Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 21, 2022
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Gross violation of principles of natural justice - Scrutiny of the GST returns filed by the petitioner - The learned Additional Government Pleader sought leave to issue notice in Form ASMT 10 in respect of the aspects forming the subject matter of the impugned proceedings and thereafter to assess in compliance with the procedure contemplated under the Act including Section 61. - Directions issued - HC
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Exemption from GST - The courses are being offered by the applicant as a Approved Training Partner of NSDC under the scheme for market led Feebased services under non funded affiliation mode. Thus, it is concluded that the services provided by applicant are as training partner approved by the National Skill Development Corporation and are in relation to Scheme implemented by the National Skill Development Corporation - the services offered by the applicant fall under Sl.No.69 (d) (iii) and therefore eligible for exemption under this notification for CGST and SGST. - AAR
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Supply to the Central Government, State Government or local authority - Undisputedly SUDA, being a registered society, is not a Panchayat or a Municipality or any Board or Cantonment as specified in the above-referred definition of local authority. Further, no documents have been produced wherefrom it can be established that SUDA is an authority who is legally entitled to and entrusted by the Government with the control or management of a local fund. Therefore, SUDA cannot be held as a local authority - AAR
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Exemption from GST - Cotton Seeds “Banaula” - agricultural produce - cotton seed emerging from the intermediate process do not fall in the definition of 'agricultural produce' under GST. It is apparent from the definition of 'agricultural produce' that the government intends to provide exemption to the produce occurring only at the first stage of the cultivation or rearing and not to those which are processed in factories after they are sold by the cultivator/producer. - AAR
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Taxable value - construction services of the apartments - the value of land or undivided share of land is deemed to be one-third of the total amount charged for the supply irrespective of the actual value of land and accordingly the applicant is eligible to avail deduction of one-third of the total amount charged for the supply in arriving at the taxable value of the supply. - AAR
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Seeking grant of anticipatory bail - availment of illegal input tax credit - non-existent firms - once the necessary documents, information has already been provided to the Department regarding the alleged evasion of tax under Input Tax Credit facility, if at all applicant is required to join the investigation, he to my mind is entitled to protection against any possible arrest, particularly when officers/officials of the companies have been rendering all necessary information/ documents to the Department - DSC
Income Tax
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Reopening of assessment u/s 147 - 'reason to believe' - the assessee had not claimed any part of its income as exempt under Sec. 11(1)(a) of the Act - as the “reasons to believe” forming the very basis for taking recourse to proceedings u/s.147 of the Act in the case of the assessee are absolutely misconceived and incorrect, therefore, the very assumption of jurisdiction on the part of the A.O cannot be sustained and is liable to be struck down. - AT
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Validity of reopening of assessment u/s 147 - assessee availed the loan is an accommodation entry provider - The bona fide of the assessee is further proved from the fact that not only the assessee paid interest on the loan availed and deducted tax at source, but, the entire loan amount was repaid to the lender in the financial year 2013-14, even, prior to the completion of the original assessment and much before initiation of proceedings u/s 147 of the Act. - AT
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Reopening of assessment - validity of order passed u/s 148A(d) - if the foundational allegation is missing in the notice issued under Section 148A(b) of the Act, the same cannot be incorporated by issuing a supplementary notice. - HC
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Reopening of assessment - validity of notice issued u/s 148A(b) - By not considering the reply of the Petitioner dated 29th March, 2022, the mandate of Section 148A(c) of the Act has been violated as it casts a duty on the Assessing Officer, by using the expression ‘shall’, to consider the reply of the Petitioner/Assessee in response to the notice under Section 148A(b) before making an order under Section 148A(d) of the Act. - HC
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Income deemed to accrue or arise in India - attribution made to the alleged PE - Ariba India has retained majority of the revenues earned from the clients (around 88% to 97% from AY 2004- 05 to AY 2011-12) and offered the same to tax in India in its income tax returns for each of these years, only a miniscule percentage of the revenues (around 3% to 12.50%) have been paid to Ariba Inc. This clearly shows that there has been no base erosion in terms of taxes to be paid in India by the relevant parties. Hence, we agree that there is no base erosion on account of non-taxability of the assessee. - AT
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Unexplained cash deposit - stand taken by the assessee went unrebutted as the A.O. who is investigator has failed to carry out any investigation to disprove the categorical stand taken by the assessee supported by documents. - additions deleted - AT
Customs
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Import of Toys - Import policy - Wither the goods are excluded under the scope of BIS, the testing of the same could be made mandatory - the testing procedures have to be followed as per the revised policy condition No. 2 (iii), which envisages that ‘sample’ would be randomly picked from each consignment and not ‘samples’ from each consignment, suggesting that only one sample from each consignment only could be sent for testing. If that be so, the apprehension of the appellant appears to be unfounded. - import policy conditions had to be satisfied - HC
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Adjudication of SCN - Deemed conclusion of proceedings on deposit of duty with interest and penalty - The language makes it clear that the provisions provide for deemed conclusion of the proceedings against the assessees if the payment as regard the duty, interest and penalty thereof stands made by the assessee. It is further seen that the provision is applicable even in the cases of demand having been arisen on account of collusion, wilful mis-statement or suppression, if the same stands accepted by him and the respective duty along with interest and the required penalty stands paid. - AT
Corporate Law
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Scheme of arrangement - the Appellant categorically mentioned that post amalgamation the net-worth of the Transferee Company will remain highly positive and the proposed scheme of arrangement will not result in any dilution in the shareholding of the shareholders of the Transferee Company. The rights of the shareholders of the Transferee Company are not affected as the proposed scheme does not involve any reorganisation in either the shareholding or debt position of the Transferee Company. - NCLT erred in not considering the decisions of this Tribunal which forms judicial precedents. - AT
Indian Laws
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Dishonor of Cheque - Period of limitation for giving notice of demand - A gross injustice shall be incurred to the complainant/petitioner in case he is denied to exclude the period during 17.03.2020 till 20.10.2020 for the purpose of issuing of notice from the date of return memo i.e. 17.03.2020 till the date of issuance of notice i.e. 20.10.2020. - HC
Service Tax
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Refund of CENVAT Credit - alleged lack of nexus - The procedure for claiming such refund, enshrined in notification no. 27/2012-Central Excise Act, 1944 (NT) dated 18th June 2012, must necessarily be in conformity with the boundaries within which the claim of refund is initiated as per rule 5 of CENVAT Credit Rules, 2004. Neither of these provide for any option other than sanction of refund, subject of course, to eligibility of amount in accordance with the formula prescribed therein, and denial of the refund - By denial of refund as a consequence of denial of eligibility for CENVAT credit, the final outcome has traversed beyond the scope of rule 5 - AT
Central Excise
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Process amounting to manufacture - Classification of goods - Sulphur – 90% WG with the brand name of CosavetFertis, which is said to be used as fertilizer - there is no change in definition of ‘manufacture’ and ‘excisable goods’ under the Central Excise Act, nor it is there any new pronouncement of a Judicial or quasi-judicial forum affecting the concepts of manufacture or that of excisable goods or classification. - Demand cannot be sustained - AT
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Benefit of exemption subject to the condition that no Cenvat Credit is availed - The appellant are eligible for exemption under Notification No. 30/2004-C.E. when they have reversed 6% of the value of exempted goods in terms of Rule 6(3)(i). It is found that the appellant’s claim on the applicability of sub-rule (3D) of Rule 6 is also legally sustainable. The said sub-rule provides for a deeming provision to the effect that payment of amount under sub-rule (3) should be considered as credit not taken for the purpose of such exemption notification. - AT
Case Laws:
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GST
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2022 (10) TMI 791
Maintainability of advance ruling application - non-deposit of full amount of fee for filing advance ruling application - Classification of goods - rate of GST - Chaff Cutter Machine, which is used in cutting of chaff, hay and agriculture produce for fodder of live stocks - time of supply of machinery - HELD THAT:- The requisite fee for filling Advance Ruling application is Rs. 10,000/- (Rs. 5,000 each for CGST and SGST), but the applicant has deposited only Rs. 5,000/- under SGST Act. Despite giving multiple opportunities, the applicant has not deposited the required pending fee of Rs. 5,000 under GCST Act. Thus, the application is hereby filed without any ruling.
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2022 (10) TMI 786
Validity of order of the first Appellate Authority - challenge on the ground that there is no Tribunal constituted under Section 112 of the Goods and Service Tax Act, 2017 - entitlement to input tax credit (ITC) with regard to certain imports of capital goods - HELD THAT:- The pre-condition for the claim of unavailed credit on capital goods that the assessee concerned ought to have claimed, at the original instance, at least a portion of the credit. Admittedly, in the instant case, the petitioner has made no claim at all - However, seeing as the Assessing Authority has not had any opportunity to address the claim of transitional credit as the claim was made for the first time in appeal, an opportunity is granted to the petitioner to make a claim before the Assessing Authority who shall, upon receipt of the claim, dispose the same within a period of two weeks from date of receipt, after hearing the petitioner. The impugned order is not interfered with in these circumstances but it is made clear that the Authority while disposing the request for transition, if and when made, shall take an independent view and not be bound either by the conclusion of the Appellate Authority or by the prima facie observations made in this order - writ petition disposed off.
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2022 (10) TMI 785
Recovery of accumulated credit transitioned - Input Service Distribution - Section 140 of Central Goods Services Tax Act, 2017 - HELD THAT:- No effect will be given to the communication dated 04.02.2019 issued to the petitioner by the office of Commissioner of Central GST Audit-II, Delhi. The respondents are restrained from enforcing recovery of accumulated credit transitioned by the petitioner [inter alia, in terms of Section 140 of the Central Goods and Services Tax Act, 2017] concerning Input Service Distributor (ISD) registration granted to it by the respondents - the petitioner would be free to approach the respondents for grant of consequential relief. Petition disposed off.
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2022 (10) TMI 784
Gross violation of principles of natural justice - Scrutiny of the GST returns filed by the petitioner - challenge to the impugned proceedings on the ground that the same stands vitiated, inasmuch as Rule 99 of the Tamil Nadu Goods Service Tax Rules, has not been complied with - HELD THAT:- To a pointed question as to whether Form ASMT 10 which ought to have been issued in respect of aspects forming the subject matter of the proceedings in GST DRC-01 culminating in GST DRC-07 in view of the fact that the proceedings are pursuant to scrutiny of assessments, the learned Additional Government Pleader submitted that Form ASMT 10 was not issued other than the one issued on 22.12.2021, which does not cover the issues raised in the impugned proceeding. The learned Additional Government Pleader sought leave to issue notice in Form ASMT 10 in respect of the aspects forming the subject matter of the impugned proceedings and thereafter to assess in compliance with the procedure contemplated under the Act including Section 61. The matter is remitted back to the Assessing Officer for redoing the assessment. It is open to the Respondent to issue appropriate Form (Form ASMT 10) and after affording a reasonable opportunity to the petitioner in the manner contemplated under the Act proceed further in accordance with law - Petition allowed by way of remand.
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2022 (10) TMI 783
Validity of adjudication order - jurisdiction of the adjudicating authority - HELD THAT:- The adjudication order dated 20.05.2022 is set aside - The concerned officer will commence proceedings de novo, which would logically mean that a fresh show-cause notice, by a proper officer, will be issued, bearing in mind the aforementioned Circular dated 20.09.2022. The writ petition is disposed of.
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2022 (10) TMI 782
Validity of N/N. 29/2018, dated 31.12.2018 - by virtue of impugned notification, an amendment has been made to Notification No.13/2017 dated 28.06.2017 - amendment made qua Entry No.14, which has been inserted via Section 9(3) of the Central Goods and Service Tax Act, 2017 - grievance is that while allowing for payment of service tax based on reverse-charge mechanism, body corporates have been excluded - HELD THAT:- At this stage, Mr Gaggar says that the petitioner-society would be satisfied if this Court were to direct that this writ petition is treated as representation to be dealt with by respondent nos.1 and 2 - there are no difficulty in disposing of the writ petition, on that basis. Petition disposed off.
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2022 (10) TMI 781
Transitional Credit - permission to file once again rectified TRAN-I Form electronically or manually within a period of 30 days from the date of the order - HELD THAT:- There are no reason to interfere with the order of the Learned Single Judge, more particularly when N number of cases filed by the revenue in identical circumstances have been disposed of. Appeal dismissed.
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2022 (10) TMI 780
Exemption from GST - training programmes offered by the applicant, as approved by NSDC would be construed under the any other scheme implemented by the NSDC - training programmes offered in collaboration with other business partners, imparted by business partners of the applicant under a sub contract - Entry no. 69 in Notification No. 12/2017 -Central Tax (Rate) issued by the Ministry of Finance dated 28 June 2017 - HELD THAT:- The applicant has entered into an agreement dated 23.06.2022 for partnership with NSDC for executing training under the above scheme for market led Fee-based services under non funded affiliation - the applicant is offering following training programs, as detailed in the proposal approved by the NSDC (Exhibit 5) as amended from time to time with the approval of NSDC. The courses are being offered by the applicant as a Approved Training Partner of NSDC under the scheme for market led Feebased services under non funded affiliation mode. Thus, it is concluded that the services provided by applicant are as training partner approved by the National Skill Development Corporation and are in relation to Scheme implemented by the National Skill Development Corporation - the services offered by the applicant fall under Sl.No.69 (d) (iii) and therefore eligible for exemption under this notification for CGST and SGST. Further, under this entry the services supplied by the applicant as approved training partner of NSDC in relation to any other scheme implemented by the NSDC as required under serial no.69 of the Notification are exempt but not the services received by the applicant from others including a sub-contractor who supplies such services to the applicant who is not a training partner approved by the National Skill Development Corporation or the Sector Skill Council.
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2022 (10) TMI 779
Classification of goods/services - rate of GST - composite supply or not - pure services or not - Design, Build, Finance, Operate and Transfer (DBFOT) of required capacity (based on total wet waste generation as on 2020 + 10%) of Municipal Solid Waste Processing facility - to be classified under Heading 9994 or not - HELD THAT:- The supply agreed to be provided by the applicant as it appears from the documents produced before us is in the nature of waste management services. It is found that waste collection services and waste treatment and disposal services fall under SAC 9994 having Group 99942 and 99943 respectively. Further, sewage and waste collection, treatment and disposal and other environmental protection services is taxable @ 18% vide serial number 32 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time (corresponding West Bengal State Notification No. 1135 F.T. dated 28.06.2017). Whether the services to be provided by the applicant can qualify for exemption under the aforesaid entries of the exempt notification or not? - HELD THAT:- The applicability of serial number 3 of the notification which exempts pure services provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. The term pure services has not been defined under the GST Act. However, a bare reading of the description of services as specified in serial number 3 of the said notification denotes that supply of services which does not involve any supply of goods can be regarded as pure services. The scope of work requires the applicant, inter alia, to construct sanitary landfill which involves supply of goods. Further, the applicant requires to sell and dispose of bye-products, recyclable reusable materials (fertilizers and alternative fuel) which also involve supply of packing materials. The applicant himself has declared that the work includes packaging, distribution sales point (for fertilizers alternative fuel. As a result, the instant supply of services fails to qualify as pure services - The tripartite agreement refers that the rate offered in the tender shall be applicable as tipping fee per ton of processing of waste (Project component includes) which includes all type of taxes duties and GST (Fixed). The applicant, however, has not produced before us any document in support of value of goods involved in the supply. We are, therefore, unable to determine whether the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply or not. Whether the supply by the applicant to SUDA can be treated as a supply provided to the Central Government, State Government or local authority? - whether the same is in relation to any function entrusted to a Panchayat under article 243G or to a Municipality under article 243W of the Constitution? - HELD THAT:- The applicant has received work order for a number of municipalities in West Bengal under Swachh Bharat Mission/Mission Nirmal Bangla. The functions entrusted to a municipality under the Twelfth Schedule to Article 243W inter alia contain Public health, sanitation conservancy and solid waste management. The supply involved in the instant case is in relation to a function entrusted to a Municipality under article 243W of the Constitution. Whether the supply to be made by the applicant can be regarded as a supply to the Central Government, State Government or local authority? - HELD THAT:- The instant supply to SUDA cannot be held as supply to the government since, it is found from the official website of State Urban Development Agency www.sudawb.org that SUDA is a registered society which was formed in the year 1991 under the aegis of erstwhile Municipal Affairs Department, Govt of West Bengal with an objective to ensure effective implementation of different development programme in urban areas of the State. Undisputedly SUDA, being a registered society, is not a Panchayat or a Municipality or any Board or Cantonment as specified in the above-referred definition of local authority. Further, no documents have been produced wherefrom it can be established that SUDA is an authority who is legally entitled to and entrusted by the Government with the control or management of a local fund. Therefore, SUDA cannot be held as a local authority as defined in clause (69) of section 2 of the GST Act and the supply involved in the instant case thus fails to qualify for exemption vide serial number 3 or 3A of the Exempt Notification.
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2022 (10) TMI 778
Maintainability of Advance Ruling application - non-payment of requisite fee for filling Advance Ruling application - Manpower supply services - Punjab Water Supply or Sewerage Board - body of Local Authority/ Municipal Committee or not? - entry no. 6 of Twelfth Schedule of Article 243 W of Constitution of India - Serial No. 3 of Notification no. 12/2017 dated 28.06.2017 - levy of GST or not under CGST/SGST/IGST - composite supply or not - HELD THAT:- The requisite fee for filling Advance Ruling application is Rs. 10,000/- (Rs. 5,000 each for CGST and SGST), but the applicant has deposited only Rs. 5,000/- under SGST Act. Despite giving multiple opportunities, the applicant has not deposited the required pending fee of Rs. 5,000 under GCST Act. Thus, the application is hereby filed without any Advance ruling.
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2022 (10) TMI 777
Maintainability of Advance Ruling application - non-deposit of full amount of fee for filing advance ruling application - Exemption for GST - Cotton Seeds Banaula - Goods transported by Goods Transport Agencies (GTA) - exemption in terms of N/N. 12/2017, dated 28th June, 2017 - HELD THAT:- The requisite fee for filling Advance Ruling application is Rs. 10,000/- (Rs. 5,000 each for CGST and SGST), but the applicant has deposited only Rs. 5,000/- under IGST Act. Despite giving multiple opportunities, the applicant has not deposited the required pending fee of Rs. 10,000/- under (Rs.5,000 each for CGST and SGST). Thus, the application is hereby filed without any ruling.
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2022 (10) TMI 776
Exemption from GST - Cotton Seeds Banaula - inclusion in the list of agricultural produce for exemption in GTA service - applicability of N/N. 12/2017dated 28'11June, 2017 (Tariff heading 9965/9967) - if taxable, then rate of GST - HELD THAT:- One of the essential conditions to qualify as agriculture produce is that the produce does not require any further processing or processing is carried by producer/cultivator. In present case, it may be seen that the cotton seed emerges after processing in mills, thus the above condition is not fulfilled and the same cannot be said to be agriculture produce as per the Notification - Further, it is held in the plethora of judgments that exemption Notification should be strictly construed and beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication. Thus, cotton seed emerging from the intermediate process do not fall in the definition of 'agricultural produce' under GST. It is apparent from the definition of 'agricultural produce' that the government intends to provide exemption to the produce occurring only at the first stage of the cultivation or rearing and not to those which are processed in factories after they are sold by the cultivator/producer. Rate of GST - HELD THAT:- The services provided by a goods transport agency in relation to transportation of cotton seeds in a goods carriage are classifiable under heading 9965 and leviable to CGST @2.5%, provided that credit of input tax charged on goods and services used in supplying the service has not been taken, else @6%, under Sr. No. 9 of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.
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2022 (10) TMI 775
Levy of GST - rate of GST - Nature of supply - electricity and water charges which are being collected at actual by the Lessor from the Lessee - difference of opinion among the Members of the Authority for Advance Ruling - HELD THAT:- Since there is no uniform opinion arrived by the Members of the Authority for Advance Ruling in respect of Questions raised by applicant representing Central Tax and State Tax and they have expressed two different views on the issue raised by the applicant on the applicability of GST on electricity and water charges which are being collected at actual by the Lessor from the Lessee, the application filed by M/s. Duet India Hotels (Hyderabad) Private Limited, Sy No.27/1 TO 27/4, Adjacent To Dell, Nanakramguda, Serilingampally, Hyderabad, Telangana, 500 017 (36AADCD1031G2Z7), is being referred to the Appellate Authority for Advance Ruling for the state of Telangana in terms of Section 98(5) of the CGST/TGST Act, 2017 for hearing and decision on the questions on which advance ruling is sought.
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2022 (10) TMI 774
Exemption from GST - pre and post Examination services being provided to the Educational Boards and Universities (including Open Universities) - services are provided on sub-contract basis i.e., the applicant provides pre and post examination services to the main contractor who in turn provides the said services to the Educational Boards and Universities (including Open Universities) - no uniform opinion arrived by the Members of the Authority for Advance Ruling. HELD THAT:- Since there is no uniform opinion arrived by the Members of the Authority for Advance Ruling in respect of Question whether the exemption is available to the applicant in case of the services are provided on sub-contract basis raised by applicant representing Central Tax and State Tax and they have expressed two different views on the issue raised by the applicant on the applicability of GST as sub-contractor or the application filed by M/s. Magnetic Infotech Pvt Ltd, Plot NO.08, Krishna Nagar Colony, Kakaguda Village, Wellington Road, Picket, Secunderabad, Hyderabad, Telangana- 500009 (36AACCM2333F1ZV), is being referred to the Appellate Authority for Advance Ruling for the state of Telangana in terms of Section 98(5) of the CGST/TGST Act, 2017 for hearing.
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2022 (10) TMI 773
Rate of tax - taxable value - construction services of the apartments rendered by them from 01.07.2017 - amount for the undivided share of land and the amount for construction are fixed and separately available - appellant are not collecting and paying GST on the amount collected for the undivided share of land and they are collecting GST at the rate of 18% on the amount collected for the construction of the apartment. HELD THAT:- The project of the applicant satisfies all the conditions of the definition of ongoing project in clause (xx) of Para 4 of the said notification and accordingly the applicant is eligible for filing option for continuing with the payment of tax at the old rates in respect of ongoing projects. It is also confirmed by the jurisdictional officer that the applicant has exercised the option to continue payment of tax at the old rate in respect of the project within the prescribed time and the manner prescribed in Item (ie) and (if) of Si No. 3 of the said notification. Given the above option exercised by the applicant, the services of construction of residential apartments rendered by the applicant are liable to GST at the rates prescribed under Item (ie) or (if) of Sl. No. 3 of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019 - the services of construction of apartments provided by the applicant squarely fall within the description of services specified in Item (if) of S1 No. 3 of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019 and accordingly the tax rates as prescribed in the said entry shall apply to the said services supplied by the applicant. Accordingly, the applicant is liable to pay GST at the rate of 18% in respect of the services of construction of residential apartments supplied by them. Taxable value of the services of construction of residential apartments rendered by them - HELD THAT:- The taxable value in respect of the service specified at item (if) of Sl.No. 3 of the said notification is the total amount charged for the supply less the value of land or undivided share of land and the value of land or undivided share of land shall be deemed to be one-third of the total amount charged for the supply. As per the valuation mechanism prescribed in paragraph 2 of the said notification, the value of land or undivided share of land is deemed to be one-third of the total amount charged for the supply irrespective of the actual value of land and accordingly the applicant is eligible to avail deduction of one-third of the total amount charged for the supply in arriving at the taxable value of the supply. Time of supply of service - Value of supply - HELD THAT:- The provisions of section 13 of the CGST Act, 2017 will apply to the determination of the time of supply. The provisions of Section 15 of the CGST Act, 2017 read with Para 2 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 will apply for determining the taxable value of the services supplied for the period from 01.07.2017 onwards and accordingly one-third of the total amount charged for the supply shall be deemed to be the value of land or undivided share of land involved in the supply.
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2022 (10) TMI 772
Seeking grant of anticipatory bail - availment of illegal input tax credit - non-existent firms - HELD THAT:- As per section 70 of CGST Act power has been given to the Department to summon a person concerned to give evidence and to produced documents. In the present case summon/notice dated 05.05.2022 does not mention any such detail as required from the applicant. It has come on the record that prior to issuance of summons to the applicant CFO and Chief of Account Department of companies involved have joined the investigation with the Department and required documents, informations have already been provided. First of all it be noted that there is no specific bar under CGST Act from seeking pre-arrest bail. No doubt such matters are economic offences involving tax evasion etc. This court is very much aware about the legal proposition that economic offences are considered to be grave offence and approach of the court is required to be different while examining the case of the accused seeking relief in such cases - the court has to strike a balance to ensure that no unwarranted abuse of process is allowed to impinge upon life and liberty of applicant and at the same time also to ensure that investigation is not hampered, procedure of administration of justice is not adversely impacted. In the present case also taking into consideration overall facts and circumstances and the gravity of the offence under CGST Act, it is found that once the necessary documents, information has already been provided to the Department regarding the alleged evasion of tax under Input Tax Credit facility, if at all applicant is required to join the investigation, he to my mind is entitled to protection against any possible arrest, particularly when officers/officials of the companies have been rendering all necessary information/ documents to the Department; the summon issued to the applicant does not enumerate any details required from him by the Department - it is directed that in the event of any possible arrest of the accused, he be released on bail upon furnishing of bail bond for Rs.50,000/- with two sureties each in like amount and subject to the condition imposed. Bail Application allowed.
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Income Tax
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2022 (10) TMI 790
Tribunal jurisdiction to hear appeal - jurisdiction of this tribunal to adjudicate this appeal - Penalty levied u/s 271FA - default in filing of the AIR information within the time stipulated u/s 285BA(1) - HELD THAT:- We hold that the first appeal arising from penalty order u/s 271FA passed by AO shall lie with ld. CIT(A) and not with the tribunal, thus we dismiss appeal filed by the assessee for ay: 2015-16(fy2014-15) , with liberty to the assessee to file appeal with ld. CIT(A), if so advised, immediately on receipt of this order , and then learned CIT(A) shall condone the delay so far as time consumed by the assessee in persuing litigation with the Tribunal. However, for other delay, the assessee has to explain the same before learned CIT(A) which shall be adjudicated on merits by ld. CIT(A). With these directions, we dismiss the appeal filed by assessee, for assessment year 2015-16(financial year 2014-15).
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2022 (10) TMI 789
Reopening of assessment u/s 147 - Eligible 'reason to believe' - assessee society had not applied 85% of its gross income as required under the Income-tax Act, therefore, it was not entitled for claiming exemption u/s.10(23C)(iiiad) - HELD THAT:- We are unable to comprehend the very basis for the AO to take recourse to proceedings u/s.147 of the Act. As application of 85% of gross income is by no means a requisite condition for claim of exemption under Sec. 10(23C)(iiiad) of the Act, therefore, in our considered view the A.O had grossly misconceived; or in fact misunderstood the settled position of law, and thus, had wrongly taken recourse to proceedings u/s.147. There is no obligation cast upon an assessee to apply 85% of its gross income to claim exemption under the aforesaid statutory provision. Ostensibly, the AO had wrongly read in the statutory requirement contemplated in the 3rd proviso to Sec. 10(23C), which we are afraid is only applicable to institutions/trusts/funds referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of Sec. 10(23C) of the Act. Be that as it may, as there is no obligation cast upon an assessee to apply 85% of its gross income for claiming exemption u/s 10(23C)(iiiad) of the Act, therefore, the very basis for reopening of the assessee s case by the AO is incorrect and misconceived on the said count. Assessee society had filed an application for registration u/s.12A on 28.11.2007, which was granted on 11.04.2008 i.e. w.e.f. 01.04.2007 from A.Y.2008-09 onwards, therefore, its income for the year under consideration i.e. A.Y.2007-08 would not be exempted and would be exigible to tax - On a perusal of the return of income filed by the assessee although the assessee in its return of income had in substance claimed exemption of its income u/s.10(23C)(iiiad) but had also referred to claim for exemption u/s.11(1)(a) of the Act of Rs. Nil. As the assessee had not claimed any part of its income as exempt under Sec. 11(1)(a) of the Act, therefore, there could have been no basis for the AO to arrive at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment on the said count i.e wrong claim of exemption u/s 11(1)(a) of the Act. On the basis of our aforesaid observation, we are of the considered view that as the reasons to believe forming the very basis for taking recourse to proceedings u/s.147 of the Act in the case of the assessee are absolutely misconceived and incorrect, therefore, the very assumption of jurisdiction on the part of the A.O cannot be sustained and is liable to be struck down. Consequent to want of valid assumption of jurisdiction by the AO the assessment framed by him u/s.147 of the Act, dated 28.03.2014 cannot be sustained and is hereby quashed in terms of our aforesaid observations. Assessment framed by the A.O u/s.147 quashe for want of valid assumption of jurisdiction - Decided in favour of assessee.
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2022 (10) TMI 788
Addition u/s 69A on account of unexplained investment - Cash deposits made by the assessee in his bank account - HELD THAT:- On a perusal of Section 69A it transpires that the same contemplates that where in any financial year the assessee is, inter alia, found to be the owner of any money and such money is not recorded in the books of account, if any, maintained by him for any source of income, and he offers no explanation about the nature and source of acquisition of the same; or the explanation offered by him is not, in the opinion of the AO satisfactory, then, the money may be deemed to be the income of the assessee for such financial year. Admittedly, it is a matter of fact borne from record that the assessee had deposited money in question in his bank account during the year under consideration. Undeniably, as at the time of depositing the aforesaid money the assessee was the owner of the same, therefore, the provisions of Section 69A would clearly be applicable. We, thus, are of the considered view that no infirmity does emerge from the addition of the aforesaid amount u/s.69A of the Act by the A.O. Unexplained cash credit u/s.68 - As in order to verify the authenticity of the aforesaid claim of the assessee had referred to one of the sale transaction in which Shri. Santosh Yadav (supra) was stated to be a purchaser and had appeared a/w. the assessee in the course of the appellate proceedings. On being queried about the source of the aforesaid amount it was claimed by him that the same was the amount that was received from the final purchaser - No details as regards the name and address of the alleged final purchaser were provided by him. Also, in the remaining four sale transactions the story was no better and neither any details about the final purchaser were divulged nor any documents in support thereof were filed by the assessee before the CIT(Appeals). As observed by the CIT(A) that the assessee and his associates had also failed to provide the details of their respective share of profits in their so called land broking business that was claimed to have been jointly carried out by them. It was further observed by the CIT(A) that the brokerage receipt that was shown by the assessee in his return of income could not be corelated with the cash deposits in his bank account. It was, thus, observed by the CIT(Appeals) that considering the facts involved in the case before him the nature and source of the cash deposits could not be proved by the assessee. Although the CIT(Appeals) as observed by us hereinabove had principally concurred with the addition of made by the A.O, but he had held the same as an unexplained cash credit u/s.68 of the Act. As the assessee had undeniably failed to substantiate on the basis of irrefutable documentary evidences the nature and source of the cash deposits made in his bank account during the year under consideration, therefore, no infirmity does emerge from the orders of the lower authorities who had rightly made/sustained the addition of the same in the hands of the assessee. We, thus, in terms of our aforesaid observations uphold the addition made by the A.O u/s.69A of the Act. Appeal of the assessee is dismissed
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2022 (10) TMI 787
Validity of reopening of assessment u/s 147 - assessee availed the loan is an accommodation entry provider - HELD THAT:- Assessee did whatever it could do to comply with the query raised by the Assessing Officer. However, the Assessing Officer has simply brushed aside all the evidences filed by the assessee by stating that the entities from whom the assessee availed the loan is an accommodation entry provider. AO has not made any independent inquiry or brought any contrary material on record to disprove the evidences brought on record by assessee. Even, the assessment order does not reveal that the AO made any preliminary inquiry u/s 133(6) of the Act either with the lender or with the concerned bank to ascertain the genuineness of the loan transaction or to unearth the money trail. Without making any inquiry the AO cannot treat the loan transaction as non-genuine on mere conjuncture and surmises. More so, when the lender is an income-tax assessee. The least the AO could have done is to obtain necessary information from the Assessing Officer having jurisdiction over the lender. In any case of the matter, when the lender is an income-tax assessee, he can be hauled up in case he is unable to explain the source of fund from which he advanced the loan to assessee. The bona fide of the assessee is further proved from the fact that not only the assessee paid interest on the loan availed and deducted tax at source, but, the entire loan amount was repaid to the lender in the financial year 2013-14, even, prior to the completion of the original assessment and much before initiation of proceedings u/s 147 of the Act. Thus, addition made in the given facts and circumstances of the present case is unsustainable. Assessee appeal is allowed.
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2022 (10) TMI 771
Reopening of assessment - validity of order passed u/s 148A(d) - HELD THAT:- This Court is of the view that in the notice issued under Section 148A(b) of the Act, the petitioner was never asked to explain the source of funds that were used by Manu Garments to purchase the shares of Bert Marketing Pvt. Ltd. This Court is further of the opinion that if the foundational allegation is missing in the notice issued under Section 148A(b) of the Act, the same cannot be incorporated by issuing a supplementary notice. Keeping in view the aforesaid, the present writ petition along with applications is allowed and the show cause notice issued under Section 148A(b) of the Act as well as the order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act for the assessment year 2018-19 are quashed.
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2022 (10) TMI 770
Assessment u/s 153C - Necessity of recording satisfaction - Assessment being time barred - HELD THAT:- The present petition was listed before this Court for the first time on 07th February, 2022, and in this date the counsel for the respondent, revenue apprised the Court that the assessment orders for AY 2011-12 to 2017-18 have been finalised. The respondent has placed on record the said assessment orders dated 31st January, 2022, a perusal whereof shows that for the AY 2011-12 to 2015-16 the assessment orders are nil . In view of this fact, the legal objections raised in the petition with respect to the notices for the said assessment years being void on account of absence of directions of the CIT(A) and the issue of minority of the petitioner do not survive for consideration. Demand has been assessed against the petitioner in the assessment orders for AY 2016-17 and AY 2017-18 under Section 153C - The said assessment orders are not a subject matter of the present writ petition. The challenge to the assessment orders would necessarily require examination of factual controversy. The petitioner has the remedy of filing an appeal against the said assessment orders.
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2022 (10) TMI 769
Faceless Assessment Scheme - As argued principles of natural justice have not been adhered to in the present case - HELD THAT:- The notice was itself only uploaded in the portal and no intimation appears to have been sent to the petitioner by way of message or otherwise and thus the submission of the petitioner that it was entirely unaware of the show cause notice or the hearing fixed is credible and is accepted. The impugned order of assessment has come to be passed on the very next day, i.e., 29.12.2019, for the reason, evidently, that it is a time barring assessment, that has to be completed by 31.12.2019. However, this does not justify the callous approach of the respondent in entirely bypassing the requirement of providing an effective opportunity of hearing. The show cause notice ought to have been issued well in time affording sufficient opportunity to the petitioner to prepare and submit its defence as well as to appear for personal hearing. For the aforesaid reasons, the impugned order is set aside. Since the show cause notice has been served, the petitioner shall file its response to the same, for which purpose, the respondents shall open/enable the portal.
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2022 (10) TMI 768
Reopening of assessment - validity of notice issued u/s 148A(b) - Petitioner states that the impugned order passed without considering the detailed reply and voluminous documents/evidences filed by the Petitioner in response to show cause notice - HELD THAT:- This Court is of the view that since the impugned show cause notice required the Petitioner to file the reply by 25th March 2022 i.e. within six days despite the fact that Section 148A(b) mandatorily requires to give a minimum time of seven days to the assessee to file its reply, the Respondents failed to fulfil the criterion of not less than seven days as provided in clause (b) of Section 148A of the Act. In this case, as the impugned order u/s 148A(d) had been passed after receipt of the reply of the Petitioner, this Court is of the view that Assessing Officer should have considered the reply as the same was available on record. By not considering the reply of the Petitioner dated 29th March, 2022, the mandate of Section 148A(c) of the Act has been violated as it casts a duty on the Assessing Officer, by using the expression shall , to consider the reply of the Petitioner/Assessee in response to the notice under Section 148A(b) before making an order under Section 148A(d) of the Act. Order issued u/s 148A(d) and the notice issued under Section 148 of the Act are set aside.
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2022 (10) TMI 767
Denial of deduction u/s.80P - interest income earned from deposits kept with banks - HELD THAT:- Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit [ 2019 (4) TMI 682 - ITAT PUNE] decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [ 2015 (8) TMI 1085 - ITAT PUNE] has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd.[ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] allowing deduction u/s. 80P on interest income and that of the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totagar s Cooperative Sale Society Ltd. [ 2014 (9) TMI 833 - DELHI HIGH COURT] - No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra).Therefore, overturn the impugned order on this score and allow the deduction. Assessee appeal is allowed.
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2022 (10) TMI 766
Initiation of proceedings and violation of principle of natural justice - HELD THAT:- As perused the material available on record and gone through the orders of the authorities below. In the absence of any specific evidence in support of the claim of the assessee, we do not see any reason to interfere in the finding of authorities below, the same is hereby affirmed. Thus, Ground Nos. 1 2 raised by the assessee are dismissed. Unexplained expenditure u/s 69C - HELD THAT:- When the assessee was confronted with above seized documents and asked to furnish an explanation, he failed to submit any proper creditable explanation and simply stated that these are rough jottings by staff. In light of the analysis of seized material and accounts of the assessee and the companies, the replies filed by him are found to be inadequate and unexplained. Therefore, it is rejected and income assessed accordingly.Therefore the expenses incurred by assessee during the year which are treated as unexplained expenditure u/s 69C in his hands and added to his total income.
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2022 (10) TMI 765
Reopening of assessment us 147 - Eligible reasons to believe - Whether reopening proceedings on the ground that from the reasons it is not discernible as to whether the AO has applied his mind to the information and independently arrived at a belief that income has escaped assessment? - HELD THAT:- Reasons referred to must disclose process of reasoning by which the Assessing Officer holds reason to believe. There must be nexus between such material and belief. Further and most importantly the reasons referred to must show application of mind by the AO. It is also a settled law that the validity of the initiation of the reassessment proceeding is to be judged with reference to the material available with the AO at the point of time of the issue of notice under section 148. In the present case, as is evident from the assessment order, the Assessing Officer was having nothing except the list provided by the CIT, Central-2, New Delhi about the list of accommodation entries. Beyond that he was not having the copies of the statement of any of these persons. He was not having copy of the assessment orders and other details or document which would have enabled the Assessing Officer to apply his mind and form a belief that income has escaped assessment. In fact this information was not with the Assessing Officer till fag end of the reassessment proceedings, a fact admitted by the Assessing Officer himself in the assessment order. In the case of Sarthak Securities Pvt. Ltd. [ 2010 (10) TMI 92 - DELHI HIGH COURT] the Hon ble jurisdictional High Court has held that under the circumstances narrated hereinabove the reopening cannot be said to be a valid reopening. Thus reopening of the assessment is without application of mind and examination of the facts and accordingly the reopening is held to be invalid and accordingly the same is quashed - Decided in favour of assessee.
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2022 (10) TMI 764
Validity of the jurisdiction assumed by ITO Ward-2(2), Bhilai for framing the impugned assessment - case of the assessee was transferred - HELD THAT:- Even in a case where jurisdiction over the case of an assessee that is vested with one A.O (having concurrent jurisdiction over the case of the assessee) is to be transferred to another A.O (having concurrent jurisdiction over the case of the assessee), even then the authority specified under sub-section (1) of Section 127 is obligated to record his reasons for doing so. Considering the aforesaid position of law, we are of the considered view that now when in the present case the assessment proceedings were initiated by the Dy. CIT, Circle-1, Bhilai vide notice u/s.143(2), dated 24.09.2013, which thereafter were taken up and culminated by the Income-Tax Officer, Ward-2(2), Bhilai vide his order passed u/s.143(3) dated 30.03.2015, then, as per the mandate of sub-section (1) of Section 127 of the Act, the specified authority i.e. Commissioner or above was obligated to have recorded his reasons for transferring the case from the aforesaid Dy. CIT, Circle-1, Bhilai to the Income-Tax Officer, Ward-2(2), Bhilai. However, nothing has been brought to our notice which would justify the transfer of jurisdiction over the assessee s case from the Dy. CIT, Circle-1, Bhilai to Income-Tax Officer, Ward-2(2), Bhilai. Be that as it may, we are of the considered view that as in the case of the assessee the assessment order u/s.143(3), dated 30.03.2015 had been passed by a non-jurisdictional officer i.e. the Income-Tax Officer, Ward-2(2), Bhilai, which is in clear contravention of the CBDT Instruction No.1/2011 dated 31.01.2011, therefore, the same cannot be sustained and is liable to be struck down on the said count itself. We are of the considered view that as in the present case before us the assessment had been framed by the Income Tax Officer, Ward-2(2), Bhilai u/s. 143(3), dated 30.03.2015 in clear contravention of the CBDT Instruction No.1/2011, dated 31.01.2011, which divested him of his jurisdiction over the case of the assessee for the year under consideration i.e AY 2012-13, therefore, the same cannot be sustained and is liable to be struck down in terms of our aforesaid observations. We, thus, in terms of our aforesaid observations quash the order passed by the Income-Tax Officer, Ward-2(2), Bhilai for want of jurisdiction on his part.
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2022 (10) TMI 763
Disallowance u/s.14A r.w.r.8D - AR submitted has sufficient cash profits available with the assessee for making investment in shares - HELD THAT:- We find substance in the claim of the Ld. AR that now when the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s.14A of the Act was warranted in its case. Alternatively, there is substance in the claim of the Ld. AR that now when the interest free funds available with the assessee were in excess of the exempt income yielding investments, therefore, no disallowance of any part of the interest expenditure could have been made in its hands. Our aforesaid view that when interest free funds and interest-bearing funds are available, then, a presumption would arise that the interest free advances have been given out of interest free funds is supported by the judgment of the Hon ble Supreme Court in the case of South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] Rejection of the books of accounts u/s.145(3) - GP estimation - CIT(Appeals) vacating the addition made by the A.O by substituting the yield of 85% in the SMS division of the assessee company, by that as was adopted by his predecessor i.e at 89% while framing the block assessment in the case of the assessee for A.Y. 2006- 07 to A.Y.2011-12 and A.Y.2012-13 - HELD THAT:- As held by the CIT(Appeals) and, rightly so, the books of account of the assessee could not have been validly rejected by the A.O u/s.145(3) of the Act for the reason that the profit of the assessee had witnessed a decline as in comparison to the preceding years - We concur with the view taken by the CIT(Appeals) that now when no irregularity or defect had been pointed out by the A.O in the books of account of the assessee, bills and vouchers and other documentary evidences pertaining to the year under consideration, therefore, there was no justification for him to have rejected its books of account u/s.145(3) of the Act, for the standalone reason that its GP rate had witnessed a decline as in comparison to the preceding years. Also, as observed by the CIT(Appeals) and, rightly so, as the assessee company being an excisable unit was regularly filing its excise and VAT returns, therefore, rejection of its duly audited books of account without pointing out any defect or irregularity by the A.O does not merit acceptance. We are of the considered view that now when the adoption of yield in the SMS division at 89% by the A.O during the year under consideration i.e A.Y 2013-14 was in itself based on the view that was taken by his predecessor while framing the block assessment in its case for A.Y.2006-07 to A.Y.2011-12 and A.Y.2012-13, which had been vacated by the CIT(Appeals) and the same thereafter had been upheld by the Tribunal [ 2021 (11) TMI 708 - ITAT RAIPUR] therefore, there remains no basis for sustaining the aforesaid view of the A.O during the year under consideration. CIT(Appeals), who in our considered view had rightly vacated the rejection of the books of accounts of the assessee by the A.O u/s.145(3) of the Act, as well as had rightly set-aside the adoption of yield in SMS division of the assessee company at 89% as against that disclosed by the assessee company on the basis of its duly audited books of accounts for the year under consideration at 85%. Thus, the Grounds of appeal No.(s) 1 2 raised by the revenue are dismissed.
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2022 (10) TMI 762
Income deemed to accrue or arise in India - attribution made to the alleged PE- existence of Dependent Agent Permanent Establishment (DAPE) - HELD THAT:- When the AE has been remunerated at arm s length. We find that it is undisputed that this ground is without prejudice to the ground that the AE is not a DAPE as held in all the appeals. It has been brought to our notice that in the assessments made for Ariba Inc. for all the AYs in question either no transfer pricing adjustments was done or they were deleted by the TPO pursuant to the direction of ITAT in this regard. Hence considering the fact that no transfer pricing adjustment has been done/sustained in case of assessments of the AE, it is the assessee s plea that no further attribution is permissible on the touchstone of Hon ble Apex Court decision pronounced in the case of DIT vs. Morgan Stanley and Co. Inc. [ 2006 (2) TMI 77 - AUTHORITY FOR ADVANCE RULINGS] Once a transfer pricing analysis has been undertaken in respect of the Indian AE, nothing further would be left to be attributed to it as the alleged PE of the assessee and that, accordingly, would automatically extinguish the need for attribution of any additional profits to the alleged PE. In all these cases, it has been submitted by the assessee that the transactions have been found to be at Arm's Length by the Transfer Pricing Officer in the Transfer pricing order of the AE or the adjustment stood deleted pursuant to appellate order. This is not disputed by the Revenue. We hold that it is undisputed that in the assessment of the AE, the transfer pricing adjustments do not survive. Hence, attribution of income to the alleged PE is not sustainable. Hence, we decide this ground in favour of the assessee. Whether receipt should be taxed as royalty within the meaning of Article 12(3)(b) of the India USA DTAA and also under Explanation 2(iva) to section 9(1)(vi)? - assessee s submission in this regard is that this payment was not received by the assessee for any use of commercial or scientific equipment, hence it cannot be in the nature of royalty under Article (12)(3)(b) of the DTAA and Explanation 2 (iva) of section 9(1)(vi) - HELD THAT:- Once it is clear that at no point of time the control of equipment is exclusively granted to AE i.e. Ariba India or its clients, the treatment of the receipt as royalty is not tenable and ld. CIT(A) s observation that the grant of access through userid and password is giving control of the equipment is an erroneous proposition, which is not sustainable. It is absolutely absurd proposition granting access through userid and passwords for availing the facility would grant control over the equipments involved in the process. We sustain the assessee s plea that it cannot be said that the receipts of the assessee from Ariba India can come within the purview of royalty as defined under Article 12(3) of the DTAA and the assessee has been merely providing services of conducting online auctions to Ariba India and no exclusive right to use the equipment / process has been granted in favour of either Ariba India or its customers in India to qualify as royalty . In the case of CIT v. De Beers India Minerals (P.) Ltd. [ 2012 (5) TMI 191 - KARNATAKA HIGH COURT] wherein it is observed that in order to satisfy the requirement of the make available clause , technical or consultancy service rendered should be of such a nature that it makes available to the recipient technical knowledge, know-how and the like; that the service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. Admittedly, this is not the case here. Hence, we agree with the ld. Counsel of the assessee that ld. CIT (A) has erred in not appreciating that no technical knowledge, know-how and the like were transferred by the assessee to Ariba India or its customers in India while rendering the online auction services. Hence, we agree that the services provided by the assessee cannot be characterized as FTS under the India-US DTAA. Another point which goes to support the case of the assessee is the assessee s submission that there is no base erosion in this case. It has been submitted that Ariba India has retained majority of the revenues earned from the clients (around 88% to 97% from AY 2004- 05 to AY 2011-12) and offered the same to tax in India in its income tax returns for each of these years, only a miniscule percentage of the revenues (around 3% to 12.50%) have been paid to Ariba Inc. This clearly shows that there has been no base erosion in terms of taxes to be paid in India by the relevant parties. Hence, we agree that there is no base erosion on account of non-taxability of the assessee. Notional income confirmed by the ld. CIT (A) - We note that Revenue has not preferred an appeal against such order of ld. CIT (A), hence ld. CIT (A) s order in this regard is final. Since the position of law on this point has been accepted by the Revenue in other assessment years, we agree that the notional income cannot be taxed in the hands of the assessee. Reliance has been placed on the decision of ITAT Pune Bench in the case of GKN Holdings Plc. [ 2014 (12) TMI 128 - ITAT PUNE] for the proposition that unless an agreement is proved beyond doubt to be a colourable device, the Revenue cannot disregard such an agreement. In our considered opinion, it is duly applicable on the facts of the case and supports the case of the assessee. Appeals filed by the assessee stand partly allowed
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2022 (10) TMI 761
Addition u/s 69 - deposit in the bank and the calculation of the tax by utilising the provision u/s 115BBE - HELD THAT:- As explained the deposit of cash in four stage was deposited as per the instruction of the CBDT which the assessee is eligible to retain cash for her own purpose. Related to deposit of agricultural income, the assessee in both the stages submitted the Khasra Girdawari and copy of Jamabandi of agricultural land. Related to withdrawals from Bank of India, the copy of the bank statement also attached - The assessee had also taken the gold loan and reflected in the bank account - So, the entire amount was duly explained at source for depositing the cash in the bank account. The ld. Sr. DR was not strongly made any objection in relation to the fact of the cases which was duly explained by the assessee. As relying on Gandhi Ram case [ 2022 (8) TMI 377 - ITAT CHANDIGARH] the implication of Section 115BBE is not relevant for the assessee. Assessee appeal allowed.
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2022 (10) TMI 760
Disallowance of ESI/PF - Addition invoking sec. 36(1)(va) - assessee failed to deposit the same before the due date prescribed under the corresponding statute(s) - HELD THAT:- The relevant observations we need to mention at this juncture that the Finance Act, 2021 has inserted Explanation 2 below section 36(1)(va) providing that the provisions of section 43B shall not apply for the purpose of determining the due date under this clause w.e.f. 01-04-2021. The effect of this amendment is that if the amount of employees contribution towards EPF, ESI, etc. is delayed by an employer beyond the due date under the respective Acts, the disallowance will be called for notwithstanding the fact that it was deposited before the due date u/s 139(1) of the Act. Memorandum explaining the provisions of the Finance Bill 2021, provides that this amendment will take effect from 1st April 2021 and will accordingly apply in relation to assessment year 2021-22 and subsequent assessment years. Before us, the assessment year is 2019-20. Since the assessment year under consideration is earlier to the amendment carried out with effect from A.Y. 2021-22, we hold that the position of law as set out by various Hon'ble High Courts decisions including Ghatge Patil Transports Ltd. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT ] and Nipso Polyfabrics Ltd [ 2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT ] squarely applies to the facts and circumstances of the instant case thereby not warranting any disallowance since the amount in question was admittedly deposited before the due date u/s 139(1) of the Act and also pertains to assessment year prior to A.Y. 2021-22. We adopt the foregoing detailed reasoning and direct the Assessing Officer herein to delete the impugned disallowance after factual verification that the assessee had credited/paid the ESI/EPF before the due date of filing the return u/s 139(1) - Appeal is allowed for statistical purposes.
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2022 (10) TMI 759
Disallowance u/s. 40A(3) - addition on account of cash payment in excess of permissible limit - HELD THAT:- We find force in the arguments of ld. AR that Rule 6DD is exhaustive and it is open to the assessee the exceptional and unavoidable circumstances which made the assessee to make payment in cash - assessee did not pay cash as already discussed above, the contention of the assessee before the CIT(A) that the sellers demanded the assessee to pay in cash being assessee s share which is part and parcel of total sale consideration. There is no dispute with regard to identification of the sellers as well as their confirmations in respect of payment in cash from the assessee. It is also not disputed that the said cash payment is not part and parcel of total sale consideration which is reflected in all the purchase deed. Further, the sellers also admitted the payment of cash before the registering authority under due process. The contention of ld. AR is that the payment vide cheque or draft is not at all practicable due to circumstances on demand of settlement of purchase consideration in cash from the sellers of the properties. Therefore, the ratio laid down in the case of Attar Singh Gurmukh Singh [ 1991 (8) TMI 5 - SUPREME COURT ] is applicable and the disallowance of Rs.21,33,333/- as confirmed by the CIT(A) in the hands of assessee on account of section 40A(3) of the Act is deleted. Thus, grounds raised by the assessee are allowed.
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2022 (10) TMI 758
Revision u/s 263 - disallowing provision for depreciation and addition on account of broken period interest - HELD THAT:- In the instant case i.e. for the A.Y.2011-12, the ld. AO had indeed made specific enquiry during the course of assessment proceedings with regard to the aforesaid items and assessee vide reply letter dated 05/03/2015 had specifically pointed out the manner in which the said provision has been made and how it is allowable deduction for the assessee and also in view of case of DCIT vs. Bank of Behrain and Kuwait [ 2010 (8) TMI 578 - ITAT, MUMBAI ] and also the decision of Woodward Governor India Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT ] The fact is that the reply letter dated 05/03/2015 has been filed before the ld. AO is acknowledged by the ld. AO himself in his assessment order. Further yet another reply was filed by the assessee vide letter dated 24/03/2015 furnishing the entire series wise details of mark to market losses of Equity Linked Notes (ELN). The ld. AO on examining these two replies was thoroughly satisfied with the explanation offered by the assessee and accordingly, no disallowance / addition was made in the assessment. This categorically goes to prove that thorough enquiry has been made by the ld. AO in respect of aforesaid two issues. Hence, the decision of this Tribunal in assessee s own case for A.Y.2010-11 referred to supra would be squarely applicable to the year under consideration also. Respectfully following the same, the revision order passed u/s.263 of the Act by the ld. PCIT is hereby quashed. Appeal of the assessee is allowed.
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2022 (10) TMI 757
Reopening of assessment u/s 147 - whether AO had no any new tangible materials and the AO has referred to the computation of taxable income which was already available during the course of assessment completed u/s 143(3) ? - HELD THAT:- On perusal of the letter in which the contents of the reasons for reopening has been mentioned, the copy of reasons were provided to the AR of the assessee, which is clear from the reassessment order. Therefore, we reject the contention of the ld.AR that the reason for reopening was recorded after issuance of notice u/s 148 of the Act. On observation of the above letter, it is clear that before reopening the case, the AO had no any new tangible materials and the AO has referred to the computation of taxable income which was already available during the course of assessment completed u/s 143(3) of the Act. It means it is complete change of opinion by the AO, which is not tenable in the eye of law. AO reopened assessment on mere ground that expenditure incurred by assessee-company, for renovation of hotel expenses and rates and taxes claimed as FBT payable, since said reason for reopening was based on same set of information which was available at time of original assessment proceedings, , therefore, reopening of assessment based on a mere change of opinion is invalid and not permissible under the law. No substance on the submission of ld.DR on this issue. Further, on other legal issues that the assessee could not produce substantial evidence for deciding the issues. Since we have quashed the reopening of the reassessment on the basis of change of opinion, therefore, the entire reassessment order does not survive. Accordingly, the appeal of the revenue also does not survive.
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2022 (10) TMI 756
CSR expenditure u/s 37(1) - Allowable revenue expenses or not? - HELD THAT:- As in Jindal Power Ltd. [ 2016 (7) TMI 203 - ITAT RAIPUR] has held in terms of explanation 2 to Section 37(1) disallowance is restricted to expenses incurred by assessee under the statutory obligation u/s.135 of the companies Act 2013 and it doesn t apply to the expenditure incurred in discharge of corporate social responsibility(CSR) on voluntarily basis. We considering the facts, submissions, provisions of the Act and the judicial decisions relied by AR find the action of the assessee incurring the expenditure voluntarily to maintain harmony at the vicinity of the factory area and is not a personal expenditure, further the assessing officer has not doubted genuineness of the expenditure but only on the nature of the expenditure was not incurred for the purpose of business. The assessee has filed the details of CSR expenditure which cannot be overlooked and the AO has accepted such claim and the assessee has made a voluntarily disallowance of CSR expenditure under section 37(1) of the Act in restricting expenses under the statutory obligations of CSR policy. Accordingly, we set-aside the order of the CIT(A) on this disputed issue and direct the AO to delete the addition and allow this ground of appeal in favour of the assessee. Disallowance of claim under 80JJAA - We found that this ground of appeal does not emanates from the order of the assessing officer u/s.143(3) of the Act. Whereas the CIT(A) findings are that the disallowance was under 143 (1)of the Act and the assessee has filed a separate appeal and the order was passed on 26.08.2021. These grounds of appeal raised by the assessee are dismissed.
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2022 (10) TMI 755
Exemption u/s 11(1)(a) - Non-granting of exemption of 15% allowed u/s 11(1)(a) - accumulation of income - whether the accumulation to the extent of 15% is required to be allowed on Gross income or Net income? - HELD THAT:- The assessee has earned capital gains of Rs.22.75 crores and the same has been claimed as exempt u/s 11(1A) of the Act. From the order passed by Ld CIT(A), we notice that the said claim has been accepted by the AO. The remaining income earned from assets held for charitable purposes which consisted of corpus donations and other income - The corpus donation is exempt u/s 11(1)(d) of the Act. The other income earned from assets held for charitable purposes - The assessee has applied a sum for charitable purposes, meaning thereby, the amount applied by the assessee for charitable purposes has exceeded the amount of other income referred above. Hence, there was no necessity for the assessee to accumulate income to the extent of 15% u/s 11(1)(a) of the Act. It is pertinent to note that the exemption of 15% allowed u/s 11(1)(a) of the Act is not a standard deduction allowed. It only allows accumulation of income without any conditions, if there is any shortfall in application of income, i.e., if the application of income falls short of 85% of the income. In the instant case, we have seen that there is no shortfall in application of income. Hence the question of allowing accumulation of income to the extent of 15% of income does not arise. Since the assessee is not eligible for accumulation granted u/s 11(1)(a) of the Act during this year, the question that the same is required to be allowed on gross income or net income will not arise. Hence those case laws are not applicable to the issue under consideration. Accordingly, we hold that the assessee is not eligible to claim accumulation of income u/s 11(1)(a) of the Act and hence the AO was justified in rejecting the claim for accumulation of income u/s 11(1)(a). Credit of TDS amount - AO has assessed income so offered by the assessee without allowing corresponding tax credit - HELD THAT:- We notice that Rule 37BA(3)(ii) allows splitting up of TDS amount when the corresponding income is assessable over a number of years. It is stated that the credit for TDS shall be allowed across those years in the same proportion in which the income is assessable to tax. Accordingly, we restore this issue to the file of AO for allowing proportionate tax credit in terms of Rule 37BA(3)(ii) of I T Rules. Appeal filed by the assessee is treated as partly allowed.
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2022 (10) TMI 754
Penalty u/s 271(1)(c) - expenditure on account of advertisement and publicity - Debatable issue - AO concluded by holding that part of the expenditure i.e. 60% is disallowed as capital expenditure and 40% is allowed as Revenue expenditure - amount disallowed as capital expenditure was treated as intangible asset and the Assessing Officer allowed depreciation as per provisions of section 32 - HELD THAT:- Past history, when considered with assessment of the years under consideration, it can be safely concluded that disallowance made by the Assessing Officer are consistently on estimation without any basis. Since the action of the Assessing Officer was tax neutral to the assessee, no appeal was preferred before the appellate authority. But this does not mean that the assessee has accepted the action of the Assessing Officer. In our considered opinion, whether an expenditure is of capital in nature or Revenue in nature, or whether part of the expenditure is capital and part is Revenue, is a highly debatable issue and, therefore, in our humble opinion, no penalty is leviable u/s 271(1)(c) of the Act on such a debatable issue. At the same time, we cannot ignore the fact that disallowance is on adhoc basis and for that reason also, no penalty is leviable. Considering the facts of the case in totality, we do not find any reason to interfere with the findings of the ld. CIT(A). Appeal of revenue dismissed.
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2022 (10) TMI 753
Addition on account of opening cash in hand - deposits made in ICICI Bank a/c - As submitted that the assessee had made several withdrawals as well as cash deposits in the said bank account and the peak balance also includes the opening balance - HELD THAT:- As the assessee is to declare the cash of business only and there is no requirement to declare personal cash balance in the hands of the assessee - assessee was having Rs. 3,74,500/- in cash out of his saving from his profession as a lawyer. As undisputed fact that the assessee in a young lawyer and we cannot lose sight of the fact that a practicing lawyer have income in cash also, therefore, considering the background of the assessee, it can be very well presume that since the assessee is in the profession of lawyer for the last so many years, therefore, he might be having his savings to the tune of Rs. 3.75 lacs. At the same time, it is also important to mention here that the A.O. had not made any independent inquiry to the specific stand taken by the assessee. Assessee has duly proved that he was having opening cash balance of Rs. 7.00 lacs and thus should have been given credit of Rs. 7.00 lacs to explain the cash peak deposit balance of Rs. 15.25 lacs. Thus, we delete the addition of Rs. 3.75 lacs confirmed by the ld. CIT(A) on account of opening cash in hand of the assessee. Thus, the A.O. is directed accordingly. Unexplained cash deposit - As assessee had duly discharged his onus of proving the deposit of Rs. 12.50 lacs in the bank account as he has categorically submitted that the assessee had received the said amount from Shri Gaurav Singh S/o Shri Vijaypal Singh Tanwar Banethi towards sale of his plot to the said purchaser and the A.O. had not even enquired or carried out any enquiry with regard to factum of said categorical stand taken by the assessee by calling or recording the statement of Shri Gaurav Singh S/o Shri Vijaypal Singh Tanwar Banethi. Thus, stand taken by the assessee went unrebutted as the A.O. who is investigator has failed to carry out any investigation to disprove the categorical stand taken by the assessee supported by documents. Thus, said amount of Rs. 12.50 lacs deposited by the assessee in the bank account cannot be termed as unexplained rather the assessee has duly proved the source of the said amount by giving complete address of the buyer i.e. Shri Gaurav Singh S/o Shri Vijaypal Singh Tanwar Banethi to the A.O. Thus, the source of said amount was duly explained and in view of the above facts and circumstances we direct to delete the same. Appeal of the assessee is allowed.
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Customs
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2022 (10) TMI 752
Maintainability of appeal - appeal rejected on the ground that the appeal preferred under Section 129A of the Customs Act, 1962 is not maintainable - suspension of Customs Broker License - Whether Regulation 21 of the Customs Broker Licensing Regulations, 2013 prohibits an appeal by the revenue department in case it were aggrieved of an order passed under the said Regulations? - HELD THAT:- The expression any person aggrieved which finds mention in Section 129A of the Act cannot include the revenue, in matters concerning issuance of licence. The appeal to the Tribunal, as per the statutory provisions referred, is restricted only to two situations i.e., against an order of suspension or revocation of licence. Clearly, it confines the right of appeal only to the Customs Broker. The Customs Broker having succeeded before the Commissioner of Customs (Airport and General), the revenue, cannot prefer an appeal. The questions of law proposed by the revenue, cannot be entertained, as they stand concluded by the decision rendered by the coordinate bench of this Court in COMMISSIONER OF CUSTOMS (GENERAL) VERSUS FALCON INDIA [ 2018 (11) TMI 314 - DELHI HIGH COURT] where it was held that In these circumstances, that the order of the Commissioner was styled as an order-in-original or even that it mistakenly pointed to an appellate remedy under Section 129A of the Customs Act, was not in any manner conclusive or whether such appeal was maintainable. This Court is therefore of the opinion that the CESTAT's decision is sound and does not call for an interference. Appeal disposed off.
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2022 (10) TMI 751
Redemption fine - whether the revenue could adjust redemption fine against the sale proceeds from goods which were sold by it upon confiscation? - HELD THAT:- The respondent/revenue, having sold the goods, which it could not have done, since the appeal was pending at the relevant time, we find that there is no good reason for adjustment of redemption fine. Appeal disposed off.
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2022 (10) TMI 750
Import of Toys - Import policy - Wither the goods are excluded under the scope of BIS, the testing of the same could be made mandatory - goods in questions are Collectibles (not suitable for children under 14 years of age) or not - non-appreciation of documents and products placed - HELD THAT:- The stand of the appellant before the Tribunal as was also urged here, was that the appellant was prepared to submit to the requirement of testing of the car models, however, without insistence of the customs authorities for drawal of sample of each type of model, which would entail a substantial destruction of a major portion of the import as the consignment consisted of different scale models of various makes of international car manufacturers. However, it goes without saying that the testing procedures have to be followed as per the revised policy condition No. 2 (iii), which envisages that sample would be randomly picked from each consignment and not samples from each consignment, suggesting that only one sample from each consignment only could be sent for testing. If that be so, the apprehension of the appellant appears to be unfounded. The order of the Tribunal holding that the import policy conditions had to be satisfied, warrants no interference - Appeal dismissed.
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2022 (10) TMI 749
Adjudication of SCN - Deemed conclusion of proceedings on deposit of duty with interest and penalty - whether the proceedings would have been concluded and as to whether the Adjudicating Authority have been right while not concluding the proceedings in that scenario? - sub-section (2) of Section 28 of the Customs Act, 1962. HELD THAT:- On perusal of sub-section (2) of Section 28 of the Customs Act, 1962 makes it clear that the same is a beneficial provision of legislation with an intention to reduce the litigation proceedings where the assessee satisfies the condition of the said Section. The language makes it clear that the provisions provide for deemed conclusion of the proceedings against the assessees if the payment as regard the duty, interest and penalty thereof stands made by the assessee. It is further seen that the provision is applicable even in the cases of demand having been arisen on account of collusion, wilful mis-statement or suppression, if the same stands accepted by him and the respective duty along with interest and the required penalty stands paid. Now coming to the fact of the present case, it is admitted facts in present matter that the appellant herein has made the duty payment alongwith interest and penalty. The said acknowledgment is very much recorded in the impugned order itself. In the given circumstances, it is opined that the Adjudicating Authority has committed error for not concluding the proceedings in present matter. The impugned order under challenge is set aside by extending the benefit of deemed conclusion of the proceedings in view of Section 28 of the Customs Act to the appellants herein for the reason that they have complied with the conditions mentioned in the provision - appeal allowed.
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2022 (10) TMI 748
Levy of penalty - Application for modification of order - failure to pay deposit amount - Section 35F of the Central Excise Act, 1944 - HELD THAT:- It is clear that the appellant is deliberately not depositing the amount of Rs.50 lacs despite getting extension of time to deposit from the Hon ble Supreme Court. Initially this Tribunal while ordering for pre-deposit in the year 2011 had specifically observed that non-deposit of the amount would result in automatic dismissal of the appeals without any further notice to the appellants but still so many opportunities were granted to the appellant to deposit the amount but of no avail. Such a contumacious conduct of the appellant cannot be tolerated. In the facts of the instant case we have left with no other option but to dismiss the Appeal filed by the Appellant for non-compliance of the order of this Tribunal as affirmed by the Hon ble Supreme Court - Appeal dismissed.
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2022 (10) TMI 747
Classification of imported goods - Antenna (Parts of telecommunication equipments) - change in classification from CTH 8570 7090 to 85176290 - Section 17(5) of the Custom Act, 1962 - HELD THAT:- Undisputedly both the sides agree that the same issue has been considered by the coordinate bench of CESTAT, in case of Reliance Jio Infocom COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI VERSUS M/S RELIANCE JIO INFOCOM LTD [ 2019 (11) TMI 451 - CESTAT MUMBAI] and bench have decided the issue in favour of appellant. Since the same issue has been considered by the coordinate bench and the appeals filed by the revenue have been dismissed, this appeal also needs to be allowed - Appeal allowed.
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Corporate Laws
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2022 (10) TMI 744
Scheme of arrangement - Direction to Appellant Company to convene its Shareholders meeting in the matter of scheme of arrangement - Sections 230 to 232 of the Companies Act, 2013. Whether in a case where there is a scheme of arrangement between the wholly owned subsidiary and the holding company, and whether the meeting of the shareholders / creditors of the holding company or Transferee Company can be dispensed with, since in case there is no dilution in the shareholding of the shareholders of the Transferee Company and even post amalgamation the net-worth of the Transferee Company remain highly positive? HELD THAT:- It is an admitted fact that the Appellant is a Transferee Company and the Transferor Companies are wholly-owned subsidiary of the Appellant Company. The total shareholding i.e. (100% shares) of Transferor Companies are held by the Transferee Company. In the affidavit, the Appellant categorically mentioned that post amalgamation the net-worth of the Transferee Company will remain highly positive and the proposed scheme of arrangement will not result in any dilution in the shareholding of the shareholders of the Transferee Company. The rights of the shareholders of the Transferee Company are not affected as the proposed scheme does not involve any reorganisation in either the shareholding or debt position of the Transferee Company. This Tribunal considering the submissions of the Appellant that the Appellant Company is a holding company and no new shares are being issued, the rights of the shareholders of the Appellant Company are not affected, the scheme does not involve reorganisation of the share capital and the net-worth of the Appellant Company post amalgamation would remain highly positive - this Tribunal is of the view that the NCLT erred in not considering the decisions of this Tribunal which forms judicial precedents. We are of the view that rejecting the prayer of the of the Appellant is non-est and without application of mind. Appeal allowed.
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Insolvency & Bankruptcy
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2022 (10) TMI 746
CIRP - Alllegation of fraudulent Trading to defraud creditors of the corporate dabtors - Contract executed between the Appellant / Applicant and the Corporate Debtor, wherein the Corporate Debtor undertook to develop a 49.5 MW Wind Power Project, comprising of 33 Wind Energy Converter (WEC) - categorical stand of the Appellant is that no amount is due and payable by the Appellant and that the Resolution Professional has no right to withhold one wind mill and in all fairness the same requires to be handed over to the Appellant. HELD THAT:- It cannot be gainsaid that Section 23 of the Insolvency Bankruptcy Code, 2016, provides for the Role of the Resolution Professional, to conduct the Corporate Insolvency Resolution Process (CIRP), in managing the affairs of the Corporate Debtor, during the Resolution Period, and not at a later point of time. No wonder, the ingredients of Section 60 (5) of the Insolvency Bankruptcy Code, 2016, is not all pervasive Section, showering upon Jurisdiction to an Appellate Authority to decide any question / issue concerned the Corporate Debtor. The Resolution Plan was approved by the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) on 01.02.2022. Taking note of the fact that the Respondent / Resolution Professional before the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai) had taken a stand that Rs.75.63 Crore is receivable and that the Applicant / Appellant ought to be directed to pay the said sum immediately and in the teeth of the stand taken by the Respondent / Resolution Professional that the Appellant / Applicant claim of ownership is subject to the Full Payment of the entire consideration for the Project and owing to the non-payment of the contractual sum, one WEC was not handed over to the Appellant / Applicant and in the event of payment of Full Dues, the 1 WEC will be handed over to the Appellant, the present Relief prayed for by the Appellant/ Applicant, seeking direction to the Respondent / Resolution Professional to deliver one 1500 KW WEC in working condition etc., resting on the ground, that it belongs to it, is as Ex Facie, is not maintainable in the eye of Law, as opined by this Tribunal. Appeal dismissed.
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2022 (10) TMI 745
Seeking Approval of the Resolution Plan - submission of the Counsel for the Appellant is that although the Adjudicating Authority has excluded 58 days period but had not granted any specific permission for issuance of Form-G - HELD THAT:- After granting exclusion of 58 days, the Adjudicating Authority has directed the Resolution Professional to complete the process of CIRP within time and file report. When direction was issued by the Adjudicating Authority to Resolution Professional to complete the process, the process includes issuance of Form-G and mere fact that expressly Form-G was not mentioned is inconsequential, we do not find any substance in the submission of the Counsel for the Appellant. Within the time when the amount was not deposited, at this stage, the Appellant cannot be permitted to deposit the amount when another plan has been approved. Further submission that plan which has been approved has value of less than Rs. 2 Crores cannot be a ground to interfere with the approval of the Resolution Plan. Further, the Resolution Applicant whose plan has been approved was already H-2 in the earlier process in which Appellant was H-1. No ground has been made out to interfere with the impugned order - Appeal dismissed.
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2022 (10) TMI 743
Liquidation of the Corporate Debtor - Resolution Plan not approved - HELD THAT:- As per the order passed by the Adjudicating Authority and affirmed by us, fresh auction of the plant and machinery has to be undertaken by the Liquidator. The Highest Successful Bidder of the plant and machinery in whose favour letter of intent is issued shall be liable to deposit the entire bid amount, for which amount the plant and machinery is re-auctioned. The ends of justice be served in directing forfeiting of 10% of the bid amount deposited by the Appellant Chhota i.e an amount of Rs.41 Lakhs. The balance amount out of the total amount deposited by the Appellant needs to be refunded subject to the condition that in the fresh auction to be conducted a higher amount is received towards 90% of the bid which may be refunded to the Appellant. In case, in the fresh auction any lesser amount is received as towards 90% of the bid, the Appellant shall be entitled to be refunded only lesser amount and not the entire balance amount. The Appeal having been entertained by this Tribunal, which is being decided by this order, the ends of justice be served in disposing of the Appeal by directing the Appellant Singhi Infrapower to deposit the balance amount within one month from the date of this order failing which the Liquidator shall proceed with the fresh auction of the land and building forfeiting 10% of bid amount already deposited - appeal disposed off.
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2022 (10) TMI 742
Direction to issue No Objection Certificate (NOC) to the Liquidator and Director of Industries in order to register the properties - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- As per Regulation 21A of the IBBI (Liquidation Process) Regulation, 2016 the secured creditor has to inform the Liquidator of its decision to relinquish its security interest to the liquidation estate or to realize its security interest in the prescribed Form and if the secured creditor has failed to intimate its decision within thirty days from the liquidation commencement date, the assets covered under the security interest shall form part of the Liquidation estate. Admittedly in the present case, 2nd Respondent has filed its claim before the Liquidator which came to be admitted by the Applicant to the tune of Rs. 1,22,70,000/- as operational debt . Further, held once 2nd Respondent has submitted himself to the liquidation process, he cannot exercise any charge over the property and the said property would from part of the Liquidation Estate. The impugned order passed by the Adjudicating Authority cannot sustain in the eye of law as the Adjudicating Authority has failed to consider the aspects of the matter, therefore, the impugned order is hereby set aside - Appeal allowed.
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2022 (10) TMI 741
Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - time limitation - HELD THAT:- The Corporate Debtor having received the Demand Notice, did not send any reply nor paid the amount to Operational Creditor. Upon perusal of the Company Petition, this Bench expressed its view with regard to the bar of limitation, for filing the Petition. However, the Petitioner satisfied this Bench with a view that, a fresh computation of limitation period should begin from 15.09.2017, as the date of MOU which was executed between the Petitioner and the Respondent. Hence, the Company Petition being filed on 19.02.2019, is well within the limitation. Thus, Company Petition satisfies all legal requirements for admission. Since the Corporate Debtor did not file any reply, the claim of Operational Creditor remained unchallenged. Hence, this Bench feels that the Petitioner has successfully demonstrated the existence of debt and default committed by the Corporate Debtor in this case - Petition allowed.
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2022 (10) TMI 740
Seeking modification of the order, limited up to waivers as sought under the Resolution Plan - section 60(5) of Insolvency and Bankruptcy Code, 2016 read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- All the past liabilities arising out of any levies/tax dues to any government authorities, etc. which are not part of the Resolution Plan and pertaining to Corporate Insolvency Process period shall stand extinguished from the date of approval of the Resolution Plan. The authorities have to file the claim before the RP before the approval of Resolution Plan by the CoC. At this stage, we cannot burden the Resolution Applicant with the liabilities that had arisen before the approval of the Resolution Plan. This bench is of the view that the income tax liability on notional income arising on implementation of the Resolution Plan due to writing back of the unpaid dues to the creditors in the books of Corporate Debtor is to be waived off. Accordingly, such liabilities are waived off. Application are disposed of as partly-allowed.
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2022 (10) TMI 739
Seeking direction against Resolution Professional to release the amount due towards Gratuity, Leave Encashment and salary during the CIRP of the corporate debtor - same does not form part of the liquidation estate of the corporate debtor - whether Gratuity is payable when no Gratuity fund is created? - HELD THAT:- In the instant matter, the Resolution Professional cannot be directed to make payment of gratuity to the applicant as there is no gratuity fund created by the corporate debtor. As regards the salary and leave encashment during the period of CIRP, the same pertains to the amounts payable to an employee for services rendered during the CIRP. In this connection, these expenses clearly fall within the definition of insolvency resolution process cost as defined in section 5(13)(c) of the IBC, 2016. The Resolution Professional is directed to make provisions for payment of salary and leave encashment after taking on record the necessary information from the applicant and as per his entitlement and modify the resolution plan to that extent with the approval of CoC. The Resolution Professional is further directed to report the above compliance at the time of consideration of the Resolution Plan - Application allowed. Seeking direction against respondent to pay car rental of Rs. 15,000/- per month/ per car or part thereof up to the date of delivery of the cars to the applicant for using the car for personal purposes - direction to respondent to hand over the custody of the cars belonging to corporate debtor to the Resolution Professional in view of provisions of Section 18 (f) read with Section 23(2) and read with Section 25(2)(a) of IBC, 2016 - HELD THAT:- Under the provisions of the Code, the Resolution Professional is clearly mandated to take possession and to preserve and protect the assets of the corporate debtor. In the present case, the two vehicles should have been in the custody of the Resolution Professional right after the initiation of the CIRP - only with respect to those properties on which the corporate debtor has to exercise rights in judicial and quasi-judicial proceedings , the Resolution Professional cannot bring a claim before the NCLT. This situation however, does not apply to the present case as there is no dispute over the ownership of the vehicles in question and hence, the respondent's reliance on the aforementioned decisions of the Hon ble Supreme Court is clearly misplaced. Therefore, the respondent is directed to handover the possession of above mentioned vehicles to the applicant-resolution professional within 15 days of the date of this order. As regards the payment of car rental upto the date of delivery, it is opined that this issue does not pertain to our jurisdiction as it is not directly related to the insolvency proceedings of the corporate debtor. The aggrieved party is, however, at liberty to move an appropriate forum for redressal of its grievances in accordance with the Law - application allowed. Seeking direction against the respondent to deliver the Refrigeration Vehicle bearing Registration no. PB22G9523 in good condition to the Respondent along with insurance, Registration documents and other tools and tackles - HELD THAT:- The respondent is directed to deliver the Refrigeration Vehicle bearing Registration no. PB22G9523 to the Respondent along with insurance, Registration documents and other tools. As regards the payment of car rental/payments upto the date of delivery we hold that this issue does not pertain to the jurisdiction as it is not directly related to the insolvency proceedings of the corporate debtor. The aggrieved party is, however, at liberty to move an appropriate forum for redressal of its grievances in accordance with the Law. Application allowed.
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PMLA
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2022 (10) TMI 738
Permission to travel abroad - Seeking production of purported Look Out Circulars, if any, issued and operating against the Petitioner - seeking production of records maintained by pursuant to which a request was made to issue the purported Look Out Circulars against the Petitioner - seizure of passport by CBI - HELD THAT:- On perusal of orders passed by the learned Trial Court which categorically require the Petitioner to seek its permission before any travel abroad. Similarly the Supreme Court while granting interim bail to the Petitioner has also clarified that the terms and conditions granted by the learned Trial Court would naturally apply to its Order granting interim bail to Petitioner. If the Petitioner desires to travel abroad she is at liberty to seek prior permission of the appropriate/concerned Trial Court, wherein she is charged as an accused - As and when the Petitioner makes any such application for travel abroad, the prosecution/prosecuting agency therein shall be at liberty to press any such ground, including the ground of existence/subsistence of LOC against the Petitioner - Petition disposed off.
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2022 (10) TMI 737
Money Laundering - Provisional attachment order - third party property, having nexus with the proceeds of crime or not - Section 5 (1) of the Prevention of Money Laundering Act, 2002 as well as proceedings initiated under Section 8 (1) of the PMLA - effect of quashing of an order under Section 5 (1) - Whether the present challenge is maintainable/ entertainable under Article 226 of the Constitution of India? - Whether a third party property, having no nexus with the proceeds of crime, can be provisionally attached under Section 5 (1) of the PMLA? - HELD THAT:- In the present case, a portion of the property of the petitioner no.1-company and shares in the names of Mahesh and Alka in the company have been attached. The respondents allege that such fraction corresponds with the shareholding ratio of the accused Mahesh, Alka and their family in the petitioner no. 1-company - It is nobody s case that any of the accused persons are directors of the petitioner no. 1-company. The respondents best case is that they are shareholders in the company. Hence, there is no scope of lifting the legal fiction of corporate veil in the present case, since, in their capacity as mere shareholders of the petitioner no. 1-company, the accused persons have no right, title and/or interest whatsoever in the assets of the company. It seems a mere childish whim and paranoid fancy of the respondent no. 2 agency and its officials to apprehend a ghost where there is none to attach a fraction of the assets of the company in proportion with the shares held by the accused person in the company, without considering the rudiments of Company Jurisprudence - Even if only the shares in the name of the accused persons in the company (although acquired much prior to the alleged crime) were sought to be attached provisionally under Section 5 of the PMLA, some reason could be laboriously attributed to the same. Here, the respondent no. 2 goes one step further and calculates the share of the company s assets in ratio with the number of shares held in the company by the accused and attaches the said share in the property provisionally. This would tantamount not to law enforcement but unwarranted muscle-flexing by the respondent no. 2-agency. In the present case, the immovable property attached provisionally is owned by the petitioner no. 1-company and was purchased by the company much prior to the chain of events leading to the alleged money laundering. The petitioners are not even suspects , although some of them were summoned under Section 50 of the PMLA merely as persons who may be possessing relevant records or having knowledge of the circumstances of the commission of crime by the accused persons. Such circumstances, by themselves, are not sufficient to justify even provisional attachment of a portion of the petitioner no. 1-company s assets - In the absence of such correlation between the company s assets and the alleged scheduled offence in any manner whatsoever, the respondent no. 2 acted in gross abuse of the process of law in passing the provisional attachment order in respect of the company s property. What is the effect of quashing of an order under Section 5 (1) on a connected adjudication under Section 8 of the PMLA? - HELD THAT:- The effect of a quashing on technical ground and consequential remand, and that of prospective setting aside of the provisional order of attachment under Section 5 (1) on merits (hence, no question of remand arises), with regard to the provisional attachment of immovable property, as in the present case, on a proceeding or adjudication under Section 8 of the PMLA stand on entirely different footings. Thus, an ultimate quashing of a portion of the provisional attachment order under Section 5 (1) itself, with regard to a portion of the immovable property, would nullify the very premise of any resultant proceeding or adjudication under Section 8. The petitioners have made out a strong prima facie triable case to go for final hearing in the writ petition, at least as far as the immovable properties of the petitioner no.1 is concerned. Petition disposed off.
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Service Tax
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2022 (10) TMI 736
Refund of CENVAT Credit - denial of credit on alleged lack of nexus of taxable service procured and the output service travels beyond the limited disposal envisaged in rule 5 of CENVAT Credit Rules, 2004 - HELD THAT:- It is seen from the impugned order that the first appellate authority has traversed beyond the issues raised in the show cause notice by insisting upon filtration through the mesh of the amended definition of input service in rule 2(l) of CENVAT Credit Rules, 2004. Furthermore, it is also seen that the first appellate authority appears to have placed undue premium on the necessity of furnishing evidence of input services having been directly consumed in rendering eligible output that are exported. It is beyond conception to even conjuncture the consumption of service; implicit in consumption is tangible and transferability both of which are absent insofar as services are concerned. The first appellate authority appears to have insinuated aspects into rendering of services that neither enumerated nor even intended by Finance Act, 1994 - Rule 5 of CENVAT Credit Rules, 2004 is a mechanism specifically designed and comprehensively formulated for reimbursement of tax/duties paid on procurement of inputs/input service to the extent of these are attributable to service that are exported by the appellant. The consequences of denial of refund is not erasure from the CENVAT credit account but restoration therein for utilization in discharge of taxes/duties of services/goods cleared domestically. The procedure for claiming such refund, enshrined in notification no. 27/2012-Central Excise Act, 1944 (NT) dated 18 th June 2012, must necessarily be in conformity with the boundaries within which the claim of refund is initiated as per rule 5 of CENVAT Credit Rules, 2004. Neither of these provide for any option other than sanction of refund, subject of course, to eligibility of amount in accordance with the formula prescribed therein, and denial of the refund - By denial of refund as a consequence of denial of eligibility for CENVAT credit, the final outcome has traversed beyond the scope of rule 5 of CENVAT Credit Rules, 2004 and which, but for the finding on nexus, was to be attributed to the tax on the input services used for rendering output service , and therefore the order itself is not in accordance with law. Issue decided in the case of PMI ORGANISATION CENTRE PVT. LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, MUMBAI EAST [ 2022 (3) TMI 192 - CESTAT MUMBAI] , where it was held that The reasons assigned by the authorities below in this case for denial of the refund benefit to the applicant shall not stand for judicial scrutiny inasmuch as other than the allegation of non-establishment of nexus, the department had never questioned nor pointed out any discrepancy, alleging that the ingredients mentioned in Rule 5 ibid have not been complied with by the appellant. Hence, refund benefit shall not be denied to the appellant. Appeal allowed - decided in favor of appellant.
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2022 (10) TMI 735
Levy of service tax - appellant paid IGST on ocean freight alongwith custom duty at the time of import - reverse charge mechanism - period from 23.04.2017 to 30.06.2017 - Exemption Notification no. 25/2012-ST dated 20.06.2012 as amended vide Notification no. 1/2017-ST dated 12.01.2017 - HELD THAT:- Admittedly, the appellant have purchased fertilizers which is their inputs, at CIF value which includes the ocean freight element. Thus, the demand under service tax is not attracted. It is further found that the show cause notice is also on wrong facts as the date of filing of two Bills of Entry is on 6/7/2017 and 14/7/2017, but it is wrongly alleged that these have been filed on May June 2017. Thus, the show cause notice is also erroneous on this score. The appeal is allowed - decided in favor of appellant.
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2022 (10) TMI 734
Recovery of Service Tax - premium received towards marine policy - period from 2006-07 to 2013-14 - HELD THAT:- The adjudicating authority has examined the breakup of the premium on marine policy received by the respondent herein for 2011-12 and has conclusively arrived at the finding that, barring the policies that are exempt from taxation, tax has been duly discharged. The grounds of appeal contain no cogent evidence of any misstatement or error in the said finding. The demand for 2006-11 has been dropped solely on the premise that CERA appeared to have accepted the stand of the service tax authorities that appropriate taxes had been discharged. CERA is the field arm of the Comptroller and Auditor General (CAG) entrusted with responsibilities in accordance with the Constitution. The correspondence between the revenue administration and the audit arm constitutes inter-departmental interface on objections raised by the latter with a hierarchy of consequences upon non-acceptance - Most often, the issue of show cause notice in furtherance of objections is sufficient satisfaction as far as the audit arm is concerned. A show cause notice is issued under the appropriate statutory empowerment and is taken to its logical conclusion, independent of the source leading to the issue of the notice, in adjudication proceedings. Such proceedings are governed by standard procedures that conform to the principles of natural justice with a specific adjudicating outcome upon evaluation of the responses to the show cause notice - the obligation devolving upon the adjudicating authority has evidently not been discharged insofar as the demand the first notice is concerned. It is seen for that, for the remaining notices, there has been no evaluation save for the period 2011-12. The applicability of the finding for this period to the subsequent periods has not been explained in the impugned order. Furthermore, the discussion pertaining to 2011-12 has placed on record the submission made by the noticee without either detail, or examination, of the facts relating to the several exemptions claimed by the assessee. Thus, the adjudicatory process has been incomplete and has thereby impacted the acceptability of the impugned order - it would be appropriate to have the notices adjudicated afresh for which the impugned order is set aside and matter remanded back to the original authority for appropriate remedial action - appeal allowed by way of remand.
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2022 (10) TMI 733
CENVAT Credit - service tax paid for availing the Goods Transport Agency Service - despatching finished goods (outward transportation) on FOR destination basis to the buyers - transportation charges have been incurred from the factory gate to the premises of the customers - Place of removal - HELD THAT:- In the facts and circumstances of this case, the place of removal is the premises of the buyer, not the factory gate of the seller/appellant, as the finished goods are cleared by the appellant on FOR destination basis - the appellant is entitled to Cenvat credit on the GTA service for outward transportation of the goods cleared on FOR destination basis. Appeal allowed - decided in favor of appellant.
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Central Excise
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2022 (10) TMI 732
Process amounting to manufacture - Classification of goods - Sulphur 90% WG with the brand name of CosavetFertis, which is said to be used as fertilizer - respondent has classified the said products under Sub-heading 24030090 of 1st schedule to Central Excise Tariff Act, 1985 for the period up to 27.12.2013 and thereafter under Sub-heading 25030010 of Central Excise Tariff Act, 1985 - whether the process of the resultant product Sulphur-90% WG with the brand name of CosavetFertis from sulphur may be held amounting to manufacture under section 2(f) of Central Excise Act, 1944? HELD THAT:- The nature and composition of the materials (including Sulphur 99%) procured and used by the Respondent are the same, the process undertaken and the chemicals added to Sulphur 99% are the same; the nature as well as composition and use of the products obtained by the Respondent i.e Casvet Fertis- WG are the same, the structures of Chapter 25,38 and 31 of tariff are also the same, and most importantly there is no change in definition of manufacture and excisable goods under the Central Excise Act, nor it is there any new pronouncement of a Judicial or quasi-judicial forum affecting the concepts of manufacture or that of excisable goods or classification. In another decision of the Apex Court in JAYASWALS NECO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2006 (1) TMI 133 - SUPREME COURT] , it has been observed as As the inserts did not require any precision machining and, therefore the inserts produced by the assessees were entitled to the exemption provided in Notification No. 223/88-C.E. The impugned order is absolutely in order and there are no infirmity therein - appeal of Revenue dismissed.
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2022 (10) TMI 731
Benefit of exemption subject to the condition that no Cenvat Credit is availed - CENVAT Credit - availment of consolidated cenvat credit by a singly entry of all the inputs used in the manufacture of Finished goods which were cleared without payment of duty under the Notification No. 30/2004-CE dated 09.07.2004 during the period April 2016 to March 2017 - reversal of credit for exempt goods - Rule 6(3) of the Cenvat Credit Rules, 2004. Whether such reversal of credit, either by payment of 6% in terms of Rule 6 or by debiting the same from the Cenvat credit account, would result to satisfying the condition of notification No. 30/2004-CE in question? HELD THAT:- The condition of the notification is that no credit should have been availed in respect of inputs used in the manufacture of such goods. We find that the issue is no more res integra and stands settled by Hon ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [ 1995 (12) TMI 72 - SUPREME COURT] . It stands held that when credit so availed is subsequently reversed, the situation would be as if no credit was ever availed. This issue had come up for consideration before the Allahabad High Court in the case of HELLO MINERALS WATER (P) LTD. VERSUS UNION OF INDIA [ 2004 (7) TMI 98 - ALLAHABAD HIGH COURT] , wherein it is held that reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence, the benefit has to be given of the notification granting exemption/rate of duty on the final products since the reversal of credit on the input was done at the Tribunal s stage. The appellant are eligible for exemption under Notification No. 30/2004-C.E. when they have reversed 6% of the value of exempted goods in terms of Rule 6(3)(i). It is found that the appellant s claim on the applicability of sub-rule (3D) of Rule 6 is also legally sustainable. The said sub-rule provides for a deeming provision to the effect that payment of amount under sub-rule (3) should be considered as credit not taken for the purpose of such exemption notification. The impugned order is unsustainable, and accordingly set aside - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2022 (10) TMI 730
Validity of assessment order - reversal of proposed turnover - it is alleged that entire accounts of the appellant are required to be verified - Sections 27(1)(a) of the TNVAT Act - HELD THAT:- Earlier, the respondent passed the revised orders of assessment and the same were subjected to challenge before the Appellate Authority, who in turn, allowed the appeals and remanded the matters to the respondent for fresh consideration. Thereafter, notices were issued by the respondent, but the appellant did not respond to the respondent. Thereafter, the respondent passed the revised orders of assessment dated 04.05.2021, 16.04.2021 and 08.06.2021, for the assessment years in question, which were impugned in the writ petitions filed by the appellant. It is evident from the revised orders of assessment that though the notices were received, the appellant has not filed their reply or any supporting documents to substantiate their claim, which compelled the assessing officer to confirm the earlier revised orders of assessment. The reasons adduced by the appellant for non-submission of the documents are that on receipt of the notices for re-assessment, they had entrusted the matter to their Accountant, who was not in a position to submit the documentary evidence, as he had contracted Covid-19 infection and hospitalised, which fact was not aware of the appellant. When the same was brought to the notice of the respondent and an opportunity was requested for production of the documentary evidence by the appellant, the respondent refused to accept the same and passed the revised orders of assessment. The said orders were also confirmed by the learned Judge, by dismissing the writ petitions on the ground of availability of alternative appeal remedy to the appellant. Having regard to the explanation given by the learned counsel for the appellant for non-submission of the documentary evidence before the respondent at the time of reassessment proceedings, which appear to be reasonable, this Court, to meet the ends of justice, is inclined to grant one more opportunity to the appellant to substantiate their claim by producing the required documentary evidence to the respondent, for which, there is no serious objection on the side of the respondent - the revised orders of assessment, which were impugned in the writ petitions, are set aside and the matters are remanded to the respondent for fresh consideration - Appeal disposed off.
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Indian Laws
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2022 (10) TMI 729
Dishonor of Cheque - Period of limitation for giving notice of demand - cognizance of the offence under Section 138 of the Negotiable Instruments Act, 1881 was declined and the complaint was held to be not maintainable - HELD THAT:- For an offence under Section 138 of the said Act, one of the essential requirements, as per Clause (b) of proviso to Section 138 is that payee/holder in due course of the dishonoured cheque should have made a demand for the payment of the said amount of money (cheque amount) by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. Admittedly, in the present case, the return of the cheque was vide memo dated 17.03.2020 and as such, the notice was required to be given within 30 days of 17.03.2020. Further, the notice was issued only on 20.10.2020. The order was for the benefit of the complainants, who had to institute the complaints. There was no embargo from instituting the complaints in case no such benefit of exclusion of limitation period was sought on behalf of the complainant, in case the proceedings were initiated within the period prescribed under proviso of Section 138 of the NI Act - A gross injustice shall be incurred to the complainant/petitioner in case he is denied to exclude the period during 17.03.2020 till 20.10.2020 for the purpose of issuing of notice from the date of return memo i.e. 17.03.2020 till the date of issuance of notice i.e. 20.10.2020. The order passed by the learned Trial Court declining to take cognizance in the proceedings initiated before Trial Court under Section 138 of the Negotiable Instruments Act appears to be erroneous - appeal allowed.
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