TMI Tax Updates - e-Newsletter
October 16, 2024

Case Laws in this Newsletter:

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

Articles

1. GST Amnesty Scheme under Section 128A (Eligibility and Procedure)

   By: Vinay Goyal

2. ARREST PROVISIONS UNDER GST LAW

   By: Dr. Sanjiv Agarwal

3. OMBUDSMAN HAS NO JURISDICTION TO INQUIRE INTO THE MATTERS PENDING BEFORE A CIVIL COURT

   By: DR.MARIAPPAN GOVINDARAJAN

4. Aluminium Foil Container is classifiable under 7615 with applicable GST rate

   By: Bimal jain

News

1. Important advisory for GSTR-9/9C

2. Attention - Advisory on IMS

3. Union Finance Minister Smt. Nirmala Sitharaman to leave tonight for an official visit to Mexico and USA from 17th to 26th October 2024

4. Auction for Sale (re-issue) of (i) ‘7.02% GS 2031’, (ii) ‘7.23% GS 2039’ and (iii) ‘7.09% GS 2054’

5. DRI busts a factory illegally manufacturing Mephedrone in Meghnagar, Jhabua, MP; 112 kg Mephedrone worth Rs. 168 crore seized; four persons arrested

Notifications

Income Tax

1. 111/2024 - dated 15-10-2024 - IT

Income-tax Amendment (Seventh Amendment) Rules, 2024.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/140 - dated 15-10-2024

Monitoring of position limits for equity derivative segment

GST

2. 237/31/2024-GST - dated 15-10-2024

Clarifying the issues regarding implementation of provisions of sub-section (5) and sub-section (6) in section 16 of CGST Act, 2017

3. 238/32/2024-GST - dated 15-10-2024

Clarification of various doubts related to Section 128A of the CGST Act, 2017

Highlights / Catch Notes

GST

• GST Circular: Lower Rate Payments Accepted as Full; No Refunds for Higher Rates Paid.

  Circulars : This circular clarifies the scope of regularization on an "as is" or "as is, where is" basis mentioned in previous GST circulars issued based on GST Council recommendations. It states that when genuine doubts arise due to competing entries with different rates or diverse interpretations, leading to some suppliers paying lower GST rates (including nil rates) and others paying higher rates, the Council recommends regularizing past payments on an "as is" basis. This means accepting the lower rate paid, without refunds for those who paid higher rates. The intention is to fully discharge tax liability based on the tax position taken by the taxpayer in filed returns. If two competing rates existed and the lower rate was paid, that payment is treated as tax fully paid for the regularized period, without requiring differential payment. Illustrations clarify scenarios like competing 5% and 12% rates, exemption versus 5% rate, and non-payment versus lower rates paid. The circular aims to provide clarity on the scope of "as is" regularization based on the Council's recommendations.
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• GST rates revised for snacks, AC units, car seats; effective prospectively.

  Circulars : This circular clarifies GST rates and classification for certain goods based on recommendations of the GST Council's 54th meeting. Key points: Extruded/expanded savoury snacks under HS 1905 90 30 attract 12% GST prospectively from 10.10.2024, previously 18%. Roof mounted air conditioning units for railways classified under HS 8415 attract 28% GST. Car seats under HS 9401 attract 28% GST prospectively from 10.10.2024, previously 18%. Motorcycle seats under HS 8714 continue attracting 28% GST. Past period tax liabilities remain unaffected for the revised rates.
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• GST Updates: University Affiliation, Helicopter Transport, and Theatrical Rights Clarified Post-54th Council Meeting.

  Circulars : This circular clarifies various GST-related issues based on recommendations of the 54th GST Council meeting. Key points are: GST at 18% applicable on affiliation services by universities to colleges; affiliation services to schools by educational boards/councils taxable except for government schools which are exempt; DGCA-approved flying training courses by approved Flying Training Organizations exempt; 5% GST on transport of passengers by helicopter on seat share basis regularized retrospectively; 18% GST on helicopter charter services clarified; incidental services like loading/unloading by Goods Transport Agencies part of composite transport supply; import of services without consideration by foreign airlines from related entities exempt prospectively and regularized retrospectively; Preferential Location Charges part of composite construction supply; certain support services by electricity transmission/distribution utilities exempt prospectively and regularized retrospectively; theatrical rights granted by distributors to exhibitors regularized retrospectively at 18% GST rate.
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• Tax Authorities' Order Quashed for Violation of Natural Justice; Remanded for Fresh Adjudication After Hearing.

  Case-Laws - HC : The High Court quashed the impugned summary order passed without issuing Form DRC-01 show cause notice to the petitioner, violating principles of natural justice. The matter was remanded to the respondent authorities for de novo adjudication after providing an opportunity of hearing to the petitioner. Fresh order to be passed within 12 weeks in accordance with law. The petition was disposed of by way of remand.
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• Technical Glitch in GST Portal Leads to Manual ITC Transfer Approval, Overcoming Filing Challenges.

  Case-Laws - HC : The summary highlights the reversal of Input Tax Credit (ITC) due to the non-electronic filing of Form GST ITC-02 by the transferor company. The key points are: Section 18(3) of the CGST Act allows transfer of unutilized ITC in case of business transfer, subject to prescribed rules. The show cause notice alleged contravention of Section 18(3) and Rule 41(1) for availing ITC without electronic filing of Form GST ITC-02. However, the GST portal had functionality issues during the relevant period, preventing electronic filing. Courts in similar cases involving the petitioner held that technical glitches on the department's part cannot defeat statutory rights. The impugned show cause notice was set aside, and the department was directed to consider the manually filed forms expeditiously.
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• Tax Order Quashed for Denying Hearing Violating Natural Justice.

  Case-Laws - HC : The impugned order violated principles of natural justice by failing to provide an opportunity of hearing to the Petitioner, despite a written request, contravening Section 75(4) of the MGST Act. The order was made without adhering to the statutory requirement of granting a hearing where an adverse decision is contemplated against the person chargeable with tax or penalty. Coordinate Benches in similar cases have set aside orders that disregarded Section 75(4)'s mandate of hearing the petitioners. Consequently, the impugned order dated 17 January 2024 and the subsequent recovery notice dated 6 September 2024 were quashed, and the petition was disposed of.
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• Court Annuls Tax Order: Petitioner Wins Reconsideration Over Alleged Filing Discrepancies, Must Pay 10% Demand to Proceed.

  Case-Laws - HC : The court set aside the impugned order passed by the respondent u/s 73 of the Tamil Nadu General Sales Tax Act, 2017, imposing a liability of Rs. 10.72 lakhs towards tax, interest, and penalty on the petitioner due to a discrepancy between Forms GSTR 3B and GSTR 1. The petitioner claimed a violation of natural justice as they were unaware of the proceedings initiated by the respondent, with communication sent only through the portal. The court found sufficient materials to substantiate the petitioner's defense that there was no mismatch between the outward supplies turnover declared in GSTR-1 and GSTR-3B. Consistent with a previous case, the matter was remanded to the respondent for fresh consideration, subject to the petitioner paying 10% of the total demand within four weeks. The petition was allowed by way of remand.
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• Tax dues paid, GST license renewal directed. Respondent to communicate remaining dues, if any.

  Case-Laws - HC : Petitioner's GST license was cancelled for non-payment of tax dues. Considering petitioner's counsel's submission that returns were filed and tax along with interest was paid, the court directed the respondent authority to renew petitioner's GST license within 10 days. If any other amount is due, the authority shall communicate to petitioner, who shall pay within 7 days from communication. The court disposed of the petition.
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• GST registration cancelled, appeal delayed but material facts not suppressed. Court revives appeal.

  Case-Laws - HC : The court addressed the issue of condonation of delay in filing an application and dismissal of an appeal on the ground of suppression of material facts regarding the cancellation of GST registration. The court referred to the Supreme Court's observation in Arunima Baruah case, which held that suppression must be of a material fact relevant for determining the lis or granting relief. The court found that while the fact of fresh registration was relevant, it was not material enough to affect the determination of the lis between the parties. Consequently, the High Court order dismissing the appeal could not be sustained, and the writ petition was allowed.
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Income Tax

• Tribunal allows tax exemption to trust for all income despite non-filing of Form 10B.

  Case-Laws - HC : Denial of exemption u/s 11 was challenged. The assessee trust's entire income, including corpus donation, voluntary donation, and other income, was adjusted by not filing Form 10B with the return. The Tribunal correctly held that the assessee's claim for exemption u/s 11 for its entire income should be allowed. The Assessing Officer/CPC was directed to delete the adjustment made in the intimation u/s 143(1). No substantial question of law arose.
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• Assessment of Permanent Establishment Status in India: Fixed Place vs. Dependent Agent for Pepsico Jainpur Project.

  Case-Laws - HC : The Authority for Advance Rulings (AAR) examined whether a Fixed Place Permanent Establishment (PE) or a Dependent Agent PE (DAPE) existed in India for the assessee. The Assessing Officer (AO) found that the Indian subsidiary, Krones India Pvt. Ltd. (KIPL), was adequately compensated at arm's length for completing agreements involving installation, commissioning, and after-sales services. Since no further attribution would arise, these findings were insignificant. Regarding the Pepsico Jainpur project, the AO found that KIPL was awarded the work, and the assessee only affected certain supplies. Applying the DAPE principles from Progress Rail Locomotive Inc., the High Court held that the appeal failed to raise any substantial questions of law.
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• Court Invalidates Search and Seizure for Lack of Evidence, Orders Return of Seized Amount; Future Actions Allowed.

  Case-Laws - HC : The court examined the validity of search and seizure u/s 132, focusing on the scope of Revenue's power and the "reasons to believe" requirement. It held that the 'satisfaction note' lacked material relating to discrete inquiry and information gathered, failing to reflect the basis for believing the petitioners would not disclose possession of money. The court distinguished "reasons to believe" from "reasons to suspect," emphasizing that the competent authority must have cogent incriminating material prior to seizure to record satisfaction. Mere suspicion or unexplained possession of amount cannot justify action u/s 132. Consequently, the impugned search and seizure was set aside, and the seized amount ordered to be returned, without precluding further lawful proceedings against the petitioners.
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• Unexplained loans scrutinized: AO's one-sided stance overturned; Assessee prevails with evidence.

  Case-Laws - AT : Assessee obtained loans from two corporate entities to purchase properties. AO treated these loans as unexplained cash credits u/s 68, relying solely on third-party statements without conducting independent inquiries or allowing cross-examination, violating natural justice principles. Assessee furnished evidence establishing lenders' identities, transaction genuineness, and creditworthiness during appellate proceedings. CIT(A) examined additional evidence due to AO's failure to complete remand proceedings. Onus u/s 68 was discharged by assessee, and AO failed to rebut the evidence. ITAT upheld CIT(A)'s order deleting the addition, citing violation of natural justice by AO and assessee's discharge of onus as per judicial precedents.
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• Tribunal Overturns AO's Misapplication of Section 50C, Upholds Purchaser's Appeal on Capital Gains Valuation.

  Case-Laws - AT : The case pertains to the applicability of Section 50C of the Income Tax Act in determining the full value of consideration for computing capital gains in the hands of the purchaser (assessee). The key points are: The Assessing Officer (AO) invoked Section 50C to deem the stamp duty valuation as the full value of consideration, treating the difference as unexplained investment in the hands of the purchaser. However, Section 50C is applicable to the seller, not the purchaser. Section 56(2)(vii), introduced in 2014, provides for deeming the stamp duty valuation as the purchase cost for the buyer, with the difference treated as a deemed gift. Since the assessment year was prior to 2014, this provision was not applicable. The Tribunal held that the AO's addition was unsustainable and contrary to law, observing a vindictive approach without understanding the issue. The assessee's appeal was allowed.
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• Company Proves Creditor Payments & Loan Validity; Appeal Allowed, No Liability Cessation Under Income Tax Law.

  Case-Laws - AT : The assessee company had shown the liability as outstanding amounts payable to three disputed creditors in its balance sheet as of 31.03.2015. The assessee provided evidence that these disputed sundry creditors were discharged in full in the subsequent assessment year. When amounts are shown as payable in the balance sheet, the debt is acknowledged by the assessee, and there cannot be any remission or cessation of liability u/s 41(1) of the Act. The assessee provided confirmations from the three sundry creditors, and if any discrepancy is found with their balance sheets, action should be taken against them, not the assessee. The assessee discharged its primary onus, and Section 41(1) cannot be applied in this case, as per the New World Synthetics Ltd. case. Regarding the unsecured loan treated as unexplained cash credit u/s 68, the assessee furnished necessary documents to prove the identity of creditors, genuineness of the transaction, and creditworthiness of lenders. The lender is duly assessed to tax and provided confirmation. The loan was received through banking channels. The summons issued u/s 131 to the lender was served but not responded to, but no adverse inference can be drawn against the assessee based on the Orissa Corporation Limited case. The assessee's appeal was allowed.
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• Tribunal Affirms Lottery Winnings as Business Income, Allows Offsetting Expenses, Dismissing Tax Department's Appeal.

  Case-Laws - AT : The key points covered in the summary are: The assessee claimed tax deducted at source (TDS) on prize winnings from unsold lottery tickets as business income and set off various expenses, including the cost of tickets, against the winnings. The income tax department contested this treatment. The Tribunal held that losses from lotteries can be set off against income from lotteries after the Finance Act, 1986 removed the earlier restriction. The winnings on unsold tickets were realized during the course of the lottery ticket distribution business and constituted business income. The Tribunal distinguished the case from CIT vs. Dr. M.A.M. Ramaswamy, where the issue was different. The Tribunal concurred with its own earlier order in the assessee's case for the previous year, which had elaborately dealt with the applicable facts and case laws. As no distinguishing feature was shown and no higher authority had reversed the earlier order, the Tribunal dismissed the revenue department's appeal, following its previous decision.
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• Assessing Officer's VAT Addition to Inventory Deemed Incorrect; Tribunal Backs Assessee's Valuation Method.

  Case-Laws - AT : The assessee followed the correct method of valuing inventory by excluding recoverable VAT from the cost of purchases and inventory, in compliance with Accounting Standard 2 and the Income Computation and Disclosure Standards. The Assessing Officer erred by adding VAT to the closing stock without making corresponding adjustments to the opening stock and purchases. The Inclusive method was correctly applied by the assessee as per Section 145A, resulting in a nil impact on income. The ITAT relied on the Supreme Court's judgment in CIT v. Indo Nippon Chemicals Co. Ltd, which disallowed adopting different methods for purchases and closing stock valuation. Consequently, the addition made by the AO was incorrect and the assessee's appeal was allowed.
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• Interest Income Exempt from Tax as Assessee Deemed State Instrumentality Under Article 289, Section 57 Deduction Allowed.

  Case-Laws - AT : Legal status of the assessee as a State or an agent of the State, based on Article 289 of the Constitution of India. It analyzes whether the assessee's activities are akin to those of the State, making it eligible for non-taxability. The assessee claimed deduction u/s 57 against interest income earned on fixed deposits with banks, offered under the head "income from other sources." The Tribunal applied the tests laid down by the Supreme Court in the Som Prakash Rekhi case to determine if the assessee falls within the term "State" under Article 12 of the Constitution. Agreeing that the assessee is an instrumentality/agent of the State, the Tribunal held that its interest income on fixed deposits is not chargeable to tax. Article 289(2) provides an exception for income derived from trade or business, but since the interest income was assessed under "income from other sources," this exception was deemed inapplicable. Consequently, the assessee's appeal was allowed.
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• Penalty on assessee for concealing income by not adopting section 50C provisions for computing capital gains.

  Case-Laws - AT : Non-filer assessee had taxable income but failed to file return u/s 139(1), later filed return in response to notice u/s 148 without considering section 50C provisions, amounting to concealment of income. Assessee neither filed explanation nor appeared before authorities during assessment or penalty proceedings u/s 271(1)(c) despite show cause notices. No reasonable cause furnished for non-filing of return or non-appearance. Penalty u/s 271(1)(c) confirmed as assessee concealed particulars of income by not adopting section 50C provisions while computing capital gains based on registered sale deed value.
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Customs

• Customs undervaluation dispute: Transaction value rejected despite evidence; orders set aside for redetermination.

  Case-Laws - AT : Dispute regarding valuation of imported goods under Customs Valuation Rules. Related parties involved, 10% loading applied to transaction value earlier. New Customs Valuation Rules 2007 introduced changes in Rules 3 and 12 regarding rejection of transaction value. Earlier order expired, cannot be relied upon. Authorities failed to provide cogent reasons for rejecting declared transaction value as per Section 14(1) and Rules 3, 12 of 2007 Rules. Impugned orders set aside, matter remanded to redetermine transaction value considering changed circumstances. Appellant provided evidence of third-party purchases at same price, negating mutuality of interest. Appropriate adjudication required considering relevant Customs Valuation Rules.
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• Duty-free for Router Line Cards: Tribunal Overrules Customs on Import Dispute.

  Case-Laws - AT : Classification dispute regarding imported goods "MPC7E MRATE IRB 10G/40G 100 QSFP28-MPC-L3 Line Cards [Router Line Cards]" under Customs Tariff Item (CTI) 8517 69 30 or 8517 62 90. Tribunal previously held in appellant's own case that Router Line Cards are Populated PCBs classifiable under CTI 8517 70 10 covering 'populated, loaded or stuffed printed circuit boards' attracting NIL duty rate. Principal Commissioner's order classifying under CTI 8517 62 90 unsustainable. Appellant's classification under CTI 8517 70 10 upheld. Principal Commissioner's order set aside. Appeal allowed.
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• Customs Value Re-Determined; Freight and Insurance Additions Unjustified; Penalties Adjusted; Case Remanded for Recalculation.

  Case-Laws - AT : Rejection of declared transaction value under Valuation Rule 12, re-determination of value under Valuation Rules 4-9. Commissioner followed Rule 9, adopted actual values from excel sheet for 3 Bills of Entry, enhanced value where warranted for 16 Bills. Addition of 20% freight, 1.125% insurance u/r 10(2) not sustainable, excel values treated as CIF. Confiscation value Rs.5,47,66,445, penalty of Rs.9 lakhs on Nitin u/s 112 fair. Penalty of Rs.20 lakhs on Nitin u/s 114AA set aside. Penalty of Rs.2 lakhs on Anshul u/s 112 upheld, Rs.5 lakhs penalty u/s 114AA set aside. Declared value rejection upheld, re-determination partly upheld treating excel values as CIF. Remanded for re-computing duty, interest, penalty u/s 114A. Appeal allowed by way of remand.
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• Customs seized passenger's gold; appeal dismissed on monetary limits.

  Case-Laws - AT : The appeal filed by the Revenue was dismissed due to the amount involved being less than the permitted monetary limit for filing an appeal before the Tribunal. The case pertained to the seizure of gold from a passenger's personal baggage. The High Court's order dated 08.08.2019 directed the dismissal based on monetary limits, which was to be followed. However, the High Court's subsequent order dated 29.03.2023 in a related case permitted the Revenue to raise objections regarding the maintainability of the appeal before the Appellate Tribunal. Consequently, the Appellate Tribunal dismissed the Revenue's appeal as not maintainable, adhering to the specific directions in the latter High Court order.
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Corporate Law

• Auditor penalized for non-cooperation, misleading claims on inaccessibility.

  Case-Laws - AT : Non-compliance with accounting standards, non-cooperation by Auditor. Appellant did not respond to NFRA's letters and show cause notice, violating principles of natural justice. Appellant's defense of relocation to Nepal and inaccessibility of email/phone unconvincing in modern communication era. Contradictory claims regarding replying to SEBI but not NFRA. Delayed appeal filing after penalty order raises doubts. NFRA followed due process, established professional misconduct charges. Maximum penalty of Rs. 20 lakhs and 10-year audit debarment justified due to non-cooperation, lack of defense records. Proportionality principle allows relief if diligence proven to NFRA. No illegality in order, appeal dismissed by NCLAT.
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State GST

• Clarification on Regularizing IGST Refunds for Exporters: Payments and Reassessments Align with Rule 96(10) WBGST Rules 2017.

  Circulars : This circular clarifies the regularization of refund of IGST availed in contravention of rule 96(10) of the WBGST Rules, 2017, where exporters had initially imported inputs without paying integrated taxes and compensation cess by availing benefits under certain notifications, but subsequently paid the IGST, compensation cess, and interest on such imported inputs. It states that if the Bill of Entry for import is reassessed by Customs authorities to reflect the payment of IGST and compensation cess, the refund of IGST paid on exports shall not be considered in contravention of rule 96(10). The circular provides a retrospective clarification on the applicability of the Explanation inserted in rule 96(10) through a notification, allowing regularization of such refunds by subsequent payment of taxes and reassessment.
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• Indian Data Hosting Services for Overseas Clients Deemed Export Under IGST; Recipient's Location is Place of Supply.

  Circulars : The circular clarifies the place of supply for data hosting services provided by Indian service providers to overseas cloud computing service providers. It addresses three scenarios: whether the service qualifies as an intermediary service u/s 2(13) of the IGST Act, whether it relates to goods made available by the recipient u/s 13(3)(a), or whether it directly relates to immovable property u/s 13(4). The circular concludes that data hosting services do not fall under these provisions. As the place of supply does not fit specific sections 13(3) to 13(13), the default Section 13(2) applies, making the recipient's location the place of supply. Consequently, such services provided to overseas cloud computing entities can be considered export of services u/s 2(6) of the IGST Act, subject to fulfilling other conditions.
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• Trade Circular Clarifies ITC Eligibility for Demo Vehicles Used by Motor Dealers Under WBGST Act Provisions.

  Circulars : This trade circular clarifies the availability of input tax credit (ITC) on demo vehicles used by authorized dealers for motor vehicles. The key points are: ITC is available on demo vehicles used for promoting further supply of similar vehicles, as it falls under the exclusion in Section 17(5)(a)(A) of the WBGST Act. However, ITC is not available if demo vehicles are used for staff transportation or the dealer merely acts as an agent for the manufacturer. If demo vehicles are capitalized by dealers, ITC is available subject to Section 16(3) regarding depreciation claims under Income Tax Act. Upon subsequent sale of capitalized demo vehicles, dealers must pay tax u/s 18(6) and Rule 44(6) of WBGST Rules. The circular provides clarity on ITC eligibility for demo vehicles based on their usage and accounting treatment by authorized dealers.
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• Clarification on Place of Supply for Indian Advertising Agencies: Full Service vs. Intermediary Roles Impact Export Benefits.

  Circulars : This trade circular clarifies the determination of place of supply and export benefits for advertising services provided by Indian advertising agencies to foreign clients. Key points: Advertising agencies providing comprehensive services from design to media procurement are not intermediaries under IGST Act, but principal service providers to foreign clients. The place of supply is the location of the foreign client recipient outside India, qualifying as export of services. However, if the agency merely facilitates media space procurement between foreign client and media owner, acting as intermediary, the place of supply is the agency's location in India u/s 13(8)(b) of IGST Act. The foreign client's representative in India or target audience cannot be considered recipients. Advertising services do not qualify as performance-based services u/s 13(3) of IGST Act.
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IBC

• Resolution Plan Must Cover Provident Fund and Gratuity Dues; Salary Claims Denied for June-Nov 2020.

  Case-Laws - AT : The National Company Law Appellate Tribunal (NCLAT) held that the Resolution Plan must provide for payment of Provident Fund and Gratuity dues in accordance with Section 30(2) of the Insolvency and Bankruptcy Code and Clause 1(vii) of the Clarificatory Note. The burden of paying these dues falls on the Successful Resolution Applicant as per the Resolution Plan read with the Clarificatory Note. The admitted Provident Fund dues of Rs.11.49 Crores and Gratuity dues of Rs.8.84 Crores, totaling Rs.20.33 Crores for the Shree Gopal Unit, must be paid as per the priority mentioned in Clause 1(vii). The claim for payment of salary from June to November 2020 was rejected, as the Resolution Professional is the best judge to compute the CIRP cost and pay wages during the CIRP period. The approval of the Resolution Plan was upheld, subject to the declaration that workmen and employees are entitled to full Provident Fund and Gratuity dues.
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Indian Laws

• Unlicensed Money Lender Loans Not a Debt Under Sec 138, Civil Remedies Still Possible for Dishonored Cheques.

  Case-Laws - HC : Applicability and interpretation of the Bengal Money Lenders Act, 1940 in relation to Section 138 of the Negotiable Instruments Act, 1881, regarding the dishonor of cheques in money lending or investment transactions. It examines whether a legally enforceable debt or investment of money into a business exists, and whether there are sufficient ingredients for an offense u/s 138. The court held that a loan advanced by an unlicensed money lender is not a debt or liability u/s 138. However, the Bengal Money Lenders Act and the Negotiable Instruments Act operate independently, and provisions of the former do not bar civil remedies or prosecution u/s 138. If mandatory requirements of Section 138 are satisfied, a complaint can be filed even without a money lending license. The court dismissed the revision application, finding no merit in the arguments against initiating or continuing proceedings u/s 138.
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SEBI

• New Framework for Monitoring Shareholding Norms in Market Infrastructure Institutions Effective in 90 Days.

  Circulars : This circular outlines the framework for monitoring shareholding norms of Market Infrastructure Institutions (MIIs) like stock exchanges, clearing corporations, and depositories. Key aspects include appointing a Designated Depository (DD) for monitoring shareholding limits, disclosing shareholding patterns quarterly on websites as per LODR formats, monitoring breaches of limits like 5%, 15%, 49% by persons resident outside India, trading members' aggregate 49% limit, clearing corporations' requirement of 51% held by stock exchanges. The DD to freeze excess shareholding, disable e-voting rights, transfer corporate benefits to investor protection funds upon breaches. MIIs to ensure shareholders are fit and proper, make investors aware of eligibility criteria, submit quarterly reports on non-fit shareholders. Divestment of excess stakes through special window for listed MIIs. Provisions effective 90 days from issuance, superseding previous circulars.
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• SEBI Updates SOP for MIIs: New Clauses for Identifying Technical Glitches and Enforcing Financial Penalties.

  Circulars : This circular serves as a corrigendum to the previous circular SEBI/HO/MRD/TPD-1/P/CIR/2024/124 dated September 20, 2024, regarding the Standard Operating Procedure for payment of "Financial Disincentives" by Market Infrastructure Institutions (MIIs) due to technical glitches. It provides references to relevant sections of the Master Circular for Commodity Derivatives Segment dated August 04, 2023, which were not explicitly mentioned in the earlier circular. The corrigendum outlines the specific paragraphs and annexures from the Master Circular that correspond to the provisions outlined in the September 20 circular. Additionally, it inserts new clauses 2.5 and 2.6 in Annexure-ZE of the Master Circular, granting SEBI the authority to identify technical glitches, provide opportunities for MIIs to make submissions, and initiate enforcement actions against individuals responsible for such glitches.
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VAT

• Insolvency resolution plan approval extinguishes all outstanding tax dues. Creditors bound by resolution.

  Case-Laws - HC : Once the resolution plan is approved under the Insolvency and Bankruptcy Code, any outstanding claims, including those under the Gujarat Value Added Tax Act for assessment years 2006-07 to 2011-12, stand extinguished. The State Tax Authority was an operational creditor in the Corporate Insolvency Resolution Process and had lodged a claim, but did not object to the approval of the resolution plan. Consequently, the demand notice issued by the State Tax Officer for recovery of outstanding dues is quashed and set aside, as no claim can be made after the resolution plan's approval, upholding the settled legal principle.
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Service Tax

• Improper service tax demand sans authentic proof, appellate order upheld.

  Case-Laws - AT : The department demanded Service Tax based on tally data retrieved, but failed to provide cogent reasons for doubting the authenticity of the records, violating principles of natural justice. The appellate authority rightly set aside the order, observing lack of corroborative evidence against the assessee based on the retrieved data. The revenue's appeal lacked specific grounds challenging the appellate authority's findings, merely contending the cited case laws pertained to goods clearances. However, the Tribunal held the case laws were rightly applied, finding no infirmity in the appellate order. Consequently, the revenue's appeal was dismissed.
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• Court Rules Transitional Credit is a Vested Right; Refund Denial Under GST Regime Overturned.

  Case-Laws - AT : The appellant paid service tax voluntarily under reverse charge mechanism before the GST regime. The adjudicating authority denied refund, holding that service tax was paid voluntarily and no credit is available in the GST regime. However, Section 174(2) of the GST Act protects the right of credit accrued under the erstwhile law. The Punjab and Haryana High Court in ADFERT TECHNOLOGIES PVT. LTD. case held that transitional credit being a vested right cannot be denied on procedural grounds. Section 142(3) of the GST Act provides for disposing refund claims of service tax/duty under the erstwhile law in accordance with the existing law, and any amount accruing has to be paid in cash. There is no allegation that the credit is ineligible to the appellant. Rejection of the refund claim by referring to Section 142(8) is misplaced as the claim is only for refund and not assessment or adjudication. Hence, rejection of the refund claim is unjustified, and the impugned order is set aside. The appeal is allowed.
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Central Excise

• Excise demands rejected due to lack of evidence, retracted statements.

  Case-Laws - AT : Central Excise demands cannot be sustained solely based on confessional statements without corroborative documentary evidence. Retracted affidavits cannot be relied upon in isolation. Cross-examination must be allowed when requested for statements relied upon. Clandestine clearance allegations require substantial evidence from the Revenue, which was lacking in this case. Demands and penalties were set aside due to lack of merits and insufficient evidence presented by the Revenue.
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• CENVAT credit denied for inputs in support structures, but allowed for installation services; penalty waived after prompt settlement.

  Case-Laws - AT : The CESTAT upheld the denial of CENVAT credit on inputs used for laying foundations or making support structures for capital goods, as per the revised definition of 'inputs' and 'capital goods' under the CENVAT Credit Rules, 2004, for the period from 01.04.2011 to 31.03.2015. The denial of credit on Earth Excavation Works, being civil work excluded from the definition of 'input service' from 01.04.2011, was also upheld. However, credit on Erection, Commission, and Installation services used within the factory premises was allowed. The credit denial on Road Works inside the factory, being a civil structure excluded from 'input services', was upheld. The CESTAT approved the eligible CENVAT credit of Rs. 5.20 crores on structural steel items used for manufacturing capital goods, as verified by the Commissioner based on documents and Chartered Engineer's certificates. Since the entire demand, interest, and 25% penalty were paid within 30 days, the penalty u/s 11AC was set aside.
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• Invoicing technicalities can't deny legit input tax credit refunds.

  Case-Laws - AT : The court held that refund claims cannot be denied or modified solely due to missing details like address in invoices. The only requirement is that the input service was used for providing output services. Since the appellant had centralized registration, taking credit for invoices addressed to other premises did not violate rules. Refunds cannot be denied for invoices issued to unregistered premises, as registration was amended retrospectively. The order did not specify services for which credit was denied as ineligible inputs. After the 2011 amendment, no nexus is required between input and output services for refund u/r 5. The matters were remanded to redetermine refund amounts, holding that the disputed credit is admissible.
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Case Laws:

• GST

• 2024 (10) TMI 671
  Challenge to impugned summary order - order passed without there being any notice issued in Form DRC-01 as provided under the GST Rules - principles of natural justice - HELD THAT:- Admittedly in facts of the case respondent authorities did not serve any show cause notice upon the petitioner and straightaway issued the impugned order in Form GST DRC-07 which does not contain any reasons. Thus, without going into the merits of the matter, the impugned summary order in Form GST DRC-07 dated 11.1.2019 issued by the respondent is hereby quashed and set aside and the matter is remanded back to the respondents for de novo adjudication after giving an opportunity of hearing to the petitioner as fresh order is required to be passed in accordance with law. Such exercise shall be completed within 12 weeks from the date of receipt of a copy of this order. Petition disposed off by way of remand.

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• 2024 (10) TMI 670
  Reversal of Input Tax Credit (ITC) - necessary GST IT 02 form was not filed by its transferor electronically but only manually - breach of provisions of Section 18 (3) of the CGST Act read with Rule 41 of the CGST Rules - Jurisdiction and validity of the show cause notice regarding the non-electronic filing of Form GST ITC-02 - HELD THAT:- Section 18 (3) of the CGST Act provides that where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed. The impugned show cause notice, after referring to Section 18 (3) of the CGST Act and Rule 41 (1) of the CGST Rules, alleges that the Petitioner has contravened the said two provisions since it has availed and utilised credit of Rs. 18,30,58,995/- (including Rs. 74,06,395/- as IGST, Rs. 15,74,90,681/- as CGST and Rs. 1,81,61,919/- as SGST) for payment of tax liability - The allegation in the impugned show cause notice might have had some substance if it had been the Respondents case that its common portal was fully functional and TDN or the Petitioners could file Form GST ITC-02 electronically on the common portal. However, it was conceded that the GST portal was nascent during the relevant time, and GST ITC-02 was not available for filing electronically. Thus, neither the Petitioner nor TDN could be faulted for not filing Form GST ITC-02 electronically on the department s common portal. The record establishes, and in any event, it was not disputed, that TDN or the Petitioner couldn t file Form GST ITC-02 on the department s common portal during the relevant period because of the functionality issues relating to such a common portal. The Division Bench of the Rajasthan High Court in Pacific Industries Ltd Vs. Union of India [ 2022 (3) TMI 1304 - RAJASTHAN HIGH COURT ] noted that though the learned counsel representing the Respondents GST Department, vehemently and fervently opposed the Petitioner s contention, he was not in a position to dispute the fact that Form GST ITC-02A was not available on the GSTN Portal within the stipulated period of 30 days from the date of registration of the Petitioner s new business vertical and hence, the Petitioner was genuinely and bona fide prevented from uploading the same. No dispute was raised about the Petitioner manually submitting the form to the Deputy Commissioner within 30 days. In Savita Oil Technologies Ltd and Savita Polymers Ltd. Vs. The Union of India and Ors. [ 2023 (7) TMI 877 - BOMBAY HIGH COURT ] the Coordinate Bench of this Court of which one of us (Jitendra Jain, J) was a member, the Petitioner was prevented from filing an Appeal against intimations issued in Form DRC-05 because the electronic portal had not made a provision for filing an appeal against an intimation issued in Form DRC-05. The Coordinate Bench noted that an appeal statutorily lay against such intimations issued in Form DRC-05. Therefore, merely because the electronic portal does not make a provision for filing of an appeal against an intimation issued in Form DRC-05, the Petitioners cannot be faulted, and for such technical reason, it cannot be countenanced that a statutory right of appeal available to the Petitioners is rendered otiose. Accordingly, this Court directed that until an appropriate provision is made for acceptance of such appeal electronically, filing of such appeal should be permitted manually. Again, even this decision is an authority for the proposition that the technicalities, mainly when not the party but the department creates them, should not be put forth by the department to defeat the statutory rights and entitlement of the parties. Based on the facts on record and the decided cases referred to above in the case of this very Petitioner, the contention that the impugned show cause notice ought not to have been issued to the Petitioner, is accepted. The Respondents were duty-bound to take cognisance of the decisions of the Allahabad, Gujarat, and Delhi High Courts in dealing with almost identical issues concerning this Petitioner. Tthe impugned show cause notice dated 17 August 2023 is set aside - the Respondents is directed to consider, according to law, the manually filed forms by the TDN as expeditiously as possible. Petition allowed.

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• 2024 (10) TMI 669
  Violation of principles of natural justice - impugned order has been made without hearing the Petitioner - breach of the provisions of Section 75 (4) of the MGST Act - HELD THAT:- Section 75 (4) of the MGST Act contemplates the opportunity of hearing where a request is received in writing from the person chargeable with tax or penalty, or any adverse decision is contemplated against such person. The Petitioner, in this case, had requested in writing an opportunity for a hearing. In any event, the impugned order is adverse to the interest of the Petitioner. On both these counts, the impugned order should have been preceded by an opportunity of hearing. On this short ground, the impugned order must be set aside. In Kuehne Nagel Private Limited [ 2023 (12) TMI 512 - BOMBAY HIGH COURT ] and Hydro Pneumatic Accessories India Pvt. Ltd. [ 2023 (12) TMI 666 - BOMBAY HIGH COURT ], Coordinate Benches of this Court, in almost identical circumstances, have interfered with orders that were made without compliance with the requirement of Section 75 (4) of the MGST Act. Even in those cases, no opportunity for a hearing was granted to the Petitioners. This was considered sufficient to set aside the orders impugned in those Petitions and for a remand to make fresh orders after hearing the Petitioners. The impugned order dated 17 January 2024 is quashed and set aside - the recovery notice dated 6 September 2024 based upon the impugned order will not survive - petition disposed off.

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• 2024 (10) TMI 668
  Challenge to proceedings of the respondent passed u/s 73 of the Tamil Nadu General Sales Tax Act, 2017 - discrepancy in between Forms GSTR 3B and GSTR 1 - petitioner is not aware about the proceedings initiated by the respondent and that the entire communication has been sent only through portal - violation of principles of natural justice - HELD THAT:- In the instant case, it is seen that notice was issued by the respondent. However, the petitioner did not receive the same. On going through the impugned order, it is seen that a total liability of Rs. 10.72 lakhs towards tax, interest and penalty has been imposed on 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 the outward supplies turnover declared in GSTR - 1 and the outward supplies arrived in GSTR - 3B. This Court had an occasion to deal with a similar issue in SRI GANESA ENGINEERING ENTERPRISES [ 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 No. ZD330424200278R/2018- 19 dated 25.4.2024 is hereby set aside. The matter is remanded back to the respondent for a fresh consideration on condition that the petitioner shall pay 10% of the total demand before the respondent within a period of four weeks from today - Petition allowed by way of remand.

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• 2024 (10) TMI 667
  Cancellation of GST Licence of the petitioner - cancellation on the ground that the petitioner had not paid tax due - HELD THAT:- Considering the submission advanced by the learned counsel for the petitioner, on the basis of instructions, that the petitioner had filed returns, and paid the tax as well as interest, the respondent no. 3 is directed to take steps for renewing the GST Licence of the petitioner within a period of ten days from the date of communication of this order, and if any other amount is due, the petitioner should be communicated the same, which the petitioner shall pay within a period of seven days from its communication. Petition disposed off.

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• 2024 (10) TMI 666
  Condonation of delay in filing application - Dismissal of appeal on the ground of suppression of material facts - cancellation of GST registration - HELD THAT:- Hon ble Supreme Court in Arunima Baruah [ 2007 (4) TMI 695 - SUPREME COURT] observed that to enable the Court to refuse to exercise its discretionary jurisdiction, the suppression must be of material fact and it has been further indicated that material fact would mean material for the purpose of determination of lis, the logical corollary whereof would be that whether the same was material for grant or denial of the relief. It appears that learned Single Judge was of the opinion that in case, the said fact was brought to the notice of the Court, the order dated 22.02.2024 ordering for the verification of premises by the Authorities would not have been passed. Though it is no doubt true that the above fact of a fresh registration was relevant in view of the order of verification passed by the learned Single Judge, the fact of said registration cannot be said to be material so as to affect the determination of the lis between the parties. The order impugned passed by the learned Single Judge cannot be sustained. The writ petition is allowed.

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• 2024 (10) TMI 665
  Principles of natural justice - petitioner seeks one opportunity to explain the case - mismatch between the Return in GSTR 1 and GSTR 3B - HELD THAT:- This Court is of the view that the petitioner may have a case on merits and therefore, discretion is exercised partly in favour of the petitioner by quashing the impugned order and remitting the case back to the first respondent to pass a fresh order on merits, subject to the petitioner depositing 25% of disputed tax to the credit of the first respondent from its Electronic Cash Register within a period of 30 days from the date of receipt of this order. The impugned order, which stands quashed, shall be treated as addendum to the show cause notices that preceded the impugned order - Subject to the petitioner depositing the amount, the petitioner s Bank Account shall be de-freezed or in alternative the aforesaid amount shall be recovered as pre-deposit from the petitioner s Bank Account - Petition disposed off by way of remand.

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• Income Tax

• 2024 (10) TMI 664
  Denial of exemption u/s 11 - adjustments were made on entire income of the assessee trust including the corpus donation, voluntary donation and other income on the ground that the assessee did not filed the requisite form 10B along with the return of income HELD THAT:- Tribunal correctly held that the claim of the assessee for exemption to its entire income under Section 11 of the Act is required to be allowed and AO/CPC was directed accordingly to delete the adjustment made in the intimation under Section 143 (1) - No substantial question of law arises.

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• 2024 (10) TMI 663
  Nature of expenses - treating land restoration expenses as Revenue expenditure - HELD THAT:- Question no.(a) is admitted. Income from house property - Expenses of the building given on rent - AO disallowed the expenditure u/s 24 on the ground that in absence of specific details and to cover up the disallowance on account of the property given on rent, the standard deduction u/s 24 was disallowed - CIT (A) held that the standard deduction available under the income from house property is to be taxed under the said heads only and not in business head - HELD THAT:- Considering the findings arrived at by the CIT (Appeals) which is upheld by the Tribunal, we are of the opinion that the assessee was entitled to get the deduction under Section 24, when the rent income is already taxed under the head income from house property and therefore no substantial question of law arises on that count. Disallowance of stamp duty - CIT (Appeals) deleted the addition following the earlier A.Y. 2009-10 and the Tribunal also upheld the same - HELD THAT:- We are of the opinion that no question of law arises, so far as question no.(c) is concerned. The appeal stands dismissed qua the same question. Accrual of income - Reimbursement of Service Tax received from GAIL as per Arbitration award - ITAT deleted addition - HELD THAT:- As reimbursement of the service tax received from GAIL was offered to tax in the subsequent year and therefore no question of law can be said to have arisen from the impugned order of the Tribunal as far as that question is concerned.

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• 2024 (10) TMI 662
  Estimation of income - Bogus purchases - amount claimed as payment to hawala dealers was in effect suppression of profits by obtaining bogus purchase bills - HELD THAT:- In view of findings of ITAT, which was based on the fact that assessee at the relevant time was a commission agent and had earned commission on the stated purchases, we do not find any error in the order of ITAT, restricting the addition to 6% of total purchases. No substantial question of law

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• 2024 (10) TMI 661
  Fixed Place Permanent Establishment [ PE ] in India - Dependent Agent PE [ DAPE ] being found to exist in India - whether the AO was correct in assuming that a Fixed Place PE existed? - HELD THAT:- AO had found that for the completion of various agreements entered into by the assessee and which entailed installation and commissioning of machinery or providing after sales services, the Indian subsidiary Krones India Pvt. Ltd [ KIPL ] had been adequately compensated at arm s length. Since no further question of attribution would have arisen, the aforesaid findings clearly pale into insignificance. Insofar as the other findings, to which our attention was drawn by Mr. Kumar, we note that the AO had itself found that the work of Pepsico, Jainpur project was one which was awarded to KIPL and that the respondent-assessee had only affected certain supplies. On the basis of the aforesaid and bearing in mind the principles with respect to DAPE which were enunciated by us in Progress Rail Locomotive Inc [ 2024 (5) TMI 1417 - DELHI HIGH COURT] we find that appeal fails to raise any substantial questions of law.

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• 2024 (10) TMI 660
  Validity of the search and seizure u/s 132 - scope of Revenue s ample power to undertake search and seizure - reasons to believe V/S reasons to believe for conducting search and seizure - HELD THAT:- The satisfaction note talks about discrete enquiry, but no such material relating to discrete enquiry and information gathered thereupon became part of the satisfaction note . Thus, nature and character of information cannot be gathered from perusal of the satisfaction note which ultimately became reason for recording satisfaction . In both the judgments of Spacewood Furnishers (P) Ltd. [ 2015 (5) TMI 483 - SUPREME COURT] and Laljibhai Kanjibhai Mandalia [ 2022 (7) TMI 639 - SUPREME COURT] it was held that the authority must have information in its possession on the basis of which a reasonable belief can be formed. The satisfaction note nowhere reflects the basis to derive a satisfaction that the petitioners who were in possession of money will not disclose the same in due course. The petitioners, as noticed, received appreciation certificates for their prompt payment of the taxes. The satisfaction cannot be recorded merely because the authority is of the opinion that the true financial affairs will never be revealed unless search seizure operation is carried out. Apex Court opined that reasons to believe cannot be equated with reasons to suspect . Thus, the competent authority must be equipped with some cogent incriminating material prior to the seizure on the strength of which a satisfaction can be recorded. The said satisfaction neither can be tested on suspicion nor can be justified on the basis of unexplained possession of amount. In the instant case, we are constrained to observe that satisfaction note is based on suspicion and is not pregnant with any cogent incriminating material which can form basis for an action u/s 132 of the Act - See INDIAN OIL CORPORATION [ 1986 (5) TMI 1 - SUPREME COURT] and M/S. PASARI CASTING AND ROLLING MILLS PRIVATE LTD [ 2024 (2) TMI 280 - JHARKHAND HIGH COURT] The impugned action of the respondents in seizing and withholding cannot be countenanced. Resultantly, the impugned search and seizure is set aside. The said amount be returned to the petitioners forthwith. However, it is made clear that this order will not come in the way of the respondents to proceed against the petitioners in accordance with law. WP allowed.

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• 2024 (10) TMI 659
  Addition u/s 14A r.w.r. 8D - CIT (A) deleted the above disallowance based on the finding that there is no exempt income declared by the assessee during this year - HELD THAT:- We observed that assessee has not declared any exempt income during the year and the issue is fairly settled and covered in favour of the assessee by various decisions of different courts, in specific in the case of PCIT vs. Era Infrastructure (India) Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] - Accordingly, ground no.1 raised by the Revenue is dismissed. Addition as deemed dividend u/s 2(22)(e) - AO treated a loan received by the assessee from its wholly owned subsidiary as deemed dividend - HELD THAT:- We observed that GFPL is the wholly owned subsidiary company of the assessee and the Assessing Officer observed that the assessee has taken certain loan from them and considering the fact that it is a wholly owned subsidiary, he treated the transaction as deemed dividend u/s 2(22)(e) - we observed from the ledger copy submitted before us which shows that assessee has taken certain advances from the company and incurs certain expenditure on behalf of them which basically relates to travelling, conveyance expenditure and certain expenditure incurred on behalf of them. As per the transactions involved between these two entities, it does not give any impression that it is a loan transaction. More or less, the details of transactions show that it is only a revenue expenditure and transactions are seemed to be current transactions. Therefore, we are inclined to agree with the findings of ld. CIT (A) and ground raised by the Revenue is dismissed.

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• 2024 (10) TMI 658
  Addition u/s 56(2)(vii)(b) - difference of stamp duty valuation of land and settlement amount - HELD THAT:- As evident that neither the detailed submissions filed by the assessee on 15/02/2021 were considered by CIT(A) nor the agreement dated 13/09/1984 and deed of confirmation dated 17/06/2000, placed reliance upon by the assessee, were considered by the CIT(A). It is trite that the power of the CIT(A) is co-terminus to the AO, however, in the present case the CIT(A) did not examine any of the contentions raised by the assessee and nor call for any further information to upheld the additions made by the AO. Therefore, in view of the above, we deem it appropriate to restore the issues raised in the present appeal to the file of the CIT(A) for denovo adjudication - Appeal of the assessee is allowed for statistical purposes.

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• 2024 (10) TMI 657
  Addition u/s 68 on cash deposited during the demonetization period , addition u/s 69A, addition on account of inventories, addition of 10% of the total expenses, disallowance on account of rent, disallowance made by the AO u/s 37(1), addition on account of kumaoni rasoi and cash payment, addition on account of depreciation as the assets was not used more than 180 days and unsecured loans - grounds of appeal were accepted by the AO in the remand proceedings and the CIT(A) had granted relief to the assessee after considering the remand report of the ld. AO - HELD THAT:- No adverse comments were given by the ld AO in the remand proceedings. We find that the ld CIT(A) had taken cognizance of the remand report while adjudicating each issue and had granted relief to the assessee. In our considered opinion, there could be no grievance that could be left to the revenue. Hence, logically the revenue ought not to have even preferred an appeal on these issues since, AO had accepted to the contentions of the assessee in the remand proceedings. See Smt B Jayalakshmi [ 2018 (8) TMI 208 - MADRAS HIGH COURT] - Ground Nos. 1 to 3 and 5 to 10 raised by the revenue are dismissed. Disallowance u/s 14A - CIT(A) deleted addition - as per AO CIT(A) has erred in not considering the CBDT circular No 5/2014 dated 11.02.2014, clarifying that section 14A r.w.r. 8D provides for disallowance of the expenditure even where the tax payer has not earned any exempt income - HELD THAT:- We find that there was no exempt income derived by the assessee during the year under consideration and hence there cannot be any applicability of provisions of section 14A of the Act. Reliance in this regard is placed on the decision of Era Infrastructure Ltd r. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] . Respectfully following the same, ground No. 4 raised by the revenue is dismissed.

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• 2024 (10) TMI 656
  Addition u/s. 69A - cash deposited in bank account - claim of the appellant that the same was deposited out of the cash withdrawn from bank account is not disputed by the AO - HELD THAT:- We find that in the Financial Year 2009-10 the assessee received an amount of Rs. 1,00,000/- as advance from Shri B. T. Sonawane which was returned to Shri B. T. Sonawane on 02-07-2018 i.e. after the period under consideration. Therefore, there was no occasion before the AO to make the addition on the basis of above payment during the period under consideration. We further find force in the argument of assessee that the total income of the assessee was determined at Rs. 1,00,000/- which is admittedly/apparently below the taxable income limit of Rs. 2,50,000/-. Even otherwise the assessee has explained the source of cash deposit successfully. We are of the considered opinion that the AO committed grave error in making addition of Rs. 1,00,000/- as taxable income and further imposing tax u/s 115BBE of the IT Act @ 60%. We therefore set-aside the ex-parte order passed by ld. Addl./JCIT(A)-2, Vadodara delete the addition of Rs. 1,00,000/- made by the Assessing Officer. Thus, the grounds of appeal raised by the assessee are allowed.

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• 2024 (10) TMI 655
  Unexplained cash credit u/s. 68 - assessee has purchased certain property and in the process, obtained loan from two corporate entities - borrowed staisfaction v/s independent application of mind - loan so obtained by the assessee has been utilized to purchase the properties and as assessee applied for certain bank loan which got delayed which led the assessee to obtain loan from these two corporate entities - CIT(A) deleted addition - Whether assessee discharged the onus as required to be discharged u/s 68? HELD THAT:- AO has added the loan so obtained by the assessee from two corporate entities as unexplained cash credit u/s 68 merely on the basis of third-party statement as recorded by DGIT (Inv.) in independent proceedings. No separate enquiries, whatsoever, have been conducted by Ld. AO to ascertain the genuineness of these loan transactions. AO has merely borrowed the findings of DGIT (Inv.) and on the basis of the same, alleged that the lenders lacked creditworthiness. The same is third-party statement in independent proceedings and no opportunity of cross-examination has ever been provided to the assessee to controvert the same. The same is in gross violation of principle of natural justice and the assessment so framed, in such a case, is liable to be treated as bad-in-law as per the decision of Andaman Timber Industries[ 2015 (10) TMI 442 - SUPREME COURT] holding that when the statements of witnesses are made basis of demand, not allowing assessee to cross-examine witnesses, is a serious flaw which makes order nullity, as it amounts to violation of principles of natural justice. Therefore, on this fact only, the assessment order is to be held as nullity. V iolation of principles of natural justice - Assessee has furnished various documents during the course of appellate proceedings to establish the identity of the lender, genuineness of the transactions as well as creditworthiness of the lender as per the requirement of Sec.68. These include ledger confirmations, Income Tax Returns of lenders, Balance Sheet, affidavit of lenders confirming the payment of loan to the assessee. These additional evidences were subject matter of remand proceedings. Despite lapse of more than 6 years, the aforesaid report was never furnished / not forthcoming. Left with no option, Ld. CIT(A) proceeded to examine the claim of the assessee in the light of these additional evidences It is settled law that the powers of Ld. CIT(A) is coterminus with the powers of Ld. AO. If Ld. AO has failed to do something, it is well within the powers of Ld. CIT(A) to examine the claim of the assessee after conducting necessary enquiries and verification. The present case is exactly like this only wherein Ld. AO has failed to culminate remand proceedings and left with no option, Ld. CIT(A) went ahead with adjudication of the appeal. The aforesaid action is well within four corners of law and could not be faulted with. Even during hearing before us, no remand report has been shown to us. Onus as required under law was duly discharged by the assessee and the onus was on Ld. AO to rebut the same. There is nothing on record which would controvert the documents furnished by the assessee. As decided in the case of PCIT vs Ambe Tradecorp (P) Ltd. [ 2022 (7) TMI 902 - GUJARAT HIGH COURT] held that where the assessee took loan from two parties and the assessee had furnished requisite material showing identity of loan givers and that assessee was not beneficiary as loan was repaid in subsequent year, no addition under section 68 could be made on account of such loan. The same duly supports the adjudication of Ld. CIT(A). Decided against revenue.

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• 2024 (10) TMI 654
  Unexplained investment - sale deed was registered by declaring sale consideration less than Stamp Duty Valuation Authorities as determined its value for the purpose of charging the Stamp - as per AO section 50C would contemplate that for the purpose of computing capital gain u/s 4 full value of consideration is to be construed equivalent to the amount on which Stamp Duty was charged - AO made a reference to section 50C and observed that full value of sale consideration is being taken - Since the assessee has purchased 25% of the total land, hence, in his hand, he deemed as an unexplained investment HELD THAT:- We are of the view that this addition is not sustainable because the assessee is a vendee and not the vendor. Section 56(2)(vii) of the Income Tax Act has been introduced in the Statute Book by the Finance Act, 2013 w.e.f. 1st April, 2014. This section provides deeming fiction of deemed gift. Subclause (vii) of section 56(2) would contemplate that if a vendee purchased a property, for example, Rs. 100/- and Stamp Duty Valuation Authority has determined the value of such property at Rs. 150/-, then purchase cost would be deemed equivalent to Rs. 150/- and the difference between both is to be added under the head deeming gift in the hands of the purchaser. There are other exceptions provided in the section and deeming fiction would be invoked subject to those exceptions. The assessment year involved herein is A.Y. 2012-13, therefore, no deeming fiction could be invoked in the hands of the purchaser in this A.Y. The reference to section 50C is meant for the vendor and not for the vendee. It is meant for the seller and not for the purchaser. Therefore, this inference by the ld. Assessing Officer is contrary to the law and absurd one. Apart from the above, we find that total purchase consideration has been disclosed at Rs. 48,60,000/-. This has not been debited from the alleged deemed gift. 1/4th of this at least ought to have been reduced from the total addition worked out by AO. No hesitation in observing that both the revenue authorities have acted against the assessee with the vindictive approach without appreciating the right controversy and without understanding the issue. Hence, the additions made in the hands of the assessee are not sustainable. Appeal of the assessee is allowed.

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• 2024 (10) TMI 653
  Exemption u/s. 80P(2)(a)(i) - interest income earned from Nationalised Banks - HELD THAT:- Interest income earned on Fixed Deposits with Nationalised Banks partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, direct the AO to allow the exemption u/s. 80P(2)(a)(i) of the Act. Appeal filed by the assessee is allowed.

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• 2024 (10) TMI 652
  Disallowance u/s 14A r.w.r. 8D - expenditure incurred on earning exempt income - HELD THAT:- Revenue has not brought any material suggesting that the contention of the assessee that the assessee do not have any income which does not part of the total income and did not make any expenditure/claimed expenditure for earning exempt income, is not true. The finding of CIT(A) is in consonance with the binding precedents. Therefore, we do not see any reason to interfere in the findings of CIT(A), the same is hereby affirmed. The Grounds of appeal raised by the Revenue on this issue are dismissed. Disallowances of assured rental/interest paid by the assessee on account of expenditure claimed by the assessee - AO made disallowance on the basis that such deduction of expenses as claimed by the assessee, could be allowed only in the year in which corresponding sale takes place - CIT(A) deleted addition - as argued CIT(A) failed to appreciate that assured rentals cannot be equated with the interest - HELD THAT:- Interest means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of money borrowed or debt incurred by the assessee . Thus, Tribunal in the case of M/s. Vipul Infracon Pvt. [ 2023 (8) TMI 670 - ITAT DELHI] has under the identical facts and the issue has ruled in favour of the assessee. The Revenue has not brought to our our notice any other binding precedent that may impel us for deviating from the decision of the Co-ordinate Bench. We therefore, respectfully following the decision of the Co-ordinate Bench of the Tribunal hereby affirm the impugned order on the issue and reject the plea of the Revenue. Addition of administrative expenses and staff cost - Assessee contended that as per AS-7, the expenses are allowable as administration cost and staff cost incurred by the assessee, are not directly related to a construction of project and same are to be charged to profit and loss account - Revenue submitted that CIT(A) was not justified in deleting the addition as it is admitted fact that the assessee is following complete contract method, therefore, the proportionate disallowance of expenditure was rightly made by the AO - HELD THAT:- Revenue has not controverted the finding that the assessee has booked the direct expenses incurred on the cost of material and labour for construction of property in the cost of inventory and claimed the indirect expenses such as office employee s salary, administrative expenses and market and selling expenses as revenue expenses. As per AS-7, these expenses would be allowable. Revenue has not brought out any other binding precedent to our notice that may impel for deviating from the decision of the Co-ordinate Bench Lodha Palazzo [ 2014 (12) TMI 1272 - ITAT MUMBAI] that the expenses would be allowable if the assessee has consistently followed the method which is as per the recognized principles of accounting. It is rebutted by the Revenue that the assessee has not been following consistently method prescribed u/s AS-7. Hence, we affirm the impugned order on the issue and reject the plea of the Revenue. Ground raised by the Revenue is accordingly, dismissed. Disallowance of depreciation - disallowance of depreciation by applying a percentage as considered by the AO - CIT(A) deleted addition - HELD THAT:-As per finding on facts, Ld.CIT(A) is not controverted by the Revenue by bringing any adverse material therefore, we do not see any reason to interfere in the findings of Ld.CIT(A) stating that disallowance of depreciation made by the AO by applying a percentage to eligible amount of depreciation is not well founded - There is no justification in making any disallowance. If the car is used by the Assessee for the purpose of his business, then the depreciation need to be allowed as per the rate suggested by the statute. Depreciation is a statutory allowance. The statutory allowance cannot be restricted on the basis of the volume of business use and volume of personal use. The condition to be satisfied is that the asset should be owned by the Assessee and it should be used for the business or profession. Both the conditions are satisfied here. Personal use of the car cannot fetter the granting of statutory allowance. Decided against revenue.

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• 2024 (10) TMI 651
  Addition u/s 41(1) - remission or cessation of liability - liability is shown as outstanding amount payable by the assessee in the balance sheet - HELD THAT:- We find that the assessee company had continued to show the liability as on 31.03.2015 as outstanding amounts payable to these 3 disputed creditors and the assessee has also placed on record evidences to prove that the disputed sundry creditors have been discharged in full in the immediately succeeding assessment year. When the amounts are shown as payable in the balance sheet of the assessee, the debt gets acknowledged by the assessee and there cannot be any remission or cessation of liability in terms of Section 41(1) of the Act. Assessee has placed on record the confirmations given by all the 3 sundry creditors before the ld AO, which fact has been acknowledged by the AO himself in his assessment order. If any discrepancy is found with the confirmation and the balance sheet of those sundry creditors, suitable action should be taken in the hands of those sundry creditors and no adverse inference could be drawn on the assessee. The assessee had discharged its primary onus. In any event, as stated supra, the provisions of Section 41(1) cannot be made applicable in the instant case. Case of New World synthetics Ltd. [ 2018 (9) TMI 230 - DELHI HIGH COURT ] is very well founded and directly applicable to the facts of the assessee s case. Hence, Ground Nos. 3 to 5 of the assessee are hereby allowed. Unsecured loan as unexplained cash credit u/s 68 - HELD THAT:- AR submitted that the loan was repaid in subsequent assessment year and reiterated that all the documents were duly placed on record by him to prove the 3 ingredients of Section 68 of the Act. We find that the assessee had furnished the necessary documents to prove 3 ingredients of Section 68 i.e. identity of the creditors, genuineness of the transaction and creditworthiness of the lenders. The lender is duly assessed to tax and had even furnished the confirmation. The loan was received by the assessee on 27.03.2015 in regular banking channels. The summons issued u/s 131 of the Act on the said lender was duly served on the lender, which fact is also acknowledged by the ld AO in his assessment order. Merely because the summons has not been responded by the said lender, no adverse inference could be drawn on the assessee. Reliance in this regard is placed on the decision of Orissa Corporation Limited [ 1986 (3) TMI 3 - SUPREME COURT ] - No case made out by the revenue for making an addition u/s 68. Appeal of the assessee is allowed.

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• 2024 (10) TMI 650
  Disallowance u/s 14A - investments yielding exempt income - assessee earned exempt dividend income and also interest from tax free bonds and offered disallowance on account of expenditure - HELD THAT:- The newly inserted explanation to Sec.14A provides that the provisions of this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such income not forming part of the total income. The Hon ble Court in Era Infrastructure India Ltd.[ 2022 (7) TMI 1093 - DELHI HIGH COURT] held the view that the amendment to Sec.14A, though it was for for removal of doubts , however, it cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood. Another argument was that the cost of investment has wrongly been taken by Ld. AO. No fault could be found in the approach of CIT(A). Cost of investment , Ld. AO is directed to verify the same and adopt the correct cost of investments as per assessee s books of accounts. Only those investments would be considered which have actually yielded any exempt income during the year. The cost of investment should not be misunderstood with the net worth of demerged entities. The assessee is directed to provide the requisite details. The grounds raised by the revenue stand dismissed. The corresponding ground of assessee s appeal stand allowed to the extent of correct adoption of cost of investments. TDS credit - AR has submitted that the assessee is in a position to substantiate the TDS credit of Rs. 16.35 Lacs also. Accepting the same, we direct Ld. AO to consider the same with a direction to the assessee to substantiate its claim. The corresponding ground stand allowed for statistical purposes.

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• 2024 (10) TMI 649
  Correct head of income - income for prize winnings from unsold lottery tickets - assessee claimed credit of TDS as deducted by the Director of Lotteries of Sikkim and Director of Lotteries of Mizoram u/s 194B - assessee considered winning from unsold lottery tickets as business income and claimed set-off of various expenses inclusive of cost of tickets against the said winning - HELD THAT:- As in the present case there is no such restriction of set-off of business loss against income from lottery either u/s 70 / 71 / 74A or u/s 115BB of the Act. Prior to Finance Act, 1986, sub-section (1) and (2) to Sec.74A provided that the loss from lotteries etc. shall be set-off against income from lotteries only. By the Finance Act, 1986, these two sub-sections were omitted and thus, the bar on setoff of losses was removed. Second distinction is the fact that, in that case, the assessee did not contend that betting income would be income from owning and maintaining of the horse races. In the present case, the winnings realized on unsold tickets are realization of closing stock of unsold lottery tickets. This prize money so earned by the assessee was business income which was realized during the course of business of distribution of lottery tickets. Regarding revenue s written submissions on stock-in-hand, it has been submitted that this contention has already been dealt with by Mumbai Tribunal in its order. The factual position, in this regard, has already been noted in the order of Mumbai Tribunal. It has been noted that in respect of draws to be held in the next year, there would be no opening and closing stock since the purchase and sale invoices would be raised in the next year only. For the draws that were to be held in the same financial year, the value of unsold tickets would become zero. The assessee, would, therefore, have no stock in its financial statements. Referring to various finding of Mumbai Tribunal, it has finally been submitted that the purchase price paid for lottery tickers was for onwards distribution of tickets to the stockiest. The purchase price could not be bifurcated between those tickets which have been sold to the stockiest and the unsold lottery tickets which have fetched prized money. The prize winnings are nothing but realization of unsold lottery tickets during the course of business. Thus opposed any interference in the impugned order. After going through the order of Mumbai Tribunal in assessee s own case for AY 2014-15 [ 2021 (5) TMI 793 - ITAT MUMBAI ] we concur that all the aspects / facts of the matter as well as applicable case laws have elaborately been dealt with by the co-ordinate bench in its order. The bench has not only considered the validity of revisionary jurisdiction u/s 263 but also decided the issue on merits. After much deliberation, the impugned issue has ultimately been decided in assessee s favor. As in the case of CIT vs. Dr. M.A.M. Ramaswamy [ 2015 (1) TMI 439 - MADRAS HIGH COURT ] has elaborately been distinguished by Ld. Sr. Counsel in its written submissions. The same has already been deliberated upon by us in preceding paragraphs. The same found our concurrence. Nothing has been shown to us that the aforesaid decision of Mumbai Tribunal has been reversed by higher judicial authorities in any manner or the same is not applicable to the facts of this year. No distinguishing feature has been shown to us. The issue, on merits, has elaborately been dealt with by the Tribunal in its order. Under these circumstances, respectfully following the aforesaid decision of Mumbai Tribunal in assessee s own case, we dismiss the appeal of the revenue.

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• 2024 (10) TMI 648
  Revision u/s 263 - distinction between lack of enquiry and inadequate enquiry - DCF method is wrong and the FMV is equal to the par value, then the assessee stands to a gain u/s 56(2)(viia) of the Act which AO failed to examine while passing the Assessment Order HELD THAT:- Merely labouring under hypothetical possibility of DCF method adopted by the assessee going on, PCIT concluded that the assessment order is erroneous and prejudicial to the interest of Revenue. On a careful reading of the impugned order, we find it to be so. PCIT seems to have accepted the contention of the assessee that in the cases of buyback of its own shares by a company, even if lesser price was paid to the shareholders, section 56(2)(viia) of the Act has no application. Learned Principal Commissioner of Income Tax however did not state in the impugned order as to how in such situation, 56(1) of the Act will be applicable. From a reading of section 56, it can be understood that where the legislature has intended to tax the capital transactions, the same have been specifically enumerated under specific clauses of section 56(2) of the Act, and if any entry is not to be found in section 56, the same would be covered by section 56(1) of the Act. It, therefore, goes without saying that unless a receipt is in the nature of Revenue receipt, it does not fall in the ambit of section 56(1) of the Act to be taxed as income. Since the issuance of shares is in the realm of capital transaction, the receipt being a capital receipt, the cancellation of shares and transfer of any amount in relation to that transaction to the capital reserve account as required by the Generally Accepted Accounting Principles will also assume the character of capital receipt, and on that score does not fall in the ambit of section 56 of the Act. We, therefore, agree with the submissions of AR that the assessment order cannot be said to be bad, being prejudicial to the interest of Revenue. Viewing from any angle, we find it difficult to agree with the learned Principal Commissioner of Income Tax that the assessment order is erroneous insofar as it is prejudicial to the interest of Revenue and therefore, the revisionary jurisdiction assumed by the learned Principal Commissioner of Income Tax cannot be sustained. Assessee appeal allowed.

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• 2024 (10) TMI 647
  Denial of Foreign Tax Credit for belated filing of Form 67 - directory OR mandatory - HELD THAT:- There is no dispute with regard to the fact that the appellant has not filed Form 67 on or before the due date for filing of the return of income u/s 139(1) in terms of section 90 of the I.T. Act, 1961 and Rule 128(9) of the I.T. Rules, 1962. Such form 67 has been filed on or before the AO passed the order u/s 143(1) of the Act which is evident from the date of intimation issued by the AO u/s 143(1) of the Act for the A.Y 2020-21 i.e. on 24.12.2021 and the date of filing of Form 67 i.e. 1/4/2021. Since the appellant has filed Form 67 on or before the AO passed the assessment order, in our considered view, the AO ought to have given credit for taxes paid outside India when the global income of the appellant has been taxed in India. We direct the AO to verify Form 67 filed by the assessee to claim credit for Foreign Tax Credit and allow the credit for taxes paid outside India. A similar issue has been considered in the case of Shri Nagababu Kuchibhotla [ 2024 (2) TMI 1443 - ITAT HYDERABAD] where under identical set of facts the Tribunal directed the Assessing Officer to allow credit for Foreign Taxes paid outside India. We direct the AO to verify Form 67 filed by the assessee to claim credit for Foreign Tax Credit and allow the credit for taxes paid outside India. Assessee appeal allowed.

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• 2024 (10) TMI 646
  Classification of receipt - receipt of the assessee as business income instead of fee for technical services (FTS) - HELD THAT:- CIT(A) had observed that the assessee does not have permanent establishment in India in assessment year 2020-21 also. The assessee continues to be a tax resident of Singapore and had filed its income tax return in Singapore. As observed that the facts prevailing in assessment year 2020-21 are similar to assessment year 2019-20, except that during the year, the assessee had entrusted the part of the work to the employees hired/ employed or subcontracted from the above company based out in Russia. Assessee clarified that the Russian shareholder is a full-time employee with Singapore. CIT(A) had granted relief to the assessee for AY 2020-21 on the same footings in assessment year 2019-20 that receipts could be FTS, but the same does not satisfy the make available clause provided in Article 12(4)(b) of India-Singapore Treaty and hence, the receipts could be considered as only business income and since it is proved beyond reasonable doubt that the assessee does not have any permanent establishment in India during the year under consideration, the same cannot be taxed in India. None of these factual findings could be controverted by the revenue before us. Hence, we do not find any infirmity in the order of the CIT(A) in granting relief to the assessee. Appeals of the revenue are dismissed.

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• 2024 (10) TMI 645
  Underassessment of closing stock - incorrect application of ICDS-2 in the return of income filed and therefore the addition was made to the returned income - in this case the assessee is accounting purchase and sale and inventory at cost excluding Value Added Tax (VAT) as the method of accounting regularly followed for more than a decade. HELD THAT:- As per para 6 and 7 of the said AS-2, the cost of purchases cannot include duties and taxes which are subsequently recoverable from the taxing authorities. Hence the input tax which is refundable, should not be included in the cost of purchases. The Input State- Level VAT, to the extent it is refundable, will not form part of the cost of the inventory. Inventory of inputs is to be valued at the net of the input tax which is refundable. Assessee prepared their accounts in compliance with the AS-2 Valuation of Inventories issued by the Institute of Chartered Accountants of India. According to the Guidance Note on Tax Audit u/s 44AB of the Income Tax Act, 1961 issued by the Institute of Chartered Accountants of India, section 145A provides that the valuation of purchase and sale of goods and inventory for the purpose of computation of income from business or profession shall be made on the basis of the method of accounting regularly employed by the assessee but this shall be subject to certain adjustments. Therefore, it is not necessary to change the method of valuation of purchase, sale and inventory regularly employed in the books of account. The adjustments provided in this section can be made while computing the income for the purpose of preparing the return of income. We have seen that the AO completed the assessment by making an addition of Value Added Tax only on the closing stock without increasing the valuation of purchase and sale and opening stock of goods with corresponding VAT and therefore the same is not in accordance with the provisions of Sec 145A of the Act. Upon perusal of the facts of case, it is observed that the assessee applied Inclusive method of valuation of inventories in compliance with Section 145A of the Income Tax Act as well as Income Computation and Disclosure Standards Il Valuation of Inventories and made the adjustment of VAT therein. Overall impact of the adjustments made on the appellant income is NIL. Therefore, the addition made of Rs. 1,02,910 on account of incorrect application of ICDS-ll cannot be sustained and the appeal is allowed on these grounds. Closing stock value should be at the cost price and rightly the assessee had followed the said system and therefore there is no mistake on the part of the assessee and infact they have followed sec.145A - AO as well as the CIT(A) had committed a mistake that when the authorities are intended to add the VAT amount along with the value of the closing stock, then the same method should be followed in respect of the opening stock which was shown on cost basis. Therefore, two different methods could not be adopted for the opening stock and the closing stock. If the AO decided to add VAT to the closing stock value, then necessarily he has to add VAT amount in the opening stock value also and in that circumstances the net effect will be neutral and no undervaluation would arise. In such circumstances, we accept the method followed by the assessee by following sec.145A of the Act and thereby hold that the method adopted by AO in taking the closing stock value after adding the VAT amount is not correct and liable to be set aside. We are also entirely in agreement with the submission of the assessee that the other orders passed by the CIT(A) in respect of other six dealers are also in accordance with the view taken by us. In coming to the above conclusion, we also relied on the judgment of the Hon ble Supreme Court in the case of CIT v. Indo Nippon Chemicals Co. Ltd [ 2003 (1) TMI 8 - SUPREME COURT] wherein held that adopting gross method for purchases and net method for unconsumed stock at the year end is not permissible. Appeal of assessee allowed.

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• 2024 (10) TMI 644
  Legal status of the assessee as a State or an agent of the State - Claim of the assessee for its nontaxability is on the strength of the Article 289 of the Constitution of India, since its activities are akin to that of the State or any agent of the State - deduction claimed by the assessee u/s. 57 against interest income earned by it on fixed deposits with banks, offered under the head income from other sources . HELD THAT:- If the body is found to be an instrumentality of the agency of the Government, it would be an authority included in term State under Article 12 of the Constitution of India. The tests indicated by the Hon ble Apex Court in the case of Som Prakash Rekhi [ 1980 (11) TMI 113 - SUPREME COURT] are merely indicative and not absolute and thus, have to be applied discretely. If any body or organisation falls within the criteria as laid down by the Hon ble Apex Court, it can be considered that it falls within the term State . We are in agreement with the same to hold the assessee to be a State, being an instrumentality / agent of the State, thereby resulting in its interest income earned on fixed deposits not chargeable to tax. Further, we note that clause (2) of Article 289 provides an exception and authorises the Union to impose a tax in respect of the income derived by the Government of a State from trade or business carried out by it or on its behalf. In this respect, it is undisputed fact that ld. Assessing Officer has himself assessed the interest income on fixed deposits under the head income from other sources . The said interest income thus, cannot be said to be derived from trade or business carried out by the assessee. Accordingly, clause(2) of the Article 289 is inapplicable. Since the assessee is held to be a State, or a surrogate of the State or an agent, performing the functions of the State and /or on behalf of the State of Maharashtra, whereby its income is not chargeable to tax within the meaning of clause(1) of the Article 289, all the other grounds of appeal raised by it in Form no.36 including the revised one and other additional grounds are rendered academic in nature and therefore not adjudicated upon. Assessee appeal allowed.

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• 2024 (10) TMI 643
  Ad hoc disallowance of 10% out of repairs and maintenance expenses of plant and machinery, travelling and conveyance expenses, telephone expenses, repairs and maintenance of vehicles and security service charges - CIT(A) made enhancement towards reimbursement received from Oman Branch - HELD THAT:- We find a sum has no effect on the computation of taxable income at all. Expenditure is debited in the branch books and income to the very same extent has been credited in head office books. On consolidation of branch financials with head office financials, the same gets knocked out. This was duly explained by the assessee before the CIT(A) and also by way of a certificate from Chartered Accountant. The said certificate is enclosed. Hence, the addition made by the ld CIT(A) by way of enhancement is absolutely without any basis and not understanding the basic financials of the assessee company. Ground No. 2 raised by the assessee is hereby allowed. Ad hoc disallowances of expenditure - Admittedly, the ld AO had sought for other details only on 26.12.2017. The assessment finally stood completed on 28.12.2017. It is a fact that the assessee work sites are located at 20 locations and spread over all over the country and also in abroad. It would be practically impossible to collect all the details and submitted the same before the ld AO within 2 days and assessee further collected the details and submitted the same to the extent of 80% of the expenditure before the ld CIT(A) in the form of additional evidences. CIT(A) had not given any finding with regard to those additional evidence and merely sustained the disallowances on the ground that assessee had agreed for the same in the assessment proceedings forgetting the circumstances under which the assessee had agreed for the same. Considering the principle that there is no estoppels against the statute and income is to be determined based on the provisions of the Act and not by concession given by the parties, we deem it fit and appropriate to restore this issue to the file of the ld AO for de novo adjudication in accordance with law. The assessee is at liberty to furnish further evidences, if any, in support of its contentions. Accordingly, ground No. 1 is allowed for statistical purposes. Penalty proceedings u/s 271(1)(c) on the aforesaid quantum order - In view of the decision rendered above on the quantum appeal, the levy of penalty would have no legs to stand. Penalty on ad hoc disallowance of expenses - The law is very well settled that there cannot be any levy of penalty on an estimated addition on ad hoc disallowances of expenses. See HARPARSHAD AND COMPANY LTD. [ 2010 (8) TMI 75 - DELHI HIGH COURT] and SAMUNDER BHAN SADH [ 1990 (11) TMI 129 - ALLAHABAD HIGH COURT] - Decided in favour of assessee.

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• 2024 (10) TMI 642
  Revision u/s 263 - underreporting or misreporting of income u/s. 270A - HELD THAT:- PCIT seems to have distorted the order of assessment and therefore, the findings of the Ld.PCIT to that extent is perverse and therefore, in the absence of clear finding of the AO that there was underreporting or misreporting of income u/s. 270A of the Act, PCIT erred in holding that omission to initiate penalty u/s. 270A of the Act was erroneous in so far as prejudicial to the interest of the Revenue. We find considerable force in the submission of AR and find that the Ld.PCIT erred in recording a finding of fact in his impugned order u/s. 263 of the Act that in the assessment orders in question, the AO has given a clear finding that the additions made in the assessment order attracted penalty as per the provisions of Sec.270A. As noted that it is not the case of the Ld.PCIT that the AO erred in initiating penalty u/s. 271AAB(1A) of the Act for all the three assessment years i.e. AY 2018-19 to 2020-21. It is also noted that the AO in the assessment orders (under consideration) hasn t given any finding that the assessee has underreported or misreported its income. PCIT erred in holding that omission to record satisfaction to initiate penalty proceedings u/s. 270A of the Act was clearly erroneous being perverse. Therefore, relying on the decision of CRK Swamy [ 2001 (11) TMI 56 - MADRAS HIGH COURT] the case of CIT v. CMRL [ 2018 (3) TMI 1586 - MADRAS HIGH COURT] we set aside the impugned order of the PCIT on the peculiar facts and circumstances of the case. Assessee appeal allowed.

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• 2024 (10) TMI 641
  Rejection of application for registration u/s 12AB r.w.s 12A(1)(ac)(vi) - assessee has paid huge commission to three persons which amounts to nearly 12% of the total donations - Assessment of genuineness of activities and compliance by the trust/institution as doubtful - Lack of documentary evidence for activities carried out by commission agents HELD THAT:- The assessee has made large payments for purchase of food grain and all the purchases were made from one Shanti Trading Co. Similarly, the donors list furnished by the assessee does not contain full name and address of the donors but only the first name of the persons has been recorded. The copies of receipts were not furnished for verification. CIT(Exemption) came to the conclusion that the charitable nature and genuineness of the activities are doubtful, for which he rejected the claim of registration u/s 12A of the Act. It is the submission of assessee that since the CIT(E) without affording adequate opportunity to the assessee to substantiate its case by filing the requisite details, suddenly came to the conclusion that the charitable nature and genuineness are doubtful, therefore, in the interest of justice, the assessee should be given an opportunity to file the requisite details before him to substantiate its case. We deem it proper to restore the issue to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details. Appeal filed by the assessee is allowed for statistical purposes.

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• 2024 (10) TMI 640
  Deduction u/s 80P(2)(a)(i)/80P(2)(d) - income earned from cooperative society - AO disallowed such deduction by taking view that such interest income is not earned from co-operative society rather earned from co-operative bank and to be taxed as income from other sources - HELD THAT:- We find that assessee in its profit and loss account besides other interest income earned from Gujarat Electricity Board and interest income on the Assessing Officer while passing assessment order disallowed deduction of interest and dividend earned from Surat District Co-Operative Bank of Rs. 3.02 crores and figure so arrived dividend and interest from co- operative bank which includes interest from G.G.C.L., GEB and interest on savings accounts aggregate. NFAC/Ld.CIT(A) confirmed the action of AO. Before us assessee submits that he has confined its claim to the extent of interest income of Rs. 3,00,21,194/- which is interest income from Surat District Co-Operative Bank. We find that in a series of decisions of various Tribunals as well High Courts held that co-operative banks are primarily as co-operative society As in the case of Surat Vankar Sahakari Sangh Ltd. [ 2016 (7) TMI 1217 - GUJARAT HIGH COURT] wherein also held that co-operative societies are eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to the said bank. This combination in a series of decisions also held that interest earned by cooperative society from cooperative bank is eligible for deduction under section 80P(2)(d). Thus, we find that ground of appeal raised by assessee to the extent of interest earned from Surat District Co-operative Bank is allowable. To make more clear, the other part of deduction which include interest from other institution except co-operative societies are not eligible - Appeal of assessee is partly allowed.

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• 2024 (10) TMI 639
  Penalty u/s 271(1)(c) - assessee is a non-filer and has not filed her return of income for the impugned assessment year even though the assessee had taxable income - HELD THAT:- Admittedly, the assessee has not filed her return of income despite having taxable income during the impugned assessment year. Assessee computed the capital gains based on the value in the registered sale deed and not by adopting the provisions of section 50C - AO has considered that the assessee has concealed the particulars of income while filing the return of income which attracts the penal provisions as per section 271(1)(c). As in response to the show cause notices issued by the Ld. AO, the assessee has neither filed any explanation nor appeared before the Ld. Revenue Authorities during the penalty proceedings. It is also found that the assessee has not furnished any reasonable cause either for non-filing of return of income or for non-appearance or non-furnishing of explanation during the assessment or penalty proceedings. Assessee has not filed her return of income u/s 139(1) of the Act but has filed in response to the notice U/s. 148 of the Act without considering the provisions of section 50C of the Act, which in our considered opinion amounts to concealment of income. Even before us, no proper explanation was provided by the assessee either for not filing the return of income or for non-appearance before the Ld. Revenue Authorities. Decided against assessee.

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• Customs

• 2024 (10) TMI 638
  Valuation of imported goods - loading 10% on the transaction value under Customs Valuation Rules - related parties - mutuality of interest - applicability of new Customs Valuation Rules, 2007 - HELD THAT:- The period of dispute in the present appeal is from 2013 to 2016. The Order-in-Original No. 6664/2007 dated 11.09.2007, the first SVB order acknowledged the fact that the appellant is 100% fully owned subsidiary of the Italian Company M/s. Biesse SPA Italy (supplier), hence, as per clause (iv) and (v) of Rule 2(2) of the Customs Valuation Rules, 1988, the buyer and the seller were related for the purpose of valuation under the Customs Act, 1962 read with Customs Valuation Rules, 1988. It was also noted that the appellant is engaged in manufacturing and selling of art wood working machines and only 20% of the components were procured by way of import from both related and unrelated parties and 80% of the components were locally procured. From the order, it is also seen that there was no technology transfer and hence, no payment of technical know-how fee or Royalty between the buyer and the seller. The products imported by the appellant were not manufactured by the supplier but procured from third party suppliers. Since, no evidence was placed on record that the overhead costs remained constant and the supplier was playing only a role of facilitator, 10% loading to the transaction value was ordered under the Customs Valuation Rules, 1988 read with Section 14(1) of the Customs Act, 1962. This order was valid for 3 years up to 10.09.2010. In view of the major changes in terms of Rule 3 and 12 brought about in the new Customs Valuation Rules, 2007, the Authorities have to give necessary reasons for rejection of value during the relevant period - Almost after 6 years, the Authorities below have without considering these factors loaded the transaction value based on the SVB order dated 11.09.2007 which expired on 10.09.2010, hence lost its validity and therefore, the present impugned order which relies on the earlier SVB order cannot be sustained. Moreover, during the relevant period, the Customs Valuation Rules, 2007 dated 10th October 2007 are the relevant Rules and these Rules are a major deviation from the earlier Valuation Rules, 1988 in view of the fact that Rule 3 and 12 specifically lays down the procedure for rejection of transaction value. Thus, in the facts and circumstances of the present case, it has to be held that the impugned orders are flawed in following an order which has lost its validity. The order is also contrary to law as it does not give cogent reasons in terms of Section 14(1) of the Customs Act 1962 read with Rules 3 and 12 of the Customs Valuation Rules, 2007 for rejection of the transaction value as declared in the Bill of Entry. In the aforesaid circumstances, the impugned orders cannot be sustained and we set aside the order and remand the matter to the original authority to redetermine the transaction value in the changed circumstances. The Tribunal in BIESSE MANUFACTURING CO. (P) LTD. [ 2018 (2) TMI 88 - CESTAT CHENNAI ] had observed that Appellants have also not been able to establish that M/s. Biesse SPA, Italy sold identical or similar goods to other importers in India at the same price. They have themselves not able to satisfy the requirements of Rules 43A 43B of the CVR, 1988 . Now, the appellant has also placed on record the third-party purchases of similar goods which have been sold at the same price that they have imported, hence, mutuality of interest does not arise. The matter is to be remanded for appropriate adjudication for considering the relevant Customs Valuation Rules - Appeal allowed by way of remand.

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• 2024 (10) TMI 637
  Finalization of assessment based on the Report which is available on dry weight basis because of which Fe content has been taken as 63% - requirement 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. Matter remanded to the Adjudicating Authority to apply the formula to arrive at the Fe content and finalize the assessment - appeal allowed by way of remand.

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• 2024 (10) TMI 636
  Classification of imported goods - MPC7E MRATE IRB 10G/40G 100 QSFP28-MPC-L3 Line Cards [Router Line Cards] - to be classified under Customs Tariff Item [CTI] 8517 69 30 of the First Schedule to the Customs Tariff Act, 1975 or under CTI 8517 62 90? - benefit of the Exemption Notification dated 01.03.2005 under Serial No. 13N - HELD THAT:- A Division Bench of the Tribunal in the case of the appellant itself in M/s Vodafone India Limited [ 2022 (9) TMI 1600 - CESTAT NEW DELHI ] found that the Router Line Cards can be classified either under CTI 8517 70 90 or CTI 8517 70 10 - it was held that Router Line Cards are Populated PCBs as they are printed circuit boards mounted with various active and passive electronic elements. Therefore, these cards can be classified under CTI 8517 70 10, which covers populated, loaded or stuffed printed circuit boards . It would attract NIL rate of duty. In view of the aforesaid decision of the Tribunal in M/s Vodafone India Limited, the classification of Router Line Cards by the Principal Commissioner under CTI 8517 62 90, as claimed by the department cannot be sustained. In this view of the matter, the classification of Router Line Cards by the appellant would have to be maintained. The order dated 24.02.2022 passed by the Principal Commissioner, therefore, deserves to be set aside and is set aside - appeal allowed.

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• 2024 (10) TMI 635
  Under-valuation of imported goods - rejection of declared transaction value and redetermination of the value of the goods imported - recovery of differential duty under section 28(4) of the Customs Act, 1962 along with interest under Section 28AA of the Act ibid - confiscation - penalty - HELD THAT:- Once the transaction value is rejected under Valuation Rule 12 in terms of Valuation Rule 3 it should be re-determined sequentially from Valuation Rules 4 to 9. The Commissioner has followed Valuation Rule 9 after recording that the deductive method under Valuation Rule 7 or the computed value under Valuation Rule 8 were not feasible in the case of these goods. Consistent with the principles laid down in these rules, the Commissioner adopted the actual value of goods found in the excel sheet produced by Nitin in respect of three Bills of Entry - He further recorded that in respect of 16 Bills of Entry no values were found in the excel sheets but the goods which were imported were similar to the goods which were found in the three Bills of Entry in respect of which the excel sheets were found. The Commissioner was not only correct in adopting the Valuation Rule 9 after examining and excluding the applicability of Valuation Rules 4 to 8 but he has also accepted the declared value in majority of the items and only enhanced the value in such cases where it was warranted. In the absence of any evidence either in the excel sheet or in the statements that values in the excel sheet were on FOB basis, it cannot be concluded that they were FOB values and freight and insurance have to be added as per Valuation Rule 10(2). In his statement, Nitin had stated that they were CIF values. Transaction both in FOB and CIF are common in international transactions. When the value is being re-determined based on excel sheet, the benefit of doubt should go to the importer and these values should be taken as CIF values - the addition of 20% towards freight and 1.125% insurance by the Commissioner under Valuation Rule 10(2) cannot be sustained and it needs to be set aside. The value of the goods liable for confiscation is Rs. 5,47,66,445/- and, therefore, we find that the penalty of Rs. 9 lakhs imposed on Nitin under section 112 is fair and calls for no interference. Penalty of Rs. 20 lakhs was also imposed on Nitin under section 114AA. This penalty needs to be set aside because there was no separate mis-declaration by the Nitin apart from a mis-declaration in the Bills of Entry filed on behalf of KLM and an penalty has already been imposed on KLM for that mis-declaration. Penalty of Rs. 2 lakhs was imposed on Anshul under section 112. It is true that he was the non-active partner of KLM and had limited role in its operations but had nevertheless filed the papers. Considering his limited role penalty of Rs. 2 lakhs imposed on Anshul needs to be upheld. Penalty of Rs. 5 lakhs were imposed under section 114AA on Anshul. Since there was no separate mis-declaration by Anshul other than the mis-declarations in the Bills of Entry for which a penalty under section 114AA was already imposed on KLM, we find that this penalty under section 114AA on Anshul needs to be set aside. The rejection of the declared transaction value in the 19 Bills of Entry under rule 12 of the Customs Valuation Rules is upheld - Re-determination of the transaction value is upheld partly. The values found in the excel sheet must be considered as a CIF values instead of FOB values in the absence of any evidence to support that they were FOB values. Consequently, the assessable value and duty must be re-determined. The matter is remanded to the Commissioner only for the purpose of re-computing of amount of duty, interest and penalty under Section 114A - Appeal allowed by way of remand.

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• 2024 (10) TMI 634
  Dismissal of Revenue s appeal based on monetary limits - amount involved being less than that permitted to the Revenue for filing an appeal before the Tribunal - seizure of gold from the personal baggage of a passenger - HELD THAT:- In terms of Article 226 the said direction contains in the order dated 08.08.2019 where to be followed. It also appears that no objection with regards to maintainability of this appeal before CESTAT was ever raised by the revenue before Hon ble High Court or CESTAT. The fact that the revenue appeal was dismissed on 28.06.2019 was also not brought to the notice of Hon ble High Court as is evident from the observations made in the order of the Hon ble High Court. Be that as it is, similar direction do not appear in the Order dated 29.03.2023 in the Custom Appeal No.3 of 2020 of the Hon ble High Court. Hon ble High Court has specifically permitted all objections to be taken against the appeal filed by revenue in the remand proceedings before CESTAT. This appeal is not maintainable before CESTAT - Appeal dismissed as not maintainable.

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• Corporate Laws

• 2024 (10) TMI 633
  Professional misconduct - Non-compliance with applicable accounting standards - non-cooperation of Auditor - Appellant did not respond to the various letters and show cause notice issued by the NFRA - Section 132 (5) read with Section 410 of the Companies Act, 2013 - violation of principles of natural justice. Only plea of the Appellant in his defence is that he relocated himself in Nepal in 2021 and therefore he could not receive any letters and also since in Nepal his telephone was not working and his e-mail was also not accessible. HELD THAT:- At one hand, the Appellant claims that from Nepal he replied to SEBI on E-mail but on the other hand he claims that he could not open his e-mail in Nepal and therefore could not reply to NFRA. This statement and the submission is just not acceptable. In the present era of technology and modern communications, where e-mails are accessible across the globe and on any instrument including mobile and laptops, it is extremely difficult for anyone to believe such submissions of the Appellant and therefore such submissions of the Appellant are rejected - Similarly, the grounds that his mobile was not accessible being in Nepal, is also not convincing. It is strange that during the entire process of the disciplinary proceedings initiated by NFRA through various modes of communications and for considerable period of time, the Appellant has claimed that he did not notice anything or anything was brought to his notice by anyone but immediately after the issue of the impugned order dated 5th January, 2024, someone informed him about the imposition of penalty by NFRA on him and he filed the present Appeal in February, 2024. Thus, such bogus claims of Appellant regarding non-accessibility and non-receipt of communications and therefore not replying to NFRA cannot be accepted. NFRA during pleading has confirmed that they have followed the due process of law and principles of natural justice and also examined all records and came to conclusion regarding establishing the various charges against the Appellant being professional misconduct in accordance with the law and thereafter passed the impugned order imposing the highest penalty since the Appellant refused to cooperate with NFRA and incidentally the Appellant also did not cooperate with SEBI which was communicated to NFRA - the submissions made by the NFRA agreed upon and there are no error in the impugned order. It is true that the principles of proportionality is relevant for any Authority like NFRA, in deciding quantum of punishment in the disciplinary proceeding. It is well settled principle of law that judicial review, generally speaking, is directed against the decision making process . In other words, the type and the quantum of penalty is by and large remains within the jurisdiction of the authority who has been vested with powers as in case of NFRA in terms of Companies Act, 2013. It is true that the punishment should be reasonable keeping in view the facts and circumstances of each case and the adverse impact in particular cases should not be vindictive or unduly hardship. The penalty imposed on the Appellant is the maximum penalty which NFRA was entitled to i.e. Rs.20 lakhs and 10 years debarment on the Appellant for conducting any audit work. However, it is also fact that the Appellant chose deliberately to avoid any submission of record and NFRA did not have any benefit of the defence of the Appellant by way of the records, if any, maintained by the Appellant to justify compliance of relevant standards like SA 230. The Appellant is eligible for relief and concessions based on principle of proportionality, in case he is able to satisfy the concerned authority like NFRA herein, about his due diligence and not otherwise and in absence of any submission or interaction with NFRA the Appellant is well aware of the consequences he has to face. The Appellant, being Chartered Accountant, is well qualified and understands the legal implications of his conduct. There are no illegality in the Impugned Order - appeal dismissed.

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• Insolvency & Bankruptcy

• 2024 (10) TMI 632
  Approval of the Resolution Plan - Resolution Plan does not provide for payment of Provident Fund and Gratuity - plan not in compliance with Section 30(2) of the I B Code - whether it is the Successful Resolution Applicant which has to bear the burden of Provident Fund dues and Gratuity Dues or it has to be discharged from the financial outlay in the Resolution Plan? - HELD THAT:- Clause 1 (vii) of the Clarificatory Note clearly contemplate payment of Provident Fund and Gratuity dues which have to be paid as per priority as contemplated in Clause 1 (vii). Thus, the payment of Provident Fund and Gratuity has to be paid as per the Resolution Plan read with Clarificatory Note Clause 1 (vii) and the submission of counsel for the CoC not accepted, that amount of Provident Fund and Gratuity dues has to be borne by the Successful Resolution Applicant independent of Resolution Plan read with Clarificatory Note. It is noticed the amount of Provident Fund and Gratuity as admitted by the Resolution Professional i.e. Provident Fund dues Rs.11.49 Crores and Gratuity dues Rs. 8.84 Crores. The said amount has to be paid as per the Resolution Plan read with the Clarificatory Note. The entitlement of salary from June to November, 2020 has never been accepted nor the employees actually worked. With regard to salary slips of five employees filed with the appeal, learned counsel for the Resolution Professional submitted that the said salary slips were issued on the request of the employees and is not proof of that they had worked. It is submitted that it is the Resolution Professional who has to take decision regarding allowing employees to work during CIRP period. It submitted by the Resolution Professional that certain employees were called to commence the work but the work did not proceed and in the CIRP cost the Resolution Professional has included the certain part of payment of salary to the workmen and claim of the Appellant for payment of salary from July to November, 2020 cannot be accepted or included in the CIRP cost. The Resolution Professional is the best judge to compute the CIRP cost and pay wages to the workmen during the CIRP period. Thus, the Resolution Plan having already included payment of salary to some extent in the CIRP cost, we see no reason to issue any direction for payment of salary as claimed by the Appellant from month of July to November, 2020. The approval of Resolution Plan by order dated 31.03.2023 is upheld subject to declaration that workmen and employees are entitled for payment of full Provident Fund and Gratuity - The Resolution Plan read with Clarificatory Note Clause 1 (vii) contemplate payment of Provident Fund dues and Gratuity dues which was computed by the Resolution Professional as Provident Fund dues of Rs.11.49 Crores + Gratuity dues of Rs.8.84 Crores, totaling to Rs.20.33 Crores (for Shree Gopal Unit), which is to be paid as per the priority mentioned in Clause 1 (vii) of the Clarificatory Note. Appeal disposed off.

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• 2024 (10) TMI 631
  Admission of application filed by the Operational Creditor u/s 9 of the IBC, 2016 - withdrawal of the petition on the basis of the settlement agreement - existence of debt and default admitted - HELD THAT:- Since, it is a case where the debt and default has been admitted by the CD by entering into a settlement deed, part payment was made but the remaining amount was not paid despite repeated emails, therefore, the Tribunal has rightly admitted the application which is above the threshold provided under Section 4 of the Code and there was no pre-existing dispute. The argument of the Appellant that settlement amount cannot be claimed as an operational debt is totally inconsequential as it has been held by this Court in the case of IDBI Trausteeship Services Limited Vs. Nirmal Lifestyle Limited [ 2023 (5) TMI 770 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] . The CD, especially in the cases of Section 9, are adopting this modus operandi by entering into a settlement with the OC in respect of its dues which arises either from the goods supplied or services provided, some payment is made and then there is a breach in the settlement thereafter all sorts of pleas are raised by the CD to deny the right of the OC regarding the resolution of its dues for which the application under Section 9 is filed. There are no merit in the present appeal for the purpose of interference and the same is hereby dismissed.

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• 2024 (10) TMI 630
  Admission of towards salary and leave encashment with interest - HELD THAT:- The substantial claim of the Appellant has been admitted in the CIRP, hence, there are no reason to interfere in the impugned order, especially when the Resolution Professional in it reply, has declared about the final admission of the claim of the total Rs.50 Lakhs. Recording the said statement of the Resolution Professional of admission of Rs.50 Lakhs of Principal Amount and interest as well as amount towards salary, this appeal is disposed off. Appeal disposed off.

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• 2024 (10) TMI 629
  Seeking condonation of delay of 10 days in filing the present appeal - calculation of limitation period - HELD THAT:- Admitted facts of this case are that the impugned order was passed on 02.03.2022 and in this regard, the Respondent has appended the cause list of 02.03.2022 as Annexure R3 with the reply in which the present appeal has been shown as for pronouncement of order, Sr. No. P1, CP No. (IB)219/ALD/2018 for order . It is admitted by the Appellant in the rejoinder that the order was pronounced in their presence. In such circumstances, the decision of the Hon ble Supreme Court delivered in the case of V. Nagarajan [ 2021 (10) TMI 941 - SUPREME COURT (LB)] would apply which says that limitation shall start running from the date of order whereas the case set up by the Appellant in the application is that since the impugned order was uploaded by the Tribunal on 14.03.2022, therefore, the limitation shall be counted from the said date and thus there is a delay of 10 days in filing the present appeal. In order to overcome the difficulties being faced, the Appellant has developed a new story in order to take the advantage of Section 12 of the Limitation Act, 1963 as per which the period spent by the office in preparing the certified copy has to be excluded from the total period of limitation and in this regard, it is alleged that after the order was pronounced on 02.03.2022 the certified copy was applied which was made available on 16.03.2022 but it was mistakenly sent to the previous office address of the counsel at New Delhi and was misplaced. The Appellant has not applied for the certified copy again for the purpose of placing it on record. The story which has now been propounded and made a part of their rejoinder is totally unbelievable because had it been a situation as suggested, it would have been the first averment in the application itself instead of a plea in the rejoinder. The story propounded in the rejoinder is a made-up story at the instance of the Appellant which cannot be believed and as it has been held in the case of Lingeswaran Etc. [ 2022 (2) TMI 1358 - SUPREME COURT] the limitation is to be condoned on a sufficient cause and not on equity, the Appellant cannot take any advantage of alleging that the Court should apply soft hand for the purpose of considering the application for condonation of delay. There are no merit in the present application, much less sufficient cause, for the purpose of condonation of delay, therefore, the application is found devoid of any merit and the same is hereby dismissed though without any order as to costs.

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• Service Tax

• 2024 (10) TMI 628
  Short payment or nonpayment of service tax - failure to provide cenvat documents to the Departmental Officers for verification - period 2007-08 to 2011-12 - Penalty - HELD THAT:- It is found that for confirmation of demand of Rs.4,20,162/-, it is submitted by the assessee that they have paid more than the service tax as alleged that they have short paid of service tax. To that effect, the assessee has produced the reconciliation statement, which shows that that against the short payment of Rs.4,20,162/-, the appellant has paid excess amount of Rs.4,62,251/-. Therefore, the demand of Rs.4,20,162/- is not payable by the assessee. With regard to the appeal filed by the Revenue against the impugned order, it is found that the assessee has later paid the service tax on advance received on Customs House Agent Service and no service tax is payable by the assessee on reimbursable expenses in terms of the decision of the Hon ble Supreme Court in the case of Intercontinental Consultants Technocrats Private Limited [ 2018 (3) TMI 357 - SUPREME COURT] - there are no merit in the appeal filed by the Revenue and the same is dismissed. Penalty - HELD THAT:- As the Appellant Assessee paid the excess amount, therefore, the demand of Rs.4,20,162/- on account of short payment of service tax is also not sustainable, the same is set aside and no penalty is imposable on the assessee. The appeal filed by the assessee is allowed.

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• 2024 (10) TMI 627
  Taxability - Business Support Services - share of collections received by the cinema owners - HELD THAT:- Movies are made by producers investing money and the producer acquires the copy right to the movies which, he then transfers to various distributors across the country for a consideration. The distributors, in turn, enter into agreements with various cinema/ theater owners and provide license/ right to screen the movie in their theaters. The Net Box Office collections, i.e. the proceeds of sales of tickets minus some expenses such as taxes are shared between the cinema owners and the distributors. The question as to whether the share of collections received by the cinema owners can be taxed has been decided in negative by this Tribunal in INOX LEISURE LTD. VERSUS COMMISSIONER OF SERVICE TAX, HYDERABAD [ 2021 (10) TMI 893 - CESTAT HYDERABAD] where it was held that There is nothing on record to show that there is an agreement to share profits and losses. Only the collections are shared after some deductions. If, for instance, the total expenses incurred by the appellant in running the theatre is much more than its collections from the movie, it will incur losses. The distributor has no responsibility to share the losses. The distributor gets its share of the net Box Office collections even though the collections may be small. Hence the nature of the agreement here is one in which the distributor gives permission to screen the movies and gets a consideration. The quantum of consideration is not a fixed amount but a share of collections. The distributor does not assume any business risks in screening the movies. Therefore, we find no evidence whatsoever in this arrangement of forming an unincorporated joint venture. Since the Tribunal has already taken a view on this issue, there is no occasion to take a different view in this appeal which is on the self-same issue and is extension of the earlier proceedings. The Order-in-Appeal is upheld and the appeal filed by the Revenue is dismissed.

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• 2024 (10) TMI 626
  Demand of Service Tax made on the basis of tally data resumed by the department - cogent reasons have been provided for doubting the authenticity of the records or not - principles of natural justice - HELD THAT:- It appears that the appeal have been filed only by referring to the order in original and for the reason that the appellate authority has set aside the same. No specific reason has been stated as to why the findings recorded by the appellate authority are not tenable, except to effect that the case law referred by Commissioner (Appeal) were in relation to the clandestine clearances of goods and hence should not have been applied. The Commissioner (Appeals) has decided the matter before him by holding that there are no corroborative evidences available on record to establish the case made out against the Respondent on the basis of second set of data retrieved. In absence of any such averment, there are no merits in this appeal. It is incorrect to say that the judgment relied upon by Commissioner (Appeals) while deciding the appeal, were in respect of the goods and not in respect of services. There are no infirmity in the order of the Commissioner (Appeals) to this extent - Appeal filed by the revenue is dismissed.

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• 2024 (10) TMI 625
  Refund of service tax paid under Reverse Charge Mechanism before migrating to GST regime - seeking refund of the amount on the basis that they were otherwise eligible to claim credit of the same, but in view of the introduction of GST, they were not able make use of said amount either in Central Excise/Service Tax or GST - HELD THAT:- Appellant has paid the service tax voluntarily under self-assessment. The tax is paid under reverse charge mechanism for the services received by them from the service providers. On perusal of the OIO, it is seen that the Adjudicating Authority has denied refund of credit holding that the service tax has been paid voluntarily and also that no credit is available in GST regime. Section 174(2) of the GST Act says that the amended Act shall not affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts. It is clear that the liability, if any, under the erstwhile law of Finance Act, 1994 to pay service tax would continue even after the introduction of GST. Conversely, the right accrued under the said Act in the nature of credit available under CCR, 2004 also is protected. In the case of ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [ 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT] it has been held that transitional credit being a vested right, it cannot be taken away on procedural or technical grounds. Section 142(3) of GST Act provides how to deal with claims of refund of service tax of tax and duty/credit under the erstwhile law. It is stated that therein that such claims have to be disposed in accordance with the provisions of existing law and any amount eventually accruing has to be paid in cash - In the present case, there is no allegation that the credit is not eligible to the Appellant. It is merely stated that tax has been paid voluntarily and therefore credit is not available under the GST regime. Though credit is not available as Input Tax Credit under GST law, the credit under the erstwhile Cenvat Credit Rules is eligible to the Appellant. Such credit has to be processed under Section 142(3) of CGST Act, 2017 and refunded in cash to the assessee. In the present case, the claim is only for refund and not proceedings for assessment or adjudication. In such a scenario, only sub-section (3) of Section 142 will be attracted. Rejection of the refund claim by referring to sub-section (8) of Section 142 of CGST Act, 2017 is misplaced. For these reasons, rejection of refund is unjustified. Rejection of refund claim cannot be justified. The impugned order is set aside - Appeal allowed.

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• 2024 (10) TMI 624
  Liability for payment of service tax on sinking fund/interest free maintenance scrutiny - interest - penalty - extended period of limitation - HELD THAT:- The issue is no more res integra. In the case of KUMAR BEHERAY RATHI OTHERS VERSUS CCE. [ 2013 (12) TMI 269 - CESTAT MUMBAI ], the Tribunal held that collection of one time deposit on account of maintenance and repair of common areas is not taxable. The said decision of the Tribunal has been affirmed by Hon ble Bombay High Court in THE COMMISSIONER OF SERVICE TAX, MUMBAI VERSUS M/S. SHRI KRISHNA CHAITANYA ENTERPRISES AND M/S. GREEN VALLEY DEVELOPERS AND KUMAR BEHERAY RATHI [ 2018 (2) TMI 1056 - BOMBAY HIGH COURT ]. Interest - penalty - HELD THAT:- As both the demands are set aside on merits, the corresponding demand of interest and penalty also set aside. Time Limitation - HELD THAT:- As both the demands are set aside on merits, it is refrained from dealing with the aspect of limitation. Appeal allowed.

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• Central Excise

• 2024 (10) TMI 623
  Entitlement to avail input tax credit of the tax paid - input services - services availed from goods transport agencies for transporting the products manufactured by it to the premises of the buyer concerned under a contract that was entered on Freight on Road (FOR) basis - HELD THAT:- While it may be a fact that in the decision of the Supreme Court in COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [ 2015 (4) TMI 857 - SUPREME COURT ] that is relied upon by the learned counsel for the appellant, it was found that in circumstances where a manufacturer enters into a contract with his buyer on FOR basis, the place of removal for the purposes of payment of Central Excise duty has to be seen as the buyer s premises and not the manufacturer s factory, the upshot of the said finding was that the manufacturer, in that case, was legally obligated to include the cost of transportation of the goods from his factory to the premises of the buyer in the assessable value of the goods for the purposes of payment of Central Excise duty. In the instant cases, however, it is found that it is the admitted case that the appellant did not include the transportation costs in the assessable value of the goods for the purposes of payment of Central Excise duty. It is failed to see how the appellant can claim input tax credit in respect of the transportation services availed by it for the purposes of transporting the goods from the place of removal to the buyer s premises - there are no reason to interfere with the order of the Tribunal impugned in these appeals - appeal dismissed.

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• 2024 (10) TMI 622
  Clandestine Removal - retraction of affidavits and statements - reliance placed on statements of transporter - absence of corroborative evidence supporting illicit manufacture - It has been contended that no demand of Central Excise Duty could be made without a source document, particularly only on the basis of a data entry worksheet prepared in a tabular form on a computer, in absence of required certificate u/s 36B of Central Excise Act, 1944 - HELD THAT:- It is found from the impugned order that M/s Patel Product in their reply to the SCN filed before the adjudicating authority, had submitted copies of retraction affidavits of the persons, whose statements were recorded under summons during the course of investigation of the present dispute. The department had also conducted an enquiry into the retracted affidavits, the fact of which is evident from the available case records. The department had called for the information about the authenticity and veracity of the stamp papers from the Collector of Stamps (stamp paper issuing authority), Thane, in context with the officially recorded dates, on which the stamp papers were issued by them; the name of the stamp vendor to whom they were issued; the date of subsequent sale by the stamp vendor and the name of the person to whom such stamps were ultimately sold for actual use by the stamp vendor etc. In the present case, the facts are not under dispute that the retracted affidavits are completely ignored and not taken into consideration, then in that case, what remains for consideration is mere confessional statements. It is a settled principle of law that demand cannot be sustained, based on stand-alone confessional statements, in the absence of corroborative evidences. When the officers of the Central Excise Department had failed to carry out any investigation at the end of raw material suppliers and were also unable to have brought out any independent evidence to prove that printed plastic pouches of Om Special Pandharpuri Tambakoo No. 1 were procured surreptitiously for the purpose of packing the said branded tobacco, it cannot be said that the department has made out a case against the appellants, alleging involvement in the fraudulent activity of clandestine removal of excisable goods. Thus, placing reliance only on the confessional statements, without proper corroboration with the documentary evidences cannot be considered as valid or justified action, which would suffice to prove the charges of clandestine removal of excisable goods. This Tribunal, in the case of JEEN BHAVANI INTERNATIONAL AND MAHESH CHANDRA SHARMA KARTA VERSUS COMMISSIONER OF CUSTOMS- NHAVA SHEVA-III [ 2022 (8) TMI 237 - CESTAT MUMBAI] , has held that in a case, where statement recorded by the officers of the department are not provided to the respective person at that very moment and that the same are provided only along with the SCN, in that case, the only opportunity which the deposer of the statement would get for the purpose of retracting the statement is only after the issuance of SCN, when he is handed over with the said statement. In such a case, the Tribunal has held that if a retraction affidavit is made after the issuance of SCN, then the said retraction would be considered as a valid retraction. During the course of investigation, statements of the packing labourer and labour supervisor of Unit III of M/s. Patel Product, Kurla, were recorded and relied upon in the adjudication order. On that basis, the adjudicating authority has observed that Om Special Pandharpuri Tambakoo No. 1 was produced in excess, and were removed outside the premises in a clandestine manner. It is an admitted position that the appellants had requested the adjudicating authority for affording cross examination of the said labour supervisor and packing labourer. However, the same was denied. Under such circumstances, in terms of Section 9D ibid, such statements have lost their evidential value and cannot be relied upon in isolation, without any further documentary evidence for confirmation of the adjudged demands. Further, the allegation of clandestine manufacture and clearance of excisable goods is a serious charge, and the burden to prove such charge is entirely lies with the Revenue - the Revenue has not brought on any substantial evidence to prove such allegation levelled against the appellants. The charges of clandestine clearance of branded tobacco, as levelled against the appellant M/s. Patel Product cannot be sustained inasmuch as Revenue has not brought out any substantial documentary evidences to prove such charges. Therefore, the adjudged demands confirmed on the appellant M/s. Patel Product fails and consequently, the penalties imposed on the other appellants in the impugned order cannot be sustained. There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellants. Therefore, the impugned order is set aside - appeal allowed.

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• 2024 (10) TMI 621
  Cenvat Credit on inputs and input services for the period from August 2010 to March 2015. Denial of credit on Inputs - disallowance on the ground that the same was used either for laying foundations or making support structures for the capital goods which have been specifically excluded based on the revised definition of inputs and capital goods as per CENVAT Credit Rules, 2004 for the period 01.04.2011 to 30.06.2012 and from 01.07.2012 to 31.03.2015 - HELD THAT:- The only plea taken by the appellant is that the inputs are directly or indirectly used in the manufacture of final products, ignoring the fact that they are specifically excluded from the definition of inputs. In view of the above, the denial of cenvat credit on the inputs during the relevant period is upheld in view of the revised definition of input and capital goods of CENVAT Credit Rules, 2004. Denial of credit on Earth Excavation Works - HELD THAT:- As seen from the invoices placed by the assessee, the Commissioner in the impugned order has held that the description of work order in the invoices are shown as Earth Work in soft soil, hard rock and soft work and disposal of the soil from the work area . Thus, the work order being in the nature of civil work and this being excluded from the input service with effect from 01.04.2011, the credit has been rightly denied - As seen from the definition of the input services during the relevant period, it is very clear that the services of laying a foundation or making of structures a construction or execution of works contract are specifically excluded. Therefore, the Commissioner was right in denying the benefit of cenvat credit on all those invoices where it has been categorically mentioned as Earth Excavation Works. Credit on Erection and Commission and Installation services - HELD THAT:- Since there is no dispute that the goods were used in the office within the factory premises, the cenvat credit is allowed. The Commissioner has denied the benefit on Road Works on the ground that the road work carried out inside the factory is a civil structure and hence, excluded from the purview of the definition of input services . Since these services are also excluded from the definition of the input services , rejection of the cenvat credit by the Commissioner is upheld. The amount of credit of Rs.1,26,48,722/- disallowed by the Commissioner has also been reversed by the appellant partly at the time of the adjudication, which has been appropriated in the order; the balance amounts have been reversed on 12.11.2016 along with the interest paid on 07.12.2016 (reversal entry No.2503 with regard to inputs and reversal entry No. 2500,2501 and 2502 with regard to input service). The 25% of the demand which works out to Rs.29,83,667/- has been also paid as penalty amount vide Challan No. 00046 and 00047 dated 07.12.2016. Since, the entire amount has been paid along with the interest and 25% penalty within 30 days of the date of the order, penalty imposed under Section 11AC cannot be sustained. Amounts allowed by the Commissioner as eligible cenvat credit - major amount (Rs.5.20 crores) relates to structural steel items which are used for the manufacture of various capital goods and the Commissioner on verifying the various documents and Chartered Engineer certificate and based on the Jurisdictional Range Officer s verification has held that the assessee is eligible for the benefit of the cenvat credit - HELD THAT:- The objections raised by the department in their grounds of appeal is that the Jurisdictional Ranger Officer has categorically mentioned that it is not possible to correlate invoice-wise material details with that of the material used and various statements that confirmed the cenvat credit was irregularly availed was ignored by the Commissioner. However, the observations of the Commissioner in the impugned order which are based on facts and the Chartered Engineer s Certificates cannot be brushed aside. The Range Officers have not disputed the fact that the inputs and input services being used in the factory but only observed that one to one correlation could not be made. It is a settled issue that as per Cenvat Credit Rules one to one correlation is not required but it has to be established that it is used within the factory and satisfies the definition of the input and input services . The Commissioner has clearly established this fact and hence, there are no reason to deny the benefit of cenvat credit as allowed by the Commissioner in the impugned order. Appeal disposed off.

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• 2024 (10) TMI 620
  Denial of CENVAT Credit wrongly availed and utilized with interest and penalty - Extended period of limitation - HELD THAT:- The impugned order appropriates an amount of Rs.3,58,58,266/- alongwith interest of Rs.48,132/- reversal/payment which was reported to the concerned Authorities vide letter dated 11.02.2011 and 29.03.2011. As these amounts have been paid and reported by the Appellant either on his own violation or on being pointed out by the Revenue Authorities, the short payment if any on this account should have been questioned and a show cause notice issued within one year from the date of receipt of these letters dated 11.02.2011 and 29.03.2011 as per the provisions of Section 11A(3). For such payment there cannot be any reason for invocation of extended period of limitation for making a demand by way of issuance of show cause notice under Section 11A (4) to the extent of these amounts paid. There are no merits in the impugned order invoking extended period of limitation. For remaining amounts, it is found that the whole issue is that credit has been taken against the bill of entries; however at the time of Audit/scrutiny, Appellant produced photocopies of the bill of entries as original was not traceable. Nothing is available on record to show that the original copy of the bill of entries was subsequently produced. Let it be as it is, this issue is no more res integra and following has been held by Delhi Bench in the case of CENTURY METAL RECYCLING PVT. LTD. VERSUS CGST, CCE, ALWAR [ 2018 (7) TMI 984 - CESTAT NEW DELHI] where it was held that As long as the input is received in the factory of the production and used for the manufacture of excisable goods, there should not be any bar in taking Cenvat credit under Rule 9 thereof which is substantial benefit and not to be denied on account and procedural ground. In this case, Revenue has not brought before us there is any loss caused by the appellant to the Revenue but for the procedural aspect of taking credit at the strength of photo copy of bill of entry. There are no merits either invocation of extended period of limitation for denial of the credit on this ground. Demand to this extent also needs to be set aside. The amount of Rs.3,58,58,266/- with interest of Rs.48,132/- had been deposited by the appellant and jurisdictional authorities informed in terms of Section 11A(2) much prior to the issuance of the show cause notice - for the remaining amount of Rs.5,47,862/- the irregularity being held as technical lapse, the same could not be covered by the words used in the sub-section 11A(4). Appeal allowed.

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• 2024 (10) TMI 619
  Levy of penalty imposed on co-noticee - main appellant has opted for settling the issue under SVLDRS - HELD THAT:- As held by this Tribunal in similar cases appeal filed by the appellant challenging the personal penalty arising within the same Order-in-Original is unsustainable. Reliance can be placed in SHRI S. BHARATH REDDY, MANAGING DIRECTOR, M/S. BRITISH NUTRITIONS PRIVATE LIMITED SHRI V.S. REDDY, EXECUTIVE DIRECTOR, M/S. BRITISH NUTRITIONS PRIVATE LIMITED, VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE [ 2024 (6) TMI 1394 - CESTAT BANGALORE] where it was held that once the main appeal is settled under SVLDRS, 2019, the appeals filed by the co-noticees challenging the personal penalty arising out of the same Orderin-Original cannot be sustained. The appeal filed by the appellant is allowed.

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• 2024 (10) TMI 618
  CENVAT Credit - capital goods removed from the factory - Applicability of concept of transaction value to the goods which are not manufactured by the respondent - interpretation of Rule 3 (5A) (ii) of Cenvat Credit Rules, 2004 - HELD THAT:- It is evident from the impugned order that the Commissioner (Appeals) completely misread Rule 3 (5A) of CCR under which the demand was confirmed. The Commissioner (Appeals) also committed an error in treating the expression transaction value as assessable value on which duty is paid. Transaction value is the amount paid by one person to another for the goods or services received. Therefore, if the respondent had sold its capital goods to another company, there will be a transaction value i.e., the price for which it had sold the used capital goods. A plain reading Rule 3 (5A) of CCR leaves no manner of doubt that there would be a transaction value when goods are sold, even if such goods are not manufactured by the seller. This is a fit case to be remanded back to the Commissioner (Appeals) to examine Rule 3 (5A) of CCR as applicable during the relevant period and also examine what is value of the capital goods on which the respondent had taken capital goods CENVAT credit. The matter is remanded to the Commissioner (Appeals) to decide the appeal afresh considering the submissions made by the respondent and also the legal provisions as applicable during the relevant period - Appeal allowed by way of remand.

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• 2024 (10) TMI 617
  CENVAT Credit - GTA Services - outward freight - clearance of the goods from their premises to the depots or to the premises of the customers on FOR basis - period 2012-13 to 2016-17 - HELD THAT:- The reason for denial of the said credit is in the decision of the Hon ble Supreme Court in the case of M/s Ultratech Cement Ltd [ 2007 (3) TMI 738 - CESTAT AHMEDABAD] . However, it is also noted that this issue has been finally clarified by the Board by Circular No.1065/4/2018-CX dated 08.06.2018. After taking note of the decision of the Hon ble Supreme Court in the case of Ultratech Cement Ltd. and COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [ 2015 (4) TMI 857 - SUPREME COURT ] it was clarified that after amendment of in the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004, effective from 01.03.2008, the service is treated as input service only up to the place of removal . Undisputedly in the present case the supplies were made on FOR basis and the value of the goods for payment of duty determined accordingly. In view of the clarification, it is clear that Cenvat credit in case where supplies were made on FOR basis to the premises of the customers Cenvat credit of the GTA Services shall be admissible. There are no merits in the impugned order - appeal allowed.

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• 2024 (10) TMI 616
  Partial rejection of refund claims - Incorrect address mentioned in invoices - Invoice were in name of unregistered premises - Invoices pertain to service which do not have any nexus with the output service rendered by the Appellant. Denial of credit for the reason that invoices do not contain proper details such as address etc. - HELD THAT:- The clarification issued by the Board is very categorical and clear and that refund claims could not have been denied or modified for the reasons that certain details are missing in the invoice. The only requirement this is to be fulfilled is that the service against which the appellant is claiming the input credit and subsequently refund under Rule 5 have been used for providing output services. Once that requirement is satisfied there are no reason as to why the CENVAT Credit on this account could have been denied - Since appellant have centralized registration at NOIDA, the input credit in respect of the services received at Pune and Chennai gets reflected in the common cenvat credit account maintained at NOIDA and in the ST-3 return filed in NOIDA. By taking the credit against the invoices addressed to their premises at Pune and Chennai appellant have not contravened any provision of the Cenvat Credit Rules, 2004 for which the said credit could have been denied. Refund claim denied/modified on the ground that invoices have been issued in unregistered premises - HELD THAT:- The refunds could not have been modified/denied placing reliance on M/S RAAJ KHOSLA CO. PVT. LTD. VERSUS CST, DELHI [ 2008 (7) TMI 122 - CESTAT NEW DELHI] where it was held that We find the registration certificate was subsequently amended included the address mentioned in the invoices with retrospective effect. In these circumstances, order whereby credit was disallowed on this ground is set aside and the appeal of the appellant in this regard are allowed. Cenvat Credit has been sought to be denied on various services by the impugned order holding the services to be ineligible as input services in terms of Rule 2 (l) of the CENVAT Credit Rules, 2004 - HELD THAT:- The impugned order does not specify the services in respect of which the credit is sought to be denied. Even in the said impugned order credit has been allowed in respect of all the services except for management, maintenance repair services and hospitality services. Establishment of nexus between the input services and output services - HELD THAT:- It is a settled law that no nexus was required to be established after the amendment made in Rule 5 of CENVAT Credit Rules, 2004 in the year 2011. Only what was required while examining the refund claim under Rule 5 was that credit has been taken during the quarter for which the refund claim is prescribed - there are no justification for denial of CENVAT credit or the refund claim in respect of these input services. There are no merits in the impugned orders and the same are set aside. The matters in respect of the refund claim are remanded back to the original authority for redetermination of amounts to be refunded to the appellant in terms of rule 5 of CENVAT Credit Rules, 2004 by holding that the disputed credit is admissible. Appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2024 (10) TMI 615
  Challenge to demand notice for recovery of outstanding dues - whether the claims if any under the Gujarat Value Added Tax Act, 2003 which are not considered in the Resolution Plan would stand extinguished? - HELD THAT:- From the record, it is noticed that in the proceedings filed before NCLT, during CIRP process, the Assistant Commissioner of State Tax, as one of the operational creditors, lodged a claim of Rs.38,86,63,983/- for its dues under the Gujarat Value Added Tax Act, 2003 for the assessment years 2006-07, 2009-10, 2010-11 and 2011-12. Thus, it cannot be denied that the respondent authorities were not aware about the pending liquidation proceedings. Further, from record it appears that objections were not raised by the respondent authorities against approval of the plan. Since, respondent did not object to approval of the plan, question of respondent not being heard would not arise. No application was filed before NCLT in the pending proceedings by the State authorities. In view of settled principle of law that once the resolution plan is approved, the claim, if any, stands extinguished and no claim can be made by any entity including the State Tax Authority, it is deemed appropriate to quash and set aside the demand notice dated 16.07.2020. Therefore, the demand notice dated 16.07.2020, issued by State Tax Officer (1), Unit-7, Ahmedabad is hereby quashed and set-aside. Petition allowed.

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• Indian Laws

• 2024 (10) TMI 614
  Dishonour of cheque - money lending or investment - Applicability and interpretation of the Bengal Money Lenders Act, 1940 in relation to Section 138 of the Negotiable Instruments Act, 1881 - legally enforceable debt or investment of money into business - specific overt act has been alleged or attributed against the petitioner for the commission of alleged offence or not - sufficient ingredient for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 in the complaint or not - HELD THAT:- As per explanation to Section 138 of the Negotiable Instruments Act debt or other liability means a legally enforceable debt or other liability. So, a loan advanced by a money lender who is doing business of money lending without licence is not a debt or other liability and provisions of Section 138 of the Act will not apply to such transaction. In the light of above, the legal position is only applicable to the case, which falls under the provision of Bombay Money Lenders Act, 1946. But, the present case falls under the provision of Bengal Money Lenders Act, 1940 and those cases circumstances are totally different. The Hon ble Supreme Court in the case Electronics Trade Technology Development Corporation Ltd., Secunderabad v. Indian Technologists Engineers (Electronics) (P) Ltd. [ 1996 (1) TMI 398 - SUPREME COURT ] observed that the object of bringing section 138 on statute appears to inculcate the faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments and section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a book and induce the payee or holder in due course to act upon it. The Bengal Money Lenders Act, 1940 and Chapter XVII of the Negotiable Instruments Act, 1881 which was incorporated by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 for providing penalties in case of dishonour of cheques with an objective to encourage the culture of use of cheques and enhancing the credibility of the instrument. Both statutory provisions were enacted with different objectives and intent and are operational in independent and separate legal spheres - There is no apparent conflict between provisions of the Bengal Money Lenders Act, 1940 which is not apparently bars civil remedy for a money lender who is not having valid licence or certificate for doing business of money lending and Chapter XVII of the Act which provides criminal remedies and penalties in case of dishonour of a cheque due to reasons as mentioned in section 138 of the Act. It is acceptable proposition of law that provisions of the Bengal Money Lenders Act, 1940 does not limit operation of section 138 of the Act and both are independent and mutually exclusive to each other. If a person advances a loan even without having a valid money lending licence or certificate, he can institute and prosecute complaint under section 138 of the Act on basis of cheques and he has to satisfy only the mandatory requirements of section 138 of the Act. There are no merits in arguments advanced by the counsel for the petitioner that without money lending license a complaint cannot be filed under the N.I. Act and the complaint can be decided without evidence being led to show that petitioner was a Money Lender. The arguments advanced by the counsel for the Petitioner on aforesaid issues are without any legal basis and are legally unsustainable. Therefore, there is insufficient reason placed before this Court that no proceedings can be initiated or continued and it would be gross abuse of process of law. The Criminal Revisional application filed by the petitioner has devoid of merits - revision dismissed.

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• 2024 (10) TMI 613
  Dishonour of Cheque - Prayer for mandatory injunction to direct the petitioner/defendant to return all the blank cheques - permanent injunction to restrain the petitioner/defendant from encashing the said blank cheques by presenting into the bank - to restrain the petitioner/defendant from disturbing the plaintiffs/respondents 1 to 3 doing their business in the suit property - HELD THAT:- On perusal of the judgment of the Apex Court in M/s. Frost International Limited vs. M/s. Milan Developers and Builders (P) Limited and another [ 2022 (4) TMI 195 - SUPREME COURT ], relied on by the learned counsel for the petitioner, it appears that it is squarely applicable to the facts of the present case, where it was held that we hold that while the plaintiff has certain grievances arising from the MoU, against the defendants which may give rise to seek appropriate remedies in law, the aforesaid three declaratory reliefs sought in the plaint are barred by law. Hence, the plaint is liable to be rejected in exercise of jurisdiction under Order VII Rule 11 CPC. This Court holds that if the plaintiffs have any grievance against the defendant, they can seek appropriate remedies in law, but the reliefs sought in the plaint are barred by law. Hence, the plaint is liable to be rejected. The Civil Revision Petition is allowed.

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• 2024 (10) TMI 612
  Seeking grant of pre-arrest bail - extracting the money from the truck owners or the drivers, under threat, impersonating themselves as GST officers - whether in each case a notice under Section 41A of the Criminal Procedure Code is mandatory? - HELD THAT:- Section 41 of the Criminal Procedure Code provides for time and situation when the police may arrest the accused without a warrant. The first condition is that the offence should be cognizable. Second would be the term of the conviction with imprisonment for a term which may be less than seven years or which may extend to seven years or with fine. Further, for such an arrest, the police officer has reason to believe on the basis of such complaint, information, or suspicion that such person has committed the said offence. In the concluding part of Satender Kumar [ 2022 (8) TMI 152 - SUPREME COURT ], the Hon ble Supreme Court issued certain directions. It has been reiterated that the investigating agencies and officers are duty-bound to comply with the mandate of Section 41 and 41A of the Code and directions issued by this Court in Arnesh Kumar [ 2014 (7) TMI 1143 - SUPREME COURT ]. Any dereliction on their part has to be brought to the notice of the higher authorities by the Court, followed by appropriate action. Reading Section 41A read with Section 41 of the Criminal Procedure Code and the law laid down by the Hon ble Supreme Court in the above cases, it is clear that for every such offence mentioned in Section 41 of the Criminal Procedure Code, a notice of appearance as provided under Section 41A of the Criminal Procedure Code is not essential, unless the investigation officer is satisfied that the arrest of accused is not required as contemplated under Section 41 of the Criminal Procedure Code. The charge sheet is filed against the applicant, showing him absconding. The police have not yet disclosed what is the direct material against the applicant, but other concerned material has shown the nexus of the applicant with the crime. The offence is apparently serious. The offence was committed with the help of police personnel and by using government police vehicles. It is a matter of safety of the businessman and the common man. The Court is agreeable with the arguments of the learned APP for the State that there are reasons to believe that the arrest of the applicant is required. Hence, notice under Section 41A may be dispensed with in this case. It seems that the learned counsel for the applicant has tried to take benefit of the ratio laid down by the Hon ble Supreme Court in the case of Satender Kumar and Arnesh Kumar, which is not applicable to the case at hand. Considering the nature of the offence, and how it has been committed is discovered, the Court is of the view that this is not a fit case to exercise discretion under Section 438 of the Criminal Procedure Code. The application stands dismissed.

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