TMI Tax Updates - e-Newsletter
October 19, 2023

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. Filing of Form 10-IFA vide Rule 21AHA by new manufacturing cooperatives to avail benefit of concessional rate of Income Tax

   By: Vivek Jalan

2. Penalty should not be imposed on ITC wrongly availed when Transitional Credit used for discharging tax liability

   By: Bimal jain

3. NO PROVISION TO DISCLOSE THE ROUTE OF TRANSPORTATION OF GOODS

   By: DR.MARIAPPAN GOVINDARAJAN

4. No service tax on construction services for the period before June 1, 2007

   By: Bimal jain

News

1. Advisory: Person supplying of Online Money Gaming services or OIDAR or Both– Form GST REG-10 and Form GSTR-5A

2. Cabinet approves Green Energy Corridor (GEC) Phase-II – Inter-State Transmission System (ISTS) for 13 GW Renewable Energy Project in Ladakh

3. Cabinet approves Minimum Support Prices (MSP) for Rabi Crops for Marketing Season 2024-25

4. Cabinet approves release of an additional instalment of Dearness Allowance and Dearness Relief due from 01.07.2023

5. DFS Secretary Dr. Vivek Joshi chairs meeting with private sector General Insurers for growth and development of insurance sector with continuous collaborative efforts

Notifications

Central Excise

1. 35/2023 - dated 17-10-2023 - CE

Exemption to the excisable goods - Reduce the Special Additional Excise Duty on export of Diesel - Further amend Notif no. 04/2022-Central Excise, dated the 30th June, 2022.

2. 34/2023 - dated 17-10-2023 - CE

SAED on production of Petroleum Crude and export of Aviation Turbine Fuel- Reduce rates - Notif. No. 18/2022-Central Excise, dated the 19th July, 2022 as amended.

DGFT

3. 37/2023 - dated 18-10-2023 - FTP

Export of Non-Basmati White Rice (under HS code 1006 30 90) to Nepal, Cameroon, Cote d' Ivore, Republic of Guinea, Malaysia, Philippines and Seychelles

4. 36/2023 - dated 18-10-2023 - FTP

Extension of date for Restriction on export of sugar beyond 31st October, 2023

GST - States

5. S.O. 343 - dated 16-10-2023 - Bihar SGST

Seeks to notify special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by unregistered persons

6. MGST-1023/C.R.53/Taxation-1 - dated 16-10-2023 - Maharashtra SGST

Amendment in Notification No. MGST.1017/C.R.193/ Taxation-1, dated 24th October, 2017

7. 51/2023-State Tax - dated 16-10-2023 - Maharashtra SGST

Maharashtra Goods and Services Tax (Second Amendment) Rules, 2023

8. 50/2023-State Tax - dated 16-10-2023 - Maharashtra SGST

Amendment in Notification No. 66/2017-State Tax, dated the 15th November, 2017

9. 49/2023-State Tax - dated 16-10-2023 - Maharashtra SGST

Seeks to notify supply of online money gaming, supply of online gaming other than online money gaming and supply of actionable claims in casinos under section 15(5) of MGST Act.

10. 48/2023-State Tax - dated 16-10-2023 - Maharashtra SGST

Seeks to notify the provisions of the Maharashtra Goods and Services Tax (Amendment) Ordinance, 2023 (Mah. Ordinance No-VII of 2023)

11. MAHARASHTRA ORDINANCE No. VII OF 2023 - dated 26-9-2023 - Maharashtra SGST

Maharashtra Goods and Services Tax (Amendment) Ordinance, 2023

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 09/2023-24 - dated 22-9-2023

Sub : Implementation of Ex-Bond Shipping Bill in ICES 1.5 -reg.

Highlights / Catch Notes

GST

• Court Rules Assessing Officer Can't Assess JVAT Returns Under JGST Act, Disallowing Transitional Credit.

  Case-Laws - HC : Denial of Transitional credit - This court has therefore clearly held that under the garb of disallowing transitional credit, the Assessing Officer under the JGST Act cannot conduct an assessment of the returns filed under the JVAT Act. - HC
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• Court Sets Aside Registration Cancellation; Fraud Allegations Insufficient for Justification, Department Urged to Follow Proper Legal Procedures.

  Case-Laws - HC : Cancellation of the petitioner’s registration - Allegation that registration obtained by means of fraud, willful misstatement or suppression of facts - time and again the department is not required to be told by the Court as to what would be the position in law as also the correct approach in law, the officers needs to follow - there are no manner of doubt that the impugned order would be required to be set aside. - HC
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• Promoter Must Pay 9% CGST and SGST Under Reverse Charge for Development Rights per Entry 5B, Notification 13/2017.

  Case-Laws - AAR : Levy of GST - Reverse Charge Mechanism (RCM) - transfer of development rights by the land owner in consideration of land development services - The Promoter is liable to pay CGST & SGST at the rate of 9% each on Reverse charge basis on transfer of development rights under entry 5B of the notification 13/2017 as amended by notification 5/2019 on 29.03.2019. The applicable rate is 9% CGST & SGST respectively. - AAR
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Income Tax

• Section 153A: No New Claims Allowed in Unabated Assessments Post-Search; Focus on Search-Related Findings Only.

  Case-Laws - AT : Assessment u/s 153A pursuant to search proceedings - making a new claim which is not a consequence of the search action in case of unabated assessment - both the assessee as well as the A.O. cannot make any claim which is not a consequence of the search action in case of unabated assessment. - AT
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• Supreme Court: Telecom License Fee Under New Policy 1999 Classified as Capital Expenditure Despite Installments.

  Case-Laws - SC : Nature of expenses - apportioning the licence fee as partly revenue and partly capital - variable licence fee paid by the assessees under the New Telecom Policy, 1999 - it cannot be axiomatically held that an expenditure which in its core, capital in nature, is actually to be treated as a revenue expenditure simply because the payment is structured in instalments. - Though the licence fee is payable in a staggered or deferred manner, the nature of the payment, which flows plainly from the licensing conditions, cannot be recharacterized. - Such a payment has to be treated or characterized as capital only. - SC
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• Amendment to Income Tax Act Section 153(2A) Not Retrospective; Actions Beyond Limitation Period Deemed Unsustainable.

  Case-Laws - HC : TP Adjustment - Period of limitation u/s 153(2A) - Scope of amendment w.e.f. 1.4.2016 - retrospective effect - Legislative intention - the proceedings drawn, admittedly being beyond a period that is prescribed under sub-section (2A) of Section 153 and the consequential orders passed are all beyond the period of limitation prescribed under sub-section (2A) of Section 153. Hence, the same being not sustainable - HC
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• Court Rules Advertorial Retained Amounts Not Commission, No TDS Liability for Media Companies u/s 194H.

  Case-Laws - HC : TDS u/s 194H - amount retained by the agencies engaged in providing advertorials in the nature of commission or not - relationship between the media company and the advertising agency is that of a principal to principal and therefore, not liable for TDS u/s 194H. - HC
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• Provident Fund and ESI Payments Due on National Holiday: Section 36(1)(5)(A) and General Clauses Act Support Assessee.

  Case-Laws - HC : Amount payable towards the provident fund and towards the ESI fell due on a National Holiday - Deduction u/s 36(1)(5)(A) - Section 10 of the General Clauses Act would help the respondent / assessee to tide over the objections raised on behalf of the appellant/revenue. - HC
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• Assessee's Fictitious Loss in Derivative Trading Uncovered; Additions to Taxable Income Confirmed by A.O.

  Case-Laws - AT : Claim of fictitious loss which reduced the profit - derivative trading - It is found by the authorities that the script wise details of the derivative trading that the assessee had taken the fictitious loss in order to reduce the profit. The assessee has not produced any material to contradict or disprove the said findings of the A.O. - Additions confirmed - AT
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• GST Input Credit Lapse Allowed as Business Expense; Section 263 Revision Deemed Unsustainable by Assessing Officer.

  Case-Laws - AT : Allowable business expenditure - Lapse of GST input credit - Disallowance u/s 43B - The said GST Credit lapse is not a provision made by the assessee bank. If said credit is not taken then also it will allowable expense as a part and parcel of respective expense. At the time of the assessment proceeding, the learned AO has opined that the GST Credit lapse is an eligible expense and hence he has allowed the same - Revision u/s 263 is not sustainable - AT
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• Show Cause Notice Unjustified: AO's Decision Upheld Due to Lack of Evident Circumstances u/s 263.

  Case-Laws - AT : Revision u/s 263 - AO has not committed any error in not chasing ‘will of the wisp’ in the absence of any brazen circumstances available. In the light of aforesaid discussion, the basis of issuance of show cause notice u/s 263 of the Act does not appear to be tenable in law in the peculiar set of facts. - AT
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• R&D expenses not claimed under IT Act section 35(2) are fully allowable u/s 35(1) without DSIR approval. &DExpenses.

  Case-Laws - AT : Research and Development expenses (R&D Expenses) - Allowability of expenses u/s 35(2) - The expenses are not covered u/s 35(2) - The assessee has not claimed the same u/s 35(2) but the expenses are allowable u/s 35(1) @ 100%. Since, the ratio of incurring of expenses per se is not in dispute, we hold that the assessee is eligible to claim expenses u/s 35(1). The approval of the DSIR is not required for claim u/s 35(1)(i). - AT
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• L&T's Technical Service Fees for Foreign Clients in Vietnam and China: Payments Made for Plant Setup Abroad.

  Case-Laws - AT : Fees for technical services - Clearly, the source of income namely the assessee’s customers were the foreign based clients of L&T and the services were also to be performed in locations outside of India. In this case, from the facts placed on record in our view, L&T has made payment for utilization of the services provided by the assessee in business carried out by L&T outside of India. The services which were provided by the assessee were utilized by L&T in respect of its plant set up in Vietnam and China for its foreign clients. - AT
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• Unaccounted Cash Found u/s 69A: Assessee Challenges Credibility of Partners' Statements, Claims Benefit of Doubt.

  Case-Laws - AT : Unexplained money u/s 69A - Unaccounted cash found in course of search and seizure - The claim of assessee that the statement of partners are neither voluntary nor reliable and is thus bereft of any probative value, is not without any substance as noted in the preceding paragraphs. The benefit of doubt, in the peculiar circumstances, thus need to go in favour of the subject assessee. The assessee cannot be held accountable for the lapses or remissness on the part of the Revenue Authorities. - AT
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• Unexplained Cash Deposits u/s 69A: Only Gross Profit Added to Income, Not Full Amount. Partial Relief Granted.

  Case-Laws - AT : Unexplained money u/s 69A - cash deposit in the Saving Bank Account - Since the assessee has not disclosed this bank account in the return of income, therefore, deposit in the saving bank account is considered as undisclosed turnover and GP rate on the said turnover would be added to the total income of the assessee instead of the entire deposit. - Partial relief granted - AT
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• Royalty Income from Financial Products in India Not Taxable Under India-UK DTAA for Assessee.

  Case-Laws - AT : Income taxable in India - royalty receipts - Distribution of Financial Products - assessee had granted rights to distribute its various financial and related products in the Indian market to DJCIPL on a principal to principal basis and at arm’s length price. - purchase price of Factiva products distributed by DJCIPL is not taxable as ‘royalty’ under India UK DTAA in the hands of the assessee. - AT
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Customs

• Defendants could not refute witnesses disproving smuggling claims; no evidence provided for goods being imported.

  Case-Laws - HC : Proof of smuggling of goods - DW.1 (revenue officer) stated in evidence that it was suspected that articles were smuggled and that it was believed that the articles were smuggled without indicating anything else or adducing any evidence that these articles were either imported or not available in the country. There is no concrete or cogent evidence adduced on behalf of the Defendants’ witnessed to rebut the evidences so adduced by the Plaintiffs witnesses disproving their evidences. - HC
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• Seizure Extension Not Invoked; Petitioner Entitled to Release of Goods After Expiry on July 11, 2023.

  Case-Laws - HC : Extension of period of seizure - The second extension of two months expired on 11 July 2023. As noted, if the extended period of six months under the proviso to sub-section (2) if was to be invoked, it would have expired on 11 August 2023. - Thus, by operation of law, that is, by application of the provisions of sub-section (2) of Section 110, read with the proviso the seizure of petitioners goods has ceased to operate and has became invalid, which would entitle the petitioner for the release of the goods. - HC
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• Differential Duty on Imports Overturned Due to Lack of Evidence; Penalty on Appellant Also Unsustainable.

  Case-Laws - AT : Valuation of imported goods - branded goods or not - There is no evidence available on record to reject the transaction value declared by them and hence the differential duty arrived at by the adjudicating authority based on the value available on contemporaneous import of similar goods is not sustainable. Since the demand is not sustainable, the penalty imposed on the Appellant on this count is not sustainable. - AT
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• Export Obligations Met Late; Redemption Fines and Penalties Annulled After Customs Duty Payment Acknowledged by DGFT.

  Case-Laws - AT : Advance Authorization Scheme - Non-fulfilment of Export obligation - The appellants have fulfilled the conditions of export obligation after the expiry of the export obligation period but upon payment of an amount towards differential customs duty and towards interest thereon to the government. These payments made by the appellants have been duly taken into account by the DGFT in their letter dated 19.02.2020 while giving the redemption cum regularisation permission to the appellants. - Levy of redemption fine and penalty on the appellants is set aside. - AT
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• Customs Limitation Extension Not Automatic Without Confiscation; Suppression or Misrepresentation Still Considered Separately in Assessments.

  Case-Laws - AT : Extended period of limitation - Suppression/ mis-representation or not - A finding on inapplicability of confiscation did not necessarily extend to ‘suppression/ misrepresentation’ deployed for enhancement of value for assessment. - AT
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• Custodian Penalized u/s 45 for Pilferage and Tampering of Container Seals Before Clearance of Imported Goods.

  Case-Laws - AT : Levy of penalty on Custodian - providing Inland transportation of containers - CONCOR - As per section 45, the custodian is burdened with the responsibility of safe custody of imported goods unless and until those goods cleared either for home consumption or for being warehoused. Admittedly, the goods got pilfered and container seal found tempered when the goods were not still cleared - there are no reason to absolve the appellant from the responsibility fastened upon him and violation confirmed. - No relief - AT
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• Appellate Authority rules red betel nuts cannot be confiscated without evidence of foreign origin and illegal smuggling.

  Case-Laws - AT : Smuggling - red Betel Nuts - Foreign origin goods - In the absence of any positive evidence to establish the foreign origin of the goods and their illegal smuggling into the country, the Appellate Authority is agreed upon that their confiscation is neither warranted nor justified. As such, there are no infirmity in the impugned order of the Commissioner (Appeals). - AT
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• Customs House Agent's Penalty u/s 112(a) Overturned Due to Lack of Evidence on Importer Verification Breach.

  Case-Laws - AT : Levy of penalty u/s 112 (a) of the Customs Act 1962 - Customs House Agent (CHA) - violation of Regulation 13 of CHALR 2004 - It is alleged that the appellant did not verify the antecedents of the importer - The department has not been able to establish sufficient grounds for imposing penalty under section 112 (a) of Customs Act 1962. The penalty imposed is not warranted and not justified. - AT
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• Freight and Insurance Costs Excluded from Duty Valuation on Fuel and Diesel Oil in Coastal Vessel Operations.

  Case-Laws - AT : Valuation of imported goods - vessel converted from ‘foreign run’ to ‘coastal run’ for carriage of coastal cargo - When IOCL sells the goods the elements of freight and insurance are already added. Hence, these elements need not be added again to arrive the assessable value for the purpose of charging duty on the Fuel Oil and Diesel Oil used by the vessel during its coastal run - AT
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Indian Laws

• Court Affirms IDFC Bank's Right to Issue Notice for Cheque Dishonor After Capital First Amalgamation.

  Case-Laws - HC : Dishonour of Cheque - validity of issue of notice by the new company after amalgamation - After the amalgamation, all the loans availed by various borrowers including the loan availed by the petitioners herein was also transferred to IDFC Bank Limited, and further that all the properties, rights, liabilities and duties of Capital First Ltd. were vested in IDFC Bank Limited including all contractual liabilities owed by the present petitioners to Capital First Ltd. - The contention rejected - HC
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• Chartered Accountant Disciplinary Case Highlights Need for Reasoned Decisions to Ensure Justice and Fairness.

  Case-Laws - HC : Disciplinary proceedings against the Chartered Accountant (CA) - The person who is adversely affected wants to know as to why his submissions have not been accepted - An unreasoned decision may be just, but it may not appear to be so to the person affected. A reasoned decision, on the other hand, will have the appearance of fairness and justice. - HC
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IBC

• Tribunal Confirms Committee of Creditors' Authority on Distribution Methodology in Resolution Plan under Insolvency Code Section 30(2.

  Case-Laws - AT : Approval of Resolution Plan - Whether the CoC is empowered to decide the distribution methodology? - Keeping in view the catena of Judgments of the Hon’ble Apex Court regarding the commercial wisdom of the CoC in approving the Plan and the limited jurisdiction therein, this Tribunal is of the considered view that ‘the CoC in its commercial wisdom can propose, consider and decide on the distribution mechanism under the Resolution Plan’, as long as it is within the domain of Section 30(2) of the Code. - AT
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• Bank Guarantee in Insolvency Proceeding Invoked; Section 14(3)(b) IBC Exception Applies, Moratorium Doesn't Block Encashment.

  Case-Laws - AT : Invocation of Bank Guarantee allowing the Application of the Resolution Professional - Performance Bank Guarantee or not - as per the facts of this case, the Bank Guarantee, provided by the Respondent No. 2/Bank is held to be covered by the exception provided in provisions of Section 14(3)(b) of IBC, 2016, and the Moratorium prescribed under Section 14(1) of IBC, 2016, shall not apply to its Encashment. - AT
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Service Tax

• Supreme Court Upholds Original Intent of Service Tax Exemption, Interprets "or" in Clause 2(s) as Intended Alternative.

  Case-Laws - SC : Exemption from Service tax - interpretation of “or” as “and” - governmental authority - educational institutions - Indian Institute of Technology, Patna (IIT Patna) - National Institute of Technology, Rourkela (NIT Rourkela) - While the Clarification Notification introduced an amended version of clause 2(s), the whole canvas was open for the author to define “governmental authority” whichever way it wished; however, “governmental authority” was re-defined with a purpose to make the clause workable in contra-distinction to the earlier definition. Therefore, we cannot overstep and interpret “or” as “and” so as to allow the alternative outlined in clause 2(s) to vanish. - SC
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• Cooperative Society Transactions with Members Not a Service per Section 65B(44) Due to Mutuality Doctrine.

  Case-Laws - AT : Doctrine of mutuality - Club or association service - since there is a doctrine of mutuality between the appellant’s corporative society and its members, it cannot be said that a person had provided service to another person. - even as per the definition of service provided under section 65B(44) with effect from 01.07.2012, the activity between the appellant and it's members does not fall under the definition of service. - AT
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Central Excise

• Refund Allowed: Revenue Wrongly Rejected Claim u/s 11B Despite Timely Filing and Self-Assessment Issues.

  Case-Laws - AT : Refund of excise duty paid erroneously - When the appellant realized that he has paid excess duty thereafter he filed the refund application under Section 11B of the Central Excise Act. Refund was rejected mainly on the ground that he has not challenged the self-assessment in appeal and without challenging the self-assessment refund claim is not maintainable. It is also not in dispute that the refund claim has been filed within the period of limitation as prescribed under the provision of Section 11B. - Revenue wrongly rejected the claim - refund allowed - AT
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Case Laws:

• GST

• 2023 (10) TMI 795
  Maintainability of petition - availability of alternative remedy - Violation of principles of natural justice - opportunity of personal hearing not provided - procedure prescribed in Circular No.12 of 2022 dated 26.09.2022 not followed before passing impugned order - HELD THAT:- Considering the submissions made by the learned counsel for the petitioner, without adverting to the contention raised by the petitioner in the present writ petition and limited direction sought for by him, this Court grants liberty to the petitioner to file appeal against the impugned order within a period of 30 days from the date of receipt of a copy of this order. On such appeal being filed, the concerned Appellate Authority shall entertain the same without insisting upon the limitation aspect. It is open to the petitioner to raise all the issues that were raised before this Court including the refund of bank deposit, before the Appellate Authority, who shall decide the same in accordance with law and on merits. This Writ Petition is dismissed.

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• 2023 (10) TMI 794
  Seeking direction to respondent to allow the petitioner to rectify the GST returns filed for the month of November 2018, December 2018, February 2019, April 2019, May 2019 and July 2019 - HELD THAT:- This Court is not inclined to entertain the present petition. Further, while rejecting this petition, this Court grants liberty to the petitioner to file a rectification application under Section 161 of the GST Act and in such case, this Court directs the respondent to consider the said application on merits and pass appropriate orders to change the credit from one head to another head, within a period of eight weeks from the date of receipt of copy of this order, or otherwise in accordance with law. Petition dismissed.

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• 2023 (10) TMI 793
  Denial of Transitional credit - transition of input tax from the erstwhile regime i.e., the Jharkhand Value Added Act, 2005 and the JGST Act, 2017 - HELD THAT:- It appears that the initiation of proceedings is bad in law, inasmuch as, in this case only a summary of show cause notice in DRC 01 was served and not the proper show cause notice. Admittedly, the Petitioner was only served a summary of show cause notice in Form DRC 01 and not a proper show cause notice under Section 73 of the JGST Act. The issuance of a proper show cause notice is not evident from the order sheet. Neither the Respondents have brought on record any proper show cause notice in its counter affidavit. The requirement of Form JVAT 410/4111 in support of these purchase invoices was / is not required under the JVAT Act or the JGST Act. The Revenue had also disallowed the amount of purchases shown by the Petitioner on the ground that the details mentioned in JVAT 410 and 411 (i.e., details of inward supplies) is not in consonance with online returns i.e., JVAT 200 filed by its Sellers. In this regard the amount involved Rs. 8,57,911.31/-. On this issue it is observed that the AO for the purpose of transition of credit is only required to verify the figures specified in the TRAN-1 and whether conditions under Section 140(3) are satisfied. From a perusal of the impugned appellate order it is evident that the transitional credit has been disallowed not because of non-conformity with condition stipulated in Section 140(3) but because of considerations which were the subject matter of assessment under JVAT Act - Undoubtedly, tax paid on purchases of medicine products / food products is admissible as tax under JGST Act, more particularly because it does not fall within any of categories specified under Section 17(5) of the JGST Act. This court has therefore clearly held that under the garb of disallowing transitional credit, the Assessing Officer under the JGST Act cannot conduct an assessment of the returns filed under the JVAT Act. Application allowed.

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• 2023 (10) TMI 792
  Cancellation of the petitioner s registration - Allegation that registration obtained by means of fraud, willful misstatement or suppression of facts - HELD THAT:- The show cause notice itself was defective, as it did not set out any reasons/grounds which could be responded by the petitioner against the cancellation of the petitioner s registration. The reasons which were furnished were undoubtedly vague. It is difficult to conceive as to how such contents of the notice could be responded when no reasons to support such allegation were provided in the show cause notice. The order dated 17 October, 2022 passed by the designated officer cancelling the petitioner s registration was inherently defective, as again no reasons were furnished dealing with the case as set out by the petitioner in the reply as filed to the show cause notice. There is no discussion whatsoever on any of the documents. The petitioner would be justified in placing reliance on the decision of this Court in MONIT TRADING PRIVATE LIMITED VERSUS UNION OF INDIA ORS. [ 2023 (7) TMI 911 - BOMBAY HIGH COURT] in which in identical circumstances and being confronted with a similar show cause notice, the action on the part of the department was set aside. Similar view has been taken by this Court in the case of NIRAKAR RAMCHANDRA PRADHAN VERSUS UNION OF INDIA ORS. [ 2023 (9) TMI 1176 - BOMBAY HIGH COURT] which was a case wherein similar circumstances the department attempted to justify the impugned order by filing a detailed affidavit as sought to be done in the present case. The Court had expressed its displeasure in the department adopting such approach. Thus, time and again the department is not required to be told by the Court as to what would be the position in law as also the correct approach in law, the officers needs to follow - there are no manner of doubt that the impugned order would be required to be set aside. The impugned show cause notice dated 22 August, 2022 is quashed and set aside - petition allowed.

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• 2023 (10) TMI 791
  Reimbursement of tax already paid by the petitioner - Scope of the contract / tender agreement - HELD THAT:- The Writ Petition is disposed of by directing the respondents to expedite the reimbursement of tax already paid by the petitioner and to pay the differential tax directly to the account of the respondents 8 9. The respondents 8 9 are directed not to take any coercive steps against the petitioner as the tax is to be paid to the Government and the amount to be paid also is also by the Government. The 6th respondent is directed to dispose of the petitioner s representation dated 21.04.2023 and to take steps for getting the amounts due from the Government as expeditiously as possible, preferably within a period of six months from the date of receipt of a copy of this order. Petition disposed off.

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• 2023 (10) TMI 790
  Condonation of delay of 28 days in filing appeal - HELD THAT:- The petitioner claims to have received the order on 09.03.2022. An appeal against Order-in-Original No.04/2021-2022 dated 25.02.2022 should have been filed within a period of sixty days from the date of the aforesaid order or within a period of thirty days thereafter with an application to condone the delay - However, in this case, the petitioner filed an appeal before the second respondent only on 07.05.2022 beyond the period of limitation by 28 days. Although the petitioner has stated that the concerned officer of the petitioner was afflicted with Covid-19 and therefore could not file the appeal in time. The reasons stated appear to be imaginary as no records have been produced by the petitioner to substantiate the same. The petitioner shall deposit 20% of disputed tax as a condition for disposing the appeal - Petition disposed off.

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• 2023 (10) TMI 789
  Demand raised in SCN or not - penultimate paragraph of the impugned notice - Impugned notice is only a proposal under Section 73(5) of the CGST Act, 2017 read with Rule 142(1A) of the CGST Rules, 2017 - HELD THAT:- There is a police threat in penultimate paragraph of the impugned notice in Form GST DRC-01A bearing reference Case ID No.DAR No.751/2023(GST) as it asks the petitioner to pay the amount. However, such threat cannot be enforced directly. The Jurisdictional Assessing Officer namely the second respondent to issue a proper notice under Section 79 after observing procedure prescribed under Rule 88C of the CGST Rules, 2017. As a matter of fact, the second respondent now has invoked Section 79 by referring to Rule 88C of the CGST Rules, 2017 and has issued none on 13.09.2023. It appears to have been in contravention of the procedure prescribed under Rule 88C of the CGST Rules, 2017. However, the aforesaid recovery notice has to be challenged separately. At the same time, the proceedings initiated pursuant to the impugned DRC can neither be stayed nor interfered with. Therefore, this writ petition challenging the impugned notice in DRC-01A dated 07.09.2023 bearing reference Case ID No.DAR No.751/2023 (GST) is liable to be dismissed. Considering the fact that the notice under Section 79 has been issued only on 13.09.2023 under Section 79 of the CGST Act, 2017, recovery proceedings under the recovery notice shall be kept in abeyance for a period of 10 days for the petitioner to work out remedy in the manner known to law. Petition dismissed.

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• 2023 (10) TMI 788
  Maintainability of petition - availability of remedy of Statutory Appeal - mis-match in the returns and the information gathered by the Commercial Tax Department - HELD THAT:- Ordinarily, the petitioner should have been relegated to file a Statutory Appeal before the Appellate Authority interms of section 107 of the TNGST Act, 2017 along with pre-deposit of 10% of the disputed tax in terms of Section 107(6). Considering the fact that there are several disputed question of facts and to balance the interest of the revenue and the interest of the petitioner, one opportunity is given to the petitioner to explain the case within a period of two months from the date of receipt of a copy of this order. The petitioner shall however pre-deposit 20% of the disputed tax within a period of 30 days from the date of receipt of a copy of this order. Petition disposed off.

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• 2023 (10) TMI 787
  Levy of GST - sale of developed plots by applicant to various customers after development - development of plots service provided to the land owners - transfer of development rights by the land owner in consideration of land development services - applicability of Reverse Charge Mechanism - transfer of development rights and development of plot service - time of payment - applicable Notification. Whether sale of developed plots by applicant to various customers after development is taxable under the GST Acts or not? - HELD THAT:- The activity of sale of land is covered as item (5) of the Schedule III to the CGST Act. The Circular No. 177/09/2022 dt: 03.08.2022 issued by Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit) at para-14.3 states that Land may be sold either as it is or after some development such as leveling, laying down of drainage lines, water lines, electricity lines, etc. It is clarified that sale of such developed land is also sale of land and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and accordingly does not attract GST - the value of Land is not taxable either sold as undeveloped land or selling it after the land is developed. Whether development of plots service provided to the land owners is taxable under GST and if so under which Notification and under which entry? - HELD THAT:- The supply of works contract service to customers as well as land owners, who have transferred the development rights to the applicant, is taxable at the rate of 9% CGST 9% SGST as sub entry xii of entry at serial no. 3 with SAC 9954 of the notification 11/2017. Whether transfer of development rights by the land owner in consideration of land development services received is taxable or not under the provisions of the GST Acts? If taxable, whether the applicant is liable to pay GST under RCM basis on the development rights received from the land owners or whether the land owner is only liable to pay GST on such transfer of development rights. What is the applicable Notification and entry in the Notification? - HELD THAT:- As the category of the works contracts under taken by the applicant, who develops plots by leveling or altering land are not included in the above notification 04/2019, this exemption is not applicable to the transactions made by them - Further the Notification 13/2017 was amended vide Notification 5/2019 dt: 29.03.2019 to include services supplied by way of transfer of development rights by any person to a promoter for construction of a project; and thus this supply attracts liability on reverse charge. The term project is defined in the notification as a Real estate project or a residential real estate project as defined under Sec 2 (zn) of the Real-estate (regulation and development) Act 2016 -The Promoter is liable to pay CGST SGST at the rate of 9% each on Reverse charge basis on transfer of development rights under entry 5B of the notification 13/2017 as amended by notification 5/2019 on 29.03.2019. The applicable rate is 9% CGST SGST respectively.

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• Income Tax

• 2023 (10) TMI 786
  Nature of expenses - apportioning the licence fee as partly revenue and partly capital - variable licence fee paid by the assessees under the New Telecom Policy, 1999 to Department of Telecommunications ( DoT ) - Allowability of revenue expenses u/s 37 or capital in nature [to be amortised u/s 35ABB] - migration to the Policy of 1999 - Whether the High Court of Delhi [ 2013 (12) TMI 1115 - DELHI HIGH COURT] was right in apportioning the licence fee as partly revenue and partly capital by dividing the licence fee into two periods, that is, before and after 31st July, 1999 and accordingly holding that the licence fee paid or payable for the period upto 31 July, 1999 i.e. the date set out in the Policy of 1999 should be treated as capital and the balance amount payable on or after the said date should be treated as revenue? HELD THAT:- The expenditure is to be attributed to capital if it be made with a view to bringing an asset or advantage into existence, however, it is not necessary that it should always achieve the intended result in order to be held to be capital in nature. Thus the sum spent in trying to procure an agency agreement or a licence, may be capital expenditure though the intended agency or licence may not be ultimately secured. By enduring , it is meant enduring in the way that fixed capital endures and it does not connote a benefit that endures in a sense that for a good number of years it relieves the assessee of a revenue payment. Payment of royalty - distinction between a payment made to acquire a right, and payment of royalty in a broad sense - Stated in the most simplistic manner, acquisition of a right would mean purchase of an asset, tangible or intangible, for the enduring advantage of the purchaser. When a right is said to be acquired, it means that the ownership of the said right vests with the purchaser. By contrast, payment of royalty is to use a right or asset. The right or asset is not per se acquired by the person or entity authorised to use it but continues to vest with the owner of the right. In case of royalty, payment is made merely to secure the right to use an asset for a stipulated duration. When the payment of royalty ceases, in most cases, the right to use the asset also ceases. Most often, the amount of royalty to be paid is dependent on the annual sales. Further, in order to qualify as royalty, the payment must have no nexus with the acquisition of a capital asset, vide Travancore Sugars and Chemicals Ltd.[ 1966 (9) TMI 44 - SUPREME COURT] , Mewar Sugar Mills Ltd.[ 1972 (9) TMI 12 - SUPREME COURT] The decision of this Court in Gotan Lime [ 1965 (11) TMI 35 - SUPREME COURT] is highly instructive while attempting to draw a distinction between payment made to acquire a right, and payment of royalty for use of a right or asset.This Court, while holding that the payment in question therein was revenue expenditure, reasoned that the payment was not for securing an enduring advantage but was a royalty payment in order to obtain raw material and hence, a revenue expenditure. The above dictum is clear on the aspect of the distinction between payment made to acquire a right and payment of royalty inasmuch as it lays down in express terms that if a payment is made, not towards securing an enduring advantage or asset, but towards a right to use an asset, the same would be royalty. It has further been stated in no unclear terms that where a payment is not referrable to the acquisition of a capital asset (particularly, mining lease in the said case), but only secures a right to use the asset, the same would be royalty and hence classifiable as a revenue expenditure. What is material is the nature of right sought to be secured through the payment or transaction in question. The purpose towards which the expenditure is incurred must guide any attempt to categorise the expenditure. The structure or form of the transaction or the payment schedule is hardly suggestive of the nature of the transaction. Therefore, it cannot be axiomatically held that an expenditure which in its core, capital in nature, is actually to be treated as a revenue expenditure simply because the payment is structured in instalments. Determinative test to identify whether an expenditure structured in the form of instalments is in the nature of a capital expenditure or revenue expenditure, would be to first assess whether the payment made either in lump-sum or in instalments relates to the acquisition or expansion of a capital asset, or by contrast, relates to the working of an asset to produce profits; whether the consideration payable towards the acquisition or expansion of a capital asset has simply been chopped up into smaller sums payable in instalments, for the sake of convenience. We shall proceed to answer whether the High Court of Delhi was right in apportioning the licence fee as partly revenue and partly capital by dividing the licence fee into two periods, i.e. before and after 31 July, 1999 and accordingly holding that the licence fee paid or payable for the period upto 31 July, 1999 i.e. the date set out in the Policy of 1999 should be treated as capital and the balance amount payable on or after the said date should be treated as revenue in the negative, against the assesses and in favour of the Revenue for the following reasons: Reliance placed by the High Court on the decisions of this Court in Jonas Woodhead [ 1997 (2) TMI 4 - SUPREME COURT] and Best and Co [ 1965 (11) TMI 23 - SUPREME COURT] and Southern Switch Gear Ltd [ 1997 (12) TMI 105 - SC ORDER] as approved by this Court appear to be misplaced inasmuch as the said cases did not deal with a single source/purpose to which payments in different forms had been made. On the contrary, in the said cases, the purpose of payments was traceable to different subject matters and accordingly, this Court held that the payments could be apportioned. However, in the present case, the licence issued under Section 4 of the Telegraph Act is a single licence to establish, maintain and operate telecommunication services. Since it is not a licence for divisible rights that conceive of divisible payments, apportionment of payment of the licence fee as partly capital and partly revenue expenditure is without any legal basis. Decision of the High Court could have been sustained if the facts were such that even if the respondents-operators did not pay the annual licence fee based on AGR, they would still be able to hold the right of establishing the network and running the telecom business. However, such a right is not preserved under the scheme of the Telegraph Act which we have detailed above. Hence, the apportionment made by the High Court is not sustainable. The fact that failure to pay the annual variable licence fee leads to revocation or cancellation of the licence, vindicates the legal position that the annual variable licence fee is paid towards the right to operate telecom services. Though the licence fee is payable in a staggered or deferred manner, the nature of the payment, which flows plainly from the licensing conditions, cannot be recharacterized. A single transaction cannot be split up, in an artificial manner into a capital payment and revenue payments by simply considering the mode of payment. Such a characterisation would be contrary to the settled position of law and decisions of this Court, which suggest that payment of an amount in instalments alone does not convert or change a capital payment into a revenue payment. It is trite that where a transaction consists of payments in two parts, i.e., lump-sum payment made at the outset, followed up by periodic payments, the nature of the two payments would be distinct only when the periodic payments have no nexus with the original obligation of the assessee. In the present case, the successive instalments relate to the same obligation, i.e., payment of licence fee as consideration for the right to establish, maintain and operate telecommunication services as a composite whole. This is because in the absence of a right to establish, maintenance and operation of telecommunication services is not possible. Hence, the cumulative expenditure would have to be held to be capital in nature. Thus, the composite right conveyed to the respondents-assessees by way of grant of licences, is the right to establish, maintain and operate telecommunication services. The said composite right cannot be bifurcated in an artificial manner, into the right to establish telecommunication services on the one hand and the right to maintain and operate telecommunication services on the other. Such bifurcation is contrary to the terms of the licensing agreement(s) and the Policy of 1999. As noticed that even under the 1994 Policy regime the payment of licence fee consisted of two parts: a) A fixed payment in the first three years of the licence regime; b) A variable payment from the fourth year of the licence regime onwards, based on the number of subscribers. Having accepted that both components, fixed and variable, of the licence fee under the 1994 Policy regime must be duly amortised, there was no basis to reclassify the same under the Policy of 1999 regime as revenue expenditure insofar as variable licence fee is concerned. As per the Policy of 1999, there was to be a multi-licence regime inasmuch as any number of licences could be issued in a given service area. Further, the licence was for a period of twenty years instead of ten years as per the earlier regime. The migration to the Policy of 1999 was on the condition that the entire policy must be accepted as a package and consequently, all legal proceedings and disputes relating to the period upto 31 July, 1999 were to be closed. High Court of Delhi was not right in apportioning the expenditure incurred towards establishing, operating and maintaining telecom services, as partly revenue and partly capital by dividing the licence fee into two periods - The nature of payment being for the same purpose cannot have a different characterisation merely because of the change in the manner or measure of payment or for that matter the payment being made on annual basis. The nomenclature and the manner of payment is irrelevant. The payment post 31 July, 1999 is a continuation of the payment pre 31 July, 1999 albeit in an altered format which does not take away the essence of the payment. It is a mandatory payment traceable to the foundational document i.e., the license agreement as modified post migration to the 1999 policy. Consequence of non-payment would result in ouster of the licensee from the trade. Thus, this is a payment which is intrinsic to the existence of the licence as well as trade itself. Such a payment has to be treated or characterized as capital only. Judgment of the Division Bench of the High Court of Delhi and connected matters, is hereby set aside.

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• 2023 (10) TMI 785
  TP Adjustment - Period of limitation u/s 153(2A) - Scope of amendment w.e.f. 1.4.2016 - retrospective effect - Legislative intention - consequential order passed by the AO after an inordinately delayed period of time - authority as denude of its powers after the prescribed time limit - appeal of the petitioner/assessee was partly allowed and the matter was remitted back to the file of AO with a direction to look into the aspect and take a decision in the matter after verifying the claim of the petitioner/assessee and giving a fair and reasonable opportunity of hearing - HELD THAT:- The very purpose of enacting sub-section (2A) goes to show that it has been enacted to meet with a situation where the original assessment order has been set aside/cancelled by the Appellate Tribunal or the Appellate Authority under Section 250 or under Section 254 or under Section 263 or under Section 264. Vide the said amendment in sub-section 3 of Section 153 is concerned with effect from 01.04.2016 onwards, the legislature has brought a time limit for adjudication of a proceeding under sub-section 3 as well which till the amendment was made was not stipulated. If the analogy of the principle contention of the learned counsel for the respondent-Department is to be accepted, then in that event, the very purpose of sub-section (2A) becomes redundant. The contention of Department also would not be sustainable for the reason that if, that would had been the intention of the legislature, then at the time of the amendment brought in to sub-section 3 of Section 153, the legislature would also had deleted the provision of subsection (2A), as it would not be any further required in the light of their contention and in the light of the subsequent amendment brought in to sub-section 3 of Section 153. In the light of above decision of Hon ble High Court of Kerala DR R.P. PATEL [ 2015 (3) TMI 1291 - KERALA HIGH COURT] the contention of Department that Section 153 (2A) of the Act has no application to the present case as the Tribunal had only partially remanded the matter, lacks merit and is untenable. From plain reading of the judicial pronouncements and precedents we are of the considered opinion that the proceedings drawn, admittedly being beyond a period that is prescribed under sub-section (2A) of Section 153 and the consequential orders passed are all beyond the period of limitation prescribed under sub-section (2A) of Section 153. Hence, the same being not sustainable, deserves to be and is accordingly set aside/quashed.

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• 2023 (10) TMI 784
  Unsecured loan obtained from a trust - Addition u/s 68 r.w.s. 115BBE - HELD THAT:- Record shows that assessee had furnished details of payments made by lender trust (Dayal Trust) to the builder for the acquisition of the subject property- containing cheque numbers, dates, amounts of each installment of loan released, bank details, interest charged (rate and amount); along with confirmation from the lender trust, copy of Income Tax return, balance sheet and details of the taxable income of trust. Assessee had taken a loan from Dayal Trust for the acquisition of the subject property from Emaar MGF Land Ltd. Tribunal has adverted to the evidence placed on record which is the subject matter of the remand report of the AO. According to us, the addition made by the AO was not called for in the instant case. Assessee had been able to place the relevant material to back his explanation that the entry in its books of accounts was nothing but a loan extended by Dayal Trust. No substantial question of law.

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• 2023 (10) TMI 783
  Depreciation of securities - contribution to Punjab Sind Bank Employee s Pension Fund Trust - ITAT and CIT(A) deleted addition - HELD THAT:- As insofar as proposed questions A B are concerned, they are covered by the decision of the coordinate bench of this court in Punjab Sind Bank [ 2019 (11) TMI 342 - DELHI HIGH COURT] Disallowance u/s 14A r.w.r. 8D(2)(ii) and 8D(2)(iii) - ITAT and CIT(A) deleted addition - HELD THAT:- This issue is covered by the decision dated 09.09.2021, rendered in case South Indian Bank [ 2021 (9) TMI 566 - SUPREME COURT] We may note that there appears to be no dispute that subject shares were held as stock in trade by the respondent/assessee. Therefore, in any event, recourse to Section 14A could not have been taken which is concerned with investments. No substantial question of law arises for our consideration.

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• 2023 (10) TMI 782
  TDS u/s 194H - amount retained by the agencies engaged in providing advertorials in the nature of commission or not - Addition u/s 40(a)(ia) - HELD THAT:- As relationship between the respondent/assessee and the agencies was found by the statutory authorities below to be on a principal-to-principal basis, the amount retained by the agencies it could only be construed as trade discount and not commission. Therefore, as rightly concluded by the Tribunal, there was no obligation on the part of the respondent/assessee to deduct TAS under Section 194H of the Act. Tribunal in this regard has noted the contents of the CBDT s Circular No. 05/2016 dated 29.02.201 held relationship between the media company and the advertising agency is that of a principal to principal and therefore, not liable for TDS under section 194H. Decided in favour of assessee. Disallowance u/s 14A under Rule 8D(2)(iii) - HELD THAT:- AO, in our view, has wrongly taken into account the investments other than the investments made to earn exempt income. [See Cargo Motors (P.) Ltd. vs. Deputy Commissioner of Income-tax [ 2022 (10) TMI 571 - DELHI HIGH COURT] .

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• 2023 (10) TMI 781
  Validity of reopening of assessment as per new regime introduced u/s 148A - Authority to AO enquire into the same issues which were subject matter of the earlier assessment proceeding under New regime - HELD THAT:- As notice issued u/s142(1) of the Act would show that the same set of allegations were made against the petitioner/assessee, which were the subject matters of the assessment order dated 31.03.2022. Therefore, in our view, as submitted by petitioner/assessee, there has been a change of opinion. The stand taken by respondents/revenue, that under the new regime the AO could in effect reopen the assessment proceedings by traversing the same path and enquire into the same issues which were subject matter of the earlier assessment proceeding, is not tenable in law. New regime has not veered away from the well-established principle that the re-assessment proceedings cannot be triggered qua aspects vis-a-vis which the AO has already formed an opinion. Thus, for the foregoing reasons, we are inclined to allow the writ petition. Accordingly, the notice issued u/s 148A(b), the impugned order passed under Section 148A(d) and the consequent notice of even date issued under Section 148 of the Act are set aside. Decided in favour of assessee.

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• 2023 (10) TMI 780
  Validity of Faceless Assessment - Standard Operating Procedure (SOP) - AO ought to have granted a minimum of seven days to the petitioner to submit her response - breach of the principles of natural justice - HELD THAT:- In the facts of the case, what is seen is that the Section 142(1) notice was issued as far back as on 10.04.2023. The petitioner responded to the same on 17.04.2023. AO, at that juncture, had enough time to take appropriate steps, including issuing a show cause notice, if he intended to propose variations in the petitioner s income. AO, by waiting till 25.05.2023, created a situation whereby, he could not have granted clear seven (7) days for filing a response, as stipulated in the SOP. AO took an extreme position by providing only twenty-four hours to the petitioner to file a response. Perhaps, a couple of days more could have been given, having regard to the narrow timeframe that was available to him. More importantly, in this case, since the petitioner has taken the position that she has not entered into a transaction with Atul Tyagi, it was incumbent upon the AO to furnish relevant material which would in the very least, prima facie, demonstrate that the assertion was believable. Thus we are of the view that the best way forward would be to set aside the impugned assessment order, with liberty to the AO to pass a fresh order, after giving an opportunity to the petitioner to file a reply.

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• 2023 (10) TMI 779
  Amount payable towards the provident fund and towards the ESI fell due on a National Holiday - HELD THAT:- We had the occasion to deal with a similar question of law in PEPSICO INDIA HOLDING PVT. LTD. [ 2023 (10) TMI 666 - DELHI HIGH COURT] held since date fell on a date which was a National Holiday, the deposit could have been made by the respondent/assessee only on the date which followed the National Holiday. Section 10 of the General Clauses Act would help the respondent / assessee to tide over the objections raised on behalf of the appellant/revenue. Decided in favour of assessee.

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• 2023 (10) TMI 778
  Reopening of assessment u/s 147 - Claim of fictitious loss which reduced the profit - derivative trading - HELD THAT:- It is observed that the assessee company has been booking losses by using Client Code Modification in the year under consideration and the amount as held by the A.O. to be fictitious loss. It is found by the authorities that the script wise details of the derivative trading that the assessee had taken the fictitious loss in order to reduce the profit. The assessee has not produced any material to contradict or disprove the said findings of the A.O. Therefore, CIT(A) has committed no error in confirming the addition made by the A.O., accordingly, we find no merits in the Grounds of Appeal of the assessee which are dismissed.

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• 2023 (10) TMI 777
  Penalty levied u/s 271(1)(c) - addition on account of loan received by the assessee which was treated as deemed dividend u/s 2(22)(e) - As alleged appellant has furnished inaccurate particulars of income - HELD THAT:- We find force in the submission of the assessee. In the case of Tristar Intech Pvt. Ltd. [ 2015 (10) TMI 810 - ITAT DELHI] the Tribunal while dealing with Explanation 1 of Section 271(1)(c) held that penalty can be imposed only for a specific charge. Furnishing inaccurate particulars of income means, when the assessee has not disclosed the particulars correctly or the particulars disclosed by the assessee are found to be incorrect whereas, concealment of particulars of income means, when the assessee has concealed the income and has not shown the income in its return or in its books of accounts. Explanation 1 is a deeming provision and is applicable when an amount is added or disallowed in computation of total income which is deemed to represent the income in respect of which particulars have been concealed. Explanation 1 cannot be applied in a case where the assessee furnishes inaccurate particulars of income. Also observed that by way of deeming provision the Assessing Officer made addition of Rs. 18,42,000/- being the loan taken by the assessee from the company in which he was a substantial shareholder which addition was ultimately reduced to the accumulated profits of the lender company at Rs. 4,73,526/- by the Tribunal vide order in MANOJ MITTAL [ 2020 (4) TMI 841 - ITAT DELHI] There is no concealment of particulars of income by the assessee so as to attract penalty u/s 271(1)(c) - AO is directed to delete the penalty levied u/s 271(1)(c) - Appeal of assessee allowed.

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• 2023 (10) TMI 776
  Penalty u/s 271(1)(c) - Defective notice - non specification of clear charge - non-strike off of the irrelevant part in the notice issued - HELD THAT:- As decided in Sahara India Life Insurance Co. Ltd. [ 2019 (8) TMI 409 - DELHI HIGH COURT] the notice issued by the AO was bad in law if it did not specify under which limb of section 271(1)(c) the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. Ratio of the full bench decision of MR. MOHD. FARHAN A. SHAIKH [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] squarely applies to the facts of the assessee s case as the notice u/s. 274 r.w.s. 271(1)(c) dated 26.12.2016 was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Decided in favour of assessee.

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• 2023 (10) TMI 775
  Revision u/s 263 by CIT - assessee has purchased fixed asset and claimed depreciation and additional depreciation during the year - GST input credit lapse claimed as business expenditure - disallowance u/s 43B - HELD THAT:- As regarding first issue of depreciation, we note that AO had the knowledge on the basis of information available at the time of assessment proceeding for the depreciation claimed by the assessee bank. The AO had on the basis of above information has asked for the explanation for the profit on sale of assets on depreciable asset. Therefore, it cannot be said that the AO has not made inquiry, or the assessee has not furnished any explanation in respect of depreciation claimed on the new asset purchased by the assessee. About GST credit, we note that these amounts of GST credits are related to the expenses incurred by the assessee bank during the year under consideration. The assessee bank has reduced the GST Credit from the related expenses and claimed the expenses after reducing the 100% GST Credit on such expenses. As per the Section 17(4) of the CGST Act 2017, the assesses bank has availed 50% of total GST Credit in its GST Return, and 50% have been debited to the Profit and Loss Account and claimed as expenses of the current year which is allowable expense because it is reduced from expenses and now once again debited in Profit and Loss Account as per section 17(4) of The GST Act, 2017. The said GST Credit lapse is not a provision made by the assessee bank. If said credit is not taken then also it will allowable expense as a part and parcel of respective expense. At the time of the assessment proceeding, the learned AO has opined that the GST Credit lapse is an eligible expense and hence he has allowed the same and had not made further inquiry because it is apparent and obvious that the GST Credit lapse is an allowable expense. Disallowance u/s 43B of the Act, the assessee bank has already disallowed the said amount in its return of income filed. During the assessment proceeding the A.O. has asked for the computation of income and the assessee bank has already submitted the copy of computation of income in which it is clearly reflected that the amount has been already disallowed u/s 43B. Therefore, from above documents and explanation it is clear that Depreciation and GST Credit lapse both are allowable expenses. Disallowance was already made u/s 43B during the filing of return of income. Therefore, we note that order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law . Therefore, we are of the considered opinion that AO s order cannot be termed as erroneous as well as prejudicial to the interest of the revenue and therefore, jurisdictional condition precedent as prescribed by statute for invoking revisional jurisdiction is absent and therefore, we are inclined to quash the impugned order of the ld. PCIT. Appeal of the assessee is allowed.

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• 2023 (10) TMI 774
  Scope of limited scrutiny - jurisdiction of AO to add delayed payment of provident fund - as argued case was selected for limited scrutiny and the provident fund was not the subject matter of the limited scrutiny - HELD THAT:- As in a limited scrutiny the jurisdiction of the AO is confined to those items which were the subject matter of the limited scrutiny and in case the AO has come across any item of disallowances or escaped income then the AO has first to form a reasonable opinion on the same and obtain a prior approval of the competent authority to convert the limited scrutiny into a complete scrutiny and only then the said addition can be made and not otherwise. In the present case the AO has not converted the limited scrutiny into complete scrutiny and therefore, the addition made is without jurisdiction. As relying on Sukhdham Infrastructures LLP [ 2023 (4) TMI 1157 - ITAT KOLKATA ] we hold that the addition made by the AO is without jurisdiction and is accordingly directed to be deleted. Addition u/s 14A r.w. Rule 8D - Mandation to record satisfaction - HELD THAT:- AO has simply invoked the provisions of Rule 8D of the Rules without recording any satisfaction as is mandatory by Section 14 before resorting to the provisions of Section 14A - recording of satisfaction is prerequisite for invoking Section 14A of the Act r.w. Rule 8D of the Rules failing which the addition made by the AO cannot be sustained. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Appeal filed by the assessee is allowed.

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• 2023 (10) TMI 773
  Revision u/s 263 - As per CIT AO has failed to carry out necessary verification towards unsecured loans aggregating to Rs. 8 crore received from certain parties - HELD THAT:- The expression lack of enquiry is quite distinct from the expression insufficient enquiry . It may be possible for the CIT in some cases to show and establish that facts on record or inferences drawn from facts on record per se justified or mandated further inquiry or investigation which the AO has erroneously not undertaken. Such finding must be clear, unambiguous and not debatable. CIT must demonstrate that the order is both erroneous as well as prejudicial to the interest of the Revenue by such lapse on the part of the AO. This is the position of law enunciated by several cases including CIT .v. Goetze (India) Ltd. [ 2013 (12) TMI 607 - DELHI HIGH COURT] , DG Housing Projects Ltd [ 2012 (3) TMI 227 - DELHI HIGH COURT] , CIT vs. Sunbeam Auto Ltd [ 2009 (9) TMI 633 - DELHI HIGH COURT] - As a question would arise whether, firstly, the action of the AO is unsustainable in law or not, owing to such assertions on mere inadequacy and secondly, whether the mandate u/s 68 of the Act for extent of inquiry by way of cross verification is absolute or left to the discretion to be reasonably exercised by the AO. As observed in the preceding paras, even if inquiry with regard to source of source of loan in a particular manner as suggested by Pr. CIT is omitted to be carried out, the provisions of Section 68 of the Act cannot be automatically fastened on the assessee. To reiterate, no objective material is discernible from the SCN or from the revisioanal order to implicate the assessee per se. Having regard to the prerogative vested with the AO towards the extent and manner of inquiry for drawing satisfaction, it is difficult to hold that the action of the AO is unintelligible. AO has not committed any error in not chasing will of the wisp in the absence of any brazen circumstances available. In the light of aforesaid discussion, the basis of issuance of show cause notice u/s 263 of the Act does not appear to be tenable in law in the peculiar set of facts. Consequently, the assumption of jurisdiction u/s 263 of the Act on this ground too, will have to be regarded as without authority of law. Assessee appeal allowed.

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• 2023 (10) TMI 772
  TP Adjustment - Corporate Guarantee addition - HELD THAT:- This issue stands covered by the Co-ordinate Bench of ITAT in assessee s own case in [ 2022 (5) TMI 685 - ITAT DELHI] direct that the adjustment in respect of corporate guarantee provided to AEs be determined at date of 0.5% instead of 1.3% determined by the revenue. Provision made for sales incentive under Shahenshah Scheme - Claim disallowed as the provision made by the assessee was not based on any scientific method and there is an element of contingent liability and therefore the sum is not allowable - HELD THAT:- This issue stands covered by the Co-ordinate Bench of ITAT in assessee s own case [ 2022 (5) TMI 685 - ITAT DELHI] decided the issue in favour of the assessee by holding that the provision made by the assessee in respect to Shahenshah Scheme to be on scientific basis. Thus we hold that the Revenue was not justified in making the addition. Interest on FDRs/Deduction u/s 80-IC - HELD THAT:- As decided in assessee s own case [ 2022 (5) TMI 685 - ITAT DELHI] held that the Revenue was not justified in denying the claim of deduction on such income. Before us, Revenue has not pointed any contrary binding decision in its support. We therefore, hold that AO not justified in denying the claim of deduction u/s 80IC of the Act and thus direct the AO to grant deduction u/s 80IC on the interest income earned by the assessee. Foreign Travel Expenditure - expenses have been incurred in connection with travel to China by the staff of the company - HELD THAT:- The details have been mentioned at page no. 137 of the paper book which gives details of starting date, ending date, fair, boarding, lodging, conveyance, telephone and other expenses. In total 15 trips have been made by the employees of the company. Since, the expenses are incurred in connection with business of the assessee, we hold that no disallowance on this account is called for. R D Expenses - Allowability of expenses u/s 35(2) - R D expenses consist of establishment expenses incurred at R D units for which application for approval has not been filed during the year - HELD THAT:-The expenses as detailed consists of employee remuneration 42 employees who are engineers and managers different R D units. The expenses are detailed of the paper book which consists of employee remuneration 42 employees who are engineers and managers placed at 7 different R D units. The expenses are not covered u/s 35(2) - The assessee has not claimed the same u/s 35(2) but the expenses are allowable u/s 35(1) @ 100%. Since, the ratio of incurring of expenses per se is not in dispute, we hold that the assessee is eligible to claim expenses u/s 35(1). The approval of the DSIR is not required for claim u/s 35(1)(i). The appeal of the assessee on this ground is allowed. Depreciation u/s 32 - asset put to use on which AY? - date of installation is after the date of the accounting year i.e. 03.04.2011 while the date of installation is 04.03.2011 on account of computerized format.. From examination of the format of the fixed assets installation report, we find that the date of installation and date of put to use is in the format of month, date and year. The page no. 168 of the paper book reflects the date of installation 10/31/2010 which reinforces the month, date and year the format and hence, we hold that the revenue authorities have fallen into error in interpreting the date of installation as April 3rd instead of 4th March. The appeal of the assessee on this ground is allowed.

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• 2023 (10) TMI 771
  TP Adjustment - variance between the price charged by the assessee to its Associated Enterprises and the rates which were charged by the assessee for the same services to third parties - assessee took the argument that the assessee had charged a higher price for the aforesaid services from it s AE, it would have let to tax base erosion in India - HELD THAT:- We observe that at any stage of the proceedings, the assessee has given no justification for charging the rates at which the services were rendered to the AEs as compared to similar services provided to third parties. Assessee has only emphasized on the argument of based erosion before the Transfer Pricing Officer and DRP, which argument was not pressed before us in view of the decision of Instrumentarium Corporation Ltd. [ 2016 (7) TMI 760 - ITAT KOLKATA] We observe that for two years, no transfer pricing adjustment was made in the case of AEs for the simple reason that no transfer pricing reference was made by the AO in the first instance. We observe that the argument of likes have not been compared with like and the argument of similarity of agreement with BLNG were never taken before the Tax Authorities at any stage of the hearing. Accordingly, looking into the facts of the instant case, and respectfully following the decision in the case of Filtrex Technologies Pvt. Ltd [ 2018 (4) TMI 1957 - ITAT BANGALORE] the matter is being restored to the file of Ld. AO for determination of ALP in respect of the aforesaid transactions. The assessee is also directed to file the relevant supporting documents to substantiate that the price paid by the AEs to the assessee is at arm s length within the methods laid down in the Act and the judicial precedents rendered on this issue. TPO is directed to consider the same in accordance with the law, after affording an opportunity of being heard to the assessee. Revenue for grant of software license as royalty - addition u/s 9(1)(vi) and under Article 12 of India Netherlands tax treaty (Tax Treaty ) - HELD THAT:- Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd [ 2021 (3) TMI 138 - SUPREME COURT] and also in Infosys Technologies Ltd. [ 2022 (10) TMI 665 - SC ORDER] held that amount payments by resident Indian and user / distributors to non-resident computer software manufacturers / suppliers as consideration for resale / use of computer software through distribution agreement is not payment for use of copy right in computer software and thus, same does not amount to income taxable in India. Accordingly, payments made the assessee to non-resident related to use of computer software was not royalty, this issue is decided in favour of the assessee. Fees for technical services - make available clause - assessee provided Computational Fluid Dynamics ( CFD ) modelling of the temperature effects on the Hazira Sea Water outflow into the port and also provided marine biological advice on its implications to HLPL - assessee provided desktop quality review of Shell Reliability Centre Maintenance done by HLPL s site team - HELD THAT:- Looking into the nature of services, wherein the analysis done by the assessee is submitted in a form of report to the recipient of services, there seems to be nothing to suggest that the technology for providing the aforesaid services have been imparted to the recipient of services in a way that the recipient of services would not be required the services of the assessee further in the future and has been enabled by the assessee to perform such services on its own without any recourse or assistance of the assessee in the future. More specifically, with respect to Work Order No. 131965, we observe that the work performance on the analysis was done only with a view to advice HPCL to decide whether switchgear was obsolete and hence, required to be refurbished or replaced. Therefore, looking into the instant facts we are of the considered view that the condition of make available has not been satisfied in the instant set of facts and hence, the services do not qualify as FTS. Department has not been able to demonstrate that in the instant facts, any technology was made available to the recipient of services in a manner that the recipients had been imparted with the requisite knowledge in such a manner that they were enabled to perform the aforesaid services in the future, without any recourse to the services of the assessee - there is nothing in the hand of the Tax Treaty or the judicial precedents on the subject to come to any such conclusion - thus such services do not qualify as fee for technical services under Section 9(1)(vii) of the Act read with Article 12 of the India-Netherlands Tax Treaty. Taxability of revenues received from Larsen Toubro (L T) - services broadly included engineering services related to manufacturing of coal gasification equipment by L T as provided in countries outside of India viz. Vietnam and China etc. and were in relation to overseas EPC projects undertaken by L T. - HELD THAT:- As decided in Motif India Infotech Pvt. Ltd. [ 2018 (12) TMI 1146 - GUJARAT HIGH COURT] which held that as per clause (b) of Section 9(1)(vii) the income by way of fees for technical services payable by a person who is a resident of India would be deemed to accrue or arise in India. This clause contains two exceptions namely where the fees are payable in respect of services utilized in a business or profession carried on by such person outside India, or it is for the purpose of making or earning any income from any source outside India. If the assessment of an assessee falls in either of these two clauses, the income by way of fees or technical services paid by the assessee would still not be covered within the deeming clause of Section 9(1)(vii) of the Act. In the present case, as accepted assessee s factual assertion that the payments were for technical services provided by a non-resident, for providing services to be utilized for serving the assessee s foreign clients. Thus, the fees for technical services was paid by the assessee for the purpose of making or earning any income from any source outside India. Clearly, the source of income namely the assessee s customers were the foreign based clients of L T and the services were also to be performed in locations outside of India. In this case, from the facts placed on record in our view, L T has made payment for utilization of the services provided by the assessee in business carried out by L T outside of India. The services which were provided by the assessee were utilized by L T in respect of its plant set up in Vietnam and China for its foreign clients. Levy of interest u/s 234B - We observe that the Hon ble Supreme Court in the case of Mitsubishi Corporation [ 2021 (9) TMI 875 - SUPREME COURT] has held that Proviso to Section 209(1) issued by Finance Act, 2012 providing that if a non-resident assessee received any amount including tax deductible at source, assessee could not reduce such tax while computing its advance tax liability was applicable prospectively after Assessment Year 2012-13. Thus assessee is not liable to pay interest u/s 234B. Income from rendering of Global P T Functional Services treated as fees for technical services - On perusal of the nature of services no such technology has been made available to Shell India during the course of rendering of such services. As evident that the Department has not been able to substantiate that the services were rendered in a manner so as to make the technology available to the recipient of services in a manner that in the future the recipient is able to perform the aforesaid services, without further recourse to the services of the assessee. In the recent case of Star Rays [ 2023 (8) TMI 296 - GUJARAT HIGH COURT] held that where assessee company availed diamond testing services for certification of diamond from U.S. company and claimed that payment was not tax deductible at source, assessee s case was protected under India-USA DTAA as mere rendering of services could not be roped into FTS since assessee company utilising services was unable to make use of technical knowledge etc. of AE. Unless the services are rendered in the manner such that the technology is made available transferred to the assessee in such a manner that he is enabled to perform such services by itself in the future and does not require further services from the service provided, it is only then that such services would qualify as fee for technical services under the applicable Tax Treaty which specifically contains the make available clause. Thus we observe that nature of services are not which make available the technology to the recipient of services i.e. Shell India and further, the Department has also not placed on record any evidence to support that such services have made available the technology to the recipient of such services.

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• 2023 (10) TMI 770
  Bogus purchases - onus to prove - reliance of the statement of partners and other persons - retracted statement - DR pointed out that the onus was upon the assessee to produce the supplier to support the bona fides which has not been done - contention of the assessee that both the parties from whom the assessee has made purchases are existing parties and such parties have independently filed their confirmation with regard to the supplies made by such parties to the assessee and mere non attendance per se after a lapse of time could not be viewed adversely - HELD THAT:- As regard to the nature of business, i.e. trade in bullion, where stocks are identifiable and the price is also governed by market forces with little scope for manipulations; the purchases duly accounted for; the transaction of only 2 parties doubted despite extensive enquiry on 122 parties etc. we find potency in the plea of bonafides. There can be variety of reasons for non-attendance by unrelated third parties and it is not always within the domain of assessee to enforce attendance of third parties. Nothing adverse need to be imputed in such circumstances, more so, where the payments have been made through banking channel. We see a greater degree of plausibility in the version of the assessee. Action of the CIT(A) is set aside and the additions / disallowances made on this count are cancelled. Unexplained money u/s 69A - Unaccounted cash found in course of search and seizure at the branch office of business premises of the assessee-firm u/s 132 - HELD THAT:- Once the existence of cash sales are reckoned, the source of cash found at the time of premises of the assessee stands recognized. The mismatch appears to have resulted owing to partial coverage of all premises u/s 132 - assessee cannot be blamed for towering failure of the search team to keep the main office out of purview of search action. It is rather inexplicable that only a branch office was covered under search and a statement of partner was regarded as gospel truth despite visible lack of business activities, attendant work force, books, records etc. The claim of assessee that the statement of partners are neither voluntary nor reliable and is thus bereft of any probative value, is not without any substance as noted in the preceding paragraphs. The benefit of doubt, in the peculiar circumstances, thus need to go in favour of the subject assessee. The assessee cannot be held accountable for the lapses or remissness on the part of the Revenue Authorities. The explanation offered by the assessee in the course of the post search investigation and thereafter in the assessment proceedings that books of accounts were kept at the main office of the assessee appears reasonable and consistent having regard to the multiple facts such as the assessment in the past on the basis of books, the accounts being subject to tax audit under Section 44AB of the Act, VAT returns etc. The reduction in the stock on account of such sales also vouches the claim of the assessee. Action of the revenue authorities to make additions towards unexplained cash sales under s. 69A is without any sound basis and hence cannot be countenanced in law. Unexplained bullion stock found at the branch premises of the assessee - HELD THAT:- As statement of the partners stood discredited and rendered unreliable by the chain of events such as recorded in odd hours and without any books and without taking cognizance of bank entries; retraction of such statement without much delay, production of books before investigation team, no cross examination of retraction, gap of about 45 days in retraction attributable to statement recorded not made available despite request on the very next of search etc. The stock found being out of stock in hand as reflected in stock records, we thus hardly see any justification in the enhancement action of the CIT(A). Also simultaneously notice a paradoxical situation that while, on one hand, the revenue seeks to question the propriety of cash sales and negation of its existence, which if taken at face value, such exclusion of cash sales would bear reciprocal effect on the stock in hand and such positioning would rather enhance the stock in hand in tandem. The allegation of stock being unexplained thus somewhat militates against logic and appears to be based on misplaced exposition of facts. Without delving further, in totality, the case made out by the CIT(A) towards enhancement is bereft of merit and thus cannot be countenanced. Thus enhancement action of the CIT(A) is quite cryptic and mere reiteration of the observations such as no details of purchases, absence of books, etc. Assessee appeal allowed.

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• 2023 (10) TMI 769
  Addition u/s 68 - bogus sale consideration received on sale of shares of listed shares - return of notices issued to two of the exit providers - HELD THAT:- AO has identified the purchasers of shares, which have been sold by the assessee and he issued notices u/s 133(6) to two persons. Since the said notices were returned back/not responded, the AO has doubted the sale transactions of shares. As it is pertinent to note that the assessee has sold the shares on the recognised stock exchange. It is not shown by the AO that the assessee was aware of the exit providers or part of the group involved in rigging the prices. Hence, mere fact of return of notices issued to two of the exit providers cannot be a ground to suspect the genuineness of sales, without bringing any other substantial evidence on record. We notice that AO has not found fault with any of the documentary evidences furnished by the assessee to prove the purchases and sale of shares. AO has not brought on record any material to show that the assessee was part of the group which involved in the manipulation of prices of shares. Hence, there is no reason to suspect the purchase and sale of shares undertaken by the assessee. Thus we are of the view that the decision rendered in the case of Shyam R Pawar [ 2014 (12) TMI 977 - BOMBAY HIGH COURT] and Ziauddin A Siddique[ 2022 (3) TMI 1437 - BOMBAY HIGH COURT] shall apply in the present case, since the AO has not established that the assessee was involved in price rigging and further the AO did not find fault with any of the documents furnished by the assessee. Thus sale consideration received on sale of shares cannot be assessed as unexplained cash credit u/s 68 of the Act and the long term capital gains declared by the assessee cannot be doubted with. Decided in favour of assessee.

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• 2023 (10) TMI 768
  Lease rental payments to a non-resident party - assessee claimed this expenditure as allowable expenditure u/s 37(1) - HELD THAT:- As keeping in view the fact that the lease rentals have been indeed paid for the accommodation of the employees and the recipient is a tax resident of USA with no PE in India, we hold that no disallowance is called for under this head. Pre-operative Expenses - assessee claimed the expenses pertaining to financial consultancy and investment advisory in relation to mutual fund investments as a deductible revenue expenditure - HELD THAT:- As is evident that the decisive test to determine if the two businesses of the assessee (IT enabled support services and financial consultancy and investment advisory in relation to mutual fund investments) constitute the same business or not, is not the nature of two businesses but whether two businesses are inter-connected and inter-dependent, which can be demonstrated through existence of common management common business organizations, common funds, etc. Since, there is a complete unity of control, management and funds between the IT-enabled services and financial consultancy and investment advisory in relation to mutual fund investments, carried out by assessee be construed as one business of the assessee. Hence, keeping in view the ratio laid down by B.R. Limited Vs. Gupta (VP) [ 1978 (5) TMI 3 - SUPREME COURT] we hold that the directions of the ld. DRP cannot be supported.

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• 2023 (10) TMI 767
  Unexplained money u/s 69A - cash deposit in the Saving Bank Account of the assessee unexplained - assessee explained the source of deposit as turnover of his business of electronic goods however, the AO refused to accept the explanation on the ground that the assessee has shown the sales in the bank account with Oriental Bank of Commerce (OBC) whereas the deposit in question has been made in the Saving Bank Account of the assessee with SBI bank which cannot be accepted as sale proceeds - HELD THAT:- As in absence of the complete details of the deposit made in the both bank accounts it cannot be conclusively determined that the deposit made in the SBI account has been declared by the assessee as his turnover. Accordingly, when the frequent deposits and withdrawal transactions are made in the Saving Bank Account throughout the year and almost nil balance was available as on 31.03.2012 then the deposit in the Saving Bank Account in our considered view represents turnover of the assessee. Since the assessee has not disclosed this bank account in the return of income, therefore, deposit in the saving bank account is considered as undisclosed turnover and GP rate on the said turnover would be added to the total income of the assessee instead of the entire deposit. Accordingly, the AO is directed to add only G.P. rate on the deposit made in the Saving Bank Account with SBI of Rs. 16,13,020/-. Appeal of assessee is partly allowed.

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• 2023 (10) TMI 766
  Deduction u/s 80P - interest income earned by a co- operative society on its investment held with co-operative bank - HELD THAT:- As in case of Pr. CIT Anr. Vs. Totgar s Co-operative Sale Society Ltd.[ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and State Bank of India [ 2016 (7) TMI 516 - GUJARAT HIGH COURT] had also held that interest income earned by a co- operative society on its investment held with co-operative bank would be eligible for claim of deduction u/s 80P(2)(d) - CIT(A) has erred in upholding the denial of deduction by the AO to the assessee under section 80P(2)(d) of the Act. Assessee society who has earned from its investment of surplus fund parked with co-operative banks is entitled for deduction under section 80P(2)(d) of the Act. Decided in favour of assessee.

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• 2023 (10) TMI 765
  Income taxable in India - royalty receipts - Distribution of Financial Products - amount received towards distribution of its products in India - Addition u/s 9(1)(vi) r.w. Article 13 of DTAA entered into between India and UK - assessee company is incorporated in UK engaged in providing global news and business information services with content delivery tools and services through a suite of products and services under the name of Factiva . To distribute these financial products in the territory of India, the assessee has entered into agreement with Dow Jones Consulting India Pvt. Ltd. (DJCIPL) while distribution agreement dated 07/08/2014, wherein assessee had granted rights to distribute its various financial and related products in the Indian market to DJCIPL on a principal to principal basis and at arm s length price. HELD THAT:- This Tribunal in A.Y.2015-16 [ 2022 (6) TMI 342 - ITAT MUMBAI] held that the purchase price received by the assessee from the distributor in India for granting access to its database does not amount to Royalty under the India-UK DTAA. Tribunal had referred and relied upon the decision in the group company of Dow Jones Consulting India Pvt. Ltd. [ 2021 (12) TMI 647 - ITAT DELHI] wherein it has been held that the purchase price received by the assessee from the distributor in India for granting access to its database does not amount to royalty under the India-USA DTAA. In the said case, the distributor in India was the same as that of the assessee (i.e., DJCIPL) and the terms of the distribution agreement between Dow Jones Company Inc. and DJCIPL were also similar in essence to the Factiva Distribution Agreement between the assessee and DJCIPL. Thus following the earlier year precedence, we hold that purchase price of Factiva products distributed by DJCIPL is not taxable as royalty under India UK DTAA in the hands of the assessee. Whether DJCIPL constituted agency PE? - AO has not made any addition in respect of PE as alleged by him and has restricted the addition by characterizing the receipts as royalty only. Therefore, we are not going into this issue, because, if ld. AO is alleging PE, then ld. AO should have brought on record as to how DJCIPL is an agency PE of the assessee. Such casual and passing remark cannot lead to conclusion that assessee had agency PE in India. Therefore, this issue is purely academic.

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• Customs

• 2023 (10) TMI 764
  Validity of search and seizure - Ownership of goods when goods were found in possession of different person - Proof of smuggling of goods - Prayer for declaration, delivery of the goods, damages along with other reliefs - Maintainability of suit under the Sea Customs Act, 1878 - HELD THAT:- The authorities under the Sea Customs Act 1878 are not vested with jurisdiction to decide on this issue or pass declaratory order as to the title or ownership of the confiscated goods. The Plaintiffs were the third parties to whom show-cause notices were not issued. The articles were seized assuming that the Defendant no. 6 illegally imported these articles from foreign countries infringing the provisions of the Sea Customs Act 1878. Neither is there any provision nor is there any machinery under the Act to decide upon the issues. The same considerations apply in cases of Bengal Public Demand Recovery Act and Income Tax Act. Although both the statutes are special statues providing with machineries for enforcement of special provisions consideration and adjudication of declaration of title is not barred by any of the statues. Whether the original Plaintiffs were the owner of the articles and goods set out respectively in Schedule A , B and C of the plaint? - whether the goods wherein possession of Plaintiff no. 1 and the Plaintiff no. 2 at the time of seizure? - HELD THAT:- Law is well-settled. Section 101 of the Indian Evidence Act provides for burden of proof and on whom such burden of proof lies. Section 102 states that burden of proof should in a proceeding lies on that person who will fail if no evidence is at all given on either side. Section 106 is also relevant to consider in this context. According to the Section 106 when any fact is specially within the knowledge of any person burden of proof of that fact is upon him. The statute never states that any specific or particular kind of evidence is to be tendered to discharge burden of proof - Once the burden of proof is discharged by the Plaintiffs to adduce evidence to substantiate their claims, onus of proof shifts on the Defendants. DW1 Shankar Ghosh stated in evidence that diamond, watches and gold ornaments were suspected to be smuggled and were in the possession of late Ramnath Bajoria. DW 1 was a member of a search party recovery were made from safe key kept in the bedroom of the original Defendant no. 6. Nothing is there in the evidence of DW. 1 to show that the articles in question whereof foreign origin. DW.1 stated in evidence that it was suspected that articles were smuggled and that it was believed that the articles were smuggled without indicating anything else or adducing any evidence that these articles were either imported or not available in the country. There is no concrete or cogent evidence adduced on behalf of the Defendants witnessed to rebut the evidences so adduced by the Plaintiffs witnesses disproving their evidences. It is admitted that in the search list the remarks column were penned through - Issues decided in favour of the Plaintiff. Propriety of search and seizure as well as prohibitory order - HELD THAT:- Sea Customs Act, 1878 as well as the Code of Criminal Procedure provides for search and seizure and procedure to be followed therein. Civil Court in exercise of ordinary jurisdiction cannot decide on the propriety of search and seizure; civil court in exercise of ordinary civil jurisdiction is neither authorized nor vested with such power. Similarly, the prohibitory order was passed in exercise of power conferred under the then existing Income Tax Act. Vires could have been challenged in appropriate forum. But exercising ordinary jurisdiction, this Court cannot decide on the same. Therefore, this Court desists from deciding the issues. The Plaintiffs are entitled to a declaratory decree - the instant suit succeeds.

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• 2023 (10) TMI 763
  Extension of period of seizure - Actual date of Seizure of imported goods - Flashforge WaxJet 400 3D Prototypeing Machine, Purple Wax, White Wax and Machine Accessories - HELD THAT:- Although the panchanama in the present case was held on 26 July 2022, the actual seizure of the goods under seizure memo in question had taken place on 8 August 2022. The date of the seizure would have relevance in the context of what Section 110 subsection (2) would provide. Admittedly the first six months from the date of the seizure memo expired on 8 February 2023. If in such situation, the department if nonetheless intends to issue a show cause notice under Section 124 of the Customs Act, necessarily recourse to the proviso below sub-section (2) of Section 110 is required to be taken to extend the period for a period of further six months - the proviso, confers powers on the Principal Commissioner of Customs or a Commissioner of Customs for reasons to be recorded in writing, to extend such period if further period has exceeding six months and inform the person from whom such goods were seized before the expiry of the periods so specified. In the present case, the initial period of six months to release the consignment expired on 8 February, 2023, considering the date of seizure to be 8 August, 2022. The Deputy Commissioner however invoked the proviso by issuing a communication dated 7 February, 2023 to the petitioner at the first instance extending the time period merely by three months - Such extended period of three months by the first extension expired on 7 May 2023. Thus, the balance period which could be extended by further invocation of the proviso below sub-section (2) of Section 110 was a period of three months upto 11 August, 2023 so as to complete the period of six months under the said proviso - The second extension of two months expired on 11 July 2023. As noted, if the extended period of six months under the proviso to sub-section (2) if was to be invoked, it would have expired on 11 August 2023. Thus, by operation of law, that is, by application of the provisions of sub-section (2) of Section 110, read with the proviso the seizure of petitioners goods has ceased to operate and has became invalid, which would entitle the petitioner for the release of the goods. Petition disposed off.

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• 2023 (10) TMI 762
  Valuation of imported goods - Glass Beads Chaton - rejection of declared value - reassessment of goods by loading the value as per the contemporaneous imports of identical goods which was done on the ICES EDI System - request a personal hearing not considered - goods were reassessed without following the principles of natural justice - HELD THAT:- It is on record that under EDI system, the assessing officer had made a query and also requested for certain documents and also email ID for conducting personal hearing but the respondent had replied to the query and provided certain documents but did not provide email ID for conducting personal hearing. Therefore, the Commissioner (A) was wrong in stating that the principles of natural justice was not followed. Moreover, the evidences provided before the Commissioner (A) vide Bill of Entry 3636934 dated 20.04.2021 was a Bill of Entry cleared subsequently to the item imported vide Bill of Entry No.2902619 dated 25.2.2021. Therefore, the Commissioner (A) s observation that on given the fact that earlier imports from the same supplier of Glass Beads Chatons have been accepted by the Department was incorrect and baseless. The matter is remanded back to the original adjudicating authority for deciding the matter afresh. The fact that the subsequent imports were cleared without enhancement of value may be taken on record before deciding the assessment of Bill of Entry in question.

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• 2023 (10) TMI 761
  Valuation of imported goods - branded goods or not - goods needed to be treated as branded because of embossing of SORL on the parts or not - reliance placed on value of contemporaneous imports available in NIDB data - penalty on appellant as well as on his partner - HELD THAT:- The Appellant sell the goods in wholesale in bulk, without any printed package. The goods sold by them do not have any replacement warranty. The part number and the embossing of SORL mentioned for identification purpose cannot be considered as sale of branded goods. There were contemporaneous imports with lesser value than the value declared by the Appellant, which was not taken into consideration by the adjudicating authority while re-determing the value. As the details of the Bills of Entry are not available, the value relied upon by the revenue on contemporaneous imports cannot be considered as value of similar goods. The value available on NIDB data cannot be relied upon to reject the declared value. This view has been held by the Tribunal in the case of AGARWAL FOUNDRIES (P) LTD. VERSUS COMMISSIONER OF CUSTOMS [ 2019 (6) TMI 1544 - CESTAT HYDERABAD ]. The rejection of the value declared by the Appellant based on NIDB data on similar goods is not sustainable. Accordingly, in respect of the import made by the Appellant under Bill of Entry No 8177874 dated 10.10.2012, there is no evidence available on record to reject the transaction value declared by them and hence the differential duty arrived at by the adjudicating authority based on the value available on contemporaneous import of similar goods is not sustainable. Since the demand is not sustainable, the penalty imposed on the Appellant on this count is not sustainable. Penalty of Rs.7,00,000/- on the Partner Shri. Puneet Samalia under Section 112(a) and 112(b) of the Customs Act, 1962 - HELD THAT:- The impugned order has not brought in any evidence against the partner in the alleged offence. As the allegation of suppression of value is not established, the penalty imposed on the partner is liable to be set aside. Accordingly, the penalty imposed on the Partner Shri. Puneet Samalia is set aside. Appeal allowed.

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• 2023 (10) TMI 760
  Advance Authorization Scheme - Non-fulfilment of Export obligation - levy of redemption fine and penalty - denial of concessional rate of duty - import of prime non alloy steel slabs falling under customs tariff item 7207 1290 - whether the appellants have violated the provisions of Customs notification No.64/2008-Cus. dated 09.05.2008, in terms of the show cause proceedings or not, and the impugned order confirming the adjudged demands, confiscation of goods and penalty is sustainable? HELD THAT:- From the perusal of Notification No.96/2009-Customs dated 11.09.2009, it is clear that the import of goods specified in the Import Authorisation issued by DGFT in the name of the appellants, are exempt from the whole of the duty of customs, additional duty of customs and safeguard duty or anti-dumping duty, if any, leviable on such imported goods. However, the said exemption was subjected to certain conditions specified therein. From the records of the case, it is clear that the appellants have produced the Advance Authorisation at the time of import of goods through the notified sea port Mumbai, and executed the Bond for Rs.47,58,98,750/- along with necessary undertaking before the Customs authorities in respect of Advance License No. 0310746001 dated 20.08.2013. There is no case of sale or transfer of advance authorisation in this case. Thus, it is found that prima facie the appellants have fulfilled the conditions (i), (ii), (iv) and (vi). In respect of the conditions (iii) and (v), since the competent authority as per the Notification No.96/2009-Customs is the DGFT, who would issue an export obligation fulfilment or discharge certificate, redemption, regularization certificate upon scrutiny of exports and other relevant details as in ANF 4F document, these conditions will be able to be met upon production of such certificate from DGFT authorities. The appellants were liable to pay customs duty against 12514.22 MTs of unutilised raw material, calculated on prorata basis after deducting the imported raw material used in the exported quantity, as per Annexure-A worksheet of the show cause notice dated 04.03.2021, as these were imported by availing the customs duty exemption notification but failed to fulfil the proportionate export obligation. From the records of the case, it is also seen that the appellants had written a letter on 06.02.2018 to the Additional DGFT, Mumbai, i.e., the licensing authority for extension of the export obligation period due to adverse international business scenario faced by them and had also requested the Policy Relaxation Committee of DGFT to allow export obligation period upto 19.08.2018. Further, as claimed by the appellants it is seen from the record that the appellants had taken a demand draft No.478828 dated 19.09.2018 for Rs.9,10,69,948/- drawn on HDFC Bank, Nariman Point Tulsiani Cahmbers, Mumbai payable to the account of Commissioner of Customs, Mumbai a/c Namco Industries Private Limited, towards the customs duty and interest payable on account of non-fulfilment of export obligation by submitting it in writing to the Deputy Commissioner of Customs, DEEC Monitoring Cell of New Custom House, Mumbai. The Notification No.96/2009-Customs dated 11.09.2009 provide that for the purpose of this notification, the Licensing Authority or Regional Authority would mean the Director General of Foreign Trade appointed under section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or an officer authorized by him to grant a licence under the said Act, in terms of Explanation to the said notification. Thus, it is clear that the export obligation discharge certificate shall be issued by the DGFT and the same would be submitted by an importer to the Customs authorities for completion of the Advance Authorisation imports and cancellation of bond and undertaking. The appellants have fulfilled the conditions of export obligation after the expiry of the export obligation period but upon payment of an amount of Rs.6,46,63,619/- towards differential customs duty and Rs.4,48,80,062/- towards interest thereon to the government. These payments made by the appellants have been duly taken into account by the DGFT in their letter dated 19.02.2020 while giving the redemption cum regularisation permission to the appellants. There are no reason to agree with the findings of learned Commissioner that the imported goods have violated the conditions of Customs Notification No.96/2009-Customs dated 11.09.2009 and thus it is liable for confiscation under Sections 111(o) and 143 ibid and that the appellants are liable to penalty for their omission in respect of non-fulfilment of export obligation and non compliance with the conditions of the above notification - Since the appellants have already paid the amounts of Rs.6,46,63,619/- towards differential customs duty and Rs.4,48,80,062/- towards interest thereon before the issuance of show-cause notice, the order of the learned Commissioner in confirming the adjudged demands and appropriating the same to the account of government exchequer is upheld - the impugned order insofar as it has imposed redemption fine and penalty on the appellants is set aside. Appeal allowed in part.

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• 2023 (10) TMI 759
  Disposal of application filed under section 129B of Customs Act, 1994 - rectification of error apparent on record that came to be rejected - bar of limitation in section 28 of Customs Act, 1962 - acceptability of facts relating to the import and assessment under section 17 Customs Act, 1962 - Suppression / mis-representation or not - levy of penalty u/s 114A of CA - extended period of limitation. HELD THAT:- In the erstwhile framework wherein acceptance of declared value as transaction value could be jeopardized by the latitude of deviating circumstances, determination of consequent duty liability did not necessarily imply misdeclaration of value and it could well be the inexorable purpose of rule 4(2) of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 that may have given rise to short payment owing to the transactional circumstances having been suppressed at the time of assessment with its own consequence. Had the circumstances which prevailed prior to 1998, depicted in the decision of the Hon ble Supreme Court in EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2000 (11) TMI 139 - SUPREME COURT] , and in accord thereof, be found to have justified the invoking of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 for re-determination of the assessable value by addition to the extent of concealed price of procurement, it would well have been within the scheme of law to confiscate the goods by resort to section 111 of Customs Act, 1962. The fresh determination would have been a consequence of non-compliance with section 14 of Customs Act, 1962 and rule 4 (2) of the said rules arising from deliberate misrepresentation of the transaction value in filing bill of entry. Confiscation of goods - HELD THAT:- Section 111(m) of Customs Act, 1962 may be invoked only upon material particulars being misdeclared and this detriment is in addition to duty liability determined under section 28 of Customs Act, 1962. For such confiscation to be correct in law, it is necessary that the circumscribing circumstances must exist; the value itself has not been established as misdeclared even if the said value was placed on record for assessment without making known the circumstances in which the same goods had been procured from the manufacturer at higher price - A finding on inapplicability of confiscation did not necessarily extend to suppression/ misrepresentation deployed for enhancement of value for assessment. Levy of penalty u/s 114A of CA - HELD THAT:- The legislative intent of compartmentalization of the two is evident in the incorporation of section 114A in Customs Act, 1962 that empowered imposition of penalty in consequence of such suppression/misrepresentation and explicitly excluding recourse to the penalty consequential to misdeclaration in proceedings for recovery of short paid duty - the submission of the appellant cannot be accepted that relief from confiscation amounts to relief from being subjected to the extended period for recovery of duty under section 28 of Customs Act, 1962. Time limitation - HELD THAT:- As no new facts pertaining to circumstances in which the parallel transaction with manufacturer of the impugned goods was not tantamount to suppression/misrepresentation is on record and the non-applicability of the re-determined value is not in dispute in these proceedings, there are no reason to set aside the demand on ground of limitation. Appeal dismissed.

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• 2023 (10) TMI 758
  Misdeclaration and undervaluation of imported goods - goods declared as steep glass bowl and deep cut glass bowl - seizure of container - HELD THAT:- The container was handed over to the custody of the appellant is an admitted fact. When the said admission is seen through the prism of above quoted interpreted provision, it cannot be denied that the said provisions have been violated and that there is lack of diligence towards responsibility of the custodian. However, the appellant though has pleaded its non involvement with panchas at the time of initial inspection when two contradicted panchnamas were prepared and that there was no information of Customs seal bearing No.594385 having been affixed at the time when the container was handed over to appellant, CONCOR and also that the responsibility of the custodian was otherwise given to CISF. There are no cogent difference in the contents thereof except that the time of proceeding is slightly different. In panchnama signed on 2.11.2011, proceedings are mentioned to have started at 12.00 hours and to have ended at 23.00 hours. Whereas for panchnama dated 3.11.2011, the proceedings are mentioned to have started at 12.18 hours on 2.11.2011 and to have got concluded at 00.30 on 3.11.2011. Thus, there is not much difference except 15 minutes/ while beginning one and half an hour time duration while ending the proceedings. Since examination ended post midnight, means date got changed by that time. This cannot be the reason to challenge or to doubt the veracity/correctness of the panchnama. The contention of appellant that it has no knowledge about seal nor any responsibility for the container lying in the customs area/shed is not sustainable. Objection about Customs seal - HELD THAT:- The appellant has not brought to notice that it was mandatory for the Customs Inspector to cut seal only in the presence of custodian of CONCOR on 2.11.2011. Admittedly, it was case of mis-declaration and undervaluation and till the request of appellant of joint survey on 15.10.2012 no pilferage was at all noticed. It is clear that presence of CONCOR was mandatory neither on 02/03.11.2011 nor even on 15.10.2012. The examination on 15.10.2012 was though, conducted in presence of CONCOR. Hence, there are no reason to differ from the finding in the order under challenge that at the time drawing panchnama dated 2.11.2011, Customs seal No.594385 was affixed on the container and the said seal was handed over to the CONCOR. Plea about transferring liability to CISF - HELD THAT:- Admittedly, there is no such approval in favour of the CISF. All the allegations as fastened against the custodian are under Regulation 6 HCCAR,2009 and section 45 of Customs Act, 1962 i.e. against the approved by custodian, who is none but CONCOR, the appellant. As per section 45 (2) (b) of Customs Act, 1962, the custodian is duty bound to not to permit such goods to be removed from the customs area, except under and in accordance with written permission of proper officer or otherwise dealt with. Admittedly, there was no such permission with CONCOR for removal of the goods. There is no denial that the container had shifted from its location within the customs area. Also the seal of the container was found tampered and most of the goods were found pilfered from the said container. As per section 45, the custodian is burdened with the responsibility of safe custody of imported goods unless and until those goods cleared either for home consumption or for being warehoused. Admittedly, the goods got pilfered and container seal found tempered when the goods were not still cleared - there are no reason to absolve the appellant from the responsibility fastened upon him and violation confirmed. Appeal dismissed.

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• 2023 (10) TMI 757
  Refund claim on account of price rebate granted by overseas supplier - rejection level of Fe content in the iron ore fines was amended - reduction in export price - HELD THAT:- The Appellant has executed a contract dated 14.04.2011, as per which the agreed price of Iron Ore was US$ 153 per DMT. The Appellant have paid export duty amounting to Rs.4,22,58,967/-on the basis of this agreed price. As per Clause 9 of the Contract, Intertek India Pvt. Ltd., the authorized surveyor submitted the Certificate of weight and Certificate of Quality vide its letter dated 23.05.2011. As per this certificate, the Fe content was 59.11%. As per the agreement, if the Fe content is less than 60%, then the contract is liable to be rejected. Since the chemical composition of Fe was not within the guaranteed limits of 60%, the Contract price was required to the adjusted in the light of clause-5 of the Contract. Accordingly, Addendum No. 3 dated 31.5.2011was signed on mutual agreement. The method adopted by the Commissioner (Appeals) is not proper. In the original contract dated 13.04.2011, there was a provision for reducing the price when the Fe content is less than 61%. However, this contract in total will be rejected when the Fe content is less than 60%. In this case as per the Certificate issued by Intertek, the Fe content was 59.11%. Accordingly, the original contract dated 13.04.2011, was liable to be rejected and the terms of arriving at the revised price as per the original contract no longer exists. In view of the Report from Intertek, the agreement was reworked and Addendum 3 dated 31.05.2011 was mutually accepted. As per this Addendum, the revised price agreed was USD 125, wherein the contract will be rejected if the Fe content is less than 58%. If the buyer and seller are not related and if the price is the sole consideration, the transaction value at the time and place of export will be the assessable value. Thus, the contention of the Appellant is agreed upon that the assessable value of the goods exported with 59.11% Fe content would be USD125. Accordingly, the Appellant was liable to pay export duty on the basis of assessable value of USD 125 Per MT. Since the Appellant has already paid export duty by adopting USD 153 per MT, they are eligible for refund of the excess duty paid. Since the Appellant are eligible for the excess customs duty, the department s appeal challenging the partly allowed refund is not sustainable. Accordingly, the department s appeal is liable to be rejected. Appeal of appellant allowed.

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• 2023 (10) TMI 756
  Valuation of imported goods - fuel oil (FO) and diesel oil (DO) used during the coastal run of the vessel - vessel converted from foreign run to coastal run for carriage of coastal cargo - consumption during coastal run to be treated as import or not - inclusion of the elements freight, insurance and handling charges in the assessable value. Whether the value should be on the basis of contemporaneous import value or on IOCL sale price to bunkers to vessel plus notional freight, insurance and loading landing charges? HELD THAT:- When IOCL sells the goods the elements of freight and insurance are already added. Hence, these elements need not be added again to arrive the assessable value for the purpose of charging duty on the Fuel Oil and Diesel Oil used by the vessel during its coastal run - this method of valuation is supported by the decision of the Tribunal in the case of M/S SICAL LOGISTICS LTD. VERSUS CCEX, CUS. S. TAX, BBSR I [ 2019 (2) TMI 777 - CESTAT KOLKATA ]. The method of valuation of the Revenue is not proper. The elements of freight and insurance and Landing charges need not be added again as the same have already been included in the selling price of IOCL. Accordingly, the assessable value is to be re-determined based on the selling price of IOCL, without including freight, insurance and landing charges. Excess payment of customs duty, if any, needs to be refunded to the Appellant along with interest. Appeal allowed.

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• 2023 (10) TMI 755
  Valuation of imported goods - old and used Printer cum Multi function Device of Xerox/Canon make from USA - enhancement of value - enhancement of value done on the basis of the value estimation given by the Chartered Engineer - Confiscation of goods - imposition of redemption fine and penalty. Appellant contended that they have accepted the enhanced value only to avoid demurrage. HELD THAT:- The contention of the importer is agreed upon. The consent given before clearance of the goods does not take away their right to appeal on this issue. However, it is found that the enhancement of value in this case was done as per the value estimation done by the Chartered Engineer. The Appellant has not submitted any evidence to substantiate their claim that the value was enhanced arbitrarily. Hence, the enhanced value agreed with and it does not require to interfere with the enhanced value determined in the impugned order. Confiscation of goods - HELD THAT:- The goods imported are used Digital multi function printer, which are not freely importable. Para 2.17 of FTP 2009-14 was amended w.e.f.28.02.2013 and subsequent to the amendment the said goods became importable only against authorization. The goods were imported vide Bill of Entry dated 06/05/2013, ie, after 28.02.2013 and hence the goods were restricted goods. Since the Appellant was not having any authorization, the goods were liable for confiscation. Accordingly, it is found that the goods were rightly confiscated and allowed to be redeemed on redemption fine. Thus, there are no infirmity in the order of confiscation of the goods. Quantum of redemption fine - HELD THAT:- In the case of NAVPAD ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS, COCHIN [ 2008 (3) TMI 604 - CESTAT, BANGALORE] , affirmed by Hon ble Kerala High Court, it has been held that fine upto 10% and penalty upto 5% would be reasonable when goods were imported against restriction in EXIM policy - It is observed that the Redemption fine imposed in this case works out to 30% of the declared value, which is very high. Accordingly, the redemption imposed reduced from 4,22,000/- to Rs.2,00,000/-. As the penalty imposed is works out to 5% of the declared value, the penalty imposed in the impugned order is upheld. Appeal allowed in part.

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• 2023 (10) TMI 754
  Smuggling - red Betel Nuts - Foreign origin goods - notified goods or not - onus to prove - confiscation of vehicle in terms of Section 115(2) of the Customs Act - HELD THAT:- The Tribunal in the case of BIJOY KUMAR LOHIA VERSUS COMMISSIONER OF CUSTOMS (PREV.), PATNA [ 2005 (11) TMI 306 - CESTAT, KOLKATA ] has held that the local trade opinion cannot take place of the legal evidence. The reliance on the opinion of Arecanut Research Development Foundation (ARDF), Mangalore as regards the country of origin by the Original Adjudicating Authority was not proper inasmuch as the said organization in reply to an RTI query has stated that it is not possible to determine the place of origin of betel nuts through test in laboratory - the Appellate Authority is agreed upon that the said report can only be treated as an opinion and not as scientific test report regarding the country of origin. Further, even if the betel nuts are held to be of foreign origin, the same can be confiscated only when it is proved that betel nuts have been illegally smuggled into the country. Revenue has not produced any evidence to show that the betel nuts in question were smuggled into India. In the absence of any positive evidence to establish the foreign origin of the goods and their illegal smuggling into the country, the Appellate Authority is agreed upon that their confiscation is neither warranted nor justified. As such, there are no infirmity in the impugned order of the Commissioner (Appeals). Appeal of Revenue dismissed.

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• 2023 (10) TMI 753
  Levy of penalty u/s 112 (a) of the Customs Act 1962 - Customs House Agent (CHA) - violation of Regulation 13 of CHALR 2004 - It is alleged that the appellant did not verify the antecedents of the importer - HELD THAT:- There is nothing brought out from the records that the appellant had in any manner abetted the importer or the import of impugned goods. In para 53 it is clearly stated that the appellant has only assisted to file the documents on behalf of importer as required of a CHA Firm. It is not done in his individual capacity. There is no allegation that the appellant committed any act helping the import of the illegal goods. The department has not been able to establish sufficient grounds for imposing penalty under section 112 (a) of Customs Act 1962. The penalty imposed is not warranted and not justified. The impugned order is modified to the extend of setting aside the penalty of Rs. 50,000/- imposed on the appellant herein - Appeal allowed.

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• Corporate Laws

• 2023 (10) TMI 752
  Condonation of delay in both re-filing and filing of the Appeal - Notice was never received by the Applicant / Appellant herein - ex-parte Order was passed on merits. It is the contention of the Learned Counsel for the Applicant / Appellant that having been set ex-parte before the Adjudicating Authority, they were unaware of the Order till 03/10/2022 when the IRP had sent communication of the same, the Appeal could not be filed within the statutory limit of 30 days, and there was a delay of 15 days from the date of the Impugned Order. HELD THAT:- The Hon ble Supreme Court in ESHA BHATTACHARJEE VERSUS MANAGING COMMITTEE OF RAGHUNATHPUR NAFAR ACADEMY AND OTHERS [ 2015 (1) TMI 1053 - SUPREME COURT] has clearly laid down that an Application for condonation of delay should not be dealt with, in a routine manner on the base of individual philosophy which is basically subjective - In the instant Case, it is seen that there is an inordinate delay in re-filing also. As per the Report of the Registry, defects were intimated and the file was returned on 07/12/2022 but the Applicant had refiled the same only on 31/03/2023 with a delay of 115 days. The contention of the Learned Counsel for the Applicant / Appellant that the delay is only 85 days is incorrect. Be that as it may, there is no explanation for this delay except for stating that there was a communication gap between the Clerk and the Registry on account of the wedding of the clerk coupled with technical difficulty associated with filing and tracking in the e-filing portal . We do not find this explanation a sufficient cause and this Tribunal is of the view that the reason cited are not adequate to condone the inordinate delay of 115 days in refiling. This Tribunal is of the earnest view that despite service of Notice and two paper publications as noted by the Adjudicating Authority the Applicants / Appellants have not chosen to appear before the Adjudicating Authority and now cannot state that they were unaware of the Order, specifically having regard to the fact that two of the addresses to whom the Notices were returned, unserved are one and the same given in the Memo of Parties in the Appeal. This Tribunal is not satisfied with the explanation furnished and therefore, the Applications seeking condonation of delay in refiling as well as the delay in filing of the Appeal are dismissed.

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• Insolvency & Bankruptcy

• 2023 (10) TMI 751
  Admission of section 7 application - seeking grant of interim relief for commencement of the project - It was contended that with the introduction of Strategic Partner, Corporate Debtor shall complete the project under the supervision of the IRP in a time bound manner which shall be beneficial to the homebuyers/allottees and to the creditor without having to undergo any haircut. HELD THAT:- From the sequence of the events and submissions made by Learned Counsel for the parties, it is clear that the project of the Appellant which is Belvedere , Sector-79, Noida having an area of 30,000 Sq. Mtr. is a project which can be very well revived under the supervision of the IRP with the assistance and co-operation of the promoters and the strategic finance provider. EKA Life a strategic project partner has offered to provide finance even before filing of this Appeal and the ground taken in the Appeal is that EKA Life the strategic project partner is ready to provide interim finance of Rs.75 Crores which shall sufficient to carry out the completion of the project which will be beneficial to both homebuyers as well as the Financial Creditor. Having passed a detailed order on 25.07.2023 for carrying out the construction in the project as per directions contained therein, there are no reason to modify the said direction and now permit any other interim finance provider who has now come up offering to provide interim finance to the project. The cost of interim finance as offered by EKA Life is now equal to the one offered by Zenious Global Media Pvt. Ltd. - it is satisfying that there are no grounds made out to issue any modification of our order dated 25.07.2023 and we are of the view that the construction of the project need to be proceeded further as per the direction on 25.07.2023. After commencement of the construction in the project, receivables in the project have to be deposited in the RERA designated account i.e. 70% and 30%. Although in the Master Agreement, as noted above, certain clauses have been indicated with regard to payment of dues of Aditya Birla Finance Limited , the promoters, IRP and interim finance provider in consultation with the Aditya Birla Finance Limited need to submit a fresh proposal as to how and in what manner the dues of Aditya Birla Finance Limited shall be cleared out of the project. Thus, the commencement of the project is needed to serve the interest of homebuyers as well as creditors - List the Appeal on 04.12.2023.

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• 2023 (10) TMI 750
  Approval of Resolution Plan - no proposal of distribution mechanism for consideration of the CoC - delegation of task of proposing the manner of distribution of funds to the CoC - whether the Adjudicating Authority was justified in approving a Resolution Plan where the manner of distribution was proposed, and decided by the CoC? HELD THAT:- It is not in dispute that the Resolution Plan of Vedanta was approved by the CoC by a majority of 94.96 % - The Hon ble Supreme Court in a catena of Judgments has held that the Adjudicating Authority and the Appellate Tribunal cannot enter into the merits of a Business Decision of the requisite majority of the CoC, unless it is violative of the provisions of Section 30 (2) of the Code. An approved Resolution Plan cannot be subject to judicial review in terms of carrying out a quantitative analysis qua each Stakeholder. The Hon ble Supreme Court has observed so in India Resurgence ARC private Limited Vs. Amit Metaliks Limited [ 2021 (6) TMI 684 - SUPREME COURT] , that the commercial wisdom of CoC and the scope of judicial review remains limited within the four corners of Section 30 (2) of the Code for the Adjudicating Authority and Section 30 (2) read with Section 61 (3) for the Appellate Authority. Whether the CoC is empowered to decide the distribution methodology? - HELD THAT:- The Hon ble Supreme Court in the matter of Amit Metaliks has held that thus, what amount is to be paid to different classes or subclasses of creditors in accordance with provisions of the Code and the related Regulations, is essentially the commercial wisdom of the Committee of Creditors; and a dissenting secured creditor like the appellant cannot suggest a higher amount to be paid to it with reference to the value of the security interest . Though the IBC does not have a specific Provision that uses the term Business Decision of the CoC, the Code contains several provisions that detail the powers and functions of the CoC, which encompass various decision-making responsibilities relating to the Insolvency Resolution Process, which definitely includes distribution methodology of the Resolution Plan - This Tribunal is of the earnest view that the Appellant having taken part in these Meetings and not having raised any substantial objections at that point of time, is estopped from questioning the commercial wisdom of the CoC in proposing, considering and approving the distribution methodology of the Resolution Plan. Keeping in view the catena of Judgments of the Hon ble Apex Court regarding the commercial wisdom of the CoC in approving the Plan and the limited jurisdiction therein, this Tribunal is of the considered view that the CoC in its commercial wisdom can propose, consider and decide on the distribution mechanism under the Resolution Plan , as long as it is within the domain of Section 30(2) of the Code. Appeal dismissed.

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• 2023 (10) TMI 749
  Invocation of Bank Guarantee allowing the Application of the Resolution Professional - Performance Bank Guarantee or not - exclusion as per provision of Section 3 sub-Section (31) of the IBC, 2016 - applicability of Moratorium under Section 14 of IBC for encashment of the bank guarantee - HELD THAT:- From the perusal of the Agreement and the Bank Guarantee it is apparent that the Bank Guarantee was given by the Bank to secure the interest of the Appellant, as per Clause 6 of the Agreement, the raw material assistance under the Agreement was to be granted by the Appellant to the Corporate Debtor subject to furnishing of surety in the form of Bank Guarantee executed by a nationalised/approved Bank to the satisfaction of the Appellant. It further prescribes that the Appellant shall be entitled to invoke and encash the said Bank Guarantee on the terms and conditions as stipulated in the said Bank Guarantee. From the perusal of the Bank Guarantee bond dated 30.05.2012, this Tribunal finds that the Bank had undertaken to pay the amounts due and payable under the said Guarantee without any demur, merely on a demand from the Appellant and the Bank had undertaken to pay the Appellant any amount so demanded notwithstanding any dispute raised by the Corporate Debtor and that the Bank s liability under the said Bank Guarantee is absolute and unequivocal - it is apparent that the Bank had absolute, unequivocal and irrevocable liability to pay to the Appellant the amount guaranteed to the Appellant on demand without any demur and irrespective of any objection or dispute or any legal proceeding initiated by the Corporate Debtor. The Moratorium was envisaged to ensure that the Corporate Debtor s Assets are not liquidated or reduced till the CIRP is completed. The idea behind Moratorium was that no additional stress is brought on the business which is being rescued. In the instant case, the Appellant has raised the demand on the Bank for payment which was guaranteed by the Bank much prior to the initiation of the CIRP. No recovery is being made from the Corporate Debtor and therefore there is no threat immediately to the Assets of the Corporate Debtor. The Bank Guarantee is a contract of Guarantee provided/furnished by the Bank, the surety, to perform the promise, or discharge the liability, of the third person, being the Corporate Debtor herein, in case of his default. From the plain reading of Section 14(3)(b) of the IBC, 2016, along with Section 126 of the Indian Contract Act, 1872, it is apparent that the Bank Guarantee given by the Respondent No. 2 to the Appellant is covered by the exclusion given in Section 14(3)(b) and that provisions of Section 14(1) shall not apply to the instant case. The Appellant had also brought to the attention of this Tribunal to the Judgement of this Tribunal in IDBI Bank Ltd. Vs. Indian Oil Corporation Ltd. [ 2023 (1) TMI 548 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] , wherein it was held that an irrevocable and unconditional Bank Guarantee can be invoked even during Moratorium period in view of the amended provisions under Section 14(3)(b) of the IBC, 2016 - In the instant case also the Bank Guarantee is an irrevocable and unconditional one, and the said Judgement squarely applies to the facts of this case on all fours. Thus, as per the facts of this case, the Bank Guarantee, provided by the Respondent No. 2/Bank is held to be covered by the exception provided in provisions of Section 14(3)(b) of IBC, 2016, and the Moratorium prescribed under Section 14(1) of IBC, 2016, shall not apply to its Encashment. Appeal allowed.

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• Service Tax

• 2023 (10) TMI 748
  Exemption from Service tax - governmental authority - educational institutions - Indian Institute of Technology, Patna (IIT Patna) - National Institute of Technology, Rourkela (NIT Rourkela) - covered by Mega Service Tax Exemption Notification No. 25/2012, G.S.R 467(E) dated 20th June, 2012 or not - HELD THAT:- When the meaning of the provision in question is clear and unambiguous by the usage of or in clause 2(s), there remains no force in the submission of Ms. Bagchi that or should be interpreted as and . In our opinion, the word or employed in clause 2(s) manifests the legislative intent of prescribing an alternative. Going by the golden rule of interpretation that words should be read in their ordinary, natural, and grammatical meaning, the word or in clause 2(s) clearly appears to us to have been used to reflect the ordinary and normal sense, that is to denote an alternative, giving a choice; and, we cannot assign it a different meaning unless it leads to vagueness or makes clause 2(s) absolutely unworkable. In the present case, the word or between sub-clauses (i) and (ii) indicates the independent and disjunctive nature of sub-clause (i), meaning thereby that or used after sub-clause (i) cannot be interpreted as and so as to tie it with the condition enumerated in the long line of clause 2(s) which is applicable only to sub-clause (ii). In the present case, the use of a semicolon is not a trivial matter but a deliberate inclusion with a clear intention to differentiate it from sub-clause (ii). Further, it can be observed upon a plain and literal reading of clause 2(s) that while there is a semicolon after sub-clause (i), sub-clause (ii) closes with a comma. This essentially supports the only possible construction that the use of a comma after sub-clause (ii) relates it with the long line provided after that and, by no stretch of imagination, the application of the long line can be extended to sub-clause (i), the scope of which ends with the semicolon - the long line of clause 2(s) governs only sub-clause (ii) and not sub-clause (i) because of the simple reason that the introduction of semicolon after sub-clause (i), followed by the word or , has established it as an independent category, thereby making it distinct from sub-clause (ii). If the author wanted both these parts to be read together, there is no plausible reason as to why it did not use the word and and without the punctuation semicolon. An interpretation of the relevant provision resulting in the expanded scope of its operation cannot in itself be sufficient to attribute ambiguity to the provision. To make a statute workable by employing interpretative tools and to venture into a kind of judicial legislation are two different things. Merely because the statute does not yield intended or desired results, that cannot be reason to overstep and cross the Lakshman Rekha by employing tools of interpretation to interpret a provision keeping in mind its outcome. Interpretative tools should be employed to make a statute workable and not to reach to a particular outcome. There are no merit in these appeals - appeal dismissed.

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• 2023 (10) TMI 747
  CENVAT credit availed on input services polishing, grinding of marble floor etc. - denial of benefit of exemption on the ground that when appellant have availed credit on input services, they are not entitled to get benefit of notification no. 1/2006 (abatement) - it was held by CESTAT that the classification and categorization of service cannot be changed at the end of the recipient - HELD THAT:- There are no reason to interfere with the impugned order dated 22-12-2016 passed by the Customs, Excise Service Tax Appellate Tribunal, Principal Bench, New Delhi. Appeal dismissed.

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• 2023 (10) TMI 746
  Refund of service tax - transportation of goods by rail - Transportation of goods by road - CHA Services - Terminal Handling Service. Transportation of goods by rail - HELD THAT:- The appellant has only engaged M/s KNL who was further allowed to avail the services of CHA and other service providers for export of goods from the factory of the appellant to the final destination of the goods in the foreign country - It is also a fact that M/s KNL availed the services of other parties in order to effect the export of goods. CHA Services - HELD THAT:- The appellant had produced that the CHA M/s Sunrise Freight and Forwarders Private Limited has provided a certificate that they had provided the service of customs clearances and related works to the clients of M/s KNL and even M/s KNL had given a certificate that M/s Sunrise Freight and Forwarders Private Limited had provided the service of customs clearance and related works to their clients but both the authorities have not been considered the certificate, therefore, the appellant are entitled to refund of service tax paid to CHA subject to verification of the certificate produced by the appellant. Refund of service tax paid on Transportation of goods by road - HELD THAT:- Once the Ld. Commissioner (Appeals) has allowed some portion of freight by Rail then on the same logic, the refund of service tax paid on Transportation of goods by Road should have been also allowed - the appellant is entitled to refund of service tax paid on transportation of goods. Service tax paid on Terminal Handling Service - HELD THAT:- The said services are rendered for handling the export containers at the port of exports. These services are rendered within the port area by various service providers and thus the same are in the nature of port service - This issue has been decided by various benches of the Tribunal wherein refund was granted in respect of service tax paid in respect of terminal handling services under the said notification - Reliance can be placed in TRL RICELAND PVT. LTD. VERSUS CCE, DELHI-III [ 2017 (7) TMI 492 - CESTAT CHANDIGARH] . The appellant are entitled to refund of service tax and for determining the quantum of the same, all the matters are remanded back to the adjudicating authority for verification and sanctioning the refund claims filed by the appellant - Appeal allowed by way of remand.

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• 2023 (10) TMI 745
  Non-payment of service tax - commission amount received from RBI for doing government related business transaction - HELD THAT:- The issue involved in the present case is squarely covered by the Larger Bench of the Tribunal in the case of CCE S.T. CHANDIGARH VERSUS STATE BANK OF PATIALA [ 2016 (10) TMI 800 - CESTAT NEW DELHI] wherein the Larger Bench of the Tribunal has observed once State Bank of Patiala has been appointed as agent of RBI, it is transacting Government business which is in the nature of a sovereign function performed on behalf of the Government and hence not liable to Service Tax. The impugned order is not sustainable - Appeal allowed.

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• 2023 (10) TMI 744
  Non-payment of service tax - transaction fees/ charge recovered from their customers, but applicable duty not discharged - HELD THAT:- The transaction charges are payable by the Stock Brokers in terms of the Regulations issued by SEBI and these are not any fee or statutory levy that is payable by the customers of the Stock Brokers. In effect, the Stock Broker/ Appellants are recovering the fee or charges payable by them to SEBI for the conduct of business and are paying the same to SEBI. It is not the case of the appellants that the said transaction charges are payable by the ultimate customers and that as the Stock Broker Agent, they are paying the same on behalf of the customers. Therefore, these charges recovered from the customers are in the nature of consideration towards the taxable service rendered by the appellant as far as the customers are concerned. The Tribunal has already gone into the issue of the includability of transaction charges in the service tax in the case of M/S SRIRAM INSIGHT SHARE BROKERS LTD. VERSUS CST, KOLKATA [ 2018 (11) TMI 1383 - CESTAT KOLKATA] where the Tribunal has found the legal responsibility of the payment of transaction charges was of the trading members (in this case apparently the appellant) and as levy of transaction charges from the concerned stock exchange is on the appellant and since this liability have been passed on by him on their clients, we are of the view that same need to be included in the taxable value as per the provision of Section 67 of the Finance Act, 1994. Accordingly, we find that there is no merit in the appeal on this count and same is dismissed. The appellant has not made out any case in their favour - the impugned orders do not require intervention - Appeal dismissed.

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• 2023 (10) TMI 743
  Refund of service tax paid - export of goods - CHA Services - Road Transport - Export Commission Agent - Terminal Handling Charges - the requirement of Notification No. 41/2007-ST dated 06.10.2007 not properly appreciated. CHA Services - rejection on the ground that the name of the CHA on the shipping bill is different then invoice submitted for refund - HELD THAT:- It is pertinent to note that the Revenue has not disputed the services in such exports. Moreover, in the appellant s own case, the Tribunal in M/S WINSOME YARNS LIMITED VERSUS CCE, CHANDIGARH [ 2017 (6) TMI 683 - CESTAT CHANDIGARH] allowed the refund of service tax paid on CHA Services - in the case of EVERGREEN SUPPLIERS VERSUS COMMISSIONER OF C. EX. [ 2007 (10) TMI 134 - CESTAT, BANGALORE] , it has been held that there is no restriction in the service tax law or in the Notification which restricts the activity of sub-contracting by CHA - the appellants are entitled to refund of service tax paid on CHA Services. Road Transport - rejection on the ground that the invoices submitted for refund is of different entity then the entity issuing consignment note - HELD THAT:- The Ld. Commissioner rejected the refund claim of service tax on transportation of goods on the sole ground that the appellant has not furnished any documents which would show that the charges were for transportation of goods from ICD to port of export whereas as per the appellant, they have furnished all these documents with the invoices issued by the service provider at the time of filing the refund - the appellant is entitled to refund of service tax on GTA Services paid by them subject to verification by the lower authorities. Export Commission Agent - HELD THAT:- As per the Notification No. 41/2007-ST dated 06.10.2007, it is not necessary that the exporter must provide the agreement or contract rather any other document showing the payment of commission to foreign agent is sufficient to claim refund of service tax. Though, the appellant has filed copies of the agreement/contract and other document but the same was not considered by the revenue authorities - the appellant has satisfied the conditions laid down in the Notification and is entitled to refund of service tax subject to verification by the lower authorities. Terminal Handling Charges - rejection on the ground that the said service is not a prescribed service under Notification No. 41/2007-ST dated 06.10.2007 - HELD THAT:- The terminal handling services are rendered for handling the export containers at the port of exports. These services are rendered within the port area by various service providers and thus the same are in the nature of port service - This issue has been decided by various benches of the Tribunal wherein refund was granted in respect of service tax paid in respect of terminal handling services under the said notification - reliance can be placed in COMMISSIONER OF CENTRAL EXCISE VERSUS AIA ENGINEERING PVT. LTD. [ 2015 (1) TMI 1044 - GUJARAT HIGH COURT] . The matters are remanded back to the adjudicating authority for verification and sanctioning of the refund claim filed by the appellant - Appeal disposed off.

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• 2023 (10) TMI 742
  Non-payment of service tax - C F Agency Service - godown Charges - Security charges - Guard charges - Electricity Charges etc. - HELD THAT:- From the Agreement, it is seen that the Appellant is required to take delivery of the goods from Railway Station and other places and store the same properly and they should clear the same to various clients of the principal. These activities very clearly show that the Appellant is carrying the activity of Clearing and Forwarding service. Therefore, the Appellant s submission that they are only carrying on the C F Vendor services is rejected. On going through Annexure 2 of the Agreement, it is seen that the amounts mentioned under the headings Rent, Security and Guards etc. are rounded figures and reflect that these are expenses which are being incurred by the Appellant. It is not mentioned anywhere that the expenses are being incurred on behalf of the principal to qualify as reimbursable expenses. Taking into consideration the fact that the Appellant has enclosed various challans showing normal payment of Service Tax of Rs.60,346/- along with interest of Rs.1934/-, it is opined that out of the total confirmed demand, after proper verification, the amounts already paid should be adjusted - matter remanded back to the Adjudicating Authority who will get these facts verified and confirm the demand for the net amount - appeal disposed off.

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• 2023 (10) TMI 741
  Exemption from payment of service tax to service provided to Special Economic Zone (SEZ) Unit - denial on the ground that Form A1 was not available with the appellant when the service were provided but was only subsequently received - N/N. 17/2011- ST dated 01.03.2011 - HELD THAT:- As per the impugned order there is no dispute that the appellant have provided services to SEZ unit. The exemption under Notification No 17/2011-ST dated 01.03.2011 was denied only on the requirement of submission of Form A1. Though the said form was not submitted at the relevant time but subsequently it was submitted, therefore, compliance of the Notification No. 17/2011 stands made. Moreover, the Section 26 (1) (e) of SEZ Act grants the exemption from payment of service tax in respect of the service provided to the SEZ units. The SEZ Act override the Finance Act, 1994 under which Notification No. 17/2011-ST was issued. On this count also the appellant is legally entitled for exemption from payment of service tax - Accordingly, demand does not sustain. Appeal allowed.

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• 2023 (10) TMI 740
  Doctrine of mutuality - Club or association service - non-payment of service tax on amounts collected from the Members - scope of SCN - adjudication order travelled beyond SCN - Levy of service tax on Maintenance deposit - Time Limitation - Suppression of facts or not - HELD THAT:- It is found that in the entire SCN the proposal of service tax demand was only on the basis of the definition of club or association service as specified in sub clause (zzze) of clause (105) of section 65 of the Finance Act, 1994. Whereas in the adjudication order, the demand was confirmed on the basis of the statutory provision prevailing with effect from 01.07.2012 where under the concept of definition of service was given away and negative list was introduced, according to which irrespective of any service provided by one person to another person except the services prescribed under the negative list are chargeable to Service Tax. The allegation made in the show cause notice is on the completely different provision and the grounds than the statutory provision applied while confirming the demand of Service Tax in the adjudication order. Therefore, the adjudication order has travelled absolutely beyond the scope of show cause notice. The demand of Service Tax is liable to be set aside on this ground itself that the adjudication order cannot travel beyond the show cause notice. From the consistent view of the Apex Court in COMMISSIONER OF CENTRAL EXCISE VERSUS GAS AUTHORITY OF INDIA LTD. [ 2007 (11) TMI 276 - SUPREME COURT] and PRECISION RUBBER INDUSTRIES (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [ 2016 (4) TMI 841 - SUPREME COURT] and following the same by the Hon ble Gujarat High Court in COMMISSIONER VERSUS RELIANCE PORTS AND TERMINALS LTD. [ 2015 (10) TMI 1571 - GUJARAT HIGH COURT] , it is settled that the show cause notice is foundation of a case and any proceeding whether adjudication or appellate proceeding cannot travel beyond the show cause notice. Therefore, following the settled legal position as cited above, the demand in the present case is not sustainable on the ground that the adjudication order has travelled beyond show cause notice. In the present case since there is a doctrine of mutuality between the appellant s corporative society and its members, it cannot be said that a person had provided service to another person. There is no difference between the corporative society and its members that means both are one. Accordingly, there is no service provision by one person to another person. Therefore even as per the definition of service provided under section 65B(44) with effect from 01.07.2012, the activity between the appellant and it s members does not fall under the definition of service. Levy of service tax - Maintenance deposit - HELD THAT:- The maintenance deposit was received as a refundable deposit and the same was shown as refundable in the ledger. Therefore, such amount cannot be considered as a consideration towards any service. Hence, the same is not chargeable to Service Tax on this ground also. This issue has been considered in various judgments, wherein the refundable deposit was held to be not consideration towards the service. Time Limitation - Suppression of facts or not - HELD THAT:- No suppression of facts or mis-declaration or any mala fide intention can be attributed to the appellant for non-payment of service tax. Therefore the extended period is not invocable in the present case. Accordingly, the demand for the extended period is not sustainable on limitation also. The Service Tax demand is not sustainable on multiple grounds - the impugned order set aside - appeal allowed.

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• 2023 (10) TMI 739
  Levy of Service Tax - SSI exemption and clubbing of rent - renting of property - Joint Ownership - renting out the show rooms/ shops/ office located at First Floor of President Plaza Building to M/s Urban Development Group (UDG) and clubbing to deny SSI exemption - HELD THAT:- There is a grave error made by the revenue by issuing a show cause notice to M/s. Dineshbhai M Patel Ors. There is no such entity, who received entire rent of the property. As per rent agreement, it is clear that the rent is on account of eight persons in the different proportion. From the proportion of the rent (given), it is clear that the total rent is not on account of Dineshbhai M Patel alone but it is in different proportion to individual of eight persons. Therefore, the entire rent cannot be considered as consideration of M/s Dineshbhai M Patel. On taking the rent proportion of each person, it will much below the threshold limit of small scale exemption provided under notification No. 06/2005-ST dated 01.03.2005 as amended by notification No. 04/2007-ST dated 01.03.2007 and Notification No. 08/2008-ST dated 01.03.2008. Accordingly, no Service Tax demand arises against any one. This issue has been considered in the various judgments cited by the appellant, wherein in the case of the joint agreement of different owner of the property made for lease to any corporate and in the said judgments, it is categorically held that the rent of individual s portion may be taken as the gross value against that individual person and cannot be taken combinedly - reliance can be placed in COMMISSIONER OF CENTRAL EXCISE, NASIK VERSUS DEORAM VISHRAMBHAI PATEL [ 2015 (9) TMI 790 - CESTAT MUMBAI] . Appeal allowed.

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• 2023 (10) TMI 738
  Levy of service tax - rent-a cab service - appellant had provided buses for transportation of students, facilities and staff to Vadodara Institute of Engineering, which is an educational institution - scope of cab. Appellant submits that the bus service was provided by the appellant for use by the educational body, therefore, this is not included within the meaning of cab. HELD THAT:- There is no dispute in the fact that for the purpose of transportation by bus the appellant had entered into a contract with the education institution namely Vadodara Institute of Engineering which is undisputedly an education institute - From the definition of rent a cab scheme operator service, the motor vehicle rented for use by an education institute shall not be included within a meaning of a cab, therefore, renting of bus for an educational institution is clearly excluded from the definition of cab for the purpose of levy of service tax under rent- a cab scheme operator service. It is also found that as per the CBEC Letter F. No.137/70/2007- CX.4 dated 26.04.2008 that school running transport services for their students are not liable to payment of service tax under the category of tour operator. The activity is not taxable under rent a cab operator service - Appeal allowed.

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• Central Excise

• 2023 (10) TMI 737
  Classification of Liquid Crystal Devices (LCDs) - it was held by CESTAT that Decision given in case of M/s Secure Meters Ltd. Vs. CC, New Delhi [2015 (5) TMI 241 - SUPREME COURT] followed wherein parts suitable for use solely or principally with LCD TV were stated not to cover LCDs for LCD TVs as specifically as description of CTH 9013 covers LCDs by name and devotes a sub heading (90138010) exclusively for it. HELD THAT:- Appeal dismissed.

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• 2023 (10) TMI 736
  Violation of principles of natural justice - mandatory pre-show cause notice consultation was not held - invocation of extended period of limitation - Demand raised on the basis of Form-26AS supplied by the Income Tax department - HELD THAT:- Although summons were issued to the appellant and the appellant did not join the proceedings, therefore, the demand has been raised on the basis of Form-26AS. Admittedly, no investigation has been conducted in this case at the end of the appellant by the adjudicating authority. Being the appellant a registered service provider and filing their Service Tax returns, in that circumstances, the demand cannot be raised on the basis of Form-26AS obtained from the Income Tax Department. Further, the adjudication order has been passed ex parte. Moreover, the show cause notice has been issued to the appellant by invoking extended period of limitation and some of the demand pertains to beyond five years and in this case, the demand has to be calculated in terms of Valuation Rules, 2006. The issue in this case is whether the appellant is eligible for the benefit of Notification No.30/2012-ST dated 20.06.2012 or not? The extended period of limitation is not invocable. Moreover, on the basis of Form-26AS, no demand is sustainable against the appellant. Appeal allowed.

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• 2023 (10) TMI 735
  100% EOU - non-fulfilment of export obligation - import of capital goods availing benefit of Notification No.53/97 and domestically procuring capital goods availing Notification No.1/95-CE dated 04.01.1995 - relevant date for application of rate of duty for demanding duty foregone in case of imports and domestic procurement by the EOU - duty is payable on the depreciated value or not - levy of penalties u/s 112 and 114A of the Customs Act, 1962 - Applicability of interest in terms of Section 15 read with Section 68 of the Customs Act 1962. HELD THAT:- As per Condition No.5(6)(i) of Notification No.53/97-Cus., duty foregone on the capital goods is payable if it is not shown to the satisfaction of Assistant/ Deputy Commissioner of Customs that the said capital goods have not been installed in the factory within one year of import or within such period that may be extended, not exceeding five years, on sufficient cause being shown - In the instant case, it is not the case of the Department that the capital goods have not been installed in the factory before the expiry of stipulated period. Therefore, in terms of Condition No.5, duty has to be demanded as if the said capital goods have been removed from the warehouse or the EOU. As the capital goods are not removed from the EOU, the relevant date for the same would be the day of de-bonding or say the date of deemed removal. Hon ble Apex Court in the case of KESORAM RAYON VERSUS COLLECTOR OF CUSTOMS, CALCUTTA [ 1996 (8) TMI 109 - SUPREME COURT] held that the valuation in respect of imported capital goods would be the date on which warehousing period or extended period comes to an end. Tribunal in the case of INTERNATIONAL KNITTING LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI [ 2012 (11) TMI 443 - CESTAT, MUMBAI] following the Hon ble Apex Court s decision in the case of Kesoram Rayon held that the rate prevailing on the date of deemed removal is relevant for valuation of capital goods. Duty is payable on the depreciated value or not - HELD THAT:- The appellants also argued that learned Commissioner has demanded the entire duty whereas it has been consistently held by the Tribunal that in case of part fulfillment of export obligation,proportionate duty is to be demanded - it is found that Tribunal in the case of M/S MOONLIGHT EXIM (P) LTD. VERSUS CCE, JAIPUR [ 2016 (11) TMI 676 - CESTAT NEW DELHI] held that the appellants are entitled proportionate benefit of exports made against which foreign exchange was realized; CBEC Circular No.29/2003-Cus. dated 03.04.2003 also supports this view. Applicability of interest in terms of Section 15 read with Section 68 of the Customs Act 1962 - HELD THAT:- In the case of INTERNATIONAL KNITTING LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI [ 2012 (11) TMI 443 - CESTAT, MUMBAI] , the Tribunal held that though the place may be warehouse at the time of deposit of goods but it may not be so at the time of removal of goods from that place and interest is payablein terms of Section 61 with Section 2(44) of the Customs Act, the goods are liable to interest on the delayed payment of duty. Confiscation of goods - imposition of redemption fine and penalty - HELD THAT:- Tribunal has been consistently holding that in such circumstances, penalty cannot be imposed on EOUs for failure to achieve positive NFE. Tribunal in the case of Moonlight Exim (P) Ltd. has held that penalty is not imposable. A conjoint reading of the relevant provisions relating to warehousing under Customs Act, 1962 and the Notifications issued and the ratio of the judgments in the cases discussed, it is found that while duty at the rate prevalent on the date of deemed removalof capital goods is payable; the appellants are entitled to the benefit to the extent of exports made by them even though they have not achieved positive NFE. However, the provisions do not seem to give any immunity as regards the payment of interest is concerned. The matter should go back to the adjudicating authority to calculate the duty liability of the appellants - the appeal is allowed by way of remand to the Adjudicating Authority.

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• 2023 (10) TMI 734
  Violation of principles of natural justice - opportunity to analyse or counter the findings of the Deputy Director (Cost) not provided - Valuation of goods removed to sister concerns - to be valued on the basis of cost plus 10%,in terms of Rule 8 of Central Excise (Valuation) Rules, 2000 or not - time limitation - revenue neutrality - HELD THAT:- The report of the Deputy Director (Cost) was not provided to the appellants; the working papers on the basis of which the Deputy Director (Cost) has arrived at the figures are also not given; the same are not even explained in the show-cause notice - This is a serious case of violation of principles of natural justice as the appellants have been denied an opportunity to analyse or counter the findings of the Deputy Director (Cost). Further, ongoing through the show-cause notice, it is found that no reasonable justification has been given to invoke the Valuation Rules except for making a bland averment that the appellants are clearing goods to their sister concerns at a lower price. The variation in the quality and thickness of the goods supplied to the sister concerns has not been distinctly brought out; no chemical analysis of the products has been made. The prices of goods cleared to their sister concern are shown to have been less compared to their clearances of comparable goods to independent buyers, the Department has not made any case for taking recourse to CVR, 2000. In the present matter it has not been disputed by the Revenue that almost 60% of the goods manufactured by the appellant are sold to the buyers who are not related and the price is the sole consideration. It clearly shows that the value of the goods at the place and time of removal is available and that price should be adopted for the purpose of ascertaining the assessable value of the goods which are used captively by Unit-I and Unit-II of the appellants. The impugned order is not sustainable - the issue of limitation or revenue neutrality not examined as appeal survives on merits - appeal allowed.

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• 2023 (10) TMI 733
  Valuation of motor vehicles manufactured by the job worker on the duty paid chassis supplied by the Appellant. Whether in relation to the body-built vehicles manufactured and cleared on payment of duty, on landed cost of chassis plus job-work charges, by the body-builder on the chassis supplied by the Appellant, differential excise duty can be demanded from the Appellant by adopting the final price at which the body-built vehicle is sold by the Appellant from RSOs as assessable value for the period prior to 01.04.2007? HELD THAT:- The issue is no more res integra as in the Appellant own case, viz. TATA ENGINEERING AND LOCOMOTIVE COMPANY LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 1988 (2) TMI 72 - PATNA HIGH COURT (RANCHI BENCH), RANCHI] , the Hon ble Patna High Court has held that the Appellant who merely supplies the chassis to body-builder and receives the body-built vehicle from the body-builder, is not the manufacturer of the body-built vehicle, even though the Appellant supervises the quality of such body-built vehicles before clearance by body-builder. The Hon ble High Court held the body builders only to be the actual manufacturers. This judgment has been affirmed by the Hon ble Apex Court in U.O.I. VERSUS TATA ENGG. LOCOMOTIVE CO. LTD. [ 1996 (1) TMI 435 - SC ORDER] . Thus, the job-worker is the actual manufacturer and not the raw-material supplier. In the present case, the activity of building body on the chassis amounts to the manufacture of motor vehicles, in terms of the Chapter Note 5 of Chapter 87 of the Central Excise Tariff Act. Accordingly, the body builder has rightly paid excise duty at the time of clearance of bodybuilt vehicle to the RSO. Thus, the demand of duty from the Appellant is not sustainable and therefore, the duty confirmed in the impugned order is set aside. Appeal allowed.

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• 2023 (10) TMI 732
  Reversal of CENVAT Credit of inputs gone into generation - Remission of duty applied - destruction of Gelatin Mass Waste - bio-hazardous/waste product or not - HELD THAT:- This Tribunal in their own case [ 2009 (3) TMI 370 - CESTAT, BANGALORE] considering the Circular issued by the Board held in their favour observing that demand for reversal of CENVAT credit on the waste product is unsustainable in law. The said view has been later upheld by the Hon ble Karnataka High Court [ 2011 (4) TMI 212 - KARNATAKA HIGH COURT] . In view of the aforesaid principle of law settled by the Hon ble High Court and later upheld by the Hon ble Supreme Court [ 2012 (1) TMI 187 - SC ORDER] by dismissing the appeal filed by the Revenue; there are no merit in the impugned order. The impugned order is set aside and appeal is allowed.

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• 2023 (10) TMI 731
  Refund of excise duty paid erroneously - rejection of refund claim holding that there was no requirement of payment of duty in view of specific bar provided under Section 5A(1A) of Central Excise Act, 1944 - HELD THAT:- It is not in dispute that the appellant supplied the goods to a project of BHEL, supply of which enjoyed exemption under Notification No. 06/2006-CE dated 01.03.2006. Further, it is not in dispute that the appellant erroneously paid duty of exercise amounting to Rs. 55,02,800/- in respect of goods supplied to BHEL and did not charge the exercise duty from its customers. When the appellant realized that he has paid excess duty thereafter he filed the refund application under Section 11B of the Central Excise Act. Refund was rejected mainly on the ground that he has not challenged the self-assessment in appeal and without challenging the self-assessment refund claim is not maintainable. It is also not in dispute that the refund claim has been filed within the period of limitation as prescribed under the provision of Section 11B. The revenue has raised the objection that in view of the judgment of the Hon ble Apex Court in the case of COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS FLOCK (INDIA) PVT. LTD. [ 2000 (8) TMI 88 - SUPREME COURT] unless the self-assessment is altered by way of an appeal, refund claim is not maintainable - On going through the judgment of the Hon ble Apex Court in the case of Flock India Pvt. Ltd., it is found that in that case there was a classification dispute and the classification filed by the assessee was changed by the Assistant Commissioner of Central Excise leading to levy of higher duty of exercise. It is found that even the case of Hon ble Apex Court of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] is also not applicable in the facts of the present case because the said case was under provision of Customs Act, 1962 where the provisions are different from that of Excise Act and service tax. The impugned order is not sustainable in law and the same is set aside - Appeal allowed.

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• 2023 (10) TMI 730
  Crossing of SSI Exemption - use of brand name of others - HELD THAT:- As the very basis of the finding of non-eligibility by the original authority, endorsed in the impugned order, has thus been discarded by the Tribunal and it is not the case of the central excise authorities that the appellant had crossed the exemption threshold, nothing remains of the demand. The impugned order is set aside and appeal allowed.

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• 2023 (10) TMI 729
  Denial of retention of credit - supplying excess production to the Tamil Nadu Electricity Board (TNEB) - generation of electricity and steam in the coal fired 50 MW captive power plant installed for consumption in the factory. It is common ground that the entire production of steam and bulk of electricity were utilized in manufacture of various excisable goods. HELD THAT:- The reviewing authority has placed emphasis in rule 2 of CENVAT Credit Rules, 2004 even though the proposal was for reversal of proportional credit by recourse to rule 6 of CENVAT Credit Rules, 2004 which is the mechanism restrictedly applicable to taking of credit correctly in terms of rule 3 therein read with rule 2(l) but to be retained subject to subsequent usage only. For denial of retention of credit after such licit availment, the provisions of rule 6 of CENVAT Credit Rules, 2004 would alone be applicable. The appellant has not been able to demonstrate, by reference to the proportionate reversal mechanism therein, that the activity of the respondent herein is susceptible to such denial. The appeal is without merit and is dismissed.

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• 2023 (10) TMI 728
  Demand of Central Excise Duty and Clean Energy Cess - requirement to pay duty at the time of removal by the transferor Area - period March 2011-12 to 2014-15 - revenue neutrality - HELD THAT:- It is fact on record that the Appellant has cleared the goods from their unit without payment of duty to their sister unit and the said sister unit cleared the said coals on payment of duty. Although it is a situation of revenue neutrality, but the appellant was monthly required to pay duty at the time of clearance from the transferor unit, otherwise, the Central Excise Act will become redundant - At the time of clearance of goods, the Appellants was liable to pay duty. Extended period of limitation - HELD THAT:- When the fact of clearance of coals from the transferor unit without payment of duty was in the knowledge of the respondent as various correspondences were made during the impugned period and the show-cause notice has been issued to the Appellant by invoking extended period of limitation, in that circumstances, the whole of the demand is barred by limitation. Accordingly, on limitation, the Appellant succeeds. On merit Appellant is liable to pay duty, but on limitation, the show-cause notice fails. Accordingly, the demand confirmed in the impugned order is not sustainable - appeal filed by the Appellant is allowed.

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• 2023 (10) TMI 727
  Realization of 8%/10% amounts to receipt of Excise Duty - Requirement to remit the same to the Department - clearance of both dutiable and exempted goods from their factory premises - non-maintenance of separate records for inputs - HELD THAT:- The issue is no more res integra. The Larger Bench of the Tribunal in the case of UNISON METALS LTD. VERSUS COMMISSIONER OF C. EX., AHMEDABAD-I [ 2006 (10) TMI 171 - CESTAT, NEW DELHI] has held The scheme of the law is that manufacturers shall not collect amounts falsely representing them as central excise duty and retain them, thus, unjustly, benefiting themselves. In the present cases, (irrespective of whether the 8% payments were duty or not) since the 8% amount remain already paid to the revenue, and no amount is retained by the assessee, Section 11D has no application. After the Larger Bench s decision, the Board has issued Circular No.870/8/2008-CX dated 16.05.2008, wherein it has been clarified that the CENVAT credit of the said amount of 8% or 10% cannot be taken by the buyer since such payment is not a payment of duty in terms of rule 3(1) of the CENVAT Credit Rules, 2004. Therefore, the said 10% amount should be shown in the invoice as 10% amount paid under Rule 6 of the CENVAT Credit Rules, 2004 . The impugned order is set aside - appeal allowed.

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• 2023 (10) TMI 726
  Refund of Excise Duty paid under protest - refund is barred by time limitation or not - HELD THAT:- The appellant had paid the duty on the behest of the audit objection which itself is a payment of duty under protest. Moreover, the appellant have also clearly mentioned in their TR-6 challan that the payment of duty is under protest. The appellant have also submitted a letter declaring that such payment of duty is under protest. In this position limitation provided under section 11B is not applicable for refunding the Excise Duty. Merely by filing the appeal, appellant s refund cannot be with held which has been clarified by the Central Board of Excise Customs in various circulars from time to time, that unless until stay is obtained from the Higher Court the refund cannot be kept pending. Therefore, on both the counts, the appellant is entitled for refund. Appeal allowed.

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• 2023 (10) TMI 725
  Recovery of dues - instant appeal filed in 2011 is a claim which existed prior to approval date and stands extinguished by virtue of Resolution Plan - HELD THAT:- Taking note of the fact that the NCLT has approved the resolution plan in the insolvency proceedings in regard to the company, the appeal does not survive any more. The appeal is disposed of accordingly as dismissed.

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• CST, VAT & Sales Tax

• 2023 (10) TMI 724
  Input Tax Credit - Intrastate stock transfer of goods - denial of credit is contrary to amended provisions of Section 18(8)(ix) of the Jharkhand Value Added Tax Act, 2005 or not - HELD THAT:- By bare perusal of the provisions of the JVAT Act, 2005 it would transpire that said provisions are in consonance with the scheme of Value Added Tax Regime introduced in the Country. From the scheme of JVAT, 2005 it would be evident that output tax liability of a dealer was required to be determined after subtracting therein the input tax paid by the dealer. ITC is claimed by a manufacturer on its input which is, admittedly, used for manufacture of goods, which is intended for sale. If the reasoning given by the Tribunal is accepted, then a manufacturer would get ITC on input if the goods are manufactured by it and sold by it itself. Whereas, the manufacturer would not be entitled to ITC if the goods are manufactured but not sold by manufacturer itself and stock transferred to its branch/stockyard/other units etc. up to the stage when the final product is sold - This is clearly not the intent of the Scheme of JVAT Act and the manufacturer is not required to wait for availment of ITC to a stage of ultimate sale of goods but it is entitled for ITC if the goods are merely intended for sale . Almost identical issue came up for consideration before the Hon ble Apex Court by interpreting almost pari materia provisions contained under Section 8(3)(b) of the Central Sales Tax Act, 1956 in the case of ASSESSING AUTHORITY-CUM-EXCISE AND TAXATION OFFICER, GURGAON AND ANOTHER VERSUS EAST INDIA COTTON MFG. CO. LTD. [ 1981 (7) TMI 205 - SUPREME COURT ] - In the said Judgment, Hon ble Apex Court in categorical term has held that the words for sale following the word goods in Section 8(3)(b) of the Central Sales Tax Act 1956 clearly indicate that the goods manufactured or processed must be goods for sale ; in other words, they must be intended for sale either by registered dealer himself or by anyone else. Thus, Petitioner is entitled to claim full ITC on Intrastate stock transfer of goods and, consequentially, the impugned orders being the orders dated 05.12.2012, impugned Judgment and order dated 10th August, 2021 passed by Commercial Taxes Tribunal, Jharkhand and impugned Judgment and Order passed by Commercial Taxes Tribunal, Jharkhand are hereby quashed and set aside. Application allowed.

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• 2023 (10) TMI 723
  Concessional rate of duty - execution of works contract - purchase of cement - taxable at the rate of 4% or 16% under the provisions of Section 5-B of the Andhra Pradesh General Sales Tax Act, 1957 - legality of penalty order passed by the assessing authority and confirmed by the Appellate Deputy Commissioner under Section 7-A of the Act - assessment orders of the years 2001-02, 2002-03, 2003-04 and 2004-05. HELD THAT:- Prior to issuance of the G.O. dated 17.07.2001, cement was one of the item which was eligible to be purchased at a concessional rate. It was in this context that the authorities at the earliest time had issued the G2 registration certificate permitting the petitioner to purchase cement at a concessional rate. However, after issuance of the G.O. dated 17.07.2001, the petitioner was not entitled for purchase of cement at a concessional rate. In spite of this, petitioner continued to purchase cement at a concessional rate against the G Forms - the petitioner, beyond 17.07.2001, could not have purchased cement at a concessional rate and petitioner continued to purchase cement against the G Forms basing on the G2 registration certificate issued much before 17.07.2001. The proviso to G.O. dated 17.07.2001 would not be applicable to the petitioner. Therefore, the assessing officer, the appellate authority and the Sales Tax Appellate Tribunal were justified by holding that the petitioner is liable to pay tax on cement at its normal rate and not at the concessional rate - The said issue whether the petitioner is entitled for purchase of cement at a concessional rate under Section 5B in the teeth of G.O. dated 17.07.2001 stands answered in the negative against the petitioner. Penalty order - HELD THAT:- Though the State has taken a plea that there is some misquoting or wrong quoting of the provision, nonetheless, the petitioner never had an occasion of defending himself in a penalty proceedings under Section 5-B(2). What is also required to be appreciated is that Section 7-A(2) and Section 5-B(2) are both independent penal provisions. Separate proceedings have to be drawn for each of the provisions. In the instant case, there does not seem to be any corrigendum or rectification order issued by the respondent for treating the notice under Section 7-A(2) as notice under Section 5-B(2) either before imposing of the penalty or subsequently, except for the admission on their part in the reply in Writ Petition No. 14484 of 2005. Since the petitioner never had an occasion to defend himself under Section 5-B(2), the entire proceedings initiated against the petitioner so far as imposing penalty is concerned under Section 7-A(2) stands vitiated as the petitioner has taken a stand that the penalty to be imposed against the petitioner was not under Section 7-A(2) but under Section 5-B(2) - the orders passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, at Hyderabad confirming the order of penalty by the Appellate Dy. Commissioner and the Assessing Authority is improper and unjustified and therefore, the same deserves to be and are accordingly set aside. Tax revision disposed off.

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• 2023 (10) TMI 722
  Non-grant of exemption to the petitioner by the respondent - cement and steel used by the petitioner are supplied by the establishment for which they were carrying out the contract - taking the goods from another site - Neither sale nor transfer of property - HELD THAT:- There is a consistent and concurrent finding of fact by the two forums below. First, the Deputy Commissioner (CT) in the course of deciding the revision and secondly by the Tribunal while deciding the Tax Appeal. Moreover, during the course of hearing of the instant Tax Revision Case also the petitioner was not in a position to bring before this Court any cogent material to dispute or disprove the concurrent finding, except for the oral submissions made so far as the petitioner receiving the cement and steel would amount to second sale or prove the contention that the product received by the petitioner had already suffered tax at the hands of the contractee. The Tax Revision Case thus being devoid of merits, deserves to be and is accordingly dismissed.

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• 2023 (10) TMI 721
  Recovery of refund claim - arrears of the petitioner s sister concern, Tvl.Eagle Earth Movers - attachment of bank account - HELD THAT:- In the present case, for the liabilities of Tvl.Eagle Earth Movers, bank account of the petitioner was attached and thereafter, the impugned liability of petitioner s sister concern was also realised. This Court already set aside the impugned order of assessment passed against the petitioner s sister concern, quantifying the liability of Rs. 81,53,038/- in respect of the assessment years 2012-13, 2013-14 and 2014-15. Now doubt, after the business succession agreement, the petitioner s sister concern continued with the TIN No. till 2015, however, it has not carried any business after the business succession agreement for three assessment years. In this regard, the petitioner s sister concern also filed Nil returns, based on which, assessment was set aside. In view of the order passed by this Court in setting aside the assessment made against the petitioner s sister concern, and the amount realized out of the attachment of the petitioner s bank account, Axis Bank, to an extent of Rs. 81,53,038/-, is liable to be refunded. Therefore, this Court is inclined to pass orders, directing the respondent to refund the amount, as prayed for by the petitioner. This Court is inclined to grant the relief sought for by the petitioner, since what the petitioner seeks for is only for refund of the amount appropriated by the respondent-Department from the bank account of the petitioner, in respect of the alleged arrears of the petitioner s sister concern - this Writ Petition is disposed of by directing the first respondent to refund the sum of Rs. 81,53,038/- to the petitioner s bank account within a period of six weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2023 (10) TMI 720
  Proper jurisdiction to decide the matter - Authority for Clarification of an Advance Ruling - non-application of mind - Violation of principles of natural justice - opportunity of personal hearing not provided before passing the impugned order. It is the case of the petitioner that there is a procedural infraction inasmuch as the petitioner submitted additional submission on 09.06.2023 and which was also received by the respondent on 12.06.2023. HELD THAT:- The petitioner has invited adverse orders from the aforesaid authority namely the Authority for Clarification and Advance Ruling earlier on 02.09.2015 and thereafter on 26.04.2019. Though the latter order of this Court in M/S. RENATUS PROCON PRIVATE LTD. VERSUS THE AUTHORITY FOR CLARIFICATION AND ADVANCE RULING, EZHILAGAM, CHEPAUK, CHENNAI, THE ASSISTANT COMMISSIONER (ST) [ 2022 (9) TMI 998 - MADRAS HIGH COURT ] has been diluted by the previous order of this Court dated 29.09.2015 based on the submission of the learned counsel for the petitioner and though the above decision was given in favour of the petitioner, the fact remains that the Assessing Officer has applied mind while passing an order determining the classification which was earlier confirmed by the Authority for Clarification and Advance Ruling by order dated 02.09.2015 and thereafter, once again, after the order of the Authority for Clarification and Advance Ruling dated 26.04.2019 was set aside by this Court vide its Order in M/S. RENATUS PROCON PRIVATE LTD. VERSUS THE AUTHORITY FOR CLARIFICATION AND ADVANCE RULING, EZHILAGAM, CHEPAUK, CHENNAI, THE ASSISTANT COMMISSIONER (ST) [ 2022 (9) TMI 998 - MADRAS HIGH COURT ]. The issues relating to classification are best left to be decided by the authorities under the hierarchy appellate body of the TNVAT Act, 2006 and in case, the petitioner is so aggrieved, the petitioner has to approach only the Appellate Commissioner and thereafter the Tribunal which is the ultimate fact finding authority. Petition dismissed.

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• Indian Laws

• 2023 (10) TMI 719
  Assault - Triple-murder - acquittal of the accused - acquittal of accused. Whether any prejudice was caused to the appellant, as his appeal was heard in the absence of his advocate? - HELD THAT:- The High Court has, thus, committed illegality by deciding the appeal against the conviction preferred by the appellant without hearing the appellant or his advocate. After finding that the advocate appointed by the appellant was absent, the High Court ought to have appointed a lawyer to espouse his cause. In view of the wide powers conferred by Section 386 of Cr.PC, even an Appellate Court can exercise the power under Section 216 of altering or adding the charge. However, if the Appellate Court intends to do so, elementary principles of natural justice require the Appellate Court to put the accused to the notice of the charge proposed to be altered or added when prejudice is likely to be caused to the accused by alteration or addition of charges. Unless the accused was put to notice that the Appellate Court intends to alter or add a charge in a particular manner, his advocate cannot effectively argue the case - the Court can grant a short time to the advocates for both sides to prepare themselves for addressing the Court on the altered or added charge. There is no reason recorded in the impugned judgment to show that Section 34 of IPC was applicable. There is no discussion on this aspect in the judgment. Only in the operative part (paragraph 15), without assigning any reasons, the High Court held that the appellant was liable to be convicted for the offence punishable under Section 302, read with Section 34 of IPC. As stated earlier, there is a complete absence of any reason for concluding that Section 34 of IPC was attracted. The High Court has not recorded a finding that there was sufficient evidence to prove that the four accused who were ultimately convicted had done the criminal act in furtherance of a common intention. There is no material to prove the existence of common intention which is the necessary ingredient of Section 34 of IPC. In this case, there is no overlap between a common object and a common intention. Therefore, the conviction of the appellant under Section 302, read with Section 34 will have to be set aside - the appellant s conviction for the offence punishable under Section 302, read with Section 34 of IPC. However, the appellant s conviction for the offence punishable under Section 201 of IPC is confirmed. The appellant has already undergone the sentence for the said offence. Therefore, the bail bonds of the appellant stand cancelled. Appeal allowed partly.

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• 2023 (10) TMI 718
  Dishonour of Cheque - insufficiency of funds - legally enforceable debt or liability - discharge of partial liability - Section 138 of NI Act. HELD THAT:- The issue of existence of legally enforceable debt or liability is also a disputed question of fact and when the complainant has averred in the impugned complaint that the petitioners herein had obtained a loan facility to the tune of Rs. 1.5 crores, which is also not disputed by the petitioner, and that petitioners had issued the cheques in question in partial discharge of the said liability, and further when the signatures on the cheque have not been disputed, this Court is of the opinion that it cannot come at any conclusion in a petition under Section 482 of Cr.P.C. that there was no legally enforceable debt or liability, which is also a matter of trial. In the present case, the petitioners herein had entered into a loan agreement with the erstwhile Capital First Ltd. in March, 2017. However, in 2018, Capital First Ltd. had amalgamated with IDFC Bank Limited by virtue of amalgamation order dated 12.12.2018 passed by Hon ble NCLT, Chennai Bench. After the amalgamation, all the loans availed by various borrowers including the loan availed by the petitioners herein was also transferred to IDFC Bank Limited, and further that all the properties, rights, liabilities and duties of Capital First Ltd. were vested in IDFC Bank Limited including all contractual liabilities owed by the present petitioners to Capital First Ltd. - the contentions regarding complaint in question being not maintainable since it was filed by IDFC First Bank Ltd. and not Capital First Ltd. in whose name the cheques had been issued, cannot be appreciated at this stage when the complainant has prima facie shown that the erstwhile Capital First Ltd. had amalgamated into the present complainant company alongwith all properties, rights, asset, liabilities including contractual liabilities such as the present loan facility. This Court finds no ground to quash summoning order dated 20.08.2019 passed by learned Trial Court against petitioners in both the Complaint Cases, without affording an opportunity to the complainant to present its case before the learned Trial Court - Petition disposed off.

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• 2023 (10) TMI 717
  Dishonour of Cheque - vicarious liability - applicability of Section 141 of NI Act to a sole proprietorship firm - whether the application filed under Section 243 read with Section 293 of Cr.P.C. read with Section 45/73 of Indian Evidence Act, 1872 for sending the cheque in question to FSL for ink dating needs to be allowed? - HELD THAT:- This Court notes that the petitioner herein had admitted before the learned Magistrate, at the stage of framing of notice under Section 251 of Cr.P.C. as well as the time of recording of his statement under Section 313 of Cr.P.C., that he had signed the cheque in question. In the present case, the revisionist had admitted his signatures on the cheque in question and that the particulars have also been filled by him in his own handwriting except the date. Even if, the contention of the revisionist that the date was not filled by him is considered as correct, for the sake of arguments, the same cannot be considered as material alteration . Section 138 NI Act does not contemplate that whenever any cheque is issued then the drawee must fill all the details in the cheque in his own handwriting for its validity u/s 138 NI Act. Even if, the contention of the revisionist is accepted as regard undated cheque, the same would be covered within the provision of Section 138 NI Act, so long as, the revisionist has admitted his signatures on the cheque. The Hon ble Apex Court in case of T. NAGAPPA VERSUS Y.R. MURALIDHAR [ 2008 (4) TMI 789 - SUPREME COURT] had observed that the accused should be given fair trial to lead evidence in his defence, however, it was also categorically held that the Court being the master of the proceedings has to determine as to whether the application of the accused in terms of Section 243 Cr.P.C. is bona fide or not or whether the accused intends to bring on record a relevant material. The facts of the present case are, undoubtedly, differentiable from the facts of the said case. This Court does not find any infirmity with the orders passed by both the Courts below by way of which the application filed by the petitioner under Section 243 read with Section 293 of Cr.P.C. read with Section 45/73 of Indian Evidence Act, 1872 was dismissed. Accordingly, the orders of dismissal of application seeking summoning of Director, FSL also warrants no interference. Whether the petitioner can be held liable, by virtue of Section 141 of NI Act, even if it is proved that he is not the sole proprietor of the accused firm? - HELD THAT:- This Court finds merit in the argument of learned counsel for petitioner that Section 141 of NI Act has no application to a sole proprietorship firm, and under Section 138 of the Act, no other person except the sole proprietor can be held liable. In this Court s opinion, the petitioner should not be denied an opportunity during the course of trial to examine witnesses in defence to prove the status of proprietorship firm and as to who was the sole proprietor of the firm and in whose name was the bank account maintained. In view of the same, this Court is of the opinion that the application seeking summoning of defence witnesses, i.e. concerned bank official and the official from VAT department, filed by the petitioner ought to be allowed. Petition allowed.

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• 2023 (10) TMI 716
  Reference case under Section 21(5) of the Chartered Accountants Act, 1949 - allegations reportedly arising out of inspection under Section 209(A) of the Companies Act, 1956 - alleged misconduct under Clauses (7), (8) and (9) of Part I of the Second Schedule to the Act, the Disciplinary Committee was constituted under Section 21 of the Act. HELD THAT:- The Institute of Chartered Accountants of India is a statutory body created by an Act of Parliament, i.e., The Chartered Accountants Act, 1949. In accordance with Section 9 of the Act, the management of the affairs of the Institute are vested in the Central Council. The Council performs its function through three different standing committees constituted under Section 17 of the Act and various other committees. One of the standing committees of the Institute is the Disciplinary Committee. The function of the Institute is to regulate the provisions of the Act and it is also empowered to take action against its members for any misconduct as contemplated in the Act and relevant regulations framed thereunder. Section 21 of the Act prescribes the procedure to be followed with regard to an inquiry relating to the misconduct of the members of the Institute. As held in D.K. Agrawal vs. Council of the Institute of Chartered Accountants of India [2021] 131 taxmann.com 103 Committee ., report of the Disciplinary Committee will only contain a statement of the allegations, the defence entered by the members, the recorded evidence and the conclusions expressed by the Disciplinary The conclusions of the Disciplinary Committee are tentative and the same are not recorded as findings. It is only the Council which is empowered to find out whether the member is guilty of misconduct. The Council has to determine that a member is guilty of misconduct and the task of recording of the findings has been specifically assigned to the Council. After recording a finding that a member is guilty of misconduct, the Act moves forward to the final stage of penalisation. As held in D.K. AGRAWAL VERSUS COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA [ 2021 (10) TMI 526 - SUPREME COURT] , report of the Disciplinary Committee will only contain a statement of the allegations, the defence entered by the members, the recorded evidence and the conclusions expressed by the Disciplinary The conclusions of the Disciplinary Committee are tentative and the same are not recorded as findings. It is only the Council which is empowered to find out whether the member is guilty of misconduct. The Council has to determine that a member is guilty of misconduct and the task of recording of the findings has been specifically assigned to the Council. After recording a finding that a member is guilty of misconduct, the Act moves forward to the final stage of penalisation. The Council has failed to give its own independent findings. The recommendations made by the Council is not supported by independent reasons. The recommendations, have been made mechanically by the Council. Recording of reasons is a principle of natural justice and every judicial/quasi judicial order must be supported by reasons to be recorded in writing. It ensures transparency and fairness in the decision making process. The person who is adversely affected wants to know as to why his submissions have not been accepted - An unreasoned decision may be just, but it may not appear to be so to the person affected. A reasoned decision, on the other hand, will have the appearance of fairness and justice. The recommendations of the Council need not agreed with - the proceedings be filed by the Institute - Reference disposed.

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