TMI Tax Updates - e-Newsletter
October 24, 2024

Case Laws in this Newsletter:

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

Highlights / Catch Notes

GST

• Delay in filing GST appeal not condoned beyond statutory limitation period.

  The court dismissed the appeal filed by the petitioner on the ground of limitation. The petitioner relied on a notification dated 02.11.2023, which allowed appeals against orders u/ss 73 or 74 of the GST Act passed before 31.03.2023 to be filed by 31.01.2024 without being time-barred. However, the impugned order in the present case was passed on 20.07.2023, after the cut-off date mentioned in the notification. The court held that the notification did not aid the petitioner. Relying on the case of M/s Yadav Steels, the court observed that delay in filing an appeal cannot be condoned beyond the prescribed period of limitation under the Act. Consequently, the court found no merit in the writ petition and dismissed it.
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• Petitioner's electronic credit ledger unblocked due to lack of reasoned order and opportunity of hearing.

  Constitutional validity of Rule 86A of the CGST/SGST Rules, 2017, which was challenged for violating Articles 14 and 19(1)(g) of the Constitution of India. The court held that since no pre-decisional hearing was granted before passing the impugned order blocking the petitioner's electronic credit ledger, and the order lacked independent or cogent reasons except relying on the enforcement authority's reports, which is impermissible as it constitutes borrowed satisfaction, the impugned order deserved to be quashed. Consequently, the High Court quashed the impugned order dated 23.01.2020 and directed the respondents to unblock the petitioner's electronic credit ledger immediately to enable the petitioner to file returns forthwith, allowing the petition.
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• Time limit extension for tax assessments upheld; GST Council's Covid recommendations justified.

  The High Court held that the Notification No. 9/2023 dated 31-03-2023, extending the time limit u/s 168A of the CGST Act, was valid and cannot be faulted. The explanation to Section 168A empowers the Government to extend time limits on the recommendation of the GST Council. The Council's decision was based on representations, increased workload due to Covid-19, and the inability to complete proceedings by 30-09-2023. The Court distinguished the Supreme Court's order on extending limitation periods before courts/tribunals, finding it inapplicable to tax authorities' actions like assessments or show cause notices. The petition challenging the notification was dismissed as no grounds were made out.
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• Ex-parte appellate decision without hearing appellant violates natural justice; matter remanded for fresh decision after hearing parties.

  The appellate authority erred in deciding the appeal ex-parte in the absence of the appellant or their counsel. The statutory mandate requires the appellate authority to hear the appellant, conduct further inquiry if necessary, and pass a reasoned order confirming, modifying, or annulling the decision appealed against. Deciding the case ex-parte without giving a reasonable opportunity violates the principles of natural justice and audi alteram partem. The appellate authority should have dismissed the appeal in default instead of deciding it on merits. The impugned ex-parte order is illegal and arbitrary, necessitating remitting the matter back to the appellate authority to decide afresh after affording an opportunity of hearing to the parties within three months.
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• Court rejects bank guarantee condition for bail, rules it illegal.

  The Court held that imposing a condition of furnishing a bank guarantee while granting bail is illegal. The Apex Court, in Subhash Chouhan v. Union of India, ruled that directing the appellant to deposit a sum as a condition for bail is not sustainable and should be set aside. The Court observed that it encounters numerous cases where Courts impose an illegal condition of furnishing a bank guarantee of any quantum while granting bail, leading to unnecessary litigation. The Court deemed it appropriate to clarify that Courts shall not insist on furnishing a bank guarantee for release on bail. However, Courts are free to impose other legally tenable conditions. The criminal petition challenging the condition of furnishing a bank guarantee was allowed.
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• Amnesty for late GSTR-9C filing till 01.04.2023, no late fees if filed by 31.08.2023.

  Amnesty scheme - Failure to file annual returns from financial year 2018-2019 till 01.04.2023, but filed before 31.08.2023. Justification for continuing notices for non-payment of late fees for belated GSTR-9C filed before 01.04.2023. Court held, relying on Anishia Chandrakanth v. Superintendent judgment, no justification for continuing notices for non-payment of late fees for belated GSTR-9C filed before 01.04.2023, when one-time amnesty commences. Ext.P3 set aside to extent seeking late fees for delay in filing GSTR-9C. However, petitioner not entitled to refund of late fees already paid over Rs. 10,000/-. Writ petition disposed of.
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• Transitional GST credit allowed after rectification of TRAN-1/TRAN-2 forms.

  Rule 117(4)(b)(iii) of the CGST Rules was challenged as ultra vires Section 140(3) of the CGST Act and violative of Article 14 of the Constitution. The court held that the petitioner has the right to avail transitional credit legally due, and the authorities should permit rectification of TRAN-1/TRAN-2 by making necessary software changes. The respondents were directed to allow the petitioner to file rectified TRAN-1 with correct details and TRAN-2 within eight weeks to avail transitional credit. The impugned show-cause notice was quashed, and the petition was allowed.
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Income Tax

• Existing trust's incorrect clause application led to approval issue, order set aside for reconsideration under correct clause.

  An existing trust had previously been granted approval u/ss 12AA and 80G of the Income Tax Act. However, instead of applying under clause (i) of the proviso to Section 80G, which is applicable for existing trusts, it incorrectly applied under clause (iii) as a new trust. Clause (i) does not require any provisional approval, and the Principal Commissioner or Commissioner would have granted approval for five years upon written application. The controversy arose due to the incorrect mention of clause (iv) instead of clause (i) in Form No. 10AC, which the assessee admitted was an error. Since Form No. 10AC was filed on time, the incorrect clause mention is considered a curable defect. The order of the Commissioner of Income Tax (Exemption) is set aside, and they are required to consider the application as filed under clause (i) of the first proviso to Section 80G(5) and grant approval accordingly. The assessee's appeal is allowed for statistical purposes.
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• Corporate tax dues wiped out after insolvency resolution plan's approval.

  Assessment/reassessment proceedings against an insolvent company were quashed. A resolution plan was approved by the Tribunal u/s 30(6) of the Insolvency and Bankruptcy Code. The claim lodged by the Deputy Commissioner of Income Tax was verified and admitted during the NCLT proceedings. As per the Code's provisions, no person can initiate or continue proceedings regarding claims for dues relating to the period prior to the resolution plan's approval. Consequently, the Assessment Order passed u/ss 147, 144, and 144B, the order u/s 148A(d), and the notices u/s 148A(b) were quashed and set aside, favoring the assessee.
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• Tax reassessment set aside for lack of independent verification & application of mind by officers.

  The Assessing Officer (AO) reopened the assessment solely based on the information from a survey conducted by the Sales Tax Department, without independently examining the allegations or ascertaining the status of proceedings under the Sales Tax statute. The Income Tax Appellate Tribunal (ITAT) set aside the reopening, as the AO failed to apply their mind and did not inquire about the subsequent developments in the Sales Tax case, where the original assessment order had been set aside and the matter remitted for fresh assessment. The Commissioner of Income Tax (Appeals) erred in upholding the reopening based on a 'prima facie' formation of opinion. The High Court held that the reasons recorded by the AO cannot be considered proper to form a belief of income escaping assessment, as the information received was not found well-founded, and the AO made no efforts to verify or apply their mind to the same. The provisions of Section 147 do not give unfettered powers to reopen assessments, and the AO is required to satisfy the preconditions, which were lacking in this case.
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• Trust can't claim tax exemption if application not decided in 6 months; SC upholds strict compliance with law.

  Section 12AA(2) of the Income Tax Act, 1961 does not recognize any deemed grant of registration if the application is not decided within six months. The Supreme Court in Harshit Foundation Sehmalpur upheld the Allahabad High Court's decision in Muzaffar Nagar Development Authority, which held that the Parliament has not provided for such a deeming fiction. This decision is the law declared by the Supreme Court under Article 141 of the Constitution. The decisions in Society for Promotion of Education and Harshit Foundation Sehmalpur are not mutually irreconcilable, as they address different aspects of the interplay between Sections 12A and 12AA(2). The specific deeming provision in Section 12AA(2) does not conceive any deemed registration if the application is not decided within six months.
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• Tax return filing delay of 1 day due to technical glitch condoned; Authority's rejection flawed & non-judicious.

  The High Court held that the authority erred in rejecting the petitioner's application for condonation of one day's delay in filing the return of income u/s 119(2)(b) of the Act. The reasoning that the return had already been processed u/s 143(1) with a demand raised was flawed and showed non-application of mind. The delay of one day was bona fide due to technical issues and should have been condoned following the principles laid down in the case of Jyotsna Mehta. The Court opined that the paramount jurisprudential principles mandate condonation of such a short delay caused by genuine reasons.
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• NRE account income not taxable in India, reopening assessment unwarranted.

  The case pertains to the reopening of assessment u/s 147 regarding income related to a Non-Resident External (NRE) Account. The assessee argued that the source of income and deposits were from the NRE Account, and therefore, not taxable in India. The bank details and statements provided by the assessee revealed that the remittance of the loan was made from the NRE Account, substantiating the source of income. As per Section 10(4)(ii) of the Income Tax Act, income earned in an NRE Account is exempt from taxation. Considering the assessee's explanation supported by bank statements, the court found no justification for issuing a notice u/s 148 or passing an order u/s 148A(d) of the Act regarding the reopening of assessment.
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• Taxpayer prevails against improper assessment, draft order objection filing.

  The High Court held that the Assessing Officer was not justified in passing the assessment order invoking Section 144C(3) on the ground that the assessee did not file objections within the specified time u/s 144C(2)(b). The assessee had uploaded Form 35A on the Income Tax Portal and sent it physically within 30 days of receiving the draft order, fulfilling the requirement. The concept of a "draft order" was introduced with the faceless assessment scheme u/s 144B. Therefore, the assessment order and the DRP's order refraining from variations were contrary to Section 144C and liable to be quashed. Consequently, the provisional attachment u/s 281B also did not survive as it had already lived its life of 6 years without extension by the Assessing Officer after passing the assessment order.
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• Income Tax reassessment quashed: Full facts disclosed earlier, mere change of opinion not allowed.

  Reopening of assessment u/s 147 was challenged on the ground of mere change of opinion. The assessee had filed return claiming deduction u/s 80IC and furnished all relevant details during original assessment proceedings u/s 143(3). The Assessing Officer, after examining the details, passed the assessment order accepting the return. Subsequently, notice u/s 148 was issued for reopening assessment on the ground that the undertaking availing deduction u/s 80IC was merged with the assessee company, rendering it ineligible for such deduction u/s 80IC(12) read with Section 80IA(12A). The High Court held that since all material facts were disclosed and examined during original assessment, reopening would amount to mere change of opinion, which is impermissible. Accordingly, the reopening notice u/s 148 was quashed.
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• Purchases and expenses scrutinized - some upheld, some deleted by tax authorities.

  The assessing officer (AO) made additions to the assessee's income based on alleged bogus purchases and unexplained investments. The key points are: Addition of Rs. 209.82 lacs under 'others' category was rightly deleted by CIT(A) due to lack of proper findings. Out of total purchases, Rs. 5,11,56,526 were from 4 entirely bogus parties, while Rs. 5,35,20,325 were partially bogus from 15 parties. Since the assessee offered Rs. 5,53,25,652 as additional income, and considering 10% leakage on partially bogus purchases, the net addition sustained is Rs. 11,82,906. Disallowance of sub-contractor's expenses of Rs. 157 lacs was upheld, as the assessee admitted only Rs. 140.18 lacs, and the GST component was adjusted against output liability. Addition of unexplained investment u/s 69, based solely on loose excel sheets found during search, was deleted following the ITAT's decision in Kranti Impex case, which held that undated, unsigned papers cannot be the sole basis for determining undisclosed income.
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• Determining arm's length pricing: Selecting comparable firms while excluding functionally dissimilar or different market companies.

  Determination of arm's length price (ALP) for international transactions, focusing on the selection of comparable companies. It excludes companies like Elofic Industries Ltd., WABCO TVS (India) Ltd., Brakes India Pvt. Ltd., Clutch Auto Ltd., ANG Industries Ltd., and Sundram Brake Linings Ltd. as functionally dissimilar or operating in different markets. It also discusses the inclusion/exclusion of Faiveley Transport Rail Technologies India Ltd., XLO India Ltd., and Rane Brake Lining Ltd. based on specific criteria. Additionally, it addresses the treatment of foreign exchange gains as operating income and the consideration of cash profit/operating income as a profit level indicator, citing relevant case laws. The summary covers the key issues related to comparable selection and ALP determination in a concise manner.
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• Delayed customs duty interest, not penalty - allowed as business expense.

  Disallowance u/s 37 of interest paid on delayed payment of additional Customs Duty was challenged, contending that it was not penal in nature but compensation for delay in payment of taxes, hence allowable as revenue expenditure. Relying on Supreme Court rulings in Mahalakshmi Sugar Mills Company Ltd., Lachmandas Mathuradas, and Karnataka High Court's decision in Mysore Electrical Industries Ltd., it was held that since interest is calculated at a certain percentage on a time basis for delayed payment of customs duty, it is compensatory in nature. The interest expenses were incurred wholly and exclusively for business purposes, neither personal nor capital, and cannot be treated as a penalty. Interest due to delayed payment of customs duty is deductible u/s 37 as an accretion to the main payment, not a penalty, and therefore allowable as a deduction. The assessee's appeal was allowed.
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• Limitation period for seized documents clarified in search case; AO to follow 153C route.

  Assessment proceedings u/s 153C - The period of limitation and deemed date for possession of seized documents were discussed. It was held that the date of recording satisfaction would be the deemed date for possession of seized documents, which was 03-10-2022, and six years would be reckoned from this date. The submission made by the Authorized Representative was tenable, and the relevant assessment year for the previous year in which the search was conducted would be AY 2023-24, with six immediately preceding assessment years being AY 2018-19 to 2022-23. The assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C and not Section 143(2). The case was covered by the Akanksha Gupta case, and the assessment order passed u/s 143(3) was held to be bad in law and liable to be quashed. The assessee's appeal was allowed.
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• Taxpayer's ability to claim deductions during search assessments: Limitations and conditions.

  The Income Tax Appellate Tribunal considered whether an assessee can claim deduction under Chapter VI-A of the Income Tax Act, 1961 for the first time in the return filed in response to a notice issued u/s 153A pursuant to a search u/s 132. Relying on the Supreme Court's decision in Abhisar Buildwell (P.) Ltd., the Tribunal held that in unabated or concluded assessments, the assessee cannot make any fresh claim of deduction in the return filed u/s 153A, as the Assessing Officer cannot make additions without incriminating material found during the search. For abated assessments, the assessee can claim all deductions by filing the return within the timeline prescribed u/s 153A, failing which deductions cannot be claimed u/s 80A. Claiming deduction u/s 80IA(4) requires filing the return before the due date u/s 139(1) and furnishing the audit report u/s 44AB, as per Section 80IA(7). The Tribunal relied on Supreme Court decisions in Dilip Kumar and Company and PCIT vs. Wipro Ltd. to interpret deduction provisions strictly in favor of revenue. Therefore, the Tribunal concluded that the assessee cannot claim fresh deductions under Chapter VI-A for the first time in the return filed u/s 153A for.
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Customs

• Customs Duty Waived During Imports Under Advance Authorization Scheme.

  The case pertains to the recovery of customs duty in the form of IGST forgone during imports under the advance authorization scheme from October 2017 to November 2018. The appellant had fulfilled the pre-import condition in most cases, and in some cases, the bill of entry was re-assessed, and the appellant paid the IGST, which they did not contest as they were eligible for ITC under GST. The demand for IGST, along with interest, fine, and penalties, is deemed unsustainable as there was no mala fide on the appellant's part, and the penalty corresponding to the duty paid, which is not in contest, is also not sustainable on the ground of revenue neutrality. The issue involved the interpretation of the exemption notification on advance authorization, and the suppression of facts cannot be attributed to the appellant. Therefore, the extended period for demand is prima facie not invokable, and the appellant has made out a strong prima facie case on the time bar. The impugned order is unsustainable, and the appeal is allowed.
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• License transfer not disputed, buyer responsible for registration & TRA. No mischief by sellers. Penalty on sellers set aside.

  The appellate tribunal held that there was no dispute regarding the transferability of the DFRC license. The appellants were unaware of the license holder after selling it, and it was the buyer's responsibility to register at the port of export and apply for Telegraphic Release Advice (TRA) as per the relevant public notice. The facts did not establish any mischief or wrongdoing by the appellants concerning the alleged change claimed by the revenue authorities. Since the appellants' role was unclear, imposing a penalty on them was not in accordance with the law. Consequently, the impugned orders were set aside, the penalty imposed on the appellants was deleted, and the appeal was allowed.
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• Customs duty denied for coal import due to technicality in origin certificate despite ASEAN FTA; Tribunal favors importers.

  Non-submission of country-of-origin certificate resulted in denial of concessional rate of Basic Customs Duty under ASEAN FTA Preferential Tariff Agreement for steaming (non-coking) coal in bulk. Alteration/correction in the certificate did not satisfy provisions of operational certification procedures. Denying substantial benefits for technical errors would be unjust. Revenue doubted authenticity of certificate due to correction and date discrepancy, but provided no concrete proof. Procedure to check doubts regarding certificate was not followed. Impugned order set aside, appeals allowed by Appellate Tribunal.
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• Tribunal rules for refund of excess customs duty based on CA certificate.

  The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the appellant is entitled to a refund of excess additional customs duty. The Tribunal accepted the chartered accountant's certificate dated 29.12.2015, which was identically issued for imports from Delhi, Ahmedabad, and Hyderabad, as sufficient proof that the incidence of duty was not passed on to buyers. The Hyderabad and Ahmedabad Benches had previously upheld the certificate's validity. The Tribunal rejected the department's contention that additional corroborative evidence u/ss 28C and 28D of the Customs Act was required. Consequently, the Commissioner (Appeals) orders confirming the deposit of the sanctioned amount in the Consumer Welfare Fund were set aside, and the appellant was held entitled to refunds of Rs. 3,43,88,087/- and Rs. 2,33,05,108/- with consequential relief.
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Corporate Law

• Delay Dismissal: Court denies condonation of late appeal filing.

  Condonation of 68 days' delay in filing appeal was denied due to lack of sufficient cause. The appellant failed to demonstrate how he was prevented from filing the appeal within the statutory period u/s 421(3) proviso. The court held that even after showing sufficient cause, parties are not entitled to condonation of delay as a matter of right; the court must exercise discretion. The appellant was clearly negligent, being aware of the order before the deadline, and had already pleaded for extension without prejudice to filing an appeal, indicating awareness of the right to appeal. The court found no sufficient cause preventing the appellant from filing within the extended period and dismissed the delay condonation application.
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• Govt intervenes in sports club's affairs over public interest concerns; orders management overhaul & remedial steps by 2025.

  The Delhi Gymkhana Club, incorporated u/s 26(1) of the Companies Act, 1913, was formed to promote sports and other useful objects in public interest. The Central Government filed an application u/ss 241-242 of the Companies Act, 2013, alleging the club's affairs were conducted prejudicially to public interest. The NCLT, based on inspection reports highlighting violations and minimal sports expenditure, superseded the management by appointing a 15-member committee nominated by the Central Government. The NCLAT upheld the NCLT's order, finding sufficient material for the Central Government's opinion u/s 241(2) that the club's affairs were prejudicial to public interest. However, to bring an end to the matters complained of, the NCLAT directed the committee to complete remedial measures by 31.03.2025 and conduct elections per the Articles of Association within three months thereafter, installing the duly elected General Council to manage the club's affairs in accordance with its objectives.
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Indian Laws

• Dispute over storage contract resolved; Arbitrator appointed despite Public Premises Act objections.

  The Supreme Court examined whether the Public Premises Act, 1971 overrides the Arbitration and Conciliation Act, 1996, and if there was any error in appointing an arbitrator u/s 11 of the latter Act. The Court held that the dispute related to promises arising from an agreement dated 26.09.2012, concerning the right of renewal and the legality of enhanced demand, which subsisted until 11.09.2015. The Public Premises Act did not apply to this period, and the dispute depended on interpreting the agreement terms. The High Court did not err in appointing an arbitrator u/s 11, as the revision of storage charges and right of renewal arose during the contract's subsistence and were covered by the arbitration clause. The Court dismissed the appeal and imposed costs of Rs. 50,000 for unnecessary litigation.
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• Defining 'workman' u/s 2(s) of Industrial Disputes Act: Supervisory role or not? Impact on employee rights and benefits.

  The case revolves around determining whether an employee qualifies as a "workman" u/s 2(s) of the Industrial Disputes Act, 1947, which would entitle them to certain protections and benefits. The key points are: The Industrial Disputes Act aims to settle industrial disputes and ensure social justice for employers and employees. Section 2(s) defines a "workman" based on the nature of work performed, excluding supervisory or managerial roles above a certain wage threshold. The employee claimed not to be in an executive cadre, while the management asserted the employee supervised junior engineers. The determinative factor is the principal duties performed, not just the designation. Lacking concrete evidence of the employee's actual duties, the court relied on the employment orders designating the employee as an engineer on the administrative side, thus excluding them from the "workman" definition u/s 2(s). Consequently, the High Court's finding that the employee was a "workman" was set aside. Since the employee did not qualify as a "workman," the provisions of the Industrial Disputes Act, including reinstatement and compensation for back wages, did not apply. The Supreme Court upheld the High Court's decision to set aside the Labour Court's award of reinstatement and compensation, as there was no violation of procedure by the management in terminating the employee's services.
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• Cheque Dishonor Case: Accused Fails to Rebut Loan Liability Presumption.

  This is a summary of a legal case related to the dishonor of a cheque. The court held that the accused failed to rebut the presumption of consideration for the cheque by providing satisfactory evidence. The accused did not dispute taking the loan, issuing the cheque, or their signature on the cheque. The burden shifted to the accused to rebut the presumption that the cheque was issued in discharge of a legal liability, which they failed to do. The accused also failed to pay the amount within 15 days of receiving the court summons, precluding them from claiming non-receipt of notice. The court upheld the trial court's sentence, including a fine of twice the cheque amount along with 9% simple interest per annum as compensation, as it was not excessive given the legal expenses and loss of interest incurred by the complainant over the three-year period.
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VAT

• Beer stock transfer saga: Manufacturers' win against interstate tax demand.

  The central issue revolved around whether the movement of goods from manufacturing units in Rajasthan to depots in Bihar and Jharkhand constituted inter-state supply of goods or inter-state stock transfers. The key points are: Transfer of goods from head office to branch cannot be treated as sale in interstate trade since a head office cannot trade with itself. A sale requires transfer of property in goods from seller to buyer for a price, while an agreement to sell involves future transfer subject to conditions. Inter-state sale attracting central sales tax occurs when sale/agreement to sell occasions movement of goods across states. Under the liquor policy, the Corporation is the wholesaler, and manufacturers submit documents like Master Agreement for supplying beer. The Corporation issues Order for Supply (OFS) based on stock requirements but has no obligation to procure minimum quantities. Delivery deviating from OFS is not acknowledged. The Master Agreement cannot be treated as an agreement to sell, being merely a standing order/tender. The movement of goods from Rajasthan to Bihar/Jharkhand was not occasioned by any sale agreement but was merely inter-state stock transfer by appellants to their own depots. Hence, central sales tax is not leviable on such movements.
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Service Tax

• Contractual interpretation: No service tax liability or damages as costs for defending erroneous third-party tax notice.

  Nil Arbitral Award upheld by HC on challenge to extraneous consideration regarding service tax liability and damages as costs. Agreements stipulated no service tax leviable, erroneous notice issued to petitioners who successfully defended before CESTAT. Arbitrator rightly held petitioners cannot fasten costs on respondent for defending erroneous third-party notice. No clause providing respondent's liability for wrongly imposed taxes. Petitioners failed to show patent illegality or fundamental breach of law to warrant interference u/s 34. Petition dismissed.
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• Water Supply Contract Not Taxable Service; Cenvat Credit Eligibility Established.

  The appellant is not liable to pay service tax on supply of water by the Government of Odisha, as the issue has been settled by the Tribunal's decision in a previous case. The agreement between the appellant and the government is for supply of water, for which charges are paid based on volume drawn, and it is not a case of assignment of right to use natural resources. Regarding re-availment of Cenvat credit subsequent to change of option u/r 6(3) of the Cenvat Credit Rules, 2004, the appellant had intimated the department, and no suppression can be alleged. Therefore, the demand of Rs. 183,09,57,095/- is set aside. Concerning Cenvat credit availed on invoices after one year of issuance, the appellant had shown it in the ER-1 return, and no suppression of facts can be alleged. Consequently, Cenvat credit cannot be denied. As no demand is sustainable, no interest is payable, and no penalty is imposable. The impugned order is set aside, and the appeal is allowed.
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Central Excise

• Gas Refilling Not Manufacturing: Court Clarifies Duty Exemption for Imported Cylinders.

  The activity of filling imported Hepta Propane/FM-200 gas from bulk containers into smaller empty cylinders does not constitute a manufacturing process under Note 9 to Chapter 38 of the Central Excise Tariff Act, 1985. The refilling process involves transferring the gas under high pressure using nitrogen gas, without any perceptible change or treatment to render the product marketable. The imported gas and nitrogen gas remain unaltered after refilling into the cylinders. The Circular No. 342/58/97-CX clarifies that simply transferring material from one container to another does not qualify as "packing" to be considered manufacturing. The Tribunal's decision aligns with previous rulings, including M/s 3M India Ltd. and Commissioner of Central Excise, Vadodara v. M/s Vadilal Gases Ltd., which held that mixing gases without chemical reactions or creating new products does not amount to manufacturing under the relevant chapter note. Consequently, the appellants' activity does not attract central excise duty, and the impugned order imposing duty and penalty cannot be sustained.
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Articles

• Rejection of Resolution Plan Submitted After The Time Fixed For Its Submission
• Unless the ITC is both availed and utilized, interest cannot be levied on the registered taxpayer
• Order passed against deceased person is nullity

Notifications

• Customs

• 22/2024 - dated 22-10-2024 - ADD
  Seeks to impose ADD on Isopropyl Alcohol imported from China PR for 5 years, pursuant to final findings of DGTR.

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• 21/2024 - dated 22-10-2024 - ADD
  Seeks to impose ADD on Sulphur Black imported from China PR for 5 years pursuant to final findings of DGTR.

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• 20/2024 - dated 22-10-2024 - ADD
  Seeks to impose ADD on Cellophane Transparent Film imported from China PR for 5 years pursuant to final findings of DGTR.

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• 19/2024 - dated 22-10-2024 - ADD
  Seeks to impose ADD on Thermoplastic Polyurethane (TPU) imported from China PR for 5 years pursuant to final findings of DGTR.

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• 46/2024 - dated 22-10-2024 - Cus
  Seeks to amend Export Duty on Certain Varieties of rice.

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• 68/2024 - dated 22-10-2024 - Cus (NT)
  Every aircraft operator shall transfer passenger name record information not later than twenty four hours - Amendments to Passenger Name Record Information Regulations, 2022

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• DGFT

• 37/2024-25 - dated 23-10-2024 - FTP
  Amendment in Export Policy of Non-Basmati Rice under HS code 1006 30 90

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• GST

• G.S.R. 652(E) - dated 22-10-2024 - CGST Rate
  Corrigendum - Notification No. 09/2024-Central Tax (Rate), dated the 8th October, 2024 - RCM on Renting of immovable property

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• G.S.R. 654 (E) - dated 22-10-2024 - IGST Rate
  Corrigendum - Notification No. 09/2024- Integrated Tax (Rate), dated the 8th October, 2024 - RCM on Renting of immovable property

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• G.S.R. 653(E) - dated 22-10-2024 - UTGST Rate
  Corrigendum - Notification No. 09/2024-Union Territory Tax (Rate), dated the 8th October, 2024 - RCM on Renting of immovable property

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• GST - States

• 4/2024-State Tax (Rate) - dated 22-8-2024 - Mizoram SGST
  Amendment in Notification No. 12/2017-State Tax (Rate), dated the 7th July, 2017

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• 3/2024-State Tax (Rate) - dated 22-8-2024 - Mizoram SGST
  Amendment in Notification No. 2/2017-State Tax (Rate), dated the 7th July, 2017

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• 15/2024-State Tax - dated 21-8-2024 - Mizoram SGST
  Amendment in Notification No. 52/2018-State Tax, dated the 4th October, 2018

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• 14/2024-State Tax - dated 21-8-2024 - Mizoram SGST
  Exempt the registered person whose aggregate turnover in FY 2023-24 is upto Rs. two crores, from filing annual return for the said financial year.

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• 12/2024-State Tax - dated 21-8-2024 - Mizoram SGST
  Mizoram Goods and Services Tax (Amendment) Rules, 2024.

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Circulars / Instructions / Orders

• SEBI - SEBI/HO/AFD/AFD-POD-3/P/CIR/2024/145 - dated 22-10-2024
  Modification in Annexure to Common Application Form (CAF)
• Customs - Instruction No. 24/2024 - dated 22-10-2024
  Issuance of Equipment Type Approval (ETA) for License-Exempt Wireless Equipment Devices.

News

• Minutes of the Monetary Policy Committee Meeting, October 7 to 9, 2024 [Under Section 45ZL of the Reserve Bank of India Act, 1934]

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• Recalibrating from Divergence to Convergence: The Indian Experience (Inaugural Address delivered by Michael Debabrata Patra, Deputy Governor, Reserve Bank of India - October 21, 2024 - at the New York Fed Central Banking Seminar organised by the Federal Reserve Bank, New York, USA)

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• CCI approves an increase in the percentage shareholding of Bharti Airtel in Indus Towers pursuant to buy back of shares by Indus Towers

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• CCI approves the proposed acquisition of Aavas Financiers Limited by Aquilo House Pte. Ltd.

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Case Laws:

• GST

• 2024 (10) TMI 1172
  Profiteering - Constitutional validity of Section 171 of the Central Good and Services Tax Act, 2017 and Rules 122, 124, 126, 127, 129, 133 and 134 of the Central Good and Services Tax Rules, 2017 - legality of the notices proposing imposition or orders imposing penalty issued by the National Anti-Profiteering Authority (NAA) under Section 122 of the Act, 2017 read with Rule 133(3)(d) of the Rules, 2017 - it was held by High Court that 'The constitutional validity of Section 171 of Act, 2017 as well as Rules 122, 124, 126, 127, 129, 133 and 134 of the Rules, 2017 is upheld. This Court clarifies that it is possible that there may be cases of arbitrary exercise of power under the anti-profiteering mechanism by enlarging the scope of the proceedings beyond the jurisdiction or on account of not considering the genuine basis of variations in other factors such as cost escalations on account of which the reduction stands offset, skewed input credit situations etc.' HELD THAT:- Issue notice.

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• 2024 (10) TMI 1171
  Profiteering - Constitutional validity of Section 171 of the Central Good and Services Tax Act, 2017 and Rules 122, 124, 126, 127, 129, 133 and 134 of the Central Good and Services Tax Rules, 2017 - legality of the notices proposing imposition or orders imposing penalty issued by the National Anti-Profiteering Authority (NAA) under Section 122 of the Act, 2017 read with Rule 133(3)(d) of the Rules, 2017 - it was held by High Court that 'The constitutional validity of Section 171 of Act, 2017 as well as Rules 122, 124, 126, 127, 129, 133 and 134 of the Rules, 2017 is upheld. This Court clarifies that it is possible that there may be cases of arbitrary exercise of power under the anti-profiteering mechanism by enlarging the scope of the proceedings beyond the jurisdiction or on account of not considering the genuine basis of variations in other factors such as cost escalations on account of which the reduction stands offset, skewed input credit situations etc.' HELD THAT:- Issue notice.

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• 2024 (10) TMI 1170
  Violation of principles of natural justice - rejection of impugned order without assigning any reason - HELD THAT:- It is settled law that reason is the heartbeat of every conclusion. An order without valid reasons cannot be sustained. To give reasons is the rule of natural justice. One of the most important aspect for necessitating to record reason is that it substitutes subjectivity with objectivity. It is well settled that not only the judicial order, but also the administrative order must be supported by reasons recording in it. The Hon'ble Supreme Court, in the cases of ASSISTANT COMMISSIONER, COMMERCIAL TAX DEPARTMENT, WORKS CONTRACT LEASING, KOTA VERSUS M/S SHUKLA BROTHERS [ 2010 (4) TMI 139 - SUPREME COURT ], TRAVANCORE RAYONS LTD. VERSUS UNION OF INDIA [ 1969 (10) TMI 23 - SUPREME COURT ] have observed that the administrative authority and the tribunal are obliged to give reasons, absence whereof would render the order liable to judicial chastisement. Once the reason has not been assigned by the competent authority for levying the penalty then on this ground alone, the impugned orders cannot be sustained. In view of the facts and circumstances of the case as well as law laid down by this Court, the impugned order passed by the appellate court dated 31.3.2023 cannot be sustained in the eyes of law and same is hereby quashed - Petiiton allowed.

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• 2024 (10) TMI 1169
  Seeking for a direction to the Respondent to process the refund application and sanction the refund along with interest - time limitation - Zero Rate Supplies - HELD THAT:- It is to be noted that initially, the petitioner has made application well within time, i.e. on 22.02.2018, claiming refund of the tax under Section 54 of CGST Act, 2017 followed a reminder letter dated 29.03.2019, but the respondent has not processed the same, but after a lapse of more than one year, they issued a Deficiency Memo on 12.04.2019 calling upon the petitioner to rectify certain deficiencies mentioned therein. According to the petitioner, they had not received the said Deficiency Memo and they came to know only when they received a letter dated 26.5.2023 from the respondent. Therefore, since the petitioner has made the application claiming refund of the tax within the time, which was not processed by the respondent more than a year, this Court is of the view that it would be appropriate to direct the respondent to process the application without insisting limitation aspect and pass orders therein. The respondent is directed to process the refund application dated 22.02.2018 filed by the petitioner and pass appropriate orders in accordance with law, after giving an opportunity of hearing to the petitioner, within a period of four (4) weeks from the date of receipt of a copy of this order. This writ petition is disposed of.

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• 2024 (10) TMI 1168
  Dismissal of appeal of the petitioner on the ground of limitation - difference between the GSTR-1 and GSTR-9C - HELD THAT:- It is admitted fact that the appeal has been dismissed on the ground of limitation. Learned counsel for the petitioner has relied upon the notification dated 02.11.2023. On close scrutiny of the said notification, it is clear that if taxable person could not file appeal against the order passed by the Proper Officer on or before 31.03.2023 under sections 73 or 74 of the GST Act and if the appeal is preferred on or before 31.01.2024, the same will be considered on merit without taking recourse to the limitation. In the case in hand, the impugned order has been passed on 20.07.2023, much after the date mentioned in the aforesaid notification, i.e., 31.03.2023. Therefore, the said notification is of no aid to the petitioner. In the case of M/s Yadav Steels [ 2024 (2) TMI 1069 - ALLAHABAD HIGH COURT ], it has been specifically held that delay in filing the appeal cannot be condoned beyond the prescribed period of limitation in the Act. This Court does not find any merit in these writ petition - Petition dismissed.

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• 2024 (10) TMI 1167
  Constitutional Validity of Rule 86A of the CGST/SGST Rules, 2017 - violation of Article 14 of the Constitution of India and Article 19 (1) (g) of the Constitution of India - requirement of reasonable cause before action is taken under the Rule by an authorized officer - HELD THAT:- In the instant case, since no pre-decisional hearing was provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A of the CGST Rules by blocking of the Electronic credit ledger of the petitioner does not contain independent or cogent reasons to believe except by placing reliance upon the reports of Enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by the Hon ble Division Bench of this Court, the impugned order deserves to be quashed. Impugned order dated 23.01.2020 at Annexure-A is hereby quashed - the concerned respondents are directed to unblock the Electronic credit ledger of the petitioner immediately upon the receipt of copy of this order , so as to enable the petitioner to file returns forthwith - petition allowed.

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• 2024 (10) TMI 1166
  Constitutional Validity of N/N. 09/2023 dated 31-03-2023 - violation of provision of section 168A of the CGST Act - extension of time limit in an arbitrary manner - non-application of mind - violation of principles of natural justice - whether the N/N. 9/2023 issued by the Government of India on 31.03.2023 at Annexure-A can be said to be without any basis or without application of mind? HELD THAT:- The explanation to Section 168A indicates as regards the time limit which has been fixed that notwithstanding anything contained in the Act, the Government may, on the recommendation of Council by notification, extend the time limit specified in or prescribed or notified under the Act. The explanation to the said Section indicates that the expression force majeure would include case of war, epidemic, flood, drought, fire, cyclone, earthquake, or any other calamity caused by nature otherwise affecting the implementation of any of the provision of the Act - A perusal of the discussion made in the GST Council in the 49th meeting held on 18.02.2023 which has been extracted hereinabove indicates that the Law Committee had considered the representation of various officers, the delay in the scrutiny and audit because of Covid-19 pandemic, the workload having been increased and that it not being capable that the proceedings be closed in terms of Subsection (10) of Section 173 by 30.09.2023, therefore, recommended an extension of a period of three months. The extension of the period of limitation in all proceedings before Courts and Tribunals is what was considered by the Hon ble Apex Court in the said decision and not matters pertaining to assessment, reassessment, show cause notice or the like issued by tax Authorities. Thus, the decision of the Hon ble Apex Court in suo motu proceedings [ 2022 (1) TMI 385 - SC ORDER ] would also not be applicable to the present facts and circumstances. The notification No.9/2023 dated 31.03.2023 at Annexure-A cannot be found fault with on the basis of the submission made by the Council for the petitioner. There are no grounds that have been made out in the present petition, so the petition is dismissed.

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• 2024 (10) TMI 1165
  Decision of appeal ex-parte - Impugned order passed ex-parte by the appellate authority on the ground that on the date fixed, the counsel of the appellant could not appear before the appellate authority and neither did anyone appear on behalf of the State and the appeal was decided on merits - whether in absence of counsel of the appellant, the appellate authority can proceed to consider and decide the appeal 'ex-parte' in absence of the appellant? - HELD THAT:- The specific statutory mandate is that after hearing the appellant, the Appellate Authority is to make further enquiry, if found necessary and pass such orders as it thinks just and proper, confirming, modifying or annuling the decision or order appealed against. Such affirmation, modification or annulment shall not be an empty formality nor can it be mechanical, without the consideration of the grounds of appeal. It is observed so, specifically when the Appellate Authority is empowered to refuse the prayer for adjournment made by an appellate, if on three prior occasions, such adjournment has been allowed, in which case also the Appellate Authority cannot absolve itself from the obligation to conduct such further enquiry as is mandated under sub-section (11) of Section 107. Sub-section (12), it has to be further emphasized, also requires the order of the Appellate Authority disposing of the appeal to be in writing and specifically stating the points for determination, the decision thereon and the reasons for such decision. When an appeal is dismissed for reason only for absence of the appellant or lack of effective prosecution, then the Tribunal should be found to have abdicated its powers and not followed the statutory mandate. Even otherwise, deciding a case ex-parte on merits without giving reasonable opportunity to the parties is blatant violation of rule of Audi alterum partem . In absence of the appellant, the Commercial Tax Tribunal had the authority to dismiss the appeal in default as provided in the Order XLI Rule 17 of the Code of Civil Procedure, 1908 rather than hearing it ex-parte and deciding it on merits. Accordingly, adequate reasons are given for the defendant for non appearance and judgement is rendered ex-parte, but recall of order, exercise of rectification has been provided under Section 31 of the U.P. Value Added Tax Act, 2008. The impugned order dated 18.12.2023, whereby the appellate authority has proceeded to decide the appeal preferred by the petitioner in his absence, is held to be illegal and arbitrary and accordingly set aside and the matter is remitted back to the appellate authority to decide the matter afresh after affording an opportunity of hearing to the parties and considering the fact that much time due to pendency of the aforesaid proceedings, has elapsed, the appellate authority is directed to expedite the appeal and decide the same within three months from the date of production of a certified copy of this order, in accordance with law. Revision allowed.

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• 2024 (10) TMI 1164
  Disposal of the petition - it is submitted that this petition may not be kept pending but with appropriate protection available under Section 112 (8) of the Rajasthan Goods and Services Tax, 2017, this petition may be disposed off with liberty to the petitioner to file appeal within stipulated period from the date the Tribunal is constituted - HELD THAT:- This petition, at this stage, is disposed off with a direction that in case petitioner makes payment as per provisions contained in Sub-section (8) of Section 112 of the Act, further proceedings shall not be drawn for recovery of the balance amount, provided that the petitioner avails statutory remedy of appeal within a period of three months from the date of the constitution of the Tribunal.

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• 2024 (10) TMI 1163
  Imposition of a condition of furnishing a bank guarantee while granting bail - Seeking modification of the order under Section 439(1)(b) of the Cr.P.C. - misappropriation of funds of the organization and also thieved certain documents - whether the Court would have imposed a condition of furnishing of bank guarantee of whatever amount it is, while granting bail? - HELD THAT:- The Apex Court answering an identical circumstance has held that asking for a bank guarantee or a condition of furnishing a bank guarantee, while granting bail, is illegal. The Apex Court in the case of Subhash Chouhan v. Union of India and another [ 2023 (1) TMI 1168 - SC ORDER ] has held ' the condition directing the appellant to deposit a sum of Rs. 70 Lakhs is not liable to be sustained and is hereby set aside.' The Apex Court has held it to be illegal in the afore-quoted judgment. The said finding would become applicable to the facts of the case at hand and the condition of furnishing of bank guarantee is on the face of it illegal. This Court is coming across plethora of cases where the concerned Courts, while granting bail are imposing a condition that the accused should furnish a bank guarantee of any quantum. This is on the face of it illegal. Such orders being passed have generated lot of litigation. It is deemed appropriate to observe that the concerned Court shall not insist on furnishing of bank guarantee for release of the accused on grant of bail. Except this, the concerned Court would be free to impose any other legally tenable conditions - the criminal petition is allowed.

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• 2024 (10) TMI 1162
  Amnesty scheme - Failure to file annual returns for the period from financial year 2018 - 2019 till 01.04.2023 but filed the same on or before 31.08.2023 - justification in continuing with the notices for non payment of late fee for belated GSTR 9C filed by tax payees before 01.04.2023 or not - HELD THAT:- Reliance placed on the judgment of this Court in Anishia Chandrakanth v. the Superintendent, Central Tax Central Excise [ 2024 (4) TMI 993 - KERALA HIGH COURT ], wherein it has been held that in view of Exts.P4 and P5 notifications, there appears to be no justification in continuing with the notices for non payment of late fee for belated GSTR 9C filed by tax payees before 01.04.2023, the date on which one time amnesty commences. Ext.P3 is set aside to the extent it sought to collect late fee for delay in filing GSTR 9C. However, the petitioner will not be entitled to claim refund of the late fee which has already been paid by him over and above Rs. 10,000/-. The writ petition is disposed of.

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• 2024 (10) TMI 1161
  Constitutional validity of Rule 117 (4) (b) (iii) of the CGST Rules - ultra-vires of Section 140 (3) of the CGST Act - violation of Article 14 of the Constitution of India - seeking declarartion that Rule 117 (4) (b) (iii) of the CGST Rules to be directory in nature - HELD THAT:- It appears that this Court has already concluded this issue in the aforesaid decision of Siddharth Enterprise [ 2019 (9) TMI 319 - GUJARAT HIGH COURT] with regard to the right of the petitioner to avail the transitional credit which is even otherwise legally available and due to the technical glitch or inadvertent mistake on the part of the petitioner, the respondent authorities were supposed to permit the petitioner to rectify TRAN-1/TRAN-2 by making necessary changes in the software if the software is designed not permitting the petitioner to upload the correct TRAN-1 to rectify the mistake in the first TRAN-1 which was uploaded on 12.12.2017. The respondent authorities are therefore directed to permit the petitioner to file the rectified TRAN-1 with correct details in correct columns so as to avail the transitional credit by the petitioner along with TRAN-2 within a period of eight weeks from today. The impugned show-cause-notice is hereby quashed and set aside - Petition allowed.

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• Income Tax

• 2024 (10) TMI 1174
  Assessment/reassessment proceedings against company insolvent - HELD THAT:- As pursuant to insolvency proceedings initiated under the Code, a resolution plan was approved by the Tribunal u/s 30 (6) of the Code. It is also on record that the claim which was lodged by the Deputy Commissioner of Income Tax, Rajkot was verified and admitted in the proceedings before NCLT after consideration of the claim filed by the Additional Commissioner of Income Tax, Rajkot. Thus, in view of above clear provisions of law no person would be entitle to initiate or continue any proceedings in respect of any claim for any dues relating to the period prior to approval of resolution plan. We therefore, deem it appropriate to quash and set aside Assessment Order passed u/s 147 r.w.s.144 and 144B and order passed u/s 148A (d) as well as the impugned notices passed under Section 148A (b) - Decided in favour of assessee.

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• 2024 (10) TMI 1173
  Denial of Registration u/s 80G - belated filing of application in form 10AB - HELD THAT:- When we read the Budget Speech of Hon ble Finance Minister 2020 and the Memorandum of Finance Bill 2020 together, it becomes clear that the concept of Provisional registration was mainly to facilitate the registration of newly formed Trust/Institutions which have not yet begun the activities. In continuation of this when we read the sub clause iii of Proviso of section 80G(5), which we have already reproduced above, it is clear that the intention of parliament in putting the word or within six months of commencement of its activities, whichever is earlier is in the context of the newly formed Trust/institutions. For the existing Trust/Institution, the time limit for applying for Regular Registration is within six months of expiry of Provisional registration if they are applying under subclause (iii) of the Proviso to Section 80G(5) of the Act. If we agree with the interpretation of the CIT(E), then say a trust which was formed in the year 1986, performed charitable activities since 1986, but did not applied for registration u/s 80G, the said trust will never be able to apply for registration now. This in our opinion is not the intention of the legislation. Even otherwise, the Provisional Approval is upto AY 2024-25, and it can be cancelled by the CIT(E) only on the specific violations by the assessee. Therefore, we hold that the Assessee had made the application in form 10AB within the prescribed time limit and hence it is valid application. CIT(E) has not discussed whether the Assessee fulfils all other conditions mentioned in the section as he rejected it on technical ground. Therefore, we direct the CIT(E) to treat the application as filed within statutory time and verify assessee s eligibility as per the Act. The CIT(E) shall grant opportunity to the assessee. Appeal of the assessee is allowed for statistical purpose.

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• 2024 (10) TMI 1160
  Validity of proceedings u/s 153C - whether the assessee should be treated as a Searched Person or Other Person ? - Whether Loose Sheets and Diary have any evidentiary value? - As decided by HC [ 2024 (2) TMI 116 - KARNATAKA HIGH COURT] impugned notices issued u/s 153C based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal. As satisfaction note is required to be recorded under Section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant / Revenue. HELD THAT:- Delay condoned. Heard the learned counsel appearing for the petitioners. We are not inclined to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petitions are dismissed.

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• 2024 (10) TMI 1159
  Deemed registration u/s 12AA - specific deeming provision in the I.T. Act, 1961 - HELD THAT:- There is much substance in the contention as urged on behalf of the Revenue that the decision of Harshit Foundation Sehmalpur [ 2022 (5) TMI 179 - SC ORDER ] would be required to be held to be the law declared by the Supreme Court u/Article 141 of the Constitution, on the interpretation of the interplay between Section 12A and Section 12AA (2) on the issue whether sub-section (2) of Section 12AA conceives any deemed grant of registration, if the assessee s application is not decided within six months. This decision considers the applicability and interpretation of the said provisions and accords an approval to the view taken in Muzafar Nagar Development Authority [ 2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB) ] and as in Harshit Foundation Sehmalpur [ 2022 (5) TMI 179 - SC ORDER ] which had also distinguished the applicability of the decision of the Supreme Court in Society for Promotion of Education [ 2016 (2) TMI 672 - SC ORDER ] We find ourselves in agreement with the observations made in Harshit Foundation Sehmalpur [ 2022 (5) TMI 179 - SC ORDER ] including to distinguish the applicability of the decision, the Supreme Court in Society for Promotion of Education [ 2016 (2) TMI 672 - SC ORDER ] On a reading of the decision of the Supreme Court in Harshit Foundation Sehmalpur (supra) it is clear that the Supreme Court has considered the legal effect which emanated from Section 12AA (2) of the IT Act and as considered by the Full Bench of the Allahabad High Court in Muzaffar Nagar Development Authority [ 2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB) ] when it upheld the decision of the Division Bench in Harshit Foundation Sehmalpur [ 2022 (5) TMI 179 - SC ORDER ] while approving the decision of the Full Bench. In this view of the matter, considering the reasoned orders passed by the Supreme Court although in dismissing the SLP applying the principles as laid down in Kunhayammed and others vs. State of Kerala Anr. [ 2000 (7) TMI 67 - SUPREME COURT (LB) ] it would be required to be held that the Revenue is right in its contention that the decision of the Supreme Court in Harshit Foundation Sehmalpur (supra) is the law declared by the Supreme Court under Article 141 of the Constitution. Having considered both the decisions as rendered by the Supreme Court namely in Society for Promotion of Education [ 2016 (2) TMI 672 - SC ORDER ] and Harshit Foundation Sehmalpur [ 2022 (5) TMI 179 - SC ORDER ] and as held by the Division Bench of the Allahabad High Court, in fact, we do not find that there is any situation that both the said decisions are mutually irreconcilable, for the reasons we have noted hereinabove. In our opinion, accepting Mr. Mundhra s argument that these decisions bring about a mutually irreconcilable legal position, would not be a correct reading of these decisions. Thus, as held by the Supreme Court in Harshit Foundation Sehmalpur [ 2022 (5) TMI 179 - SC ORDER ] the clear position in law is to the effect that Section 12AA (2) of the IT Act does not recognize any deeming fiction, that an application for registration is deemed to be granted, if it is not disposed of within six months, as succinctly held by the Full Bench of the Allahabad High Court in Muzafar Nagar Development Authority (supra) when it observed that the Parliament has carefully and advisedly not provided for such deeming fiction and as approved by the Supreme Court in Harshit Foundation Sehmalpur [ 2022 (5) TMI 179 - SC ORDER ] Allow the Revenue s appeal in answering the question of law in favour of the Revenue and against the assessee.

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• 2024 (10) TMI 1158
  Condonation of delay in filing return of income u/s 119 (2) (b) - delay of one day, as on the earlier day, the returns could not be uploaded on account of technical issue - HELD THAT:- We are not persuaded to accept the reasoning as set out namely that Respondent No. 1 considered the report submitted by the AO, which contained a screen shot of the Assessment Order in which it was found that the Return has been processed u/s 143 (1) of the Act with demand due. It is for such reason Respondent No. 1 was of the opinion that the application of the Petitioner for condonation of delay needs to be disposed of. In our opinion, in passing the impugned order, there is complete nonapplication of mind, as also the reason set out to reject the petitioner s application is completely misconceived. The reason, that the return has been processed, can be no ground to reject the delay in filing of the petitioner s application seeking only one day s delay in filing of the return. Respondent would also not dispute that the delay in filing the Return being only of one day which was bona fide could not have been rejected for such reason. The principles which are paramount and jurisprudentially accepted, and as discussed by this Court in the case of Jyotsna Mehta [ 2024 (9) TMI 585 - BOMBAY HIGH COURT] in our opinion, mandate their application in the present facts, for the delay to be condoned.

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• 2024 (10) TMI 1157
  Reopening of assessment u/s 147 - income in relation to NRE Account - as argued source of income as well as deposits were from NRE Account and therefore, the same was not taxable in India - HELD THAT:- From the bank details provided, it is evident that remittance of the loan was made from NRE account of the assessee, and source of that income was explained. Assesse s explanation is supported by the bank statement produced. The income earned in NRE Account is exempt u/s 10(4) (ii) of the Act and the source of income and the remittance of loan being explained by the assessee, we do not find any justification for issuance of Notice u/s 148, as also for passing of order u/s 148A (d) of the Act.

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• 2024 (10) TMI 1156
  Revision u/s 263 against company insolvent - HELD THAT:- Considering the submissions made on behalf of both the sides and upon perusal of the record, it is noticed that pursuant to insolvency proceedings initiated under the Code, a resolution plan was approved by the Tribunal under Section 30 (6) of the Code. It is also on record that the claim which was lodged by the Deputy Commissioner of Income Tax, Rajkot was verified and admitted in the proceedings before NCLT after consideration of the claim filed by the Additional Commissioner of Income Tax, Rajkot. As relying on case of Ghanashyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT ] no person would be entitled to initiate or continue any proceedings in respect of any claim for any dues relating to the period prior to approval of resolution plan. In view of approval of resolution plan, all liabilities of all stakeholders including that of Government/ Statutory Authority shall stand extinguished after approval of the resolution plan. We therefore, deem it appropriate to quash and set aside the notice u/s 263 of the Act. WP allowed.

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• 2024 (10) TMI 1155
  Validity of Assessment Order passed by ACIT, International Taxation - failure to file objections within the stipulated time period u/s 144C - concept of draft order - HELD THAT:- Section 144C (2) provides that on receipt of the draft order, the eligible officer shall within 30 days of the receipt by him of the draft order file his objections, if any, to such variations with DRP and AO. The concept of draft order is introduced in Section 144B which provides for faceless assessment. Prior to insertion of Section 144B, there was no concept of draft order . Therefore, after the draft assessment order has been served upon the assessee, it was open for the assessee to upload form 35A on the Income Tax Portal. In the facts of the case, it is not in dispute that the petitioner had uploaded form 35A on 18.04.2023. The petitioner assessee had also sent form 35A in physical form through Maruti courier on 18.04.2023. Thus, for all intents and purpose, it cannot be said that the petitioner had not filed the objections within 30 days as specified under the provision of Section 144C (2) (b) of the Act. AO was therefore not justified in passing the impugned assessment order dated 29.05.2023 invoking provisions of Section 144C (3) of the Act on the ground that the assessee did not file objections within the specified time as per the provisions of Section 144C (2) (b) of the Act. The impugned Assessment Order is contrary to the provision of Section 144C of the Act and is therefore liable to be quashed and set aside and at the same time, when the DRP by the impugned order dated 29.12.2023 has refrained from passing any order on variation in view of the impugned final assessment order being passed. As the final assessment order is not tenable the order of DRP is also required to be quashed and set aside. Similarly, the provisional attachment placed under Section 281B of the Act would also not survive as the same has already lived its life of 6 years and there is nothing on record to show that the same is extended by the Assessing Officer more particularly after passing of the assessment order dated 29.05.2023. The petition succeeds and is accordingly allowed.

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• 2024 (10) TMI 1154
  Reopening of assessment u/s 147 - reason to believe - deduction u/s 80IC - scope of change of opinion - HELD THAT:- As noticed that the return filed by the assessee for the AY2016-17 was selected for scrutiny and thereafter the assessment order u/s 143 (3) was passed. Prior to assessment order u/s 143 (3), a notice u/s 142 (1) was issued whereby details with regard to claim of deduction u/s 80IC of the Act were called for. To the said notice, assessee responded on 08.12.2018 with the details called for in relation to deduction u/s 80IC of the Act. Thereafter, assessment order u/s 143 (3) dated 24.12.2012 was passed accepting the return. Thereafter, notice u/s 148 was issued for the reason that the assessee has stated that M/s. Alpha Pharma Roorkee was merged with assessee company w.e.f. 01.10.2014. Assessee company as stated above has claimed deduction u/s. 80IC in respect of profit earned by Alpha Pharma Roorkee (undertaking). Since, the undertaking availing deduction u/s. 80IC was merged with the assessee company w.e.f. 01.10.2014, as per the provision of sub-section 12 of Section 80IA r.w.s. 12A of the Act, the undertaking is not eligible for tax benefit u/s.80IC of the Act. Thus no reason to believe that income of the assesse has escaped assessment for A.Y. 2016-17 within the meaning of section 147 of the I.T. Act, because of the non-disclosure of fully and truly all the material facts necessary for assessment for A.Y.2016-17. Assessee at the original assessment stage disclosed fully and truly all material facts relevant for assessment. The details in relation to deduction claimed under Section 80IC were called for and responded by the assessee. Therefore, the assesse s contention of reopening based on mere change of opinion merits acceptance. In this case also it is not a case where the details called for in relation to deduction under Section 80IC of the Act were not submitted by the assessee. The query raised and responded shows that the deduction claimed by the assessee was fully explained and thereafter the order of assessment under Section 143 (3) was passed. Therefore, in our opinion, the reasons recorded for reopening of the assessment under Section 147 for Assessment Year 2016-17 would amount to mere change of opinion by the respondents. The notice for reopening of assessment cannot be sustained. In this view of the matter validity or otherwise of the claim for deduction under section 80IC of the Act is not necessary to be examined. Petition succeeds and is accordingly allowed. Impugned notice u/s 148 is hereby quashed and set aside.

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• 2024 (10) TMI 1153
  Seeking condonation of delay for e-verification of the return of income - HELD THAT:- As noticed that in the application u/s 119 (2) (b) of the Act, the assessee explained the reason for belated filing of return. The status of petitioner being Non-resident Individual, is not in dispute. There is no denial to the fact that the petitioner was not available in India from 17.06.2020 to 09.08.2022, since the necessary documents were part of record. The due date of filing of return of income had expired on account of assessee s non availability and therefore, she had filed belated return of income u/s 139 (4). The contention of respondent in the affidavit that there is no evidence to prove the technical glitches faced by the assessee in our opinion is not a valid ground since it is very difficult to prove technical glitch. In our opinion, it is a case of genuine hardship faced by the assessee and there being sufficient cause for condonation of delay, the order passed by the respondent u/s 119 (2) (b) of the Income Tax Act, 1961 deserves to be quashed and set aside. The aspect of undue hardship on part of the Petitioner has remained undisputed by the respondent. The order passed by the respondent u/s 119 (2) (b) of the Income Tax Act, 1961 is hereby quashed and set aside. The respondent is directed to consider the application of the assessee on merits and to pass an order in accordance with Law within a period of 12 weeks from the date of receipt of this order.

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• 2024 (10) TMI 1152
  Validity of Reopening of assessment - suppression of turnover as unearthed during the survey conducted by the Enforcement branch of Trade Taxes - ITAT set aside reopening as was without application of mind - HELD THAT:- When the notice u/s 148 had come to be issued, there were no outstanding demands or orders of assessment on the basis of the survey which had been originally conducted. In fact, and as the Tribunal records, on 30 December 2010 the original order of assessment had itself come to be set aside by the appellate authority and the matter remitted to the AO under the Sales Tax enactment for making a fresh assessment. We are informed that till dateno fresh assessment under the aforesaid Act has come to be either framed or drawn. This thus constituted material which was squarely relevant and pertinent for the purposes of formation of opinion u/s148. However, and as would be manifest from the reading of the reasons recorded by the AO, it had proceeded solely on the basis of what had come to be recorded in the course of the Sales Tax survey. It becomes evident that the AO not only failed to independently examine those allegations, it also abjectly failed to enquire and ascertain the status of the proceedings under the Sales Tax statute. If that had been done, it would have found that there existed no demand or assessment against the assessee on the relevant date. CIT (A) while dealing with the aforesaid and while negating the objections relating to the assumption of jurisdiction u/s 148 had chosen to rest its view on a prima facie formation of opinion. The said decision is thus clearly rendered untenable and unsustainable on this ground alone. As correctly decided by ITAT impugned information regarding survey by Sales Tax Department has been solely used by the Assessing Officer in letter and spirit for formation of belief of escapement of income without making any enquiry or application of mind, particularly when subsequent proceedings before various authorities of Sales Tax Department were available before issuance of notice u/s. 148 and were got acknowledged to the AO before passing the reassessment order. In presence of these facts, the reasons recorded by the AO cannot, in any way, be said to be proper to form a belief of escapement of income, as the information so received was neither found well founded nor the AO made any efforts to make any verification or application of his mind on the same. The provisions of Section 147 do not give unfettered powers to reopen the assessment and the AO is required to satisfy the pre-conditions as given in the said section, which is lacking in the present case - Decided against revenue.

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• 2024 (10) TMI 1151
  Computation of STCG - manner in which the short-term capital gains that are chargeable u/s 45(4) - HELD THAT:- A reading of the provisions of Section 45(4) would indicate that the computation has to be in the manner prescribed u/s 48, as modified by Section 50(1) of the Act. Consequence of an application of the said provisions of the IT Act to the income assessed in respect of the appellant firm, has not been discussed by the Tribunal in the impugned order. We are of the view that the Tribunal ought to have considered the said aspect also while disposing the appeal preferred by the revenue, especially because the order of the First Appellate Authority, that was impugned by the revenue before it, was in favour of the appellant herein. Thus, while we uphold the finding of the Tribunal that the charge of Short Term Capital Gains, in the instant case, has to be as mandated in Section 45(4) we remand the matter back to the Tribunal for computing the extent of short-term capital gains, if any, that would be brought to tax in relation to the appellant herein. The Appellate Tribunal would have to do the said exercise by taking into account the totality of transactions effected during the previous year relevant to the assessment year in question.Decided against revenue. Thus in the light of the discussions in this judgment and the remand necessitated to the Tribunal for a specific finding on the extent of short term capital gains, if any, that would accrue to the appellant firm during the assessment year in question. The Appellate Tribunal shall examine the provisions of Section 48, as modified by Section 50(1) of the Income Tax Act, and determine whether or not any short-term gains had accrued to the appellant firm for the assessment year in question.

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• 2024 (10) TMI 1150
  Income tax demand proceedings post insolvency - demand issued u/s 156 - Steps as secured creditor before the Hon ble NCLT against the tax liability arising in the present case - HELD THAT:- Section 14 of IBC Code is very clear on the aspect that once moratorium is drawn and the insolvency commencement date is declared any institution of suits or definition of pending suits or proceedings against the creditor, debtor (in the present facts of the case of assessee before us) including the execution of any judgment, decree, or order in any Court of law, Tribunal, Arbitration Panel or other authority is to be prohibited. Admittedly, a registered Insolvency Professional is appointed by Hon ble NCLT and the assessee no longer could be represented by the representative to whom the authority was provided. Even otherwise, none appeared on behalf of the assessee before us today. At this juncture, we refer to the decision of in the case of Ghanshyam Mishra and Sons Pvt. Ltd [ 2021 (4) TMI 613 - SUPREME COURT ] wherein has considered a situation wherein, the resolution plan was approved by the adjudicating authority u/s 31(1) of the IBC Code. Hon ble Supreme Court observed that, once the resolution plan was drawn, the claim as provided in the resolution plan stood frozen, and will be binding on the corporate debtor, its employee, its members, creditors, Central Government and any State Government or legal authority, guarantor and other stakeholders. We note that in the present facts of the case, the resolution plan is yet to be finalized. When we read the newly inserted provisions of Section 156A of the Act, it is necessary to remand the appeal to the Ld. AO to take necessary steps/action before Hon ble NCLT. We deem it fit and proper to remand this appeal back to the Ld. AO to take necessary steps as per Section 156A of the Act

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• 2024 (10) TMI 1149
  Denial of deduction u/s 80IA - adjustment made u/s 143(1)(a) - assessee has contended that no prior intimation was given to the assessee before making the alleged adjustment or denying deduction u/s 80IE - HELD THAT:- As decided in case of Smt. Neelam Pachisia, Bangalore [ 2020 (3) TMI 1480 - ITAT BANGALORE] the proviso mandating giving of intimation to the assessee to the proposed adjustment should have also been followed by the revenue. It is so because, the said proviso was also inserted in sec.143(1) along with clauses (iii) to (vi) by Finance Act, 2016. Since no such intimation was given to the assessee, the impugned adjustment is liable to be deleted. Thus we allow the ground raised by the assessee because no such intimation was given to the assessee prior to make the impugned adjustment.

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• 2024 (10) TMI 1148
  Estimation of income - Addition of Bogus Purchases - HELD THAT:- The party listed as serial no. 20 by Ld. AO is others for Rs.209.82 Lacs for which even the names of the suppliers have not been identified by AO. The party wise list of others have nowhere been provided to the assessee and there is no finding with respect to these parties. Therefore, the addition, to that extent, has rightly been deleted by Ld. CIT(A). Purchases made from 4 entirely bogus parties aggregate to Rs.5,11,56,526/-. The purchases from remaining 15 parties are Rs.5,35,20.325/- which are partially bogus only. The assessee has already offered additional income of Rs.5,53,25,652/- in its return of income. Since the remaining purchases of Rs.5,35,20,325/- as made from 15 parties are partially bogus, to plug the leakage of revenue, we estimate addition against the same @10% which comes to Rs.53,52,032/-. The complete bogus purchase from 4 parties aggregate to Rs.5,11,56,526/- which stand sustained by us. Thus, the total addition as estimated by us would be Rs.5,65,08,558/-. The assessee has already offered additional income of Rs.5,53,25,652/-. Therefore, the balance addition as sustained by us would be Rs.11,82,906/-. No relief could be granted against GST component. The Ld. AO is directed to restrict the impugned additions to the extent of Rs.11,82,906/-. Disallowance of sub-contractor s expenses - We find that such expenses have been quantified at Rs.157 Lacs whereas the assessee has admitted partial income to the extent of Rs.140.18 Lacs only. The remaining component is GST component which also could not be allowed to the assessee on the ground that expense itself is bogus. The bogus GST component so paid has been adjusted from output GST liability.The assessee has avoided GST payment to that extent. Therefore, no interference is required in the orders of lower authorities, on this issue. The grounds raised by the assessee stand dismissed. Addition of unexplained investment u/s 69 - addition has been made solely on the basis of loose excel sheet found during search and statements record therein - HELD THAT:- As in Kranti Impex Pvt. Ltd. [ 2018 (3) TMI 424 - ITAT MUMBAI] held that when the seized papers were undated having no acceptable narration and did not bear the signature of any party, they are in the nature of dumb documents having no evidentiary value and could not be taken to be the sole basis for determination of undisclosed income of the assessee. The onus would be on revenue to collect cogent evidences to corroborate the nothings therein. Impugned additions as made by AO merely on the basis of loose sheets without any corroboration thereof, was not adequate enough to draw adverse inference of unaccounted loans by the assessee-firm. Therefore, we delete the same and allow the corresponding grounds as raised by the assessee. AO is directed to recompute the income of the assessee in terms of our adjudication.

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• 2024 (10) TMI 1147
  TP Adjustment - determination of Arm s Length Price ( AMP ) of international transactions entered - comparable selection - HELD THAT:- Elofic Industries Ltd. AND WABCO TVS (India) Ltd. Brakes India Pvt. Ltd. be excluded as functionally dissimilar with that of assessee, an Indian manufacturing for Auto components System and breaking system products. Brakes India Pvt. Ltd. is having diversified operations and diversified market, the Brakes India Ltd. cannot be proper comparable. Accordingly, we order to exclude Brakes India Pvt. Ltd. from the list of comparables. Clutch Auto Ltd. cannot be a valid comparable vis- -vis a taxpayer having export sales of more than 10% . Accordingly, we direct the TPO to exclude it from the list of comparables. ANG Industries Ltd. excluded from comparables as total sales are not even near to the taxpayer which is having a meager export sale of 0.17% and since the comparable companies are operating in entirely different geographical market, the same cannot be a valid comparable vis- -vis the taxpayer. Faiveley Transport Rail Technologies India Ltd. has revenue from comparable segment 26% and it has AMP expense ratio of 4% which is higher than filter of 2% which has been considered appropriate by the CIT(A) to direct the TPO to exclude from the comparable in the absence of any contrary materials on record, we find no error or infirmity in the finding and the conclusion of the CIT(A). XLO India Ltd. excluded having negative net worth - As per the financials of the XLO India Ltd., it had profit of Rs. 6,150/- thousand in AY 2010-11 and it had negative net worth in the same year. The net worth of the said company has been improved from previous three years and it is not the case of diminishing returns, to substantiate the above claim, the Assessee produced the working at Annexure A-1 to the submission filed on 13/06/2024 - thus as relying on the ratio laid down in the case of Gillette Diversified and Operation Pvt. Ltd.[ 2017 (5) TMI 1828 - DELHI HIGH COURT] and Welspun Zucchi Textiles Ltd. [ 2014 (2) TMI 1287 - ITAT MUMBAI ] we direct the T.P.O. to consider XLO India as comparable company. Rane Brake Lining Ltd be excluded as the same is having AMP expense ratio of 4% which is higher than filter of 2% as considered appropriate by CIT(A) and it is also supplying goods in aftermarket segment. Sundram Brake Linings Ltd. sales are not even near to the taxpayer which is having a meager export sale of 0.17% and since the comparable companies are operating in entirely different geographical market, the same cannot be a valid comparable vis- -vis the taxpayer. Determination of operating revenue - not considering the foreign exchange gain as operating income - Assessee contended that foreign exchange fluctuation is directly related to business transaction, therefore it is an operative item, therefore, the foreign exchange fluctuation should be considered as operating revenue - HELD THAT:- By relying on the order of the Co-ordinate Bench in Assessee s own case for A.Y 2010-11 [ 2018 (7) TMI 2351 - ITAT DELHI] we direct to compute the operating margin of the tax payer, foreign exchange gain is to be considering the same as part of operating income for computing the operating margin as well as comparable companies. Accordingly, the Ground No. 4 of the Assessee is allowed. Not considering cash profit/operating income as profit level indicator on account of high depreciation component - It is the case of the assesses that the average depreciation/sales of the Assessee is 10.57%, therefore, sought adjustment on account of depreciation - TPO has not allowed the adjustment in PLI of the Assessee on the ground that for the tested party, no adjustment should be allowed in the net profit - HELD THAT:- As relying in Assessee s own case for Assessment Year 2010-11 [ 2018 (7) TMI 2351 - ITAT DELHI] we direct the TPO to decide the issue afresh in the light of decision rendered in the case of ACIT Vs. Gates India Pvt. Ltd. [[ 2017 (8) TMI 282 - ITAT DELHI ] and Schefenacker Motherson Ltd. [ 2009 (6) TMI 125 - ITAT DELHI ] accordingly the Ground of the Assessee is partly allowed for statistical purpose.

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• 2024 (10) TMI 1146
  Disallowance u/s 37 - interest paid on delayed payment of additional Customs Duty paid, considering the same as in nature of penalty - assessee in its submissions mainly contended that the interest paid was not penal in nature but was compensation for delay in payment of taxes and hence the same is allowable as revenue expenditure u/s 37 - HELD THAT:- As relying on Mahalakshmi Sugar Mills Company Ltd. [ 1980 (4) TMI 1 - SUPREME COURT] , Lachmandas Mathuradas [ 1997 (12) TMI 16 - SUPREME COURT] Mysore Electrical Industries Ltd. [ 1991 (3) TMI 30 - KARNATAKA HIGH COURT] since interest is paid on delayed payment of custom duty, which calculated at certain percentage and on time basis is nothing but compensation for delay in payment of taxes and accordingly compensatory in nature. The interest expenses are incurred wholly and exclusively for the purpose of business and the same is neither personal in nature nor capital in nature and therefore cannot be treated at par with the penalty at any point of time. The Interest due to delayed payment of custom duty is deductible u/s 37 of the Act as it is an accretion to the main payment and not a penalty and accordingly allowable as deduction. Appeal filed by the assessee is allowed.

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• 2024 (10) TMI 1145
  Assessment proceedings u/s 153C - Period of limitation - deemed date for the possession of the seized documents - HELD THAT:- On the similar facts in the case of Jasjit Singh [ 2014 (11) TMI 1012 - ITAT DELHI] it was held that the date of receiving of the seizes documents would become the date of search and six years period would be reckoned from this date. From the above discussion the date of recording of the satisfaction will be the deemed date for the possession of the seized documents which is 03-10-2022 and six years would be reckoned from this date. The submission made by AR is tenable that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and six years immediately preceding the assessment year relevant for u/s 153C of the Act will be AY 2018-19 to 2022-23. The assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C and not u/s 143(2) of the Act. The case is squarely covered by case of Akanksha Gupta [ 2024 (7) TMI 1133 - ITAT DELHI] Therefore the assessment order passed u/s 143(3) of the Act is bad in law and liable to be quashed and quashed accordingly. Appeal of assessee is allowed.

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• 2024 (10) TMI 1144
  Assessment u/s 153A - Assessment in case of search or requisition - deduction claimed u/s 80IA(4) - Whether an assessee can make a claim for deduction under Chapter VIA of Income Tax Act, 1961, for the first time, in the return of income filed in response to the notice issued u/s 153A pursuant to a search conducted u/s 132 ? - HELD THAT:- Once the matter has been finally concluded by the Hon ble Apex Court Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] and held that in unabated or concluded assessment, the AO cannot make any additions in the absence of any incriminating material found as a result of the search, in our considered view, particularly in the case of unabated or concluded assessments, and since the AO cannot tinker with unabated or concluded assessments in the absence of any incriminating material, with equal force, the same ratio should be applicable to the assessee as well. Thus, based on the findings of the Hon'ble Apex Court, in our considered view, the appellant also cannot make any fresh claim of deduction or expenditure for the first time in the return of income filed in response to the notice issued u/s 153A of the Act. Insofar as the abated assessment is concerned, the assessee can make all claims, provided the return of income is filed in adherence to the timeline to furnish as per notice u/s 153A of the Act, failing which the assessee shall not be able to claim any deduction in view of Section 80A As going by the wording of the provisions of Section 80A(5) and Section 80AC of the Act, in order to claim any deductions u/s 80IA(4) of the Act, the assessee should file its return of income on or before the due date prescribed u/s 139(1) and further, the said claim should be made in the return furnished. in order to claim deduction u/s 80IA(4) as per Section 80IA(7), furnishing of the audit report on or before the specified date referred to in Section 44AB of the Act is mandatory and not directory as argued by assessee. We are taking support from the decision of Dilip Kumar and Company [ 2018 (7) TMI 1826 - SUPREME COURT] wherein clearly held that beneficial provisions like, deductions/ exemptions provisions are required to be strictly interpreted and any perceived ambiguity would necessarily ensure to the benefit of the revenue. We further note that in the case of PCIT Vs. Wipro Ltd [ 2022 (7) TMI 560 - SUPREME COURT] has also considered the interpretation of provisions of Section 10B of the Act and held that such an option should be exercised before the due date u/s 139(1) by way of filing a declaration. Although the said decision was in the context of withdrawal of exemption u/s 10B in our considered view, when it comes to the interpretation of exemption and deduction provisions, the said provisions should be strictly interpreted so as to achieve the larger intent of the Legislature. Therefore, we are of the considered view that the arguments of the learned counsel for the assessee that when the appellant filed its return of income in response to a notice u/s 153A of the Act, it partakes the nature of the return filed u/s 139 of the Act and thus, all the conditions prescribed u/s 80A(5) and Section 80AC are satisfied is contrary to law and devoid of merit and cannot be accepted. We are of the considered view that the assessee cannot make a fresh claim of deduction under Chapter VI-A of the Income Tax Act, 1961, for the first time, in the return of income filed in response to notice issued u/s 153A of the Act, pursuant to search conducted u/s 132 of the Act, in unabated/completed assessment as on the date of search. In case of abated assessments, like the AO who can make assessment based on incriminating materials and any other information made available to him, including information furnished in return of income, the assessee may claim all deductions towards any income or expenditure, as if it is a first return of income and fresh assessment. The present discussion hereinabove is with reference to the questions referred to on the issue, i.e. whether a fresh claim of deduction under Chapter VI-A of the Income Tax Act, 1961 could be maintained for the first time in the return filed pursuant to a notice u/s 153A of the Act or not. Assessee and the Senior Standing Counsel appearing for the Revenue did not argue on the merits as to whether the assessee is eligible for such a claim or not. Therefore, the present appeals filed by the Revenue are posted for hearing on the issue of deduction claimed u/s 80IA(4) of the Act on merits. The Registry is directed to list the appeals in due course and inform both parties

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• Customs

• 2024 (10) TMI 1143
  Denial of benefit of duty exemption No. 21/2002 CUS dated 01.03.2002 - imported coke breeze - validity of the show cause notice, having invoked the extended period of limitation u/s Section 28(4) of the Customs Act - penalty - it was held by CESTAT that 'As the importer had clearly declared the imported goods as coke breeze in the Bills of Entry filed at the time of import, the charge of suppression willful misstatement as levelled against the importer does not hold good and cannot be sustained.' HELD THAT:- This appeal is disposed off by bearing in mind the fact that the appellant has succeeded on the ground of limitation. Since it is not inclined to interfere in the matter on that score, all contentions which would arise to the appellant could be raised in any other appropriate case. Application disposed off.

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• 2024 (10) TMI 1142
  Condonation of delay of 263 days in filing this appeal - HELD THAT:- The reasons assigned for seeking condonation of delay are neither satisfactory nor sufficient in law so as to condone the delay - the application seeking condonation of delay is dismissed.

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• 2024 (10) TMI 1141
  Recovery of Customs duty in the form of IGST forgone in course of imports of the goods - violation of Pre-import Condition in the imports made against the advance authorization scheme during the period October 2017 to November 2018 - Jurisdiction - proper officer to issue SCN - Revenue neutrality - whether Ld. Commissioner of Customs, Ahmedabad does not have the jurisdiction to issue the impugned show cause notice for the goods imported through Mundra Ports and Nhava Sheva Ports? - time limitation - HELD THAT:- In almost all the cases, the appellant have fulfilled the pre-import condition, in some cases the bill of entry was re-assessed and appellant have paid the IGST for which they are not contesting on the ground that they are eligible for ITC under GST. In view of the above on the factual aspects of the case the demand of IGST along with the interest, fine and penalties are not sustainable. As regard the penalty corresponding to the IGST paid by the appellant since, the same is availed as ITC under GST there is no malafide on the part of the appellant. Hence, penalty corresponding to the duty paid by the appellant which is not in contest will also not sustain on the ground of Revenue neutrality. In the facts of the present case the appellant‟s bills of entry were assessed and the same were verified by the custom authority and clearance of goods was allowed. The issue raised in the present show cause notice was very much existing at the time of assessment of bill of entry. The appellant have bonafidely claimed the exemption Notification No.18/2015 as amended. Therefore, nothing prevented the department to raise the objection at the time of assessment of bills of entry and clearance of goods. Moreover, the issue involved interpretation of exemption notification on advance authorization - the suppression of fact cannot be attributed to the appellant. Accordingly, the extended period for demand is prima facie not invokable in the facts of the present case. Therefore, the appellant has made out a strong prima facie case on time bar. Though entire case has been decided on factual matrix as discussed above, the demand of duty, interest, penalty and fine are not sustainable. However, the issue of levy of interest, fine and penalty has been independently considered by this Tribunal in the case of CHIRIPAL POLY FILMS LTD. VERSUS COMMISSIONER OF CUSTOMS-CUSTOMS AHMEDABAD [ 2024 (9) TMI 940 - CESTAT AHMEDABAD] . In view of the said judgment also, the appellant are also entitled for waiver of interest, penalty and redemption fine. The impugned order is not sustainable - Appeal allowed.

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• 2024 (10) TMI 1140
  Levy of penalty under section 112(a) of CA, 1962 - Alleged forged DFRC license for import - HELD THAT:- There is no dispute insofar as the fact that the DFRC license is freely transferable. It is also a fact borne on record that the appellants were not even aware as to who was the holder of license once they admittedly sold it on 14.06.2007. Hence, it was for the buyer of DFRC license to register at the port of export and then apply for Telegraphic Release Advice TRA, in terms of para 8 of the Public Notice No. 75/2000 dated 10.7.2000. The above facts when considered relied up on by the appellants, cumulatively suggest that as pointed out by the bench, it is nowhere seen as to the mischief played by the appellants insofar as the alleged change that was alleged by the revenue. Hence, when the role of these appellants itself are not clear, saddling them with penalty is not in accordance with law. The impugned orders is set aside - deletion of penalty imposed on the appellants - appeal allowed.

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• 2024 (10) TMI 1139
  Classification of goods - steaming (non-coking) coal in bulk - non-submission of country-of-origin certificate - Benefit of concessional rate of BCD under ASEAN FTA Preferential Tariff Agreement - HELD THAT:- There was an alteration / correction made in the COO certificate which was did not satisfy the provisions of procedure 9 of operational certification procedures for the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement Between the Government of Member States of the Association of South East Asian Nations (ASEAN) and the Republic of India) Rules 2009. It is felt that denying substantial benefits only for technical errors would not do justice to the appellant. While the authenticity of COO is doubted by revenue on this score, nothing concrete has been mentioned in the impugned order to justify the doubt, except for the correction made and the date of the COO certificate being after the date of shipment. Doubt is not a substitute for proof. There is no other taint on the validity of the certificate. The procedure mentioned in the Rules to check any doubt regarding the COO certificate was not followed. The impugned order is set aside and the appeals are allowed.

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• 2024 (10) TMI 1138
  Refund of the excess additional duty of customs - refund claims are hit by time limitation or not - prove beyond doubt that the incidence of duty has not been passed on to the buyers - HELD THAT:- It is seen that the same chartered accountant issued three identical certificates, each dated 29.12.2015, to the appellant in respect of the import of the same goods at about the same time from Delhi, Ahemdabad and Hyderabad. The Hyderabad Bench of the Tribunal accepted this certificate and held that the burden of duty had not passed on to the buyers. This order of the Hyderabad Bench has attained finality. An identical chartered accountant certificate dated 29.12.2015 also came up for consideration before the Ahemdabad Bench of the Tribunal. The Tribunal remanded the matter to the Deputy Commissioner to examine the issue afresh. The Deputy Commissioner, on remand, after carefully examining the said chartered accountant certificate dated 29.12.2015, held that the incidence of duty had not passed on to the buyers. This order passed by the Deputy Commissioner has also attained finality. It is not possible to accept the contention raised by the learned authorized representatives appearing for the department that the certificate of the chartered accountant produced by the appellant to substantiate the incidence of duty had not passed on to the buyers should not be accepted because the appellant did not produce any other corroborative evidence as required under sections 28C and 28D of the Customs Act. The orders dated 05.09.2019 and 26.09.2019 passed by the Commissioner (Appeals) confirming the order passed by the Deputy Commissioner for deposit of the sanctioned amount in the Consumer Welfare Fund under section 27(2) of the Customs Act, therefore, deserve to be set aside and are set aside - The appellant is held entitled to the payment of amount of Rs. 3,43,88,087/- and Rs. 2,33,05,108/- with consequential relief(s) - Appeal allowed.

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• 2024 (10) TMI 1137
  Violation of principles of natural justice - interpretation of Section 17(5) of the Customs Act, 1962 - whether the Learned Commissioner(Appeals) is justified in rejecting the appeals without deciding the issue on merits taking the recourse of Section 17(5) of the Customs Act, 1962? - HELD THAT:- In the present case, it is found that after rejection of the classification of the appellant declared in their Bills of Entry, they paid the duty under protest and preferred appeal before the Learned Commissioner(Appeals). Therefore, the Learned Commissioner (Appeals) ought to have decided the appeals on merits instead of rejecting the same by observing that the appellant has accepted the re-assessment. Further, the Hon ble Supreme Court in the case of ITC Ltd. [ 2019 (9) TMI 802 - SUPREME COURT] has held that Revenue as well as appellant can prefer an appeal against the order of the assessment. The impugned orders are set aside and the case is remanded to the Learned Commissioner (Appeals) to decide the issue of classification on merit, after affording an opportunity of hearing to the appellant. since the assessment involved in the appeals is more than a decade old, it is directed that the remand proceeding be completed within three months from the date of communication of this order. Appeal is allowed by way of remand.

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• Corporate Laws

• 2024 (10) TMI 1136
  Condonation of delay of 68 days of filing appeal - sufficient cause for delay or not - whether there is any reason to record satisfaction that the Appellant was prevented by sufficient cause from filing the appeal within that period? - HELD THAT:- No sufficient cause has been shown by the Appellant as to how he was prevented from filing the appeal within period as required under Section 421(3) proviso. It is not persuaded to entertain submission of the Appellant on the merits of challenge to the order impugned. There is one more reason due to which Appellant s prayer in the application for condonation of delay cannot be allowed. It is noted that the judgment of the Hon ble Supreme Court in Ramlal, Motilal, Chotelal [ 1961 (5) TMI 54 - SUPREME COURT ] where it has been held that even after sufficient cause has been shown by the parties, parties are not entitled to condonation of delay in question as a matter of right. Even if sufficient cause has been shown Court has to enquire as to whether it should exercise its discretion to condone the delay. The Appellant has not even shown any sufficient cause that he was prevented to file an appeal rather Appellant is clearly negligent in filing the appeal since he was well aware of the order even prior to 22.02.2024 and has filed two applications - Appellant has already pleaded that extension of time be granted without prejudice to the rights of the Appellant to file appeal. Thus, Appellant has already pleaded that he has right to file an appeal without prejudice to the extension of time. It is not satisfied that Appellant was prevented by sufficient cause from filing the Appeal within the extended period of 45 days. The Delay Condonation Application deserves to be dismissed and is hereby dismissed.

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• 2024 (10) TMI 1135
  Nomination of 15 number of persons as Directors in General Committee of Delhi Gymkhana Club Limited. - Section 241-242 of the Companies Act, 2013 - conditions precedent for invoking provisions of Section 241(2) of the Companies Act, 2013 - formation of opinion by the Central Government under Section 241(2) - conduct of affairs of the Company in proper way or not - sufficient materials on the record for formation of requisite opinion - affairs of the Company (Delhi Gymkhana Club) were being conducted in a manner prejudicial to the public interest or not - interim order or final order - finding for exercising jurisdiction under Section 242 of the Companies Act, 2013 - supersession of the management of the Company by 15 members committee to be nominated by the Central Government without providing for any time period. What are the requisite conditions precedent for invoking provisions of Section 241(2) of the Companies Act, 2013? - HELD THAT:- To enable the Central Government to apply for an order under Section 241, the conditions precedent i.e. (i) the Central Government is of the opinion; and (ii) that the affairs of the Company are being conducted in a manner prejudicial to the public interest, need to be satisfied. On fulfilment of the above two conditions, an application can be filed by the Central Government under Section 241 of the 2013 Act for an order. Whether the requisite conditions precedent within the meaning of Section 241(2) of the Companies Act, 2013 in the application filed by the Union of India under Sections 241 and 242 are met i.e. (i) formation of opinion by the Central Government under Section 241(2); and (ii) that the affairs of the Company are being conducted in a manner prejudicial to the public interest? - Whether there was sufficient materials on the record for formation of requisite opinion under Section 241(2) by the Central Government? - Whether affairs of the Company (Delhi Gymkhana Club) were being conducted in a manner prejudicial to the public interest so as to enable the Central Government to file an application under Section 241(2) of the 2013 Act? - HELD THAT:- The statutory pre-condition for registration of a company under Section 26 of the Companies Act, 1913 is that it has been or is about to be formed for promoting Commerce, Art, Science, Charity or any other useful object . When the statute itself indicates that registration under Section 26 of the Companies Act, 1913 can be of the companies which were formed not for profit but for promoting commerce, art, science or any other useful object, the statutory requirement of promoting commerce, art, science, charity or any other useful object is clearly designed for public purpose. The special status and recognition of such companies by the Statute is since the said companies are formed not for profit but for promoting commerce, art, science, charity or any other useful object. Admittedly, the Delhi Gymkhana Club was incorporated under Section 26(1) if the Companies Act, 1913. Although the word sport is not specifically included in sub-section (1) of section 26 but the use of expression other useful object is wide enough to include sport also. As noted above, the Memorandum of Association of the Delhi Gymkhana Club specifically in Clause 3(a) lists the object to promote Polo, Hunting, Racing, Tennis, other games, athletic sports and pastime . The submission of learned counsel for the appellants thus cannot be accepted that object of the Company was not to promote sports. Non use of the word sport in Section 26(1) of the 1913 Act is in consequential. The question in the present case is not as to whether the Delhi Gymkhana Club is an industry or not. The expression that affairs of the Company are being conducted in a manner prejudicial to the public interest as required under Section 241(2) is a entirely different expression and right given to the Central Government to apply for an order is also for an entirely different purpose. As noted above, under Section 241(1) of the 2013 Act right has been given to the Members to apply for an order under Section 241 after fulfilling necessary requirements under Section 244 of the 2013 Act and by the same Statute power has been given to the Central Government to apply for an order under Section 241. The question to be answered is as to whether there were sufficient materials before the Central Government to form an opinion that affairs of the Company are being conducted in a manner prejudicial to the public interest. The materials which were before the Central Government, as noticed above, contained inspection report and the supplementary inspection report pointing out various violations of the 2013 Act as well as violation of the Articles of Association. The inspection report reported that only 3% of the entire expenditure by the Company is devoted towards sports. The findings returned by the NCLT on the materials before it that the Company has not been able to follow-up its main object and the affairs of the Company are being mismanaged which is prejudicial to the public interest - the submission of the appellants cannot be accepted that there was no public interest involved in carrying of the affairs of the Company and the Company is only for the benefit of its members and no public interest is prejudicially affected by the internal management and affairs of the Company. When a company is incorporated with an object, which is object of public interest, any impairment of such object in carrying out the affairs of the Company which do not truly promote the objects for which it has been incorporated, it is failed to see any substance in the submission of the appellants that in managing the affairs of the Company/Delhi Gymkhana Club, no public interest is involved. Thus, summarily, Requisite conditions precedent within the meaning of Section 241(2) of the 2013 Act in the application filed by the Union of India under Section 241-242 are met - There were sufficient materials on record for formation of requisite opinion under Section 241(2) of the 2013 Act by the Central Government - The affairs of the Company/Delhi Gymkhana Club are being conducted in a manner prejudicial to the public interest which enabled the Central Government to file an application under Section 241(2) of the 2013 Act. Whether the impugned order dated 1st April, 2022 is in nature of interim order under Section 242(4) and not a final order? - Whether the impugned order does not record any finding for exercising jurisdiction under Section 242 of the Companies Act, 2013? - Whether the NCLT vide its impugned judgment has delegated its jurisdiction to the 15 members committee which was to be nominated by the Central Government in pursuance of the impugned order? - HELD THAT:- The task, which was entrusted to Fifteen Members Committee has been outlined in the order from the above two directions are clearly decipherable, i.e. (i) take all actions for restructuring Respondent No.1 Company in terms of Memorandum and Article of Association; and (ii) take corrective measures which are in violation of the Memorandum and Article of Association and the Companies Act, 2013. We, thus, are unable to accept the submission of the Appellant that the NCLT has delegated its jurisdiction to the Fifteen Members Committee. The Fifteen Members Committee, which was to replace all the General Council was entrusted with the task as noted above. Hence, the Fifteen Members Committee has to take its action as per the directions and it cannot be said that the NCLT has delegated its jurisdiction to the Fifteen Members Committee. It goes without saying that Fifteen Members Committee has to act in accordance with the NCLT s order, after taking into consideration the observations of the NCLT and directions issued thereunder. Direction No.3 has to be read with the findings as returned by the NCLT in the impugned order - the submission of the Appellant that NCLT abdicated its jurisdiction and delegated its jurisdiction to Fifteen Members Committee cannot be accepted. Whether the supersession of the management of the Company by 15 members committee to be nominated by the Central Government without providing for any time period or course of action with a view to bringing to an end the matters complained of requires interference by the Appellate Tribunal? - HELD THAT:- The principal objective of order under Sections 241 and 242 is to pass order with a view to bringing to an end the matters complained of. Thus, the proceeding under Sections 241 and 242 is to take remedial action. The affairs of the Company, which are being conducted to the prejudicial to the public interest, should be remedied to protect the public interest, has to be the objective of the Court in proceeding under Sections 241 and 242. The order was passed by the NCLT on 01.04.2022 and more than two and a half years have been elapsed from passing of the order and Fifteen Members Committee (at present only eight Members are functioning) has acted in pursuance of the impugned order and has taken certain steps. It is not necessary for us to enter into details and the steps taken by Fifteen Members Committee, since the challenge in the present case is basically to the order impugned dated 01.04.2022. The Committee nominated by the Central Government has to complete the process of taking actions to bring to an end the matters complained of expeditiously. It is inclined to fix a time frame for completing the process of remedial actions by Committee to subserve the object for which NCLT passed an order under Section 241 and 242. We direct the Committee to complete its process of taking remedial actions to bring to an end the matters complained of by 31.03.2025. The Committee to also conduct the elections as per the Article of Association, Clause 20 of the Article of Association deals with Management of the Club to be vested in a General Committee , which provides the mode and manner of the election of General Committee from the prominent Members of the Club. The Committee, which is functioning in pursuance of the impugned order may take steps and conclude the remedial action and hold election as as per Clause 20 of the Article of Association to elect the President and other Members of the Committee. With regard to witness protection, liberty having been granted to approach the Witness Protection Cell, New Delhi District for dealing with the aspect of protection. Both, Col. Ashish Khanna and Niji Sapra can take recourse to the liberty given by Metropolitan Magistrate in the above order dated 29.05.2024. Hence, no directions are required in the present Appeal with regard to witness protection with respect to Complaint Case No.959/2021 in the Court of Metropolitan Magistrate. To what relief, if any, the appellants are entitled in the present appeals? - Course of Action with a view to bringing to an end the matters complained of - HELD THAT:- The Application filed by Union of India under Sections 241 and 242 of the Companies Act, 2013, the Union of India was fully maintainable and NCLT has rightly exercised its jurisdiction under Sections 241 and 242 on the basis of materials on record - there are substance in the submission of the Appellant that management of the Club cannot be superseded for indefinite period and the object of Sections 241 and 242 proceeding is only to bring to an end the matters complained of. Certain steps have been claimed to be taken by the Fifteen Members Committee appointed in consequent to the impugned order dated 01.04.2022 - the ends of justice will be served in directing the existing Committee nominated by Central Government to conclude remedial steps and conduct the election of Delhi Gymkhana Club in accordance with Clause 20 of Article of Association. The order dated 01.04.2022 passed by NCLT is upheld - The Committee nominated by the Central Government in pursuance to the order dated 01.04.2022 passed by NCLAT is directed to complete the all remedial measures, so as to end the matters complained of on or before 31.03.2025 - The Committee nominated by the Central Government in pursuance of the impugned order dated 01.04.2022, is directed to conduct the election of President and Members of the General Council in accordance with Clause 20 of the Article of Association within three months after 31.03.2025 and install the duly elected General Council accordingly - The General Council of the Club with whom management is entrusted, shall act in accordance with Memorandum of Association and Article of Association and conduct its affairs accordingly. Appeal disposed off.

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• Service Tax

• 2024 (10) TMI 1134
  Challenge to Nil Arbitral Award, on extraneous consideration, levying the service tax on the petitioners on the NCA - interpretation of the terms of the Agreements - determination of contractual obligations viz indirect tax (service tax) liability and for the payment of damages constituted as costs incurred by the petitioner in defending the Assessment Order. The core argument of the Petitioners is that they had sought a Declaratory finding as to on whom the liability of any tax that may get imposed in future would lie, but this question has been left unanswered. HELD THAT:- The first aspect which is agitated is that the Show Cause Notice and Assessment Order for payment of Service Tax in the sum of Rs. 9,68,50,000/- had been served upon the petitioners. The parties had specifically agreed in their NCA that there is no service tax leviable on the said Agreement. In case the Notice got issued in the name of the petitioners, it is for the petitioners to have defended the same in which they were successful - It was a Notice/Order issued for payment of service tax on the premise that NCA attracted the service tax. The Notice may have been found to be not sustainable by CESTAT, but in no way can the respondent be held responsible for the costs incurred by the petitioners in defending the said Notice/Order before the CESTAT. The overhead costs, expenses and interest on the overdraft to garner money for pre Appeal deposit may have been borne by the petitioners as the Notice was in their name, and under no law can the incurred expenses be fastened on the respondent. Furthermore, the specific challenge was to the Notice/Order vide which the Service Tax was sought to be imposed upon the petitioners, which was not leviable in the first instance. In view of erroneous Notice in the name of the Petitioners, it was only they who had to defend themselves from imposition of the Service Tax. The costs incurred for challenging. The Notices was specific to the petitioners and they cannot transpose their liability on the respondents - It cannot be overlooked that in the Agreements, in was specifically mentioned that the service Tax is not leviable on NCA fees. For the erroneous acts of the third party, the respondent can definitely not be held liable for the costs incurred in defending the Notices before CESTAT. There is no denying that the parties could have contracted in regard to which party would be liable for any taxes that may get imposed in regard to the Agreements between the parties, but Petitioners have not been able to show any such clause providing that any liability, whether rightly or wrongly sought to be imposed, shall be the responsibility or indemnified by the Respondent - The learned Arbitral Tribunal was thus, right in giving the Nil Award. The petitioners have also claimed that the costs of the arbitration proceedings which it had initiated for determination of the liability of which to pay the impeding tax demand - In fact, the respondent had even filed an Application under Section 16 of the Act to assert that the arbitration had been invoked prematurely, though the same got dismissed by the learned Arbitrator. The arbitration proceedings were not at the behest or at the instance of the respondent and, therefore, no costs can be recovered from the respondent. The ground of patent illegality is applied when there is a contravention of the substantive law of India, the Arbitration Act or the rules applicable to the substance of the dispute - it is evident that the grounds agitated by the petitioners, do not fall in either of the categories of patent illegality or fundamental breach of Indian Law. The scope of interference under Section 34 of the Act being limited, there is no merit in the present Petition under Section 34 of the Act, 1996 which is hereby dismissed.

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• 2024 (10) TMI 1133
  Rejection of declaration in Form SVLDRS-1 filed by the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - rejection on the ground that the petitioner was not eligible to avail the Scheme as there is no quantification of Rs. 20,72,31,044/- stated by the petitioner in the Form for proposed such levy in the show cause notice - HELD THAT:- It is not in dispute that the show cause notice was pending adjudication when the scheme was introduced as on 30.06.2019, which was cut-off date as per the SVLDRS. The show cause notice was for the levy of penalty amounting to Rs. 20,72,31,044/-, as stated in Para-12 of the show cause notice dated 25.02.2019. The scheme is applicable to any show cause notice for penalty/late fee, irrespective of whether it is under adjudication or appeal. The case of the petitioner therefore would squarely fall in the eligible cases and merely because the petitioner has shown the amount of proposed penalty mentioned in the show cause notice would not make the declaration made by the petitioner as eligible under the Scheme. The impugned order dated 18.03.2020 passed by respondent No. 2 is hereby quashed and set aside. The matter is remanded back to the respondent authorities to adjudicate the Form SVLDRS-1 in accordance with law as it is not in dispute that the show cause notice for penalty was pending adjudication as on 30.06.2019. Petition allowed by way of remand.

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• 2024 (10) TMI 1132
  Demand of short paid service tax - managements, maintainenance or repair service shown as works contract service - eligibility for CENVAT Credit - service tax on differential value as per reconciliation of income with the ST-3 return. Service Tax amounting Rs. 91,27,000/- demanded as short paid by the appellants towards the managements, maintainenance or repair service shown as works contract service - HELD THAT:- The appellant have paid the VAT on the value of goods used in providing the management, maintenance or repair service. Therefore, if this value of the goods is excluded then on the remaining value the service tax was said to have been paid. It is submission of the appellant that the said value is much below the value at which the appellant have discharged the service tax considering it as works contract service. Therefore, no service tax demand will prima facie exist. However on all the above aspects the final conclusion is subject to verification. Benefit of abatement of 70% of the total amount charged towards works contract service was denied as service tax demanded as short paid on the ground that the appellant have availed the Cenvat credit which is not permissible to the service as works contract service - HELD THAT:- The Lower Authority has denied the such benefit only on the ground that the appellant have availed the Cenvat credit. The appellant have claimed that they have reversed the Cenvat credit and if at all there is any short fall, the appellant shall reverse the balance amount, in such situation the appellant is prima facie eligible for benefit of Works Contract Service. Hence, on this count matter needs reconsideration. Service Tax amount of Rs. 16,32,909/- was demanded on the differential value as per reconciliation of income with the ST-3 return - HELD THAT:- It is found that as per the reconciliation given by the appellant, the appellant claimed to have discharged the Service Tax correctly and accordingly no differential demand of service tax arise. However, the correctness of the calculation needs to be verified by the department. The entire matter needs to be reconsidered - the impugned order is set aside - appeal allowed by way of remand.

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• 2024 (10) TMI 1131
  Levy of service tax - security deposit collected by the respondent - validity of SCN issued in the form of a statement is valid under the negative list regime effective from 01.07.2012 - HELD THAT:- A security deposit for any length of time would not automatically became a taxable service in the hands of the respondent and that there is no provision in service tax law for taxing on a security deposit amount. Admittedly, the security deposit collected by the respondent is refundable at the time of termination of Gas supply agreement. Therefore, the said security deposit cannot form a part of service provided by the respondent. Therefore, on the said amount, Service Tax is not payable - As per the agreement, after all dues are cleared and the meter and allied equipment have been removed in proper and undamaged working condition, the security deposit shall be refunded to the buyer. Clearly, the said security deposit amount is not a part of service which is provided by the respondent, hence not taxable. Whether the show cause notice issued in the form of a statement is valid under the negative list regime effective from 01.07.2012? - HELD THAT:- Since the matter is decided on merit i.e. whether security deposit is liable to service tax or otherwise, this issue is not being addressed and same is kept open. The order of Ld. Commissioner is upheld - appeal of department dismissed.

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• 2024 (10) TMI 1130
  Levy of service tax - security services availed from CISF under reverse charge mechanism basis - valuation of free housing facility provided by the appellant to the CISF personnel - Rule 2 (1) (d) (i) (E) of the Service Tax Rules of 1994 read with Notification No. 30/2012 -ST dated 20.06.2012 - HELD THAT:- The issue of valuation of free housing facility provided by the appellant to the CISF personnel is no longer res integra as this Tribunal in the appellant s own case NTPC LTD VERSUS C.C.E. S.T. -SURAT-I [ 2024 (5) TMI 816 - CESTAT AHMEDABAD ] decided the issue in favour of the appellant - thus, it is seen that the demand raised by the Department is unsustainable and liable to be set aside. It is further observed that the appellant are not liable to pay service tax on the value of accommodation, vehicles for transportation, telephone facilities, etc. and it is found that as regard the issue penalty, the demand on merits is not sustainable, there is no question of imposition of penalty under Section 76. It is also observed that when the demand is not maintainable, there is no question of interest on the differential demand of service tax. Hence, the interest demand on the differential service tax liability is not maintainable. The impugned order is set aside - Appeal allowed.

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• 2024 (10) TMI 1129
  Liability to pay service tax on supply of water to Government of Odisha - re-availment of Cenvat Credit subsequent to change of option under Rule 6(3) of Cenvat Credit Rules, 2004 - Cenvat Credit availed on invoices after one year of issuance in the year of return. Whether the appellant is liable to pay Service Tax on supply of water by Government of Odisha in terms of Section 66(B)A of the Finance Act, 1994? - HELD THAT:- The said issue has been settled by this Tribunal in the case of M/S. PARADEEP PHOSPHATES LIMITED VERSUS COMMISSIONER OF CGST EXCISE, BHUBANESWAR-I, BHUBANESWAR [ 2024 (6) TMI 1410 - CESTAT KOLKATA] wherein this Tribunal observed ' The appellant is, therefore, justified in asserting that the Agreement executed between the appellant and the government is for supply of water for which charges are paid by the appellant on the basis of volume of water drawn and it is not a case of assignment of right to use natural resources of the government.' - As issue has already been settled by the decision of this Trbunal for water supply by Government of Odisha, the appellant is not liable to Service Tax. Therefore, issue is no more res-integra and appellant is not liable to pay Service Tax. Re-availment of Cenvat Credit subsequent to change of option under Rule 6(3) of the Cenvat Credit Rules, 2004 - HELD THAT:- The appellant has intimated to the Department vide letters dated 01.12.2016 and 12.01.2017 and which were in well knowledge of the Department. Therefore, no suppression can be alleged against the appellant. Therefore, no demand can be raised against the appellant for re-availment of credit subsequent to change of option under Rule 6(3) of the Cenvat Credit Rules, 2004. Therefore, the demand of Rs. 183,09,57,095/- is set aside. Cenvat Credit availed on invoice after one year of the issuance - HELD THAT:- The same has been shown by the appellant in the ER-1 return which was filed on 12.01.2017 and which has well within the knowledge of the Department in 2017 itself, therefore, no suppression of facts can be alleged against the appellant. Therefore, Cenvat credit cannot be denied to the appellant only on the reason that they have shown in the ER-1 return beyond one year period. Interest and penalty - HELD THAT:- As no demand is sustainable against the appellant, consequently no interest is payable by the appellant and no penalty is imposable. The impugned order is set aside - appeal allowed.

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• Central Excise

• 2024 (10) TMI 1128
  Rejection of rebate claim - rejection on the ground that self-sealing procedure for the export containers was followed by the petitioners though such procedure was not available to the petitioners and the chain of identity of goods dispatched by the petitioners to Merchant Exporter had been broken and consequently, the identity of the export goods was not established. HELD THAT:- The Revisional Authority has referred to the Rules of Central Excise Rules, 1944 which are not applicable in the facts of the case and arrived at a conclusion by referring to the Rules 187, 187A and 187B of the Central Excise Rules, 1944 instead of referring to the Central Excise Rules, 2001 and subsequent Rules as well as the condition Nos. 2 (e) and 2 (h) of the Notification No. 19/2004 dated 06.09.2004 issued under Rule 18 of the Central Excise Rules, 2002. The impugned order dated 13.12.2021 passed by the Revisional Authority set aside, and the Revisional Authority is hereby directed to decide the Revision Applications afresh de-novo after giving adequate opportunity of hearing to the petitioners as well as considering the Central Excise Rules, 2001 and subsequent Rules and the Notification No.19/2004 dated 06.09.2014 issued under Rule 18 of the said Rules. It is clarifed that the merits of the case not considered and the Revisional Authority shall decide the Revision Applications filed by the petitioners in accordance with law. Petition disposed off.

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• 2024 (10) TMI 1127
  Process amounting to manufacture or not, in terms of note 9 to chapter 38 of the Central Excise Tariff Act, 1985 - activity undertaken by the appellants in filling of imported Hepta Propane / FM-200 gas from bulk mother container to empty cylinders of different sizes - clearance of impugned goods are liable to pay Central Excise duty or not - levy pf penalty. HELD THAT:- The records of the case indicate that the imported gas is refilled into seamless cylinders with super pressure in order to obtain the required 25 bar or 360 per square inch parameter, by use of nitrogen gas. Such filling up of container under heavy pressure cannot be equated to a process of treatment to render the product marketable, since there is no perceptible change brough out in the imported product. The facts of the case indicate that the imported FM 200 gas and nitrogen gas remained as it is, after they were refilled into the seamless cylinders. Therefore, it is opined that the assertion made by the learned Commissioner (Appeals) for treating the process of refilling as amounting to manufacture is not duly supported by factual evidences or any supporting technical documents. The Circular No. 342/58/97-CX dated 08.10.1997 was issued by CBEC in the specific context of doubts raised in respect of receiving of liquid chemicals in bulk in containers and offloading the same into available empty vessel and consequent delivery of these materials in the very same condition to customers against orders. It had been specifically clarified that the question of whether an operation amounts to repacking or not, has to be decided on facts; and activities such as simply transferring the material from one container to another container may not be categorised under the scope of this description packing for deeming it as manufacture. The impugned order, insofar as it had categorised the activity undertaken by the appellants as amounting to manufacture, in the present case is not legally sustainable. It is found that on a similar set of facts, in the case of M/S 3M INDIA LTD., SHRI SAMEER AGARWAL, SHRI SUNIL BANTHIYA, SHRI D.K. SURESH, SHRI AMIT LAROY, SHRI B. SRIKANTH, SHRI MILIND JOGLEKAR, M/S INDI CANS AND SHRI J. CHANDRAKANTH VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE-III AND OTHERS [ 2023 (2) TMI 729 - CESTAT BANGALORE] , the Co-ordinate Bench of the Tribunal has dealt with the similar issue of deemed manufacture as per chapter note 38 and have held that injecting raw material into cans would not amount to adopting any treatment on the raw materials to render the product marketable. The Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, VADODARA VERSUS M/S VADILAL GASES LTD. ORS. [ 2017 (1) TMI 1311 - SUPREME COURT] have held that mixing of gases and making them available to consumers in smaller cylinders, did not make gases marketable as they did not chemically mix/react with each other and retained their character, without any new commodity being created and hence this would not amount to manufacture in terms of the chapter note. Thus, activity undertaken by the appellants in filling of imported Hepta Propane / FM-200 gas from bulk mother container to empty cylinders of different sizes is not a process of manufacture in terms of note 9 to chapter 38 of the Central Excise Tariff Act, 1985. Therefore, the impugned order passed by the learned Commissioner (Appeals) cannot be sustained on merits. Accordingly, the impugned order is set aside and the appeal is allowed in favour of the appellants.

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• 2024 (10) TMI 1126
  Rejection of refund of certain amount which was debited by the appellant in response of audit objection raised - rejection for want of clear, related and relevant grounds under Section 11 B of Central Excise Act, 1944 - HELD THAT:- Both the authorities bellow have categorically concluded that the amounts were paid by the appellants, they deposited these amounts for the closer of the proceedings that would have been initiated against them for recovery of these amounts in response of the audit objection raised. Taking note of such deposit these proceedings were initiated against the appellants. Accordingly, the claim made by the appellants that amounts were paid in protest also do not have any merits and needs to be rejected. For this reason, these claims would be hit by the bar of limitation also. Hon ble Bombay High Court in the case of M/s National Leather Cloth Manufacturing Co. [ 2002 (7) TMI 111 - HIGH COURT OF JUDICATURE AT BOMBAY ] has held that ' we see no reason to interfere with the finding given by the adjudicating authority in rejecting the Petitioners claim as time-barred. Since the payments made during the relevant period are not under protest and the refund claim is beyond the period prescribed under the Act, the adjudicating authority is justified in rejecting the claim as time-barred.' There are no merits in these appeals - appeal dismissed.

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• CST, VAT & Sales Tax

• 2024 (10) TMI 1125
  Input tax credit - non-existing or bogus entities - HELD THAT:- The appeal is disposed off in light of ratio in Ecom Gill Coffee Trading Private Limited [ 2023 (3) TMI 533 - SUPREME COURT] where it was held that ' Both, the second Appellate Authority as well as the High Court have materially erred in allowing the ITC despite the concerned purchasing dealers failed to prove the genuineness of the transactions and failed to discharge the burden of proof as per section 70 of the KVAT Act, 2003.' Appeal allowed.

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• 2024 (10) TMI 1124
  Demand of central sales tax on movement of goods from the manufacturing units of the appellants situated in the State of Rajasthan to their depots in the State of Bihar and the State of Jharkhand - inter-state supply of goods or inter-state stock transfers? - HELD THAT:- Mere transfer of goods from a head office to a branch office or inter-branch transfer of goods which broadly come under the phrase branch transfers cannot be regarded as sale in the course of interstate trade for the simple reason that a head office or branch cannot be treated as having traded with itself or sold articles to itself by means of stock transfers. A contract of sale of goods would be effective when a seller agrees to transfer the property in goods to the buyer for a price and that such a contract may be either absolute or conditional. If the transfer is in presenti, it is called a sale ; but if the transfer is to take place at a future time and subject to some conditions to be fulfilled subsequently, the contract is called an agreement to sell . When the conditions subject to which the property in goods is to be transferred are fulfilled, the agreement to sell becomes a sale . When the sale or agreement to sell causes or has the effect of occasioning the movement of goods from one State to another, an inter-state sale would ensue and would result in exigibility of tax under section 3(a) of the Central Sales Tax Act. Under the Liquor Policy, the Corporation is the wholesaler for all kinds of liquor, including beer. A manufacturer desirous of supplying beer to the Corporation for subsequent distribution shall have to submit documents, including the Master Agreement. The Corporation issues OFS on the depots of Carlsberg in the State of Bihar based on the stock requirements of the Corporation, but the Corporation has the right to decide the quantity for which OFS can be issued and the Corporation is also under no obligation to procure any specified minimum quantities of any brand of beer during the currency of the contract - The stocks have to be delivered at the concerned depots of the Corporation at the cost and risk of the manufacturer. Any delivery that deviates from the OFS is not acknowledged by the Corporation and would not be unloaded at the depots. In the present case, in terms of the Liquor Policy of the State of Bihar, the Corporation is under no obligation to procure any specified minimum quantities of beer. The Corporation issues the OFS on the local depots of the appellants situated in the State of Bihar for supply of specified quantity of beer. The OFS have a validity period within which the goods are required to be delivered to the Corporation. Clause 10.1 of the Liquor Policy clearly provides that the supply of beer to the Corporation against OFS shall be construed as an agreement to sell under section 4(3) of the Sale of Goods Act. Clause 5A of the License also requires Carlsberg to maintain a minimum stock of liquor at its depots in the State of Bihar as prescribed by the Corporation from time to time and to recoup the stock within seven days in case it goes below the minimum limits - it is the OFS that concludes the contract of sale between Carlsberg and the Corporation. The movement of goods from the State of Rajasthan to the depots of Carlsberg in the State of Bihar, therefore, cannot be said to have been occasioned by reason of any sale agreement. The appellants treated the sale from its depots in the State of Bihar to the Corporation in the State of Bihar as sale and paid local VAT. There can, therefore, be no manner of doubt that the movement of goods from the manufacturing units of the appellants situated in the State of Rajasthan to the depots of the appellants in the State of Bihar or the State of Jharkhand was not occasioned by any prior contract of sale or agreement to sell. The appellants had merely stock transferred beer from the manufacturing units of the appellants situated in the State of Rajasthan to the depots of the appellants situated in the State of Bihar or the State of Jharkhand. The movement of goods did not occur from the State of Rajasthan to the State of Bihar or the State of Jharkhand pursuant to the Master Agreement or the Liquor Policy. The Master Agreement, therefore, cannot be treated to be an agreement to sell. It would, in fact, be in the nature of a standing order or a tender which does not amount to a sale or an agreement to sell. It is, therefore, clear that none of the clauses of the Master Agreement contemplate or refer to any inter-state delivery of the goods from the State of Rajasthan to the State of Bihar or the State of Jharkhand. The movement of goods cannot also be considered incidental to the Master Agreement. Reliance placed by the Rajasthan Tax Board and the learned senior counsel for the State of Rajasthan on clause 2 of the Master Agreement to justify that the movement of goods occurred incidental to the Master Agreement, is not correct. It will, therefore, not be possible to sustain the order dated 24.11.2014 passed by the Rajasthan Tax Board. It is, accordingly, set aside and all the fourteen appeals filed by Carlsberg, United Breweries and Mount Shivalik are allowed.

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• Indian Laws

• 2024 (10) TMI 1123
  Overriding effect of Public Premises Act, 1971 over the Arbitration and Conciliation Act, 1996 - error or not in appointing the arbitrator while exercising the jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996. Whether the Public Premises Act, 1971 overrides the Arbitration and Conciliation Act, 1996? - HELD THAT:- The dispute that is raised in the Section 11 application relate to promises and reciprocal promises arising out of the agreement dated 26.09.2012. The right of renewal as well as the legality and propriety of the enhanced demand arose during the subsistence of the agreement. It will be on the interpretation, construction and the obligations arising out of the agreement that the respondent s claim rests - The original lease as it were, validly subsisted till 11.09.2015 and the dispute between the parties related to the period commencing from 12.09.2012 to 11.09.2015, when the lease expired. The Public Premises Act would not even cast a shadow on this period. In so far as the dispute relating to this right of renewal is concerned, it depends on the terms of the agreement. The Public Premises Act neither bars nor overlaps with the scope and ambit of proceedings that were initiated under the Arbitration and Conciliation Act. Whether the High Court committed any error in appointing the arbitrator while exercising the jurisdiction under Section 11? - HELD THAT:- The revision of storage charges occurred during the subsistence of the contract. Its legality and propriety will depend on the terms of the agreement dated 26.09.2012. Similarly, the right of renewal will also be based on and a construct of the said agreement. These two disputes will undoubtedly arise out of the agreement between the parties and the resolution of such disputes is clearly covered by the arbitration clause. There are no hesitation in rejecting the petition and it is further held that the appellant must bear the costs for this unnecessary litigation which is quantified at Rs. 50,000/- - appeal dismissed.

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• 2024 (10) TMI 1122
  Reinstatement of employees and paymnet of compensation in lieu of back wages - employee falls under the definition of workman as given in section 2(s) of the Industrial Disputes Act, 1947 or not - HELD THAT:- It is pertinent to point out that the Industrial Disputes Act, 1947, was enacted by the legislature to settle the industrial disputes. It was brought with the object to ensure social justice to both the employers and employees and advance the progress of industry by bringing about the existence of harmony and cordial relationship between the parties. As per Section 2(s) of the I.D. Act, a person to be qualified as a workman has to do any work of manual, unskilled, skilled, technical, operational, clerical or supervisory in nature. But, the latter part of the section excludes four classes of employees including a person employed in a supervisory capacity drawing wages exceeding Rs.10,000/- after amendment (Rs.1,600/- before amendment) per month or exercises functions mainly of a managerial nature. In this legal backdrop, let us first examine, whether the employee falls within the definition of workman . During the course of examination, the employee deposed as W.W.1 that he was not an executive cadre employee and there were senior officers to supervise and control his work. But, in the cross-examination, he asserted that he was supervising the work of two juniors who were working under him. According to M.W.1- Senior Manager of the management, the employee was an executive of the management and the management appointed two Junior Engineers and their works were being supervised by the said employee The law is well settled that the determinative factor for workman covered under section 2(s) of the I.D. Act, is the principal duties and functions performed by an employee in the establishment and not merely the designation of his post. Further, the onus of proving the nature of employment rests on the person claiming to be a workman within the definition of section 2(s) of the I.D. Act. In the present case, there is no specific document adduced relating to the actual work and functions performed by the employee. In the absence of any concrete material to demonstrate the nature of duties discharged by the employee, the employment orders issued by the management will have to be taken into consideration and as per the same, the employee was appointed as Junior Engineer and was promoted as Assistant Engineer, on the administrative side - the employee is not a workman as defined under section 2(s) and is not covered by the provisions of the I.D. Act. In view of the same, the order of the High Court upholding the finding of the Labour Court that the employee was a workman within the definition of post-amended section 2(s), is liable to be set aside. Grant of reinstatement of the employee in service and payment of compensation in lieu of back wages by the Labour Court - HELD THAT:- There is no violation of procedure on the part of the management in terminating the services of the employee. The employee is not a workman as covered under section 2(s) and hence, the provisions of the I.D. Act do not apply to him. Resultantly, the contention of the learned senior counsel for the employee qua violation of section 25F coupled with sections 25G and 25H of the I.D. Act, ordering reinstatement with full back wages as normal rule, etc., cannot be countenanced. Though it is agreed with the principles laid down in the citations relied on by the learned counsel for the employee, they do not come to rescue the employee as the facts of the same are distinguishable. Thus, there are no infirmity or illegality in the order of the High Court setting aside the award of the Labour Court which directed reinstatement of the employee along with payment of compensation in lieu of back wages and hence, the same does not call for any interference. The order of the High Court confirming the finding of the Labour Court to the extent that the employee was a workman within the meaning of section 2(s) of the I.D. Act set aside - insofar as setting aside the award of the Labour Court to reinstate the employee in service and pay compensation of Rs.75,000/- in lieu of back wages, is affirmed - the Appeal filed by the employee stands dismissed and the Appeal filed by the management stands allowed.

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• 2024 (10) TMI 1121
  Dishonour of Cheque - presumption regarding the consideration - failure to rebut the presumption by providing satisfactory evidence - HELD THAT:- It was laid down by the Hon ble Supreme Court in MALKEET SINGH GILL VERSUS THE STATE OF CHHATTISGARH [ 2022 (7) TMI 1455 - SUPREME COURT] that the revisional court is not an appellate jurisdiction and it can only rectify the patent defect, errors of jurisdiction or the law. The accused has not disputed the taking of the loan, the issuance of the cheque and his signatures on the cheque. It was laid down by this Court in NARESH VERMA VERSUS NARENDER CHAUHAN [ 2019 (10) TMI 1578 - HIMACHAL PRADESH HIGH COURT] that where the accused had not disputed his signatures on the cheque, the Court has to presume that it was issued in discharge of legal liability and the burden would shift upon the accused to rebut the presumption. In the present case, the accused did not lead any evidence to rebut the presumption. His plea that he had deposited the amount will not help him because the amount was not proved to have been deposited towards the present loan transaction. Thus, the learned Courts below had rightly held that the cheque was issued in discharge of the legal liability. The accused failed to pay the amount even within 15 days of the receipt of the summons from the Court. It was laid down in CC. ALAVI HAJI VERSUS PALAPETTY MUHAMMED [ 2007 (5) TMI 335 - SUPREME COURT] that the person who claims that he had not received the notice has to pay the amount within 15 days from the date of the receipt of the summons from the Court and in case of failure to do so, he cannot take the advantage of the fact that notice was not received by him. The accused had issued a cheque of ₹ 70,000/- on 18.02.2019. Learned Trial Court imposed the sentence on 14.10.2022 after the lapse of more than three years. The complainant had to incur the legal expenses and he had to engage a counsel for that. He also suffered a loss of interest and was entitled to be compensated for the same. It was laid down by the Hon ble Supreme Court in M/S. KALAMANI TEX ANR VERSUS P. BALASUBRAMANIAN [ 2021 (2) TMI 505 - SUPREME COURT] that the Courts should uniformly levy a fine up to twice the cheque amount along with simple interest at the rate of 9% per annum - Hence, the amount of ₹ 1,00,000/- as compensation cannot be said to be excessive and no interference is required with the sentence imposed by the learned Trial Court. The present revision fails and same be dismissed.

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