TMI Tax Updates - e-Newsletter
October 3, 2024

Case Laws in this Newsletter:

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

Articles

1. Another refund application after deficiency is not a new refund application

   By: Kamal Aggarwal and Aditi Vishnoi

2. INSPECTION OF GOODS IN MOVEMENT IN GST LAW

   By: Dr. Sanjiv Agarwal

3. HC directs Government to complete the selection process of members within four months for initiating GSTAT operations

   By: Bimal jain

4. HC grants opportunity for reply to SCN as Assessee being small businessman was not aware of the proceedings initiated

   By: Bimal jain

5. CRITERIA FOR COMBINATIONS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman chairs meeting to review performance of 7 Regional Rural Banks (RRBs) of the North East Region in Itanagar

Notifications

Companies Law

1. G.S.R. 602(E). - dated 28-9-2024 - Co. Law

Companies (Indian Accounting Standards) Third Amendment Rules, 2024.

Customs

2. 45/2024 - dated 30-9-2024 - Cus

Seeks to amend the various Customs notifications in order to align the HS Codes of the said notifications with the Finance Act, 2024, w.e.f. 01.10.2024

3. 64/2024 - dated 30-9-2024 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

DGFT

4. 34/2024-25 - dated 1-10-2024 - FTP

Streamlining of Halal Certification Process for Meat and Meat Products

5. 33/2024-25 - dated 1-10-2024 - FTP

Imposition of Minimum Import Price on Synthetic Knitted Fabrics up to 31st December 2024

GST

6. 19/2024 - dated 30-9-2024 - CGST

Central Government, on the recommendations of the Goods and Services Tax Council, will terminate the acceptance of requests by the Competition Commission of India (CCI) or Appellate Tribunal regarding Input Tax Credit and Pricing Impact effective April 1, 2025. (Notification under Section 171 of CGST Act to provide for the sunset date)

7. 18/2024 - dated 30-9-2024 - CGST

Central Government, on the recommendations of the Goods and Services Tax Council, empowers the Principal Bench of the Appellate Tribunal to assess Impact of Input Tax Credits and Tax Rate Reductions on Pricing. (Notify Principal Bench of GST Appellate Tribunal to hear cases of anti-profiteering)

Circulars / Instructions / Orders

DGFT

1. Trade Notice No. 18/2024-2025 - dated 30-9-2024

Extension of Interest Equalisation Scheme (IES) for Pre and Post shipment Rupee Export Credit for three months beyond 30th September, 2024.

Customs

2. 19/2024 - dated 30-9-2024

Digitization of Customs Bonded Warehouse procedures relating to obtaining Warehouse License, Bond to Bond Movement of warehoused goods, and uploading of Monthly Returns

Highlights / Catch Notes

GST

• Govt restricts anti-profiteering scrutiny by CCI or Appellate Tribunal on GST benefits from Apr 2025.

  Notifications : The Central Government, based on recommendations from the Goods and Services Tax Council, will cease accepting requests from the Competition Commission of India or Appellate Tribunal regarding Input Tax Credit and Pricing Impact from April 1, 2025. This notification, issued u/s 171 of the Central Goods and Services Tax Act, 2017, prohibits the Authority from examining whether input tax credits availed or tax rate reductions have resulted in commensurate price reductions for goods or services supplied by registered persons. The notification takes effect upon publication in the Official Gazette.
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• Govt empowers tax tribunal to assess pricing impact of ITC, tax cuts on goods/services supplied by registered entities.

  Notifications : Central Government empowers Principal Bench of Appellate Tribunal to assess impact of input tax credits and tax rate reductions on pricing of goods and services supplied by registered persons. This power is conferred u/s 171(2) read with Section 109(1) and second proviso to Section 109(5) of Central Goods and Services Tax Act, 2017, on recommendations of GST Council. Notification comes into force from 1st October 2024.
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• Exporter accidentally omitted IGST on exports, HC ordered tax authorities to refund IGST within 12 weeks.

  Case-Laws - HC : The petitioner exported goods but inadvertently failed to include the IGST amount paid in Form GSTR-1 for the relevant month. The High Court directed the respondent authorities to manually process and refund the IGST paid by the petitioner on the exported goods within twelve weeks from the date of receiving the order. The petition was disposed of accordingly.
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• Court Overturns Tax Decision Due to Procedural Error; Case Sent Back for Reevaluation.

  Case-Laws - HC : The High Court held that the appellate authority erred in enhancing the tax liability payable by the appellant/assessee in an appeal filed by the assessee without following the mandatory procedure u/s 107(11) of the Act. The assessing officer had quantified the tax liability at Rs.2,58,536.80, but imposed penalty on Rs.41,83,804.72. The appellate authority was required to consider the correctness of the tax liability fixed by the assessing officer and the penalty levied, but instead enhanced the tax liability without adhering to the statutory procedure. Consequently, the orders of both the appellate authority and assessing officer were set aside, and the matter was remanded to the assessing authority for fresh consideration after following due process.
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• Cancellation of GST registration without inquiry quashed; registration to be restored.

  Case-Laws - HC : GST registration of petitioner cancelled by respondent for alleged violation of Rule 86B of CGST Rules, 2017 without providing details, particulars or conducting necessary enquiry. Impugned order deserves to be quashed and direction issued to reinstate/restore GST registration, reserving liberty for respondent to take necessary action in accordance with law. Dismissal of petitioner's appeal by Appellate Authority as barred by limitation does not preclude HC from entertaining petition under Article 226, as appeal dismissed summarily without merging with Appellate Authority order. Petition allowed.
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Income Tax

• Mechanised Coal Handling System qualifies for tax deduction; Tribunal rules facility part of Kakinada port infrastructure.

  Case-Laws - HC : The assessee developed a Mechanised Coal Handling System as per an agreement with KSPL, a Special Purpose Company of ISPL, which had an agreement with the Government of Andhra Pradesh. The assessee obtained a certificate from the port authority certifying that the infrastructure facility developed for coal handling is part of the Kakinada deep water port's infrastructure. Although the second condition was relaxed by the CBDT Circular, the assessee provided a letter from KSPL stating that upon expiry of the concession period, the structures constructed by KSPL or its subcontractors shall become the property of the Government of Andhra Pradesh without any obligation to reimburse. The Mechanised Coal Handling Terminal Installation of the assessee is to be taken over by the Government of Andhra Pradesh at the end of the concession period. The permission obtained from the customs authority is deemed to be the approval granted by the competent authority of the Central Government, as per the Madras High Court decision in A.L. Logistics Private Limited, affirmed by the Supreme Court in Container Corporation of India Limited. The Tribunal was justified in allowing the assessee's appeal for deduction u/s 80IA(4), as the assessee satisfied the prescribed conditions.
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• Assessee's revision plea for tax relief can't be denied just for not filing revised return.

  Case-Laws - HC : Section 264 empowers Commissioner to revise assessment order to provide relief to assessee in cases of over-assessment, even if assessee did not file revised return. Commissioner erred in rejecting revision application merely on ground that assessee did not file revised return. Section 264 is a salutary provision to remedy bona fide mistakes and correct inadvertent situations in assessment proceedings to prevent injustice. Goetze and M.S. Raju decisions not applicable in present case. Commissioner directed to pass appropriate order u/s 264 on merits of adjustment claimed by assessee.
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• High Court Clarifies Section 80IC Deductions, Royalty Payments, and Rental Income Classification for Tax Purposes.

  Case-Laws - HC : The High Court examined various issues concerning the calculation of deduction u/s 80IC, eligibility for the deduction, disallowance of royalty payments, and treatment of income from house property. The key points are: The assessee is eligible for the deduction u/s 80IC as it established the manufacturing unit before amalgamation, and Section 80IC(4) is not applicable. The royalty payments were rightly allowed as the expenses were for enduring benefit and capital in nature, following the Hero Honda case. The rental income should be taxed under 'income from house property' and not 'income from other sources,' as the assessee earned rental income by letting out its property, irrespective of the agreement's nomenclature. The Assessing Officer was directed to tax the rental income under 'income from house property' as per law.
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• Educational trust's registration u/s 12AA upheld; powers to cancel can't be applied retrospectively.

  Case-Laws - HC : The case pertains to the refusal of registration u/s 12AA for charitable activities u/s 2(15). The Commissioner of Income Tax observed that the society was not imparting education as a charitable purpose within the meaning of Section 2(15), despite being granted approval u/s 10(23)(vi). The court held that the powers to cancel registration u/s 12AA(3) can only be applied prospectively, not retrospectively, as per precedents. Since the institute is a registered educational trust and utilizes earnings for education, it cannot be denied registration u/s 12AA. The High Court dismissed the appeal, finding no error by the Income Tax Appellate Tribunal in granting registration u/s 12AA.
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• Revenue Recognition and Depreciation Rules: PCM for Contracts, AMC Monthly Revenue, TDS Disallowances, Goodwill Depreciation Upheld.

  Case-Laws - AT : Revenue recognition based on Accounting Standard (AS) 7 for advance received from customers under contracts - assessee followed Percentage Completion Method (PCM) substantiated with sample contracts and explanations filed with tax authorities. Unadjusted advances shown as current liabilities, unbilled revenue as current assets. Method consistently followed and approved by Tribunal in earlier years to match costs with revenues. Advance received for Annual Maintenance Contracts (AMC) accounted as per AS-9, proportionately transferred to revenue each month. Method approved by Tribunal for previous years. Disallowance of TDS recoverable written off covered by assessee's own case. Depreciation claim on intangible assets like know-how, business contracts allowed based on court decisions in assessee's and other cases. Goodwill held as depreciable asset following Supreme Court ruling.
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• Tribunal Upholds Commissioner's Revision; Assessee's Appeal Dismissed Due to Inadequate Inquiry by Assessing Officer.

  Case-Laws - AT : The assessee's appeal against the Commissioner's revision order u/s 263 was dismissed. The Tribunal held that the Assessing Officer (AO), after reopening the assessment u/s 147, failed to conduct a detailed inquiry and verification regarding the reasons for reopening and the genuineness of the transactions. The order passed u/s 147 read with Section 144B lacked findings on these aspects, rendering it erroneous and prejudicial to the Revenue's interests. The Tribunal rejected the contentions regarding non-application of mind by the Commissioner and the invalidity of the order u/s 147 due to non-addition of income. It held that the AO can make additions on other issues even if no addition is made for the reasons for reopening, and the order u/s 147 does not become invalid merely because the returned income was accepted. The Tribunal affirmed the Commissioner's revisionary jurisdiction u/s 263 in such cases.
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• Personal expenses wrongly disallowed in search assessment; penalty cancelled following judicial precedent.

  Case-Laws - AT : Penalty u/s 271AAB(1A)(b) was levied for suo moto disallowance of personal expenses u/s 37 by the assessee in the return filed in response to a notice u/s 153A. The assessee had made the disallowance in the search assessment completed u/s 153A, where no concealment was found. The issue of levying penalty u/s 271AAB in such circumstances is no longer res integra, following the Delhi High Court's decision in Neeraj Jindal. Accordingly, the penalty u/s 271AAB is deleted.
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• Tribunal Rejects Income Attribution Due to Lack of Evidence in Notations Found During Search.

  Case-Laws - AT : Loose papers found during a search at the residences of individuals contained notings and calculations presumed by the Assessing Officer (AO) to relate to undisclosed income and investments of one individual. However, the evidence failed to establish any connection between the notings and that individual's activities or sources of income. The notings pertained to expenses, vehicle purchases, and numerical entries, but no regular income was identified for that person to correlate with such expenses. The loose papers were found at another individual's residence, whose business records were accepted. The Tribunal held that the AO wrongly attributed the loose paper notings to the first individual without establishing any link or means of income, when they likely related to the second individual's accepted business. Consequently, the additions made by the AO based on the loose papers were deleted for lack of credible evidence connecting them to the first individual's undisclosed income or investments.
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• Tribunal Quashes Tax Reassessment; Allows Rs. 90 Crore Deduction, Rejects Multiple House Ownership Claim.

  Case-Laws - AT : Validity of reopening an assessment beyond four years from the end of the relevant assessment year, denial of deduction u/s 54F, and the addition on the ground of owning more than one residential house. The key points are: the assessee did not fail to furnish requisite details, satisfying the proviso to Section 147; the Assessing Officer could not have validly assumed jurisdiction u/s 147 based on website information; different floors of a property cannot be construed as independent residential units, as decided by the Tribunal in the assessee's own wealth tax case; merely having several independent residential units does not impact the claim for deduction u/s 54F. The reassessment proceedings were quashed, and the assessee was entitled to a deduction of Rs. 90 crores u/s 54F. The denial of deduction u/s 54F for not utilizing the entire sale proceeds was addressed, clarifying that no deduction u/s 80G was claimed for the donation to the trust. The loan from Alert Buildtech was accepted as genuine, and no addition was made u/s 68.
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• Section 154 reversal on depreciation for non-compete fee set aside; debatable issue pending Supreme Court decision.

  Case-Laws - AT : Section 154 rectification order reversing previous order on allowance of depreciation on non-compete fee cannot be invoked when the issue is debatable. Primary issue pending consideration before Supreme Court. Jurisdictional High Court admitted whether Section 154 powers can be exercised when the issue is debatable in assessee's own case for earlier assessment year. Considering High Court admission of identical question in assessee's case, for judicial discipline and propriety, impugned order set aside, issue restored to CIT(Appeals) to decide after outcome of assessee's own case for AY 2012-13 and pass order accordingly. Appeal allowed for statistical purposes.
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• Tax Tribunal Overturns PCIT's Revision; Assessee's Appeal Succeeds on Interest Expense and Unexplained Cash Credits.

  Case-Laws - AT : The assessee borrowed loans from financial institutions at an interest rate of 12.75% and advanced loans to group companies or relatives at 12% interest rate. The assessee restricted the claim of interest expense u/s 57 to 12%, being the interest earned. The Principal Commissioner of Income Tax (PCIT) invoked revision u/s 263, disallowing the interest income, concluding the assessee failed to substantiate the nexus between the interest-bearing loans taken and advances made. The PCIT also held the Assessing Officer (AO) wrongly added unexplained cash credits to income without considering the assessee's submissions. The Income Tax Appellate Tribunal (ITAT) observed the assessee disclosed rental income correctly. Relying on the Supreme Court's decision in Malabar Industrial Co. Ltd., the ITAT held the PCIT failed to demonstrate the AO's order was erroneous due to inadequate inquiry. The AO conducted necessary inquiries and applied his mind. No prejudice was caused to the Revenue. The PCIT's order was unsustainable in law, and the assessee's appeal was allowed.
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• Tax Tribunal Rules on Transfer Pricing, Deductions; Some Adjustments Deleted, Others Reconsidered; ESI Disallowance Upheld.

  Case-Laws - AT : This is a summary of an Income Tax Appellate Tribunal (ITAT) order dealing with various transfer pricing and deduction issues. The key points are: Transfer pricing adjustments were deleted for trademark fee, outstanding receivables, and purchase of finished goods transactions based on the application of appropriate methods and factual findings. The regional service charges and accounting support services transactions were remitted to the Transfer Pricing Officer for fresh adjudication after considering the assessee's submissions. The disallowance of 30% advertising and brand-building expenses was decided in favor of the assessee, following earlier years' ITAT orders. The disallowance of employees' contribution to ESI was upheld based on the Supreme Court's decision in Checkmate Services, as the contributions were deposited after the due dates prescribed under the relevant Act.
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Customs

• Customs Bonded Warehouse Processes Go Digital via ICEGATE for Licensing, Transfers, and Returns Submission.

  Circulars : This circular outlines the digitization of Customs Bonded Warehouse procedures on ICEGATE, enabling online filing for warehouse licensing, bond-to-bond movement of warehoused goods, and uploading monthly returns. Key aspects include an online application process for warehouse licenses, with designated port codes for handling applications; online requests for transferring warehoused goods between persons/warehouses, involving validation of bonds, ownership changes, and officer approvals; and uploading scanned monthly returns initially, with webform filing planned later. It emphasizes user manuals, grievance redressal mechanisms, and directs Chief Commissioners to issue public notices and assist trade members in onboarding the new system. The circular aims to facilitate ease of doing business while ensuring compliance through digitized processes.
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• Customs Duty Update: Revised Tariff Entries and Rates for Aviation Fuel, Chemicals, Machinery Parts, Vehicles, and More.

  Notifications : This notification amends various earlier customs duty notifications by making changes to the tariff item entries, descriptions, and rates of duty applicable to certain goods. The key amendments are: 1. Changes in tariff item entries and duty rates for goods like aviation turbine fuel, certain chemicals, carpets, ceramic products, structures of iron/steel, aluminum articles, machinery parts, vehicles, aircraft, arms and ammunition. 2. Insertions of new tariff lines with corresponding duty rates for goods like food preparations, plastic products, textile floor coverings, ceramic wares, iron/steel structures, aircraft parts, arms and ammunition. 3. Omissions of certain existing tariff lines from the duty notifications. 4. Substitutions of tariff codes for certain goods like boards/panels, electrical apparatus, vehicles, aircraft parts. The amendments involve technical changes to customs duty rates and tariff codes, using relevant legal and trade terminology, without providing additional context or commentary. The changes are aimed at aligning the customs duty structure with trade policies and requirements.
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• Revised Import Tariff Values for Oct'24: Edible Oils, Brass Scrap, Areca Nuts, Gold & Silver.

  Notifications : This notification from the Ministry of Finance revises the tariff values for import of certain goods like edible oils, brass scrap, areca nuts, gold and silver. The tariff values are fixed as per the tables provided, specifying the tariff value per metric ton for commodities like crude palm oil, RBD palm oil, crude palmolein, RBD palmolein, crude soyabean oil and brass scrap. For gold and silver, the tariff values are given per 10 grams and per kilogram respectively, covering different forms like bars, coins, medallions and semi-manufactured items. The notification comes into force from 1st October 2024, superseding the previous revisions.
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• Gold Bars Seizure: Marked Bars Confiscated, Unmarked Bars Released; Burden of Proof Shifts Under Customs Act.

  Case-Laws - AT : 10kg of gold consisting of 10 gold bars, with 7 bars bearing foreign markings and 3 bars without markings, was seized along with cash from an employee of the appellant. The appellant claimed the 3 unmarked bars were melted from old jewelry. Section 123 of the Customs Act was invoked, requiring the appellant to prove the 7 marked bars were not smuggled goods. The Tribunal held there was reasonable belief of smuggling for the 7 bars, but not for the 3 unmarked bars, shifting the burden of proof to the department for those. The department failed to prove the 3 bars were smuggled. Confiscation of the 7 marked bars was upheld as smuggled goods u/s 111(d), but confiscation of the 3 unmarked bars was set aside. Penalties u/ss 112 and 114AA were reduced proportionately. The appeal was partly allowed, and the department was directed to release the 3 unmarked bars.
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• Duty-free goods diverted to local market, appellant penalized without sufficient evidence of knowledge.

  Case-Laws - AT : Customs Act, 1962 - Penalty levied on appellant as co-noticee for principal violator's diversion of duty-free imported goods under DEEC scheme to local market without fulfilling export obligation. Appellant's relationship with principal violator not sufficient evidence of knowledge about modus operandi. Appellant severed ties with partnership firm after payment issue. Commissioner's order imposing penalty set aside by Appellate Tribunal due to lack of corroborative evidence against appellant.
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• Tribunal Rules on Classification of Brake Pad Materials Under Customs Tariff; Misclassification Not Intentional Misdeclaration.

  Case-Laws - AT : The case pertains to the classification of imported goods such as binding material, parts for brake, disc brake pads, tool for mould, etc. under the Customs Tariff Headings (CTH) 38249090/38247900 or CTH 68138900. The key points are: The imported materials are more appropriately classifiable under Chapter Heading 6813 as friction material based on their composition and usage in brake pad manufacturing. The Material Safety Data Sheet also identifies them as friction material. Friction materials not mounted for brakes or clutches fall under CTH 6813. However, when mounted, including friction material fixed to a metal plate for disc brakes, they are classified as parts of the machines or vehicles for which they are designed. The imported product consists of a friction material bonded with a steel backing plate, forming an integrated component used in automotive vehicle brakes. Therefore, it is more appropriately classifiable under CTH 6813 and not under CTH 3824. Regarding the invocation of the extended period, the Tribunal held that in the absence of any finding of positive suppression by the importer, misclassification cannot be equated with misdeclaration within the meaning of Section 28(4) of the Customs Act, 1962. Considering the importer's consistent classification practice and regular imports, attributing any.
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DGFT

• Export Incentive Scheme Extension with Revisions for Budget Adherence.

  Notifications : The RoDTEP scheme for exports manufactured by DTA Units is extended until 30.09.2025, while for exports by Advance Authorization holders (excluding deemed exports), EOUs, and SEZ Units, it is extended until 31.12.2024. To adhere to the budgetary framework, necessary changes will be made to the scheme benefits, including revisions or deletions in eligible items, rates, value caps, and other measures. New RoDTEP rates based on the committee's recommendations are notified from 10.10.2024 under revised Appendices 4R and 4RE, available on the DGFT portal. For exports between 01.10.2024 and 09.10.2024, existing rates apply. The notification aims to extend the RoDTEP scheme while making adjustments to remain within the approved budget.
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Corporate Law

• Guidance on Ind AS 104: Key Definitions, Risk Transfer, and Identifying Insurance Contracts and Components.

  Notifications : This is a summary of key definitions and guidance related to insurance contracts under Indian Accounting Standard (Ind AS) 104. It covers the definition of an insurance contract, insurance risk, insured event, insurer, policyholder, reinsurance, and related terms. It provides guidance on identifying insurance contracts, assessing significance of insurance risk transfer, treatment of components like deposits, and examples of contracts within and outside the scope. The appendix details aspects like uncertain future events, payments in kind, distinction between insurance and financial risks, and changes in insurance risk level over the contract term. Key points include the requirement of significant insurance risk transfer for a contract to qualify as insurance, and the focus on the insurance component when unbundling deposits.
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• Tribunal Denies Third-Party Intervention in Insolvency Case, Upholding IBC's Pre-Admission Restrictions.

  Case-Laws - Tri : The Tribunal dismissed the application filed by companies holding units in the Corporate Debtor's project, seeking to intervene and proposing a scheme of compromise and arrangement u/s 230 of the Companies Act, 2013. The Tribunal held that there are no provisions in the Insolvency and Bankruptcy Code (IBC) for intervention by a third party at the pre-admission stage. The Tribunal's role is limited to ascertaining the existence of financial debt and its default on an application filed u/s 7 of the IBC. The Financial Creditors had already opposed the issuance of notice in the Intervention Petitions and pressed for dismissal, arguing that the IBC does not allow intervention at the pre-admission stage. The Tribunal concluded that entertaining the application would severely impact and prejudice the rights of the individual allottees who filed the main company petition, leading to unnecessary delay in the proceedings.
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IBC

• Tribunal Approves Liquidator's Plan to Distribute Unsold Assets, Assigns Recovery Rights to VS & B Containers LLC.

  Case-Laws - Tri : The Tribunal granted permission to the Applicant to distribute the unsold assets, being the amount recoverable from the corporate debtor and its erstwhile management under the action initiated against their previous preferential, undervalued and fraudulent transactions among the Respondents. In the 5th SCC meeting, the Liquidator proposed assigning the right to file PUFE proceedings for avoidance/recovery of amounts to VS & B Containers LLC, which was accepted by a 66.82% majority vote. The SCC resolved that if any amounts are recovered, VS & B Containers LLC shall share the recovered amounts with other Shareholders as per their claim sharing ratio. The Tribunal ordered that the right to recover from PUFE proceedings shall be assigned to VS & B Containers LLC, and any amount recovered shall be shared accordingly. The Application was disposed of.
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VAT

• Pandemic chaos allows amnesty compliance delay, HC grants tax relief.

  Case-Laws - HC : Taxpayer company availed amnesty scheme benefit, deposited tax amount, but failed to communicate timely due to COVID-19 pandemic and consultant's death. HC quashed revenue's order denying amnesty benefit, directed granting full benefit by accepting deposited tax amount as final settlement for the year, considering pandemic situation and limitation extension by Supreme Court order.
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Service Tax

• Ruling Prevents Double Taxation on Service Recipient Due to Full Payment by Provider in Manpower Supply Case.

  Case-Laws - AT : Service tax liability cannot be imposed twice on the same transaction. The appellant, as a service recipient, was required to pay 75% of the service tax under the reverse charge mechanism for manpower supply agency services. However, the undisputed fact is that the service provider, M/s. Kalpataru Job Management, had already discharged 100% of the applicable service tax, as reflected in their invoice. Demanding service tax from the appellant would amount to recovering the tax twice, which is impermissible. The CESTAT Bangalore Bench in Kerala Ceramics Ltd vs CCE case held that if the transporter has discharged the service tax liability and provided documentary evidence, the same cannot be demanded from the recipient. Since 100% service tax was paid by the service provider, it cannot be recovered from the appellant. Consequently, the impugned order is set aside, and the appeal is allowed.
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Central Excise

• Export Rebate Claim Denied; Penalty Imposed for Forged Documents Under Excise Act; Dismissed on Limitation Grounds.

  Case-Laws - HC : The petitioners' rebate claim for export of goods was rejected and penalty imposed u/s 11AC of the Central Excise Act, 1944 read with Rules 25 and 27 of the Central Excise Rules, 2002. During investigation, it was found that the petitioners and co-noticees filed rebate claims with forged documents like shipping bills and Form ARE-I, which is mandatory for claiming rebate. The petitioners did not comply with the prescribed procedure and committed fraud by forging the Forms. The authorities rightly rejected the rebate claim. Regarding the limitation for issuance of the show-cause notice, although the period is five years from the date of knowledge u/s 11A, the authorities issued the notice in 2014 after obtaining the original documents from the Court of Sessions in 2014, which were earlier unavailable. The petitioners did not raise the limitation issue before the Adjudicating Authority, but raised it before the Revisional Authority and the High Court. As the limitation is a mixed question of fact and law, the High Court dealt with it. No interference was warranted in the orders rejecting the rebate claim and levying penalty on the petitioners under Article 227 of the Constitution, and the petitions were dismissed.
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• Refund of Education Cess Denied: CGST Act's Transitional Provisions Exclude Cesses from Eligible Duties for Credit.

  Case-Laws - AT : Refund of Education Cess and Secondary & Higher Education Cess (SHE Cess) under the transitional provisions of the CGST Act, 2017. The key points are: Cess is a tax levied for a specific purpose, in this case, education. The definition of 'eligible duties and taxes' u/s 140 of the CGST Act excludes cesses, making them ineligible for transitional credit. Unutilized cesses cannot be transitioned through TRAN-1 and shall lapse as per the transitional provisions. Section 11B of the Central Excise Act and Rule 5 of the CENVAT Credit Rules do not provide for refund of such cesses. The Tribunal held that equity or hardship cannot influence fiscal laws without statutory backing. Mere accounting entry of cess credits in the electronic ledger does not confer a vested right for utilization against GST liability. Section 142(3) of the CGST Act does not entitle refund of such ineligible credits. The appeal for refund of Education Cess and SHE Cess was dismissed.
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• Tribunal Validates ISD's Credit Distribution for Post-Manufacturing Services; Dismisses Revenue's Appeal, No Penalties.

  Case-Laws - AT : Wrongful transfer of credit attributable to all units by the Input Service Distributor (ISD) exclusively to the respondent, contravening the second proviso to Rule 3(4) of the Cenvat Credit Rules. The tribunal held that the credit of service tax paid on Clearing & Forwarding Agents Services is eligible as it is a post-manufacturing activity not used in or in relation to manufacturing goods. The proviso limiting credit availment does not apply when credit is availed based on invoices issued by ISD. The department lacks jurisdiction to question the correctness of credit distributed by ISD from the recipient merely availing credit based on ISD invoices. Services like advertisement, manpower recruitment, market research are used by all units, and no input service was exclusively utilized in respondent's Guwahati units. Hence, ISD correctly followed Section 7(b). The extended period of limitation cannot be invoked as respondent and ISD regularly filed returns showing Cenvat Credit availed without concealing material facts. Interest and penalty are not applicable since the service tax demand itself is unsustainable. The tribunal upheld the Commissioner's order dismissing the Revenue's appeal.
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• Manufacturers' CENVAT Credit Penalty Dropped After Pre-Notice Payment; Tribunal Cites Previous Case Decision.

  Case-Laws - AT : Appellants engaged in manufacturing dutiable goods and providing exempted trading services failed to maintain separate accounts for input services utilized in both activities as mandated u/r 6(2) of CENVAT Credit Rules, 2004 (CCR). They paid service tax on royalty charges to overseas principals for both domestically manufactured and imported bottle closures. Department interpreted royalty as common input service requiring separate accounting and payment u/r 6(3) for exempted trading activity. Appellants discharged amount u/r 6(3) with interest and penalty before show cause notice (SCN). Original authority and Commissioner (Appeals) orders lacked examination of facts and appellants' compliance. Tribunal relied on BHEL-GE case, holding since appellants paid CENVAT credit for trading, it's construed as no credit taken, dropping demand. Commissioner (Appeals) directed redetermination of actual CENVAT payable u/r 6(3) after considering appellants' option u/r 6(3AA), without imposing penalty. Appeal partly allowed, setting aside penalty imposition.
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Case Laws:

• GST

• 2024 (10) TMI 41
  Refund of IGST paid in regard to the goods exported by the petitioner - petitioner has exported the goods but inadvertently did not include the amount of IGST paid by the petitioner in Form GSTR-1 for the relevant month - HELD THAT:- This petition is disposed off with a direction to the respondent authorities to immediately act and manually process the refund payable to the petitioner as claimed in this petition within a period of twelve weeks from the date of receipt of copy of this order. Petition disposed off.

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• 2024 (10) TMI 40
  Grant of stay of the proceedings subject to the payment of 10% balance amount of the disputed tax - whether the appellate authority was justified in enhancing the tax liability payable by the appellant/assessee in an appeal filed by the assessee without following the procedure under Section 107(11) of the Act? - HELD THAT:- Admittedly, the tax which was quantified by the assessing officer is Rs.2,58,536.80. However, while imposing the penalty the assessing officer imposed penalty on the sum of Rs.41,83,804.72/- - This order was put to challenge by filing a statutory appeal. The appellate authority was required to consider as to whether the tax liability fixed by the adjudicating authority at Rs.2,58,536.80 is correct and whether the penalty is to be levied on the total amount of Rs.41,83,804.72. However, the appellate authority while passing the order has suo motu enhanced the tax liability on the amount payable by the appellant without following the procedure under Section 107(11) of the Act - the order passed by the appellate authority to that extent is not tenable in law and, therefore, liable to be set aside. The order passed by the appellate authority as well as the adjudicating authority is set aside and the matter stands remanded to the adjudicating authority for fresh consideration - Petition allowed.

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• 2024 (10) TMI 39
  Cancellation of GST registration - violation of Rule 86B r.w. Rule 21 of CGST Rules, 2017 - appeal dismissed as barred by limitation - HELD THAT:- A perusal of the impugned Show Cause Notice at Annexure-C and the impugned order at Annexure-D will indicate that the sole ground on which GST registration of the petitioner has been cancelled is by coming to the conclusion that petitioner had violated Rule 86B of the CGST Rules. However, details, particulars etc, as regards violation are conspicuously absent and have not been mentioned either in the Show Cause Notice or in the impugned order. So also necessary enquiry in this regard has not been conducted by respondent No. 1 before passing the impugned order and consequently, in the absence of material particulars/details and necessary enquiry by respondent No. 1 as regards alleged violation of the petitioner of Rule 86B having not been conducted, it is opined that the impugned order at Annexure-D dated 07.09.2022 deserves to be quashed and direction be issued to respondent to reinstate/restore the GST registration by reserving liberty in favour of respondent to take necessary action in accordance with law. Insofar as dismissal of the appeal filed by the petitioner as barred by limitation is concerned, since the said appeal was filed beyond the maximum period of four months (3+1 months), the said appeal is no appeal in the eye of law and since the appeal has been dismissed summarily as barred by limitation, the impugned order would not merge with the Appellate Authority order. Consequently, dismissal of the Appellate Authority order would not come in the way of this Court in entertaining the petition by exercising its jurisdiction under Article 226 of the Constitution of India. Petition allowed.

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• Income Tax

• 2024 (10) TMI 38
  TDS u/s 195 - Royalty - amounts paid by the concerned persons resident in India to non-resident, foreign software suppliers - Whether constitutes as taxable income deemed to accrue in India u/s 9(1)(vi)? - interest u/s 234B - Delay filling SLP - HELD THAT:- Besides the delay of 531 days in filing the Special Leave Petition, the issue sought to be raised by the Revenue is covered by the decision of this Court in Engineering Analysis Centre of Excellence Private Limited [ 2021 (3) TMI 138 - SUPREME COURT] Counsel appearing on behalf of the petitioner states that the review petition has also been dismissed.

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• 2024 (10) TMI 37
  Penalty imposed u/s. 271D and 271E - default u/s 269SS and Section 269ST - delay fillIng SLP - ITAT and HC [ 2022 (7) TMI 1551 - GUJARAT HIGH COURT] deleted addition as there is no intention/mens rea on the part of the assessee-Co-operative society to accept the cash deposit from its members in their accounts maintained by it similar to savings account maintained by the banks in view of the provision of section 273B. No penalty would be leviable if the person concerned proves that there is reasonable cause for the alleged failure. HELD THAT:- There is an inordinate delay of 660 days in filing the special leave petition. The explanation offered seeking condonation of delay is neither satisfactory nor sufficient in law to be condoned. Hence, the application seeking condonation is dismissed. Further, we do not find any merit in the special leave petition. Hence, the special leave petition is dismissed both on the ground of delay as well as on merits.

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• 2024 (10) TMI 36
  Deduction u/s 80IA (4) - Whether the assessee satisfies the conditions prescribed in clause (b) of Section 80IA (4)? - HELD THAT:- Assessee has developed the Mechanised Coal Handling System in terms of the agreement entered into by it with KSPL and KSPL is none other than a Special Purpose Company of ISPL, who had entered into an agreement with the Government of Andhra Pradesh. HELD THAT:- Assessee has obtained a certificate dated 11.08.2015 issued by the port authority of the Government of Andhra Pradesh certifying that the infrastructural facility developed for handling of coal through Mechanised Coal Handling System constructed and owned by the assessee are part of the infrastructural facility of the Kakinada deep water port which has been put to use from 13.10.2013. Though the second condition was relaxed by the CBDT Circular, the assessee had placed on record, a letter issued by KSPL which is to the effect that on expiry of the concession period, the structures, building constructed by or belonging to KSPL or their subcontractors, sub lessees, assignees free from all encumbrances and liability shall automatically become property of Government of Andhra Pradesh without any obligation to reimburse therefrom. In terms of the said condition, the Mechanised Coal Handling Terminal Installation of the assessee are to be taken over by the Government of Andhra Pradesh at the expiry of the concession period. Tribunal was also right in coming to the conclusion that the permission obtained from the customs authority by the assessee vide a letter dated 01.02.2013 is deemed to be the approval granted by the competent authority of the Central Government and in this regard, the learned tribunal rightly took note of the decision in the case of A.L. Logistics Private Limited [ 2015 (1) TMI 401 - MADRAS HIGH COURT ] which was affirmed by the Hon ble Supreme Court in Container Corporation of India Limited [ 2018 (5) TMI 359 - SUPREME COURT ] As under clause 13 power has been granted to appoint its own labour, agents, pilots etc. to carry out all port related activities at deep water port, Kakinada including amongst others handling, storing, marine operations, security etc. Further in terms of the clause 17, the nominee of ISPL among other powers the other authorities to discharge the obligations of the concession agreements. We have no hesitation to hold that the learned tribunal was fully justified in allowing the assessee s appeal and the impugned order does not call for any interference. Decided in favour of the assessee.

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• 2024 (10) TMI 35
  Application for revision u/s 264 against the intimation u/s 143 (1) - reduce the excess provision from the returned income - rejecting the petitioner s application u/s 264 on the ground that the petitioner should have filed a revised return of income - HELD THAT:- We are of the opinion that there is much substance in the contentions as urged on behalf of the petitioners. Insofar as the revisional powers are concerned, Section 264 inter alia empowers the Commissioner, either on his own motion or on an application made by the assessee, to call for the record of any proceeding under the Act and pass such order thereon not being an order prejudicial to the assessee. It is well settled that such power is conferred on the Commissioner to enable him to give relief to an assessee also in cases of over-assessment, however, such power is required to be exercised by the Commissioner subject to the limitations prescribed in the provision. This would include a situation that after an assessment is completed, if an assessee detects mistakes on account of which he was over-assessed, the revisional jurisdiction can be invoked by the assessee. Such power is not confined merely to erroneous orders passed by the lower authorities. In the present case the Commissioner was not correct in rejecting the revision application filed by the petitioner on the ground that the petitioner had not filed a revised return within the prescribed limitation. In our opinion, Section 264 is a salutary provision which also bridges the gap and / or removes vacuum to remedy a bona fide mistake and / or for correction of an inadvertent situation, which may take place in the assessment proceedings. By remedying such mistake by orders being passed u/s 264 of the Act, any illegality or injustice which would otherwise be caused to the assessee can be corrected so as to maintain a lawful course of action being followed in the course of assessment. The object of such provision also appears to be that the law would not be oblivious to any bona fide human mistake which may occur at the end of the assessee and which if otherwise permitted to remain, may lead to injustice or the provisions of law being breached. Now coming to the decision as cited we are not persuaded to accept that the decision in Goetze (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT ] in the facts of the present case would at all be applicable. Such decision is not in the context of the revisionary powers as conferred under the provisions of section 264 of the Income Tax Act, but in the context of deduction claimed by the assessee by a letter, after the return was filed, without filing of a revised return. Also the decision as rendered in M.S. Raju [ 2007 (12) TMI 23 - ANDHRA PRADESH HIGH COURT ] would also not support the respondent s case. In such case the the assessee had made payment of 30 lakhs as damages much after the assessment in question. No material was placed to show that the audit report for the previous year had made any reference to the subsequent event of payment of damages. However in the subsequent assessment year the assessee did not claim any deduction of 30 lakhs. On such facts the assessee filed a revision requesting the Commissioner to direct the assessing officer to allow a deduction of 30 lakhs paid by the assessee as damages. The Commissioner rejected the request holding that the assessment for the relevant year made no reference to any claim for deduction of the said amount in the profit and loss account. In such circumstances, the Court in the facts of the case held that since the record under the provisions of section 264 (1) is only the record of the proceedings before the assessing authority and as assessee did not claim any such deduction in the return of income filed by him before the assessing authority, he was not entitled to raise such question for the first time in revision proceedings under Section 264 (1). Thus, not only the facts of the case are quite distinct but also even otherwise on the position in law the decision is not applicable to the case in hand. Commissioner has certainly erred in law in rejecting the revision application filed by the petitioner merely on the ground that the petitioner had not filed a revised return. The petition needs to succeed. It is accordingly allowed in terms of prayer clause (a). The revision proceedings are accordingly restored to the file of Respondent No. 1 for appropriate orders to be passed under the provisions of Section 264 in the light of the above observations on the merits of the adjustment as claimed by the petitioner.

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• 2024 (10) TMI 34
  Deduction u/s 80IC - Calculation of deduction u/s 80IC - HELD THAT:- We find that the view ultimately taken by the ITAT does not give rise to any substantial question of law. We also take note of our judgment rendered in the context of a Scheme duly approved by a High Court and the lack of authority inhering in the AO to doubt its validity or question its provisions in Aamby Valley Ltd. [ 2024 (7) TMI 1529 - DELHI HIGH COURT] . Eligibility for deduction u/s 80IC - There is no ambiguity as to the amalgamation/ merger undertaken by the appellant and its legal and economic effect. While doing so the appellant followed the prescribed procedure. Everything that the appellant did was permitted by law and was perfectly legal in the eyes of law. The legal effect of each of the aforesaid transactions undertaken by the appellant was achieved. It could not, therefore, be said that the appellant had employed any colorable device. It is clear that the appellant is eligible for the deduction under section 80IC of the Act as appellant had established the manufacturing unit at Parwanoo prior to the amalgamation with erstwhile Mahle. Therefore, provisions of section 80IC(4) of the Act are not applicable in the case of the appellant. There is no proper justification for the addition made by the AO and accordingly the same is deleted. Disallowance of royalty payments - expenses incurred by the Assessee are for enduring benefit and are thus capital in nature? - ITAT deleted addition - HELD THAT:- We note that the Tribunal has relied upon the decision of this Court in Hero Honda Motors Ltd. [ 2015 (2) TMI 368 - DELHI HIGH COURT ] We thus find no justification to interfere with the view taken by the Tribunal. Treating income from house property declared by the Assessee to income from other sources - Assessee has entered into lease and License agreement not lease rental agreement - ITAT deleted addition - HELD THAT:- There is no dispute that the factory building owned by the assessee was let out for which the assessee earned rental income of Rs. 47.26 lakhs. Whether there existed leave and licence agreement and not rental agreement would not change the colour of receipts in the hands of the assessee. The undeniable fact is that the assessee has earned rental income from letting out its property and the same has to be taxed under the head income from house property eligible for deduction as per the provisions of section 24 - We, accordingly, direct the Assessing Officer to tax rental income under the head income from house property as per provisions of law.

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• 2024 (10) TMI 33
  Refusal of registration of the association u/s 12AA - charitable activities under Section 2(15) or not? - CIT observed that the society had not been carrying on with any charitable activity as the society was not imparting education as a charitable purpose within the meaning of Section 2 (15) - society had already been granted approval under Section 10 (23)(vi) of the Act but mere approval does not automatically entitle the assessee to registration under section 12AA - HELD THAT:- In the case of New Noble Educational Society [ 2022 (10) TMI 855 - SUPREME COURT] and Pinegrove International Chairtable Trust [ 2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT] this Court has held that the powers available to the authorities to cancel the registration granted under Section 12AA (3) of the Act was only prospective and could not be applied retrospectively. In the present case, we find that the institute has been able to satisfy that it has already been registered under Section 10 (23) (vi) to be an educational institute and Section 12AA pertains to registration of the trust. Since the respondent institute is a duly registered educational trust and whatever earnings it receives are also utilized for the purpose of advancement of education, the institution could not have been denied the benefit of Section 12AA as mentioned in Ananda Social Educational Trust s case [ 2020 (2) TMI 1293 - SUPREME COURT] We, therefore, do not find any error committed by the Income Tax Appellate Tribunal holding the respondent entitled for registration u/s 12AA. The appeal is accordingly dismissed.

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• 2024 (10) TMI 32
  Accrual of income - revenue recognition - Advance received from Customers under the contracts entered into by the assessee - method of accounting - HELD THAT:- In support of method of accounting as per AS-7, the assessee had filed detailed explanation with the AO. However, on 6.2.2015 CIT(A) required the assessee to substantiate its claim that it followed Percentage Completion Method (PCM) as per AS-7 for booking revenues. Assessee filed detailed reply. The assessee, inter-alia, filed by way of sample a few Contracts for sale and installation of elevators. CIT(A) has commented on the contract with Swan Mills Ltd. Lanco Infrastructure. It may be noted that unadjusted Advance from Customers and Deferred Revenue are shown as current liabilities . whereas the amount of revenue recognised but not billed to the customer is shown as Unbilled Revenue under other current assets in the accounts. CIT(A) in A.Y. 2011-12 accepted the assessee s explanation after duly examining it. Method of accounting has been consistently followed and approved by the Tribunal in earlier years. Any deviation in method of accounting of revenue would lead to mismatch of the cost with the revenues. Addition in respect of advance received from customers under AMC contract. CIT(A) followed his predecessor s order for A.Y. 2005-06 and upheld the disallowance of unadjusted advances under the maintenance contract as income. Tribunal has consistently approved the method of accounting adopted by the Assessee. As per this method the assessee accounts for amount received for Annual Maintenance Contracts for elevators (AMC) as advance at the beginning of the year and the end of every month transfer the proportionate amount to the Revenue account. The method adopted by the assessee is in accordance with AS-9. This method has been approved by the Hon ble Tribunal of A.Y. 2008-09 wherein it followed its own orders of earlier years. Ground of assessee s appeal are sustainable. Disallowance debited under TDS recoverable written off in the books of account is covered by assessee s own case. Accordingly, Ground No.4 is also sustainable. Disallowance on account of depreciation claimed on intangible assets - The issue is covered by the assessee s own case in order dated 15th October, 2015 for AY. 2003-04 wherein held Court finds that the decision of this Court in Areva T D India Limited [ 2012 (4) TMI 79 - DELHI HIGH COURT] answers a similar question in favour of the Assessee and against the Revenue. In that decision it was held that knonw-how, business contracts, business information, etc. acquired as part of a slump sale were entitled for depreciation u/s 32(1)(ii) of the Act. Also question whether the goodwill is an asset within the purview of Section 32 of the Act, the question stands answered in favour of the Assessee and against the Revenue by the decision of Smifs Securities Limited [ 2012 (8) TMI 713 - SUPREME COURT] Decided in favour of assessee.

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• 2024 (10) TMI 31
  Revision u/s 263 - as per CIT order passed u/s 147 r.w.s. 144B determining the income as erroneous and prejudicial to the interest of revenue - HELD THAT:- Core reason for reopening the assessment has not been properly examined/investigated. AO, after having reopened the case u/s 147 was required to carry out detailed enquiry and verification, not only on the reasons for reopening the case but also about the genuineness of the transactions as a whole and other issues emerged during the reopened assessment proceedings. In the order passed u/s 147 r.w.s. 144B of the Act, there is no whisper about any enquiry or verification done by the AO in this regard. Though, in his order disposing of the assessee s objection on validity of proceedings u/s 147 it is seen that he has passed a detailed order justifying the assumption of jurisdiction under section 147 of the Act. However, there is no clear-cut finding on this score in the order dated 30.03.2022 passed under section 147 r.w.s. 144B of the Act. Here in this case, one important aspect which needs to be kept in mind that the reopening has been done within four years from the end of the relevant assessment year. Thus, the law contained in proviso to section 147 of the Act will not apply whereby ascribing of failure on part of the assessee by the AO is sine-qua-non to acquire the jurisdiction beyond the period of 4 years. It is nowhere borne out from the record of the reopened assessment proceedings that the AO has properly verified the genuineness of the issues/transactions referred by the Ld. PCIT in the impugned order. There is no categorical rebuttal of the observation of the Ld. Pr. CIT. First contention raised is in respect of non-application of mind on the part of the Ld. PCIT - The record shows that the impugned order is in respect of the reopened assessment order passed u/s 147 r.w.s. 144B - The final show-cause notice and the impugned order passed u/s 263 show correct and complete factual details and there is no discrepancy crept therein. We find that there were some factual errors in the initial notice issued under section 263 of the Act, which got revised/rectified in the subsequent notice. It shows that the revised show case notice issued u/s 263 reflected correct facts and figures and was issued after due diligence and application of mind by the PCIT. Thus, the appellant/assessee has been provided an opportunity to response to a valid notice dated 18.03.2024 and no prejudice has been caused to the appellant/assessee on account of inadvertent error crept in notice dated 04.01.2024. The said revision/rectification of the show-cause notice speaks volume about the application of mind. Only a person, after applying her/his mind, revises/rectifies herself/himself. Thus, we do not find any merit, on this score, in the contention/argument of the Ld. Sr. Counsel. Order passed u/s 147 r.w.s. 144B is not a valid order, therefore, the same cannot be revised after two years u/s 263 - From perusal of the order passed under section 147 r.w.s. 144B it is evident that the AO did not make any addition in respect of the issue for which the case was reopened. Keeping in view the ratios laid in the above cited decision of Mehak Finvest P. Ltd., Govind Raju and Majinder Singh Kang [ 2012 (6) TMI 616 - PUNJAB AND HARYANA HIGH COURT ] we are of the considered opinion that the AO is legally competent to make addition on other issues even if no addition is made in respect of those issues for which the assessment has been reopened under section 148 of the Act. In any case, assumption of the jurisdiction under section 147 of the Act based on the information/material referred to in the reasons recorded has never been disputed here. Only, the outcome there of has been disputed here. The order passed u/s 147 r.w.s. 144B of the Act has not become non-est or invalid order just because the AO has accepted the returned income. If the proposition of the Ld. Sr. Counsel is accepted on this score, then a very peculiar situation will arise against the intent of amendment brought into the section 263 of the Act. Take a case, where the AO has not carried out any investigation or improper investigation and has accepted the returned income in the scrutiny assessment; then the PCIT/CIT cannot invoke her/his revisionary power under section 263 of the Act. Thus, in such situation as contemplated by the Ld. Counsel, the AO by not carrying out the investigation will have upper hand on the revisionary power under section 263 of the Act. When the AO has failed to carry out requisite inquiry and verification as in this case, the order passed under section 147 r.w.s. 144B of the Act in this case has become erroneous and prejudicial to the interest of the Revenue. Appeal of the assessee is dismissed.

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• 2024 (10) TMI 30
  Levy of penalty u/s 271AAB (1A)(b) - suo moto disallowance of expenses of personal nature u/s 37 made by the assessee in the return filed in response to notice issued u/s 153A - HELD THAT:- As stated in the earlier part of the order, it is not in dispute that assessee had indeed made suo moto disallowance in the return filed in response to notice issued u/s 153A of the Act. The penalty proceedings u/s 271AAB of the Act had been initiated only pursuant to search assessment completed u/s 153A of the Act on the assessee. In that search assessment, no concealment on the part of the assessee was even found/ detected. In these circumstances, whether penalty u/s 271AAB of the Act could be levied on the assessee is the dispute before us. We find that this issue is no longer res-integra in view of the decision of Neeraj Jindal [ 2017 (2) TMI 1002 - DELHI HIGH COURT] . Hence respectfully following the same, the levy of penalty u/s 271AAB of the Act is hereby deleted.

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• 2024 (10) TMI 29
  Additions made on the basis of loose papers found during the search - additions based on rough jottings in loose papers - HED THAT:- As observed that the search was conducted at the residence of Mr. Vijay Gupta and Vikas Gupta, where it was found certain cash, stock, jewellery and loose papers relating to certain transactions. With regard to jewellery and stock, CIT(A) has deleted the additions. The issues raised before us by Mr. Vijay Gupta relates to loose papers found at the premises of Mr. Vikas Gupta and additions were sustained in the hands of Mr. Vijay Gupta. All the notings recorded in the loose sheet of diary referred as A1 should have some connection with the activities carried by the assessee. We observe that no activities or source of income was found as carried out by Mr.Vijay. All the notings which are found has to have some credibility with the presumptions applied by the AO. From the first page relating to noting of Duster Vehicle, which was presumed that this vehicle is owned by Mr. Vijay but the documents clearly shows that this is belongs to Hoover Marketing. There is absolutely no link established with the assessee as the owner. This is only a calculation of purchase of vehicle through bank and the relevant payment scheme. This shows the application of mind of the AO. Further the other notings show that certain expenses were written, the same was not correlated with the nature of income earned by the assessee. As per the records submitted before us, there is no regular income was found in the case of the assessee to relate the above said expenses. It is also relevant to note at this stage that this diary or loose paper was found at the possession or at the residence of Mr.Vikas. We know that Mr.Vikas is running the business in his proprietor concern VCS, where the book result and financial results were accepted. Whereas in the case of Mr. Vijay no such regular income was established to have earned. This evidence may have related to the business carried on by Mr. Vikas. There is no correlation to Mr.Vijay and there is no evidence to show that these are incurred by Mr.Vijay. Hence, this is nothing but dumb document found at the premises of Mr Vikas or it is related to business of VCS. Therefore, this addition also directed to deleted in the hands of Mr. Vijay. Information recorded are in thousands and in the page 23, the informations are jotted with certain amounts in numerical like 15, 3, 8 etc along with certain percentages. For this, AO has presumed that these are in lakhs. This is considered as undisclosed investments in the hands of Mr. Vijay but it is found at the residence place of Mr. Vikas. As discussed earlier, this could be transactions relating to proprietary concern VCS. The AO has wrongly considered as transactions belongs to Mr. Vijay. There is no means of income or business identified or carried by Mr.Vijay, it is not proper to presume that it is belongs to Mr. Vijay. Hence, this addition also directed to be deleted in the hands of Mr. Vijay. Income earned u/s 69A - In our views this income also belongs to the business of Mr. Vikas and there is sufficient funds available and most of the transactions carried on by Mr. Vikas is in cash only, the payment by cash and sells the cigarettes by cash. Therefore, the information found in the loose paper found at the residence of Mr.Vikas, therefore this is also relating to his business only and the addition made in the hands of Mr.Vijay is not proper. Hence, this addition also deleted in the hands of Mr. Vijay. Assessee appeal allowed.

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• 2024 (10) TMI 28
  Validity of reopening of assessment - notice beyond four years from the end of the relevant assessment year - denial of deduction u/s 54F - Addition on the ground that assessee was owning more than one residential house on the date of transfer of shares of FIITJEE Ltd (i.e. the original asset) - HELD THAT:- There cannot be any failure at all on the part of the assessee to furnish the requisite details. Accordingly, the proviso to section 147 of the Act is not satisfied at all in the facts and circumstances of the instant case. Hence, AO could not have validly assumed jurisdiction u/s 147 of the Act in the facts and circumstances of the instant case. The only information in any case that is available or which is being relied upon by the AO for reopening the assessment is the information available on SDMC website. First of all, any information provided in any website cannot be construed as a relevant material for drawing adverse inference against the assessee. Further, the information available in the Government website about any person or any person s possession could have to be construed as an information available in public domain and cannot be construed as a fresh tangible material that had come into the possession of the ld AO warranting reopening of assessment. Hence, the reopening of assessment fails on this count. This tribunal in [ 2021 (1) TMI 973 - ITAT DELHI] for AY 2013-14 dismissed the plea of the revenue and held that different floors of a property cannot be construed as a independent residential unit and instead had to be construed only as a single residential unit and accordingly deleted the action of the ld. CWT(A) levying wealth tax on the same. Hence, the issue has already been decided on merits i.e. basement and second floor owned by the assessee cannot be construed as two separate residential properties as already been decided by the Tribunal in assessee s own case in Wealth Tax proceedings stated supra. Hence it could be safely concluded that on the date of transfer of original asset, the assessee was having only one residential house property. The law is very well settled that merely because a residential home consisting of several independent residential units, it will not have an impact on claim of deduction u/s 54F of the Act. No hesitation to quash the reassessment proceedings on the ground that the assumption of jurisdiction u/s 147 of the Act is not sustainable in the eyes of law by the ld AO in the facts and circumstances of the instant case. Further, even on merits, the assessee would be entitled for deduction u/s 54F of the Act of Rs.90 crores. Grounds raised by the assessee are allowed. Denial of deduction u/s 54F is only for the reason that the assessee had not utilized the sale proceeds of shares of FIITJEE Ltd in its entirety for making re-investment in residential property - AO had concluded that the transaction between FIITJEE and Alert Buildtech is not genuine and that were also made the basis for denial of deduction u/s 54F of the Act. In this regard, it was specifically clarified before the ld AO that the assessee had not even made any claim of deduction u/s 80G of the Act in respect of donation paid to trust in the computation of income or during the course of assessment proceedings. In the instant case, there has been an actual deposit of money on 28.04.2011 in capital gains account scheme and Rs.60 crores on 29.07.2011. Both the deposits are within the prescribed time limit as per statute. It is a fact that assessee had received loan of Rs.60 crores from Alert Buildtech and utilized the same for making investment in capital gain account scheme - AO had accepted the said loan to be genuine and had not resorted to make any addition u/s 68 of the Act in respect of the said loan. Hence, the entire allegations of the revenue are absolutely without any basis. In view of the aforesaid observations, the grounds raised by the revenue are dismissed.

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• 2024 (10) TMI 27
  Delay in filling appeal before CIT(A) - promoter and managing director of the society was having health issues which resulted in delay in filing appeal before the CIT(A) - HELD THAT:- Appellant was not set to gain by delaying the filing of appeal before the CIT(A). In view of the explanation provided by the Appellant, the delay of 131 days in filing the appeal before CIT(A) deserved to be condoned. In any case, in our view, CIT(A) was not justified in rejecting the application for condonation of delay without first confronting the Appellant. Therefore, the order passed by the CIT(A) dismissing the appeal as being barred by limitation in set aside. Deduction u/s 80P(2)(a)(i) - income of the Co-operative Credit Societies attributable to providing credit facilities to the members - Issue raised in the present appeal, on merits, stands decided in favour of the Assessee by the judgment of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] wherein it was held that the provision of Section 80P(4) of the Act are attracted only in case of co-operative society holding a banking license issued by the Reserve Bank of India (RBI). It is not the case of the Revenue that the Assessee is either registered with RBI under Banking Regulation Act, 1949 and/or holds banking license issued by RBI. Therefore, provisions of Section 80P(4) of the Act would not get attracted in the present case and the Appellant would be eligible to claim deduction under Section 80P of the Act. As regards profits and gains earned by the Appellant from the business of provide credit facility to its members, the Appellant would be entitled to deduction under section 80P2(a)(i) of the Act. Whereas in respect of interest received from Co-operative Bank, the Appellant would be entitled to deduction u/s 80P2(d) of the Act since a co-operative bank continues to be a co-operative society as held in the case of NPC Employees Cooperative Credit Society Limited [ 2024 (6) TMI 1402 - ITAT MUMBAI] . Thus direct the AO to grant deduction u/s 80P(2)(a)/80P(2)(d) of the Act as claimed by the Appellant - Assessee appeal allowed.

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• 2024 (10) TMI 26
  Rectification order u/s 154 reversing own order - allowance of depreciation on non-compete fee - HELD THAT:- As if the issue is debatable in that event the provisions of section 154 of the Act cannot be invoked. In the case in hand, primary issue related to allowance of depreciation on non-compete fee is pending consideration before the Hon ble Supreme Court. Further, the Hon ble Jurisdictional High Court has also admitted the issue whether powers u/s 154 can be exercised when the issue is debatable in the assessee s own case for earlier assessment year. Under these circumstances and looking to the totality of facts when the Hon ble Jurisdictional High Court has admitted the identical question in assessee s own case we deem it proper for the judicial discipline and propriety to set aside the impugned order and restore the issue to the file of learned CIT(Appeals), who would decide it after the outcome of [ 2024 (3) TMI 1355 - DELHI HIGH COURT] in assessee s own case for the assessment year 2012-13 and pass order accordingly. Appeal of the assessee stands allowed for statistical purposes.

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• 2024 (10) TMI 25
  Denial of exemption u/s 11(1) - Form 10B was not submitted in the e-filing portal till date of the order of the FAA - HELD THAT:- We note from the intimation that as per return furnished, the assessee is not registered u/s. 12A/12AA or approval u/s. 10(23C)(iv), (v), (vi) or (via) for claiming exemption as made by the assessee in sl. No.4(i) to (viii) of Schedule Part B-T1. These fields are mandatory for claim of exemption u/s. 11 or 10(23C)(v) or 10(23C)(vi) or 10(23C)(via). Hence exemption was not allowed by the CPC. We also note from Form 10B digitally signed on 16.09.2019 which shows that Form 10B was filed by the assessee, but how it does not appear in e-filing portal is best known to the department. Thus, we remit the issue back to the file of CIT(A) for fresh consideration and decision as per law. The assessee is directed to file necessary documents that would be essential and required for substantiating his case and for proper adjudication by the revenue authorities. Assesee appeals allowed for statistical purposes.

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• 2024 (10) TMI 24
  Revision u/s 263 - disallowance of interest income - allowability of Interest us. 57 (iii) - assessee failed to substantiate the nexus between the interest-bearing loans taken from financial institutions and the advances made to group companies or relatives. The interest rate of loans borrowed (12.75%) was higher than the interest earned (12%), resulting in an excess claim for which no satisfactory explanation was provided - PCIT also concluded AO has wrongly addition in income on account of unexplained cash credits appearing the bank, submission of assessee not considered. HELD THAT:- As observed that the assessee has borrowed loan from various financial institutions against the mortgage of properties at the rate of interest more than 12% p.a. and since the interest earned from various parties is at the rate of 12% p.a., the assessee has restricted the claim of interest expense u/s. 57 of the Act to 12%. So far as passing reference of notional rent in his order u/s 263 of the Act, the AR stated that the assessee has disclosed rental income from the property - Mayuresh Elanza in his return of income which is Rs. 23,35,200/-. The same is verified with the copy of return of income filed and found to be correct. Thus, the contention of PCIT relating to notional rent is also factually incorrect. As well-settled proposition of law in the case of Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT ] that the power of revision under Section 263 cannot be exercised to correct each and every error committed by the AO, but only those which render the assessment order erroneous and prejudicial to the interests of the Revenue. The revisionary authority cannot invoke Section 263 of the Act merely because it has a different view on the matter. In the present case, the PCIT has failed to demonstrate that the AO s order was erroneous due to inadequate inquiry. The AO conducted the necessary inquiries and applied his mind to the facts presented during the assessment proceedings. As demonstrated by the assessee, there is no any prejudice caused to the Revenue. The order of the PCIT is, therefore, unsustainable in law. Appeal filed by the assessee is allowed.

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• 2024 (10) TMI 23
  Denial of accumulation u/s 11(2) as mentioned in Form No. 10 - specific charitable purpose has not been mentioned in Form No. 10, as filed to the department - HELD THAT:- We find that the appellant/assessee s objectives derive its spirit from the Directive Principles of State Policy enshrined in the Constitution of India. Since, the Govt. of India makes endeavor to provide welfare to one and all in the society at large and in view thereof the registration for public charitable trust through enactment is given in order to ensure that through these charitable trusts benefits should flow to the entire society and the objectives of the Govt. of India in furtherance to the Directive Principles of State Policy are achieved. In the present case in hand, the appellant/assessee is directly controlled by the Ministry of Women and Child Welfare. Therefore, the appellant/assessee Trust s aims and objectives are not questionable at all. There may be some technical lacuna in compliances as such Trust is not being advised by the top available Professionals in day-to-day affairs and routine compliances. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. We find the purpose for which the amount was claimed to be accumulated or set apart mentioned in the Form No. 10 of the AY 2016- 17 To be applied to promote and support research scientists for the advancement of research and development in future as specific and categorical and thus, we are inclined to interfere with the finding of the CIT(A) in this regard. Accordingly, we order so and allow the appeal of the AY 2016-17 with the direction to the AO to allow the consequential benefit under section 11(2) of the Act to the appellant/assessee.

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• 2024 (10) TMI 22
  Income from sale of three flats - ownership and taxation of the sale consideration from three flats under a Joint Development Agreement (JDA) - real owner. HELD THAT:- We note that the AO had called for the financials and books of accounts of the developers (M/s. Foundation One India Pvt. Ltd.), and ascertained that the developer has accounted the sale proceeds in respect of the 3 flats/parties during the AY 2018-19 and has shown the same under the head advance from purchases and the same has been offered as income during AY 2019-20. We further note that the assessee has offered to tax on the undivided share of land and that the developer offered as its income from the sale of three (3) flats. Therefore, on the same transaction (of the 3 apartments in question), the Revenue can t add the same again in the hands of the assessee, which will tantamount to double taxation. In this case, the assessee is the landlord who entered into JDA/PoA with the developer and agreed to give 45% of built up area along with UDS, for 55% of the built up area to the assessee. Accordingly, separate sharing agreement based on the built up area in proportionate to the agreed percentage of share was entered into and accordingly, the flats earmarked for the developer and the assessee respectively. The flats in question fell into the share of the developer and the developer has duly offered the tax on the entire sale consideration as turnover of the developer and hence, the same can t be considered as income of the assessee. Consequently, the addition made can t be legally sustained and therefore, assessee succeeds, and we are inclined to order deletion of the addition made by AO.

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• 2024 (10) TMI 21
  TP adjustment - difference in Arm s Length Price of international transaction of payment of trade mark fee - assessee selected CUP Method as Most Appropriate Method (MAM) - HELD THAT:- The Co-ordinate Bench of the Tribunal in Assessee s own case [ 2021 (8) TMI 1423 - ITAT DELHI] deleting the similar addition stating since the operating margin of the assessee at 6.96% is higher than the comparables at 2.77%, the international transaction of payment of royalty entered into by the assessee are to be considered being at arm s length applying TNMM as the most appropriate method. We therefore direct the assessing officer to delete the adjustment on this account Addition on account of Arm s Length Price of outstanding receivables - HELD THAT:- By relying on the binding decision of Satyam Venture Engineering Services Pvt. Ltd. [ 2016 (5) TMI 715 - ITAT HYDERABAD] and by, considering the fact that the outstanding payable to the respective AE s is much higher than the receivable and the Associated Enterprises has not charged the interest on delay in payment made by the assessee, therefore, in our considered opinion, charging of notional interest on outstanding receivables does not arise. Accordingly, the addition on account of Arm s Length Price of outstanding receivables are hereby deleted. Addition in Arm s Length Price of international transaction of purchase of sale of finished goods - HELD THAT:- As observed that the detailed working submitted by the assessee has not been examined at all either by the TPO or the DRP, therefore, it is in the interest of justice, issue is set aside to the file of the TPO for fresh adjudication by given due consideration to the submission made by the assessee. Accordingly, the Assessee s Ground partly allowed for statistical purpose. TP Adjustment - Arm s Length Price of international transaction of payment of Regional Service Charges (RSC) and addition in the Arm s Length Price of international transaction of receipt of accounting support services - selection of Most Appropriate Method (MAM) - HELD THAT:- We are of the opinion that comparable Uncontrolled Price (CUP) has been rightly taken up by the TPO. We observe that the assessee has not demonstrated the impact of the services obtained on the business affairs of the assessee in terms of turnover and profit. The abstract words of greater operational efficiency have to be demonstrated in real terms in terms of benefit obtained by the assessee, the same has not been displayed by the assessee. The cost incurred by the recipient and mark-up charges have not been given in detail by the Assessee. Hence, it would be appropriate to refer the matter to the file of the TPO with direction to the assessee to demonstrate the actual expenses incurred by the A.E and the mark-up as well as the rendition of the service by the assessee to the AE s company with regard to the five international transactions of provision of services to the assessee (except Information Technology Services) Disallowance of 30% advertising brand building and sales commercial expense - AO held that the assessee has incurred a large amount of advertisement and publicity which is resulting in benefit of AE s who own the brand - HELD THAT:- The above issue has already been decided in favour of the assessee by the Coordinate Bench of the Tribunal in Assessee s own case for Assessment Year 2007-08 to 2014-15 [ 2016 (7) TMI 21 - ITAT DELHI] , [ 2018 (1) TMI 1716 - ITAT DELHI] , [ 2019 (2) TMI 2111 - ITAT DELHI] held that advertisement expenditure incurred by the appellant is incurred wholly for the purpose of its business and profession and ought to be allowed in entirety. Further the Assessing Officer has clearly made an ad-hoc disallowance of advertisement expenditure incurred by the appellant which is not permissible under the law - Decided in favour of assesse. Disallowance of Employees Contribution to ESI - assessee has deposited Employees Contribution Funds ESI funds beyond the time period stipulated in the relevant ESI and PF Act - HELD THAT:- The provision of the Income Tax Act provides for payment of the Employees Contribution of ESI/PF on or before the due date prescribed under the relevant PF Act. The Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] categorically held that the Employees Contribution deposited after respective due date mentioned in the PF Act cannot be allowed as deduction u/s 36(1)(va) - Assessee ground dismissed.

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• Customs

• 2024 (10) TMI 20
  Maintainability of appeal - low tax effect - HELD THAT:- The appeals stand disposed of owing to low tax effect.

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• 2024 (10) TMI 19
  Confiscation - penalties under Section 112 and 114 AA of the Customs Act, 1962 - 10kg of gold (10 gold bars of one kg each) with the blue colour suitcase which was used to conceal the said gold along with cash - admission of smuggling - invocation of Section 123 of the Customs Act, 1962 - existence of evidence on a record proving that the order of confiscation is not sustainable, or not. Whether the department has rightly invoked Section 123 of the Customs Act, 1962? - HELD THAT:- For invoking Section 123 of the Act, it would be necessary, before any person could be called upon to prove that the goods seized from him were not smuggled goods, that the customs officer making the seizure must proceed upon the foundation of a reasonable belief inspired in him by some definite material by way of some definite information or otherwise so that he could be said to have seized the goods in a reasonable belief that they were smuggled goods as was held in Bapalal v. Collector of Central Excise [ 1964 (3) TMI 103 - HIGH COURT OF GUJARAT ] - in the present case, there was reasonable belief with the DRI officers about the impugned gold to have been the smuggled one. However, since there were no foreign markings on three out of 10 seized gold bars and Shri Dharmender Kumar had stated about those to be melted out of old gold jewellery. The very basis of reasonable belief of smuggling i.e. the foreign origin of the 3 bars is missing. In the light of this discussion Hence, there are no infirmity when section 123 has been invoked by the investigation agencies. with respect of 7 gold bars having foreign markings for remaining three gold bars the burden was on the department to prove that those are also of foreign origin. Whether there is any evidence on a record proving that the order of confiscation is not sustainable? - HELD THAT:- Having come to the conclusion that the gold seized of which the appellant claimed to be the owner if fails to prove by any valid documents of its purchase, gold has to be treated as prohibited goods and gold falls under the category of dutiable goods and if the liability to pay the customs duty is not discharged by necessary implication the seized gold becomes smuggled goods , are liable for confiscation under Section 111(d). Also absolute confiscation shall be justified where the trail of the events show that the possessor or owner of such gold is engaged in procuring gold of foreign origin in illegal. manner and the multiple stands taken by him on the face of it were false. Reverting to the facts of the present case, the burden of proof with respect to 10 gold bars seized from Shri Dharmendra Kumar employee of the appellant has already been bifurcated. It has been held above that with respect to 7 bars having foreign markings the burden of proof is upon the appellant in terms of section 123 of the Act to prove that 7 of those were not smuggled gold. Whereas for the remaining three bars since there was nothing except those were also found with 7 foreign marked bars, it has been held that there was no circumstance to reasonably believe that 3 gold bars were also the smuggled gold. The burden of proof rest upon the department itself to prove that 3 gold bars were also smuggled. There is sufficient corroboration to the appellant s testimony about 3 out of 10 gold bars were not procured from outside the country but got melted out of old jewellery with the appellants being in business of sale and purchase of gold ornaments as well. Department could not produce any evidence to falsify the said testimony on a record. No evidence has been produced by the department to show that 3 gold bars were also of foreign origin and the foreign markings as well as the serial numbers got defaced from these bars by the appellant. On the contrary appellant has successfully established that 3 gold bars were plain with no process of alleged tampering. In the show cause notice also no tampering has been alleged vis- vis 3 bars weighing 1000 gms each as apparent from the table given in the Para 2.1 of the showcase notice. Resultantly, we hold that department has failed to discharge their burden to prove these three bars to be smuggled gold. Thus, these 3 bars cannot be called as smuggled gold. The order confiscating these 3 bars is therefore not sustainable. Same is hereby set aside. Penalty - HELD THAT:- Since the confiscation of 7 gold bars of foreign origin upheld and confiscation of 3 gold bars is set aside, the penalty imposed under Section 112 is reduced to Rs.7 Lakhs and penalty under Section 114AA reduced to Rs.7 Lakhs. Consequent to entire above discussion, the order under challenge is modified by setting aside confiscation of 3 gold bars which has no foreign markings. The penalty is also reduced under Section 112 to Rs.7 Lakhs and also under Section 114AA to Rs.7 Lakhs. Rest of the impugned order, is hereby upheld. The department shall release the 3 gold bars within 15 days of receiving the present order. The appeal is partly allowed.

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• 2024 (10) TMI 18
  Levy of penalty on appellant u/s 112(b) of the Customs Act, 1962 as co-noticee to principal violator M/s. Sumira Plastic of the terms of DEEC schemes by diverting imported goods to local market without fulfilment of export obligation - HELD THAT:- In view of the relationship, the Appellant was well aware of the fact that the raw materials supplied, for moulding buckets and shutter cones were meant for export and raw materials were imported duty free under DEEC scheme was not based on any reasoning as this observation of the Commissioner, as found from his order is not based on any other corroborative evidence to the effect that such blood relationship had made the Appellant easily accessible to the modus operandi of the manufacturing company namely M/s. Sumira Plastic, who allegedly violated the terms of DEEC scheme. Appellant has demonstratively stated during his examination that after the payment made through cheque was bounced back, he served his relationship with the partnership firm M/s. Sumira Plastic from where her sister herself had resigned long back in 1996. The order passed by the Commissioner of Customs (Adjudication), Mumba is hereby set aside - Appeal allowed.

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• 2024 (10) TMI 17
  Classification of imported goods - Binding Material, Parts for Brake, disc brake pads, tool for mould, etc . - to be classified under CTH 38249090 / 38247900 or CTH 68138900? - benefit of N/N. 152/2009-Cus. dated 31.12.2009 and also N/N. 50/2017-Cus. dated 30.06.2017 - invocation of Extended Period of limitation. HELD THAT:- Considering the composition of the materials and their usage in the manufacture of the brake pads indicate that imported materials are more appropriately classifiable under Chapter Heading 6813 as friction material. Even the Material Safety Data Sheet also indicates the name of the material as friction material and by synonyms as friction lining and brake lining as evidenced by the material safety data sheet. It is evident that Friction Material in the form consisting of mineral materials with or without textiles are classifiable under CTH 6813 if they are not mounted. But when they are mounted including friction material fixed to a metal plate provided with circular cavities or similar fittings for disc brakes, these are classified as parts of the machines or vehicles for which they are designed. In the present case, the product consists of a friction material (made up of organic and inorganic chemicals and minerals, graphite) which is bonded with a steel backing plate forming an integrated component. It is used in automotive vehicle brakes to stop or slow down the vehicle. From a perusal of the Tariff sub-heading 6813 we observe that friction materials and articles thereof (e.g. sheets, rolls, strips, segments, discs, washers, pads) not mounted for brakes or for clutches or the like is mentioned in the said heading. It is, therefore, clear that the friction material alone without any steel plate backing would fall under Tariff Heading 6813. The claim of the Appellant that the friction material is only in powder form and not in a particular shape necessitating its classification not under CTH 6813 is rejected as we find that such a condition is not a requirement for such classification. Further Chapter subheading 6813 reads as friction material and article thereof . The chapter heading 6813 includes both friction materials and also articles of friction materials. As such the contention of the Importer Respondent that Friction Materials unless they become an article cannot be classified under Chapter heading 6813 is not acceptable. Thus, appropriate classification of the imported product is not under CTH 3824 9090/3824 7900 as classified by the importer respondent. The Revenue was seeking to classify the product under CTH 6813 8900 as friction materials. After going through the provisions of the Customs Tariff Act and after considering the nature and composition of imported product and its essential character and the use to which this material is put to, we hold that it is more appropriately classifiable under CTH 6813 and not under CTH 3824. In view of the above, the impugned order dated 26.6.2019 passed by the Commissioner of Customs (Imports), Customs House, Chennai cannot be sustained and so is ordered to be set aside. Invocation of extended period - HELD THAT:- In the absence of any finding of positive suppression by the Appellant in the impugned order, it is found that the allegation of wilful misclassification and intention to evade duty by the Respondent is not at all tenable and misclassification could not be equated with misdeclaration within the meaning of Section 28(4) of the Customs Act, 1962. Considering the above facts that the Respondent is a regular importer of the product which is used in the manufacture of Brake pads and also considering that they were adopting the above classification consistently, it is opined that attributing any malafide intention or motive for adopting such classification or claiming exemption benefit of the Notification is not justified, considering the facts of this case. As such invocation of extended period for demand of duty in terms of provision of section 28(4) of Custom Act 1962 is not legal or justified. The issue of limitation is answered in favour of the Respondent importer. The Respondent s classification of the impugned goods under Chapter Heading 3824 9090/3824 7900 is rejected and the department s classification under CTH 6813 8900 is upheld. Consequently, the appellant is not eligible for the benefit of the Notification No. 50/2017-Cus. dated 30.06.2017 and Notification no.152/2009-Cus dated 31.12.2009. However, the demand for the normal period along with interest is only upheld and the demand for the extended period is decided in favour of the Respondent importer - Appeal of Revenue is partly allowed.

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• Corporate Laws

• 2024 (10) TMI 16
  Sanction of scheme of compromise and arrangement filed under Section 230 of the Companies Act, 2013 - HELD THAT:- The applicants have referred the scheme of arrangement which was filed by the CD under section 230 of Companies Act, 2013. The counsel representing the Financial Creditors had already opposed the issuance of notice in the Intervention Petitions filed by the applicants and pressed for the dismissal of the applications, arguing that there are no provisions in the Insolvency and Bankruptcy Code (IB Code) for intervention at the pre-admission stage. The submissions of the Financial Creditors were also recorded in the order dated 15.02.2024. Hence, the allottees/ Financial Creditors who had filed the main Company Petition cannot be directed to consider the scheme of Arrangement proposed by the Corporate Debtor. On an application filed under Section 7 of the IBC, 2016, this Adjudicating Authority merely has to ascertain existence of financial debt and its default. The issue of maintainability has already been concluded by Hon ble Supreme Court. The submissions of the applicants, asserting that the admission of the company petition would severely impact and prejudice the rights of the applicant, leading to the corporate death of the company, cannot be entertained because there are no provisions in the IB Code that provide for intervention by a third party, especially at this stage where arguments of the Financial Creditor have concluded, and arguments of the Corporate Debtor are in progress and soon to be concluded. Furthermore, this application is filed by companies holding units in the Corporate Debtor project, whereas the main company petition is filed by individual allottees whose interests will also be prejudiced if we entertain the present application because it will lead to unnecessary delay. The present application also appears to be similarly motivated, filed with the intention of delaying the proceedings which this Adjudicating Authority cannot entertain - petition dismissed.

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• Insolvency & Bankruptcy

• 2024 (10) TMI 15
  Seeking grant of permission to Applicant to distribute the unsold assets being the amount recoverable from the corporate debtor and its erstwhile management under the action to be initiated against their previous preferential, undervalued and fraudulent transactions amongst the Respondents - HELD THAT:- In the 5th SCC meeting held on 22.01.2024, it is seen that the Liquidator has proposed to assign the right to file PUFE proceedings for avoidance/recovery of amounts contemplated under the M.A.No. 1080 of 2019 (now disposed with liberty to file fresh proceedings). The assignment was accepted by VS B Containers LLC during the meeting. It is seen that SCC with 66.82% voting (majority) resolved that the right to file PUFE proceedings for avoidance, recovery of amounts contemplated under M. A. No.1080 of 2019 (now disposed with liberty to file fresh proceedings) shall be assigned to Stakeholder - VS B Containers LLC. It has been further resolved by SCC that, if recovery of any amounts is successful, VS B Containers LLC shall share the amounts recovered with other Shareholders as per the claim sharing ratio of the Stakeholders. It is ordered that the right to recover from PUFE proceedings shall be assigned to Stakeholder - VS B Containers LLC. The amount recovered if any, shall be shared. Application disposed off.

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• PMLA

• 2024 (10) TMI 14
  Money Laundering - attachment by the Enforcement Directorate - HELD THAT:- Since the amount is being directed to be disbursed to the depositors under the orders of the Division Bench of the High Court, in the peculiar facts and circumstances of the case, no interference is warranted. The special leave petitions are, accordingly, dismissed.

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• 2024 (10) TMI 13
  Money Laundering - proceeds of crime - predicate offence - allegation against the appellant in the predicate offence is that after illegally transporting cattle across the border, he bribed various officials - HELD THAT:- Bail granted to the appellant not only on the ground of parity but also for the reason that the trial is yet to commence. Admittedly, there are 85 witnesses. The trial has not even started. The appellant has been incarcerated for more than 2 years in the present case. Thus, even if any period of incarceration undergone in a predicate offence is left out, a continued incarceration where the appellant is not entirely at fault for the completion of trial due to a prolonged delay, would enure to his benefit for the purpose of granting bail. The appellant cannot be solely faulted for the non-commencement of the trial as he has not gained anything. Therefore, without commenting on the entitlement of the appellant to receive the copies of the document relied upon the prosecution, we are of the view that taking into consideration not only the period of incarceration but also the trial getting delayed owing to numerous witnesses, he is entitled for bail at this stage. The impugned order stands set aside and the appellant is granted bail, subject to the conditions that may be imposed by the Trial Court - Appeal allowed.

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• Service Tax

• 2024 (10) TMI 12
  Prospective effect given to judgment of the Sikkim High Court in M/S. FUTURE GAMING SOLUTIONS PVT. LTD. AND SUMMIT ONLINE TRADE SOLUTIONS PVT. LTD. VERSUS UNION OF INDIA AND OTHERS [ 2013 (11) TMI 1002 - SIKKIM HIGH COURT] - Assessee had secured registration and had paid that service tax under the impugned provisions on their own - HELD THAT:- This civil appeal would not survive for further consideration and accordingly stands disposed of.

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• 2024 (10) TMI 11
  Levy of Service tax - Support Services of Business or Commerce - Adda Fees - Levy of service tax - Manpower Recruitment Agency - undertaking work allotted by M/s Faridkot Co-op. Milk Producer Union Ltd., Firozpur, Punjab Health System Corporation Ltd., Civil Hospital, Kotkapura and Faridkot etc - appellant could not submit any records or documents to prove the same - Levy of service tax on Renting of Immovable Property on the basis of miscellaneous income of Rs.10,32,070/- for the year 2010-11 - Extended period of limitation. Levy of Service tax - Support Services of Business or Commerce - Adda Fees - HELD THAT:- On going through the contract with the Punjab Roadways, the appellants are collecting the same. The appellants are paying a certain fixed sum to the Government. They are retaining the entire amount collected from the bus operators. In lieu of the consideration received from the bus operators, they are providing infrastructure for parking of the vehicles, roads, ticket counters, resting facilities etc. inside the premises - the contractors, who are undertaking the work with a commercial motive cannot be equated to a sovereign authority though operating in terms of a contract with the authority - the appellant is liable to pay service tax on this account. Levy of service tax - Manpower Recruitment Agency - undertaking work allotted by M/s Faridkot Co-op. Milk Producer Union Ltd., Firozpur, Punjab Health System Corporation Ltd., Civil Hospital, Kotkapura and Faridkot etc - appellant could not submit any records or documents to prove the same - HELD THAT:- The appellant has been denied an opportunity to represent their case with whatever evidence they could have obtained. To that extent, we find that the impugned proceedings are vitiated. Moreover, it is opined that the entire demand in this category cannot be confirmed on the basis of a single contract or invoice; it was incumbent upon the Department that they prove that the liability to service tax with evidence after giving due opportunity to the appellants in following the principles of natural justice. Such procedure not being followed, the confirmation of demand on this count cannot be sustained. Levy of service tax on Renting of Immovable Property on the basis of miscellaneous income of Rs.10,32,070/- for the year 2010-11 - HELD THAT:- The Department has not established as to the payer/ service recipient of the amount. It is opined that unless all elements i.e. service provider, service receiver, the service provided and the remuneration received are established, demand of service tax cannot be sustained. Coming to demand of service tax on Management, Maintenance and Repair Service , it is found that the appellant submits that they have undertaken the work with respect to construction of roads/ railways and not in respect of any commercial enterprise and the same is exempt vide Notification No.24/2009 - the Department did not controvert the submissions of the appellants and have not established as to which was the specific work they have undertaken. Effort has been made to confirm the demand on the basis of entries in the books of accounts - such a confirmation is not acceptable. Extended period of limitation - HELD THAT:- The appellant not being a sovereign authority, the ratio of the judgment is not applicable, it goes to establish the bona fides of the appellants and shows that there were reasons for the appellant to entertain a doubt as to whether the Adda Fees was taxable. It is also found that most of the demand is based on the books of accounts without establishing the service, the service recipient and the consideration - the Department has not made out any case for the invocation of extended period. Under the circumstances, though, the appellant is liable to pay service tax on the Adda Fees, the demand on the same is liable to be restricted to the normal period of limitation. The appeal is partly allowed by way of remand to the Adjudicating Authority.

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• 2024 (10) TMI 10
  Liability of the appellant to pay 75% of the service tax under the reverse charge mechanism - case of the department is that since the appellant is liable to pay 75% of the service tax on the Man Power Agency Service as a recipient of service under reverse charge mechanism, demand of service tax was confirmed - HELD THAT:- Even though as per the statutory provision, the appellant being a service recipient is required to pay 75% of service tax under reverse charge mechanism in respect of Man Power Supply Agency Service, however undisputed fact is that 100% service tax was discharged by the service provider M/s. Kalpataru Job Management which is reflected in the invoice of the service provider. Therefore, in this position the service tax once again cannot be demanded from the appellant otherwise it will amount to recovery of the applicable service tax twice which is not permissible in law. In the case of Kerala Ceramics Ltd vs CCE [ 2024 (5) TMI 868 - CESTAT BANGALORE] the Divisional Bench of CESTAT Bangalore held that these transporters have categorically stated that the Service Tax liability for the invoices raised on the appellant has been discharged by them and they had also mentioned their Service Tax registration number and PAN number in their certificates. As against such documentary evidences, the first appellate authority s findings as to no authentic documentary evidence has been produced, seems to be incorrect. Since the certificates clearly indicate the Service Tax registration number, the least that could have been expected from the Revenue, was to call for the details from the concerned jurisdictional Service Tax authorities. Having not done, the lower authorities cannot shift the entire blame on the appellants for having not produced any authentic documentary evidence. Thus, the issue is settled that once 100% service tax was discharged the same cannot be recovered twice from any other person. Accordingly, in the present case also since the 100% service tax was discharged by the service provider the same service tax cannot be recovered from the appellant. Hence, the impugned order is set aside - appeal allowed.

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• Central Excise

• 2024 (10) TMI 9
  Rejection of rebate claim of the petitioners against the export of goods - penalty imposed u/s 11AC of the Central Excise Act, 1944 read with Rules 25 and 27 of the Central Excise Rules, 2002 - limitation for issuance of the SCN - HELD THAT:- It is not in dispute that during the course of investigation it was found that the petitioners and other co-noticees have filed a rebate claim with forged documents like shipping bills and form ARE-I which is a mandatory requirement to claim the rebate claim - it is mandatory for the claimant to file original copy of ARE-I. The Form ARE-I is the export document which is prepared in quintuplicate five copies which are similar to erstwhile Form AR-4. Such Forms bear running Serial Numbers beginning from the first day of the financial year. From the prescribed procedure for claim of the rebate claim for the goods exported for the duty paid goods exported, it is apparent that the petitioners and the other co-noticees have not complied with the same. On the contrary, they have committed fraud and forged the Forms which is found during the course of investigation as per the concurrent findings of fact arrived at by the three Authorities below. In such circumstances it is opined that the respondent-Authorities have rightly rejected the rebate claim of the petitioner and no interference is called for. Levy of penalty - HELD THAT:- In the show-cause notice as contemplated under Section 11A of the Act, time period is prescribed as five years from the date of knowledge. However, in the facts of the case, as the original documents were lying with the Court of Sessions and the reminders were sent which were provided by the respondent-Authorities in 2008 to the Police Authorities for investigation and the same were not made available till 2014, show-cause notice was thereafter issued in 2014 cannot be said to be beyond the period of limitation. However, the petitioner has never raised the issue of limitation before the Adjudicating Authority nor the Adjudicating Authority have therefore had any occasion to deal with such a contention raised by the petitioners. However, as the petitioners have raised such contentions before the Revisional Authority and before this Court, as the question of limitation is mixed question of facts and law, we have permitted the petitioners to raise such contention and is accordingly, dealt with. Thus, no interference is called for in the impugned orders rejecting the rebate claim and levy of penalty upon the petitioners while exercising the extra-ordinary jurisdiction under Article 227 of the Constitution of India and the petitions therefore being devoid of any merit are accordingly dismissed.

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• 2024 (10) TMI 8
  Clandestine removal - inclusion of panchnamas as RUDs Intended for the sake of completeness - data retrieved from pen-drive and the PCU and Laptop - data retrieved by GEQD - HELD THAT:- It has specifically been recorded in case of C.G. ST C C. E-ALWAR VERSUS KAMDHENU ISPAT LTD AND KAMDHENU ISPAT LIMITED VERSUS C.C.E. S.T. -JAIPUR-I (VICE-VERSA) [ 2018 (5) TMI 905 - CESTAT NEW DELHI] that the concerned official of GEQD was not examined by the adjudicating authority and, therefore, the matter was remanded directing it to be re-adjudicate after examining the concerned official of GEQD in a personal hearing in the presence of the assessee or its representative for the purpose of arriving at the proper conclusion on the veracity of the data retrieved. It was also recorded in the first round of litigation that the adjudicating authority had doubted the data and further remarked that the laptops and other devices were possibly manipulated in the office of the DGCEI. While passing the impugned order the Principal Commissioner specifically declined to examine and allow cross-examination of the officials of GEQD on the ground that GEQD enjoys trust of premier investigating agencies including CBI and NIA that had played a major role in investigation of several high profile cases. To cast a doubt on working or result of such prestigious institution without a solid reason or evidence is an attempt to delay the process of adjudication - the Commissioner has openly defied the direction of this Tribunal. The reasoning that since GEQD is a premier institute, it is above examination or cross-examination cannot be accepted. Simply because an expert has a high profile does not mean that the evidence produced by such an expert cannot be questioned and can be used against anyone without even giving them an opportunity to cross-examine such a person. The Principal Commissioner clearly erred in holding that the officers of GEQD was not required to be examined or cross examined. The mandatory procedure prescribed under section 36B of the Central Excise Act was not followed with respect to the data retrieved from the several computers by the officers of DGCEI. Therefore, such data is not admissible as evidence. This sole document is not sufficient to either charge the assessee with clandestine removal or to recover duty from it. Consequently, the confirmation of demand of duty interest and penalty against the assessee as well as the penalty imposed on Prakash cannot be sustained. The impugned order is set aside - appeals are allowed.

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• 2024 (10) TMI 7
  Refund of the amount lying in profit and loss account of the appellant - rejection of refund of the amount paid towards Education Cess Secondary Higher Education Cess (SHE Cess) - transitional credit - applicability of Section 142(3) of CGST Act, 2017 - HELD THAT:- Cess is commonly employed to connote a tax with a purpose or a tax allocated to a particular thing suggested by the name of the cess. In the present case, it is related to education. Cess is generally for such levy which is for some special administrative expense as shall be suggested by the name of the cess. Education cess was levied by virtue of Finance Act No. 2 of 2004 in Section 92 to 94 thereof to be charged as a duty of excise with an objective to fulfill commitment of the government to provide a finance universalized quality basic education. The definition of eligible duties and taxes as per the explanation 3 under Section 140 of the CGST Act, 2017 was amended with retrospective effect from 01.07.2017 whereby it is specified that cesses are excluded from the definition of eligible duties and taxes , Thus, the credit is ab initio not available for utilization for GST. In view of the above, cesses are not be transitioned through TRAN-1, as per the transitional provisions specified under CGST Act, the credit balances not transitioned to GST regime shall lapse, and, as such, the argument of the appellant the impugned credits never lapse, as there is no provision retaining the same is not sustainable. Section 11B the only other provision for refunds in existing laws had been Rule 5 of CCR, 2004. To my understanding the interpretation of Rule 5 of CCR, 2004 is that where any inputs are used in the final products which are cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate products cleared for export, the CENVAT credit in respect of the inputs so used shall be allowed to be utilized by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification. This Tribunal also in the case of Steel Strips Ltd. Vs. Commissioner of Central Excise, Ludhiana [ 2011 (5) TMI 111 - CESTAT, NEW DELHI-LB] has held that no equity or good conscience influence fiscal codes without the same being embodied to statutory provisions. The Larger Bench of this Tribunal also held that the plea of injustice or hardship cannot be raised to claim a refund in the absence of statutory mandate. The transitioning in the Electronic Credit Ledger, the amount of such Education Cess and Secondary and Higher Education Cess, does not entitle appellant/assess to utilize the said unutilised amount of Education Cess and Secondary and Higher Education Cess against the Output GST Liability. The taking of the input credit in respect of Education Cess and Secondary and Higher Education Cess in the Electronic Ledger after 2015, after the levy of Cess itself ceased and stopped, does not even permit it to be called an input CENVAT Credit and therefore, mere such accounting entry will not give any vested right to the Assessee to claim such transition and set off against such Output GST Liability after 01.07.2017 - The utilisation of such credit, even if taken in Electronic Ledger and notified in Form TRAN-1, does not guarantee any such right of utilisation independent of other parts of Section 140 specially ignoring Explanation 3. As far as the Section 142(3) of CGST Act is concerned as already appreciated above that the refund has to be dealt with in accordance of Section 11B as already explained above that refund of EC and SHEC, in the given circumstance, shall not be available under Section 11B of Central Excise Act, 2002 nor even under Rule 5 of CCR, 2004 (as already discussed above). No question of any kind of eligibility of the appellant to claim the refund of such credit which is nothing more than a dead claim, at all arises. There are no infirmity in the order under challenge vide which the refund claim for the amount of Cenvat credit of EC and SHEC, paid prior March 2015, has been denied to the appellant as was filed under the garb of transitional provisions of CGST Act, 2017 - appeal dismissed.

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• 2024 (10) TMI 6
  Wrongful transfer of credit attributable to all units by ISD exclusively to the respondent - contravention of second proviso to Rule 3(4) of Cenvat Credit Rules - entitlement to take the credit of service tax paid on Clearing Forwarding Agents Services as it is a post manufacturing activity which is not used in or in relation to manufacturing of the goods - extended period of limitation - interest and penalty - HELD THAT:- The perusal of the ingredients of input service shows that the law itself distinguishes between services included in means-clause which are used directly or indirectly, in or in relation to the manufacturing and other services covered under inclusive-clause. It shows that the concept of manufacturing cost and post manufacturing expenses like advertisement, market research etc are incurred in relation to sales of goods. The proviso to Rule 3(4) limiting such credit availment does not apply where the credit is availed based on the invoices issued by ISD. Further it is a settled issue that the department does not have jurisdiction to question the correctness of credit distributed by ISD from the recipient i.e. respondent which is merely availing the credit based on invoices issued ISD - reference made to the decision of the Tribunal in the case of Metro Shoes Pvt. Ltd. [ 2019 (9) TMI 1532 - CESTAT MUMBAI ], wherein the Tribunal has observed The appellant-assessee is a recipient of credit that is assigned by the distributor who, undisputedly, has borne the incidence of tax on procured services. It is the distributor who can be charged with awareness of exempted output/output service. if any, and who is empowered by the statute to take the credit. And it is only such availment by the distributor that can be put to notice for ineligibility as espoused in the decisions that fulfill the criteria of precedent. The credit of service tax used exclusively in units manufacturing exempted goods cannot be attributed to a specific unit. Services like advertisement, manpower recruitment, market research etc are used by all the units and therefore, no input service has been exclusively utilized in respondent s Guwahati units. Show cause notices also have not established that these input services were exclusively utilized in Guwahati units. In view of the above, Guwahati units are not exclusively engaged in manufacturing and clearing the exempted goods and therefore, ISD has not violated the conditions of Section 7(b) and instead correctly followed the same. Extended period of limitation - HELD THAT:- The respondent and ISD have been regularly filing the returns wherein they have been showing the Cenvat Credit availed by them and the department has not brought anything on record to show that the respondent and ISD have concealed the material facts with intent to evade the payment of tax. Therefore, extended period of limitation cannot be invoked in the present case. Interest and penalty - HELD THAT:- The question of interest and penalty does not arise because the demand of service tax itself is not sustainable. There are no infirmity in the impugned order passed by the learned Commissioner and the same is upheld - appeal of Revenue dismissed.

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• 2024 (10) TMI 5
  Exemption eligibility based on power project capacity - Interpretation of N/N. 46/2008 - for the purpose of Notification No.46/2008 dated 14.08.2008 whether the capacity of each unit/plant to be taken for eligibility of the exemption Notification which prescribes the capacity of 3960 MW or above or total capacity of all the units in the project should be considered? - HELD THAT:- This issue is no longer resintegra as the same has been considered by this Tribunal in CROMPTON GREAVES LTD. [ 2015 (10) TMI 1916 - CESTAT NEW DELHI] where it was held that In the Office Memorandum dated 20-10-2011 emanating from the Under Secretary, Ministry of Power it is clarified that mega/ultra mega power projects wherein the capacities of a number of units totals up to at least 1000 MW are eligible to avail the requisite benefits under the mega status certificate, issued in terms of condition No. 86 of Notification No. 6/2006- C.E., dated 1-3-2006. Board proceeding dated 21-8-2012 also reiterates this position. Ld. AR for Revenue states that in the circumstances the issue is now settled in favour of the assessee. Thus, it is settled that it is not the capacity of individual plant but the total capacity of the project consisting of multiple plant has to be considered. Therefore, in the present case the total capacity of the mega power project is 4000 MW. Accordingly it satisfies the condition of the notification. The impugned order set aside - appeal allowed.

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• 2024 (10) TMI 4
  Process amounting to manufacture or not - process carried out by the appellant on the raw materials - manufacture of menthol and De-mentholised Oil (DMO) during the relevant period - SCN to several units of J K including the appellant raising demands of duty refunded to or self-credit taken by such units under Notification No. 56/2002-C.E. dated 14.11.2002 - HELD THAT:- This issue is no more res integra and the Tribunal has already decided a number of cases arising out of the same investigation and all the appeals have been allowed by the Tribunal in favour of the assessees. In this regard, it is pertinent to refer to the decision of this Tribunal in the case of Sangam Aromatics others [ 2019 (5) TMI 1339 - CESTAT CHANDIGARH] wherein this Tribunal has decided a bunch of appeals vide Final Order No. 60498-60506/2019 dated 03.04.2019 holding that the Jammu based manufacturer were manufacturer during the impugned period and paid the duty on the goods manufactured by them. Consequently, the cenvat credit can t be denied to the recipient of goods located in the State of U.P i.e. M/s Sangam Aromatics. We also held that the allegations against the appellants are based on assumption presumption which is not sustainable. In view of above, no penalty is imposable on the appellants. The impugned order is not sustainable in law and is liable to be set aside - Appeal allowed.

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• 2024 (10) TMI 3
  Levy of central excise duty - clinker used for captive consumption by availing exemption under N/N. 67/95-CE dated 16.3.1995 for manufacturing of cement that was cleared against International competitive bidding by claiming exemption under Sr No. 91 of N/N. 6/2006-CE dated 01.03.2006 - HELD THAT:- This tribunal in SHREE DIGVIJAY CEMENT CO LTD VERSUS C.C.E. S.T. -RAJKOT [ 2023 (1) TMI 187 - CESTAT AHMEDABAD] and M/S ULTRATECH CEMENTS LTD AND OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, TIRUCHIRAPALLI AND OTHERS [ 2015 (10) TMI 1058 - CESTAT CHENNAI] considered the very same issue and held that the appellant are entitled for the exemption Notification No. 67/95-CE dated 16.3.1995 for captive use of clinker in the manufacture of cement which is cleared against the International competitive bidding under Notification No. 6/2006-CE dated 01.03.2006. The issue involved in the present case has already been settled by this Tribunal. Therefore, the issue in hand is no longer res-integra accordingly the impugned orders are set aside - Appeal allowed.

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• 2024 (10) TMI 2
  Inadmissible CENVAT credit - input services used for the manufacture of dutiable goods as well as for the provision of exempted service of trading - non-maintenance of separate accounts for the receipts and use of input services in or in relation to the manufacture of dutiable products and exempted services as required under the provisions of Rule 6(2) of the CCR, 2004 - HELD THAT:- From the facts of the case, it is seen that the appellants are paying service tax on royalty charges to their overseas principals in respect of the bottle closures manufactured domestically in their factory as well as in respect of the bottle closures imported and sold as it is. In respect of such royalty payment, treating the same as services provided to the appellants by the overseas principals in non-taxable territory, the appellants had discharged the service tax liability as recipient of service. The department had interpreted that since royalty charges are paid in respect of both domestically manufactured and imported bottle closures, these are common input services and therefore the appellants are required to maintain separate account for common input services utilised in dutiable as well as exempt/non-taxable trading service. Further, they are required to pay an amount equal to prescribed percentage of the value of exempted traded goods, considering it as exempted services as defined under Rule 2(e) of the CCR, 2004. It is on record that the appellants have already calculated the value of trading of bottle closures during the period June, 2016 to December, 2016 and had duly discharged the amount to be reversed as per Rule 6(3) of the CCR, 2004 including the interest and 15% penalty, before issuance of the SCN. However, neither the original order nor the impugned order have gone into the details of such facts, to either examine, scrutinise the fact that such payment is as per CCR, 2004 or to record the reasons as to why the same is not acceptable. Thus, the difference between the above figures being Rs. 3,86,170/- and 10% of the cost of the traded goods has been worked out as Rs.71,55,278/-, and the higher of the same has been taken into account for determination of the prescribed 7% percentage for the purpose of determining the amount required to be paid under Rule 6(3) of the CCR of 2004 as Rs.5,00,869/-. The appellants have duly followed the procedure and conditions prescribed in complying with the obligations under CENVAT Credit Rules, 2004, and had also complied with for payment of CENVAT credit when pointed out by the audit wing of the department along with interest and penalty - the value of trading of goods taken as a basis in the SCN at Rs.7,19,38,951/- in paragraph 10 of the original order and the consequent amount of CENVAT to be paid under Rule 6(3)(i) of the CCR of 2004 in that paragraph and the same amount dealt in paragraph 10.1 of the impugned order, is not disputed by the appellants. From careful reading of the legal provisions under clause (c) of Explanation I to Rule 6(3) of the CCR, 2004 for the purpose of determining the value in case of trading of goods and to work out the CENVAT amount to be paid, it transpires that higher of the two amounts indicated therein has to be taken as the basis for arriving at the correct amount to be paid. It is further found that the amount already calculated by the appellants towards such payment also needs to be taken into account, while determining the balance amount required to be paid towards payment of CENVAT amount under Rule 6(3) of the CCR of 2004. However, the original authority had not recorded the basis on which he had dealt with the demand as proposed in the SCN and how he had taken into account the various figures as provided by the appellants - the learned Commissioner (Appeals) had modified the order of the original authority for redetermination of the correct amount of CENVAT amount to be paid by the appellants, after the exercise of the option by the appellants under Rule 6(3AA) of the CCR, 2004. The Tribunal in the case of BHEL-GE Gas Turbine Services Pvt. Ltd. [ 2020 (2) TMI 1367 - CESTAT HYDERABAD ] had held that the assessee-appellant having paid the CENVAT credit amount towards trading of goods, has to be construed as no CENVAT credit has been taken and accordingly dropped the demand. There are no reason for interfering with that part of the impugned order at paragraphs 14(i) to 14(iii) passed by the learned Commissioner (Appeals) as it had duly taken into account the amount of CENVAT paid by the appellants along with interest and penalty, and had directed the original authority for redetermination of the actual amount of CENVAT to be paid under Rule 6(3) of the CCR, 2004 and interest thereon, after taking into account the option chosen by the appellants in terms of Rule 6(3AA) ibid, for determination of the amount payable by the appellants. However, the portion of the impugned order at paragraph 14(iv) therein, imposing penalty on the appellants is set aside. Appeal allowed in part.

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• CST, VAT & Sales Tax

• 2024 (10) TMI 1
  Remission of interest and penalty since tax amount has already been paid by the Petitioner no. 1-Company - benefit of the Amnesty Scheme - HELD THAT:- It is not in dispute that the petitioner filed a Purshis to avail the benefit of the Amnesty Scheme and made a prayer to remand the matter back to the first appellate authority so as to enable the petitioner to furnish C-Forms/F-Forms which were available with the petitioner. The Tribunal accordingly passed order on 10th January, 2020 which was communicated to the petitioner on 29th January, 2020 and thereafter the petitioner furnished C-Forms/F-Forms before the first Appellate Authority who passed the order on 28th February, 2020. It also appears from the record that the petitioner received the order from the first appellate authority on 16th March, 2020 and thereafter COVID-19 pandemic has started. The benefit of COVID-19 pandemic situation is required to be extended to the petitioner, more particularly in view of the order passed by the Hon ble Supreme Court in Miscellaneous Application No. 21 of 2022 in Suo Motu Writ Petition No.3 of 2020, by which the period from 15th March, 2020 till 28th February, 2022 was to be treated as a relaxation period for granting benefit of limitation. The petitioner has already deposited sum of Rs. 06,04,393/- which is not disputed by the respondent to be payable under the Amnesty Scheme by 18th March, 2020. Thus, the petitioner has availed the benefit of the Amnesty Scheme, however the same is not given effect to by the respondent authorities on failure of the petitioner to communicate with the department because of the aforesaid two major factors viz. COVID-19 pandemic as well as death of the Consultant in the month of August, 2020. The impugned communication dated 29th March, 2022 and consequential action taken by the respondents are hereby quashed and set aside and the respondents are directed to pass necessary order granting benefit of the Amnesty Scheme to the petitioner accepting amount of Rs. 06,04,393/- towards full and final settlement of the dispute for the year under consideration - Petition allowed.

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