eligible units during the year under consideration, the assessee has placed on record the list of products. From the perusal of the lists placed on record by the assessee in respect of the products developed in the R D centre during the year under consideration, we find that the same is completely unrelated to the list of products manufactured and sold by the Sikkim unit of the assessee (eligible unit under section 80-IE). Moreover, it is pertinent to note that products in the R D undergo a process of 6 to 10 years before these formulations or drugs undergo manufacturing at the eligible unit. This aspect is equally important to any improvement in the existing products or any enhancement to the existing category of products as the same requires years of testing and multiple approvals/accreditations by the concerned department/authority for mere change in the composition of the medicine. Pharmaceutical products cannot be equated with any other off-the-shelf products since they require years of testing before the commercial launch and that too if the development is successful. Thus, we find no merit in the findings of the AO that the products developed in the R D unit were manufactured in the eligible units during the year under consideration. Even though the research expenditure may have some linkage with the products ultimately manufactured in the eligible units, however the same cannot lead to the conclusion that the expenditure incurred on R D during the year under consideration is for the products manufactured in the eligible units during the year under consideration. Thus, we find no basis in the general assumption adopted by the AO while allocating R D expenditure for computing the deduction claimed under section 80-IE of the Act. We find no infirmity in the impugned order passed by the CIT(A) in deleting the allocation of R D expenditure to the units eligible for deduction under section 80-IE of the Act. Decided against revenue.
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2024 (10) TMI 593
Unexplained investment u/s 69 - admission during survey u/s 133A - HELD THAT:-As assessee has undertaken construction on a land which is jointly owned by the assessee, his wife and two sons. The same is also evident from the fact that after completion of the building, the same has been let out and rental income has been offered in respective hands on proportionate basis. In such a case, adding entire alleged undisclosed investment in the hands of the assessee could not be held to be justified. Another fact is that the assessee has furnished cash flow statements and statement of affairs of all the persons before lower authorities in support of the claim. However, going by the admission of the assessee in statement recorded during survey u/s 133A, AO has made impugned addition on estimated basis. There is no material on record to indicate that the assessee has made that kind of investment. The statement recorded during survey u/s 133A do not bind the assessee as per the decision of of S. Khader Khan [ 2013 (6) TMI 305 - SC ORDER] The same is rebuttable one. The assessee, in our considered opinion, by furnishing the cash flow statements and loan sanction letters, duly substantiated its case to a great extent. Considering the fact that the property is a joint one and with a view to put an end to litigation, we restrict the impugned additions to the extent of Rs. 10 Lacs. The balance addition stand deleted - Decided partly in favour of assessee.
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2024 (10) TMI 592
Addition u/s 69A - AIR information found the assessee made cash deposit in his savings bank account - assessee applied section 44AD of the Act on business income - HELD THAT:- Admittedly, the assessee was a contractor before his appointment and there is no dispute in this regard by the Revenue. The dispute is only with regard to non-submission of any evidence with regard to the extent of addition as confirmed by the ld. CIT(A). We note that the provision u/s 44AD of the Act provides for computing profits and gains of business on presumptive basis in case of an eligible assessee engaged in an eligible business a sum equal to 8% of the total turnover or gross receipts of the assessee or a sum higher than 8% shall be deemed to be profits and gains of such business. Admittedly, there was no dispute the business of the assessee falls under the category of an eligible business attracting provisions of section 44AD of the Act. We note that there was no evidence brought on record by the AO in the remand proceedings showing the sum is not arising from business and further, we find the AO has not disputed the business activity of the assessee. In the absence of any evidence contrary to the submissions of the assessee, we hold the assessee s business is an eligible business attracting the provisions of section 44AD of the Act and the cash deposits as found in two bank accounts of the assessee are out of business. Thus, 10% of profit u/s 44AD of the Act offered by the assessee is accepted. Thus, the order of the ld. CIT(A) fails and it is not justified. Therefore, the grounds raised by the assessee are allowed.
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2024 (10) TMI 591
Confirmation of levy of fees u/s. 234E for late filing of quarterly TDS returns - Since the assessee did not file order issued u/s 200A, the appeal was held to be deficient by Ld. first appellate authority - AR held that Sec.200A(1)(c) was not introduced during the AYs 2012-13, 2013-14 2014-15 and in the absence of any such provisions prevailing at the time of processing of TDS return, no late fees u/s 234E could be levied. HELD THAT:- As decided in Conceria International (P.) Ltd [ 2023 (12) TMI 281 - MADRAS HIGH COURT] Section 234E of the Act is the substantive provision and its levy is not dependent on Section 200A(1)( c ) of the Act which only prescribes a recovery mechanism. A reading of Section 234E of the Act would make it clear that it gets attracted, the moment there is a failure on the part of a person to deliver the quarterly TDS statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C of the Act. The person committing the above breach / infraction renders himself liable to pay by way of fee a sum of Rs. 200/- for everyday during which the failure continues. Sub-section (3) in fact provides for a self assessment / payment of the fee while delivering or causing to deliver a statement in accordance with sub-section (3) of section 200 or the proviso to sub4 section (3) of section 206C - Sub-section (4) to section 234E of the Act also makes it clear that the above provision would be effective from 01-07-2012. Therefore, the submission that 234E of the Act would not be operable/effective unless and until Section 200A(1)(c) was introduced overlooks the fact that Section 234E (1) of the Act is the substantive provision. Levy of fees u/s 234E for AYs 2013- 14 2014-15 could not be faulted with.
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2024 (10) TMI 590
Binding effect on Findings recorded by the ITAT in Income Tax Proceedings in Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ( BMA ) - difference proposed by the Ld. Members for the decision of the Third Member. AM was of the firm belief that the additions made under the Income Tax Act and BMA, are almost the same and since the Co-ordinate Bench in Income Tax proceedings passed an order [ 2022 (1) TMI 1467 - ITAT MUMBAI] wherein the Bench considered the facts of the present case and decided the issue in favour of the assessee and since the Ld. AM was also of the view that information relied upon by the AO for initiating the proceedings under the BMA are similar to the Income Tax Act proceedings, the basic facts are unchanged in the proceedings initiated under BMA, the Ld. AM took a view that ITAT cannot take different view under different proceedings after evaluation of the same facts on record and following the order of the Co-ordinate Bench, held that the decision awarded in the Income Tax proceedings has to be applied in the present proceedings and decided the issues in favour of the assessee - JM was of the opinion that though the Tribunal has discharged the assessee from its liability in the Income Tax proceedings, the same will not have a binding effect on the BMA proceedings and went on to decide the appeal under BMA. HELD THAT:- The scope of total income under the Income Tax Act includes all income from whatever source derived unless specifically exempt from tax or not included in total taxable income whereas under the BMA only undisclosed asset located outside India and undisclosed foreign income and assets are considered. It would be pertinent to refer to Clause (3) of Section 4 of the BMA, which reads as under:- (3) The income included in the total undisclosed foreign income and asset under this Act shall not form part of the total income under the Income-tax Act. Thus, any addition made as undisclosed foreign income and asset under the BMA, shall not be repeated under the Income Tax Act but there is no corresponding provision under the Income tax Act, which means that addition/s made under the Income tax Act have no bearing under the BMA. Scope of total income - It has been specifically provided u/s 65 of the BMA that, the declarant shall not be entitled, in respect of undisclosed asset located outside India declared or any amount of tax paid thereon, to reopen any assessment or reassessment made under the Income-tax Act or the Wealth-tax Act or claim any set-off or relief in any appeal, reference or other proceeding in relation to any such assessment or reassessment. Thus, it is only under the BMA that such provisions have been provided whereas no such corresponding provisions are provided under the Income tax Act. This also goes to show that the proceedings under both the Act are clearly distinguishable and moreover, the proceedings under the Income tax Act, have no binding effect on the proceedings under the BMA inasmuch as the scope of income is totally different under both the Acts. Wherever the legislators thought of providing specific provisions, it has been provided but no such corresponding provisions are provided under the Income Tax Act, which again go to show that the proceedings under Income Tax Act and BMA cannot be equated. Considering the scope of income vis- -vis the proceedings under both the Act, I am of the considered view that having different scope of income, the findings given under the Income Tax proceedings may have a guiding force but certainly not a binding force under the BMA proceedings and, therefore AM grossly erred in following blindly the findings given by the Co-ordinate bench in the Income Tax proceedings. Moreover, under the Income tax proceedings, additions were made u/s 68 69 of the Act and both the provisions are deeming provisions. Under section 68, assessee is only required to establish the identity, creditworthiness and genuineness of the transactions and capacity of the lender and now also the source of the source of these are required to be proved prima facie. Similarly, u/s 69 of the Act, the assessee has to show that the investments are recorded in the books of accounts and offer explanation about the nature and source of the investments. Whereas under BMA, Section 2(11) provides that undisclosed asset located outside India means an asset (including financial interest in any entity) located outside India, held by the assessee in his name or in respect of which he is a beneficial owner, and he has no explanation about the source of investment in such asset or the explanation given by him is in the opinion of the Assessing Officer unsatisfactory; Section 2(12) provides that undisclosed foreign income and asset means the total amount of undisclosed income of an assessee from a source located outside India and the value of an undisclosed asset located outside India, referred to in section 4, and computed in the manner laid down in section 5. , and it can be seen that none of the above is a deeming provisions and have different implications than Section 68 69 of the Act. Therefore, we considered view that Ld. AM should have decided the quarrel within the four walls of BMA. As mentioned elsewhere, since the Ld. AM has not given any finding in respect of the other issues, decided by the Ld. JM, there is no question of any dissent and, therefore, the decision of the Ld. JM shall prevail. Whether the assessee is obliged to make any disclosure of his assets/income held overseas in any capacity whatsoever during the relevant Assessment years 2008-09 to 2012-13 in the Income Tax Return Forms where there was no specific column in the ITR to that effect? - The declaration has to be made after the date of commencement of BMA on or before a date notified by the Central Government which is effective from 01/04/2016 and after the date of notification, the assessee can declare undisclosed foreign assets and not necessarily in the return of income for AYs 2008-09 to 2012-13. Therefore, the answer to the question posed by the Ld. AM is YES. ORDER: 1. Whether the finding recorded by the Income Tax Appellate Tribunal in Income Tax Proceedings be binding on the Tribunal in MBA Proceedings when the lower authorities under BMA itself relied only on their respective orders passed under Income Tax Proceedings? - Answer: NO. 2. Whether the assessee is obliged to make any disclosure of his assets/income held overseas in any capacity whatsoever during the relevant Assessment Years 2008-09 to 2012-13 in the Income Tax Return Forms when there was no specific column in the ITR to that effect? - Answer: YES.
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2024 (10) TMI 589
Intimation orders passed u/s 143(1) - disallowance on account of delayed contribution to Provident Fund and Employees's State Insurance which were debatable and contentious in nature - applicability of provisions of section 158AB(1)(a) - assessee filed Application in Form 8 invoking Section 158(A)(1) of the Act that identical Question of Law is admitted and pending before the Hon ble High Court of Gujarat in assessee s own case for the Asst. Year 2017-18 - HELD THAT:- As Recording the statements of the assessee and the Ld. Assessing Officer, the appeals filed by the assessee are hereby dismissed with liberty the Assessing Officer to apply the ratio of the Judgment to be rendered by the Hon ble High Court of Gujarat in [ 2024 (3) TMI 1357 - GUJARAT HIGH COURT] as per the provisions of Section 158A(1) of the Act and apply for the respective Asst. Years 2018-19 2019-20. Appeals filed by the Assessee are hereby dismissed.
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2024 (10) TMI 588
Intimation order passed u/s 143(1) - Adjustment of capital gains income - CIT(A) not deleting the adjustment which was made by erroneously considering the Sale consideration of Short Term Capital Gain as Total Capital Gain earned under the head Capital Gain' HELD THAT:- While processing the return of income instead of reducing aggregate capital gains from the business income, amount of sale consideration received by the Appellant in respect of short term capital gains was reduced. As a result, the Business Income got increased and the loss was converted into profit - The aforesaid facts are apparent on perusal of the return of income. Therefore, the addition made in the intimation order passed u/s 143(1) of the Act cannot be sustained. We are of the view that the delay in filing the appeal before the CIT(A) should have been condoned. In our view, restoring the issue back to the file of CIT(A) for adjudication on merits would be an empty formality. Accordingly, the order passed by the CIT(A) is set aside and the addition is deleted. Grounds No.1 to 4 raised by the Appellant are allowed.
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2024 (10) TMI 587
Disallowance u/s 40(a)(ia) - non-deduction of tax at source u/s 194J on the accountancy charges debited in the profit and loss account - AR submitted that the assessee has paid monthly salary to his accountant at the rate of 12,000/- per month and the same is not liable for deduction of tax at source - HELD THAT:- We observe that the assessee has paid salary to his accountant at the rate of 12,000/- per month. We failed to find any merit in the action of ld. AO who has treated the salary as professional and technical fee. As the assessee had paid a salary to its accountant and the total sum paid as a salary is below the taxable limit, there was no liability to deduct the tax at source u/s 192 of the Act. Therefore, since the alleged sum of ₹ 1,44,000/- is a salary expenditure and not a payment towards Professional or Technical Services, no disallowance was called for u/s 40(a)(ia) for non-deduction of tax at source u/s 194J of the Act. We therefore, set aside the finding of CIT (A) and delete the impugned disallowance and allow, the effective ground of appeal raised by the assessee is allowed.
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2024 (10) TMI 586
Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income - Assessee claimed deduction on account of compensation paid to farmers for acquiring mining rights of the land. In the assessment proceedings, the AO allowed the expenditure over 20 years and therefore made addition - HELD THAT:- The undisputed fact is that the expenditure claimed by the Assessee is allowable expenditure. The details of the expenditure were furnished by the assessee in the return of income as well as during the course of assessment proceedings. CIT(A) allowed the appeal of the assessee by placing reliance on the order of M/s Reliance Petro products Pvt. Ltd [ 2010 (3) TMI 80 - SUPREME COURT] holding that the it is not a case of furnishing inaccurate particulars of income and penalty u/s 271(1)(c) of the Income Tax Act is not leviable - furnishing inaccurate particulars of income means furnishing wrong details of income and further held that making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. The Assessee has not furnished any inaccurate particulars in return of income and the claim of revenue expenditure was allowed in 20 years as against in the year itself. Thus, expenditure was allowed on a deferred basis. Also, the Delhi Bench of ITAT in case of Simplex Pharma (P) Ltd. [ 2010 (5) TMI 710 - ITAT DELHI ] and Onicra Credit Rating Agency of India Ltd. [ 2013 (6) TMI 855 - ITAT DELHI ] had deleted the penalty levied under section 271(1)(c) of the Act on deferred revenue expenditure. Thus, we concur with the findings of the Ld. CIT(A). Thus, solitary ground of the revenue is dismissed
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2024 (10) TMI 585
Unexplained credits u/s 68 - sham/bogus share transactions - identity, creditworthiness and genuineness of transactions not proved - HELD THAT:- As appellant/assessee did not furnish any material to controvert the findings of the Ld. CIT(A) - According to the Section 68 where any sum is found credited in the books of account of assessee, the assessee offers no explanation about the nature and source of the same or explanation offered by him is not found satisfactory in the opinion of the AO, the sum credited may be charged to tax as the income of the assessee of the relevant year. All three limbs of section 68 of the Act; the identity, creditworthiness and genuineness of transactions have not been explained by the appellant/assessee not only before the lower authorities but also before us. Nothing has been brought on the record to controvert the finding of the Ld. CIT(A). In the present case, the creditworthiness/financial strength of the shareholders and genuineness of such credits have not been established by the appellant/assessee as the burden of proof of these is on the appellant/assessee. Following the ratio laid down by the Hon ble Supreme Court in the case of N. R. Iron and Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT ] and Oasis Hospitalities Pvt. Ltd. [ 2011 (1) TMI 194 - DELHI HIGH COURT ] it is hereby held that the appellant/assessee has failed to prove and establish the creditworthiness and genuineness of transaction which resulted credits in the books of account of the appellant/assessee. In view of the above, we decline to interfere with the finding of the Ld. CIT(A). Appeal of the assessee is dismissed.
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2024 (10) TMI 584
Deduction u/s 57 - assessee has shown interest from saving bank account and interest from Thangamayil Jewellery Limited under the head income from other sources - whether direct nexus between the loan borrowed and loan given exist? - names on loan documents did not match with name of the assessee and deduction u/s 57 cannot be given as the said loans were availed for specific purposes i.e., home entity loan and agricultural loan - HELD THAT:- On perusal of the order of the Tribunal in the case of ACIT v. Nishith Desai [ 2017 (8) TMI 364 - ITAT MUMBAI] we note that the Tribunal upheld the order of the CIT(A) in allowing the interest expenditure as deduction u/s 57 of the Act by holding the said interest expenditure was for expending wholly and exclusively for the purpose of earning the interest income. Tribunal further observed that the order of the ld. CIT(A) is justified as the decision of the Hon ble Supreme Court in the case of CIT v. Rajendra Prasad Moody [ 1978 (10) TMI 133 - SUPREME COURT] supports the said view. Therefore, we find the facts and circumstances of the present case are similar to the facts and circumstances before the Mumbai Benches of the Tribunal in the case of ACIT v. Nishith Desai [supra] but, however, we find force in the arguments of the ld. DR regarding non-submissions of evidences such as bank statement showing credit of loan amount in the accounts of M/s. Thangamayil Jewellery Limited. It is clear from assessment order that there was no such evidence filed by the assessee except loan sanction letters from the above said three banks. Therefore, the issue requires examination in this regard and we deem it proper to remand the matter back to the file of the AO for fresh examination. The assessee is directed to file evidence as sought by the AO in respect of the claim made by the assessee u/s 57 of the Act. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (10) TMI 583
Rejection of books of accounts - trading account - application of section 145(3) - HELD THAT:- It is apparent that the gross profit and net profit of the assessee is improving. A comparative chart of net profit and gross profit shown by the assessee CIT(A) also shows that the gross profit and net profit shown by the assessee is comparative. AO has not given any comparable instance of a contractor of similar size which earns profit rate of 8% after granting of deduction of interest expenditure. According to us, when contractor is working on borrowed funds from the Bank, interest thereon should be granted to the assessee as deduction. Therefore, on the basis of the facts and circumstances and comparative history of the assessee for earlier years, we direct the AO to compute the net profit of the assessee @ 8% of the gross receipt and then grant deduction of depreciation allowance, interest paid to banks and other parties, partners and remuneration to the partners. Disallowance u/s. 40A(3) - This issue is covered in favour of the assessee by the decision of Hindustan Equipments Pvt. Ltd [ 2013 (3) TMI 221 - MADHYA PRADESH HIGH COURT ] wherein it is held that once net profit rate is applied to compute the income there is no scope of disallowance u/s. 40A(3) - In the present case, undisputedly, profit is estimated @ 8% subject to adjustment. Therefore, respectfully following the above decision, we delete the disallowance made u/s. 40A(3). Deduction on interest expenditure paid to bank other party - A.Y. 2017-18 - We find that the facts /issues are similar as supra wherein the lAO is directed to grant deduction of interest expenditure paid to 3rd party and banks after the profit determination of 8% along with the interest and remuneration to the partners and depreciation allowance. Therefore, the assessee should be allowed deduction interest expenditure also.
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2024 (10) TMI 582
Dismissal of appeal of assesee ex-parte in the absence of the assessee for non-prosecution - Assessee raised this issue of breach of principles of natural justice, improper service of notice as well not deciding the issues arising in the appeal on merits - Compliance with procedural requirements under Sections 176(3) and 189 of the Income Tax Act, 1961 or not? HELD THAT:- It is observed that the ld. CIT(A) dismissed the appeal of the assessee vide appellate orders dated 30.01.2018 ex-parte in limine without deciding the issues on merits, which is not in consonance with mandate of Section 250(6). The ld. CIT(A) is required to adjudicate the issues on merit in accordance with law, as is provided u/s. 250(6), by stating point for determination, his decision thereon and reason for the decision. CIT(A) has power to make such inquiries as he thinks fit and may also direct AO to make such enquiries and report the result of the same to ld. CIT(A), as is provided u/s 250(4). Thus, ld. CIT(A) has to adjudicate issues arising in the appeal on merits in accordance with law. CIT(A) has issued only one notice of hearing fixing the date of hearing on 30.01.2018. The said notice was not served on the assessee and returned unserved. The assessee is contending that the notice was sent to wrong address and was not sent to the address mentioned in Form No. 35. The return of notice of hearing is also confirmed by ld.CIT(A), and further in communication dated 18.06.2018, the ld. CIT(A) stated that notice will be issued only to the address mentioned in PAN database. First of all there is a clear breach of principles of natural justice as by issuing solitary notice, the ld. CIT(A) dismissed the appeal of the assessee ex-parte in limine without deciding the issues arising in the appeal on merits. Secondly, procedure as contemplated u/s 282 read with Rule 127 was not followed by ld. CIT(A). Once the address for serving of notice of hearing is mentioned in Form No. 35, it was obligatory on the part of ld. CIT(A) to send notice of hearing to said address as is envisaged in first proviso to sub-rule (2) to Rule 127 of the 1962 Rules. Thus, the appellate order passed by ld. CIT(A) is also liable to be set aside on these grounds. As stated by the assessee that the business of the assessee was closed since 2018, but there is no evidence brought on record that the assessee intimated revenue about the closure of its business as is required u/s 176(3). It is for the first time in affidavit dated 04.09.2024 filed before ITAT, this factum of closure of business is brought on record by the assessee. It is stated that PAN number was kept alive as litigation with Income-tax department is continuing, and Nil Returns of income were filed with department. The copies of return of income for assessment year 2019-20 to 2024-25 declaring Nil Income are placed on record. The assessee is a partnership firm. The assessee has to make true, complete and correct disclosure of its status and current state of affairs. Further reference is also drawn to provisions of Section 189(4), which stipulates that where such discontinuance or dissolution takes place after any proceedings in respect of an assessment year have commenced, the proceedings may be continued against the person referred to in sub-section (3)(i.e partners of the firm, and the legal representative of any such person who is deceased) from the stage at which the proceedings stood at the time of such discontinuance or dissolution, and all the provisions of this Act shall, so far as may be, apply accordingly These are especial facts which are within the knowledge of the assessee and the same were to be brought on record by the assessee whether the business stood discontinued or there was dissolution of the firm. It was the duty of the assessee to have brought complete, true and correct facts on record before the authorities, as to whether the assessee firm stood dissolved or the business stood discontinued. The assessee has filed appeal in its own name as well ITR s are filed in its own name, which indicate that the assessee firm did not stood dissolved although business might have been discontinued, but it required inquiry so that true, correct and complete facts are brought on record. Under these facts and circumstances, we are of the considered view, that complete inquiry is required in this regard thereto keeping in view provisions of Section 176(3), 189(3) and 189(4), and the assessee is directed to furnish complete, true and correct facts in connection thereto before ld. CIT(A) to enable ld. CIT(A) to conduct aforesaid inquiry, the powers of ld. CIT(A) being co-terminus with the powers of the AO. Thus, keeping in view entire facts and circumstances of the case, we are inclined to set aside the appellate order dated 30.01.2018 passed by ld. CIT(A), and restore the matter back to the file of ld. CIT(A) for denovo adjudication of the appeal of the assessee. CIT(A) is directed to pass orders in compliance with the provisions of section 250(6) of the Act. Needless to say that ld. CIT(A) shall give proper opportunity of being heard to both the assessee as well AO. The assessee is directed to comply with the directions / notices of hearing issued by the Ld. CIT(A) in the appellate proceedings, otherwise Ld. CIT(A) will be within its right to pass an ex parte order on merits, in accordance with law. The appeal of the assessee is allowed for statistical purposes.
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2024 (10) TMI 581
Addition u/s 68 - bogus LTCG - penny-stocks purchases - addition on account of commission - AO concluded that the entire LTCG claim of assessee was bogus, and such an act was resorted to by assessee for converting her black money to white - AO has disallowed the LTCG claim of assessee by mainly taking note of report submitted by Investigation Wing (Kolkata) as well as he doubted the financial prudence of the assessee to have purchased the shares of M/s. Marigold and wondered as to how the price of shares of M/s. Marigold would have commanded a price of (approximately) Rs.90 per share within a span of two years HELD THAT:- As decided in Renu Agarwal [ 2022 (7) TMI 1340 - ALLAHABAD HIGH COURT] the lower appellate authorities had extensively examined the facts of the case and taken note of the material fact that there was no adverse comment in form of any specific statement by Principal Officer of stock exchange or by company whose shares were involved in these transactions against the assessee and that the AO had only cited statements of unrelated persons on basis of unfounded presumptions. On these given facts, the Hon ble High Court upheld the order of lower authorities deleting the addition made in relation to LTCG derived on sale of shares. For the various reasons discussed in the foregoing and following the judgments cited above, more particularly of the binding jurisdictional High Court in the cases of Shyam Pawar [ 2014 (12) TMI 977 - BOMBAY HIGH COURT] , Ziauddin A Siddique [ 2022 (3) TMI 1437 - BOMBAY HIGH COURT] , Mukesh R Marolia [ 2011 (9) TMI 919 - BOMBAY HIGH COURT] Jamna Devi Agarwal [ 2010 (9) TMI 81 - BOMBAY HIGH COURT] , we uphold the impugned action of Ld. CIT(A) in deleting the addition and also the addition on account of commission. And we direct the AO to verify and allow the correct LTCG/exemption claimed by assessee u/s 10(38) of the Act on sale of shares - Decided against revenue.
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Customs
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2024 (10) TMI 611
Finalization of assessment based on the Report which is available on Dry weight basis - Fe content has been taken as 63.86% which requires the appellant to pay export duty @ 300 per metric ton - HELD THAT:- Time and again, it has been held that WMT content can be arrived at by using the formula given in the case of V.M. SALGAOCAR AND BROTHER PVT. LTD., MR. SHIVANAND V. SALGAONCAR. VERSUS THE ASSISTANT COMMISSIONER OF CUSTOMS (EXPORT) , GOA, DIRECTORATE OF REVENUE INTELLIGENCE, CENTRAL BOARD OF INDIRECT TAXES CUSTOMS MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NEW DELHI, UNION OF INDIA, MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2022 (9) TMI 1306 - BOMBAY HIGH COURT] , which has been affirmed by various Tribunals including this Tribunal. Reliance placed in M/S. NARBHERAM VISHRAM VERSUS COMMISSIONER OF C.G.S.T. AND CENTRAL EXCISE AND CUSTOMS, BHUBANESWAR [ 2024 (7) TMI 1080 - CESTAT KOLKATA] wherein this Bench had accepted the submission of the Appellant and remanded the matter to the Adjudicating Authority to apply the formula to arrive at the moisture content as Fe content and finalize the assessment. Thus, matter remanded to the Adjudicating Authority to apply the formula to arrive at the moisture content and Fe content and finalize the assessment - appeal disposed off by way of remand.
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2024 (10) TMI 580
Contempt of court - disregarding the court's directions on payment of interest on delayed refund amounts - HELD THAT:- The adjudicating officer was directed to decide the interest claim of the Petitioner after due compliance with the principles of natural justice. The adjudicating officer made an order dated 15 May 2024 after complying with the principles of natural justice. The issue as to whether this order is correct or not can always be examined in appropriate proceedings. However, even assuming that the incorrect order is made, that would not invite any action under the Contempt of Courts Act. Further, it cannot be usually presumed that a wrong order has been made deliberately or to frustrate the orders made by this Court. The non-entertainment of this Contempt Petition would be without prejudice to such entitlement of the Petitioners. Such non-entertainment is without prejudice to the Petitioner taking out appropriate proceedings before the appropriate Court to challenge the orders made by the adjudicating authority - Petition is therefore not entertained - Contempt Petitions are disposed of.
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2024 (10) TMI 579
Classification of imported goods - parts of the shock absorbers to be classified under Customs Tariff Item [CTI] 8714 91 00 or under 8714 10 90? - entitlement to the benefit of Notification No. 50/2017-CUS (Sl. No. 532) - Confiscation of the goods under section 111(m) and imposition of redemption fine - Penalty under section 112 upon the appellant - Penalty on Shri Negi [Manager (Commercial) of Showa] under section 114AA. Classification of goods - HELD THAT:- General Rules of Interpretation help in classifying the goods under the Customs Tariff. GIR 1 states that the goods should be classified as per the Customs Headings and sub-headings and the related chapter notes and section notes. There are no chapter notes or section notes, relevant to this case. The undisputed position is that the imported goods were parts of frames of motorcycles. Therefore, they fall under the 4 digit heading of 8714 - the correct classification on six digit level of the imported goods is 8714 10. Within that six digit heading are two 8 digit CTI saddles and others. Since the imported goods are not saddles they fall under others. We have no manner of doubt that appropriate classification for the imported goods is 8714 10 90. Therefore, we hold in favour of the Revenue on the question of classification and uphold the classification of the imported goods in the impugned order. The Commissioner (Appeals) erred in holding that the parts of motorcycle or moped need to have the characteristics of the shock absorber for them to be classified under 8714 10 90. It goes without saying that no part in itself will have the essential character of the article until it becomes the part of the article. However, for that reason it does not cease to be a part of the article. A shock absorber, for instance, will be a shock absorber even if it is not fitted in the motorcycle. Similarly parts of shock absorber will be such parts even before they are assembled together as a shock absorber. The Commissioner (Appeals) clearly erred in holding that the parts have to assume the essential character of the article - Classification of the goods in the order impugned in this appeal under 8714 10 90 needs to be sustained. Benefit of exemption Notification No. 50/2017-CUS (Sl. No. 532) - HELD THAT:- All goods falling under the CTI indicated in Column '2 of the notification other than bicycle parts and components are eligible for exemption Notification No. 50/2017-CUS. The notification does not say that all goods in the entire tariff will get exempted other than bicycle parts and components. They must fall under one of the CTI indicated in Column '2' of the table. CTI 8714 10 90 does not fall in Column '2'. Therefore, this assertion of the appellant has no force and deserves to be rejected. Confiscation of the goods under section 111(m) and imposition of redemption fine - HELD THAT:- Evidently, goods which do not respond in respect of value or any other particular with the entry made under the Act are liable for confiscation. This would imply that the goods should be as per the declarations. It does not mean that the classification of the goods which is a matter of opinion of the importer self-assessing goods should match with the opinion of the officer who may re-assess the goods. Nothing in this section provides for confiscation of the goods if the classification of the goods by the importer during self-assessment does not confirm to the views of the proper officer or any adjudicating authority. Clearly goods cannot be confiscated under section 111(m), if the classification claimed by the appellant for the Bill of Entry does not confirm to the views which the officers may hold. Therefore, the order of confiscation needs to be set aside and consequently the redemption fine also needs to be set aside. Penalty under section 112 upon the appellant - HELD THAT:- Evidently the penalty under section 112 is imposable if the goods are rendered liable for confiscation under section 111. Since, it is held against the confiscation of the goods, under Section 111, the penalty under section 112 also needs to be set aside. Penalty on Shri Negi under section 114AA - HELD THAT:- Nothing in the records shows that Shri Negi made any declaration or statement which is false or incorrect in the Bill of Entry. All that was done that was during self-assessment, they classified the goods under a particular CTI which is different from the CTI held in the impugned order. Therefore, the penalty imposed on Shri Negi also needs to be set aside. Appeal disposed off.
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2024 (10) TMI 578
Maintainability of appeals by the Committee of Chief Commissioners under Section 129D of the Customs Act, 1962 - breaches of regulation 10 of Customs Brokers Licensing Regulations (CBLR), 2018 - HELD THAT:- The order of the Tribunal in COMMISSIONER OF CUSTOMS-NEW DELHI (AIRPORT AND GENERAL) VERSUS M/S. ENTIRE LOGISTICS PVT. LTD. [ 2024 (10) TMI 553 - CESTAT DELHI] by relying on the decision of the Hon ble Delhi High Court in COMMISSIONER OF CUSTOMS (AIRPORT GENERAL) VERSUS TRANSWORLD CARGO TRAVELS [ 2023 (3) TMI 847 - DELHI HIGH COURT] , held that such appeals by the licensing authority are not maintainable. This appeal has been initiated without authority of law and is consequently dismissed.
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2024 (10) TMI 577
Valid DEPB scrips or not - whether the DEPB scrips utilised by the appellant for payment of duty which were later declared as obtained fraudulently, which is not disputed, can be considered as valid DEPB scrips? - Imposition of penalty under Section 114A of the Customs Act, 1962 - HELD THAT:- The exporter M/s. Bilwa Labs had obtained the DEPB scrips fraudulently by declaring Muriate of Potash as Industrial Salt at the time of export for claiming the benefit of DEPB scheme is not under dispute. However, the claim of the appellant is since these DEPB scrips are freely available in the open market for purchase and they had purchased valid DEPB scrips and at the time of import, they were considered to be valid DEPB scrips, hence there cannot be demand of duty on them. It is also claimed that since the demand is time barred, the demand of duty cannot be sustained and accordingly, the interest and penalty is not sustainable. The matter is no longer res integra in as much as the Hon ble Supreme Court in the case of M/S. MUNJAL SHOWA LTD. VERSUS COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE (DELHI IV) AND M/S. FRIENDS TRADING CO. VERSUS UNION OF INDIA AND ORS. [ 2022 (9) TMI 1076 - SUPREME COURT] observed ' it has been found that the DEPB licenses/Scrips, on which the exemption benefit was availed of by the appellant(s) (as buyers of the forged/ fake DEPB licenses/Scrips) were found to be forged one and it was found that the DEPB licenses/Scrips were not issued at all. A fraud was played and the exemption benefit was availed on such forged/fake DEPB licenses/Scrips.' There are no reason to interfere with the impugned order as far as the demand of duty is concerned. However, since the appellants were not aware of the fact that the goods imported by them were based on the fraudulently obtained DEPB scrips, the question of imposing penalty on them does not arise. Accordingly, the penalty is set aside. Appeal allowed in part.
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2024 (10) TMI 576
Revocation of customs broker licence of the appellant - forfeiture of security deposit and imposition of penalty - import of prohibited goods - contravention of Regulations 10(a), 10(b), 10(d), 10(e), 10(f) and 10(k) of the Customs Broker Licencing Regulations, 2018 [CBLR] - Whether the appellant had acted as the Customs Broker with respect to the bill of entry and instead of using its own licence used the licence of M/s Prakhar Gupta and filed the bill of entry? - Proportionality of the punishment to the violations. HELD THAT:- It is evident that Shri Awadhendra Kumar, director of the appellant had filed the bill of entry using the Customs Broker licence of M/s Prakhar Gupta. This fact having been admitted, need not be proved. It is also a matter of record that all documents were sent by the importer to the appellant s E-mail ID and the importer had not contacted Shri Prakhar Gupta. Shri Prakhar Gupta also confirmed that he had allowed the appellant to use his licence to file bill of entry although he denied allowing them to use his licence in respect of this bill of entry. It needs to be pointed out that bills of entry are filed online through the Customs EDI system. Therefore, it is imposible for anyone to file a bill of entry using the credentials of a Customs Broker unless the Customs Broker lends its credentials to such a person. In this case, admittedly Shri Prakhar Gupta had lent his credentials to the appellant. Shri Awadhendra Kumar, Director of the appellant used those credentials to file this Bill of entry. The importer only contacted the appellant and not Shri Prakhar Gupta and sent the relevant documents to the appellant. Admittedly, the appellant filed the bill of entry using the credentials of Shri Prakhar Gupta. Shri Prakhar Gupta clearly erred in subletting his licence to the appellant. However, the appellant also violated the conditions of CBLR and instead of obtaining an authorization to file the bill of entry from the importer in its own name and then filing the bill of entry using its own credentials it filed the bill of entry using the credentials of Prakhar Gupta. Through this Bill of Entry, the appellant attempted to clear prohibited goods. The appellant should not have filed the bill of entry but instead should have brought such imports to the notice of Assistant Commissioner or Deputy Commissioner - the appellant is trying to profit from its own wrong. It is like a boy who murdered both his parents and sought mercy on the ground that he was an orphan. The appellant was, indeed, the Customs Broker in this case although it avoided being exposed by illegally using the credentials of another Customs Broker. Another contention of the appellant is that revocation of licence takes away the livelihood of the Customs Broker and its employees and, therefore, such harsh action should not be taken - In this case, the intentions of the appellant are clear. It has its own Customs Broker licence but instead of using its licence, it used the licence of another Customs Broker and filed a bill of entry so as to facilitate clearance of prohibited goods. It is not a case of innocent violation or minor infraction. Its clear a case of facilitation of import of prohibited goods. To cover it up, the appellant used the identity of another Customs Broker illegally for the purpose. Violation of Regulation 10 (a) - HELD THAT:- Regulation 10 (a) requires the Customs Broker to obtain an authorization from each of the companies, firms or individuals by whom he is employed as Customs Broker and produce such authorization when required by the Deputy Commissioner or Assistant Commissioner of the Customs. In this case, the appellant had not obtained any authorization at all from the importer and yet filed the bill of entry and used the credentials of another Customs Broker M/s Prakhar Gupta to file the bill of entry. There are no hesitation in upholding the decision in impugned order that the appellant had violated Regulation 10 (a). Violation of Regulation 10 (d) - HELD THAT:- Regulation 10 (d) requires the Customs Broker to advise his client to comply with the provisions of the Customs Act, other allied Acts and Rules and Regulations thereof and in case of non-compliance bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs. Evidently, the goods which were imported by M/s JCS Botanicals were prohibited for import - Instead of advising its client or intimating the Assistant Commissioner about the import prohibited goods, the appellant filed the bill of entry in an attempt to clear them. In order to conceal this fact it used the credentials of another Customs Broker M/s Prakhar Gupta. There are no manner of doubt that the appellant violated Regulation 10 (d). Violation of Regulation 10 (e) - HELD THAT:- Regulation 10 (e) requires the Customs Broker to exercise due diligence to ascertain the correctness of any information which he imparts to a client with respect to any work related to clearance of cargo or package. In this case, the appellant did not impart correct information to its client nor did it disclose its own name as the Customs Broker in the bill of entry. Therefore, appellant has clearly violated Regulation 10 (e). Violation of Regulation 10 (f) - HELD THAT:- Regulation 10 (f) requires the Customs Broker to not withhold information contained in any order, instruction or public notice relating to parents of cargo or package issued by Customs authorities, as the case may be from a client who is entitled to such information. There is nothing on record to show that the appellant had informed the importer about the prohibitions on the import of the goods as per the Plant Quarantine Laws. Therefore, the allegation of violation of Regulation 10 (f) needs to sustain. Violation of Regulation 10 (k) - HELD THAT:- Regulation 10 (k) requires the Customs Broker to maintain up-to-date records, such as, bill of entry, shipping bill, trans-shipment application etc. All correspondence, other papers relating to his business as Customs Broker and accounts including financial transactions in an orderly and itemized manner. In this case, the importer stated that he had sent the documents/details of the consignment by E-mail to [email protected] of the appellant on the direction of its Director Shri Awadhendra Kumar and that Shri Awadhendra Yadav collected the original documents, but he failed to submit the original documents even when the customs authorities asked for them. Thus, the allegation of violation of Regulation 10 (k) of CBLR needs to be sustained. Proportionality of the punishment to the violations - HELD THAT:- This is not a case of lapse of the appellant due to carelessness or oversight. A Customs Broker is naturally expected to file the bills of entry in its own name just as an advocate is expected to file a vakalatnama in his own name in any court of law - The imported goods were prohibited and the bill of entry filed using the credentials of another Customs Broker and in the appeal before us the submission of the appellant is that it is absolved of all responsibility because it used the credentials of another Customs Broker. It is not in dispute that all activities from bill of entry to obtaining the documents by E-mail and also physically and further participating in the examination of the goods is done by the appellant itself. There are no room for any leniency being shown to the appellant. There are no reason to interfere with the impugned order. The impugned order is upheld and the appeal is dismissed.
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2024 (10) TMI 553
Maintainability of appeal - respondent submitted that this appeal is not maintainable because the department cannot file an appeal against the order passed by the Commissioner under CBLR - Revocation of Customs Broker License - forfeiture of security deposit - penalty - HELD THAT:- In Transworld Cargo [ 2023 (3) TMI 847 - DELHI HIGH COURT] Delhi High Court held that the Revenue cannot file an appeal against an order passed under CBLR by the Commissioner. Revenue has appealed against this judgment to the Supreme Court but there is no stay on the order. Respectfully following the decision of Delhi High Court in Transworld Cargo, the appeal filed by the Revenue is dismissed as not maintainable.
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Insolvency & Bankruptcy
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2024 (10) TMI 575
Alleged outstanding dues owed by the Petitioner-Company to the Opposite Parties in view of the approval of the Resolution Plan by the National Company Law Tribunal (NCLT) - Validity of demands raised against the Petitioner-Company post-approval of the Resolution Plan - HELD THAT:- In the present case, once the Resolution Plan was approved by the NCLT, which attained finality as per the order of the Hon ble Supreme Court, it is no more open for the Opposite Parties to again raise the demands for the very period covered by the Resolution Plan, which in other words to say that no claim for the period prior to 22.06.2018, the date of approval of the Resolution Plan by the NCLT, i.e., the Plan Effective Date, could have been raised by the Opposite Parties and such demands to the extent as they cover the period up to 22.06.2018 stand automatically extinguished in terms of the Resolution Plan. The observations made above in the case of the Appeal filed by the present successful Resolution Applicant in the case of Ghanashyam Mishra Sons [ 2021 (4) TMI 613 - SUPREME COURT ] provide the answer to the submission of the learned Counsel for the State that the dues arising out of the judgment of the Hon ble Supreme Court in case of Common Cause were not specifically dealt with in the ARP - the Resolution Applicant should start with fresh slate on the basis of the Resolution Plan approved. In other-words, upon approval of the Resolution Plan, the Company-OMML no more stands as the Corporate-Debtor and it is only under the legal obligation as being in the management of the Company (OMML) strictly in terms of the Resolution Plan. In terms of section 31 of the I B Code, the above ARP is binding on all creditors including Central Government and State Government. All those impugned demands raised against the Petitioner-Company pertaining to the period prior to the Plan Effective Date, i.e. 22.06.2018 stand automatically extinguished in terms of Approved Resolution Plan (ARP). In other words, the demands to the extent, which cover the period up to 22.06.2018 are thus unsustainable in law. Thus, while setting aside the impugned letters under which the demands have been raised against the Petitioner-Company, which are the subject matters of all the three writ petitions, this Court directs the Opposite Parties to revise the demands by limiting it to the period from 22.06.2018 onwards and raise the same afresh as against the Petitioner-Company in accordance with law so as to be satisfactorily discharged. Petition disposed off.
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2024 (10) TMI 574
Admissibility of Section application - Petition barred by time limitation or not - existence of debt and default corroborated by records or not - Legal Right Under Sanctioned Restructuring - Interpretation of Clause 7. Date of Default and Limitation Period - HELD THAT:- The period of limitation was extended, pursuant to the restructuring of debt, vide letter dated 27th March, 2021, and further modified vide letter dated 31st March, 2021. By this, the corporate debtor acknowledged its liability as on 31.12.20219, to the extent of Rs. 30,33,02,248.17. Thus, there was due acknowledgment of debt/liability, by the corporate debtor, prior to expiry of limitation period on 29.04.2021, even if the date of default is taken as 30.04.2018. Therefore, we find that the Adjudicating Authority has correctly concluded that the limitation period was extended due to the restructuring of the debt acknowledged on 27.03.2021, thus making the filing of the Petition on 15.12.2022 within the limitation period. The part payments made by the Corporate Debtor post-cancellation of the restructuring plan do not alter this acknowledgment. The Hon ble Supreme Court's order in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2022 (1) TMI 385 - SC ORDER ], which excluded the period from 15.03.2020 to 28.02.2022 for limitation purposes, further supports the timely filing of the Petition. The Honourable Apex Court had issued direction that period from 15.03.2020 till 28.02.2022, shall stand excluded for the purposes of limitation as may be prescribed under any special or general statute. Legal Right Under Sanctioned Restructuring - HELD THAT:- Respondent No.1 exercised its legal right under Clause 7 of the Sanctioned Restructuring to revoke the restructuring upon default, reinstating the original liability plus interest. The Corporate Debtor's failure to meet the restructuring terms led to the revocation, and subsequent letters from the Corporate Debtor requesting additional time were not grounds for continuation of the restructuring plan. Compliance with Circular and Other Grounds - Appellant's contention regarding non-compliance with the Master Circular on Asset Reconstruction Companies dated 10.02.2022 is not substantiated with concrete evidence. Furthermore, the arguments about malicious intent and lack of evidence are unsubstantiated, given the documentary evidence presented by Respondent No.1. Interpretation of Clause 7 - HELD THAT:- Clause 7 of the Sanctioned Restructuring Plan explicitly provides that in the event of default, the Financial Creditor has the legal right to revoke the sanctioned restructuring and restore the original liability as on the cutoff date. The Corporate Debtor's non-compliance with the restructuring terms justified the revocation - Appellant has relied on the judgement of the Hon ble Apex Court in Vidharbha Industries Power Limited vs Axis Bank Limited [ 2022 (7) TMI 581 - SUPREME COURT ] wherein it was held that discretionary power vests with this Tribunal under Section 7 (5)(a). It was held that while discretion is conferred on the Adjudicating Authority, such discretionary power cannot be exercised arbitrarily or capriciously. The Hon ble Supreme Court further held that the decision in the case of Vidarbha Industries cannot be read and understood as taking a view which is contrary to the view taken in the case of Innoventive Industries [ 2017 (9) TMI 58 - SUPREME COURT ] and E.S. Krishnamurthy [ 2021 (12) TMI 683 - SUPREME COURT ]. It finally held that the non-payment of a part of the debt when it becomes due and payable will amount to default on the part of the corporate debtor and an order under Section 7 Insolvency Bankruptcy Code must follow. So both these judgements do not support the case of the Appellant. In view of the admitted facts, documentary evidence, and the justified findings of the Adjudicating Authority, the Appeal lacks merit. The Impugned Order dated 27.10.2023, admitting Company Petition No. 9 of 2023 and initiating CIRP against Vilson Roofing Product Pvt. Ltd., is upheld. Appeal dismissed.
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2024 (10) TMI 573
Encashment of PBG during moratorium - Legality of invocation of the Performance Bank Guarantee (PBG) by the Nominated Authority during the moratorium period - HELD THAT:- The judgment of the Hon ble Supreme Court in Standard Chartered Bank vs. Heavy Engineering Corporation Limited and Anr. [ 2019 (12) TMI 843 - SUPREME COURT ] noticed, where the Hon ble Supreme Court has laid down that Bank Guarantee is an independent contract between Bank and the beneficiary and the Bank is always obliged to honour its guarantee as long as it is an unconditional and irrevocable one. Few exceptions were also noticed in the judgment, i.e. fraud, irretrievable harm or injustice. The present is a case where Show Cause notice was issued to the Appellant and after Show Cause notice, decision was taken by Scrutiny Committee, recommending for invocation. The Nominated Authority after considering the recommendation, facts and circumstances, took the decision to invoke the Bank Guarantee as per the terms of the Agreement. Default on the part of the Corporate Debtor was established, hence, present was not a case where Court ought to have exercised its discretion, restraining the Bank from enforcing the Bank Guarantee. The Adjudicating Authority rightly took the decision to not grant the relief as prayed by the Appellant. There are no error in the order of the Adjudicating Authority, refusing the prayer to set aside the letter sent by Respondent No.1 to the Bank for invocation of Bank Guarantee. It is further to be noticed that letters, which were sent to the Bank were all in consequence to the earlier decision taken on 27.10.2023 by the Nominated Authority to invoke the Bank Guarantee, which was Appropriation Order. Subsequent letters were only follow-up and in consequence to the earlier order and by letter dated 28.03.2024, notice of dispute given by the Corporate Debtor was disposed of, upholding the earlier decision. There are no ground to interfere with the order of the Adjudicating Authority in this Appeal. There is no merit in the Appeal - Appeal is dismissed.
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2024 (10) TMI 572
Dismissal of Section 7 application - appellant has argued that the Adjudicating Authority has committed an error in dismissing the application because the amount of interest can also be claimed by filing an application under Section 7 of IBC - HELD THAT:- The Appellant did not make any effort to bring to the notice of the Adjudicating Authority in the application filed under Section 9 about the bonafide mistake which has been pleaded in the rejoinder filed in the present appeal in order to avoid the pleadings already set up in the application filed under Section 9 of the Code in which it was averred that the amount in question has been invested which is now sought to be changed as a loan. It is pertinent to mention that Respondent has already paid the principal amount of Rs. 58,30,077/- to the Appellant but the Appellant is pursuing the present appeal for the resolution of the amount of interest, however, in our considered opinion, the petition filed before the Adjudicating Authority under Section 7 is an abuse of process of law because the Appellant cannot change the stand taken in the application filed under Section 9 of the Code by it on its convenience and drag the Respondent before the Adjudicating Authority and this Court in an unnecessary litigation. The conduct of the Appellant is depreciable and deplorable because this kind of practice is not acceptable before this Court, therefore, this is one such case in which the Appellant deserves to be saddled with costs for initiating a frivolous litigation. Hence, while dismissing the present appeal, a cost of Rs. 1 Lac. imposed upon the Appellant which shall be paid by it to the Respondent by way of a demand draft within a period of 30 days from the date of passing of this order. Appeal dismissed.
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2024 (10) TMI 571
Admission of Section 7 application - locus of appellant to challenge the order of admission passed by the Adjudicating Authority - pending Section 66 application - loan transaction is a sham or collusive or not - illusion that money has been disbursed to a borrower. Locus of appellant to challenge the order of admission passed by the Adjudicating Authority - HELD THAT:- The Appellant s case as set up on the appeal is that the Appellant has entered a Share Purchase Agreement dated 17.05.2019 with two shareholders of the Corporate Debtor namely Vision India Fund (VIF) and Infra Resurrection Fund (IRF). Share Purchase Agreement has been brought on the record by the Appellant which indicate that it was entered with two entities VIF and IRF and the Corporate Debtor was also part of the Share Purchase Agreement entered with two shareholders of the Corporate Debtor. The Appellants could not acquire any shareholding of the Corporate Debtor since according to its own case the Share Purchase Agreement could not be given effect to in view of attachment of land by the Enforcement Directorate (ED) on 04.02.2020. The Appellant has referred to Settlement Award dated 19.04.2021 where it was agreed between the parties that the Appellants would be liable to pay the amounts due towards repayment of the loan amount received by Varutha Developers Private Limited (VDPL) within 360 days of the variation of the ED order, whereunder the Land had been attached by the ED. Provisional attachment has been confirmed by the Adjudicating Authority under the PMLA Act. Section 7 application has been filed by the SREI Equipment Finance Limited challenging default on part of the Corporate Debtor in repayment of loan of Rs.300 crores. The Appellant s case itself is that it has undertaken to pay the loan of the Corporate Debtor. Thus, the Appellant is not disputing the debt and default committed by the Corporate Debtor in repayment of loan. The debt and default is not denied only by the Corporate Debtor but the Appellants also. There are no valid ground on which Appellants can question order of Adjudicating Authority admitting the Section 7 application - The Appellant has every right or jurisdiction to enforce his Settlement Award. Appellant has also brought on the record application filed by Appellant for execution of award dated 19.04.2021 before the District Judge Cum Presiding Officer Special Commercial Court, Gurugram, Haryana. There being debt and default against the Corporate Debtor, which is an admitted fact, no error has been committed by the Adjudicating Authority in admitting Section 7 application - Appeal dismissed.
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PMLA
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2024 (10) TMI 570
Money Laundering - scheduled offences - Proceeds of crime - amassing huge assets disproportionate to his known source of income - burden of prove - offences under Sections 120B, 420 and 472 of IPC and offences under Sections 7, 9 and 13 of the Prevention of Corruption Act, 1988. Whether any prima facie materials are made available against the petitioner in the complaint filed or not? - HELD THAT:- The expression money-laundering , ordinarily, means the process or activity of placement, layering and finally integrating the tainted property in the formal economy of the country. However, Section 3 has a wider reach. The offence, as defined, captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money- laundering. This is amply clear from the original provision, which has been further clarified by insertion of Explanation vide Finance (No. 2) Act, 2019, Section 3, as amended. Mere possession of proceeds of crime would be sufficient to invoke the provisions of PMLA. Using the proceeds of crime by itself is an offence. Since the scope of Section 3 is wider enough to cover various circumstances in order to curb the economic offences, High Court cannot restrict its meaning so as to restrain the Authorities from invoking the provisions of PMLA. Section 24 of PMLA denotes Burden of Proof . In any proceeding relating to proceeds of crime under PMLA in a case of a person charged with offence of money laundering under Section 3, the authority or Court shall unless the contrary is proved presume that such proceeds of crime are involved in money laundering and in the case of any other person, the authority or Court may presume that such proceeds of crime involved in money laundering . Therefore, the presumptions of the authorities, investigation conducted and documents collected would be sufficient to proceed against a person under PMLA. Unless contrary is proved, presume that such proceeds of crime are involved in money laundering. Therefore, the burden of proof lies on the affected person, who in turn has to prove his innocence during the course of trial. Adjudication of those materials placed by the petitioners would be unnecessary for this Court, while dealing with the discharge petitions. The Trial Court considered the allegations set out in the complaint and formed an opinion that the petitioner has failed to made out prima facie case for discharge. There are no infirmity or perversity with reference to the findings made by the Special Court rejecting the discharge petition. The Criminal Revision Case is dismissed.
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Service Tax
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2024 (10) TMI 569
Levy of service tax - Commercial Training or Coaching Centre - appellant is a learning centre in Sikkim and Manipal and engaged in providing various educational students programmers conducted by Sikkim Manipal University under Distance Education Programme as approved by UGC - period April, 2009 to October, 2013 - invocation of extended period of limitation - HELD THAT:- Considering the facts that on identical facts, another institute was also imparting education to the students through distance education programme approved by the University Grant Commission (UGC). In the case of ACADEMY FOR PROFESSIONAL EXCELLENCE VERSUS COMMR. OF CGST EX., HOWRAH [ 2019 (10) TMI 1328 - CESTAT KOLKATA] , this Tribunal has held ' We find that the Sikkim Manipal University is a recognised university under UGC and is certainly not doing any business activity but providing education services and these facts are not in dispute. The similar services carried on the appellant, being identical services to that of the university, cannot by any stretch of imagination be classified under support services of business when the service provided by the University is not a business activity itself. We agree with the contentions raised by the appellant that the parallel institutes imparting degree courses recognised by law are clearly excluded from the service category of Commercial Training or Coaching Centre ' Thus, as the Sikkim Manipal University is a recognized University under UGC and is not doing any business activity, but providing education services and these facts are not in dispute. Therefore, the service provided by the University is not the business activity itself and is not liable to service tax under Commercial Training or Coaching Centre services. The appellant is not liable to pay under the category of Commercial Training or Coaching Centre services. Accordingly, the demand against the appellant is not sustainable. Consequently, no penalty is imposable on the appellant. The impugned order is set aside - appeal allowed.
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2024 (10) TMI 568
Levy of service tax - Automated Teller Machine [ATM] interchange fee (termed as commission) received by the State Bank of Hyderabad from SBI for deployment of ATMs owned by it in the shared network - notional consideration of the free ATM services provided by the State Bank of Hyderabad on its ATM to the other Associate Banks and SBI - invocation of extended period of limitation. Levy of service tax on Automated Teller Machine [ATM] interchange fee (termed as commission) received by the State Bank of Hyderabad from SBI for deployment of ATMs owned by it in the shared network - HELD THAT:- It needs to be noted that neither the SBI nor the Associate Banks have raised any dispute and indeed the conduct of the parties does establish that there was an implied authority with SBI to discharge service tax liability of the Associate Banks. It is only when an enquiry was conducted by the department that the Associate Banks started discharging service tax on such interchange fees. Prior to that, SBI was discharging the service tax liability of the Associate Banks on the interchange fees. It also needs to be noted that even after the Associate Banks started separately paying service tax, the service tax liability of the SBG Banks remained the same. This demonstrates that the earlier arrangement that existed between the Associate Banks and SBI was merely for smooth settlement and did not have any service tax impact. Payment of service tax by SBI is not disputed. What is disputed is the payment of service tax by SBI as an agent of the Associated Banks. It has been found that there was an implied authority with SBI to discharge service tax liability of Associated Banks. Once service tax was paid by SBI as an agent of the Associate Banks, service tax cannot be demanded on the same transaction again from the Associate Banks. It further needs to be noted that while the show cause notice proposed demand of service tax on interchange fees received on the ground that interchange fee is commission from SBI for deployment of ATMs owned by Associate Banks in shared network, but the adjudicating authority has held that interchange fees is not a consideration for deployment of ATM, but is a consideration for the services provided to non-SBG Banks. The demand of service tax on the ATM interchange fee (termed as commission) received by the Associate Banks from the SBI for deployment of ATMs owned by the Associate Banks in the shared network could not have been confirmed - demand set aside. Levy of service tax on notional consideration of the free ATM services provided by the State Bank of Hyderabad on its ATM to the other Associate Banks and SBI - HELD THAT:- The SBG Switch was set up much prior to the levy of service tax on ATM services in 2006. At the time of setting up of the SBG ATM Switch it was a common understanding that none of the constituents of the SBG Banks would charge any fee on transactions between them. There is nothing on the record which may indicate that any change has taken place in the manner of operation of the SBG ATM Switch. The SBG Banks did not charge interchange fees for transactions. This can be said to be a condition of contract for the setting up of the co-owned ATM Switch and cannot be considered as a consideration. In COMMISSIONER OF CGST CENTRAL EXCISE MUMBAI EAST VERSUS EDELWEISS FINANCIAL SERVICES LTD [ 2022 (2) TMI 1359 - CESTAT MUMBAI] , the department contended that service tax would be leviable on corporate guarantee given for subsidiary company without any consideration. The demand cannot be sustained and is set aside. Invocation of Extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act - HELD THAT:- It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within eighteen months from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice - The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word eighteen months , the word five years has been substituted. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] , the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression is shown to be wilful with intent to evade the payment of service tax. In the present case, there is, therefore, no suppression of material facts from the department, much less with an intent to evade payment of service tax. Post the enquiry by the DGGI in 2013, the Associate Banks started separately discharging service tax liability and it is stated that even with the changed methodology the service tax liability of SBG Banks remained the same. Thus, the earlier arrangement did not have any service tax impact. There is, therefore, no reason to doubt the contention of the Associate Banks that they were under a bonafide belief that the liability to pay service tax was being discharged by SBI as their agent. The extended period of limitation contemplated under the proviso to section 73(1) Finance Act, therefore, was correctly invoked in the facts and circumstances of the case. The finding recorded by the Commissioner on the invocation of the extended period of limitation, therefore, does not suffer from any infirmity. The five appeals filed by State Bank of India deserve to be allowed and are allowed.
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2024 (10) TMI 567
Levy of service tax - income earned by the noticee from the foresee transaction of selling allotment rights in respect of selling flats to buyers - amount charged in the name of demand survey - cancellation charges and miscellaneous income received by the noticees - Extended period of limitation - Penalty - interest. Whether the income earned from selling allotment rights of flats is exigible to service tax? - HELD THAT:- On examining the terms and conditions under the MOU, it is found that the society had agreed to book 232 apartments, the sale price of which was payable by them. Further, Clause 6 of the MOU is relevant to be appreciated as it provides that in case the society fails to confirm the purchase of all the 232 apartments to the company within the time prescribed, the company will be entitled to forfeit the entire sum of Rs.11 lakhs, which has been deposited by the society as advance. This establishes that the appellant is acting on principal to principal basis being solely responsible for the sale of the flats and in the event of failure, are liable to bear the consequences. In the entire transaction, there is no scope of commission being paid to the appellant either by the builder or by the subsequent customers. The contention of the Revenue that the respondent receives consideration for the services by retaining a certain amount from the total amount paid by a customer to the builder and, therefore, the role is similar to the role of a Real Estate Agent, cannot be upheld. The profit earned by way of difference in the amount which the appellant paid to the builder and what is collected from the customers cannot really be termed as commission . The definition of service specifically excludes the activities which constitutes a transfer of title in goods or immovable property, by way of sale, gift, or in any other manner. In view of our conclusion that the respondent is engaged in sale-purchase of flats which involves transfer of rights in immovable property, on the simple reading of the definition, the activity rendered by the appellant does not fall within the ambit of services . Consequently, even during the post-negative era, respondent is not exigible to service tax. Following the decision in M/S SAUMYA CONSTRUCTION PVT. LTD. VERSUS CST AHMEDABAD [ 2013 (12) TMI 379 - CESTAT AHMEDABAD] , the Principal Bench in M/S ESS GEE REAL ESTATE DEVELOPERS PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE [ 2019 (6) TMI 633 - CESTAT NEW DELHI] , where the owners granted/assigned exclusive rights to the appellant to develop the property and to sell individual developed plots in a phased manner and as consideration for the same the owners were entitled to receive from the appellant the amounts specified in the agreement. Taking note of the Circular No. B 11/3/98-TRU dated 7.10.1998 clarifying that activity of actual construction of any building, carried out by builders or developers does not attract service tax levy as it is not a service within the meaning of the term Real Estate agent or Real Estate Consultant , it was concluded that as per the agreement, extensive construction and development had to be carried out by the appellant and it is thereafter the land or plots were to be sold for which the finances were also arranged by the appellant and, therefore, does not fall in the category of Real Estate Agent . Service tax on amount charged by the respondent in the name of Demand Survey - HELD THAT:- The Adjudicating Authority referring to the actual transaction on the basis of which the amount of Rs.5000/- was deposited by the customers along with the application form had dropped the demand. The findings arrived at is agreed upon, as the said amount is adjusted against the price of the property in the customers account on finalising the deal or is refunded to the customer in the event the property is not found to be suitable. It has been rightly noted that the department has accepted the said situation in the show cause notice. Leviability of service tax on the Cancellation Charges - HELD THAT:- There are no hesitation in agreeing with the findings arrived at by the adjudicating authority that the cancellation charges are in the nature of penalty levied on the buyers for not fulfilling the commitment in which no real estate agent service is being provided by the appellant and hence, no service tax is leviable thereon. Similarly, the Miscellaneous Income has been verified as per the ledger account where the miscellaneous income has been reflected as discount extended to them on the advertising service on which no element of service is involved. Extended period of limitation - Penalty - interest - HELD THAT:- Since the issue on merits stands decided in favour of the respondent, there are no reason to go into the question of the applicability of the extended period of limitation or the imposition of penalty and interest. There are no error in the impugned order and the same is, hereby affirmed - appeal of Revenue dismissed.
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2024 (10) TMI 566
Classification of services - rent a cab service or Transportation Services? - providing transportation services to employees of a client - Abatement under Notification no. 1/2006 dated 01.03.2006 - Benefit of Cum Duty value - Extended period of limitation - interest - penalty. - HELD THAT:- A perusal of the service tax Registration Certificate reveals that the appellant was registered for provision of Cab operators service. The appellant was renting vehicles viz., Tavera, Indica etc to his clients for their activities which included pick-up and drop facility to their employees. The consideration received is on kilometre basis. It is also noted that the charges were inclusive of all taxes, insurance etc. The rental for a long period of time such as 11 months. From the clauses of the agreement placed on record, it is clear that the appellant was renting out his cab to his clients and not providing point to point transportation, as claimed by him. The impugned order has carefully examined this aspect as well. The liability to tax arises when a rent-a-cab operator provides a vehicle to another person on rent and receives consideration. In M/S. RS. TRAVELS VERSUS CCE, MEERUT [ 2008 (7) TMI 27 - CESTAT NEW DELHI] , the Tribunal, relying on the decision in the case of EXPRESS TOURS TRAVELS PVT. LTD. VERSUS COMMISSIONER OF C. EX., VADODARA [ 2005 (4) TMI 5 - CESTAT, MUMBAI] , held that that the Government's intention, is to tax the provider of a service, which involves hire and renting of a cab formally for a long period. It was further held that the test for ascertaining whether an activity is covered by the entry rent-a-cab operator service is as to whether it involves giving a cab with or without driver to a client for a certain period of time for some consideration, which can be on per hour or per day or per month basis. In the instant case, it is noted that the car had been hired on monthly basis to their clients, as per the Agreements on file. Accordingly, the impugned order is correct in holding that the appellant is liable to service tax in respect of the services rendered by him under the category of rent-a-cab services . In the present case, the RTA issues a special permit to the vehicle for operation as Contract Carriage. Therefore, in order to be eligible for the exemption under the said Notification, the appellant should satisfy the Contract Carriage conditions as enumerated above. The other conditions require the vehicles to ply in a specific route only, specified fare table is to be exhibited in the vehicle, a taximeter should be fixed etc. In the absence of any such compliance to the requirements stated above, the appellant cannot be considered eligible for the exemption as claimed by them. Abatement under Notification no. 1/2006 dated 01.03.2006 - HELD THAT:- Appellant has submitted that they are eligible for abatement under Notification no. 1/2006 dated 01.03.2006, as they had not availed any Cenvat Credit and the benefit of Notification No. 1/2003-ST dated 20.06.2003 was not availed by them. It is found that this contention of the appellant has been rejected by the adjudicating authority as no evidence had been submitted by them in this regard. In view of the same, there are no infirmity in the impugned order - the appellant is not eligible for the exemption under Notification 25/2012-ST dated 20.06.2012. Benefit of Cum Duty value - HELD THAT:- A perusal of the sample invoices submitted by the appellant indicates that the value charged is the gross amount. The Agreements with the clients also indicate that the rate was inclusive of all taxes. It is observed that in the case of TRIVENI UDYOG, SH SURENDRAMADHANI, AGARWAL SONS, GOVIND BOORA BHANDAR, MAHESH BOORA UDYOG, SHANKER PRODUCTS RAMESHWAR UDYOG VERSUS C.C.E. JAIPUR-I [ 2017 (6) TMI 699 - CESTAT NEW DELHI] , it was held that for the goods already sold to the customer, it is an accepted principle that the assessee would be entitled to cum-duty benefit as the duty component now cannot be recovered separately from the customers. In other words, the sale price of the goods is to be treated as inclusive of the duty component. Consequently, the appellant should be given the benefit of cum-duty value. Extended period of limitation - HELD THAT:- The show cause notice has recorded that the appellant had charged Service Tax from Mahindra Logistics vide the invoices issued to the said Company, but had not deposited the same to the Government treasury. The Ld. Counsel submitted that mere non-declaration does not amount to suppression of facts, and some positive evidence of intent to evade is to be evidenced by the Department. In this regard, the appellant had collected the tax from his client, but did not discharge his liability nor filed any returns. This clearly establishes his intent to evade - the extended period has been rightly invoked in the impugned order. Interest - HELD THAT:- In the case of PRATIBHA PROCESSORS VERSUS UNION OF INDIA [ 1996 (10) TMI 88 - SUPREME COURT] the Supreme Court held that Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable . Accordingly, the demand of interest in the impugned order is correct. Penalty - HELD THAT:- The penalty imposed under Section 77(2) of the Finance Act, 1994 is upheld. The impugned order is upheld - it is directed that the demand may be recalculated after extending cum duty benefit to the appellant. The penalty equal to the demand under Section 78 of the Act will stand modified to the extent of the revised demand. Appeal allowed by way of remand for calculation of demand.
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2024 (10) TMI 565
Classification of service - whether the services provided by the appellant can be classified as Business Auxiliary Service and would, therefore, amount to export of services under the Export of Service Rules, 2005 and hence are exempt from payment of service tax? - penalty - interest - extended period of limitation. HELD THAT:- From the assertion made by the appellant, there is no dispute that the goods manufactured by M/s FOSS are being supplied directly to the buyers by issuing the invoices directly. The appellant has not bought any of the goods from M/s FOSS. From the terms and conditions of the contract, it is found that the appellant had not provided any marketing services rather the characteristics of the services required to be rendered by the appellant related to Maintenance and Repair services. They had nothing to do with the marketing or sales promotion of the products of FOSS which they were directly indulging in. The commission received by the appellant in advance was for providing complete service support on the products in India and not in connection with the marketing or sales so as to fall under definition of Commission Agent under Business Auxiliary Service as defined under Section65(19) of the Act. Accordingly, the services provided by the appellant are covered under commissioning and installation, repairing and maintenance service, commercial training, and coaching, testing and certification, IT software and Internet telecommunication services. Since the services have been provided in India and are used in India, as the products are in India, they are not covered under the export of service and hence are not entitled to exemption from the levy of service tax. The submission of the learned Counsel for the appellant that the services provided by them are activities which are incidental or ancillary to the activity of sale of goods and hence are entitled to the shelter under the export of service rules has no merit as it is concluded that the appellant is not engaged in rendering marketing or sales promotion services. Once the main activity is out of net, the incidental or ancillary services would automatically fail. The reliance placed by the appellant on the Circular No. 111/5/2009-ST dated 24.02.2009 is misplaced for the simple reason that the issue whether the benefit of export of services can be denied on the ground that these activities do not satisfy the condition used outside India was with reference to marketing . Time Limitation - HELD THAT:- The show cause notice was issued pursuant to the audit conducted by the Department, where it was revealed that the amount of commission received by the appellant has been taxed wrongly availing the exemption under the export of service rules. The suppression of the correct valuation of tax liability was detected by the Audit team and, therefore, the extended period of limitation has been rightly invoked under Section 73(1) of the Act. Penaty - Interest - HELD THAT:- The penalty imposed on the appellant under Section 78 is upheld. Since on merits, it is held that the services rendered by the appellant cannot be treated as export services, they are liable to pay interest amount on the delayed payment of the service tax as ascertained by the Adjudicating Authority. There is no merit in the submission that services rendered by the appellant under the contract are covered under the definition of Commission Agent under the BAS as per Section 65(19). Consequently, the services do not fall under the category of export of service under the Rules. The services provided by the appellant are not used outside India and, therefore, the appellant is not entitle to any exemption on account of export of services. There are no reason to interfere with the impugned order and the same is affirmed - The appeal is dismissed.
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2024 (10) TMI 564
Rejection of appeal as time barred - non-payment of service tax for FY 2013-14 - no proof of service of Order-in-Original - violation of principles of natural justice - HELD THAT:- It is found apparent on record that there is no proof of service of Order-in-Original dated 11th September, 2019 to ever have been served upon the appellant. The Show Cause Notice was also not received by the appellant as submitted. His absence before Original Adjudicating Authority, to my opinion, is the sufficient corroboration for the fact that the Show Cause Notice was not received by the appellant. Also no proof of service is placed on record by the Department. Similarly, there is no proof of service of Order-in-Original upon the appellant. In the present case, the date of receipt is 6th April, 2022. The appeal before Commissioner (Appeals) should have been filed on or before 5th June, 2022. Though the said section 85 of Finance Act has a proviso that the appeal can be presented within a further period of one month, however, the appellant has to satisfy the Commissioner (Appeals) that it was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months. No doubt the appellant has filed the appeal before Commissioner (Appeals) alongwith the application seeking the condonation of delay for filing the same beyond two months, but the same has not been considered as the one as required under the proviso to section 85 3A of the Finance Act. The findings in para 8 of the order under challenge are sufficient enough to reflect that the one month extension has been declined by Commissioner (Appeals). In the light of the facts of the present case where the appellant could not appear before the original adjudicating authority for want of receiving any processes ever served upon him except that he received recovery notice for an amount of Rs.11,27,649/-, that too, much beyond the date when this demand was confirmed. Such circumstances warrant utmost diligence on part of the appellant to expedite the filing of the appeal against the order confirming such demand. No single effort has been brought to notice by ld. Counsel about such diligence ever exercised by the appellant. Irrespective the appellant is an uneducated person but ignorance of law is not a defence available to any litigant. The delay in such circumstance, that too, solely attributed to a part time Assistant is highly insufficient to be liberal towards the appellant. The ground of limitation though has to be dealt with liberally except in case of apparent negligence on part of the litigant. As observed, present is the case of absolute negligence. There are no infirmity in the order of Commissioner (Appeals) while holding the appeal as being barred by limitation except that the reason for the purpose is modified. Irrespective of it to be an appeal filed within a period of three months, the delay beyond 60 days from the date of receipt of Order-in-Original dated 06.04.2019 is not been reasonably and sufficiently explained. Appeal dismissed.
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Central Excise
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2024 (10) TMI 563
Maintainability of appeal - mandatory pre-deposit not deposited - Petitioner s Appeal dismissed on the ground of failure to deposit 7.5% of the demanded tax amount, which is the requirement under Section 35 (F) of the Central Excise Act, 1944 has applicable to the Finance Act, 1994 - HELD THAT:- In the peculiar facts of the present case, some indulgence is due to the Petitioner, who now says that he would arrange to deposit 7.5% of the tax amount demanded within some reasonable period. Considering the peculiar facts, the petitioner can be granted an additional opportunity without waiving the pre-deposit requirement. The impugned order dated 30 April 2024 made by the Commissioner (Appeals) is set aside - the Appeal instituted by the Petition is restored on the Commissioner (Appeals) file for reconsideration.
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2024 (10) TMI 562
Cenvat credit - ISO Tank which is used for packing and transportation of the appellant s excisable final product namely Di-methyl Sulphate (DMS) from factory to the consignee premises/destination - HELD THAT:- The identical issue in the appellant s own case has been considered by this Tribunal in AARTI INDUSTRIES LTD VERSUS COMMISSIONER OF C.E. S.T. -SURAT-I [ 2024 (9) TMI 1169 - CESTAT AHMEDABAD] whereby the matter was remanded to the adjudicating authority for passing a de-novo order. This matter also needs to be remanded so the adjudicating authority can decide both the matters together - Appeal is allowed by way of remand to the adjudicating authority for passing a fresh order.
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2024 (10) TMI 561
Evasion of Central Excise duty by resorting to gross undervaluation of PTY (Polyester Texturized Yarn) - contention of the investigating agencies was that under the modus operandi while the sale of PTY be shown at the factory gate, the invoice used for clearance of PTY contained name of fictitious buyers and generally such invoices issued contain particulars of buyers - HELD THAT:- It is found from the close scrutiny of the show cause notice and Adjudication order and records related thereto, it is observed that the investigation, all the evidences are absolutely identical and the charge in the show cause notice also same in bunch of cases, out of which majority of cases has been finally settled in favour of the assessee in the case of COMMISSIONER OF CENTRAL EXCISE, VAPI VERSUS SYNFAB SALES [ 2015 (6) TMI 777 - SUPREME COURT] . The identical issue in the case of COMMR. OF CEN. EXC. CUSTOMS SURAT VERSUS SURESH SYNTHETICS ORS. [ 2016 (4) TMI 838 - SUPREME COURT] , the Hon ble Supreme Court held that ' From the orders passed by the Tribunal and the High Court, it is clear that the revenue has really built its case on the base of the statement made by the authorized officer and, accordingly, there has been intervention by the Tribunal and the High Court. If the whole case is founded on the statement of the authorised officer of the respondent without verification of any other independent evidence, it would not merit acceptance.' In view of the above judgments, it is clear that the present appeals as well as the above judgments are on identical issue and facts. Therefore, the ratio of the above judgments are directly applicable in the present case. It is also noteworthy that in the present cases, the show cause notices were kept in call book by the department awaiting the decision of Supreme Court in the cases cited above. This also shows that the present appeals are on the identical issue and facts involving the same investigation and evidences as that in the above judgments. The present appeals of the department do not survive, as the adjudication orders impugned herein do not suffer from any infirmity. Revenue s appeals are dismissed.
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2024 (10) TMI 560
Refund of CENVAT Credit of CVD and SAD under GST regime for imports made prior to GST regime - Advance Authorisations Scheme - Non-fulfillment of export obligation within the prescribed time limit - refund was rejected only on the ground that the amount of CVD and SAD paid by the appellant after 01.07.2017 but for the period prior to 01.07.2017 is not eligible for Cenvat credit to the appellant - HELD THAT:- There is no dispute that the CVD and SAD was paid in respect to the imports made prior to GST regime i.e. before 01.07.2017 therefore any CVD and SAD was payable during the period prior 01.07.2017 was available as Cenvat credit. Merely because the payment was made after 01.07.2017 it will not lose the character of Cenvat credit in respect of such payment of CVD and SAD. Section 142 (3) and/or Section 142 (6) of the CGST Act, 2017 was created only to deal with the situation of the kind in the present case. The appellant was clearly entitled for the Cenvat credit of CVD and SAD prior to 01.07.2017 but since the same was paid after 01.07.2017, they were not in a position to avail the Cenvat credit and utilize the same. Therefore the appellant is prima facie entitle for the refund of CVD and SAD being in the nature of Cenvat credit under Section 142 (3) and/or Section 142 (6) of the CGST Act, 2017. All the impugned orders are set aside and appeals are allowed by way of remand to the adjudicating authority for processing the refund claim in accordance with law.
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CST, VAT & Sales Tax
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2024 (10) TMI 559
Levy of commercial tax under the Commercial Tax Act as well as the Entry Tax Act - challenge to assessment orders - works contract or not - Build, Operate and Transfer (BOT) contract - scope of registered dealer as defined under Section 2 (gg) of the M.P. Entry Tax Act, 1976 - HELD THAT:- It is a settled law that no person has a right to collect a toll or any tax from private persons for using the road. The State Government gave a right to collect the toll to the petitioner from the vehicle passing through the road for a definite period to recover the only cost of construction i.e. the sale amount or the contract value, therefore, the Dy. Advocate General for the State has rightly contended that in this case, the contract amount or sale price is liable to be made to the contractor as a deferred payment by authorizing him to recover the toll tax and except this, there is no difference in the work done under the BOT scheme and in the normal works contract. This issue has been considered in detail by the Full Bench of this Court in the matter of Viva Highways [ 2017 (5) TMI 1622 - MADHYA PRADESH HIGH COURT ] before the Apex Court in which it has been held that the works contract means an agreement must be in writing, it must be executed of any work related to the construction, repair or maintenance of any building, superstructure or other amenities mentioned in the definition. Any agreement by whatever name is called, if it falls within the meaning of a definition of works contract as per the definition of 1983 it must be treated as the works contract. The petitioner is misconstruing the terms of the agreement and the construction of Dewas by-pass road on a BOT basis that it does not amount to execution of works contract, the petitioner executed the works contract on the land belonging to the State Government and recovered the construction and maintenance cost by way of toll with the due permission from the State Government, it is nothing but a deferred payment by a mode of recovery of toll. Hence, there are no substance in the writ petition. The petition being devoid of merit and substance are hereby dismissed.
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2024 (10) TMI 558
Imposition of Entry Tax on the crude Soyabean Oil brought by the petitioners within the State of MP for manufacturing/refining Soyabean Refined Oil - revision filed u/s 62 of the MPCT Act read with the relevant provision of the Entry Tax Act - levy of tax also challenged on the ground that in case, the refining of Soya crude oil is treated as a process of manufacture then even in such case, soya crude oil being Raw material would be exempted under N/N. A-3-10-2000-ST-V(82) dated 06-09-2001. HELD THAT:- In the case of Commercial Trade Tax V/s M/s Kumar Paints and Mills Store [ 2023 (3) TMI 943 - SUPREME COURT] the Apex Court considered the question with respect to the product which underwent mixing of base paint with different colours did not result in the new product after undergoing the process of manufacturing as defined under the U.P. Trade Tax Act. The revenue department contended that the sale of paints which had undergone mixing through a computerized process amounts to manufacture thereby resulting in new products. The case in hand, admittedly the petitioner brought Soyabean crude oil within the State and after the process manufactured the refined oil. According to the petitioner, the entry tax on oil entered into the State of M.P. and after refining sent to the outside State hence the entry tax is not leviable because there is neither any consumption nor use of oil. The petitioner claimed the non-liveability on the ground that the process of refining does not constitute the process of manufacturing oil because before and after refining it remains the same commodity - The process of so-called refining has been explained in the aforesaid paragraphs with the help of the diagram clearly establishes that a big manufacturing plant is required to be installed for making Soyabean oil from crude Soya oil, therefore, the tax on entry of the goods into the local area has rightly been imposed for consumption/use or sale therein. The petitioner is trying to avoid the payment of the entry tax solely on the ground that the petitioner is engaged in refining the crude Soya oil to Soyabean oil, no entry tax is leviable in view of Proviso 2 of Section 3 (1) of the Entry Tax Act, only in case of consumption or use of oil by the Assessee. It is correct that the Revisional Authority while rejecting the aforesaid contention has held that the process of refining crude oil does not constitute a process of manufacture in view of the said exclusion of the process of refining under notification No. 18 dated 01.04.1995 issued by the State under Section 2(o) of the MPCT Act, 1994. As per Entry No.52 of List 2, VIIth Schedule of the Constitution of India, the tax on the entry of goods into the local area is leviable for consumption, use or sale therein even if it is called by whatever name manufacturing or refining. In the case of the petitioner, a new product Refined Soyabean oil emerges after applying various processes to the crude Soyabean oil. The cued soya oil is used in making finished consumable soyabean oil. Refined soyabean oil is a new commodity that is packed in bottles and cans of different sizes for sale in the market after undergoing various processes as explained. Therefore, there is a consumption/use in the local area before the sale of finished refined oil to other States by the petitioner. Even if the Revisional Authority has held that under notification No.18 dated 01.04.1995, the processing of refining of crude oil into refined soyabean oil cannot said to be manufacturing even then under N/N. 82 dated 06.09.2001 it is leviable for the Entry tax. There are no ground to interfere with the order of the Assessment Authority and the Revisional Authority, therefore, all the Writ Petitions are hereby dismissed.
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2024 (10) TMI 557
Entitlement of interest for grant of interest on the principal amount - bone of contention of the learned counsel for the petitioner is that the respondents were bound to refund the amount within six months from the date of the order of the Supreme Court i.e., 02.03.2006, they refunded the amount only on 25.04.2012 - HELD THAT:- A plain reading of Section 33-B of Andhra Pradesh General Sales Tax Act, 1957 makes it clear that when refund is as a result of order passed in an appeal or other proceedings, the amount must be paid without there being any claim preferred in that behalf by the assessee or licensee. In the instant case, Section 33-B of the Act is applicable with full force. Admittedly, the order dated 02.03.2006 was passed by the Supreme Court, pursuant to which, refund was necessitated. Section 33-F of the Act talks about grant of interest, where no claim needs to be made - in a case of this nature, where the petitioner has succeeded in appeal from the Supreme Court, no claim was required to be made. Thus, Section 33-F of the Act is squarely applicable in the instant case. A conjoint reading of Section 33-B and 33-F of the Act shows that the argument of learned counsel for the petitioner has substantial force. There is a statutory mandate ingrained in Section 33-B and Section 33-F of the Act to pay the statutory interest @ 12% per annum, after six months from the date of passing of the judgment of the Appellate Court, till the date of actual refund i.e., 24.04.2012. Thus, the respondents are directed to calculate and pay the said interest to the petitioner. The entire exercise of calculation and payment of interest to the petitioner shall be completed within (90) days from the date of communication of this order. Petition allowed.
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2024 (10) TMI 556
Maintainability of petition - availability of alternative remedy - Time Limitation - Challenge to Re-assessment Order and the consequential demand notice - claim for exemption from payment of Value Added Tax on facility charges disallowed - HELD THAT:- It is necessary to peruse Section 40 (4) of the JVAT Act, which specifies that no order of assessment and reassessment shall be made under section 40 (1) after the expiry of five years from the end of the year in respect of which the tax is assessable - In the present case, the Assessment Year is 2015-16 and five years from the end of the relevant year would be 31.03.2021. However, the order in the present case has been passed belatedly on 07.09.2021 and hence is clearly without jurisdiction and barred by limitation. The Respondents have specifically admitted that the present reassessment proceedings have been initiated pursuant to an audit objection, under Section 42 (3) of the JVAT Act. In this regard it is pertinent to mention here that section 42 (3) of the JVAT Act only specifies one of the categories pursuant to which reassessment can be initiated and is therefore also subject to the rigours of limitation as provided under Section 40 (4) of the JVAT Act. Such period of limitation of five years cannot be given a complete go-by the Respondents as the stipulation has been inserted by legislature to give finality to proceedings to a certain assessment year. Completion of assessment of an assessee confers valuable right upon the said assessee and the said assessment proceeding can be subjected to re-assessment strictly in accordance with the statutory provisions contained under the Act. This issue has already been decided by this Hon ble Court in M/s. Rungta Mines Ltd. [ 2023 (8) TMI 786 - JHARKHAND HIGH COURT] . It is therefore, beyond cavil that the Order dated 07.09.2021 having been passed beyond the period of limitation, is void and bad in law. Further, reassessment order being a nullity is without jurisdiction and hence its invalidity can be set up at any time. Since the present Order has been passed beyond the period of limitation, it has rendered the entire proceedings as a nullity. Since the Order is a nullity, its invalidity can be set up at any point of time and alternative remedy is not a bar when the order is wholly without jurisdiction. Re-assessment Order dated 07.09.2021 (Annexure-5) and the consequential demand notice dated 07.09.2021 (Annexure-6) demanding Rs. 2,37,69,924/- in respect of the Assessment Year 2015-16, are hereby, quashed and set aside - Application allowed.
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Indian Laws
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2024 (10) TMI 555
Suit for money due under a dishonoured cheque was decreed by the trial court - correctness of findings of the trial court with regard to the due execution of Ext.A1 cheque and the drawing of presumption under Section 118(a) of the N.I. Act - failure to rebut the presumption under Section 118(a) of the N.I. Act based on the evidence. Do the findings of the trial court with regard to the due execution of Ext.A1 cheque and the drawing of presumption under Section 118(a) of the N.I. Act warrant any interference? - HELD THAT:- The plaintiff as PW1, has categorically deposed about the execution and issuance of Ext.A1 cheque by the defendant. He has asserted about the signing of the cheque by the defendant in his presence. There is no other witness, for such execution and issuance - When PW1 is cross examined there is no suggestion that the signature in Ext.A1 is not that of the defendant. No steps were taken by her to have an expert opinion obtained regarding the signature on Ext.A1. We are in agreement with the finding of the trial court that the plaintiff has proved the due execution of the cheque. The execution of the cheque having been proved, the plaintiff is entitled for the benefit of the presumption under Section 118(a) of the N.I. Act that, the instrument is supported by consideration. The burden is on the defendant to rebut the presumption. The trial court was right in holding so. Is the finding of the trial court that the defendant failed to rebut the presumption under Section 118(a) of the N.I. Act based on the evidence in the case? - HELD THAT:- Admittedly there were financial dealings between the plaintiff and the husband of the defendant while they were abroad. Ext.B2 is the agreement executed between the plaintiff and the husband of the defendant regarding the same. Ext.B2 and the transaction thereunder is admitted by both parties. According to the defendant, the liability under Ext.B2 was paid off, and the original of Ext.B2 was got returned - The cheque was dishonoured for insufficiency of funds. Though it is claimed that the liability under Ext.B2 agreement was discharged, there is no evidence to prove such discharge - the finding of the trial court that the evidence on record is insufficient to rebut the presumption of consideration under Section 118(a) of the N.I. Act, is justified. On the evidence on record, the conclusions arrived at by the trial court are plausible. There is no sufficient material to upturn the findings of the trial court. The trial court has granted interest only at the rate of 6% per annum from the date of suit which is reasonable and warrants no interference - Appeal dismissed.
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2024 (10) TMI 554
Dishonour of Cheque - petitioner-accused is not coming forward to deposit the amount - existence of a legally enforceable debt or liability - failure to lead any evidence - presumption under Sections 118 and 139 of the Negotiable Instruments Act - HELD THAT:- This Court finds that both the Courts below have dealt with each and every aspect of the matter meticulously and there is no scope left for this Court to interfere. Interestingly, in the case at hand, at no point of time, factum with regard to issuance of cheque as well as signature thereupon ever came to be refuted by the accused, rather she attempted to carve out a case that she had only borrowed sum of Rs. 2,00,000/-, which was returned, but cheques obtained as security by the complainant were misused. Since aforesaid defence sought to be raised was never probablized by leading cogent and convincing evidence, both the Courts below rightly invoked Sections 118 and 139 of the Act, which speak about presumption in favour of holder of cheque that cheque in question was issued towards discharge of lawful liability. No doubt, aforesaid presumption is rebuttable, but to rebut such presumption, accused is required to raise probable defence. Despite sufficient opportunity, accused failed to lead any evidence. In the instant case, neither accused could show in his pleadings as well as evidence of the complainant that sum of Rs. 6,50,000/- was never borrowed by her, rather she had taken only Rs. 2,00,000/-, which was also returned nor she lead any positive evidence to probabalize aforesaid defence set up by her. The Hon ble Apex Court in M/S LAXMI DYECHEM VERSUS STATE OF GUJARAT ORS. [ 2012 (12) TMI 106 - SUPREME COURT] , has categorically held that if the accused is able to establish a probable defence, which creates doubt about the existence of a legally enforceable debt or liability the prosecution can fail. To raise probable defence, accused can rely on the materials submitted by the complainant. Needless to say, if the accused/drawer of the cheque in question neither raises a probable defence nor is able to contest existence of a legally enforceable debt or liability, statutory presumption under Section 139 of the Negotiable Instruments Act, regarding commission of the offence comes into play. Factum with regard to issuance of cheques as well as signatures thereupon stands duly established and as such, no illegality can be said to have been committed by the learned Court below, while invoking Sections 118 and 139 of the Act. In his cross-examination, CW1 admitted that he has transferred Rs. 2,00,000/- to the accused. He also admitted that his 2-3 cases of dishonour of cheques are pending adjudication in the Court. However, he denied that accused demanded cheques after returning the borrowed amount. This Court sees no reason to interfere with the well reasoned judgments recorded by the Courts below, which otherwise, appear to be based upon proper appreciation of evidence available on record and as such, same are upheld. The present criminal revision petition is dismissed being devoid of any merit. The petitioner is directed to surrender before the learned trial Court forthwith to serve the sentence as awarded by the learned trial Court, if not already served. Interim direction, if any, stands vacated.
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