Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 21, 2024
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
Highlights / Catch Notes
GST
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Valuation of service supply to state govt, tax rate, and goods % in composite supply under Notification 2/2018.
Dispute concerning value of supply of services by petitioner company to state government, rate of tax applicable, and components included in calculating percentage of goods value in composite supply under Notification 2/2018-Central Tax (Rate). Court granted interim protection to petitioner, allowing response to show cause within 30 days, considering prima facie case and advance ruling. Petition disposed.
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Tax notice challenged, adjudication ordered on interest liability for delayed GST filing.
Writ petition challenging notice for failure to file GST returns on time and consequential recovery notice. Court held petitioner should have sought mandamus for adjudication on liability for interest u/s 50 of CGST/TNGST Act. Petition disposed directing respondents to pass fresh order on merits within three months, justifying interest payable when amounts credited to government's electronic ledger/register.
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Tax authorities' orders quashed for violating natural justice over GST return mistake.
The High Court quashed the orders issued by the tax authorities after scrutiny of GST returns u/s 61, as the principles of natural justice were violated by not providing an opportunity of hearing. The petitioner inadvertently claimed input tax credit under the wrong column in GSTR-3B, which was clarified through a reply, but the authorities failed to consider it before passing the orders and recovering excess tax. Consequently, the HC set aside the orders, lifted the attachment on the petitioner's bank account, and directed the authorities to release the attachment immediately upon production of the court order, disposing of the writ petition.
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Two-wheeler seat GST dispute: Misclassification led to tax liability. Petitioner to forgo refund claim for Rs. 1.25 billion if notices split for AMNESTY scheme.
GST dispute involving misclassification of two-wheeler seats - petitioner challenged bunching of show cause notices for multiple assessment years - HC allowed splitting notices for separate years to avail proposed AMNESTY scheme - petitioner agreed not to claim refund of Rs. 1,24,74,14,950 deposited as tax liability and not raise limitation issue if separate notices issued - impugned show cause notice set aside - HC directed issuance of separate notices within two weeks for six assessment years to enable AMNESTY scheme benefit.
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Petitioner wins Rs. 32.29L VAT input tax refund sans application after Rs. 5.38Cr refund under old Act.
Transitional credit of input tax available under VAT Act sought. State contended refund application pursuant to Annexure-P/15 required. Court held refund of Rs. 5,38,20,214/- sanctioned payable to petitioner unrelated to input tax sought for transitional credit in GST period. Rs. 32,29,195/- withheld due to additional demand, would have been forfeited if input tax claim disallowed. Input tax claim allowed, withholding of refund amounts to that extent to be disbursed as per Section 54(12) of CGST Act. No refund application required since major refund portion under Annexure-P/15 already refunded. Refund with applicable interest to be made within one month. Writ petition disposed of.
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GST Registration Revocation Challenged Over Door Number Discrepancy - Court Revokes Cancellation Upon Satisfactory Explanation.
Petitioner challenged the rejection of application for revocation of cancellation of GST registration due to discrepancies in the door number of business premises. Court, satisfied with petitioner's explanation regarding door number discrepancy, revoked cancellation of GST registration. Impugned order dated 16.08.2024 and cancellation order dated 03.07.2024 set aside. Restoration of GST registration subject to fulfilling conditions imposed. Writ petition disposed of.
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Registration Cancelled, Remedy Bypassed - Amnesty Scheme Missed.
Cancellation of petitioner's registration occurred without availing appellate remedy or Amnesty Scheme. SCN not produced in writ petition, nor averment of non-receipt, violating principles of natural justice. Section 30 of GST Act allows application for revocation within thirty days. Government issued Amnesty Scheme Circular No. 3 of 2023 permitting restoration of cancelled registrations on payment of dues between 31.03.2023 to 31.08.2023, which petitioner did not avail. Petitioner not a registered dealer after cancellation, with no monitoring by Department during intervening period, unable to ascertain transactions. Petitioner failed to utilize appellate remedy or Amnesty Scheme. Writ petition dismissed.
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Tax liability of Rs 38,361 upheld for availing fake input tax credit; Appeal remedy available.
Petitioner challenged ex-parte order demanding tax liability of Rs. 38,361/- including penalty and interest for wrongful availment of input tax credit on fake invoices. Court found no infirmity in impugned order passed after providing opportunity to petitioner. Petitioner has efficacious appeal remedy u/s 107, without exhausting which writ petition is not maintainable. Writ petition dismissed.
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Bank account unfrozen, tax dispute reopened after lack of fair hearing.
Bank attachment order set aside due to lack of opportunity for personal hearing, violating natural justice principles. Order remanded for fresh consideration after petitioner pays 10% of disputed tax within 4 weeks. Petition allowed on remand.
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GST authority's order quashed for violating natural justice; petitioner to get personal hearing.
The court held that the impugned order was passed in violation of principles of natural justice as no opportunity of personal hearing was provided to the petitioner prior to passing the order, contrary to Section 75(4) of the GST Act. The court directed the respondent authority to consider the petitioner's replies, issue a 14-day notice for personal hearing, and pass appropriate orders on merits after hearing the petitioner. The impugned order was set aside, and the matter was remanded to the respondent for fresh consideration. The petition was disposed of by way of remand.
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Unfair tax assessment order quashed for lack of notice; authorities to re-evaluate after fair hearing.
Assessment order quashed due to violation of principles of natural justice. Petitioner not notified of defect in availing Input Tax Credit. Impugned order unsustainable. Case remitted to pass fresh order on merits after issuing show cause notice within 45 days. Petition allowed.
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Writ Petition Allowed: Company Wins Against GST Demand on MD's Guarantees & Intra-Group Loans.
This case pertains to the liability of an appellant to pay Goods and Services Tax (GST) on a reverse charge basis for two specific services: supply of services by the Managing Director through personal guarantees on loans obtained by the company, and supply of services by extending loans from the petitioner-company to its subsidiary. The High Court held that Circular No. 204/16/2023-GST and Circular No. 218/12/2024-GST issued by the Central Board are binding on the authorities. The respondent department's counsel did not dispute the applicability of these circulars to the issues raised. Consequently, the High Court allowed the writ petition and quashed the impugned show cause notice.
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Tax registration revoked for not filing returns; Court grants relief to restart business on clearing dues.
Registration cancellation under WB GST/CGST Act due to non-filing of returns. Appeal rejected as time-barred u/s 107(4). Court observed petitioner's case did not involve tax evasion or dubious activities. Suspension/revocation would be counterproductive, impacting revenue recovery as petitioner cannot raise invoices or carry on business. Respondents directed to take pragmatic view, allow petitioner to operate business subject to filing pending returns and paying requisite tax, interest, penalty. Order cancelling petitioner's registration set aside on condition of clearing arrears. Petition disposed.
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Contractor denied GST exemption on services for local authority due to specific entries.
This is a case regarding the applicability of GST exemption under Entry 3B of Notification No. 13/2017-CT (Rate) dated 28.06.2017 for services provided by the applicant to a local authority. The key points are: The applicant is engaged in providing 'works contract services' involving supply of goods along with services for an immovable property to Kotputli Municipal Council, a local authority. Entry 3B extends to pure services or composite supplies where the value of goods does not exceed 25%. However, Entries 3 and 3A specifically cover services provided to local authorities. Since the applicant is providing services to a local authority, Entries 3 and 3A are applicable, and there is no need to consider Entry 3B. Therefore, the exemption under Entry 3B is not applicable to the applicant for the services provided to the Kotputli Municipal Council.
Income Tax
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Tax Regulation: Arm's Length Price Tolerance for 2024-25 Set at 1% for Wholesale Trade, 3% for Others.
This notification, issued u/s 92C(2) of the Income Tax Act 1961, specifies the tolerance range for variation between the arm's length price determined u/s 92C and the actual transaction price for the assessment year 2024-2025. The tolerance range is one percent for wholesale trading transactions and three percent for all other cases. Wholesale trading is defined as transactions where the purchase cost of finished goods is at least 80% of the total cost, and the average monthly closing inventory is not more than 10% of sales. If the variation falls within the specified range, the actual transaction price shall be deemed as the arm's length price.
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Tax evasion? Compounding offers a way out if you meet the criteria. But beware of exclusions & higher charges for delay.
The guidelines provide a comprehensive framework for compounding offenses under the Income Tax Act, 1961. The key points are: 1. Compounding is permissible for specified offenses, subject to certain exclusions like anti-national/terrorist activities, offenses related to black money, benami transactions, and repeat offenders. 2. The jurisdictional Pr. CCIT/CCIT/Pr. DGIT/DGIT is the competent authority for compounding. Detailed procedures and timelines are prescribed for processing applications. 3. Compounding charges are computed based on the tax amount involved and whether it is a first or subsequent application for the same offense type. Higher charges apply for delayed applications. 4. Co-accused persons in company/HUF offenses can file separate or joint applications. The order compounds offenses for all upon payment by any one party. 5. The compounding order does not constitute admission of the offense by the applicant. 6. Detailed formats are provided for the application affidavit, checklist for processing, and orders accepting or rejecting compounding. 7. Procedures for payment of compounding charges, withdrawal of prosecution complaints/appeals, and recovery of pending demands are outlined. The guidelines aim to streamline and encourage compounding while excluding grave offenses, ensuring effective prosecution for non-compoundable cases.
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Company's Goodwill Write-Off & TP Adjustment Scrutinized - Intangible Asset Treatment Upheld, ALP Calculation Scope Clarified &A.
The High Court's decision addressed two key issues: disallowance of goodwill amount written off and transfer pricing adjustment. Regarding goodwill, the court held that the entire amount paid for acquiring assets should be treated as expenditure for asset acquisition. Since the acquired assets were valued at a certain amount, the remaining balance was rightly treated as an intangible asset, and depreciation was correctly allowed on such intangibles. On transfer pricing, the court noted that the Revenue's grievance pertained to the calculation of arm's length price (ALP) involving an associated enterprise, "eSys Singapore." However, the court found that this associated enterprise was not included as a tested party for determining ALP. Therefore, the Revenue's objection regarding its inclusion as a tested party did not arise in the given facts.
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Buyer challenges property valuation by authorities, demands fresh valuation as seller's case cannot apply. Court rules in favor of taxpayer.
The assessee objected to the valuation report prepared by the district valuation officer and the stamp duty rate. The assessing officer referred the matter to the district valuation officer, but the officer reiterated the valuation made in the seller's case, stating no need for a fresh valuation. The ITAT held that u/s 50C, if the assessee objects to the adopted deemed consideration, the assessing officer must refer to the district valuation officer for a fresh valuation. As the assessing officer failed to obtain a fresh valuation report after giving the assessee an opportunity to represent before the DVO, the addition deserves deletion. The ITAT emphasized that the valuation made for the seller cannot be applicable to the buyer, as the parties' perspectives and reasons may differ. Sections 50C/56(2)(viia) and 43CA provide for valuation qua the assessee, not the property. The DVO's refusal to consider the assessee's objections and failure to make a fresh valuation violates Section 142A(4). Even considering a discount for obstructions and tolerance limit, no addition could be made. Regarding the validity of reassessment, the ITAT dismissed the grounds, relying on the Supreme Court's decision in Union of India v. Rajeev Bansal, finding tangible material for reopening. However, the.
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Royalty payment to non-UK entities without APA/MAP; transfer pricing adjustment remitted to TPO for arm's length determination.
The Assessee paid royalty to non-UK entities without entering into an Advance Pricing Agreement (APA) or Mutual Agreement Procedure (MAP) proceedings for the assessment year 2017-18. However, the Assessee entered into MAP with UK entities. The issue pertains to transfer pricing adjustment on royalty paid to non-UK entities. The Tribunal remitted the matter to the Assessing Officer/Transfer Pricing Officer to determine the arm's length price, consistent with its earlier decision for the assessment year 2013-14 involving a similar issue with an associated enterprise in Germany. The Assessee's appeal was partly allowed for statistical purposes.
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Penalty deleted for delayed financial transaction reporting due to ignorance & tech issues.
Penalty levied u/s 271FA for delay in filing Statement of Financial Transactions (SFT) was challenged. The assessee delayed 255 days in complying with Section 285BA, citing unawareness of SFT filing requirement and technical issues with the income tax portal. Following previous ITAT decisions in similar cases, it was held that the breach was a technical or venial breach arising from bona fide ignorance. Considering the assessee's explanation of lack of knowledge and the fact that only one transaction was reported, the penalty u/s 271FA was deleted, and the assessee's appeal was allowed.
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Assessee's wrong claim not concealment, no penalty for inaccurate income disclosure on sale of depreciable asset.
The assessee had not offered short-term capital gain u/s 50 on the sale of a depreciable fixed asset as income in the return or during scrutiny proceedings. The issue was whether the assessee had furnished inaccurate particulars of income, attracting penalty u/s 271(1)(c). The Tribunal held that if the disclosure of facts is incorrect or false to the knowledge of the assessee, and this is established, then such disclosure cannot take the assessee out of the purview of concealment of particulars or furnishing inaccurate particulars for the purpose of levy of penalty. However, in this case, there was no concealment as all necessary facts were available on record, and the disallowance of the claim admitted to be withdrawn by the assessee in the quantum proceedings was due to a wrong claim made. Therefore, the decision was in favor of the assessee, and penalty u/s 271(1)(c) was not leviable.
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Sketchy statement can't justify additions under income tax law without incriminating material found during search.
Additions u/s 153A solely based on a sketchy statement of an accountant u/s 132(4), which in turn is based on a confessional statement of a director in a previous search, are impermissible. No incriminating material was discovered during the search in the assessee's case. The statement of the director in the previous search cannot be regarded as incriminating material found in the course of the assessee's search. Mere confessional statements without other material are unsustainable in law. In the absence of incriminating material found during the search, the legal foundation for making additions u/s 153A in unabated assessments does not exist, as per the Supreme Court's judgment in Pr. CIT vs. Abhisar Builwell Pvt. Ltd. and the Delhi High Court's ruling in Pavitra Realcon Pvt. Ltd. and Anand Kumar Jain (HUF). Additions made u/s 153A are not permissible. The assessee's appeal is allowed.
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Trust fund loans & deposits under scrutiny - violation of tax laws or permissible transactions?
This summary concerns an appeal before the Income Tax Appellate Tribunal regarding violations of Sections 11 to 13 of the Income Tax Act by a trust. The key points are: The trust advanced funds to another trust with common objects and trustees, which did not violate provisions. If a violation of Section 13 occurred by giving a loan, only notional interest at 12% per annum on the loan amount could be taxed, not the entire loan amount at maximum marginal rate. Regarding a large security deposit paid by the trust, the matter was remanded to the Assessing Officer to determine if it conferred any benefit on the trustees by comparing with similar instances. If benefit accrued, tax at maximum marginal rate would apply on the deposit amount. The issue of advances given to trustees was restored to the AO to consider if it violated Section 13(1)(c) and taxable at maximum marginal rate based on peak loan amounts each year after examining ledgers. The ITAT held that the AO erred in not allowing deduction for capital expenditure utilized for the trust's objects.
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Bad debt provision deductibility for banks: Accepted view despite conflicting stances.
PCIT's view that section 36 allows deduction only for bad and doubtful debts, not for provision on standard assets, was challenged. AR presented case laws allowing deduction u/s 36(1)(viia) for entire provision including standard assets as per RBI circular. DR agreed it's a debatable issue. AO allowed deduction after verifying details, taking a possible view. PCIT contended AO didn't inquire into allowability of deduction on standard assets, but it was found AO raised query and assessee replied. Mere non-mentioning of accepted issues in order doesn't mean no inquiry. PCIT didn't show deduction was erroneously claimed or any error prejudicial to revenue. Following Malabar Industrial case, PCIT's conclusion of erroneous order was held untenable and quashed. Assessee's appeal allowed.
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Trust's exemption upheld; bonus shares & pre-1983 holdings exempted u/s 13(1)(d), trustees didn't violate voting power limits, payments were for services.
Denial of exemption u/s 11 was challenged due to alleged violations of Sections 13(1)(d), 13(2)(h), and 13(1)(c) of the Income Tax Act. The key points are: Section 13(1)(d) was held inapplicable as the assessee's holdings mainly consisted of bonus shares and acquisitions before 1983, covered by an exception. Section 13(2)(h) was inapplicable as no trustee held more than 20% voting power in the company. Section 13(1)(c) was wrongly invoked as payments received by trustees were for past services, not application of trust income. The assessee was not engaged in business u/s 2(15) as it earned only dividends and donations, not business income. The right to nominate directors was to protect the trust's interests. Exemption u/s 11 was upheld, and the appeal was allowed.
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Excess diamonds found during survey, taxed under "Other Sources" instead of Unexplained Investment, leading to higher tax liability.
Assessee included excess stock of diamonds found during survey under "Income from Other Sources" and paid normal tax. PCIT held income should be taxed u/s 69B as unexplained investment, attracting higher tax u/s 115BBE. AO completed assessment without mentioning survey operations or examining assessee's claim. ITAT held AO failed to make proper enquiry before allowing the claim, making order amenable to revision u/s 263. ITAT directed AO to examine issue afresh regarding taxability of income offered during survey and decide in accordance with law. Assessee's appeal dismissed.
Customs
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New customs port added for Maharashtra's imports and exports.
This notification amends the previous Notification No. 62/1994-Customs (N.T.) dated 21st November 1994, issued by the Central Board of Indirect Taxes and Customs under the Ministry of Finance. It exercises powers conferred by Section 7(1)(a) of the Customs Act, 1962. For the state of Maharashtra, it adds the customs port of Yogayatan to the list of ports appointed for unloading imported goods and loading export goods or any class of such goods. The amendment is made by inserting a new item (19) under column (3) and the corresponding entry in column (4) of the table in the original notification against serial number 8 relating to Maharashtra.
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Customs duty exemption on imported parts for manufacturing lithium-ion batteries, not just final power banks.
The appellant imported parts, components, and accessories at a concessional rate of customs duty under Notification No. 50/2017-Cus dated 30.06.2017, Entry No. 512, for manufacturing Lithium-ion batteries. However, it was alleged that the imported goods were used for manufacturing power banks instead. The term "manufacture" in the notification must be interpreted considering Rule 3(e) of the IGCR Rules, 2017. A cell is a single unit that converts chemical energy into electrical energy, while a battery is a group of cells. The term "manufacture" in Rule 3(e) is satisfied when a battery emerges as a distinct product from its components, i.e., individual lithium cells and others. The exemption under Entry No. 512 is available when the imported parts and components are used in the manufacture of lithium batteries, not necessarily as the final product. Since the appellant used the imported goods to manufacture Lithium-ion batteries, which were then captively used to manufacture power banks, the appellant is entitled to the exemption under Entry No. 512. The amendment made vide Notification Nos. 02/2019-Cus and 03/2019-Cus dated 29.01.2019 manifests that before the amendment, the subject goods were exempted under Notification No.
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Customs export scam: Smugglers misled authorities through fictitious filings & misdeclarations.
Goods were mis-declared in baggage declaration for export, rendering them liable for confiscation. Penalties imposed under Customs Act: Section 114 on individuals involved in filing airway bills using fictitious company name, enabling export fraud. Section 114AA on individuals responsible for mis-declarations in baggage declaration filed for customs purposes, with penalties based on their roles and knowledge. Appellate Tribunal upheld some penalties, modified or set aside others based on evidence of involvement and applicability of specific provisions. Determination made regarding appropriate penalties commensurate with the nature of offenses and roles played by different individuals in the smuggling attempt.
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Govt's contradictory reports and lack of evidence lead to dismissal of customs duty hike on imported printing paper.
Mis-declaration: The department issued a show cause notice alleging mis-declaration of imported goods as "printing paper" instead of "newsprint," based on a contradictory test report from CPPRI, Saharanpur, which found the ash content to be less than 8%. However, the ash content is irrelevant for the classification under Chapter 48.02, where the criteria is mechanical wood pulp content. The CPPRI report contradicted the department's own CRCL, Pusa report, which was initially accepted. The department failed to provide evidence supporting the CPPRI report, including details of sample testing procedures. The Tribunal held that the CPPRI report was an afterthought, obtained without following proper procedures and without giving the importer an opportunity to represent against it. Since the department had already acted upon the CRCL report and released the goods, and there was no justification to reopen the assessment, the Tribunal dismissed the department's appeal, finding no infirmity in the order under challenge.
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Importer's quest for duty refund: When amending bill of entry u/ss 149, 154 is key.
Refund for excess customs duty paid by filing an application for amendment of the bill of entry u/ss 149 or 154 of the Customs Act, 1962. It was held that a refund u/s 27 can only be granted if the assessment is modified u/s 128 or other relevant provisions. Sections 149 and 154 allow for amendment of documents or correction of clerical errors, respectively. If review is limited to Section 128, other provisions like Sections 149, 154, and 28 (for recovering short-paid duty) would become redundant. Even for self-assessed bills of entry, importers can seek amendment u/s 149. However, in this case, no request was made initially for rectification or amendment u/s 149 or 154. The adjudication authority rightly rejected the refund claim based on the Supreme Court's judgment in ITC Ltd. The appellate authority erred in not considering the proper officer's power to allow corrections u/s 149, as no other objections were raised regarding amending the bill of entry to avail the benefit of the correct notification.
DGFT
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New online portal for digital submission of certificates for export promotion schemes.
This Trade Notice announces the launch of an online system for electronic submission of Appendix 4H certificates by Certifying Authorities for Advance Authorization and DFIA schemes under the Foreign Trade Policy. It outlines the workflows for exporters and Certifying Authorities to digitally sign and submit the certificates. Exporters can fill in details, forward drafts to registered Certifying Authorities who verify, update if needed, and digitally sign using Aadhaar e-sign or DSC. The signed certificate automatically attaches to redemption applications, facilitating verification. User guides, FAQs, and support channels are provided. The system aims to streamline the process and integrate digitally uploaded annexures seamlessly with online applications across various FTP schemes.
Corporate Law
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Notification amends IEPF rules, replacing "one Member" with "CEO" for preparing annual accounts.
The notification amends the Investor Education and Protection Fund Authority (Form of Annual Statement of Accounts) Rules, 2018. It substitutes the words "one Member" with "the chief executive officer" in sub-rule (2) of rule 5, pertaining to the authority responsible for preparing the annual statement of accounts for the Investor Education and Protection Fund Authority.
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Allowing minor tweak in swap ratio averts lengthy redo of merger scheme &A.
An appeal against the rejection of an application for amendment of a Scheme of Amalgamation, involving a minuscule change in the swap ratio of the Transferor Companies. Precedents were cited where amendments to schemes were allowed, including changes in appointed dates, swap ratios, and exclusion of companies from the merger. The proposed modification would not require additional approvals under FEMA regulations. Sustaining the impugned order would necessitate remodifying the scheme and undertaking lengthy compliances for the third time. Consequently, the Appellate Tribunal allowed the appeal and set aside the impugned order rejecting the amendment.
IBC
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Delay in appeal filing barred by statutory non-compliance & estoppel by conduct despite COVID extension.
Determination of the limitation period for filing an appeal u/s 61 of the Insolvency and Bankruptcy Code, 2016, the scope of an "Aggrieved Person," and the principle of Estoppel by Conduct. The key points are: The appellant cannot claim the benefit of the extended limitation period due to COVID-19, as the mandatory 30-day period for applying for a certified copy of the impugned order had expired much before the extended period commenced on 15.03.2020. The appellant's failure to comply with the statutory requirement of procuring a certified copy within the prescribed time, despite having knowledge of the proceedings, creates a legal bar u/s 114 of the Evidence Act. The appellant's inaction to apply for a certified copy, despite having knowledge, would constitute an "Estoppel by Conduct." Consequently, the application for condonation of delay lacks merit and is dismissed.
Indian Laws
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Dishonored cheques: Court upholds conviction under NI Act despite accused's claim of cheques as security.
In a case concerning dishonor of cheques u/s 138 of the Negotiable Instruments Act, the Court upheld the conviction and sentence. The accused admitted issuing cheques but claimed they were issued as security and misused by the complainant. However, no cogent evidence was led to substantiate this defense. The Court invoked Sections 118 and 139 of the Act, which raise a presumption in favor of the cheque holder that it was issued towards discharge of a lawful liability. This presumption can be rebutted by the accused through evidence or referring to the complainant's documents. The complainant successfully proved sale of goods worth Rs. 80,000 and issuance of two cheques of Rs. 40,000 each by the accused, which were dishonored due to insufficient funds. The Court held that even if cheques were issued as security, they can be presented for encashment if the promised amount is not repaid. All ingredients of Section 138 were met, and the High Court found no reason to interfere with the well-reasoned judgments of the lower courts.
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Dishonor of cheque case acquittal; cheque as collateral security, not debt payment. Payee wrongly issued notice.
Dishonor of cheque case where accused was acquitted. Cheque given as collateral security, not towards debt. Drawee passed away before cheque clearance. Complainant posed as payee/holder issued notice u/s 138 of NI Act. Trial court rightly acquitted accused after considering evidence and relevant decisions. No offense u/s 138 attributable. High Court in agreement with trial court's findings, no infirmity or perversity in acquittal order. Appeal dismissed as devoid of merits.
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Company official wrongly summoned for bounced check; High Court quashes proceedings citing lack of evidence.
The petitioner was neither the signatory nor the proprietor of the firm that issued the cheques in question. Before summoning an individual to face criminal trial, the Magistrate must find prima facie legally admissible evidence attributing a role that constitutes a penal offense. In this case, the complainant did not provide evidence pointing to the petitioner's criminal liability regarding the cheque. As per the Supreme Court's ruling in Anil Hada v. Indian Acrylic Ltd., if the offense was committed by a company, it can be punished only if the company is prosecuted. If the payee opts to prosecute individuals, they can succeed only by showing the company committed the offense. Continuation of criminal proceedings would amount to an abuse of the process of law. The High Court invoked its inherent jurisdiction u/s 482 CrPC to quash the summons against the petitioner and all subsequent proceedings. The summoning orders against all petitioners were quashed and set aside, and the petition was allowed.
PMLA
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Loan fund misappropriation leads to money laundering arrest, upheld due to valid grounds provided under PMLA.
Proceeds of crime were diverted from a sanctioned loan amount of Rs. 1530.99 crores for an unauthorized purpose, constituting a predicate offence for money laundering. The Enforcement Directorate (ED) arrested the accused under the Prevention of Money Laundering Act (PMLA), providing reasons to believe as mandated by Section 19. The High Court upheld the arrest, ruling that the ED complied with statutory requirements by apprising the accused of reasons and grounds for arrest at the time of arrest. Non-recovery of substantial proceeds of crime necessitated the arrest. The arrest grounds were self-sufficient and valid, conforming to Section 19 of PMLA. An illegal arrest breaching Section 19 requirements would invalidate the arrest and prevent re-arrest on the same grounds, infringing constitutional rights.
SEBI
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Investors can use 3-in-1 accounts for online bids in public issues of debt, preference, municipal & securitized debt instruments.
This circular clarifies that investors can continue to submit the bid-cum-application form online using 3-in-1 type accounts (linked online trading, demat and bank account) for making applications in public issues of debt securities, non-convertible redeemable preference shares, municipal debt securities and securitised debt instruments. This is in addition to existing modes prescribed under the Master Circular and notwithstanding provisions of an earlier circular. The circular is issued under relevant regulations to protect investors' interests and regulate securities markets.
Service Tax
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No service tax on reimbursement of expenses paid to third parties; only consideration for services taxable.
The appellant was not liable to pay service tax on the expenditure reimbursed by group companies, as the expenses were not shown to be consideration for services rendered. The department failed to prove that the reimbursed expenses were artificially shown and were actually consideration for services. As per the Supreme Court's judgment in Intercontinental Consultants case and Section 67 of the Finance Act, 1994, service tax is leviable only on consideration for services rendered, not on reimbursement of expenses paid to third parties. The show cause notice did not dispute the nature of reimbursed expenses or their includibility for service tax. The appellant's plea regarding classification of services as 'Business Support Services' instead of 'Management Consultancy Services' was irrelevant to the impugned proceedings. The appeal was allowed.
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Vehicle sales incentives not taxable: Tribunal rules trade discounts by car manufacturers to dealers are part of sale transaction.
The appellant contested the service tax demand on trade discounts and incentives received from Tata Motors Limited for promoting or marketing vehicles. The Tribunal held that the transaction between the appellant and Tata Motors Limited was a pure sale and purchase of cars, with the trade discount deducted from the sale value. The Tribunal reiterated that trade discounts or incentives given by car manufacturers to dealers in the course of vehicle sales do not constitute a service, and hence, no service tax is payable. Even under the negative list regime post-Finance Act, 1944, the sale of goods through transfer of title is excluded from service tax. Relying on a Division Bench decision in Infinium Motors case, the Tribunal ruled that trade incentives or discounts are not liable to service tax as they are connected to the purchase and sale of vehicles, not any service. Consequently, the Tribunal set aside the impugned order and allowed the appeal.
Central Excise
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Manufacturing process for crude oils denied; order vitiated for lack of cross-examination & reliance on statements.
The appellant lacked the capacity for deterpenation/fractionation of Crude Pipertia Oil, Crude Mentha Oil (Shivalik), or any Mint Oil, implying no manufacturing process occurred for the cleared goods. The Commissioner denied cross-examination, violating natural justice principles. Reliance on statements without following Section 9D of the Central Excise Act vitiated the order. The Commissioner's observations contradicted judicial precedents, warranting setting aside the impugned order and allowing the appeal. Penalties imposed on the Partner and Managing Director were unsustainable for the same reasons.
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Dept's clandestine mfg & removal claim falls flat - mere parts recovery insufficient, clinching evidence lacking.
Clandestine removal case - Department failed to establish clandestine manufacture and removal of assembled TV sets from warehouse/godown beyond reasonable doubt. Mere recovery of parts or TV sets insufficient, clinching corroborative evidence required. Statements alone cannot establish facts. Department tried to establish cash dealings to avoid buyer identity, but ledger showed banking transactions with buyer details. Consistent view that Settlement Commission findings cannot be basis for adjudication in different proceedings. As duty demand failed, interest and penalties also set aside. Extended period wrongly invoked as facts known to department in 2016 itself when DRI investigation started, show cause notice issued belatedly in 2020. Lack of evidence on manufacturing, transportation, buyers. Show cause notice unsustainable, appeal allowed.
Case Laws:
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GST
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2024 (10) TMI 970
Withdrawal of the Budgetary Support Scheme by SO 239 dated 16-07-2021 - violation of doctrines of promissory estoppel and legitimate expectation - violation of Article 14 of the Constitution of India - HELD THAT:- The Supreme Court in Brahmputra Mettalics [ 2020 (12) TMI 1241 - SUPREME COURT] has also drawn distinction between the doctrine of promissory estoppel and doctrine of legitimate expectation. The doctrine of legitimate expectations is founded on the principles of fairness in government dealings and would come into play if a public body leads an individual to believe that they will be a recipient of a substantive benefit. So far as difference between the doctrine of promissory estoppel and doctrine of legitimate expectation under English law is concerned; under English law the doctrine of legitimate expectation initially developed in the context of public law as an analogy to the doctrine of promissory estoppel found in private law. Another difference is that the legitimate expectation can constitute a cause of action whereas the doctrine of promissory estoppel can only be used as a shield. The scope of legitimate expectation is wider than the promissory estoppel because it not only takes into consideration a promise made by a public body but also official promise, as well. For invoking the principle of promissory estoppel there has to be a clear and unequivocal promise and on that basis the party concerned must have acted to its prejudice, whereas the basis of doctrine of legitimate expectation is in reasonableness and fairness. True it is that the doctrine of legitimate expectation cannot be claimed as a matter of right and can be used when the denial of legitimate expectation leads to violation of Article 14 of the Constitution. While the benefit of CST was being extended on year to year basis awaiting implementation of Integrated Goods and Services Tax Act, 2017 (IGST) and adoption of GST regime, the GST regime came to be adopted by the State with effect from 08-07-2017 and with that the entire tax structure in the State underwent a change. It was no longer possible to continue with the exemption from payment of GST as the scheme was now replaced by IGST payable under the Integrated Goods and Services Tax, 2017. However, with a view to continue supporting the entrepreneurs, who had established their industrial units in the State, the Government came up with a Budgetary Support Scheme which was promulgated vide SRO 431 of 2018 dated 25-09-2018. Initially it was envisaged in the scheme that the benefit of budgetary support to the manufacturing units in the shape of IGST shall be continued till 31-03-2026. It is thus clear that under the Budgetary Support Scheme envisaged under SRO 431 of 2018, the budgetary support was in the shape of reimbursement of IGST paid under IGST Act, 2017 in respect of interstate supplies, whereas under the Turnover Incentive Scheme 2021, the incentive was to be calculated on the gross turnover of the Industrial Unit subject, of course, to the maximum provided under clause 7. The incentive in terms of percentage of gross turnover of Industrial Unit would include the incentive on the taxable turnover with respect to interstate supplies made by the industrial unit under IGST Act as well - overlapping of the Turnover Incentive Scheme 2021 and the Budgetary Support Scheme promulgated by SRO 431 of 2018. It is with a view to set the record straight and also to remove the ambiguity, the impugned SO 239 dated 16-07-2021 was issued and the Budgetary Support Scheme envisaged under SRO 431 of 2018 was withdrawn with effect from 01-04-2021 i.e. with effect from the date the Turnover Incentive Scheme came into force. The petitioners are not deprived of the incentives but have been extended the same in different form. In the absence of any prejudice pleaded by the petitioners, the action of the respondents, replacing the Budgetary Support Scheme by the other scheme, both aimed at providing incentives to the industrial units like the petitioners, cannot be said to be irrational, unreasonable or arbitrary. Firstly, there is nothing in the conduct exhibited by the Government of Jammu and Kashmir to raise any legitimate expectation in the petitioners and, secondly, even if it were there, the Government has not acted arbitrarily, unjustly or in an unfair manner. The benefit of incentives in the shape of reimbursement paid under IGST Act, 2017 is continued to be paid now under the Turnover Incentive Scheme 2021. It is only the mode and manner which has been changed. The Turnover Incentive Scheme 2021 came into operation with effect from 01-04-2021 and, therefore, it was necessary to do away with the Budgetary Support Scheme promulgated vide SRO N431 of 2018. It is because of this reason the impugned SO was issued and given effect from 01-04-2021. Thus, both the doctrines i.e. doctrine of promissory estoppel and the doctrine of legitimate expectations are not attracted nor do we find issuance of the impugned SO in violation of Article 14 of the Constitution of India - petition dismissed.
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2024 (10) TMI 969
Value of supply of services provided by the petitioner company to the state government - rate of tax applicable on the value of supply - components to be included in calculation of the percentage of value of goods in the total value of composite supply for the purpose of N/N. 2/2018 Central Tax (Rate) - HELD THAT:- Considering the prima facie case made out by the petitioner, especially considering the advance ruling, however, at the same time noting that a show cause has been issued, the petitioner is entitled to a limited interim protection. Liberty is granted to the petitioner to respond to the aforesaid show cause dated 1st/3rd August, 2024. Taking into consideration the fact that the writ petition has been affirmed on 30th August, 2024, and since, the time to file response has already expired, the petitioner shall be at liberty to file its response within a period of thirty days from date. Petition disposed off.
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2024 (10) TMI 968
Challenge to notice in Form GST ASMT-10 and consequential recovery notice in FORM GST DRC-13 - failure to to file the returns in time as is contemplated under Section 39 of the Central Goods and Services Tax (CGST) Act, 2017 - HELD THAT:- The relief sought for in this writ petition is without any basis. The petitioner ought to have filed a writ petition for a mandamus to direct the respondents to adjudicate the issue as to whether the petitioner indeed liable to interest under Section 50 of the Central Goods and Services Tax (CGST) Act, 2017/Tamil Nadu Goods and Services Tax (TNGST) Act, 2017. This writ petition is disposed of by directing the respondents to pass a fresh order on merits and in accordance with law within a period of three months from the date of receipt of a copy of this order, justifying their stand as to how the interest is payable particularly when the amounts were credited to the accounts of the Government in the petitioner's Electronic Cash Ledger/Electronic Cash Register.
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2024 (10) TMI 967
Challenge to order and consequential rectification order - discrepancies on scrutiny of returns under Section 61 of the Act - opprotunity of hearing not provided - violation of principles of natural justice - HELD THAT:- In the present case on hand there was an error in filing GST 3B Returns that the Petitioner had inadvertently claimed Input Tax in ' RCM' Column instead of 'All other ITC Column' and the said aspect was stated by the Petitioner in its reply dated 05.09.2023, but the 1st Respondent had not considered the reply filed by the Petitioner had passed the impugned orders and that apart a sum of Rs. 2,99,000/- have been recovered for the tax liability of Rs. 2,33,000/-. Therefore, this Court is of the view that the impugned orders dated 27.12.2023 and 12.03.2024 are liable to be set aside. The orders impugned herein is set aside - Considering the fact that the impugned order itself has been set aside, this Court is of the opinion that the attachment made on the bank account of the petitioner cannot survive any longer and hence, it is lifted. As a sequel, 2nd respondent is directed to release the attachment on the bank account of the petitioner, immediately upon the production of a copy of this order. The writ petition is disposed of.
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2024 (10) TMI 966
Dismissal of appeal on the ground of non-payment of pre-deposit envisaged under Section 107 of the CGST Act - HELD THAT:- This Court is of the view that neither the provisions of Section 107(6)(a) nor of Section 107(6)(b) of the CGST Act would be attracted in Cases where the Assessee deposits the entire amount while challenging/disputing the same, however, the same amount shall be treated to be sufficient for the purpose of hearing the Appeal without insisting on pre-deposit. The petitioner in the present case having already deposited the entire amount, though in dispute, it needs not be further asked to deposit amount either in terms of Section 107(6)(a) or 107(6)(b) of the CGST Act. The orders dated 31.05.2024 (Annexure P-1), rejecting the prayer of the petitioner for allowing its Appeal to be heard on merits and insisting on pre-deposit, is set aside with a further direction to the respondents to decide the Appeal expeditiously on merits. The Writ Petition is allowed.
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2024 (10) TMI 965
Challenge to SCN along with summary notice in Form GST DRC-01 - misclassification of two-wheeler seats under Customs Tariff Heading (CTH) 9401 instead of CTH 8714 - short payment of GST - invocation of extended period of limitation - HELD THAT:- This Court records the submission of the petitioner to the extent as follows that 'the deposit amount made by the petitioner as tax liability to the extent of Rs. 1,24,74,14,950/- shall not be claimed to be refunded. Further in the event, if the respondent is issuing separate show cause notices for six assessment years, the petitioner will not raise the issue of limitation.' However, the petitioner's intention is that only in the event of separate show cause notices being issued, the petitioner will pay the tax liability and avail the AMNESTY scheme, which is proposed to be launched by the respondent from November 2024 and would get the benefit of waiver of interest as well as penalty. This Court sets aside the bunching of show cause notices issued for separate years, in the present case, the show cause notices may be split up regarding assessment years and separate notices may be issued for each and every assessment years separately in order to avail AMNESTY Scheme, which is proposed to be launched during November 2024. The respondent is directed to issue separate show cause notices regarding six assessment years within a period of two weeks from the date of receipt of copy of this order, in which case, the petitioner shall not raise issue of limitation - The amount of Rs. 1,24,74,14,950/- crores already deposited by the petitioner, the petitioner shall not claim any refund of the said amount deposited with the respondent - the impugned show cause notice is set aside - Petition allowed.
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2024 (10) TMI 964
Levy of penalty u/s 122(2)(b) of the CGST Act - petitioner is a Local Authority and falls within the definition of Local Authority as provided in Clause (69) of Section 2 of CGST Act or not - HELD THAT:- Taking into account the peculiar facts of the case, wherein, the petitioner has paid the entire tax along with interest, this Court is of the view that the petitioner may be granted one final opportunity to put forth its objections, which was not objected to by the learned Standing Counsel for the respondent. The impugned order dated 11.10.2023 is set aside. The impugned order shall be treated as a show cause notice and the petitioner shall file their objections with regard to the levy of penalty within a period of two (2) weeks from the date of receipt of a copy of this order. If any such objections are filed within the stipulated period, the respondent shall consider the same and pass appropriate orders in accordance with law after affording the petitioner a reasonable opportunity of hearing. The Writ Petition stands disposed of.
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2024 (10) TMI 963
Violation of principles of natural justice - Impugned order was passed without affording an opportunity - mismatch of input tax claim under Section 73(5) of the Act - HELD THAT:- In the instant case, it is seen that notice was issued by the respondent but however, the case was handled by his accountant who did not attend the personal hearing. On going through the impugned order, it is seen that a total tax liability of Rs. 5,89,004/- has been imposed against the petitioner. The petitioner has come up with a clear case that there are sufficient materials/documents to substantiate the defense of the petitioner to the effect that there was no mismatch of the input tax claim between GSTR 3B and GSTR 1. This Court had an occasion to deal with a similar issue in SRI GANESA ENGINEERING ENTERPRISES [ 2024 (10) TMI 125 - MADRAS HIGH COURT ]. This Court wanted to afford an opportunity to the petitioner therein by putting the petitioner on terms. In order to maintain consistency, a similar order can be passed in this writ petition also. In the light of the above discussion, the impugned order passed by the respondent in Reference Number ZD331123055367M dated 09.11.2023, is hereby set aside. The matter is remanded back to the file of the respondent for fresh consideration on condition that the petitioner will pay 10% of the disputed tax amount to the respondent within a period of four weeks from today. If this condition is not complied with, the order passed by the respondent will stand automatically revived. This writ petition is allowed.
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2024 (10) TMI 962
Seeking transitional credit of the input tax available under the VAT Act - only contention of the respondent-State is that, there should be a refund application filed pursuant to Annexure- P/15 - HELD THAT:- There was a refund of Rs. 5,38,20,214/- which was sanctioned as payable to the petitioner, which also was unrelated to the input tax sought, for transitional credit in the GST period. The withholding of Rs. 32,29,195/- was only by reason of the additional demand, which would have been forfeited if the dis-allowance of the input tax claim was upheld. Admittedly, the input tax claimed was allowed and withholding of the refund amounts, to that extent, has to be now disbursed as per sub-section (12) of Section 54 of the CGST Act. There is no requirement for filing of refund application, since already a major portion of the refund sanctioned under Annexure-P/15 has been refunded to the petitioner. The refund shall be made with interest as applicable within a period of one month from the date of uploading of the judgment. The writ petition stands disposed of.
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2024 (10) TMI 961
Rejection of Application for Revocation of Cancellation of GST Registration - discrepancies in the door number of the petitioner's place of business - HELD THAT:- Being satisfied with the explanation provided by the petitioner with regard to the discrepancy in the door number, this Court is inclined to revoke the cancellation of GST Registration of the petitioner. Therefore, the impugned order dated 16.08.2024 and the cancellation order dated 03.07.2024 are hereby set aside. Accordingly, the restoration of the GST registration is subject to and conditional upon fulfilling the conditions imposed - this writ petition is disposed of.
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2024 (10) TMI 960
Issuance of notices u/s 61 of the JGST Act - excess of the power conferred upon Respondent-authority regarding scrutiny of returns - HELD THAT:- This writ petition is disposed of by giving liberty to the petitioner to explain the reason which has been sought in the second show-cause, within two weeks and the authority concerned will consider the same in accordance with law and depending upon the conclusion, follow-up action be taken in view of the mandate of Section 61 of the JGST Act.
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2024 (10) TMI 959
Cancellation of registration of petitioner - petitioner has not availed of the appellate remedy nor the Amnesty Scheme - SCN is not produced in the writ petition nor is there any averment that it was not received - Violation of principles of natural justice - HELD THAT:- Section 30 of the GST Act also provides for an application for revocation of cancellation within thirty days of the order. Further, the Government had come out with an Amnesty Scheme by Circular No. 3 of 2023 by which the registered dealers, whose registrations were cancelled, were permitted to restore their registration, on payment of all dues, between 31.03.2023 to 31.08.2023. The petitioner did not avail of such remedy also. The petitioner was not a registered dealer after cancellation and there was no monitoring of his activities by the Department in the intervening period. There is no way to ascertain as to whether there was any transaction carried out during the said period. There is also the fact that the petitioner has not availed of the appellate remedy nor the Amnesty Scheme which was made applicable. The writ petition would stand dismissed.
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2024 (10) TMI 958
Violation of principles of natural justice - challenge to impugned ex-parte order - wrongful availment of ITC - fake invoices - HELD THAT:- A perusal of the impugned order dated 15.02.2024 reveals that the purchase made by the petitioner found to be based on fake invoice and wrongly availed input tax credit and hence, by invoking Section 74, the respondent demanded the total tax liability of Rs. 38,361/- including penalty and interest. The respondent has taken into consideration the payment made by the petitioner towards CGST and SGST through DRC-03 dated 09.09.2017, however, since there was no payment of tax on the supply made by the supplier, the respondent treated the purchase made by the petitioner was on fake invoices and thereby, invoked Section 74 of the Act and rightly passed the impugned order after affording ample opportunity to the petitioner. This Court does not find any infirmity in the impugned order passed by the respondent. In fact, as against the impugned order passed by the respondent under Section 74 of the Act, the petitioner is having efficacious appeal remedy under Section 107 of the Act and without exhausting such remedy, the petitioner has filed the present Writ Petition, which is not maintainable on this ground also. This Writ Petition fails and it is dismissed.
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2024 (10) TMI 957
Whether on filing an appeal the ten per cent of the due amounts are to be paid from the Electronic Cash Ledger or the Electronic Credit Ledger? - HELD THAT:- It is noticed that from N/N. 53/2023 dated 02.11.2023 issued by the Ministry of Finance, Department of Revenue (Central Board of Indirect Taxes and Customs), which permitted filing of delayed appeals even beyond the period provided under Section 107 of the GST Act, that the stipulation was of paying an amount of 12.5 per cent of the amounts pending and due to be paid to the Department as against the 10 per cent prescribed by the statute. In the said Notification issued by the Central Government on the recommendation of the GST Council, it has been specifically stated that at least 20 per cent of the 12.5 per cent remaining due and payable should be paid from the Electronic Cash Ledger. Hence, even the GST Council understood the ten per cent to be enabled for payment through the Electronic Credit Ledger. The order in appeal dated 14.01.2023 is set aside - the petition is allowed.
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2024 (10) TMI 956
Seeking mandamus, certiorari, or appropriate writ for complete record disclosure and payment clearance - HELD THAT:- Considering the facts and circumstances of the case, ground raised in the writ petition as also submission of learned counsel for the petitioner that the laboratory items have been supplied by the petitioner in the month of March 2023 and amount is to be disbursed within 20 days from the date of receipt of articles under the supply order, without commenting anything on merits of claim of the petitioner, this writ petition at this stage is disposed of permitting the petitioner to submit fresh representation before respondent No. 3 as also respondent No.2 who is also holding the ex-officio post of Mission Director, Samagra Shiksha and if such representation is filed, the same shall be considered and decided by the concerned authority in accordance with law. Petition disposed off.
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2024 (10) TMI 955
Demand to pay 10% of the disputed tax amount within four weeks - petitioner was not aware of the notices - no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order - violation of principles of natural justice - HELD THAT:- In the present case, it appears that no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order. Hence, this Court is of the view that the impugned order was passed in violation of principles of natural justice since it is just and necessary to provide an opportunity to the petitioner to establish their case on merits. In such view of the matter, this Court is inclined to set aside the impugned order dated 23.03.2024 passed by the respondent. The impugned order dated 23.03.2024 is set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 10% of disputed tax amount to the respondent with in a period of four weeks from today (02.09.2024) and the setting aside of the impugned order will take effect from the date of payment of the said amount - Petition disposed off by way of remand.
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2024 (10) TMI 954
Request to lift the bank attachment and de-freeze the bank account of the petitioner - petitioner was not aware of the notices - the impugned order came to be passed by the respondent without providing any opportunity of personal hearing to the petitioner - violation of principles of natural justice - HELD THAT:- In the present case, it appears that no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order. Hence, this Court is of the view that the impugned order was passed in violation of principles of natural justice since it is just and necessary to provide an opportunity to the petitioner to establish their case on merits. In such view of the matter, this Court is inclined to set aside the impugned order dated 27.12.2023 passed by the 1st respondent. The impugned order dated 27.12.2023 is set aside and the matter is remanded to the 1st respondent for fresh consideration on condition that the petitioner shall pay 10% of disputed tax amount to the respondent within a period of four weeks from today (02.09.2024) and the setting aside of the impugned order will take effect from the date of payment of the said amount - Petition allowed by way of remand.
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2024 (10) TMI 953
Violation of principles of natural justice - petitioner was not aware of the notices - impugned order came to be passed by the respondent without providing any opportunity of personal hearing to the petitioner - HELD THAT:- In the present case, it appears that no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order. Hence, this Court is of the view that the impugned order was passed in violation of principles of natural justice since it is just and necessary to provide an opportunity to the petitioner to establish their case on merits. In such view of the matter, this Court is inclined to set aside the impugned order dated 28.12.2023 passed by the respondent. The impugned order dated 28.12.2023 is set aside and the matter is remanded to the respondent for fresh consideration on condition that the petitioner shall pay 10% of disputed tax amount to the respondent within a period of four weeks from today (02.09.2024) and the setting aside of the impugned order will take effect from the date of payment of the said amount - Petition is disposed off by way of remand.
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2024 (10) TMI 952
Violation of principles of natural justice - no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order - HELD THAT:- In the present case, it appears that no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order, which is contrary to the provisions of Section 75(4) of the GST Act, wherein it has been stated that it is the bounded duty of the Authority concerned to provide an opportunity of personal hearing to the Assessee in the event of passing any adverse order. Hence, this Court is of the view that the impugned order was passed in violation of principles of natural justice since it is just and necessary to provide an opportunity to the petitioner to establish their case on merits. The 1st respondent is directed to consider the replies dated 26.01.2024 and 20.03.2024 filed by the petitioner and issue a 14 days clear notice, by fixing the date of personal hearing, to the petitioner and thereafter, pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible - the impugned order dated 25.04.2024 is set aside and the matter is remanded to the 1st respondent for fresh consideration - Petition disposed off by way of remand.
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2024 (10) TMI 951
Cancellation of GST Registration of the Petitioner - non-filing the returns under Section 39 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- A perusal of the impugned order dated 14.04.2024 would show that the said order is passed by a quasi judicial authority. The effect of the said order would be that in absence of a registration, the Petitioner cannot carry out his business. Therefore, the effect of the said impugned order would entail civil consequences. If this Court peruses the order, it is shocking that the Respondent No.3 had cancelled the registration assigning any reason. This clearly shows a total non-application of mind. Accordingly, this Court therefore sets aside the said impugned order dated 14.04.2024 thereby restoring the status back to the date on which the Show Cause notice dated 05.09.2023 was issued. The instant writ petition stands disposed of.
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2024 (10) TMI 950
Rejection of appeal in Form GST APL-02 - Lack of reasons for determining liability - Violation of rpinciples of natural justice - HELD THAT:- The petitioners did not respond either to the notice in DRC-01A or to the notice in DRC-01. Having regard thereto the proper officer had determined the liability. Though ordinarily, such an order having regard to the conduct of the petitioners, cannot be said to be bad, however, upon a closer scrutiny of such order it would transpire that the proper officer had failed to give any reasons apart from recording that the petitioners had failed to respond to the notice issued in DRC- 01A or to the notice in DRC-01. The appellate authority had also rejected the appeal on the ground of delay. There has been no appropriate consideration of the matter on merits at any stage. Having regard to the peculiar facts of the case and taking note of the fact that the petitioners have already deposited 12.5 percent of the amount to the tax in dispute, the matter remanded to the appellate authority for adjudicating on merits. The appellate authority shall hear out and dispose of the appeal on merits as expeditiously as possible preferably within a period of eight weeks from the date of communication of this order. The order of rejection of the appeal in Form GST APL-02 dated 3rd April, 2024 stands set aside - the writ petition is disposed of.
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2024 (10) TMI 949
Cancellation of client s registration under Odisha Goods and Services Tax Act, 2017 - client is ready and willing to pay the tax, interest, late fee, penalty and any other sum required to be paid for the return form of his client to be accepted by the department - HELD THAT:- The petitioner's registration was canceled, but the court allowed relief by directing the petitioner to pay the necessary dues for registration revocation consideration. The writ petition is disposed of.
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2024 (10) TMI 948
Levy of service tax - income accruing on account of affiliation - HELD THAT:- The issue is squarely covered by the order of the division bench of this Court in PRINCIPAL ADDITIONAL DIRECTOR GENERAL DIRECTORATE GENERAL OF GST INTELLIGENCE BENGALURU ZONE UNIT, PRINCIPAL COMMISSIONER OF CENTRAL GST BENGALURU, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, UNION OF INDIA, ASSISTANT COMMISSIONER OF CENTRAL TAX BENGALURU VERSUS M/S. RAJIV GANDHI UNIVERSITY OF HEALTH SCIENCES, KARNATAKA, [ 2024 (8) TMI 209 - KARNATAKA HIGH COURT] . The division bench has held that service tax cannot be levied on the income accruing on account of affiliation. Hence, the authorities concerned are not justified in levying service tax on the income accruing on account of affiliation during the academic year July 2012 to March 2017 and April 2017 to June 2017. Therefore, the show cause notices issued by the authorities concerned are liable to be set aside. Accordingly, they are set aside. The Writ of Certiorari is ordered. The show cause notice dated 29.03.2018 issued by the Additional Director General, Directorate General of GST Intelligence, Belagavi Zonal Unit, Belagavi - first respondent vide Annexure-A and also the show cause notice dated 22.07.2019 issued by the Assistant Commissioner of Central Tax and Central Excise, Belagavi City Division, Belagavi-fifth respondent vide Annexure-S are quashed. The Writ Petition is allowed.
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2024 (10) TMI 947
Challenge to order confirming demand for excess utilization of Input Tax Credit (ITC) under CGST Act and DGST Act - impugned order does not consider the said contention and has mechanically confirmed the liability - violation of principles of natural justice - HELD THAT:- As apparent from the plain language of Section 16(2)(c) of the CGST Act, the ITC would be available only in respect of such supplies where the tax is actually being paid to the government, either in cash or through utilisation of the ITC admissible in respect of the said supply. There is no specific finding in the impugned order that the suppliers, from whom the petitioner had availed supplies, have not paid the tax in respect of their outward supplies to the petitioner, either in cash or by utilisation of admissible liability. The impugned order is set aside - matter remanded to the concerned Adjudicating Authority - petition disposed off by way of remand.
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2024 (10) TMI 946
Remission of case back to the respondent to pass fresh orders in the light of the recommendations of the 53 GST Council s Meeting held on 22.06.2024 - HELD THAT:- Since the Legislation has accepted the above recommendation of 53 GST Council s Meeting held on 22.06.2024 by incorporating Clauses in the Finance (No.2) Bill, 2024, the Court is of the view that the case can be remitted back to the respondent to pass fresh orders on merits, after the Finance Act, 2024 is passed amending the provision of GST enactments and after State legislative suitably amends TNGST Act, 2017 and after the State Bill is presented and passed. The respondent shall thereafter pass final order after the respective Finance Bills are passed by the Parliament and the State Legislative. Petition disposed off.
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2024 (10) TMI 945
Challenge to show cause cum demand notice issued u/s 73/74 of the WBGST CGST Act, 2017 - discrepancies in audit proceedings - HELD THAT:- The petitioner no. 1 appears to have made payment of not only the tax interest but also the penalty, as identified by the audit authorities. Factum of such payment would corroborate from Form GST DRC 03 issued on 18th March 2024. Ordinarily therefore, no proceeding can be initiated in respect of the period for which an audit has already been conducted and upon completion of such audit in the manner provided under Sections 65(6) of the said Act the final audit report in Form GST ADT-02 is published, recording the discrepancies as accepted and settled. Having regard to the above and the judgment delivered by the Hon ble Division of this Court in the case of M/S. R.P. BUILDCON PRIVATE LIMITED ANR. VERSUS THE SUPERINTENDENT, CGST CX, CIRCLE II, GROUP - 10 ORS. [ 2022 (10) TMI 501 - CALCUTTA HIGH COURT] , the petitioner no. 1 has been able to make out a prima facie case, at least for the period which is covered in the audit. However, since the period indicated in the show cause only partly overlaps the period of the audit proceedings, it would be prudent at this stage to direct the petitioner no. 1 to be present before the proper officer and to respond to the show cause. The petitioner no. 1 shall be at liberty to file its response to the show cause notice dated 28th/29th May 2024 within a period of 15 days from date. Let affidavit-in-opposition be filed within a period of 4 weeks from date. Reply, if any, thereto be filed within 3 weeks thereafter - Liberty to mention immediately upon expiry of the period for exchange of affidavits.
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2024 (10) TMI 944
Challenge to assessment order - it is submitted that the petitioner has not produced the requisite documents to substantiate that the petitioner had validly availed the Input Tax Credit - violation of principles of natural justice - HELD THAT:- The Court is of the view that the impugned order suffers from the gross violation of the principles of natural justice as the petitioner was not put to notice on defect No.1. Therefore, the reasoning, which produced in conclusion of the impugned order, is also unsustainable, The Court is left with no other option, but to quash the impugned order and to remit the case back to the respondent to pass a fresh order on merits. The impugned order, which stands quashed, shall be treated as corrigendum to the notice in DRC 01 dated 19.04.2022. The respondent is also directed to issue fresh additional addendum to the above as a show cause notice with in a period of 45 days from today. Petition allowed.
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2024 (10) TMI 943
Liability of appellant to pay GST on reverse charge basis - supply of services by the Managing Director of the company by way of providing personal guarantee on loans taken by the company - supply of services by way of extending loans by the petitioner-company to its subsidiary company - HELD THAT:- Circular No.204/16/2023-GST dated 27-10-2023 and Circular No.218/12/2024-GST dated 26-06-2024 issued by the Central Board are binding on the authorities. The learned Senior Standing Counsel appearing for the respondent department does not dispute that the issues raised are covered by virtue of the clarifications given in the Circulars referred. It is not disputed that the impugned show cause notice does not deal with any other issue. This writ petition is allowed and Ext.P1 show cause notice will stand quashed.
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2024 (10) TMI 942
Cancellation of registration of the petitioner under the provision of the WB GST/CGST, 2017 - rejection of appeal on the ground that the same was time barred in terms of provision contained in Section 107 (4) of the said Act - HELD THAT:- The registration of the petitioner had been cancelled on the ground of non-filing of returns. It is not the case of the respondents that the petitioner had evaded tax or had been engaging in dubious process to evade tax. Taking note of the fact that suspension/revocation of licence would be counter productive and work against the interest of the revenue since the petitioner in such case would not be able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of revenue, the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business. The order dated 15th January, 2020 cancelling the registration of the petitioner is set aside subject to the condition that the petitioner files his returns for the entire period of default and pay requisite amount of tax, interest, fine and penalty. Petition disposed off.
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2024 (10) TMI 941
Classification of the Fish Meal - HELD THAT:- The issue is now subjudiced before the Hon'ble Supreme Court. Under the similar circumstances, this Court has allowed the Writ Petition in the case of REHOBOTH FISH MEAL AND OIL PLANT, REPRESENTED BY ITS MANAGING PARTNERSHIP J. SUDEEP FERNANDO; NPM ASSOCIATES; MARKSMEN AQUATIC PRODUCTS LLP; FINLEY MARINE PRODUCTS VERSUS ADDITIONAL COMMISSIONER, TIRUNELVELI [ 2024 (7) TMI 1521 - MADRAS HIGH COURT] by directing the petitioners therein to file statutory appeal before the Appellate Authority without pre-deposit. Since the matter subjudiced before the Hon'ble Supreme Court, a different view need not be taken. This Writ Petition is disposed of by permitting the petitioner to file statutory appeal before the Appellate Authority/the Commissioner of GST Central Excise (Appeals), Coimbatore at Madurai, without pre-deposit of 10%. This appeal shall be filed within a period of 30 days from the date of receipt of a copy of this order.
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2024 (10) TMI 940
Cancellation of petitioner's GST registration - non-filing of the Return - HELD THAT:- This Court is of the view that the petitioner may have a case on merits and therefore, discretion is exercised partly in favour of the petitioner and quashed the impugned order, subject to the petitioner depositing 25% of disputed tax to the credit of the respondent from its Electronic Cash Register within a period of 30 days from the date of receipt of this order. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order. This Writ Petition is disposed of.
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2024 (10) TMI 939
Violation of principles of natural justice - petitioner was unaware of the notices that were posted in the GST common portal - time limitation - HELD THAT:- This Court is of the view that the petitioner may have a case on merits and therefore, discretion is exercised partly in favour of the petitioner. Therefore, the impugned quashed and the case is remitted back to the respondent to pass a fresh order, subject to the petitioner depositing 25% of disputed tax to the credit of the respondent from its Electronic Cash Register within a period of 30 days from the date of receipt of this order. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order. The petition is disposed off.
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2024 (10) TMI 938
Violation of principles of natural justice - petitioner was unaware of the notice in DRC 01 that preceded the impugned order - time limitation of appellate remedy - HELD THAT:- This Court is of the view that the petitioner may have a case on merits and therefore, discretion is partly exercised in favour of the petitioner and quashed the impugned order, subject to the petitioner depositing 25% of disputed tax to the credit of the respondent from his Electronic Cash Register with in a period of 30 days from the date of receipt of this order. The impugned order, which stands quashed, shall be treated as addendum to the show cause notice that preceded the impugned order. Petition disposed off.
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2024 (10) TMI 937
GST demands on various items including Fish Meal - pre-deposit 10% of the disputed tax as as contemplated under Section 107 of the respective GST enactments - HELD THAT:- The Court is inclined to dispose of this Writ Petition by directing the petitioner to file statutory appeal before the Appellate Authority/the Commissioner of GST Central Excise (Appeals), Coimbatore at Madurai, within a period of 30 days from today. Petition disposed off.
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2024 (10) TMI 936
Reimbursement of 8% of the value of work done by the petitioner (every month or periodically) after 01.07.2017 - HELD THAT:- This Court deems it fit and proper to direct the Principal Secretary, Water Resources Department, Government of Jharkhand to look into the pending representation of the writ petitioner and take decision in accordance with law, preferably with in two months from the date of receipt of copy of the order.
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2024 (10) TMI 935
Application for modification/relaxation of the condition of deposit of 50% of the tax component - HELD THAT:- The amount of Rs. 31,08,18,919/- already deposited by the petitioner, is not a deposit after the judgment in REDDY ENTERPRISES VERSUS THE STATE OF AP [ 2023 (3) TMI 1265 - ANDHRA PRADESH HIGH COURT] or in pursuance thereof. This amount is already adjusted in the Assessment Order itself. It is the 50% of the remaining tax component under the order impugned in Writ Petition that was directed to be deposited. A perusal of para 11 of the judgment dated 24.03.2023, makes it very clear that the petitioner was directed to deposit 50% of the tax component of Rs. 23,79,26,090/-. In the judgment, specific amount has been mentioned of which 50% was directed to be deposited, the order is very clear. Application rejected.
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2024 (10) TMI 934
Exemption from GST - activity of providing, laying, jointing, testing and commissioning of sewer system and all ancillary works - applicability of entry 3B of the NN 13/2017-CT (Rate) dated 28.06.2017 - composite supply of works contract or not - determination of tax liability for the services provided to a local authority - HELD THAT:- In the instant case the applicant is engaged in providing works contract services . The applicant also admits the fact that they are engaged in supply of goods along with services for an immovable property. Thus, the services provided by the applicant are found to be works contract services, where goods along with services are supplied. KOTPUTLI Municipal Council is covered under the definition of Local Authority. In the instant case, the applicant is providing services to KOTPUTLI Municipal Council which is a local authority. The Sr No. 3 and 3A of the Notification No. 12/2017-CTR dtd 28.06.2017 are applicable only in the case of pure services or composite supply having value of supply of goods not more than 25 percent. Since, Sr No 3B is also extension of Sr No 3 and 3A and all these entries are inter-related and it won t be appropriate to read all these entries in isolation or individually. Therefore, Sr.No. 3B will also be applicable in case of pure services or composite supply, where value of the goods is not more than 25 percent. The applicant provides services to kotputli Municipal Council, which is a local authority and all the three entries Sr No. 3, 3A and 3B of the Notification No. 12/2017-CTR dtd 28.06.2017 are consistent and should not be read individually, the rate of tax on services provided by the applicant should be decided in terms of Sr No. 3 and 3A, since the said entries cover services provided to local authority , there is no need to go to Sr No. 3B. The applicant is providing it s services to Municipal Council KOTPUTLI (local authority) of Providing, laying, jointing, testing and commissioning of sewer system and all ancillary works along with Design, construction, supply, installation, testing and commissioning (Civil, Electrical, Mechanical and Instrumentation and other necessary works) of SPS, MPS and 10 MLD capacity STP based on SBR process with provision of 1 year defect liability and there after 10 years for Kotputli town, Jaipur District, Rajasthan. So, exemption entry No. 3B is not applicable to the applicant.
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2024 (9) TMI 1648
Constitutional validity of section 16(4) of CGST Act/SGST Act 2017 - Petition seeking declaration of certain provisions as illegal and discriminatory - Blocking of credit balance - HELD THAT:- In view of the amendment by inserting Section 16(5) to the CGST / KGST Act, the present petition deserves to be disposed of relegating the parties to the original authority to implement and give effect to the said provisions after providing sufficient and reasonable opportunity to the petitioner and hearing them and proceed further in accordance with law and by issuing certain directions in this regard. The parties are relegated to the stage of show cause notice at Annexure-C dated 13.02.2020 issued by the respondent(s) and the respondents are directed to give effect to and implement the amended provisions contained in Section 118 of The Finance (No.2) Act, 2024 relating to insertion of Section 16(5) to the CGST Act / KGST Act by providing sufficient and reasonable opportunity and hear the petitioner and proceed further in accordance with law within a period of one month from the date of receipt of a copy of this order. The petition is disposed off.
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Income Tax
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2024 (10) TMI 933
Disallowance of goodwill amount as written off - AO had disallowed the amount as it was not wholly and exclusively for the purposes of business - HELD THAT:- There is no dispute that the assessee had paid a sum for acquisition of assets of Nebula as claimed. There is also no suggestion that the said amount was paid for any other consideration or purpose. It would, thus, follow that the entire amount is required to be treated as expenditure for acquisition of assets or attendant to the said acquisition. Since the assets acquired have been valued at Rs. 12,37,450/-, there is no infirmity in treating the balance amount as pan intangible asset, and the decision of the CIT(A) to allow deprecation on such intangibles cannot be faulted. Decided in favour of assessee. TP Adjustment - addition made on account of ALP with related enterprises - Revenue s grievance regarding the calculation of ALP is confined to an associated enterprise eSys Singapore (the Foreign AE), as one of the tested parties - HELD THAT:- It is premised on the basis that the Foreign AE which is admittedly one of the associated enterprises was treated as one of the tested parties. According to the Revenue, it was not apposite to use the said entity as a tested party, considering that the financials and functions of the Foreign AE was more complex as compared to the assessee. However, it is conceded that the said question does not arise in the given facts. This is so because, in fact, the Foreign AE was not included as one of the tested parties for determining the ALP. Although the assessee had proposed the same, it was rejected by the Transfer Pricing Officer and therefore, the addition made on account of the ALP adjustment was not on account of inclusion of the Foreign AE as a tested party. Since, concededly, the Foreign AE was not included as one of the tested parties, the question projected by the Revenue does not arise.
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2024 (10) TMI 932
Refusal to condone the extremely small/short delay of 2 Hours 38 Minutes and 26 Seconds in filing the Income Tax Returns - HELD THAT:- As rightly contended by petitioner, the impugned order passed by the first respondent refusing to consider the extremely short/small delay of 2 Hours 38 Minutes and 26 Seconds by adopting a hyper technical approach is clearly contrary to the material on record without appreciating the specific contention of the petitioner that he could not file the Income Tax Returns on account of genuine hardship as contemplated in the Circular dated 09.06.2015 bearing No. 9/2015 and also the provisions of Section 119 (2) (b). It is also relevant to state that having come to the conclusion that the petitioner was not entitled for condonation of delay, the first respondent did not have jurisdiction or authority of law to issue impugned intimation at Annexure-B, which consequently deserves to be quashed and the delay in filing the returns deserves to be condoned and necessary directions to be issued to the respondents.
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2024 (10) TMI 931
Ex-parte Order of CIT(A) due to the non-appearance of/on behalf of the assessee - HELD THAT:- CIT(A) merely on the basis of non-compliance with notices, dismissed the appeal filed by the assessee without adjudicating the grounds raised by the assessee on merits, as required u/s 250(6) of the Act. We find that in CIT v/s Premkumar Arjundas Luthra (HUF) [ 2016 (5) TMI 290 - BOMBAY HIGH COURT] held that Commissioner (Appeals) cannot dismiss the appeal on account of non-prosecution of appeal by the assessee. We deem it fit and proper to set aside the impugned order and restore the matter to the file of the CIT(A) for de novo adjudication of the appeal on merits. We further direct that no order shall be passed without affording reasonable opportunity of hearing to the parties. Assessee is directed to appear before the learned CIT(A) on all the hearing dates as may be fixed without any default. As the matter is being restored to the file of the CIT(A) for adjudication on merits, the other grievances raised by the assessee in the present appeal do not call for adjudication at this stage. Grounds raised by the assessee are allowed for statistical purposes.
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2024 (10) TMI 930
Disallowance u/s 14A r.w.r. 8D - appellant contended that it had sufficient interest-free own funds for investments - HELD THAT:-Having gone through the Hon ble Supreme Court judgment in the case of South Indian Bank Ltd [ 2021 (9) TMI 566 - SUPREME COURT] we find strength in the argument of assessee. Therefore, on the basis of above referred chart we find that at March 31, 2017, the appellant had total own funds of Rs. 12,198.62 crores whereas investment made in NTPL shown as Rs. 200.93 crores. In this case observation of the Hon ble Supreme Court is aptly apply here. Therefore, we conclude that in this case interest free funds are sufficiently available with the assessee for investment. Hence, we delete the part disallowance by the CIT(A) u/s 14A and direct the AO to recompute the income accordingly. Assessee appeal allowed.
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2024 (10) TMI 929
Addition u/s 56(2)(viia) - property purchased by the assessee is having higher stamp duty value than consideration and therefore the provisions of section 56 (2) are attracted - assessee objected to the valuation report prepared by the district valuation officer as well as the stamp duty rate and requested the learned AO to refer the matter to the district valuation officer, but the district valuation officer reiterated the valuation made in case of seller of the property stating that there is no point in making once again the reference of the same property which was subject matter of transaction. HELD THAT:- According to the provisions of section 50C, if the assessee objects to the adoption of deemed sale consideration or deemed purchase consideration of any immovable property wherein the agreed consideration is compared with the stamp duty rate, the learned assessing officer is duty-bound to refer to the district valuation officer to make the valuation of the property. In this case though the learned assessing officer referred the matter to the district valuation officer for making a fresh valuation report, which was not adhered to by the DVO and reiterated the valuation made by him in case of a seller. If the AO does not obtain the valuation report, then the addition deserves to be deleted if the difference between the actual consideration and the stamp duty value is made in the hands of the assessee based on Asstt. CIT v. Tarun Agarwal [ 2018 (8) TMI 1989 - ITAT AGRA] and Ramesh Chandra Kulshresth Brothers HUF [ 2018 (10) TMI 1849 - ITAT AGRA] It cannot be said that the valuation made in the case of the seller would also be applicable in case of a buyer, this is so because if the seller does not represent anything before the learned district valuation officer, it will go against the buyer which is not permitted. Therefore, if the two parties to the same transaction, objects to the valuation, there perspective and reasons may be different than the others. Even otherwise if a perspective of either bur or seller is not considered it hampers the rights of that assessee. Section 50 C/ 56 (2) (viia) and Section 43CA does not provide that valuation made by the DVIO is qua the property , in fact it is qua the assessee. Thus, on this ground itself, when the ld. AO fails to obtain the Report of DVO of the impugned property after giving assessee opportunity of representing before DVO, addition so made is to be deleted. It cannot be said that the valuation made in the case of the seller would also be applicable in case of a buyer, this is so because if the seller does not represent anything before the learned district valuation officer, it will go against the buyer which is not permitted. Therefore, if the two parties to the same transaction, objects to the valuation, there perspective and reasons may be different than the others. Even otherwise if a perspective of either bur or seller is not considered it hampers the rights of that assessee. Section 50C/ 56 (2) (viia) and Section 43 CA does not provide that valuation made by the DVIO is qua the property , in fact it is qua the assessee. Thus, on this ground itself, when the ld. AO fails to obtain the Report of DVO of the impugned property after giving assessee opportunity of representing before DVO, addition so made is to be deleted. Valuation made by the district valuation officer did not give any deduction with respect to the above sum despite agreeing to the fact of improvement in the property - This fact also proves that the valuation report of obtaining the case of a seller cannot be always relevant also in case of the buyer. For this reason, also the addition cannot be made on the basis of the valuation report in case of a seller. It results into a failure of the learned assessing officer to obtain the valuation report in case of a buyer. As in the case of the seller the valuation adopted by the district valuation officer was automatically made applicable in the case of buyer. This report was also given by the assessing officer to the assessee prior to making a reference where the assessee raised an objection, when the valuation officer refuse to consider those objections, does not make the fresh valuation, naturally the report of the district valuation officer, cannot be used for making an addition in the hands of the assessee. This is in clear violation of provisions of section 142A (4) of the act. If we adjust the discount of the obstruction due to Lokhandwala Minerva construction where the property website and economic on the basis of reports shows 30% down fall in the price, if we consider only 7.5% downfall in the average sale price considered by the learned District valuation officer in its report of Rs. 352,440/- per square meter, the average square meter rates would be Rs. 325,000 per square meter. If the assessee is granted benefit of the 10% of the tolerance limit of the sale consideration which will come to Rs. 332,280 per square meter, no addition could be made in the hands of the assessee despite many infirmities in the procedure as well as on factual aspects. Decided in favour of assessee. Validity of reopening of assessment - formation relied upon by the learned assessing officer does not have any linkage with the appellant and without any tangible material and therefore the reopening of the assessment is invalid - HELD THAT:- We find that in view of the decision of the honourable Supreme Court in case of Union of India versus Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] the above issue does not remain for contention. Further there is a tangible material which shows that the report indicates that there is a difference between the consideration of the property and the stamp duty value of the property. Accordingly ground number 11 and 13 are dismissed. Notice u/s 148 of the Act has been issued by JAO instead of FAO - This issues is covered in favour of the assessee by the decision of Pravina Jagdish Patel [ 2024 (10) TMI 93 - BOMBAY HIGH COURT] and Hexaware [ 2024 (5) TMI 302 - BOMBAY HIGH COURT] where it is held that for a notice to be validly issued for reassessment under section 148, the revenue would need to be compliant with section 151A, which has been interpreted and analyzed in detail by in the case of Hexaware Technologies Ltd.[supra]. Thus, on this issue reopening of assessment is quashed. No approval by prescribed authority - This issue is squarely covered in favour of the assessee by the decision of the honourable Bombay High Court in case of Siemens financial services private limited [ 2023 (9) TMI 552 - BOMBAY HIGH COURT] wherein it has been held that when the approval is required to be taken by a prescribed authority, it has to be done in the same manner. However, in view of the decision of Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] the above decision of the honourable Bombay High Court has been reversed; therefore, ground number 12 of appeal is dismissed.
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2024 (10) TMI 928
TP Adjustment - royalty paid to non UK entities as the Assessee has not entered into APA/MPA proceedings for AY 2017-18 with UK entities - payment of royalty and the Assessee has entered into Mutual Agreement Procedure (MAP) with respect to the transactions with UK entities - HELD THAT:- It is the case of the Assessee that no royalty adjustment should be made with non-UK entities and alternatively has also prayed for application for APA/MPA signed for assessment year 2018-19 to 2022-23 for the year under consideration as well. Admittedly, for assessment year 2017-18 is not covered within APA period. The similar issue came for consideration for the assessment year 2013-14 wherein the Tribunal has remitted the matter to the file of the TPO to determine arm s length price of international transaction entered into by the Assessee with associated enterprise in Germany. Taking a consistent view of the matter, we remit the issue in dispute to the file of the AO/TPO for fresh consideration on similar lines. Appeal filed by the assessee is partly allowed for statistical purposes
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2024 (10) TMI 927
Validity of assessment u/s 153A or 147/148 - AO has made the addition on the basis of documents found during the course of search - HELD THAT:- We find considerable cogency in the contention of the AR that it is settled law that once a search has taken place u/s 132 of the Act or requisition is made u/s 132A then assessment proceedings in respect of the assessment years (earlier six years, now ten years) specified in section 153A has to be mandatorily initiated and completed u/s 153A - assessment proceedings cannot be initiated u/s 148/147 of the Act in respect of the assessment years covered u/s 153A of the Act. We find considerable cogency in the contention of the AR that it is settled law that once a search has taken place u/s 132 of the Act or requisition is made u/s 132A of the Act, then assessment proceedings in respect of the assessment years (earlier six years, now ten years) specified in section 153A has to be mandatorily initiated and completed u/s 153A. The assessment proceedings cannot be initiated u/s 148/147 of the Act in respect of the assessment years covered u/s 153A of the Act. The Hon ble Rajasthan High Court in the case of Shyam Sunder Khandelwal [ 2024 (4) TMI 196 - RAJASTHAN HIGH COURT] held that assessment/reassessment in Section 153A, 153C in cases of search or requisition has an overriding effect to the regular provisions for assessment or reassessment under Sections 139, 147, 148, 149, 151 153. In the case of Aditi Constructions [ 2023 (5) TMI 281 - BOMBAY HIGH COURT] has held that the specific provisions of section 153C would prevail over the general provisions of section 147. Decided in favour of assessee.
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2024 (10) TMI 926
Levy of penalty u/s 271FA - delay in filing the SFT [Statement of financial transactions] - there was a delay of 255 days in complying to the provisions of section 285BA - assessee not only failed to furnish the statement mandated u/s 285BA in time, but even after the notice was issued, it failed to comply for another 112 days - main submission of the assessee is that the return u/s 285BA(1) could not be filed on the ground that the assessee was unaware of the requirement of filing of Form SFT and submitted when it tried to file its return, the income tax portal was not working properly and therefore it had to file manually - HELD THAT:- On similar facts, Tribunal allowed the appeal in the case of Malda District Central Co-op Bank Ltd. [ 2016 (9) TMI 147 - ITAT KOLKATA ] and Durgapur Steel Peoples Cooperative Bank Ltd. [ 2016 (11) TMI 207 - ITAT KOLKATA ] by holding that such a breach was only technical or venial breach of the provisions of the Act and such a breach could have flown from a bona fide ignorance of the assessee that he was liable to act in a manner prescribed by the statute. Considering the submissions of the assessee, it is held that its explanation for not filing of the SFT return due to lack of knowledge is a bona fide explanation given the fact that the assessee had only one transaction to report in the return filed by it on 09.08.2019. Respectfully following the above decisions, the penalty u/s 271FA levied by the AO and confirmed by the Ld. CIT(A) is not sustainable and the same is deleted. Appeal of the assessee is allowed.
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2024 (10) TMI 925
Penalty levied u/s. 271(1)(c) - assessee had not offered Short Term Capital Gain u/s 50 on sale of depreciable fixed asset as its income in return of income or during the scrutiny proceedings - whether assessee had not filed inaccurate particulars of income? - HELD THAT:- If the disclosure of facts is incorrect or false to the knowledge of the assessee, and this fact is established, then such disclosure cannot take such assessee out from the purview of the act of concealment of particulars or furnishing inaccurate particulars for the purpose of levy of penalty. Penalty u/s 271(1)(c) is leviable if the AO is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. As noted that the Ld.AO placed reliance on the decision of Dharmendra Textile Processors [ 2008 (9) TMI 52 - SUPREME COURT] that dealt with the concept of mens rea in order to impose penalty for a breach of civil obligation and is not applicable to the present facts of the case. There is no case of concealment made out by the revenue, as all the necessary facts were available on record and the disallowance of the claim admitted to be withdrawn by the assessee in the quantum proceedings is due to a wrong claim made. Decided against revenue.
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2024 (10) TMI 924
Reassessment proceedings against deceased person - HELD THAT:- The factum of demise of assessee was already conveyed to the income tax department/revenue when survey u/s 133 was conducted. We also find that digital notice u/s 148 of the Act was issued on a dead assessee despite knowledge of fact to the revenue regarding death of assessee. We also note that the revenue did not take any step u/s 159 of the Act to bring on record the legal representatives of the deceased assessee. As decided in the case of Smt. Madhuben Kantilal Patel [ 2023 (2) TMI 272 - GUJARAT HIGH COURT] held that where the legal heirs of the assessee deceased had supplied information of death to the revenue and despite reopening notice issued subsequently u/s 148 in the name of deceased was illegal and thus liable to be set aside. Similarly, in the case of Savita Kapila [ 2020 (7) TMI 441 - DELHI HIGH COURT] has quashed the notice u/s 148 of the Act on a dead person. Assessee appeal allowed.
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2024 (10) TMI 923
Assessment u/s 153A - additions solely based on a sketchy statement of accountant u/s 132(4) - such statement is, in turn, based on confessional statement of the director in the previous search carried out in the case of Shri Praveen Kumar Jain - whether incriminating material discovered during the search or not? - HELD THAT:- As pointed out on behalf of the assessee, we observe that admittedly, no demonstrable incriminating material has been found in the course of search in the case of the assessee carried out in June, 2017. The statement of Shri Praveen Kumar Jain given in the previous search in the search case of Shri Praveen Kumar Jain on 01.10.2013 was confronted to the accountant of the assessee in the present search and certain confessions were obtained. The statement of Shri Praveen Kumar Jain was thus adopted for the purposes of additions u/s 153A of the Act proceedings in the case of the assessee. The same statement was the basis for assessment under section 153C of the Act previously carried out in the case of the assessee. The issue already stood resolved in favour of the assessee by the ITAT in the earlier proceedings u/s 153C of the Act. In view of the judgment delivered in the case of Pr. CIT vs. Abhisar Builwell Pvt. Ltd [ 2023 (4) TMI 1056 - SUPREME COURT ] it is trite that in the absence of incriminating material found in the course of search, the legal foundation for making additions under section 153A in unabated assessment do not exist. Coupled with this, mere statement of a person under section 132(4) of the Act in the course of search, by itself, cannot be regarded as incriminating material found in the course of search as held in the case of Pavitra Realcon Pvt. Ltd. and Anand Kumar Jain (HUF) [ 2021 (3) TMI 8 - DELHI HIGH COURT ]. The additions made on the basis of confessional statement without other material is thus unsustainable in law. Thus, seen from any angle, additions made under section 153A of the Act for the captioned appeals are not permissible in law. Assessee appeal allowed.
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2024 (10) TMI 922
Exemption u/s 11 - Violation of Section 13 regarding loans and advances to related parties - assessee has diverted the funds of the trust and thereby violated third and 14th proviso to Section 10(23C)(vi) - funds are diverted for the benefit of the trustees and the associates concerns of the trustee - whether the advance given to M/s Samarth Vivdhlaxi Seva Trust is in violation of provisions of Sections 11 to 13 of the Act or not? - HELD THAT:- We do not find that the provisions of the income tax act are violated when the assessee has given an advance to another trust having the common object and also registered u/s 12AA of the act though having the common trustees. Even otherwise, if there is a violation of section 13 of the trust if the loan is given to another trust, an addition of Rs. 40,20,000/- on account of notional interest @ 12 % per annum only Rs. 3.35 crores advance to the above trust, could not have been made. In fact, if assessee is found to be in violation of Rs. 3.35 crores then assessee trust is charged to tax at maximum marginal rate at Rs. 3.35 crores and not only on 12% of such income. Therefore, also we do not find any infirmity in the order of CIT(A) in deleting the addition. Assessee has paid a security deposit - For the purpose of deciding the benefit one has to compare the Apple with the Apple and not oranges with the Apple. Against this the learned assessing officer has categorically cited a comparable instance of the property having four times more value than the impugned property at substantially lower and without deposit. AO on submission of such details by the assessee of comparable instance, then decide the issue afresh whether there is any benefit to the trustees or not. If, no benefit is found to be accruing to the trustees on comparable of similar instance, the denial of exemption to the assessee is not permissible. If, benefit accrued to the trustee by giving such a huge deposit in the form of security deposit, then on the amount of security deposit, the tax at the maximum marginal rate is required to be charged - Thus restore this issue back to the file of the learned assessing officer. Advance given by the assessee trust to Mr. Manish Vyas and Mrs.Asha Vyas - AO held that amount of advance given is clear cut violation of Section 13(1)(c) and, therefore, he imputed 12% thereon charged with interest income to the maximum marginal rate - We restore this issue back to the file of AO to consider that amount paid by the assessee as a loan to Mr. Manish Vyas and Mrs.Asha Vyas is a direct benefit to the trustees of the trust which is in clear-cut violation of the provisions of section 13 (1) (c) of the act. However as only opening and closing balances are considered by the assessing officer, the peak amount of loan for each year is required to be considered for the purpose of taxation at the maximum marginal rate. Because of the reason that the assessee has not given us the Ledger with balances, this issue needs to be restored back. AO after examination decide the issue in accordance with the above directions. Allowing the capital expenditure to the assessee - We find that the learned assessing officer is not correct in not granting benefit of this capital expenditure to the assessee because if the capital expenditure is utilized for the object of the trust, the assessee trust is entitled to such deduction. Accordingly, this ground of appeal is dismissed.
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2024 (10) TMI 921
Addition u/s 50C - reference to DVO - difference between collector rate as compared to sale consideration mentioned in the sale deeds in respect of property sold by the assessee along with others, wherein, the assessee had share of 11.277% - HELD THAT:- We find that so far as the contention regarding the fair market value on the date of sale is concerned, the report of the DVO in the case of another assessee relating to the same property and regarding the same transaction has been produced before us, wherein, fair market value of the property as on the date of sale has been mentioned at Rs. 7,50,15,600/-. We are inclined to accept the said value as the fair market value of the property as on the date of sale. We order accordingly. Cost of acquisition as on 01.04.1981 - The assessee in the case in hand has disputed the same and also furnished the report of the registered valuer. Neither the DVO nor the AO has pointed out any defect or infirmity in the same, rather, they have completely ignored the same and took the fair market value as on 01.04.1981 at Rs. 38.22 lakhs. So far as, the fair market value as on 01.04.1981 in the case of co-sharer is concerned, the ld. AR has submitted that in the said case, the co-sharer did not dispute the same. However, in the case of the assessee, the assessee has categorically disputed the same and has also furnished the report of the registered valuer. Considering the above submissions and totality of facts and circumstances, the cost of acquisition as on 01.04.1981 is directed to be taken as per the value estimated by the registered valuer i.e. at Rs. 1,51,94,000/-. AO is accordingly directed to compute the capital gains in the case of the assessee.
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2024 (10) TMI 920
Rejection of application for registration u/s 12A(1)(ac)(iii) - assessee appellant has not complied with notices served mainly through ITBA portal - HELD THAT:- In the case of Amrut Antimdham Charitable Trust [ 2024 (7) TMI 444 - ITAT AHMEDABAD ] had observed that where assessee-trust failed to file documentary evidences to enable Commissioner to be satisfied about genuineness of activities of assessee and to verify if its activities were in consonance with its objects, Commissioner was justified in rejecting application for registration u/s 12AB as not maintainable in law. As per the amended mandate, under the provisions of Section 12A(1)(ac)(iii) of the Act where the trust or institution has been provisionally registered u/s 12AB of the Act, has to make an application for registration u/s 12AB within six months of commencement of activities. In the absence of required submission from the applicant it is not possible for the CIT(E) to ascertain that the activities carried out by the applicant are in accordance with its objects and genuineness in consonance with the stated objects as per MoA. In the present case, the CIT(E) clearly recorded that the assessee failed to furnish any detail pursuant to the notices dated 13.11.2023; 22.12.2023 and 09.01.2024. In the absence of any details, CIT(E) was unable to satisfy himself with the genuineness of the activities carried out by the assessee. In the absence of any details before the CIT(E), the grounds raised by the assessee are found to be devoid of merits and the case law relied by the assessee are not applicable in the facts of the present case. PCIT while considering applications for grant of registration u/s 12AA, is not bound to examine not only objects of institutions or society trust, to ascertain genuineness, he is also free to call for books of accounts or other such documents for recording satisfaction where society, trust or institution genuinely seeks to achieve object which it professes. AR contention that appellant has been carrying out such charitable activities which has been discernible with the expenditure incurred and source of funds thereof. In our view, the appellant is required to produce the desired details as show caused by the Ld. CIT(E) to arrive at the necessary satisfaction on charitable objectives viz-a-viz genuineness of activities as per the MoA. We set aside the impugned order of CIT(E) and direct him CIT(E) to pass a de novo order in accordance with law after providing reasonable opportunity to the assessee and after giving due consideration to the submissions made by the assessee. We specifically direct CIT(E) to give findings on charitable objects of the assessee trust and on genuineness of the charitable activities of the assessee. Appeal filed by the assessee s is allowed for statistical purposes.
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2024 (10) TMI 919
Revision u/s 263 - Non-allowance of provision for standard assets u/s 36(1)(viia) (c) - HELD THAT:- PCIT is of the view that section 36 starts with in respect of any provision for bad and doubtful debts and therefore, the deduction is allowable only for the bad and doubtful debts, whereas, the assessee has claimed the deduction on standard assets as well. During the course of hearing the AR presented case laws where it has been held that deduction u/s 36(1)(viia) is allowable for the entire provision made as per RBI circular including the provision towards standard assets. DR also fairly submitted that the allowability of the deduction as claimed by the assessee is a debatable issue. There is merit in the contention that whether the provision made by the assessee towards standard assets is allowable u/s 36(1)(viia) is a debatable issue and that the AO while allowing the deduction the order passed has taken a possible view upon verifying the details available on record. On the contention of the PCIT that the AO has not specifically enquired into the allowability of the claim of the deduction on standard assets u/s 36(1)(viia) we notice that the AO has raised a specific query on the same and the assessee has filed the relevant reply for the same. Therefore, it cannot be stated that the AO has not made enquiry into the issue of allowability of the claim of the deduction on standard assets u/s 36(1)(viia). Assessee has no control over the way an assessment order is drafted and generally, the issues which are accepted do not find mention in the assessment order and only such points are taken note of on which the assessee's explanations are rejected and additions/ disallowances are made. In our considered view the error envisaged by section 263 of the Act should actually be an error either of fact or of law and in the given case the PCIT has not brought anything on record to show that the deduction claimed by the assessee has been erroneously claimed under the law or any material to show that there been an error in the order that is prejudicial to the interest of the revenue. As in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] we hold that the conclusion of the PCIT that the order passed by the AO is erroneous is not tenable and liable to be quashed. Assessee appeal allowed.
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2024 (10) TMI 918
Denial of exemption u/s 11 - violation of provisions of section 13(1)(d) - assessee has received the dividend income f rom its holdings as exempt u/s 10(34) - AO invoked the provisions of section 13(1)(d) to hold that the of the assessee trust has invested otherwise than in forms or modes specified u/s 11(5) - HELD THAT:-Holding of the assessee Trust as of 31.03.2014 mainly consists of bonus shares and that the acquisitions prior to 01.03.1983 are not continued to be held (refer Sale Gifts above). Therefore in our considered view there is merit in the submission that the provisions of section 13(1)(d)(ii) is not applicable to assessee's case and that the holdings in Tata Sons Ltd., are covered by the exception as provided in section 13(1)(d). One more argument of the ld AR is that the shares of Tata Sons Ltd., are not acquired as investments using the fund of the assessee Trust but received as corpus donations and on that count also section 13(1)(d) is not applicable. AR also argued that the shares were received at the time of formation of the Trust which goes to prove that it forms part of the corpus of the assessee Trust - AR also made a without prejudice submission that even if the dividend income is held to be taxable for violation of section 11(5), it is otherwise exempt under section 10(34) which the AO has denied saying the Trust is not entitled to claim exemption u/s 10(34). Thus we hold that the AO is not correct in denying the benefit of section 11 to the assessee on the ground that section 13(1)(d) is applicable in assessee's case. Violation of section 13(2)(h) - founder trust of the assessee has invested in a concern in which he was the Chairman and that he is having substantial interest in Tata Sons Ltd. - Tata Sons Ltd. is an interested party in terms of section 13(3)(b) of the Act as it has contributed more than Rs. 50,000/- to the assessee - HELD THAT:- The facts for the year under consideration is that none of Trustees including Mr.Ratan Tata is holding more than 20% of the voting powers in Tata Sons Ltd and therefore as per the provisions of explanation 3 to section 13, there is no violation of provisions of section 13(2)(h). As we note from the decision of JRD Trust [ 2019 (10) TMI 305 - ITAT MUMBAI] that being a chairman in a company would not amount to holding substantial interest therein as per explanation to section 13(3). It is also relevant to note that the contention of the revenue that Tata Sons Ltd. has contributed more than Rs. 50,000/- is not supported by any evidence and the revenue did not bring anything on record to substantiate the same. In view of these discussions and considering the above decisions of the Tribunal we hold that the provisions of section 13(2)(h) cannot be applied in assessee's case and the benefit of section 11 cannot be denied for that reason. As already held that the benefit under section 11 cannot be denied to the assessee on the ground on violation of section 13(1)(d) 13(2)(h). Therefore, the deduction allowed towards application of funds on the ground that assessee is not entitled for exemption under section 11 is not sustainable. Accordingly the AO is directed to allow the deduction claimed by the assessee towards application of funds. It is ordered accordingly. Violation of provisions of section 13(1)(c) - Trustees of assessee Trust have received certain payments towards there past services from Tata Sons Ltd whose shares are held as corpus in assessee's Trust - HELD THAT:- In assessee's case we are unable to appreciate how the AO applied the said provisions for the reason certain payment received by the Trustee. The payments are received for the past services rendered by the Trustees from Tata Sons Ltd, and there is no application/use of the income of the assessee. Therefore on the plain facts itself we are of the view that the AO is not correct in invoking the provisions of section 13(1)(c) of the Act. Violation of section 2(15) - assessee engaged in business by having control over the business of Tata Sons Ltd. - AO drew this conclusion from the fact that the assessee Trust is holding 23.56% of the shareholding in Tata Sons Ltd., and that one of the ex-Directors of Tata Sons Ltd. had submitted certain documents in support of the allegation that the business of Tata Sons Ltd., is controlled by the Trustees of the assessee Trust - HELD THAT:- There is merit in the submission that the right to nominate persons to be a director of Tata Sons Ltd., is to protect the interest of assessee Trust and the numerous beneficiaries who are benefitted by the activities of the Trust by utilizing the Dividend earned from Tata Sons Ltd., which is a major source of income for the assessee Trust. The fact that the income of the Trust consists of Dividend and other donations and does not include any income from business proves that the assessee is not engaged in any activity in the nature of business. Further the income of Tata Sons Ltd is taxed in its own hand and not in the hands of the assessee also supports the contention that the assessee Trust is not engaged in any business activity - we hold that the Trust is not hit by the proviso to section 2(15) of the Act and accordingly, exemption under section 11 of the Act cannot be denied to the assessee Trust. Assessee appeal allowed.
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2024 (10) TMI 917
Rejection of books of accounts - non-maintenance of the stock register - estimation of gross profit on trading of oil - HELD THAT:- On perusal of the material on record, we find that the Appellant has offered to tax gross profits at the rate of around 27% which were in excess of profits of gross profit of 22.5% estimated by the Assessing Officer in relation the business of manufacture of wafer snack. Accordingly, we accept the contention of the Appellant that in the facts and circumstances of the present case no addition was warranted in respect of business of manufacture of wafer farsan. As regards, the business of trading in edible oil, the contention of the Appellant that the Appellant had offered to tax gross profits at the rate of INR 5.6% which were higher than the average industry gross profit rate of 3.25% was not disputed by the Assessing Officer. Thus, no addition was warranted in the hand of the Appellant. Our view draws support from the decision of Mohommad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT ] We delete the addition made by the Assessing Officer. Ground raised by the Appellant is allowed.
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2024 (10) TMI 916
Revision u/s 263 - assessee while filing the return of income had included excess stock of Diamonds found during the course of survey action under the head Income from Other Sources and has paid normal tax - PCIT was of the view that since the assessee has accepted the said income towards unexplained stock of loose diamonds the income should be added u/s 69B as unexplained investments and to be taxed u/s 115BBE - HELD THAT:- AO completed the assessment by making certain small additions. It is relevant to mention here that the AO in the assessment order has not mentioned anything about the survey operations conducted in assessee's case and nothing is stated with regard to the income offered towards unexplained stock of diamonds. The argument of the assessee is that the AO has examined and has taken a conscious decision to accept the income declared. However we are unable appreciate this contention of the assessee since the AO's order does not even mention the fact that there has been survey and therefore the claim that the AO has applied his mind while accepting the income offered by the assessee towards unexplained diamonds found during survey does not have merit. As decided in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] held that non- enquiry before allowing the claim would make the order of the AO amenable to jurisdiction u/s 263 - In the given case, the ld AR did not bring anything on record to show that the AO has raised any query with regard to the income declared by the assessee from the survey operations and that the assessee furnished any details which were examined by the AO. AO has completely ignored the fact that the assessee was subject to survey and has declared certain income under the head Income from Other Sources towards unexplained stock found during survey. Therefore in our considered view the PCIT is justified in invoking the powers of revision under section 263 on the ground that the AO has not done any proper enquiry which ought to have been done. Whether the income should be subject to normal tax or under section 115BBE since the AO has not examined the issue at all we modify the order passed u/s. 263 with a direction to the AO to examine the issue afresh by calling for the relevant details and decide the taxability of the income offered during survey in accordance with law. Appeal by the assessee is dismissed.
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2024 (10) TMI 915
Estimation of income - bogus purchases - valid parameter for determining the amount of profits embedded in purchases made from grey market - HELD THAT:- We note that in the present case it has been contended by the Assessee that the Assessee has disclosed overall gross profit margin of 50.77%. Accordingly, keeping in view the above judgment of Mohommad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] the AO is directed to compute/verify the gross profit margin declared/computed by the Assessee in respect of the genuine purchases as well as the alleged bogus purchases; and thereafter, restrict the quantum of addition sustained by the CIT(A) to the differential amount determined by taking into consideration the difference, if any, in the aforesaid gross profit margins. Assessee is also directed to co-operate and provide to the Assessing Officer the computation of gross profit margins to implement the aforesaid directions of the Tribunal - Assessee ground allowed for statistical purposes.
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2024 (10) TMI 914
Rectification u/s 154 - validity of order u/s 143(3) - HELD THAT:- As already come on record that the learned assessing authority had duly accepted the assessee s sec.154 rectification petition thereby followed by re-computation of her taxable income either. That being the case, we quote TS Balram, ITO vs. Volkart Brothers [ 1971 (8) TMI 3 - SUPREME COURT] that the assessee s sole ground in the instant appeal in fact involve detailed investigation/enquiries which is no more permissible u/sec.154 rectification proceedings as the latter provision is meant to deal with the mistakes apparent on record. Assessee appeal dismissed.
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Customs
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2024 (10) TMI 913
Classification of goods on the basis of use - Goods imported ground glass described as BIOMIN F-Ground Glass (Fluoro Calcium Phospho-Silicate) and BIOMIN C-Glass (Chloro Calcium Phospho-Silicate) - used in the manufacture of toothpaste - classified under Customs Tariff Item (CTI) 3207 4000 Or under CTI 3824 9990 - it was held by CESTAT that ' the products under consideration i.e., (i) BIOMIN F-Ground Glass (Fluoro Calcium Phospho-Silicate) and (ii) BIOMIN C-Glass (Chloro Calcium Phospho-Silicate) would appropriately be classifiable under Customs Tariff Item (CTI) 3207 40 00 and not under CTI 3824 99 90, as claimed by Revenue. Further, we also conclude that there no separate classification required to be adopted in respect of (iii) plastic pallets used as packing container or packing material, when presented along with the imported goods.' HELD THAT:- There are no merit in this appeal - The Civil Appeal is hence dismissed.
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2024 (10) TMI 912
Challenge to SCN issued u/s 28, 124, etc. of the Customs Act primarily on the ground of delay in adjudicating the show cause notice until today - HELD THAT:- The issue of delay in adjudication of the show cause notice came up for consideration in the cases of Sanghvi Reconditioners Pvt. Ltd. [ 2017 (12) TMI 906 - BOMBAY HIGH COURT] and Reliance Industries Ltd. [ 2020 (1) TMI 283 - BOMBAY HIGH COURT] , and this Court quashed the show cause notice on the ground of delay in adjudication of the said notice. In our view, the petitioner s case stands on a firmer footing because in the case of the petitioner, the delay is more than 20 years from the date of the show cause notice, whereas, in the case of Sanghvi Reconditioners Pvt. Ltd. and Reliance Industries Ltd., the delay was of 15 years since show cause notice was quashed in the year 2017. Merely because the petitioner did not file the writ petition after the order was passed in the cases of Sanghvi Reconditioners Pvt. Ltd. and Reliance Industries Ltd. but has filed the petition now, the same cannot be a ground for not following the ratio of the decision rendered in the case of co-noticees. In the absence of the assessee being informed about his case being transferred to the call book, justification for the delay in adjudication cannot be accepted. Petition disposed off.
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2024 (10) TMI 911
Exemption benefit of N/N. 50/2017-Cus dated 30.06.2017, entry at Sl. No. 512 - It is alleged that the appellant has used the imported goods (parts, components, accessories etc.) received on concessional rate of customs duty in terms of N/N. 50/2017 dated 30.06.2017 not for the manufacture of Lithium-ion battery but for manufacturing the power bank - HELD THAT:- The benefit of exemption to components, parts and accessories to be imported at concessional rate of duty since is based on observance and compliance of IGCR Rules, 2017, therefore the term manufacture appearing in Notification No. 50/2017 dated 30.06.2017 in its entry at S.No. 512 has to be interpreted by taking into consideration the provision of Rule 3 (e) of IGCR Rules, 2017. The term cell and battery are used inter changeably, however both are quite different. Cell is a single unit device which convert chemical energy into electrical energy whereas battery is a group of such cells. Depending upon the type of electro lights used in the cell. The cell is either wet or dry. Whereas battery is either a primary battery or a secondary battery i.e. a chargeable or nonchargeable battery. Cell is a single unit and battery is a combination of those single units - the term manufacture of Rule 3(e) IGCR, 2017 gets satisfied at the time of emergence of battery as distinct from its component i.e. individual lithiumcell and others. From the case law as quoted above about interpretation of a notification, it is clear that definition of Manufacture as given in IGCR Rules, 2017, the scope thereof cannot be enlarged from the stage of emergence of new product to the stage of manufacture of final product which is Power Bank in the present case. Coming back to Entry No. 512, it is observed that the exemption is available when the imported parts and components are used in manufacture of lithium batteries. The notification is nowhere requiring the Lithium Ion Battery to be manufactured as the final product of the importer. This observation and definition of manufacture under IGCR Rules, 2017 a joint reading, is sufficient for us to hold that the Entry No. 512, the term manufacture therein, has not to be understood/interpreted in terms of the definition of manufacture given under Excise Act, 1944 - since the appellant has used the imported parts and components in manufacture of Lithium Ion Battery which irrespective the battery has been captively used to manufacture power bank and irrespective that power bank has a slight different connotation from Lithium Ion Battery despite having the same function as that of Lithium Ion Battery, the appellant entitled for the benefit of exemption of Entry No. 512 of Notification 50/2017 dated 30.06.2017. It is evident that w.e.f. 29.01.2019, lithium-ion cells were taken out of the scope of Serial No. 512 of N/N. 50/2017-Cus and placed in a separate entry 17B of N/N. 02/2019 where those were made chargeable to duty at the rate of 5%. Conversely, Lithium-ion cells were squarely covered within the ambit of Sr. No. 512 prior to 29.01.2019 and were eligible for exemption. Hence, the amendment made vide Notification Nos. 02/2019-Cus and 03/2019- Cus both dated 29.01.2019 clearly manifest that before the amendment, subject goods were exempted vide Notification No. 50/2017-Cus. Post the above amendment, the subject goods have been withdrawn from exemption notification and have been placed under the duty rate of 5%. The power bank performs the same function of storing and transfering electrical energy, it being a Lithium Ion Battery that is a combination of Lithium Ion Cells,however, connected to a printed circuit board which is meant for converting the 3.7 volt stored energy to 5 volt energy as is required by the gadget to be charged through the said power bank working on Lithium Ion Battery. It also stands established that it is only the printed circuit board(PCBA) which distinguishes a generic Lithium Ion Battery from power bank. Appellant is admittedly paying Customs Duty on the import of said PCBA - any productcalled Power Bank was not known to trade nor to HSN during the relevant time. As brought to notice, there was a TRU circular dated 26.04.2017 wherein it was clarified that the power banks merits classification as an accumulator under Heading 8507 of the Customs Tariff Act and the chapter heading 8507 covers Lithium Ion Accumulator. It is held that from the raw material imported by the appellant at concessional/ exempted rate of customs Duty in terms of Notification No. 50/2017 dated 30.06.2017 has been utilised by them to manufacture Lithium Ion Battery (Accumulator) which has been captively used by them to manufacture Power Bank . Hence it is held that appellants have rightly claimed the exemption. The appellant since has duly complied with the condition no. 9 of the Notification No. 50/2017, the appellant is entitled for the benefit of exemption of the said Notification No. 50/2017 dated 30.06.2017. Though Notification No. 02/2019 dated 29.01.2019 distinguished Lithium ion Battery from Power Bank but the first time in January 2019 i.e. after the period in question duty demand is not sustainable, as notification cannot be given retrospective effect. The impugned show cause notice is also held being barred by limitation. The said demand is also liable to be set aside on this ground as well. The order under challenge is hereby set aside - Appeal allowed.
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2024 (10) TMI 910
Smuggling - Confiscation of Red Sanders attempted to be exported - levy of penalties under CA, 1962 - rejection of declared value - redetermination of value. Levy of penalty u/s 114 of CA - HELD THAT:- The goods were mis-declared in the baggage declaration which is an entry made under the Customs Act and the goods were prohibited for export. Both these factors rendered the goods liable for confiscation. The baggage declaration itself was filed in the name of Shri Vipin Dua who had nothing to do with the consignment. However, this consignment could not have been exported unless an airway bill was also filed which is the requirement of the airlines. The airway bill was filed in the name of M/s Sikki Auto Pvt. Ltd. the fictitious company (M/s Seiki Auto a company which exists at the address and nothing to do with the consignment). Since the name of the consignor/consignee and the description of the goods in the airway bill and the baggage declaration were different, two letters were filed and the name of the consignor and consignee and the description of the goods in the airway bill were changed to match the description in the baggage declaration. Several persons were involved in this scheme and Shri Mayank Gupta s role in the entire operation is that of filing the airway bills themselves. Without the airway bill being filed by Shri Mayank Gupta in the name of a fictitious company the entire fraud would not have been possible. There is no error in the Commissioner imposing penalty on Shri Mayank Gupta under section 114 of the Act. It also needs to be noted that section 114 does not require the intent of an individual to be established. The act or omission which rendered the goods liable for confiscation under section 113 of the Act is sufficient. Penalty on Shri Mayank Gupta under section 114AA of the Act - HELD THAT:- The document for the purpose of the Act in this case was the baggage declaration which was not filed by Shri Mayank Gupta. The airway bill is not a document filed under the Act but is a document required by the airlines. It is the counterpart of bill of lading filed for transport by ships. Although the airway bill is an essential document to take the goods out of the country it is not the document filed under the Act. In view of the above, the Commissioner was correct in not imposing a penalty on Shri Mayank Gupta under section 114AA of the Act. Penalty of Shri Ravindra Kumar - HELD THAT:- There is no dispute that red sanders were attempted to be exported using fake baggage declarations filed in the name of Shri Vipin Dua without his knowledge and fake airway bills filed in the name of fictitious company M/s Sikki Auto. Later, in order to align the two documents, letters were given to change the consignor, consignee and description of goods in the airway bill. Shri Ravindra Kumar was a key player in arranging the fake airway bills through Shri Mayank Gupta at the behest of Shri Sarvesh Kumar. We have no manner of doubt that but for these actions of Ravindra Kumar the attempted export of red sanders would not have been possible. Therefore, the Commissioner was correct in imposing penalty under section 114 of the Act on Shri Ravindra Kumar. Penalty under section 114 AA of the Act - HELD THAT:- This can be imposed only if the knowledge of the person is established and the mis-declaration was in respect of a document filed for the purposes of the Act. In this case, the document filed for the purpose of Act is the baggage declaration. The role of Shri Ravindra Kumar was in getting the airway bill filed which was the document related to the airlines. Therefore, no penalty was imposable on section 114AA of the Act. The Commissioner was correct in not imposing penalty on him under this section. Penalty under section 114AA of the Act on Shri Sarvesh Kumar - HELD THAT:- There are no hesitation in holding Shri Sarvesh Kumar was liable for penalty under section 114AA of the Act for the mis-declarations in the baggage declaration. In our considered view, Commissioner erred in not imposing the penalty under section 114AA of the Act on Shri Sarvesh Kumar. The value of the goods admitted to be exported was Rs. 2,00,00,306/-. Section 114AA of the Act provides for imposition of the penalty not exceeding five times the value of the goods for mis-declaration. No minimum penalty is stipulated under this section. Considering the role of Shri Sarvesh Kumar, it is found appropriate to impose penalty of Rs. 75,00,000/- on Shri Sarvesh Kumar under section 114AA of the Act. Penalty on Krishna Chandra Jha under section 114AA of the Act - HELD THAT:- There are no manner of doubt that Shri Krishna Chandra Jha was not only a co-player but had full knowledge of the entire fraud being perpetuated. Since the baggage declaration was filed in the Custom House, any mis-declaration in it with knowledge attracts penalty under section 114AA of the Act. The Commissioner erred in not imposing the penalty under section 114AA of the Act on Shri Krishna Chandra Jha. Considering his role, it is found appropriate to impose a penalty of Rs. 50,00,000/- under section 114AA of the Act on Shri Krishna Chandra Jha. Appeal disposed off.
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2024 (10) TMI 909
Recovery of differential duty with penalty - suppression of fact of the fire accident which had occurred in their factory premises on 10.6.2011 with an intention to evade payment of customs duty - HELD THAT:- The charge by revenue that the appellant claimed insurance for the goods destroyed by fire shows that the fire accident and loss of goods has been correctly made by the appellant and it was not a case of a false claim. The department should have examined the survey report and the insurance Co s final settlement order before coming to a conclusion. The survey report No. MSPL/F/UH/6217/SE/2011 dt 14/11/2011 is quite detailed and has not been shown to be false. There is no allegation that the goods on which duty was demanded had been diverted for other purposes. Hence this charge does not hold good. No proof has been submitted by revenue that the appellant had received insurance money towards the tax amounts involved. The appellant has stated that their claim for CVD and ED was disallowed and the claim for the damage for material alone was accepted - Merely stating that the appellant claimed insurance including the taxes paid on goods with an intention to get double benefit, will not suffice. Revenue should have proved their case with documentary proof, which could easily have been collected. However, with the survey report stating to the contrary, this charge of revenue is rejected. A Coordinate Bench of this Tribunal in NATIONAL ORGANIC CHEMICAL INDUS. LTD. VERSUS CC., (IMPORT), MUMBAI [ 1999 (5) TMI 388 - CEGAT, MUMBAI] held that the benefit of the Notification concerned, could not be denied in respect of goods which were intended for use for manufacture of the final product but could not be so used due to shortage or leakage. The demand cannot sustain, and the question of imposing fine and penalty does not arise. The impugned orders are set aside - Appeal allowed.
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2024 (10) TMI 908
Ineligible exemption benefit of N/N. 11/97-Cus dated 01.03.1997, entry on S.No. 78 - mis-declaration of imported goods as printing paper instead of newsprint - SCN issued after a significant delay - Extended period of limitation - HELD THAT:- The test reports of CPPRI, Saharanpur has contradictory findings vis- -vis CRCL, Pusa reports. Also it is not clear as to why, after release of 100% goods, report from another lab were required. Apparently no intimation of second testing, as required, was sent to the respondent-assessee. There is nothing on record to show that which samples were sent to Saharanpur lab and when those were drawn. Still the test report of CPPRI, Saharanpur have been relied upon by the department while issuing the Show Cause Notice with allegations to say that the ash content is less than 8%. Since the ash content is absolutely irrelevant for the above entry, it is held that the ash content was unnecessarily discussed in those reports, despite that mechanical wood pulp is the criteria for classification of paper under Chapter 48.02. The test report of Saharanpur, despite it is reporting mechanical wood pulp be more than 70% was wrongly made the basis of denying the imported goods to be printing paper. It is also observed that even the detention certificates of the period August, 1997 to December 1997 specifically mentions that the importer was not found at fault. Above all the test bonds as were furnished by the assessee-respondent were all cancelled by the department while releasing the goods/printing paper of CTH 4802.60 - even the detention certificates of the period August, 1997 to December 1997 specifically mentions that the importer was not found at fault - all the test bonds as were furnished by the assessee-respondent were all cancelled by the department while releasing the goods/printing paper of CTH 4802.60. There is no proof/bagger with the department to get the samples tested from the Lab at Saharanpur. There is also no proof as to which samples were sent to Saharanpur, and the reason to doubt the report of CRCL, Pusa, which is the department s own laboratory. No additional document is produced by the department to justify the subsequent drawing of samples, if any, that too at the back of importer. There is no additional document produced by the department which may falsify their own documents which had come in existence prior to sending the samples to CPPRI, Saharanpur. This is sufficient for us to hold that CPPRI, Saharanpur Report is an afterthought, which has no basis. The report cannot be relied also for the reason that it has been obtained at the back of the respondent and is contradictory to the report which was already accepted and acted upon by the department itself. No opportunity of representation, against a contrary report, was given to the importer-respondent. It stands clear that the proper procedure was not followed while obtaining the report from CRCL, Saharanpur. The reports cannot be accepted to the prejudice of the importer-respondent. In view of lack of evidence in support of CPPRI, Saharanpur report, and no other document than what have been already produced and discussed, there are no justification in remanding the matter back to the adjudication authority. The department itself had acted upon the test reports of CRCL, Pusa, Delhi and had finally released the goods by January 1998 itself. The show cause notice of July 2002 based on the subsequent report which is not legally sustainable and have no fate other than it being rejected. There can be no proper findings on such show cause notice in the absence of any document with department to reopen department s earlier assessment. There are no infirmity in the order under challenge - appeal dismissed.
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2024 (10) TMI 907
Seeking refund of excess amount by filing a refund application or by seeking amendment in the bill of entry regarding the exemption Notification under the provisions of Section 149 or 154 of Customs Act, 1962 - HELD THAT:- It is well settled that refund under section 27 of Customs Act, 1962 can be made only if assessment is modified under Section 128 or under other relevant provisions of the Act. Any other provision cannot be limited to provisions of Section 17, 18, 28 128 of Customs Act, 1962 as submitted by Learned AR, but include other provisions like Section 149 for amendment of document or section 154 of the Customs Act, 1962 for correction of clerical error, etc. If review of the assessment is limited to Section 128 of the Act, other provisions like section 149 meant for amendment of document, section 154 for correction of clerical error and provisions of Section 28 of the Customs Act, 1962 to recover duty short paid by the importer will become redundant. Thus even if the bill of entry is self-assessed, importer can seek amendment of bill of entry under Section 149 of the Customs Act, 1962 and respondent has to consider such request in accordance with law. There is no request made before the adjudication authority initially to rectify the mistake and when the said request was rejected, appellant filed the appeal challenging the order on the ground that the adjudication authority ought to have corrected the omission as a clerical error under Section 154 of the Customs Act, 1962 and to reassess the duty by permitting amendment of bill of entry as sought by the appellant. Considering the above and in the absence of any request seeking amendment of bill of entry under Section 154 of the Customs Act, 1962, the issue is squarely covered by the judgment of the Hon ble Supreme Court in the matter of ITC Ltd. [ 2019 (9) TMI 802 - SUPREME COURT] , and adjudication authority has rightly rejected the refund claim. The Appellate authority has held that in the absence of any grievance on the part of the Appellant or speaking order from the proper officer, hands are tied and no ground for interference in terms of Section 128 of the Customs Act, 1962. However Appellate authority failed to appreciate that the impugned order was issued by proper officer, who is empowered to allow such corrections as per the provision of Section 149 of the Customs Act, 1962. No other objections were raised by the respondent to amend the bill of entry to avail the benefit of Notification No. 12/2012 instead of Notification No. 18/2012 both dated 17.03.2012. Appeal disposed off.
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Corporate Laws
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2024 (10) TMI 906
Amendment of amalgamation scheme - Rejection of application for amendment of the Scheme of Amalgamation - miniscule change in the swap ratio of the Transferor Companies - HELD THAT:- In Maccaferri Environmental Solutions Private Limited [ 2008 (7) TMI 1126 - PUNJAB AND HARYANA HIGH COURT ], sanction was sought to amend the scheme by changing the appointed date which also necessitated a change in the swap ratio. Sanction was accorded to the same by the Ld NCLT Mumbai bench and the proposed amendments were allowed. In IN THE MATTER OF SCHEME OF AMALGAMATION OF OBEROI CONSTRUCTIONS LIMITED AND ORS. [ 2024 (2) TMI 1444 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI] , amendments were sought to the original Scheme to the effect that amongst the five petitioner companies, the fourth and the fifth petitioner companies sought exclusion from the merger as they did not intend to merge due to commercial and regulatory reasons. The modified scheme thereafter was only for the merger of the remaining three petitioner companies. In said case, the equity shares of the Transferee Company No. 5 were listed on stock exchange. Sanction was granted to the modified scheme by the Ld. NCLT Mumbai Bench. The amendment can therefore be done at any stage. Admittedly the present modification to scheme will not require any further / revised adherence in so far as the regulations for inbound merger are concerned. Further, as per FEMA Notification No. FEMA.389/2018-RB dated March 20, 2018 Foreign Exchange Management (Cross Border Merger) Regulations, 2018 , point 9(1) states any transaction on account of a cross- border merger undertaken in accordance with these Regulations shall be deemed to have prior approval of the Reserve Bank of India as required under Rule 25A of the Companies (Compromises, Arrangement and Amalgamations) Rules, 2016. Hence, the proposed modification would also need no additional approval from Reserve Bank of India. If the impugned order is allowed to sustain then the scheme will have to be remodified to reflect such justification which will result into another round of lengthy compliances all of which would have to be undertaken for the third time. The Impugned Order is liable to be set aside - Appeal allowed.
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2024 (10) TMI 883
Interpretation of Rule 50 of the NCLT Rules and Rule 22 of the NCLAT Rules regarding the filing of appeals under the IBC - Rejection of petition on the ground of maintainability by an order - HELD THAT:- Rule 22(2) of the NCLAT Rules requires that every appeal shall be accompanied by a certified copy of the impugned order. Rule 50 of the NCLT Rules prescribes that the Registry shall send a certified copy of the final order free of cost and certified copies may be made available on payment of costs in terms of the Schedule of Fees in all other cases. Both the certified copy which is made available free of cost as well as the certified copy which is made available on the payment of costs, are treated as certified copies for the purpose of Rule 50. A litigant who does not apply for a certified copy cannot then fall back and claim that he was awaiting the grant of a free copy to obviate the bar of limitation. A Schedule of Fees is prescribed by the NCLT Rules. Entry 31 of the Schedule stipulates that the fee for obtaining true certified copies of final orders passed to parties other than the concerned parties under Rule 50 shall be Rupees five per page. The stipulation of Rupees five per page in Entry 31 excludes the concerned parties under Rule 50 - The provisions of Rule 50 of the NCLT Rules place both the free certified copy as well as the certified copy which is applied for on payment of fees on the same footing. The appeal in the present case was filed within the condonable period of 15 days, which should have been condoned. The impugned judgment and order of the NCLAT dated 7 May 2024 is set aside - appeal allowed.
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Insolvency & Bankruptcy
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2024 (10) TMI 905
Determination of the period of limitation for filing an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 - scope of Aggrieved Person - Principle of Estoppel by Conduct - HELD THAT:- Admittedly, because the Appellant has not disputed the fact of email communications being made to him or generated from his email address during the course of the proceedings of CIRP, there will be a deeming presumption of knowledge and if the fact of knowledge is not denied by the Appellant by a specific pleading to that effect, in that eventuality he cannot be deriving the benefit of extension of limitation as a consequence of the Covid-19 situation, which according to the Judgment of the Hon ble Apex Court commenced from 15.03.2020, and the ratio of the said Judgment cannot be extended to be made applicable in the instant Appeal to the Appellant, because the mandatory period of 30 days for applying for the Certified Copy of the Impugned Order of 31.01.2020 expired much before the short date of the extended period of limitation laid down by the Judgment of the Hon ble Apex Court in the Suo Motu proceedings [ 2022 (1) TMI 385 - SC ORDER ], due to Covid-19 situation, which was made effective with effect from 15.03.2020. When the Appellant himself has failed to comply with the first part of the intention of legislature of procuring the Certified Copy of the Judgment in order to enable him to file an Appeal as an Aggrieved Person in the light of the provisions contained under Rule 22 and if the cut off period of procuring of the Certified Copy, which was a condition precedent, has expired much prior to the benefit of limitation extended by the Hon ble Apex Court, the Appellant cannot contend that, he would be entitled for the benefit of limitation for the purposes of condonation of delay of about 451 days and that too, when according to his own records, the Appellant has for the first time applied for the Certified Copy of the Judgment only on 30.04.2021, though, he had knowledge of the proceedings, which is a fact already been established, by documents on record. The Appellant s inaction to apply for the Certified Copy despite of having the knowledge of proceedings, would create a legal bar against him in the light of the provisions contained under Section 114 of the Evidence Act, because, the presumption which has been given therein will run against the Appellant and the knowledge would be deemed to be attributed to him, prior to the expiry of the period of limitation which is mandatory for the purposes of applying for the Certified Copy and thus, the entire action of the Appellant would be barred by an `Estoppel by Conduct . The Application for condonation of delay, lacks merit and the same is accordingly dismissed.
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PMLA
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2024 (10) TMI 904
Money Laundering - proceeds of crime - predicate offence - diversion of Rs. 1530.99 crores from the loan amount for a purpose other than it was sanctioned - power to arrest - reasons to believe - HELD THAT:- The issue regarding providing reasons to believe to the person being arrested by ED has been dealt with expansively by the Hon ble Supreme Court in ARVIND KEJRIWAL VERSUS DIRECTORATE OF ENFORCEMENT [ 2024 (7) TMI 760 - SUPREME COURT] , wherein it has been held that it is difficult to accept that the reasons to believe, as recorded in writing, are not to be furnished, and the requirements in Section 19 (1) PMLA, are the jurisdictional conditions to be satisfied for arrest, the validity of which can be challenged by the accused and examined by the Court. In compliance with the statutory mandate of S. 19 of PMLA, the arresting officer at the arrest stage had apprised the petitioner of his reasons of belief and the grounds that necessitated such an arrest. Consequently, the arrest conformed with the requirements of section 19 of the PMLA Act, 2002 - An illegal arrest, as determined by a breach of the fundamental requirements of Section 19, invalidates the arrest and prevents the possibility of re-arrest based on the same justifications. This is because the violation infringed upon the individual's constitutional rights. A perusal of the grounds of arrest explicitly reveal and point to the effect that the Arresting Officer had conveyed his intention, reasons, grounds and believe to arrest the petitioner. The order of grounds of arrest is in conformity with the requirement of Section 19 of PMLA Act. The satisfaction of the concerned Officer is also duly reflected in the wordings and the necessity of arrest and has also clearly revealed. Thus, there is no fault in the grounds of arrest and consequent arrest. One of the reasons which necessitated the petitioner s arrest was the non-recovery of massive amount of proceeds of crime. The grounds of arrest are self-sufficient and need no other clarity from this Court. Petition dismissed.
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Service Tax
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2024 (10) TMI 903
Seeking withdrawal of Civil Appeal - HELD THAT:- The application is allowed - The Civil Appeal is dismissed as withdrawn.
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2024 (10) TMI 902
Non-payment of service tax on the expenditure reimbursed to them by the group companies - invocation of extended period of limitation - HELD THAT:- It is found that as long as the expenses reimbursed are not shown to be a consideration towards the provisions of service, the same cannot be included for the purposes of arriving at the taxable value. The department has not brought out anything on record to show that the said expenses are indeed a consideration but were shown artificially as expenses. The finding of the adjudicating authority that the appellant could not produced any evidence or document to show that these are reimbursed expenses , is not a valid finding. It is for the department who alleged to prove the same with evidence; it is not for the appellant to disprove the same. In the light of the judgment of the Hon ble Supreme Court in the case of Intercontinental Consultants [ 2018 (3) TMI 357 - SUPREME COURT ] and in terms of Section 67 of the Finance Act, 1994, service tax is to be levied on the consideration for the services rendered and not for any reimbursement of expenses particularly paid to third parties. Moreover, it is found that the show cause notice does not dispute the nature of the reimbursed expenses and their includibilty; the show cause notice merely avers that the said assessee evaded payment of service tax including education cess on the reimbursed expenses from its subsidiaries in spite of numerous letters issued to them. The appellant has raised that the objection that services rendered by the appellant fall under Business Support Services and not under Management Consultancy Services - the plea has no relevance to the impugned proceedings as the same was not subject matter of the impugned case. Appeal allowed.
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2024 (10) TMI 901
Levy of service tax - income recorded under the head trade discounts and incentives which is alleged to have been received as consideration for promoting or marketing vehicles of respective Tata Motors Limited - extended period of limitation - HELD THAT:- The Revenue has demanded the service tax on the trade discount given by M/s. TATA Motors Limited to its buyer i.e. the appellant. This transaction is purely a sale purchase transaction. The appellant have not provided any service against the amount of trade discount. The trade discount is deducted from the sale value of the goods. Therefore, the entire transaction between the appellant and M/s. TATA Motors Ltd is purchase and sale of the cars. This Tribunal time and again clearly held that since the discount/ incentive given by the car manufacturer to its dealer in the course of the sale of the car to the dealer is not amount to any service. Therefore, consequently no service tax is payable. Even for the period post negative list regime in the Finance Act, 1944, the sale of goods by way of transfer of title of goods is excluded from the service. The Division bench of this Tribunal dealing with the identical issue in the case of INFINIUM MOTORS GUJ PVT LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [ 2022 (11) TMI 948 - CESTAT AHMEDABAD] held that ' it is not in dispute about the transaction even in the present case being identical and sales incentive given by M/s Toyota Kirloskar Motors Pvt Ltd to the appellant is nothing but in connection with purchase and sale of the vehicles. Hence, the same can not be considered as commission against any service by any stretch of imagination. ' - Thus, it is settled that the trade incentive/ discount is not liable to service tax. Thus, in the present case, the amount of trade discount is not liable to service tax. Hence, the impugned order is set aside, the appeal is allowed.
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2024 (10) TMI 900
Disallowance of abatement claimed by the Appellant under N/N. 1/2006-ST dated 01.03.2006 - period from July, 2012 to September, 2013 - extended period of limitation - HELD THAT:- Appellant is provider of Residential Complex Services which are defined under Finance Act, 1994 and w.e.f. 01.07.2012 the said definition of Individual Services does not exist on the statute and w.e.f. 01.07.2012, a new concept of negative list was introduced wherein whatever has not been included in the negative list is treated as a service. The facts of the present case are squarely covered by the decision of the Tribunal in the case of LOGIX INFRASTRUCTURE PVT. LTD., SHREE CHETAN SHARMA VICE PRESIDENT, SHRI SAWAN KUMAR MANAGER (TAXATION) , SHRI SAMEER SATIJA, DGM (ACCOUNTS) VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., NOIDA [ 2018 (11) TMI 462 - CESTAT ALLAHABAD] where it was held that ' the components such as preferred location charges, external development charges etc. are part and parcel and for various elements of the main service which is Residential Complex Service and therefore the entire consideration received by the appellants are eligible for abatement under said Notification No.26/2012-S.T.' The impugned order cannot be sustained and is accordingly set aside - The appeal filed by the Appellant is allowed.
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2024 (10) TMI 899
Incorrect availment of 100% CENVAT credit on capital goods in the first financial year - levy of interest and penalty - HELD THAT:- In the catena of judgements it has been observed that in such cases that credit would not have been denied. There could be a case for recovery of interest. It is also observed that if said credit which was taken was not utilized then there should be no interest liability as has been held in RANA SUGAR LTD. VERSUS COMMISSIONER OF C. EX., MEERUT-II [ 2009 (9) TMI 350 - CESTAT, NEW DELHI] and POOJA FORGE LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, FARIDABAD [ 2004 (6) TMI 193 - CESTAT, NEW DELHI] . There are no merits in the impugned order to the effect that credit is to be denied and penalties are to be imposed only liability that can arise upon the Appellant is payment of interest for the period in which excess credit was taken and that subject to verification that the credit was taken utilized by the Appellant for payment of duty. In case credit has not been utilized there would be no liability for interest as have been held by Hon ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] . Appellant should produce a certificate from the statutory auditor to the effect, whether the excess credit taken by the Appellant during the first year of receipt of the capital goods has been utilized or not utilized before its reversal or till the first day of the next financial year as the case may be. Any interest on the credit so utilized if any should be paid forthwith. There are no merits in this order to the extent it confirms the recovery of CENVAT Credit and penalties imposed - appeal allowed.
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Central Excise
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2024 (10) TMI 898
Challenge to SCN based on statements recorded in the past - Jurisdiction of the court to interfere at the stage of show cause notice issuance - HELD THAT:- Unless a case of the impugned show cause notice being ex-facie without jurisdiction is made out, we are usually not inclined or required to interfere at the stage of issue of the show cause notice. In this case, the impugned show cause notice does not attract the vices indicated in Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Others [ 1998 (10) TMI 510 - SUPREME COURT ]. In Whirlpool, the Hon ble Supreme Court has explained that writ petitions may be entertained against show cause notices where the Petitioner seeks enforcement of any of the fundamental rights, where there is a violation of the principles of natural justice, or where the order or proceedings are wholly without jurisdiction or vires of the Act, is challenged. In Special Director and Another Vs. Mohd. Ghulam Ghouse and another [ 2004 (1) TMI 378 - SUPREME COURT ] the Hon ble Supreme Court has held that unless the High Court is satisfied that the show-cause notice was totally non-est in the eyes of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine. The writ petitioner should invariably be directed to respond to the show cause notice and raise all defences and contentions highlighted in the writ petition. Whether the show cause notice was founded on any legal premises is a jurisdictional issue the recipient can even urge before the authority issuing the notice. Such issues can also be adjudicated by the authority initially issuing the notice before the aggrieved party could approach the Court. In Malladi Drugs and Pharma Limited Vs. Union of India and another [ 2004 (3) TMI 67 - SC ORDER ] the Hon ble Supreme Court held that the High Court was absolutely correct in dismissing the writ petition against the mere show cause notice. The High Court, by the impugned judgment, held that the appellant should first raise all the objections before the authority that has issued the show cause notice. If any adverse order was passed against the appellant, liberty was granted to approach the High Court. Petition dismissed.
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2024 (10) TMI 897
CENVAT Credit in respect of input and/ or input service used in the manufacture of goods cleared at 2% duty under Notification No.01/2011-CE - HELD THAT:- In the present case, it is not the case of the department that the appellant have taken Cenvat Credit in respect of any input or input service which were used in the manufacture of excisable goods which are cleared by availing the Notification No.01/2011-CE dated 01.03.2011. As per facts the only charge of the department is that the appellant have utilized the Cenvat Credit for payment of 2% duty on the excisable goods cleared under Notification No.01/2011-CE. - there are no restriction for the assessee to utilize the Cenvat Credit which was correctly and legally availed on the input and input service which were used in the manufacture of goods cleared at the rate of 6%. Therefore, only restriction is the assessee is barred to take the Cenvat Credit on input and/or input service used in the manufacture of excisable goods cleared under Notification No.01/2011-CE which is not the case here. Therefore, the appellant have not contravened the condition of Notification No.01/2011-CE. The appellant have reversed the amount of Cenvat Credit utilized for payment of 2% excise duty along with the payment of interest. After payment of Cenvat credit which was utilized along with the payment of interest, the situation becomes as if no Cenvat Credit has been availed. The impugned order is not sustainable, hence, the same is set aside - Appeal allowed.
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2024 (10) TMI 896
Levy of penalty u/s 11AC of the Central Excise Act, 1944 - non-inclusion of amortized value of the moulding machines supplied free of cost by M/s. Hanil to the appellants - HELD THAT:- Entire amount of duty was paid on 31.08.2012 within three days of the visit of the officers which was on 28.08.2012 and applicable interest was paid on 10.09.2012 whereas the Show Cause Notice was issued only subsequent to payment of interest and duty which was on 28.12.2012. The provisions of Section 11A(2) of the Central Excise Act, 1944 clearly mandates that when the assessee has paid the duty along with interest and informs the Central Excise officer concerned, no notice shall be served in respect of such duty paid and no penalty is leviable under the provisions of the Act. Even otherwise, there are no justification to attribute suppression on the part of the appellant with an intent to evade payment of tax. The Ld. Lower Appellate Authority has also observed that it happened due to the ignorance of law on the part of the appellant. As the appellant has accepted the need to include the amortized cost of the capital goods supplied free of cost in the value of finished products supplied to M/s. Hanil in terms of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, appropriation of the demand of duty and interest is not interfered with. However, the impugned Order-in-Appeal No. 236/2015 (CXA-II) dated 25.08.2015 cannot be sustained only on the issue of imposition of penalty under 11AC of Central Excise 1944. The appeal is allowed.
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2024 (10) TMI 895
Liability of appellant to pay service tax under reverse charge mechanism in terms of Section 66A of FA - intellectual property service received from M/s. Monogram Licensing International Inc.USA when the service provider located in abroad having office in India - HELD THAT:- There is no dispute in the fact that the service provider M/s. Monogram Licensing International Inc. though located in UAS but at the same time they have their establishment office at Bangalore, in this position, it is necessary to record to Section 66A and Rule 2(1) D4 under which the assessee is require to pay service tax under reverse charge mechanism. The service recipient is liable to pay service tax only in a case where the service provider located outside India does not have any establishment in India. In the present case admittedly the service provider M/s Monogram Licensing International Inc. has office at Bangalore and the agreement itself has been executed in Bangalore by the signature of Chief Financial Officer of M/s. Monogram Licensing International Inc. Bangalore. In this fact in terms of Section 66 A, the appellant is not liable to pay service tax under reverse charge mechanism. Without prejudice, it is also found that the appellant s claim that there is revenue neutrality as if at all the service tax is paid, the same is available as Cenvat credit. Therefore, no malafide intention can be attributed to the appellant. The demand is not sustainable for the extended period - the impugned order is set aside - appeal is allowed.
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2024 (10) TMI 894
Recovery of refund claim - allegation of non-manufacturing activities and manipulation of records - appellant did not have the capacity of deterpenation/fractionation of either the Crude Pipertia Oil or Crude Mentha Oil (Shivalik) or any Mint Oil and so no manufacturing process took place in the manufacturing unit of the appellant in respect of the goods cleared as Fractionated/ Deterpenated/ Distilled Pipertia Oil and Fractionated/ Deterpenated/ Distilled Menthe Oil (Shivalik)/Spearmint Oil or Terpene - extended period of limitation - denial of right of cross-examination - violation of principles of natural justice - HELD THAT:- The Commissioner found that since the departmental officers had verified the facts which had been declared by the appellant in the statutory records and the test reports also indicated that the goods would be Crude Mint Oils, the genuineness of test report conducted after receipt of the goods from the appellant, cannot be doubted and so the request for cross examination of departmental officers and other persons should not be granted. The Commissioner also observed that the case against the appellant is not only on the basis of statements of employees of the appellant, but also on circumstantial test reports and, therefore, denying the right of cross examination would not be violative of principle of natural justice. These observations made by the Commissioner in the impugned order are clearly contrary to the principles enunciated by the Allahabad High Court in Parmarth Iron [ 2010 (11) TMI 109 - ALLAHABAD HIGH COURT] and the Punjab and Haryana High Court in Jindal Drugs [ 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT] . In the first instance, under section 9D of the Central Excise Act it is clear that a statement made during investigation/enquiry before a central excise officer cannot be relied upon unless it is first admitted and for this the person who made the statement has to be summoned and examined as a witness in adjudication proceedings. Failure to do so would mean that the adjudicating authority has relied upon an irrelevant material and, therefore, the order would be vitiated. The question of cross examination would arise only after examination of the person who makes statement before the central excise officer. The Commissioner has placed reliance upon the statements without following the procedure prescribed under section 9D of the Central Excise Act. The order passed by the Commissioner deserves to be set aside for this reason also - The penalties imposed upon the Partner and Managing Director of the appellant cannot also, for the same reasons, be sustained. The impugned order dated 17.05.2010 passed by the Commissioner so far as it concerns the three appellants deserves to be set aside and is set aside - appeal allowed.
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2024 (10) TMI 893
Applicability of Rule 6 of the Cenvat Credit Rules, 2004 - Zinc Ash and Zinc Skimming - HELD THAT:- This Tribunal in the case of Mahesh Chemicals Allied Industries [ 2024 (8) TMI 309 - CESTAT CHANDIGARH ] has considered the same issue in details and after considering the same, this Tribunal has allowed the appeal of the appellant-assessee. It is pertinent to reproduce the relevant findings of the Tribunal in the case of Mahesh Chemicals Allied Industries, where it was held that ' Bagasse is non-excisable to which the CENVAT Credit Rules have no application, and held that the Circular dated 25.04.2016 is unsustainable in law.' The impugned orders are not sustainable in law and are liable to be set aside - Appeal allowed.
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2024 (10) TMI 892
Clandestine removal - Time limitation for issuance of SCN - issuance of show cause notice much belatedly on 28.9.2020 after invoking the extended period despite starting the investigation in the month of May, 2016 itself - suppression of facts or not - discharge of burden of establishing beyond reasonable doubt the clandestine manufacture and removal of alleged assembled T.V. sets from the warehouse/godown at Bhiwandi. HELD THAT:- It is the case of the department and also the finding of the learned Commissioner that the case is booked by the department on the basis of the statements as well as on the basis of manufacturing process of the appellant and recovery of certain documents from the godown, which collectively established that the appellant assembled parts of TV sets at their godown at Bhiwandi that amounts to manufacture and liable to Central Excise duty. Since the statements recorded cannot be relied, the purported manufacturing process which has also been mentioned in those statements also meet the same fate. It is failed to find from record about any manufacturing process being witnessed by the department during search in the godown. Mere finding some table alongwith walls having electricity socket and few TV sets or its parts cannot be considered as corroborative evidence. From the allegations and arguments, the department tried to pitch it to the extent that the appellant was dealing only in cash payment in order to avoid the identity of its customers. But the ledger account of the appellant establishes other way round. Most of the payments were received through banking channel and the account numbers of the buyers were also mentioned in the ledger. On the sale invoices issued by the appellant, name and address of the buyer alongwith VAT TIN were clearly mentioned from which the bank details and the whereabouts of the said buyers were ascertainable. What the department did, instead of getting the details from the records provided by the appellants by way of ledger, sale invoice etc. they tried to get them through Google search on internet. Therefore there are no force in the submission of the department that in order to clandestinely removing the TV sets incomplete address or incomplete details of the buyers were provided by the appellant. A case of clandestine removal cannot be proved merely on the basis of probabilities. Revenue did not produce any clinching corroborative evidence to discharge its obligation to prove clandestine removal. Their case is mainly based upon conjecture and surmises. The department failed to establish that the appellant received spare parts etc. clandestinely or some other corroborative evidence to support clandestine removal of complete TV sets from the godown. A consistent view has been taken by this Tribunal time and again that the proceedings before the Settlement Commission are different from the adjudication proceedings. In proceedings before the Settlement Commission there was no requirement to adjudicate any allegations raised in the show cause notice whereas in adjudicating proceedings the authority concerned has to adjudicate all the issues/allegations raised in the show cause notice - Once the issue has been settled by the Settlement Commission on an application filed by an assessee, the adjudicating authority in different proceedings for different show cause notice concerning same assessee cannot base its adjudication on the findings recorded by the Settlement Commission. Therefore, the Adjudicating Authority is not justified. As the department has failed to establish any case against the appellant, the duty demand alongwith interest and respective penalties as mentioned in the show cause notice in issue herein cannot survive. Invocation of extended period of limitation - HELD THAT:- It is no doubt true that when the facts were within the knowledge of the department then the department cannot take the plea of suppression or misdeclaration etc. only to invoke extended period for issuing the show cause notice after 4-5 years. What is gathered from the show cause notice herein that the facts about alleged misdeclaration or suppression etc. were within the knowledge of the department in the year 2016 itself when DRI started investigation in the said year by recording statements etc and informed the department herein - there is no dispute that the fact about alleged mis-declaration was within the knowledge of the department in the year 2016 itself when DRI initiated investigation and show cause notice therein was also issued to the appellant by DRI on 15.7.2016. As per case records, the basis of the instant show cause notice is the information received from DRI in the year 2016 itself but still the instant show cause notice came to be issued much belatedly in the year, 2020 after invoking the extended period which is not invokable. Mere recovery of certain parts or TV sets or cartons in the instant case is not sufficient to prove clandestine manufacture/assembling or removal. Clinching evidence is required to be produced by the department to substantiate the allegations levelled against the appellants beyond any reasonable doubt which, in the facts of the present case, the department has failed to prove. Neither any evidence of manufacturing of finished goods i.e. TV sets nor its onward transportation or its buyers have been produced on record by the department. Statements, if any, can only provide the missing links to corroborate facts and they cannot, of themselves, establish facts or the whole claim of alleged events. As the duty demand itself has been set aside, there is no question of any interest, and/or penalties etc. On the ground of limitation also the show cause notice cannot sustain. The show cause notice is not sustainable and the adjudication order impugned herein is therefore set aside - Appeal allowed.
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2024 (10) TMI 891
Levy of penalty under Rule 26(2) of the Central Excise Rules, 2002 - CENVAT credit availed on the basis of fake CENVAT invoices issued by the units - HELD THAT:- This issue is no more res integra and the matter has attained finality by the decision of the Tribunal in the case of Principal Appellant and suppliers of the appellant in the case of M/s Neeru Enterprises [ 2019 (4) TMI 432 - CESTAT CHANDIGARH] wherein it has been held that Principal Appellant was receiving Menthol, Menthol Flakes and De-Mentholized Oil in its premises as raw materials from it suppliers i.e. J K manufacturers and was consequentially manufacturing the finished goods and has rightly availed the CENVAT credit. Further, it is found that the demand for penalty would not arise if the demand against the Principal Appellant is not sustainable and in the present case, the demand against the Principal Appellant is itself set aside by this Tribunal holding that the impugned goods were actually received by the Principal Appellant supplied by the appellant and other J K manufacturers. Further, the penalty under Rule 26(2) has been imposed whereas during the relevant period, the said Rule did not exist and the same came into existence w.e.f. 11.05.2007. It is found that once the penalty against the main appellant has been dropped, the penalty against the present appellant is not sustainable and moreover, the said Rule 26(2) was not in existence during the relevant period. The impugned order is set aside - Appeal allowed.
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2024 (10) TMI 890
CENVAT Credit availed on input services used exclusively in the manufacture of dutiable goods - Activity amounting to manufacture or not - packing and labelling of parts of motor vehicles and safety headgears - whether the CENVAT Credit, availed on the input services used exclusively in the manufacture of the dutiable goods, was required to be included in the numerator for apportioning the common credit between the exempted service (trading) and dutiable goods? - levy of interest and penalty. HELD THAT:- This issue is no more res integra as it has been held that the CENVAT Credit, which pertains to input services exclusively used in dutiable goods, is not required to be included in the total CENVAT Credit for apportionment between exempted services and dutiable goods. It has been held that for apportionment of CENVAT Credit, only such credit which was availed on input service used commonly in exempted service and dutiable goods has to be taken into consideration. In order to bring parity with the underlying objective of Rule 6, Rule 6(3A) of the Credit Rules was amended vide Notification No. 13/2016-CE (NT) dated 01.03.2016, effective from 01.04.2016, by substituting Rule 6(3A) (b)(ii) of the Credit Rules, to consider only common input services and not total input service credit, for the purpose of computing the amount of reversal. It is observed that such amendment in Rule 6(3A) by virtue of substitution was clarified by the Board vide TRU Circular No. 334/8/2016-TRU dated 29.02.2016, to apply retrospectively. The clarification clearly mentioned that the provisions of Rule 6 providing for reversal of Credit in respect of input services used w.r.t. exempted goods/services, is being redrafted with the objective to simplify and rationalize the same without altering the established principles of reversal of such credit. The modality adopted by the Appellant for reversal of credit on proportionate basis is in accordance with the provisions of Rule 6(3A). Hence, the impugned order by upholding the demand on incorrect understanding of provision is erroneous and not sustainable - the impugned order passed by the Ld. Commissioner (Appeals) is not sustainable and is liable to be set aside. Interest and penalty - HELD THAT:- Since the demand of Cenvat Credit itself is not sustainable, penalty is not imposable and consequently, no interest is also recoverable. The impugned order is not sustainable and is accordingly set aside - Appeal allowed.
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2024 (10) TMI 884
Valuation - inclusion of cost of type test , charged by the appellant from some of their customers who have difficulty in carrying out such ascertainment at their premises on transformers manufactured by appellant, in the assessable value even though the tests are carried out before clearance - section 4 of Central Excise Act, 1944 - HELD THAT:- There is no doubt that the type test is carried out before the goods leave the factory but, at the same time, it is an optional exercise at the instance of such customer, as lack such facilities at their respective premises. Duty, being leviable on manufacture of goods, arises and upon transformers coming into existence but chargeable only upon clearance. The contention of the lower authorities is that the goods do not come into existence until after the type test is concluded. This premise is clearly unacceptable inasmuch as the clearance to other customers are of transformers on which such tests have not been carried out. Consequently, duty liability devolves upon manufacture of transformers even before type test is carried out. It is clearly evident from rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 that the cost of transportation of goods from place of removal , as well as the other cost attributable to services, are not liable to be included in the value of goods manufactured for levy of duties of central excise. There is no justification for collection of duties of central excise on the consideration realised for an activity which has been subjected to levy under the Finance Act, 1994 - there is no merit in the impugned order which is set aside - Appeal allowed.
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CST, VAT & Sales Tax
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2024 (10) TMI 889
Classification of goods - electric motor - falling in capital goods under entry 27 of Schedule-IV or not - HELD THAT:- There are no reason to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petitions are dismissed.
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Indian Laws
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2024 (10) TMI 888
Dishonour of Cheque - challenge to conviction and sentence under Section 138 of the Negotiable Instruments Act - applicability of presumption under Sections 118 and 139 of the Negotiable Instruments Act - HELD THAT:- In the instant case, there is no specific denial, if any, on the part of the accused with regard to his having issued Cheques as well as his signatures thereupon, rather, in his statement recorded under Section 313 Cr.P.C., he admitted complainant to be his acquaintance as well as factum of his having purchased the material, but for less amount. He categorically deposed that he had issued blank Cheque as a security, which subsequently came to be misused by the complainant. However, to probablize the aforesaid defence, no cogent and convincing evidence ever came to be led on record at the behest of accused, as such, no illegality can be said to have been committed by the learned Appellate Court while upholding the judgment of conviction and order of sentence recorded by learned trial Court. Since in the case at hand, factum of issuance of Cheques as well as his signatures thereupon never came to be refuted at the behest of accused, no illegality can be said to have been committed by both the Courts below while invoking Sections 118 and 139 of the Act, which speak about presumption in favour of the holder of the Cheque that Cheque was issued towards discharge of a lawful liability. No doubt, aforesaid presumption is rebuttable, but to rebut such presumption, accused either can refer to the documents and evidence led on record by the complainant or presumption can be rebutted by leading positive evidence, if any. The Hon ble Apex Court in M/s Laxmi Dyechem V. State of Gujarat, [ 2012 (12) TMI 106 - SUPREME COURT] , has categorically held that if the accused is able to establish a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. To raise probable defence, accused can rely on the materials submitted by the complainant. Needless to say, if the accused/drawer of the Cheque in question neither raises a probable defence nor able to contest existence of a legally enforceable debt or liability, statutory presumption under Section 139 of the Negotiable Instruments Act, regarding commission of the offence comes into play. In the case at hand, complainant while examining himself as CW-1, tendered affidavit Ex.CW1/A wherein he successfully reiterated the contents of the complaint. He successfully proved on record that he had sold articles of hardware and grill gate amounting to Rs.80,000/- to the accused, who with a view to discharge his liability issued two Cheques for sum of Rs.40,000/- each, but same were dishonoured on account of insufficient funds in his bank account vide returning memos Ex.C2 and Ex.C4 - there is no evidence worth credence suggestive of the fact that Cheques in question were issued as a security, but even if it is presumed that Cheques in question were issued as a security, that may not be of much help to the accused for the reason that by now it is well settled that Cheques, if any, issued as a security can also be presented for encashment, if amount taken or promised to be repaid is not paid. This Court finds that all the basic ingredients of Section 138 of the Act are met in the case at hand. Since Cheque issued by accused towards discharge of his lawful liability was returned on account of insufficient funds in the bank account of accused and he despite having received legal notice failed to make the payment good within the stipulated time, complainant had no option but to institute proceedings under Section 138 of the Act, which subsequently rightly came to be decided by both the Courts below on the basis of pleadings as well as evidence adduced on record by the respective parties. This Court sees no valid reason to interfere with the well reasoned judgments recorded by the Courts below, which otherwise, appear to be based upon proper appreciation of evidence available on record and as such, same are upheld. The present criminal revision petition is dismissed being devoid of any merit.
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2024 (10) TMI 887
Dishonour of cheque - acquittal of the accused - cheque was given as collateral security or not - HELD THAT:- This Court has perused the impugned judgment and order of acquittal passed by the Trial Court and the decisions cited at the Bar. Considering the facts of the case, it reveals that the cheque in question was issued in favour of father of the complainant towards the debt and during the course of clearance of the cheque, the drawee was passed away and, therefore, the complainant posed himself as payee or the holder in due course issued notice as provided under Section 138 of the N. I. Act and the offence under Section 138 of the N.I. Act cannot be attributed. Therefore, the Trial Court has dealt with the contentions raised by the respective parties and rightly passed the impugned judgment and order of acquittal. The Trial Court, after considering the evidence and the relevant decisions, has rightly passed the impugned judgment and order of acquittal and hence, no interference is required to be called for. This Court is complete agreement with the findings recorded by the Trial Court and this Court does not find any infirmity and perversity in the impugned judgment and order of the Trial Court. Under such circumstances, the present appeal is devoid of merits and the same deserves to be dismissed.
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2024 (10) TMI 886
Application for grant of leave to file appeal - Acquittal of accused under Section 138 of the Negotiable Instruments Act - HELD THAT:- Evidently, a leave to appeal is required by the complainant of such cases, who is not a victim as defined above. The law is wellsettled that any person can set the criminal proceedings in motion, if he has knowledge of commission of any cognizable offences, such step may be taken by filing an F.I.R. with the police or a complaint petition before a Magistrate. If such complainant, is not a victim as defined above then, he would be required to prefer leave application before the High Court for preferring appeal against acquittal. However, if the complaintant is a victim of the crime, he/she shall have right under Proviso to Section 413 BNSS to prefer appeal against acquittal, conviction for a lesser offence or imposing inadequate compensation. This leave to appeal stands disposed of.
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2024 (10) TMI 885
Dishonour of Cheque - Issuance of summons in the complaint - role of petitioner in the firm's business - respondent seeks dismissal of the petition and submits that the appropriate stage for discharge is before the trial Court and not the inherent jurisdiction of this Court - HELD THAT:- It is clear that the petitioner was neither the signatory nor the proprietor of the firm which issued two cheques in question. Before anyone can be summoned to face a criminal trial, the Magistrate must search for primafacie legally admissible evidence, which attributes some role that makes out a penal offense - In the present case, the complainant is silent about the petitioner's role and there is no evidence pointing out the petitioner s criminal liability with the cheque. In Anil Hada v. Indian Acrylic Ltd., [ 1999 (11) TMI 808 - SUPREME COURT] , Hon ble Supreme Court holds ' If the offence was committed by a company it can be punished only if the company is prosecuted. But instead of prosecuting the company if a payee opts to prosecute only the persons falling within the second or third category the payee can succeed in the case only if he succeeds in showing that the offence was actually committed by the company. In such a prosecution the accused can show that the company has not committed the offence, though such company is not made an accused, and hence the prosecuted accused is not liable to be punished. The provisions do not contain a condition that prosecution of the company is sine qua non for prosecution of the other persons who fall within the second and the third categories.' Thus, it is a fit case where the continuation of criminal proceedings shall amount to an abuse of the process of law, and the Court invokes its inherent jurisdiction under section 482 CrPC to quash the summons qua the petitioner and all subsequent proceedings. The summoning orders qua all the petitioners, are quashed and set aside - petition allowed.
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