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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter October 5, 2024 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST Rejecting appeal without reasons violates natural justice, undermines objectivity. The court quashed the impugned orders rejecting the appeal as the appellate authority failed to assign any reasons, violating principles of natural justice. It is settled law that reasons are the heartbeat of every conclusion, and an order without valid reasons cannot be sustained. Giving reasons substitutes subjectivity with objectivity. The Supreme Court has held that administrative authorities and tribunals are obliged to give reasons, absence of which renders the order liable to judicial scrutiny. As no reason was assigned for rejecting the appeal, the orders could not be sustained in the eyes of law. Visit to Get Source Milk manufacturer's tax assessment revoked over flawed show cause notice, Covid-19 impact oversight. Tax assessment order set aside due to defects in show cause notice, failure to consider Covid-19 impact on business operations. Taxpayer engaged in milk manufacturing faced stagnation of goods, requiring excess electricity consumption for storage despite low sales. Respondent failed to consider vital aspects explained by taxpayer regarding disparity between turnover and electricity units consumed. High Court remanded matter for reconsideration by respondent after finding violation of principles of natural justice by not considering taxpayer's reply and supporting documents adequately before alleging suppression of sales. Visit to Get Source Quashing tax order for violation of natural justice; fresh opportunity granted. The High Court quashed the impugned order passed by the Deputy Commissioner, State Tax u/s 74 of the Uttar Pradesh Goods and Services Tax Act, 2017, citing violation of principles of natural justice. The Court relied on its coordinate Bench judgment in Mahaveer Trading Company, where it held that the self-imposed bar of alternative remedy cannot be applied in such cases, as the appeal authority lacks the power to remand proceedings. Considering the factual similarities, the Court directed the concerned officer to grant the petitioner an opportunity to file a fresh reply, conduct a hearing, and pass a reasoned order. Visit to Get Source Steel company's GST registration restored after resolving tax credit utilization issue. The petitioner sought restoration of its GST registration under the trade name 'Shri Salasar Balaji Steel'. The court directed the respondent authorities to confirm the petitioner's compliance with the Show Cause Notice and take necessary steps to restore its GST status without delay. As per Rule 86B of CGST/DGST Rules, a registered taxpayer cannot utilize input tax credit (ITC) from the electronic credit ledger to discharge its entire liability towards outward supplies, being limited to a maximum of 99%. The petitioner deposited Rs. 80,000/- to comply with the requirement of paying at least 1% of its liability on outward supplies. The court observed that suspension of GST registration has wide adverse ramifications for the taxpayer's business and can be undertaken only after due consideration. Since the only allegation in the Show Cause Notice was non-compliance with Rule 86B, which stands remedied by the deposit, the court allowed the petition and directed the respondents to forthwith restore the petitioner's GST registration. Visit to Get Source GST penalty proceedings initiated by State nullifies Centre's jurisdiction on same matter. Penalty proceedings under CGST Act cannot be initiated after State GST Authorities have initiated proceedings on the same subject matter. Once proceedings are initiated u/ss 73 or 74, penalty proceedings u/s 122 are deemed concluded. The impugned show cause notice purporting u/s 122 of CGST Act, after initiation of proceedings by State GST Authorities, is illegal, arbitrary, without jurisdiction, and contrary to provisions of law, warranting court's interference to quash it. Visit to Get Source Advance Ruling Authority rejects application due to irrelevant questions not covered under GST Act provisions. The Advance Ruling Authority rejected the application made by the applicant for pronouncement of ruling as the questions raised were not covered under any of the clauses of sub-section (2) of section 97 of the GST Act. The applicant had selected clause (b) of sub-section (2) of section 97 but failed to refer to any relevant notification during the hearing. Despite being given reasonable opportunity, the applicant did not raise questions covered under any clause of sub-section (2) of section 97. The application was rejected as the questions were found not to be covered under the scope of Advance Ruling application for interpretation of provisions of Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017, or classification of goods and services for tax purposes. Visit to Get Source Ride-hailing app not liable for GST on driver services despite e-commerce tag. E-commerce operator definition under GST Act examined. Applicant found to be owner of digital platform facilitating supply of services, qualifying as e-commerce operator. However, driver services supplied directly to customers, not 'through' applicant's platform as required u/s 9(5). Thus, applicant not liable to collect and pay GST on driver services, despite being an e-commerce operator. Conditions of Section 9(5) not met for tax liability on e-commerce operator. Visit to Get Source Baby carriers classified as textile articles, not vehicle parts. Duty based on value: <=Rs. 1000 @ 5%, >Rs. 1000 @ 12%. Baby carriers with hip seats, made of textile fabric, are classified under HSN code 6307 90 as "other made up articles" of textiles, rather than as parts or accessories of motor vehicles. This classification is based on the interpretation that such baby carriers are not integral parts of motor vehicles, similar to car covers which were held classifiable under 6307 90 by the CEGAT. The applicable GST rate is 5% when the sale value does not exceed Rs. 1,000 per piece, and 12% when it exceeds Rs. 1,000 per piece. Visit to Get Source Catering and venue rental combo: GST 5% with ITC limits for 'unspecified premises' events. The case involves the classification of a composite supply of outdoor catering services along with renting of premises. It is held that where the applicant provides renting of premises along with the supply of food at any event, such a composite supply would attract GST at 5% with the restriction of input tax credit, subject to the condition that the room tariff does not exceed Rs. 7,500 per unit per day or equivalent. The clarification provided in CBIC Circular 27/01/2018-GST dated 04.01.2018 is to be followed to determine whether the applicant is located in 'specified premises' or the supply is provided at 'specified premises'. The composite supply of catering services within the club premises along with renting of premises falls under 'outdoor catering service together with renting of premises' arranged at premises other than 'specified premises', and GST is payable on the whole consideration at 5% without input tax credit, subject to the imposed condition. Visit to Get Source Interest charges on loans by HDFC Bank are exempted services for computing 80% GST threshold limit. Interest charges by HDFC Bank Ltd on loans are an inward supply of exempted services for the applicant. As per Notification No. 12/2017-Central Tax (Rate), services by way of extending deposits, loans or advances, where consideration is interest or discount (excluding credit card services), are exempt from GST. Since HDFC Bank is a registered person under GST, the supply of exempted services by way of interest on loans constitutes part of the applicant's total inward supply for computing the 80% threshold limit. The Advance Ruling Authority held that such interest charges qualify as inward supply from a registered supplier for calculating the 80% threshold. Visit to Get Source Income Tax Assessing Officer rightly reopened assessment for potential income escaping tax after search revealed bogus billing. The High Court held that the Assessing Officer had credible reasons to reopen the assessment u/s 147 for the Assessment Year 2011-12. During the search and seizure proceedings, statements of certain individuals connected with M/s Spaze Group were recorded u/s 131(1A), including Mr. Anand Singh, the proprietor of M/s JMD International. His statements revealed that he was not in control of the concern, and it was controlled by Sh. Kishori Sharan Goyal for providing "Bogus Billing to various entities." The record showed that M/s JMD International made payments to the petitioner, giving the Assessing Officer reason to believe that the petitioner's income had escaped assessment. The contention that all receipts were taxed in the previous Assessment Year 2010-11 was erroneous, as the petitioner's ledger account indicated receipt of certain amounts from M/s JMD International in the financial year 2010-11 (relevant to Assessment Year 2011-12). The court stated that it was unnecessary to examine the quantum of receipts, as prima facie, all receipts from M/s JMD International were not taxed in Assessment Year 2011-12. The petitioner's argument that the books of accounts were available with the Assessing Officer was unmerited, as. Visit to Get Source Taxpayer escapes final assessment order due to officer's delay despite late objection filing. The assessment order passed u/s 144C(3) was beyond the prescribed period of one month from the end of the month in which the period for filing objections u/s 144C(2) expired. Although the assessee filed objections before the Dispute Resolution Panel beyond the 30-day period, the Assessing Officer was still required to pass the final order within the stipulated timeframe u/s 144C(4). The High Court upheld the Tribunal's decision to set aside the final assessment order as being time-barred, rejecting the Revenue's argument that the assessee cannot take advantage of its own delay in filing objections. The statutory language of Section 144C(4) is unambiguous, and the Assessing Officer's failure to comply with the time limit renders the order invalid, irrespective of the assessee's delay. Visit to Get Source Revisionary powers under Income Tax Act: Broader interpretation of 'record' crucial for fair adjudication. The High Court held that the Commissioner of Income-Tax, while exercising revisionary powers u/s 264 of the Income Tax Act, is duty-bound to consider the revision petition on merits. The term 'record' in Section 264 should be interpreted broadly, as per the Central Board of Direct Taxes' circular. Consequently, the order u/s 144A should have been considered part of the record by the Commissioner while deciding the revision petition u/s 264. The impugned orders passed u/ss 264 and 154 were quashed, and the matter was remanded to the Principal Commissioner to decide the revision petition u/s 264 on merits, considering the order u/s 144A as part of the record. Visit to Get Source Indian bank's foreign currency mobilization expenses allowable; card commission not taxable if debt incurred abroad. The High Court upheld the Tribunal's decision regarding the allowability of expenses incurred for garnering FCNR deposits to be maintained at the assessee bank's Indian branches. The funds mobilized abroad were brought to India in foreign currency accounts and kept for the Indian business. The benefits accrued to the Indian branch/Permanent Establishment were accounted for as Indian income, and the deduction of expenses incurred for procurement of business cannot be disallowed as Head Office expenses. Regarding credit card commission paid for cards issued by foreign branches and used in India, the Tribunal correctly held that the charges received by foreign branches for extending credit lines outside India would not be taxable in India, as the debt was incurred outside India. Visit to Get Source Government grant exemption for Trust: ITAT upholds based on consistency principle. Revision u/s 263 disallowing exemption u/s 11(1) for government grant received by assessee-Trust. ITAT concluded Principal CIT did not independently apply mind by calling office records, but acted on Assessing Officer's proposal to initiate Section 263 proceedings, rendering order liable to be set aside. ITAT based on consistency principle and absence of change in facts regarding Trust receiving government grant in earlier years accepted by Revenue for Section 11 exemption eligibility. HC found no erroneous or prejudicial assessment order u/s 143(3), dismissing appeal as no substantial question of law arose from ITAT order. Visit to Get Source Tax Dispute Remanded for Reconsideration in Light of Relaxed Delay Condonation Rules. The High Court set aside the order u/s 119(2)(b) of the Act, finding that the authority took a restrictive and conservative approach in not noticing the Central Board of Direct Taxes (CBDT) circular dated 09.06.2015 regarding condonation of delay up to six years. The matter was remitted back to the authority to reconsider, taking note of the CBDT circular. The authority must take a holistic view and pass appropriate orders expeditiously, as the period sought to be condoned is within six years, and the restriction on non-condonation applies only beyond six years. Visit to Get Source Assessee's Long-Term Capital Gains wrongly treated as 'undisclosed income'; no admission during search; penalty deleted. Penalty order u/s 271AAB for treating an amount included in the Return of Income as 'undisclosed income' was found unjustified. The Commissioner of Income Tax (Appeals) analyzed the facts and law, concluding that the ingredients of Section 271AAB were not fulfilled, and therefore held that the penalty imposed by the Assessing Officer was outside the sanction of law, leading to the deletion of the penalty. The income disclosed as Long-Term Capital Gains did not fall under the definition of 'undisclosed income' u/s 271AAB, nor was there any admission of undisclosed income during the search u/s 132(4). The Long-Term Capital Gains were taxable and not exempt, and transactions were routed through banking channels with advance tax paid. The assessment and penalty orders lacked reference to any statement recorded u/s 132(4) showing admission of undisclosed income. The assessee's case did not meet the definition of undisclosed income provided in the Explanation to Section 271AAB. In an identical case, the ITAT had affirmed the view of the CIT(A), favoring the assessee. Considering the extenuating circumstances, the Income Tax Appellate Tribunal dismissed the Revenue's appeal, exonerating the assessee from the penalty provisions u/s 271AAB. Visit to Get Source Withholding Tax Credit Denial for Procedural Lapses by Third Parties Unjustified If Income Declared. Procedural lapses by third parties should not deprive taxpayers of TDS credit when they have acted in good faith and declared income. Section 205 bars direct tax recovery from deductees if tax was deducted, protecting them from double taxation. Rule 37BA aims to align TDS credit with income's beneficial owner. Denying credit due to third-party errors contradicts this purpose when the assessee rightfully owned and offered the income. Allowing TDS credit avoids revenue loss when tax was deducted and income declared. Substance should prevail over procedural deficiencies not attributable to the taxpayer. Denial of TDS credit solely on procedural grounds is unjustified. Visit to Get Source Income Tax penalties imposed without due process, failure to issue notice or allow explanation. Penalty u/s 271(1)(c) was levied by the Assessing Officer solely based on the order of the Income Tax Settlement Commission withdrawing immunity from penalty and prosecution, without adhering to the due process prescribed under the Act. The Assessing Officer failed to make reference to assessment proceedings, record satisfaction regarding concealment of income or furnishing inaccurate particulars, and issue notice u/s 274 before initiating penalty proceedings. The penalty proceedings u/s 271(1)(c) were arbitrary, not in accordance with law, and void ab initio. Regarding penalty u/s 271AAA, the Assessing Officer did not refer to the conditions prescribed, statement recorded u/s 132(4), or opportunity given to the assessee to explain the undisclosed income. Consequently, the initiation of penalty proceedings u/s 271AAA was illegal, and the penalties levied u/s 271AAA were quashed. Visit to Get Source Fraudulent tax evasion through sham transactions, artificial losses; exorbitant rates to group entities, interest disallowance on exempt income. Appellant booked artificial short-term capital loss by purchasing shares from group entities at exorbitant rates and selling same shares to other group entities at lower rates to offset huge capital gains. Transaction lacked genuineness, designed solely to avoid taxes. Cost of purchase rightly recomputed by authorities at Rs.33 per share. Interest expenditure disallowed u/s 14A as appellant failed to substantiate investments were for strategic business purposes, admitted using interest-bearing funds for non-business investments yielding exempt income. CIT(A)'s order upheld, assessee's appeal dismissed by Appellate Tribunal. Visit to Get Source Customs Customs duty misclassification: Edible oil mix not penalized for lack of intent to evade. Classification of imported goods - LC PUFA Mix Oil with Sofinol (edible grade) - whether to be classified under CTH 15079010 or CTH 15179090 - importer misclassified goods but without any intent to evade duty - voluntarily paid differential duty. Misclassification different from misdeclaration unless facts required to be disclosed were not disclosed. Misdeclaration must be intentional, not just wrong declaration. Penalty cannot be automatic, must pass mens rea test. No evidence of intent to evade duty by Customs House Agent (CHA). Penalty u/s 112B set aside as Show Cause Notice did not invoke specific sub-clause. Penalty u/s 114AA wrongly imposed on CHA as provision applies to fraudulent exporters. Impugned order set aside, appeal allowed by CESTAT. Visit to Get Source Customs duty upheld on pre-sensitized aluminum printing plates from China. The imported goods, aluminum PS printing plates, were correctly classified under CTH 3701 as photographic printing plates, and not under CTH 84425020 as declared by the importer. The plates were sensitized and excluded from Chapter 8442 covering printing equipment and components. The Harmonized System Nomenclature and explanatory notes support classification under CTH 3701. Anti-dumping duty at $0.22/kg was applicable on pre-sensitized aluminum plates imported from China under Notification 25/2014, contrary to the importer's claim. The differential basic customs duty demand of Rs. 1,43,233/- and interest were upheld. Penalties u/ss 112(a) and 114AA of the Customs Act, as initially imposed, were restored. The Commissioner (Appeals) order was set aside, and the department's appeal allowed, confirming the original adjudicating authorities' order. Visit to Get Source IBC Scrutinizing corporate debtor's alleged fraudulent transactions, tribunal clears the air. Tribunal examined allegations of fraudulent transactions u/s 66 of Insolvency and Bankruptcy Code against corporate debtor. Conversion of share application money to unsecured loan, conspicuous investments into related parties, and unaccounted rental income were scrutinized. Tribunal held fraud must be established beyond reasonable doubt, mere suspicion insufficient. Conversion of share money to debt not fraudulent. Investments in related parties explained, not prejudicial, complied with Companies Act. Cash withdrawals for salaries before 2016, not proximate to insolvency. Rental income agreements not proven fraudulent. Resolution Professional failed to establish fraudulent trading case u/s 66. Application dismissed due to lack of evidence of fraud. Visit to Get Source Corporate debtor liquidated by creditors amid asset freeze, enforcement probe. The Committee of Creditors (CoC) resolved to liquidate the Corporate Debtor u/s 33 of the Insolvency and Bankruptcy Code, 2016 by a majority of 90.16% voting in favor, considering the bleak chances of insolvency resolution amid ongoing investigations and attachment of assets by the Directorate of Enforcement under the PMLA, 2002. The CoC appointed Mr. Santanu T. Ray as the Liquidator with his written consent. The Supreme Court in K. Sashidhar v. Indian Overseas Bank held that the CoC's decisions based on commercial wisdom are non-justiciable. The Tribunal has limited powers of judicial review in such matters and allowed the application, opining that the Corporate Debtor should be liquidated as per the Code. Visit to Get Source Indian Laws Accused cleared of cheque dishonor charges due to lack of evidence proving debt. Acquittal of the accused in a cheque dishonor case. The court observed that once the accused raises a probable defense by leading evidence to show no debt/liability existed, the presumptions u/ss 118 and 139 of the Negotiable Instruments Act disappear. The burden then shifts to the complainant to prove the existence of debt as a matter of fact. In this case, the accused denied issuing the cheque and his signatures. Expert opinion was obtained, and the trial court found the complainant failed to prove the debt/liability's existence, mode of loan advancement, or documentary evidence. The high court found no perversity in the acquittal order, dismissing the petition challenging the acquittal. Visit to Get Source PMLA BSF Officer Granted Bail in Cattle Smuggling, Bribery Case. The summary covers a bail application in a money laundering case involving cattle smuggling and illegal gratification paid to Border Security Force (BSF) personnel. The court considered the Supreme Court's recent decision in Manish Sisodia vs. Central Bureau of Investigation, which upheld the fundamental right to liberty under Article 21 and emphasized that prolonged incarceration before conviction should not become punishment. In the present case, the applicant, a BSF Commandant, facilitated cattle smuggling for monetary gain but was not a flight risk. The evidence being documentary, tampering or witness influence was unlikely. Considering these factors, the High Court granted regular bail to the applicant, subject to fulfilling certain conditions. Visit to Get Source Money laundering suspects' appeals against freezing assets dismissed; evidence access allowed. The Appellate Tribunal dismissed appeals challenging the interim order passed by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002, retaining/seizing/freezing documents, digital records, and bank accounts. The Enforcement Directorate had filed a prosecution complaint, wherein the appellants and other family members were accused. The properties were mentioned for confiscation upon conviction in the complaint case. The Tribunal held the impugned order as an interim step to protect the assets until trial conclusion, finding no illegality. However, the appellants were entitled to copies of relied-upon documents/seized material and could apply for release of unrequired documents, considering the prosecution complaint filing. Visit to Get Source VAT Powder coating business faces tax liability under "works contract" definition; Assessments upheld despite time delays. The case pertains to the challenge to assessment orders passed by the Assessing Officer for the assessment years 2007-2008 to 2009-2010 on the grounds of time limitation under the Pondicherry Value Added Tax Act, 2007. The key issues were: whether the powder coating work undertaken by the assessee amounted to execution of works contract, and whether it involved transfer of property. The court held that the powder coating work fell within the definition of 'works contract' u/s 2(zp) of the Act, involving transfer of property, making the assessee liable to pay tax u/s 15(1). Regarding the time limitation, the court ruled that the assessment orders were passed within the prescribed three-year period from the end of the relevant assessment year, as the initial notices were issued within that timeframe u/s 24(5), even though the final orders were passed later. Consequently, the substantial questions of law were answered in favor of the revenue department. Visit to Get Source Service Tax Disputed Tax Payment: Court Rejects Extended Limitation Period for Mere Non-Payment. The key points are: Appropriation of Rs. 11,00,000 deposited under protest during investigation cannot be considered as acceptance of liability. The extended period of limitation u/s 73(1) of the Finance Act cannot be invoked as the department failed to substantiate that the appellant suppressed material facts with an intent to evade service tax payment. The Supreme Court and Delhi High Court have held that for invoking extended limitation, suppression of facts must be willful with intent to evade tax. The burden of proving willful suppression lies on the department. Mere non-payment or short payment does not constitute suppression unless there is a deliberate act to evade tax with intent. The Tribunal dismissed the department's appeal against the Commissioner's order holding that extended limitation cannot be invoked in this case. Visit to Get Source Telecom tower erection services eligible for CENVAT credit, overruling previous order. The Tribunal allowed the appeal filed by the appellant and set aside the impugned order disallowing CENVAT credit taken on input services used in BTS (Base Transceiver Station) Towers/Shelters. The Larger Bench observed that the decision in Bharti Airtel case was limited to 'input' as a source of credit and is not relevant for the dispute over entitlement of 'input service' as credit. There is no break in the CENVAT credit chain insofar as 'input service' is concerned. The Larger Bench held that various Benches of the Tribunal had allowed CENVAT credit on input services used for commissioning and erection of telecom towers without examining the definition of 'input service' under the CENVAT Credit Rules, 2004 and the Bharti Airtel decision. The Larger Bench clarified that the Bharti Airtel decision did not make any distinction between inputs and input services. Visit to Get Source Global brand promotion reimbursement: Not intermediary service, but exportable auxiliary business. Classification of services provided by Grant Thornton, India to develop the "Grant Thornton" brand name and the payment received towards reimbursement of "Brand Development Expenses". It examines whether these services constitute business auxiliary services or intermediary services, and whether they qualify as export of services. The Tribunal held that Grant Thornton, India was not acting as an intermediary but providing services on its own account for promoting the brand in India. The transaction did not fall under the intermediary services rule, and the place of provision was the location of the recipient, Grant Thornton, London, outside India. As payment was received in convertible foreign currency, the conditions for export of services were satisfied. The Tribunal relied on previous decisions clarifying the meaning of intermediary services and the scope of export of services. It concluded that Grant Thornton, India was not an intermediary, and the services provided to Grant Thornton, London constituted export of services, dismissing the appeal against the order dropping the proceedings. Visit to Get Source Mall wins case: Parking not taxable, signage demand time-barred, electricity charges not service. Non-payment of service tax on car parking fee categorized as renting of immovable property service was held inadmissible based on Delhi High Court's ruling that parking services stand excluded entirely. Reimbursement of electricity charges collected from shop owners on actual consumption basis and paid to the electricity provider was held not liable for service tax as the assessee acted as a 'pure agent'. Signage charges demand was held time-barred due to lack of suppression of facts. Reversal of CENVAT credit was held inadmissible as service tax was paid on full invoice value. Interest and penalties were set aside as the demands were unsustainable. The assessee's appeal was allowed. Visit to Get Source Central Excise Manufacturer cleared goods after availing CENVAT credit, properly reversed; demand unjustified, time-barred. The appellant, engaged in manufacturing SS Hose Assembly, Flange & Fittings, also procured MS Round, TMT Bars, etc., performed work on them, and cleared them to buyers after availing CENVAT credit on inputs. The entire CENVAT credit was reversed upon clearance to buyers. The demand of Rs. 1,46,75,425/- towards CENVAT credit and u/s 11D indicates the credit was properly reversed. The goods' clearance falls u/r 3(5) of CCR, 2004 rather than finished goods clearance. The appellant provided documentary evidence of receiving goods, accounting in books, and banking channel payments. The CESTAT held that denying CENVAT credit was unjustified. Regarding time limitation, the show cause notice was issued belatedly in 2013 for transactions during 2008-10, which were part of ER-1 returns relied upon. No suppression was established, making the demand time-barred. The appeals were allowed on merits and time bar. Visit to Get Source Wrongfully availed self-credit: Recovery procedure must be followed for rejected refund claims. In cases where an assessee has wrongfully availed self-credit, the inadmissible credit needs to be recovered if not reversed by the assessee within the specified period, following the procedure laid down under Notification No. 19/2008. The authorities must issue a notice and follow the prescribed manner for recovery u/s 11A of the Central Excise Act, 1944. Rejecting the refund without adhering to the statutory procedure is legally incorrect. The order becomes superfluous if the alleged wrongful credit has not been established through the proper manner. The appellants are entitled to a refund calculated as per Notification No. 19/2008, since the rejection of the cash refund was not legally valid. Visit to Get Source Articles Tax Treaty Tussle: Tiger Global’s Grandfathering Saga FINANCE ACT (2), 2024 – AMENDMENTS TO INCOME TAX ACT, 1961 – EFFECTIVE DATES Relaxation for the availment of ITC for the FYs 2017-2021 RECENT DEVELOPMENTS IN GST No Interest and Penalty if demanded tax amount is paid by 31st March 2025 for FYs 2017-20 Circulars / Instructions / Orders SEZ - Instruction No. 117 - dated 24-9-2024 Guidelines for Operational Framework of FTWZ and Warehousing units in SEZ SEBI - SEBI/HO/CFD/CFD-PoD-2/P/CIR/2024/133 - dated 3-10-2024 Relaxation from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 DGFT - Trade Notice No. 19/2024-25 - dated 4-10-2024 Clarification on RCMC Requirements for Post-Export Remission-Based Schemes under FTP 2023 Companies Law - NF- 25013/2/2023-O/o Secy-NFRA - dated 3-10-2024 Responsibilities of Principal Auditor and Other Auditors in Group Audits News IICA holds National Conference & Exhibition on Aligning CSR with SDGs in New Delhi CBIC celebrates 10th anniversary of Swachh Bharat Mission with enthusiasm and renewed commitment across India IIFT organizes regional conference of Asian and African chair holders of WTO Chairs Programme in New Delhi Case Laws: GST 2024 (10) TMI 206 Rejection of appeal - neither any order has been passed nor any reason has been assigned for rejecting the appeal - violation of principles of natural justice - HELD THAT:- It is not in dispute that the petitioner has filed an appeal, which has been rejected by the impugned order dated 22.7.2024 wherein no reason has been assigned. On the strength of instruction filed today, learned Standing Counsel has tried to support the action of the respondent, however, on perusal of the instructions, it shows that no reason whatsoever has been assigned for rejecting the appeal of the petitioner. It only refers the delay in submission of appeal, which shows that while rejecting the appeal of the petitioner, the appellate authority has not applied its mind. It is settled law that reason is the heartbeat of every conclusion. An order without valid reasons cannot be sustained. To give reasons is the rule of natural justice. One of the most important aspect for necessitating to record reason is that it substitutes subjectivity with objectivity. It is well settled that not only the judicial order, but also the administrative order must be supported by reasons recording in it. Hon'ble Supreme Court, in the cases of Assistant Commissioner, Commercial Tax Department, Works Contract Leasing, Kota Vs. Shukla Brothers [ 2010 (4) TMI 139 - SUPREME COURT] , M/s Travancore Rayon Ltd. v. Union of India [ 1969 (10) TMI 23 - SUPREME COURT] have observed that the administrative authority and the tribunal are obliged to give reasons, absence whereof would render the order liable to judicial chastisement. Once the reason has not been assigned by the competent authority for levying the penalty then on this ground alone, the impugned orders cannot be sustained. The impugned orders passed in both the writ petitions cannot be sustained in the eyes of law and same are hereby quashed - Petition allowed. 2024 (10) TMI 205 Confirmation of tax with interest and penalty - various defects in SCN - suppression of sales - violation of principles of natural justice - HELD THAT:- There is no dispute on the aspect that during the year 2020, Covid-19 was at peak, during which period, there was complete shut down. The petitioner is engaged in the business of manufacture/sale of milk and milk allied products. Due to Covid-19 lock down restrictions, the petitioner could not run the business successfully as they did before, which resulted in the goods being stagnated in the godowns, and that since the petitioner is carrying out the manufacturing process as a Job Worker, the final products manufactured for the third party has to be stored in the deep freezer facility installed in the petitioner's business premises till the final products are supplied to the principal suppliers, viz., Co-operatives Societies, i.e. for 200 MT under (-20 degree Celsius) for which purpose, the petitioner has to run the plant for 24 hours for storage of the goods under -20 degree Celsius, which contributed to the excess consumption of electricity, and despite the fact that the said aspect was answered by the petitioner in the form of reply, clearly stating that EB units consumed are not directly linked with the sales of the petitioner and also explained the reason for the difference in turnover during the period subject period with supporting documents, the respondent failed to consider the said vital aspect and passed the impugned orders. This Court also feels that the respondent ought to have taken into consideration of the aforesaid vital aspect before passing the impugned orders, in the absence of any contrary evidence available to substantiate the alleged suppression of sale, as rightly pointed out by the learned counsel for the petitioner. Hence, this Court is inclined to set aside the impugned orders. The matter is remanded to the respondent for reconsideration with regard to the said defect alone - Petition allowed by way of remand. 2024 (10) TMI 204 Challenge to order passed by the respondent No. 2 u/s 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- The matter is squarely covered by a coordinate Bench judgment of this Court in Mahaveer Trading Company vs. Deputy Commissioner State Tax and another [ 2024 (3) TMI 334 - ALLAHABAD HIGH COURT] where it was held that ' It has been passed in gross violation of fundamental principles of natural justice. The self imposed bar of alternative remedy cannot be applied in such facts. If applied, it would be of no real use. In fact, it would be counter productive to the interest of justice. Here, it may be noted, the appeal authority does not have the authority to remand the proceedings.' Upon a perusal of record, it appears that the factual matrix is very similar to one in Mahaveer Trading Company's [ 2024 (3) TMI 334 - ALLAHABAD HIGH COURT ] - there are no reason to take a different stand. The impugned order dated 29.4.2024 passed by Deputy Commissioner, State Tax, Karvi Sector-1, Banda, Uttar Pradesh (Respondent No. 2) is quashed and set-aside with a direction given to the officer concerned to grant the petitioner another opportunity of filing a fresh reply and thereafter fix a date of hearing and pass a reasoned order - Petition disposed off. 2024 (10) TMI 203 Seeking to restore the GST registration of the Petitioner under the trade name of Shri Salasar Balaji Steel - direction to Respondent authorities to confirm compliance by the Petitioner of the Show Cause Notice and take all necessary steps to restore the Petitioner s GST status without any further delay - non-compliance with Rule 86B of CGST Rules/DGST Rules - HELD THAT:- In terms of Rule 86B of the CGST Rules/the DGST Rules, a registered taxpayer cannot use input tax credit (ITC) available in the electronic credit ledger for discharge of its entire liability towards the outward supplies. The taxpayer s utilisation of ITC for the aforesaid purpose is confined to a maximum of 99% of its liability towards output supply. Accordingly, the petitioner deposited a sum of ₹80,000/-. The petitioner contends that with the deposit of the said amount, it has satisfied the requirement of paying at least 1% of its liability on outward supplies. Insofar as the payment of 1% of liability on outward supplies is concerned, the petitioner would ensure that it deposits the amount under the relevant form or furnishes the necessary forms for duly recording the payment of tax against its liability within a period of two working days from date. Insofar as the allegation that the petitioner s name is included in the list of fake firms is concerned, there is no allegation to the said effect in the SCN. Thus, clearly, the same cannot be a ground for continuing to suspend the petitioner s GST registration. It is necessary to bear in mind that suspension of a taxpayer s GST registration has wide adverse ramifications for the business of the taxpayer. Thus, such an action can be taken only after due consideration. Since, the only allegation in the SCN is that the petitioner has not complied with Rule 86B of the CGST Rules/DGST Rules, which in effect stands remedied by deposit of the amount of ₹80,000/- with the Revenue, it is considered apposite to allow the present petition and the respondents is directed to forthwith restore the petitioner s GST registration. Petition disposed off. 2024 (10) TMI 202 Challenge to order passed by the respondent on the ground that the order was passed without affording an opportunity and in violation of principles of natural justice - mismatch of input tax claim under Section 73(5) of TNGST Act - HELD THAT:- In the instant case, it is seen that notice was issued by the respondent but however, the case was handled by some consultant who did not attend the personal hearing. On going through the impugned order, it is seen that a total tax liability of Rs.19.95 lakhs has been imposed against the petitioner. The petitioner has come up with a clear case that there are sufficient materials/documents to substantiate the defense of the petitioner to the effect that there was no mismatch of the input tax claim between GSTR2A and GSTR3B. This Court had an occasion to deal with a similar issue in WP.No.26477 of 2024 dated 12.09.2024. This Court wanted to afford an opportunity to the petitioner therein by putting the petitioner on terms. In order to maintain consistency, a similar order can be passed in this writ petition also - matter is remanded back to the file of the respondent for fresh consideration on condition that the petitioner will pay 10% of the disputed tax amount to the respondent within a period of four weeks from today. Petition allowed by way of remand. 2024 (10) TMI 201 Bar on initiating penalty proceedings under CGST Act after proceedings initiated by State GST Authorities. Karnataka State GST Authorities initiated proceedings by invoking Section 70 of the KGST Act against the petitioner, which ultimately culminated in the adjudication order dated 09.11.2022 under Section 73 (1) of the KGST Act - In the meanwhile, respondent Nos. 1 and 2/CGST Authorities also initiated penalty proceedings under Section 122 of the CGST Act in relation to the very same subject matter comprising of the transactions between the petitioner and one M/s. Crystal Hardware. HELD THAT:- A perusal of the material on record in particular Annexure-C dated 15.09.2022 issued by CGST authorities and adjudication order dated 09.11.2022 at Annexure-D is sufficient to come to the conclusion that the both relates to the same subject matter in relation to the transaction between petitioner and M/s Crystal Hardware. Once proceedings are initiated under Sections 73 or 74, penalty proceedings under Section 122 are deemed to have been concluded and on this ground also, the impugned Show Cause Notice which purports under Section 122 of the CGST Act is clearly illegal and arbitrary and without jurisdiction or authority of law and contrary to the aforesaid provisions of law, warranting interference by this Court. The impugned show cause notice dated 15.09.2022 issued by respondent No.1 at Annexure-C is hereby quashed - Petition allowed. 2024 (10) TMI 200 Levy of interest on a petitioner for belatedly filing returns under the Tamil Nadu Goods and Service Tax Act, 2017 - main ground that was urged by the learned counsel for the petitioner is that they did not participate in the adjudication proceedings because all the notices were only uploaded in the GST portal - HELD THAT:- In the instant case, it is seen that notice was issued by the respondent. However, the petitioner did not receive the same. On going through the impugned order, it is seen that a total liability of Rs. 6,24,779/- towards interest has been imposed against the petitioner for filing the returns belatedly. The petitioner has come up with a clear case that without affording sufficient opportunity, the impugned order came to be passed. The impugned order passed by the respondent in Reference No.ZD331123185891E dated 29.11.2023 is hereby set aside. The matter is remanded back to the respondent for a fresh consideration on condition that the petitioner shall pay 10% of the total demand to the respondent within a period of four weeks from today - Petition allowed by way of remand. 2024 (10) TMI 199 Jurisdiction to issue SCN - excess of the power conferred upon Respondent-authority regarding scrutiny of returns, as provided under Section 61 of the JGST Act - HELD THAT:- The issue decided in JINDAL STONE WORKS VERSUS STATE OF JHARKHAND, JOINT COMMISSIONER OF STATE TAX, SAHIBGANJ, ASSISTANT COMMISSIONER OF STATE TAX, SAHIBGANJ CIRCLE, STATE TAX OFFICER, SAHIBGANJ CIRCLE. [ 2024 (9) TMI 1579 - JHARKHAND HIGH COURT] where it was held that ' this writ petition is disposed of by giving liberty to the petitioner to explain the reason which has been sought in the second show-cause, within two weeks and the authority concerned will consider the same in accordance with law and depending upon the conclusion, follow-up action be taken in view of the mandate of Section 61 of the JGST Act.' The instant writ petition is disposed of. 2024 (10) TMI 198 Challenge to impugned proceedings on the ground of being violation of principles of natural justice - discrepancies between GSTR-1 and GSTR-7 which were treated as suppression of outward tax supply - HELD THAT:- The impugned order dated 19.06.2023 is set aside and the petitioner shall deposit 25% of the disputed tax within a period of two (2) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. If the above deposit is not paid or the objections not filed within the stipulated period, i.e., two weeks and four weeks from the date of receipt of a copy of this order respectively, the impugned order of assessment shall stand revived. Petition disposed off. 2024 (10) TMI 197 Cancellation of GST registration based on SCN - petitioner failed to submit his reply to the show cause notice - notice provided only a short/small period of one day to submit his response and for personal appearance - HELD THAT:- Perusal of the impugned show cause notice would indicate that except stating that the GST registration of the petitioner had been obtained by fraud, willful misstatement or suppression of fact, necessary particulars, details etc. in this regard are not forthcoming in the impugned show cause notice. Further the show cause notice having been issued on 2.2.2024, the petitioner has been granted extremely a short/small period of time upto only 11.00 a.m. on the very next day i.e., 3.2.2024 to not only submit his reply and also appear for personal hearing in the matter. Under these circumstances, the impugned order at Annexure-E dated 16.2.2024 cancelling GST registration of the petitioner is violative of principles of natural justice warranting interference by this Court in the present petition. A perusal of the impugned order at Annexure-J dated 17.4.2024 rejecting the revocation application submitted by the petitioner will indicate that new grounds and reasons have been assigned for rejecting the revocation application which were not found in the original cancellation order - Under these circumstances, the impugned order Annexure-J dated 17.4.2024 putting forth various grounds which were not forthcoming in the earlier cancellation order would also vitiate the impugned order Annexure-J which deserves to be set aside by reserving liberty in favour of the respondent to issue fresh show cause notice and provide sufficient and reasonable opportunity to the petitioner and proceed further in accordance with law. The impugned orders at Annexures D, E and J are hereby quashed - Respondent is directed to reinstate/restore GST registration of the petitioner immediately upon the petitioner paying tax and filing returns - Petition allowed. 2024 (10) TMI 196 Violation of principle of natural justice - client was not notified with date of personal hearing - HELD THAT:- The writ petition is disposed of as covered in ALFA CITYINFRA PRIVATE LIMITED VERSUS CHIEF COMMISSIONER OF CT AND GST, ODISHA, CUTTACK AND OTHERS. [ 2024 (7) TMI 1527 - ORISSA HIGH COURT] . Orders passed consequent to said show-cause notice are set aside and quashed. Petitioner be notified date of personal hearing, in the authority proceeding pursuant to the show cause notice dated 25th November, 2020. The writ petition is disposed of as covered by said order - Orders passed consequent to said show-cause notice are set aside and quashed. Petitioner be notified date of personal hearing, in the authority proceeding pursuant to the show cause notice dated 25th November, 2020. 2024 (10) TMI 195 Scope of Advance Ruling application - Interpretation of provisions of Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017 - Classification of goods and services for tax purposes - HELD THAT:- In the instant case, questions raised by the applicant vide application made in FORM GST ARA-01 are found not to be covered under any of the clauses of sub-section (2) of section 97 of the GST Act. The applicant has selected clause (b) of sub section (2) of section 97 of the GST Act in serial no 13 of the application. However, in course of hearing, the authorized representatives of the applicant have failed to refer any such notification in respect of which the option was selected. The applicant has not raised any questions which are found to be covered under any of the clauses of sub-section (2) of section 97 of the GST Act. The applicant has been provided reasonable opportunity to counter the aforesaid observations - there are no reason to accept the instant application made by the applicant for pronouncement of ruling. The application is, therefore, rejected. 2024 (10) TMI 194 E-commerce Operator as defined in sec 2 (45) of the GST Act or not - service provider or not u/s 9 (5) of the GST Act read with notification no. 17/2021-Central tax(rate) dated 18th November, 2021 for the Driver services provided by the Driver to the Customer connected by Yatri Sathi Mobile App - liability of applicant to collect and pay GST on the services supplied by the Drivers (person who subscribed the app) to the Customers (person who subscribed the app) connected through the App considering the Applicant as service provider u/s 9 (5) of the GST Act read with notification no. 17/2021-Central Tax (Rate) dated 18th November, 2021. Whether the applicant falls under the purview of the E-commerce Operator as defined in section 2 (45) of the GST Act? - HELD THAT:- It appears that any person who is an owner or operator of digital or electronic facility or platform or one who manages such platform for supply of goods or services or both, including digital products i.e. a platform which in common parlance is said to be an electronic commerce platform can be said to be an Electronic Commerce Operator. Admittedly, in the instant case, the applicant is the owner of a digital platform namely the Yatri Sathi App and provides supply of services to the drivers by way of allowing the drivers to use the digital platform against a consideration. The applicant thus fits into the definition and qualifies to be an Electronic Commerce Operator in terms of section 2 (45) of the GST Act. Whether the applicant shall be deemed to be the service provider under section 9 (5) of the GST Act read with notification no. 17/2021-Central Tax (Rate) dated 18th November, 2021 for the Driver services provided by the Driver to the Customer connected by Yatri Sathi Mobile App ? - HELD THAT:- The first two arms of the conditions as laid down in Section 9 (5) of the GST Act get satisfied, i.e. the instant services are notified by the Government and the supply is intra-state in nature. Now, this issue narrows down to the focal point as to whether this service is supplied through (emphasis added) the electronic commerce operator or not. The word through as referred to in Section 9 (5) of the GST Act is not explained or defined in the relevant context. Hence that requires to be discussed in detail. Whether the applicant shall be liable to collect and pay GST on the services supplied by the Drivers (person who subscribed the app) to the Customers (person who subscribed the app) connected through the App? - HELD THAT:- Even though the applicant qualifies to be an electronic commerce operator, the supply of services is not made through him but such supply is independent in nature. Therefore, the applicant, though qualifies the definition of being an e-commerce operator, does not satisfy the conditions of Section 9 (5) of the GST Act for discharging the tax liability by an electronic commerce operator and hence, is not the person liable for discharge of tax liability under section 9 (5) of the GST Act. 2024 (10) TMI 193 Classification of goods - Baby Carriers with Hip seat - to be covered by HSN code 63079099 or not - HELD THAT:- From a bare reading of the Chapter Heading 6307, it can be derived that other made up articles, including dress pattern is wide enough to cover the articles like Baby carriage with hip seat. In COMMISSIONER OF CUSTOMS, ACC, MUMBAI VERSUS RUBY IMPEX LTD. [ 1999 (12) TMI 271 - CEGAT, MUMBAI] , the appellant imported car covers, made of polyester which were used to cover a car when it was parked for long periods; e.g., overnight to protect its surface from the elements. The importer was of the view that goods so imported would be classified under Heading 8708.99 being parts and accessories of motor vehicle. The department did not accept this classification and took a view that the goods were more appropriately classifiable as made up articles of textiles under Heading 6307.90. The Hon ble Tribunal held that car covers are not part of motor vehicles and are classifiable as made up articles of textiles under sub-heading 6307.90 of Customs Tariff Act, 1975. Similar view may be taken for the instant case and the item baby carrier with seats, made of textile fabric, may be classified under sub-heading 6307.90. Supply of Baby Carrier with hip seat as manufactured by the applicant shall be covered under HSN 6307 90 and would attract tax @ 5% when sale value does not exceed Rs. 1,000/- per piece and @12% when sale value exceeds Rs. 1,000/- per piece. 2024 (10) TMI 192 Classification of service - Outdoor Catering service along with Renting of Premise or not - composite supply of catering service within the club premise along with renting of premise - applicable rate of GST on the catering service along with renting of premise - HELD THAT:- Where the applicant provides renting of premises along with supply of food at any event, such supply would attract tax @ 5% with the restriction of input tax credit and subject to the condition that the Room Tariff of the club does not exceed Rs. 7,500/- per unit per day or equivalent. Clarification given in the CBIC Circular 27/01/2018-GST dated 04.01.2018 as referred by the applicant is to be followed in order to determine whether the applicant is located in specified premises or the supply is provided at specified premises . Composite supply of catering services within the club premises along with renting of premises falls under outdoor catering service together with renting of premises arranged at premises other than 'specified premises' - GST is payable against whole consideration of the composite supply @ 5% without ITC subject to condition imposed. 2024 (10) TMI 191 Interest charges by HDFC Bank Ltd - Inward supply from registered suppliers for calculating threshold of 80% or not - HDFC Bank Ltd is a registered company - HELD THAT:- Services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services) is exempted from payment of tax vide serial number 27 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. So, services by way of extending loans by HDFC Bank to the applicant against consideration payable in the form of interest is an inward supply of exempted services of the applicant. Such services, therefore, would be a part of total inward supply for the purpose of computing the threshold limit of 80% and since HDFC Bank is a registered person under the GST Act, the supply admittedly has been made from a registered person. Income Tax 2024 (10) TMI 209 ITA order suffers from delay and laches - order impugned has been passed in 2020, whereas the ITA has been filed in 2023, and as such, there is delay of more than three years in filing the ITA - HELD THAT:- This Court is not inclined to entertain this ITA at this belated stage, as the ITA suffers from delay and laches, in view of the judgment/order of this Court in the case of State of Odisha v. Surama Manjari Das [ 2021 (7) TMI 1461 - ORISSA HIGH COURT] which has been confirmed by the Apex Court [ 2023 (4) TMI 1358 - SC ORDER] . 2024 (10) TMI 208 Reopening of assessment - petitioner was a beneficiary of accommodation entries - Delay filling SLP - as decided by HC [ 2022 (12) TMI 1460 - GUJARAT HIGH COURT] action of reopening by the AO was bad in law, mainly for the reason that it was passed on a mere change of opinion on the same set of facts, which was disclosed and considered by the assessing officer during previous AY - HELD THAT:-There is gross delay of 489 days in filing this Special Leave Petition. The reasons assigned for explaining the said delay are neither satisfactory nor sufficient in law to be condoned. Hence, the application seeking condonation of delay is dismissed. Consequently, the Special Leave Petition also stands dismissed. 2024 (10) TMI 207 Revision u/s 263 - as per CIT AO had not verified the necessary relevant facts relating to the taxability of sale of certain immovable property - Tribunal rejected the appellant s appeal against the order passed by the CIT u/s 263 - HELD THAT:- We find no merit in the appellant s contention. Concededly, the audit report could not have commented upon the dishonour of cheques, as the report was issued prior to the date of the cheques aggregating ₹1,45,00,000/-. The AO had accepted the said report. The assessment order does not indicate any enquiries in this regard. CIT has rightly held that the Assessment Order was passed without making the necessary inquiries and verification. Thus, in terms of clause (a) of Explanation 2 to Section 263 of the Act, the assessment order is deemed to be erroneous in so far as it is prejudicial to the interests of the revenue.The appeal is, accordingly, dismissed. 2024 (10) TMI 190 Block Assessment - prosecution with regard to undisclosed income for block assessment - Offence Committed u/s 276C(1), Section 277 read with Section 278B - As decided by HC [ 2023 (3) TMI 1057 - GUJARAT HIGH COURT] Since the learned Coordinate Bench has taken a view as regards there being no provision existing at the relevant point of time whereby the Income Tax Department could launch a prosecution as regards income disclosed in block assessment for the period between 1.7.1995 to 1.1.1997, automatically and as a direct consequence, quashing of prosecution is the only necessary corollary. Having come to such a conclusion, there was no requirement for the learned Coordinate Bench to have discussed with regard to applicability of Section 278E and whereas in the considered opinion of this Court, therefore, the submission of the learned Advocate for the Income Tax Department cannot be accepted HELD THAT:-We are not inclined to interfere with the impugned judgment/order of the High Court. Accordingly, the Special Leave Petition is dismissed. 2024 (10) TMI 189 Reopening of assessment u/s 147 - reasons to believe - credible reasons for issuing the impugned notice or not? - sales advances assessment year - as submitted no reason to believe that income of the petitioner had escaped assessment as all material, on the basis of which the assessment is sought to be reopened, was examined in assessment proceedings for the previous assessment year Assessment Year 2010-11. HELD THAT:-. During the search and seizure proceedings and thereafter, statements of certain persons connected with the M/s Spaze Group were recorded u/s 131 (1A) of the Act. The same also included statement of one Mr. Anand Singh who was ostensibly the proprietor of M/s JMD International. He stated that he was an electrician and received a remuneration of ₹6,000/- per month. He made statements to the effect that he had signed blank cheques in his capacity of proprietor of M/s JMD International and he was not in control of the said concern. He had stated that he had no knowledge of any godown or office of the said concern (M/s JMD International). According to his statement, one Sh. Kishori Sharan Goyal was the person who was controlling the said concern for providing Bogus Billing to various entities . The record of M/s JMD International indicated that it had made payment to the petitioner. This provided the AO the reason to believe that the petitioner s income chargeable to tax had escaped assessment. The contention that there are no credible reasons for issuing the impugned notice for reopening the assessment for the Assessment Year 2011-12 is thus insubstantial. The contention that all receipts have been taxed during the previous assessment year Assessment Year 2010-11 is also erroneous. Copy of the ledger account maintained by the petitioner indicates that certain amounts were received from M/s JMD International in the financial year 2010-11 (relevant to Assessment Year 2011-12). According to the learned counsel for the petitioner only a sum of ₹5,00,000/- was received during the said financial year. It is not necessary for this Court to examine the quantum of receipts during the previous year 2010-11 (relevant to AY 2011-12) in these proceedings. Suffice it is to state that, prima facie, all receipts received from M/s JMD International Ltd. were not taxed in Assessment Year 2010-11. Thus, notwithstanding that the petitioner s income chargeable to tax was assessed in Assessment Year 2010-11, prima facie, certain amounts, which were received in the financial year 2010-11 were not brought to tax in the Assessment Year 2011-12. The petitioner s explanation that its books of accounts were available with the AO prior to its assessment for the AY 2011-12 also does not carry the petitioner s case any further. This is for the reason that the AO had not assessed the petitioner s income for the Assessment year 2011-12 under Section 143 (3) of the Act. Contention that all material including explanation of the petitioner was available with the Assessing Officer at the time of framing of the assessment for the Assessment Year 2011-12 and the impugned notice is occasioned by a change in opinion, is unmerited. The assessment of tax under Section 143 (1) of the Act is a self-assessment and in a strict sense cannot be stated as assessment framed by the AO. The petition is unmerited and accordingly dismissed. 2024 (10) TMI 188 Validity of order passed beyond the period prescribed u/s 144C - Reference to dispute resolution panel - HELD THAT:- In terms of sub-section (4) of Section 144C of the Act, the AO is required to pass the assessment order under sub-section (3) of Section 144C of the Act within the period of one month from the end of the month in which the period for filing the objections under sub-section (2) of Section 144C of the Act expires. In the present case, the draft assessment order was passed on 04.03.2022, thus, the assessee was required to file its objections before the learned Dispute Resolution Panel (hereafter the DRP) within the period of one month from the said date. The assessee had filed such objection on 06.04.2022, which was beyond the period of thirty days stipulated under sub-section (2) of Section 144C of the Act. There is no cavil that the AO was required to pass the assessment order within a period of one month from the end of the month in which the period for filing the objections under sub-section (2) of Section 144C of the Act expired. Thus, the order was required to be passed within the period of one month from 30.04.2022. In the present case, the final assessment order was passed on 27.12.2022, which was beyond the stipulated period, Thus, we find no infirmity with the decision of the ITAT in setting aside the final assessment order as being beyond the period of limitation as prescribed under the Act. Revenue submitted that the assessee cannot be allowed to take advantage of its own wrong as it had filed the objections beyond the period of thirty days - This argument is insubstantial. There is no ambiguity in the language of sub-section (4) of Section 144C of the Act and notwithstanding that the assessee had not filed its objections within the period of thirty days, the AO was required to pass the final order, within the period as stipulated under sub-section (4) of Section 144C of the Act. No substantial question of law arises in the present appeal. 2024 (10) TMI 187 Reopening of assessment u/s 148 - Addition u/s 68 - late father of the petitioner advanced loan during the year and source of which has remained unexplained - HELD THAT:- There is no escapement of income since the amount was received by the late father of the petitioner on 04.09.2014 from Mr. Hardik Parekh and was paid by NEFT to Ms. Darshana Doshi on the same day. Similarly, the amount was received back on 19.09.2015 from Ms. Darshana Doshi and returned to Mr. Hardik Parekh. In such circumstances, there is no escapement of income of the late father of the petitioner is concerned. The reason given by the Assessing Officer for alleged escapement is therefore not sustainable since there is no unexplained amount in the bank statement on record since the assessee did not retain the amount and as such the ingredients of Section 68 are not attracted. We are of the opinion that the AO could not have come to the conclusion that it is a fit case for reopen the assessment. The petition therefore succeeds and is accordingly allowed. 2024 (10) TMI 186 Rectification u/s 154 - Revision u/s 264 - scope of powers u/s 264 - what constitutes 'record' ? - mistake apparent on the record to the effect that the opening balance for the year under consideration could not be added as income by the AO and ought to have been considered by the Commissioner while passing the order under Section 264 - HELD THAT:- Commissioner of Income-Tax is supposed to consider the merits of the case while entertaining the petition filed by the assessee under Section 264 of the Act. It is not in dispute that the assessee has availed the remedy of revision instead of filing of appeal as per his choice of the assessee and the Commissioner was therefore, duty bound to consider such revision petition on merits. As decided in Pamod R. Agrawal [ 2023 (10) TMI 1142 - BOMBAY HIGH COURT] held that Commissioner while exercising revisionary powers under section 264 of the Act has to ensure that there is relief provided to assessee where the law permits the same. We see no reason to take a different view on the interpretation of the word 'record' occurring in section 264 of the Act from that expressed by the Central Board of Direct Taxes in the Circular extracted above. The order under section 144A dated 31-12-2007 is thus part of the record and ought to have been take into consideration in deciding the petition under section 264 Thus, impugned order passed by respondent No. 1 u/s 264 as well as the order under Section 154 of the Act are hereby quashed and set aside and the matter is remanded back to the Principal Commissioner Respondent No. 1 to decide the revision petition filed by the petitioner under Section 264 on merits. 2024 (10) TMI 185 Allowability of expenses incurred for garnering FCNR deposits which were to be maintained at its Indian branches - Tribunal held funds mobilized abroad were brought to India in foreign currency account and kept in India for the Indian business of the assessee bank. The benefits reaped by the India branch or Permanent Establishment in India have been accounted for as Indian income and why the deduction of expenditure should not be allowed as expenses incurred for procurement of business cannot be understood as Head Office expenses - HELD THAT:- The expenses were incurred for the purposes of inviting NRIs to open deposits in the Indian branches of the respondent assessee. The aforesaid initiative was predicated upon the circular of the RBI itself which is dated 16 October 1991. Since this was expenditure which was incurred solely for the purpose of the business of the respondent assessee in India, we find no merits in the challenge which stands mounted to the order of the Tribunal in this respect. Credit card commission paid in relation to cards which had been issued by the foreign branches of the respondent and used in India - Undisputedly the credit cards had been issued by the foreign branches of the respondent. It was in the aforesaid backdrop that the Tribunal noted that the charges are received by the foreign branch for providing and extending a credit line to the account holder outside India. It has further been noted that the amount payable by those card holders would clearly be a debt incurred outside India. It is in the aforesaid conspectus of facts that it ultimately came to hold that the fee in respect of such transactions would not be taxable in India. We find no justification to take a contrary view. 2024 (10) TMI 184 Faceless assessment scheme - Jurisdiction of the Jurisdictional Assessing Officer (JAO) to issue notice u/s 148 - admittedly notice was issued by the JAO for re-assessment - HELD THAT:- As decided in Jasjit Singh v. Union of India [ 2024 (8) TMI 228 - PUNJAB AND HARYANA HIGH COURT ] Principal Chief Commissioner or the Principal Director General, as the case may be, transfer the case to the Assessing Officer having jurisdiction over such case i.e. JAO. Thus, the power of transfer to the JAO is although available but it has to be exercised only in a particular case considering the facts and circumstances therein and not by way of general order as passed vide letter dated 19.01.2024. notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged u/s 144B have been found to be contrary to the provisions of the Act, 1961 and accordingly notices are set aside for want of jurisdiction. 2024 (10) TMI 183 Validity of Assessment Orde passed u/s 143(3) r.w.s. 144B - there is a breach of principles of natural justice as the petitioner could not avail the opportunity of hearing through video conferencing which was granted - petitioner submitted that on 27.03.2022, an intimation was given to the petitioner of personal hearing through video conferencing, fixing the time at 11.00 a.m. on 28.03.2022 - AO has duly recorded that the petitioner failed to logged into the portal to avail the opportunity of hearing granted on 28.03.2022 HELD THAT:- Though the petitioner has prayed for personal hearing through video conference and in spite of the fact that the petitioner logged into the portal as stated in the communication made by the petitioner placed on record, no one appeared for video conferencing on behalf of the respondent and the petitioner therefore prayed for another opportunity of personal hearing which was not granted and on the next date which was 29.03.2022, the impugned order was passed. The petitioner is entitled to the personal hearing and as no personal hearing through video conferencing is granted though it was scheduled on 28.03.2022, there is a breach of principles of natural justice. Therefore, without entering into the merits of the matter, the impugned order dated 29.03.2022 is hereby quashed and set aside and the matter is remanded back to the respondent AO to pass a fresh de novo order after giving personal hearing to the petitioner through video conference in accordance with law. 2024 (10) TMI 182 Validity of Section 56(2)(viib) came to be inserted in terms of Finance Act, 2012 - shares have been subscribed by the holding company - HELD THAT:- We note that the Income Tax Appellate Tribunal Tribunal in BLP Vayu (Project-1) (P.) Ltd [ 2023 (6) TMI 209 - ITAT DELHI] held that not only that the fair market value is supported by independent valuer report, the allotment has been made to the existing shareholder holding 100% equity and therefore, there is no change in the interest or control over the money by such issuance of shares. The object of deeming an unjustified premium charged on issue of share as taxable income u/s 56(2)(viib) is wholly inapplicable for transactions between holding and its subsidiary company where no income can be said to accrue to the ultimate beneficiary, i.e., holding company. The chargeability of deemed income arising from transactions between holding and subsidiary or vice versa militates against the solemn object of Section 56(2)(viib) of the Act.Section 56(2)(viib) could not be applied in the case of transaction between holding company and wholly owned subsidiary in the absence of any benefit occurring to any outsider. Also decided in Kissandhan Agri Financial Services (P.) Ltd [ 2023 (3) TMI 769 - ITAT DELHI] held that section 56(2)(viib) creates a legal fiction whereby the scope and ambit of expression 'income' has been enlarged to artificially tax a capital receipt earned by way of premium as taxable revenue receipt. Hence, such a deeming fiction ordinarily requires to be read to meet its purpose of taxing unaccounted money and thus needs to be seen in context of peculiar facts of present case. The legal fiction has been created for definite purpose and its application need not be extended beyond the purpose for which it has been created. Bringing the premium received from holding company to tax net under these deeming fictions would tantamount to stretching provision to an illogical length and will lead to some kind of absurdity in taxing own money of shareholders without any corresponding benefit. We find no occasion to go into the challenge raised with respect to the Section 56(2)(viib), since the apprehension of the writ petitioner stands duly allayed. We accordingly allow the writ petition in part and quash the direction of the DRP dated 29 June 2024. The matter shall stand remitted to the said authority who shall examine the issue afresh. 2024 (10) TMI 181 Validity of reopening of assessment - non granting an opportunity of hearing to the petitioner - denial of natural justice - HELD THAT:- Since, the provisions of Section 148A(b) of the said Act, confers a right on the assessee to be provided with an opportunity of hearing, the jurisdictional Assessing Officer ought not to have decided the show cause notice without granting an opportunity of hearing to the petitioner. Since, the right to personal hearing is embedded in the statute itself, denial of such opportunity in my view vitiates the order passed u/s 148A(d) of the said Act dated 20th March, 2024 in respect of the assessment year 2020-21. As such on this short point upon setting aside the order passed u/s 148A(d) of the said Act, for the assessment year 2020-21, the matter is remanded back to the jurisdictional Assessing Officer. Jurisdictional Assessing Officer is directed to hear out the matter a fresh upon giving an opportunity of personal hearing to the petitioner. Needless to note all points raised herein as regards the challenge to the show cause notice are kept open for being decided by the jurisdictional Assessing Officer. 2024 (10) TMI 180 Revision u/s 263 - disallowing the exemption u/s 11(1) for the grant received by the assessee Trust from the Government - ITAT came to the conclusion that the order passed by the Principal CIT u/s 263 reveals that he has not applied his mind by calling for the office records and independently taking a view that the assessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue, but the Principal CIT has acted only on the proposal sent by the Assessing Officer to initiate proceedings u/s 263, thus liable to be set aside HELD THAT:- ITAT on the basis of the principle of consistency and in absence of any change of facts to the effect that the assessee Trust was in receipt of the government grant in the earlier years which has been accepted by the Revenue to be considered for being eligible for exemption under Section 11 of the Act. In view of such finding of fact arrived at by the Tribunal, it cannot be said that the assessment order passed u/s 143(3) of the Act was erroneous or prejudicial to the interest of the Revenue. We are, therefore, of the opinion that no question of law much less any substantial question of law would arise from the impugned order of the Tribunal. The appeal is, accordingly, dismissed. 2024 (10) TMI 179 Revision petition u/s 264 - Assessment proceedings were conducted, but the petitioner did not participate - petitioner had filed the return of income and had claimed exemption. An audit report in Form 10B was also filed by the assessee within the due date - HELD THAT:- As per sub-section (3) of Section 264, a revision application is required to be made within one year from the date on which the relevant order was communicated to the revision applicant. In this case, the assessment order is dated 23.09.2022 and the revision application was filed on 26.12.2022. Hence, the petition was filed well within the period of limitation. Once a petition is filed within the period of limitation, it becomes necessary for the authority receiving such petition to consider and dispose of such petition on merits. Sub-section (1) of Section 264 confers wide powers to pass orders in revision either suo motu or on application. The petitioner asserts that the entire expenditure was disallowed in the assessment order and has requested for a revision of such order. It is necessary to examine the revision application on merits and dispose of the same in accordance with law. Since this was not done, the matter requires reconsideration. 2024 (10) TMI 178 Stay petition - petition was rejected on the ground that the petitioner did not make the 20% deposit in terms of CBDT's office memorandum - HELD THAT:- On examining the stay petition filed by the petitioner, it is evident, however, that such stay petition did not contain details relating to financial stringency. Therefore, it is necessary to impose costs on the petitioner. Subject to payment of a sum of Rs.10,000/- to the Cancer Institute, Adyar, by the petitioner, within a period of two weeks from the date of receipt of a copy of this order, the petitioner is permitted to submit a fresh stay application before the assessing officer. Such application shall be submitted within two weeks from the date of receipt of a copy of this order. Such application shall be considered and disposed of by the assessing officer by taking note of the observations contained in this order. The petitioner is directed to extend full co-operation by not taking adjournments. 2024 (10) TMI 177 Condonation of delay in terms of Section 119(2)(b) - Permission of to file a revised return of income in order to declare income in accordance with law and condone delay in filing the revised return of income - HELD THAT:- In the present case, the order passed has entered into the merits which is not permissible. The order u/s 119(2)(b) of the Act is to be restricted insofar as condonation of delay. While merits may be taken note of, however the said aspect cannot be a conclusive aspect while dealing with the application u/s 119(2)(b) of the Act. Accordingly, we set aside the order u/s 119(2)(b) as the Court also finds that the authority has taken a very restrictive and conservative approach while dealing with Section 119(2)(b), in not noticing the directions of the Central Board of Direct Taxes (CBDT) regarding condonation up to six years. Matter is remitted back to respondent No.1 to reconsider the matter. While so reconsidering, the authority to take note of the directions of the CBDT as per the circular dated 09.06.2015. In light of circular 9/2015, the authority must take a holistic view of the matter insofar as condonation of delay. In light of circular providing that the restriction regarding non-condonation is only for an extent beyond six years. But in the present case, the period sought to be condoned is within the period of six years and the authority to take note of the same appropriately and pass appropriate orders expeditiously. 2024 (10) TMI 176 Validity of reassessment proceedings - assessee did not respond to the notice u/s 148A(b) - as submitted petitioner was called upon to submit a reply on or before 07.03.2024 electronically at the specified website. Instead of replying within the specified date, he submits that the petitioner appears to have hand-delivered the notice on 08.03.2024, which is beyond the last date, the reply could not be considered because of these reasons - HELD THAT:- Impugned order and impugned notice are set aside subject to the above condition and the matter is remanded for re-consideration by the first respondent. The petitioner is permitted to submit a detailed reply to the notice u/s148A(b) within fifteen days from the date of receipt of a copy of this order. To enable the petitioner to upload such reply, the respondents are directed to provide access to the portal. 2024 (10) TMI 175 Validity of assessment order challenged on the ground of breach of principles of natural justice - shorter period to respond to SCN - show cause notice proposing the variation was issued calling upon the petitioner to show cause on or before 20.03.2024. In spite of a request for further time, he submitted that the time was extended by only one day - addition of unexplained expenditure u/s 69C r.w.s.115BBE - HELD THAT:- Without providing reasonable time to the petitioner, the proposed variation was confirmed. In these circumstances, the interest of justice warrants that a reasonable opportunity be provided to the petitioner. Therefore, the impugned assessment order dated 26.03.2024 is set aside and the matter is remanded to the first respondent for reconsideration. The petitioner is permitted to submit a detailed reply by enclosing all relevant documents within fifteen days from the date of receipt of a copy of this order. In order to enable the petitioner to upload such reply, the respondents are directed to provide access to the portal. Upon receipt of the petitioner's reply, the first respondent is directed to provide a reasonable opportunity to the petitioner, including by way of video conference hearing, and thereafter issue a fresh assessment order within a period of three months from the date of receipt of the petitioner's reply. 2024 (10) TMI 174 Addition u/s 69A - unexplained money - onus to prove - addition made by AO on account of alleged cash transaction on the basis of loose papers found during the course of search proceedings at Swastik Group/third party - CIT(A) dismissing the appeal filed by the assessee held that since the assessee could not explain the nature and source of cash paid, the amount has rightly been added to its total income by the AO u/s 69A - Assessee submitted amount disclosed in these loose papers has been offered to tax by the other entities of the Swastik group in their application filed before the Hon ble ITSC and the said application has also been accepted by the Hon ble ITSC HELD THAT:- We find that the CIT(A) merely proceeded on the basis that the taxpayers before the Hon ble ITSC do not include the name of the assessee. Having considered the various details as noted above regarding the amount appearing in the loose sheets found during the search proceedings, we are of the considered view that since the amount has already been considered in the application filed before the Hon ble ITSC by the Swastik group and the disclosure of additional income and the application has been accepted by the Hon ble ITSC, the addition of the said amount of ₹ 21,65,000 in the hands of the assessee on account of entries appearing in the loose sheets will amount to double taxation which is completely impermissible. Therefore, we direct the AO to delete the impugned addition in the hands of the assessee as the same has already been offered to tax by the Swastik group and the due tax thereon has been paid - Assessee appeal allowed. 2024 (10) TMI 173 Penalty order u/s 271AAB - treating an amount included in the ROI as undisclosed income susceptible - CIT(A) on analysis of facts and law found that the ingredients of Section 271AAB are not fulfilled and therefore held that the penalty imposed by the AO is outside the sanction of law. The penalty imposed was thus deleted HELD THAT:- As contended on behalf of the assessee, neither the income disclosed in the return by way of LTCG fall under the definition of undisclosed income contemplated u/s 271AAB of the Act nor any admission of so called undisclosed income has been made in the course of search in statement u/s 132(4) of the Act. The prerequisites of Section 271AAB (1A) are thus not satisfied. The action of the AO thus do not align with the penalty provisions codified u/s 271AAB of the Act. Significantly, LTCG in question was taxable in law in so far as the A.Y. 2021-22 is concerned and not exempt u/s 10 in any manner. The transactions are routed through Banking Channel and advance tax has also been paid prior to search. Taxable income from LTCG cannot be treated as undisclosed income by any stretch of imagination. On perusal of the assessment order or penalty order, it is seen that there is no reference to any statement recorded u/s 132(4) of the Act which may show any kind of admission towards so called undisclosed income. The admission of undisclosed income of alleged undisclosed income (with some further conditions with which, we are not personally concern) is the fulcrum on which action u/s 271AAB(1A) of the Act is based. In the absence of such admission imposition of penalty @ 30% of the so called undisclosed income under clause (a) of Section 271AAB(1A) of the Act is not justified. The case of the assessee does not fall in the definition of undisclosed income provided in the Explanation appended to Section 271AAB of the Act. The assessee claims to be not obligated of law to maintain the books of accounts and the income declared in the return of income arising from entries in respect of LTCG has not been alleged to be false by the Revenue. In the identical fact situation, in the case of family member of assessee (Tanya Jaiswal) [ 2024 (9) TMI 425 - ITAT DELHI] has affirmed the view of the CIT(A). The issue thus stands covered in favour of the assessee and against the Revenue by the decision rendered in Tanya Jaiswal. Where imposition of penalty u/s 271AAB is left to the statutory discretion of AO and not being automatic, we are of the considered view that extenuating circumstances exists to exonerate the assessee from clutches of penalty provisions under Section 271AAB. Appeal of the Revenue is dismissed. 2024 (10) TMI 172 Denial of TDS credit - Procedural lapses, specifically the non-reflection of TDS credit in Form 26AS and the failure to comply with Rule 37BA of the Income Tax Rules, 1962 - CIT(A) relied on the provisions of Section 205 clarifying that while this section bars the recovery of tax directly from the deductee where tax has been deducted, it does not govern the allowance of TDS credit and concluded that the assessee s non-compliance with Rule 37BA was a sufficient basis for the denial of TDS credit and dismissed the appeal - HELD THAT:- It is a well-established principle of natural justice that a taxpayer should not suffer due to procedural lapses caused by third parties, especially when the taxpayer has acted in good faith and made all reasonable efforts to rectify the situation. It is consistently held on many judicial forums that the substance of compliance-namely, offering income to tax-should take precedence over procedural errors when assessing a taxpayer s entitlement to TDS credit. Section 205 protects the taxpayer from being asked to pay tax again if tax has already been deducted at source. This principle supports the argument that TDS credit, once deducted, should not be denied based on procedural failures, particularly those not attributable to the taxpayer. Rule 37BA of the Income Tax Rules provides for the mechanism of TDS credit, intending to ensure that the credit is given to the person who offers the income for taxation. The primary objective of this rule is to align TDS credit with the person who is the beneficial owner of the income. In this case, the assessee is the rightful owner of the income from Vedanta ADRs, and despite procedural errors by Citibank NA, the assessee has fulfilled the substantive requirements by declaring the income in its tax return. Denying credit due to procedural lapses by third parties contradicts the rule s purpose. From revenue perspective, allowing TDS credit to the assessee where the corresponding income has been offered does not result in any revenue loss to the exchequer. The tax has been deducted and accounted for; it is merely the credit that has been procedurally misplaced due to third-party errors. We hold that the denial of TDS credit based solely on procedural grounds is not justified. Assessee appeal allowed. 2024 (10) TMI 171 Penalty u/s 271(1)(c) - order of ITSC, withdrawing immunity from levy of penalty and prosecution relied upon - Parallel proceedings - As argued non-recording the satisfaction as to how the assessee has concealed the income or has furnished the inaccurate particulars of income - HELD THAT:- Parallel working is going on i.e. on one hand assessee was asked to deposit the amount as per the order of ld. ITSC dated 31st December, 2015, to which assessee deposited almost 60% of the tax settlement amount and paid the remaining amount as directed by the Hon ble High Court vide writ order and parallelly ld. AO without making reference to the provisions of the Act laying down the procedure prior to visiting the assessee with the penalty, has levied the penalty solely on the basis of order of ld. ITSC, withdrawing immunity from levy of penalty and prosecution. AO has not referred to the assessment proceedings if any, carried out. AO has also not referred to any satisfaction having been recorded during the course of assessment proceedings prior to initiating the penalty proceedings. There is also no reference of any notice issued u/s 274 with respect to 271 of the Act. What is indicated in the said penalty order is that immediately after getting information about withdrawing of immunity from penalty and prosecution by ld. ITSC letters were issued to the assessee on 28th June, 2018, and 5th July, 2018, informing about the withdrawal of immunity from penalty and prosecution to which the assessee filed the reply on 13th July, 2018, stating that a major amount of tax liability has been paid off and some more time is required to deposit the remaining amount. The reply of the assessee is already captured in the penalty order reproduced above. Soon after receiving the reply of the assessee on 13th Jul, 2018, the ld. AO has framed the penalty order on 30th July, 2018, levying the penalty - The complete exercise carried out by the ld. AO levying penalty u/s 271(1)(c) of the Act is arbitrary and not in accordance with the law. Thus assessee deserves to succeed as the penalty proceedings have not been initiated in accordance with law and they are void ab initio. Levy of penalty u/s 271AAA - We find that in the penalty order u/s 271AAA of the Act, the ld. AO has not referred to any conditions prescribed u/s 271AAA of the Act nor there is any mentioned of any statement recorded u/s 132(4) of the Act nor is there any mention about the assessee having being asked to explain the manner of earning undisclosed income. Therefore, when the conditions prescribed u/s 271AAA of the Act remains to be fulfilled, the initiation of penalty proceedings u/s 271AAA of the Act are itself void, illegal and bad in law and therefore, the penalty proceedings u/s 271AAA for A.Ys. 2011-12 and 2012-13 are hereby quashed and impugned penalty levied u/s 271AAA of the Act are hereby deleted. 2024 (10) TMI 170 Stay the recovery of outstanding demand - revised demand after TPO passed the rectification order u/s 154 - HELD THAT:- The apparent mistake that is sought to be rectified is that the assessee had filed a loss return. However, in the Final Assessment Order concluded under section 143(3) r.w.s. 144C(13) of the Act, Nil income is taken as the starting point. Since the assessee had declared a loss in the income tax return, the same has to be taken as the starting point of computation of the assessed income. The aforesaid action of the AO has resulted in increased assessed income to Rs. 37,38,03,079/- and consequently tax demand by Rs. 20,25,83,329/-. In view of the facts of the case, AO is directed to dispose off the rectification application in a time bound manner. TPO has made an adjustment with respect to the entire turnover of the assessee in the construction equipment segment. It is a settled principle of law that adjustment, if any, is to be restricted to the international transactions undertaken by the assessee. In this context, we rely on the judgment of Hindustan Unilever Ltd. [ 2016 (7) TMI 1245 - BOMBAY HIGH COURT] .The SLP filed by the Revenue against the aforesaid judgment of the Hon ble Bombay High Court has been dismissed by the Hon ble Apex Court in Special Leave [ 2018 (10) TMI 1611 - SC ORDER] . The assessee had submitted a revised working of collectable outstanding demand if the TP adjustment is restricted to the international transactions undertaken by the assessee, the rectification applications filed by the assessee if the same are disposed off, etc. On perusal of revised working of collectable outstanding demand, we find that the demand would be reduced to Nil after taking into account the TDS credits. DR was unable to controvert the above computation of tax demand which is placed on record. Therefore, we deem it appropriate to grant stay of the outstanding demand provided assessee undertakes before the AO not to sell assets worth atleast an amount equal to the total tax demand that is raised as per the Final Assessment Order passed under section 143(3) r.w.s. 144C(13). If the assessee satisfy the above condition, the stay shall be effective for a period of 180 days from the date of this Order or till the disposal of the appeal, whichever is earlier. The assessee shall not seek adjournment of hearing of the appeal without compelling reasons. With these observations, we dispose off the aforesaid stay application. 2024 (10) TMI 169 Revision u/s 263 - AO passed the order u/s. 147 r.w.s. 144B - PCIT rejected the contentions of the assessee stating that details noted in incriminating documents i.e. excel sheet had proper details of KBG units such as number of unit, selling price of land, construction cost, amount received were matching with the unit of the assessee and the NODPL, on the basis of seized documents, accepted the receipt of On Money before the Settlement Commission and paid due taxes on it. HELD THAT:- It is well-settled law that for invoking Section 263 PCIT must demonstrate that the order passed by the AO was erroneous and prejudicial to the interests of the Revenue. The primary reason cited by the PCIT for invoking Section 263 is that the AO did not sufficiently inquire into the alleged on-money payments. As evident from the assessment records that the AO had conducted an inquiry into the assessee s property purchase. Assessee provided documentary evidence, including the sale deed, bank account statements, and payment confirmations, which were duly examined by the AO. Assessee's name does not appear in the incriminating documents, and the AO did not question the explanation that the unit was purchased by the assessee's parents, and her name was added only for inheritance purposes. AO had accepted a large sum of unexplained cash deposits without any inquiry and the PCIT held that the entire amount should have been taxed, particularly in the absence of plausible explanations. In that case it was noted that the assessee made contradictory submissions-first, claiming the deposits did not belong to him, and second, stating that they were related to his business. AO accepted the latter without sufficient inquiry into either of these explanations. In contrast, the present case involves a detailed inquiry conducted by the AO into the property purchase, supported by documentary evidence, including the sale deed, bank statements, and confirmations from the developer. Assessee consistently denied making any on-money payments, and the AO found no direct evidence implicating the assessee. Therefore, unlike in the case of Prakashbhai Ishwarbhai Changela [ 2024 (4) TMI 1185 - ITAT RAJKOT] the AO s assessment in the present case was based on a proper examination of all relevant facts and documents, and there were no contradictory explanations that warranted further inquiry. The facts of the present case are more akin to the decision in Divyesh Bhupendra Desai [ 2024 (10) TMI 77 - ITAT AHMEDABAD] where the Tribunal held that when the AO has taken a plausible view based on inquiry and material on record, the invocation of Section 263 of the Act is unwarranted. Thus, the principles established by the judicial precedents, we find that the PCIT s order u/s 263 is unjustified. AO's original assessment was based on a proper examination of the relevant material, and there is no error or prejudice to the interests of the Revenue. Allow the appeals of the assessee. 2024 (10) TMI 168 Computation of Short-Term Capital Loss from purchase and sale of shares - Appellant has paid excess price for purchase of shares to group entities and sold very same shares to other group entities at lower rate to book artificial Short-Term Capital loss - HELD THAT:- From the facts brought on record by the AO and the CIT (A), it is abundantly clear that the transaction of purchase and sale of shares of SVCL is definitely not for acquiring controlling interest in M/s. SVCL, but only for the purpose of booking Short-Term Capital Loss to offset huge capital gain derived by the assessee from sale of shares of Rasi Cements Ltd. Although the appellant tried to justify the transaction as genuine, but on perusal of the relevant dates and events and also parties to the transaction, it is undisputedly clear that the appellant has arranged transaction in collusion with the related parties to book artificial Short-Term Capital Loss to offset huge capital gain derived from transfer of shares of Rasi Cements Ltd. Appellant entered into a MOU with and M/s. Kalahasteeswar Finance Pvt. Ltd for acquiring shares at Rs.25 per share. Although, as per MOU shares has to be purchased at Rs.25/- per share, why it has paid Rs.109 per share to the above parties is not explained. Therefore, reasons given by the learned CIT (A) to adopt purchase price of Rs.33 per share for all the share purchase from 3 entities is based on well reasonings and on relevant facts. Transaction of the appellant for purchase and sale of shares of M/s. SVCL is not genuine transaction but a transaction designed to avoid payment of taxes arising on capital gain due to transfer of shares of Rasi Cements Ltd. CIT (A) after considering the relevant facts has rightly recomputed the Short-Term Capital Loss on sale of shares by adopting the cost of purchase at Rs.33/- per share. Thus, we are inclined to uphold the findings of the learned CIT (A) and rejects the grounds taken by the assessee. Disallowance of interest expenditure u/s 14A - AO disallowed interest paid on loan on the ground that the appellant has utilized interest bearing fund for making investment in shares and securities which yield exempt income - HELD THAT:- On perusal of the reasons given by the assessee, in our considered view, the assessee could not substantiate its argument that the investments in shares of other companies is for strategic business purpose is not provided with relevant evidences. Assessee itself has admitted fact that the interest bearing funds has been used for investment in shares and also for non-business purpose. CIT (A) after considering the relevant facts has rightly sustained disallowance of interest and thus, in our considered view, there is no error in the reasons given by the CIT (A) on this issue to take a contrary view. Thus, we reject the argument of the assessee and uphold the findings of the learned CIT (A). Assessee appeal dismissed. 2024 (10) TMI 167 Rejection of approval u/s 80G - applicant accepted to have been begun its activities from 05.11.2020, whereas the application in Form No. 10AB came to be filed beyond the prescribed period of six months - HELD THAT:- Application was rejected on merits i.e. on the ground that religious trusts are not eligible under section 80G(5)(iii) of the Act. But, as we are going to discuss hereinafter, reasonable opportunity of being heard was not granted to the applicant before disposal of the application, and the matter needs to be remanded. Therefore, having regard to the extension of period by CBDT vide circular No.7 dated 25.4.2024, we deem it a fit case where the application rejected deserves to be restored to its original number for fresh decision by learned CIT(E), so far as the second ground is concerned. Religious trusts are not eligible u/s 80G(5)(iii) and the applicant being a religious trust does not fall within scope of section 80G - As per section 12AB of the Act, on an application under clause (ac) sub-section 12A of the Act, Principal of Commissioner or Commissioner is empowered to pass an order registering the trust or institution for a period of 5 years after specifying about genuineness of activities of the trust or institution. Section 80G(5)(iii) of the Act provides that the institution or fund established in India, should be for a charitable purpose and the institution or fund is not expressed to be for the benefit of any particular religious community or caste. It is true that as per Explanation 3 to section 80G, charitable purpose does not include any purpose the whole or substantially the whole of which is of a religious nature. To explain the objects of the trust or to explain that the same are charitable purposes and do not include any purpose the whole or substantially the whole of which is of a religious nature, the applicant trust deserved reasonable opportunity of being heard. But, as noticed above, reasonable opportunity cannot be said to have been granted to the applicant trust before the application came to be rejected by Learned CIT(E). This appeal is disposed off for statistical purposes, and the matter is remanded to Learned CIT(E) for decision of the application u/s 80G(5)(ii) of the Act afresh. 2024 (10) TMI 166 Rejection of registration of assessee society u/s 80G - application filled belatedly - HELD THAT:- Assessee submitted that recently the Board has considered the genuine hardship of the assessee, who could not file the application with in 6 months of commencement of activities, and allowed such applicants to file fresh application in those cases on or before 30.06.2023, and that the assessee has taken the benefit of said circular in filing fresh application. Based on said contention, ld. AR of the assessee has submitted that since fresh application has already submitted by the assessee in online mode, same is pending before ld. CIT(E). DR who happens to be the same authority / officer-in- charge dealing with said applications filed by assessees, based on that contention raised by the assessee relying on the CBDT Circular, has not objected the prayer of the assessee. He has submitted at Bar that the present appeal of the assessee may be allowed to be withdrawn and the application which the assessee has filed in view of the abovesaid circular of the Board, be allowed to be dealt with in accordance with law, by the revenue. Prayer made by the assessee for withdrawal of the appeal for which ld. DR has no objection, is allowed. Hence, we allow the appellant to withdraw the appeal. Appeal of the assessee is dismissed as withdrawn. Customs 2024 (10) TMI 165 Classification of imported goods - Agricultural Reaper - Spare parts of Reaper - classifiable under CTH 84672900 and 84679900 respectively (Revenue) or under CTH 84331190 and 84339000 respectively? - Levy of penalty under Section 114A of the Customs Act - it was held by CESTAT that 'Since the classification of the goods is found to be falling under CTH 8467, hence in terms of Note 2(b) of Section XVI, parts of brush cutter will be classifiable under CTH 84679900.' HELD THAT:- There shall be stay of demand subject to appellant depositing the amount payable by way of duty with the respondent within a period of three months from today. Application disposed off. 2024 (10) TMI 164 Import of Construction equipment - violation of post-importation conditions - Benefit of N/N. 21/2002-Cus dated 1st March 2002 denied - import of rotary piling rig R-625 serial no. 2553 and its accessories - it was held by CESTAT that 'the pre-importation condition, which is neither included in the undertaking for continuing obligation under the notification nor mandated to be so in the notification, cannot be held to have been deniable after the eligibility was determined at the threshold. Consequently, there is no breach leading to invokability of section 28 of the Customs Act, 1962 and/or section 111 of the Customs Act, 1962.' HELD THAT:- Taking note of the status of the parties, it is not required to interfere in the matter. The Civil Appeals are dismissed. 2024 (10) TMI 163 Seeking rectification of mistake apparent in the record - it was held by CESTAT that ' As no further evidence of non-applicability of customs law was brought on record, the findings of the Tribunal cannot be said to be flawed ' - HELD THAT:- Let notice be issued on the application seeking condonation of delay as well as on the Civil Appeal. 2024 (10) TMI 162 Maintainability of appeal - monetary threshold of the tax effect for filing an appeal - HELD THAT:- By a Circular dated 6 August 2024 of the Revenue Division, Judicial Cell (Central Board of Indirect Taxes Customs), Ministry of Finance, the monetary threshold of the tax effect for filing an appeal to the Supreme Court has been increased from Rupees two crores to Rupees five crores. The Additional Solicitor General has confirmed that the tax effect in the present matters is less than Rupees five crores. The present Civil Appeals and Special Leave Petition are disposed of. 2024 (10) TMI 161 Compounding of the offence under Section 137 (3) of the Customs Act, 1962 - illegal carrying of the foreign currency - HELD THAT:- The petitioners has been unable to point out any ground on which the impugned order can be faulted. The only submissions made by him is that the petitioners were merely carriers and the said amounts as determined as a compounding fee is in the upper band of the permissible limit - the said amounts as determined, is a small fraction of the currency being carried by the petitioners. No interference with the impugned order is called for in these proceedings under Section 226 of the Constitution of India. However, the petitioners are granted further thirty days from date to deposit the said amounts as determined and furnish the proof of payment of compounding fee to the Compounding Authority. Petition disposed off. 2024 (10) TMI 160 Challenge to final assessment of imported goods under incorrect customs tariff heading - UPVC Profiles - to be classified under Customs Tariff Heading (CTH) 3916 2019 or under a Customs Tariff Heading (CTH) 3925 2000? - contrary to the mandate of Regulation 6(3) of the Customs (Finalization of Provisional Assessment) Regulations, 2018 - HELD THAT:- There are no documents forthcoming from the respondent to indicate that the petitioner had indeed accepted the classification of the imported item under the Customs Tariff Heading (CTH) 3925 2000. The data that is available in the Check List dated 17.04.2021 indicates that the petitioner has taken a categorical stand that the imported item was UPVC profiles, merits classification under the Customs Tariff Heading (CTH) 3916 2019. That apart, it is noticed that import by the petitioner from the Gujarat Pipavav Port Limited has been now assessed under the Customs Tariff Heading (CTH) 3916 2019 attracting 10% customs duty. There shall be a positive direction to the respondent to pass a fresh order on merits in accordance with Regulation 6(3) of the Customs (Finalization of Provisional Assessment) Regulations, 2018 within a period of six weeks from the date of receipt of a copy of this order - Writ Petition is disposed of. 2024 (10) TMI 159 Classification of imported goods - LC PUFA Mix Oil with Sofinol (edible grade) - to be classified under CTH 15079010 or under CTH 15179090? - confiscation - penalty - HELD THAT:- The importer M/s. Nestle India vide their technical writeup dated 10.05.2013 and 15.05.2013 had conveyed to the Department that they have imported a number of items for manufacture of their final products. Since the product imported was composed of 3 vegetable oils and was of food grade suitable for application in nutritional products that the importer was under bonafide impression that the product imported is classifiable under 1507. However, on being pointed out the importer initiated the process of re-considering the classification not only this had voluntarily deposited the differential duty of Rs.38,43,921/- with respect to the past 6 bills of entry as brought to notice by the Department. These facts are sufficient for us to hold that the importer had misclassified the goods to be imported. But penalties are not imposable in every case of mis-declaration. Law has been settled that mis-classification is different from mis-declaration. This Tribunal Calcutta Bench in the case of Unique Plastic Industries vs. Commissioner of Central Excise Calcutta reported in [ 2002 (6) TMI 273 - CEGAT, KOLKATA] has held that wrong claim of classification or availing wrong benefit of exemption Notification by itself does not amount to suppression or mis-declaration unless there are certain facts which were required to be disclosed by the assessee but have not been disclosed. The Delhi Bench of this Tribunal also in the case of KIRTI SALES CORPN. VERSUS COMMR. OF CUS., FARIDABAD [ 2008 (5) TMI 555 - CESTAT, NEW DELHI ] has held that to constitute misdeclaration the declaration must be intentional. Misdeclaration cannot be understood as same as wrong declaration. The imposition of penalty cannot be automatic. It has to pass the test of mens-rea as has been held by Hon ble High Court of Punjab and Haryana in the case of COMMISSIONER OF CUSTOMS, AMRITSAR VERSUS KAMAL KAPOOR [ 2006 (12) TMI 152 - HIGH COURT OF PUNJAB HARYANA AT CHANDIGARH ]. There are no evidence of presence of mens-rea at-least with the appellant CHA to deliberately and intentionally mention the wrong classification with an intent to evade the Customs Duty - It cannot be imposed in the cases where there is a technical or venial breach of the provisions of act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute. Hon ble Court also clarified that the discretion to impose a penalty must be exercised judicially. Penalty u/s 112 B of the Customs Act, 1962 - HELD THAT:- The main argument of the department that the appellant has violated the provisions of CBLR is denied to be the sole ground for imposing penalty upon appellant CHA under section 112 B of the Customs Act, 1962. The order imposing penalty is therefore liable to be set aside for the said reason. Also for the reason that the Show Cause Notice has not invoked the specific sub clause of section 112B - The Apex Court in the case of AMRIT FOODS VERSUS COMMISSIONER OF CENTRAL EXCISE, UP. [ 2005 (10) TMI 96 - SUPREME COURT ] has held that when a particular clause of the provision has not been invoked in the Show Cause Notice nor has been specified in the adjudication order. The order imposing penalty is waived and is liable to be set aside. Penalty imposed under 114 AA - HELD THAT:- Since provision 114 AA is against the fraudulent exporters we hold that the same is wrongly invoked for penalizing the Customs House Agent - penalty even under 114AA has wrongly been imposed upon the appellant-CHA, same is liable to be set aside. The impugned order is set aside - appeal allowed. 2024 (10) TMI 158 Classification of imported goods - Aluminum PS Printing Plates - to be classified under CTH 84425020 or under CTH 3701? - N/N. 51/2012 dated 03.12.2012. Whether the goods imported by the respondent-importer have rightly been reported as CTCP printing plates attracting antidumping duty in terms of Notification No. 51/2012 dated 03.12.2012 as is the case of department or the goods are the aluminum PS printing plates to which there is no anti-dumping duty liability as is the case of the respondent? - HELD THAT:- It is coming from the show cause notice itself that another notification no. 25/2014-Cus.(ADD) dated 09.06.2014 imposes anti-dumping duty on pre sensitized aluminium plates at the rate of .22 USD per kg. The Notification No. 25/2014 dated 09.02.2014 is perused which has been issued pursuant to the review in matter of continuation of anti- dumping duty on imports of pre-sensitized positive offset aluminum plates of thickness ranging from 1.5 mm to .40 mm falling under Chapter 37, 76 or 84. Pursuant to the findings of said review, the notification 25/2014 had extended anti-dumping duty on PS aluminum plates originating in or exported from China PR at the rate of .22 per USD per kg for a period of 5 years. It becomes clear that though the plates imported by the respondent are not proved to be CTCP aluminum plates but these admittedly are pre sensitized aluminum plates against which also there is an imposition of anti dumping duty w.e.f. 10.03.2014 till 09.03.2019. The impugned Bill of Entry is of February, 2015. Hence it stands clear that the respondentimporter is liable to pay anti-dumping duty at the rate of .22 USD per kg. Commissioner (Appeals) has ignored the said notification while setting aside the order of imposition of ADD by the original adjudicating authority. Though the quantum confirmed by original authority has to be recomputed at the .22 USD instead of .40 USD per kg. It is apparent from the documents placed on record by the department in the form of test memos and test reports that the goods imported through Bill of Entry No. 8422708 dated 25.02.2015, the country of origin is China. The sample thereof had thickness of 0.27 mm. It stands clear that both these parameters also confirm the criteria specifed under Notification No. 25/2014 dated 09.06.2014. As such it is held that the entire demand of anti dumping duty on the impugned goods has wrongly been set aside. The anti dumping duty at the rate as prescribed in Notification No. 25/2014 is still liable to be recovered from the respondentimporter. Whether the goods imported are liable to be classified under CTH 3701 as alleged by department instead of CTH 84425020 as declared by the respondent the respondent is liable to pay additional BCD? - HELD THAT:- While going through the Chapter notes and explanatory notes of 8442 no doubt 84425020 include plates, cylinders and other printing components prepared for printing purposes but there has been an exclusion clause to this section note according to which the sensitized plates (consisting of metal or plastics, coated with a sensitized photographic emulsion or of a sheet of photo sensitive plastic, whether or not affixed to a support of metal of other material) are excluded. There is no denial to the fact that the imported aluminum plates are sensitized plates. Hence, the plates are excluded from Chapter 8442. Otherwise also, as already observed above 8442 mainly talks about equipments and machines for preparation of printing plates whereas CTH 3701 talks specifically about photographic printing plates. Hence the goods in question are more precisely and specifically classifiable under CTH. The Hon ble Supreme Court in the case LML LTD. VERSUS COMMISSIONER OF CUSTOMS [ 2010 (9) TMI 12 - SUPREME COURT] has held that the safe guide to resolve dispute on tariff classification is internationally accepted nomenclature emerging from Harmonized System of Nomenclature (HSN). HSN explanatory notes are the dependable guide for interpretation of Customs Act - the Commissioner (Appeals) has committed an error while holding that goods imported fall under CTH 8442 based whereupon the demand of differential amount of basis customs duty is held to have been wrongly been set aside. The findings of Commissioner (Appeals) are hereby set aside. The anti dumping duty at the rate .22 USD per kg is ordered to be recovered from the respondent-importer. In addition the differential BCD amounting to Rs. 1,43,233/- along with the interest is also held to be the respondent-importer s liability - the original order imposing the penalty of Rs. 2.40 lakhs under Section 112(a) and the same amount of penalty under Section 114AA of the Customs Act as was imposed by the original adjudicating authorities, restored - the order of Commissioner (Appeals) is hereby set aside and the department s appeal stands allowed. Insolvency & Bankruptcy 2024 (10) TMI 157 Application has been filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 by the Applicant/Personal Guarantor to initiate proceeding in terms of in terms of Rule 6 of the IB (AAA for IRP for PGCD) Rules, 2019 - HELD THAT:- In the present case no document is annexed with the application which suggests that guarantee is invoked by the Respondent Bank. The Hon ble NCLAT in its decision in the matter of Amanjyot Singh Vs. Navneet Kumar Jain Ors. [ 2023 (1) TMI 253 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] has upheld the view taken by NCLT, Delhi dismissing an application filed by the Appellant under section 94. Therefore, by looking at the facts of the present case and the above case, the present application is filed without any cause and is premature. Petition dismissed. 2024 (10) TMI 156 Liquidation of the Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The assets of the Corporate Debtor were under attachment by the Directorate of Enforcement under the provisions of the PMLA, 2002 and considering the bleak chances of insolvency resolution amid the ongoing investigations and attachment of assets, the CoC had resolved in its 06th Meeting held on 05th April, 2019 to liquidate the Corporate Debtor by a majority of 90.16% voting in favour. The Applicant informed the CoC about his personal difficulty to act as a Liquidator and it was thus decided by the members of CoC in the 7th Meeting that if the Resolution Professional did not provide his consent, then the appointment of liquidator will be in the manner as envisaged u/s 34 of the Code. Accordingly, in the Eighth CoC Meeting held on August 01, 2019, the committee resolved to appoint Mr. Santanu T. Ray to act as the Liquidator of the Corporate Debtor and the written consent of Mr. Santanu T. Ray to act as the Liquidator of the Corporate Debtor has also been placed on record. The Financial Creditor has also filed M.A. No. 2740 of 2019 before this Tribunal proposing the name of Mr. Santanu T. Ray in place of Mr. Vijay Kumar Garg, to act as Liquidator of the Corporate Debtor. The Hon ble Supreme Court in the matter of K. Sashidhar Versus Indian Overseas Bank Ors [ 2019 (2) TMI 1043 - SUPREME COURT ] has held that the decisions of CoC based on its commercial wisdom are non-justiciable. The CoC with requisite voting as given under Section 33(2) has approved the liquidation of Corporate Debtor in view of bleak chances of receiving any resolution plan for the reasons discussed hereinbefore. This Tribunal has very limited powers of judicial review in such matters of commercial wisdom. This Bench is of the opinion that the Corporate Debtor is required to be liquidated in the manner as laid down under the Insolvency Bankruptcy Code, 2016 - Application allowed. 2024 (10) TMI 155 Fraudulent transactions - section 66 of the Insolvency and Bankruptcy Code, 2016 - Conversion of Share Application Money to Unsecured Loan - Conspicuous Investments into Related Parties - investment into related parties - Unaccounted rental income. HELD THAT:- Perusal of the provision of section 66 of IBC requires a Resolution Professional to establish that 'business' of a Corporate Debtor has been carried on with intent to defraud creditors or for any fraudulent purpose. Thus, this Adjudicating Authority is bound to examine and satisfy itself whether the impugned business/transactions attribute malice and thus constitute fraud. Perusal of the judgement in the case Union of India v. Chaturbhai M. Patel Co. [ 1975 (12) TMI 176 - SUPREME COURT ] would make it abundantly clear that for a fraud like any other charge whether made in civil or criminal proceedings, must be established beyond reasonable doubt. In the present case, the Applicant for all the four impugned transactions has primarily relied on the Transaction Audit alone which is also clearly disputed by the respondents. It is also noteworthy to highlight that Section 66 of the Code vide explanation contained therein has set up a rebuttable presumption in favour of the erstwhile directors of the Corporate Debtor. This presumption can only be rebutted by providing adequate, material proofs and pleadings so as to establish fraudulent intent and knowledge of the fraudulent intent at the very inception of the transaction and not later. Conversion of share application money - HELD THAT:- It is the admitted position that the money paid as share application money was held by the Corporate Debtor and that no shares were issued for the same. Further, the infusion of capital was subsequently converted into debt and the same would not constitute as fraudulent transaction. Investment into related parties - HELD THAT:- The respondents have furnished accounts and explained the investments. It is also noteworthy to highlight that even in the report of the Transaction Auditor, it was suggested that in order to infer and ascertain the whole picture, a consolidated transaction audit of the group companies was necessary. The investments made thereof are not made in any manner prejudicial to the interest of the Corporate Debtor, its creditors or its stake holders. That all the investments were made in accordance with the provision of 186 of the Companies Act, 2013 at arm's length. Thus, the investments cannot be concluded as fraudulent trading under section 66 of the Code. Unjustified Cash Withdrawal on Account of Salaries - HELD THAT:- After 2016, no payment in the name of salary to employees were made by the Corporate Debtor. Assuming that the payments made in the name of salaries were made proximate to the commencement of Corporate Insolvency Resolution process and, there may be a possible suspicion, however, in the present case, there is no disbursement after the year 2016. Hence, this Adjudicating Authority cannot conclude that these salaries were disbursed for defrauding the creditors of the Corporate Debtor. Unaccounted Rental Income - HELD THAT:- The applicant has failed to establish with material and reason as to how and why these agreements were entered into are for the purpose of defrauding the creditors of the Corporate Debtor. The applicant has only suspicion on the genuineness of the transactions and has not sought for any application to setaside the agreements as no material is available to establish the same. Thus, it is concluded that the Applicant has failed to establish a case for intervention under section 66 of the Code. Thus, upon detailed consideration of all the materials placed on record, this Adjudicating Authority holds that the Application has been filed on mere suspicion and the Resolution Professional has not established a case of fraudulent trading under section 66 of the Code - application allowed. PMLA 2024 (10) TMI 154 Money Laundering - seeking grant of Regular Bail - Predicate Offence - paying illegal gratification to BSF personnel deputed on the Border - Applicant was a party to cattle-smuggling in so much as he facilitated the same for money considerations - HELD THAT:- In the recent decision of Manish Sisodia vs. Central Bureau of Investigation, [ 2023 (11) TMI 63 - SUPREME COURT] , the Hon ble Supreme Court observed that right of liberty guaranteed under Article 21 of the Constitution of India is a sacrosanct right which needs to be accepted even in cases where stringent provisions are incorporated through special laws. It was held that prolonged incarceration before being pronounced guilty of an offence, should not be permitted to become punishment without trial. It was further observed that fundamental right of liberty provided under Article 21 of the Constitution is superior to statutory restrictions and reiterated the principle that bail is the rule and refusal is an exception . In the present case, the allegations are that the Applicant was a party to cattle-smuggling in so much as he facilitated the same for money considerations. The investigations qua the Petitioner are already complete as the Complaint has been filed in the Court. Pertinently, the Applicant was named only in First Supplementary Charge Sheet. He is not a flight risk, considering his position of being a Commandant in the BSF and that he has deep roots in the Society. The evidence being essentially documentary, is not likely to be tampered or the witnesses influenced. The Applicant is admitted to bail subject to fulfilment of conditions imposed - bail application allowed. 2024 (10) TMI 153 Money Laundering - disclosure of the source of income to acquire Anil Marriage Hall - challenge to attachment order under Prevention of Money Laundering Act, 2002 - HELD THAT:- It is despite an opportunity to the appellant to produce the CC loan limit on the receipt of the notice from the Adjudicating Authority but no documents was produced. In fact, notice under section 8 (1) of the Act of 2002 was given to disclose the source of income but despite an opportunity for it, no document was submitted. The bank statement has been filed along with the appeal. The source of it has not been disclosed. The amount of Rs. 41,49,807/- was deposited in the bank account in cash. No justification for deposit of the amount in cash could be given by the appellant and that too when it was not a small amount but was more than Rs. 41 lakhs. No transaction of M/s Amit Traders could be proved - the appellant could not give explanation to the admission made by the deceased appellant for embezzlement of Rs. 65 lakhs and further admission that the amount was used for the construction Anil Marriage Hall in Rajinder Nagar Colony, Fatehpur. The land was otherwise purchased partly in the name of deceased appellant s wife on 01.08.2005 and remaining in the name of deceased appellant on 02.03.2006. The source of purchase of land has also not been disclosed. The Investigating Officer has analyzed the bank account of the deceased appellant and his family members to make a proper scrutiny but no source for transfer of amount inter-se was found except in the account number 2800 in District Cooperative Bank which was also not sufficient to substantiate the pleas and arguments raised by the counsel for the appellant. The allegation for embezzlement is not levied only on the deceased appellant but even others who said to have taken money out of the bogus cheques of the farmers and it was embezzled in connivance with each other. The charge sheet pursuant to the FIR has already been filed. There are no case to cause interference in the order passed by the Adjudicating Authority - appeal dismissed. 2024 (10) TMI 152 Money Laundering - retention/seizure/freezing of documents, digital records, and bank accounts by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act, 2002 - HELD THAT:- After the completion of investigation, prosecution complaint is already filed by respondent ED, wherein present appellants along with other family members of Ashu Mehra are arrayed as accused persons. Even otherwise, the aforesaid properties are stated to be mentioned in the list of properties for the purpose of confiscation in case of conviction, in prosecution complaint case under PMLA. Therefore, the impugned order passed by Ld. Adjudicating Authority was just an interim order/step to protect the same, till the conclusion of trial. There are no illegality in the impugned order. Therefore, the Ld. Counsel for the appellants not agreed upon and hence, the present appeals are liable to be dismissed being devoid of any merits. However, seeing the fact that prosecution complaint is already filed, the present appellants are entitled to the copies of all relied upon documents/seized material and he has right to apply for release of all un-relied documents (if any), if the same are not required for any further investigation. The present appeals are hereby dismissed. Service Tax 2024 (10) TMI 151 Demand under the head Commercial or industrial construction service - Eligibility for the benefit of N/N. 01/2006-S.T dated 01.03.2006 - usage of materials - claim of the appellant is that they have executed all the Work Orders along with materials and hence, they are eligible for the benefit of the Notification No. 01/2006-S.T. dated 01.03.2006 - Extended period of Limitation - Demand of service tax confirmed in the impugned order under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service'. Demand under the head Commercial or industrial construction service - Eligibility for the benefit of N/N. 01/2006-S.T dated 01.03.2006 - usage of materials - claim of the appellant is that they have executed all the Work Orders along with materials and hence, they are eligible for the benefit of the Notification No. 01/2006-S.T. dated 01.03.2006 - HELD THAT:- It is the submission of the Appellant that they have evidence on record to show that they have used 'materials' while executing all the Work Orders. It is their submission that if the issue is remanded back to the adjudicating authority, they will be able to prove the usage of 'materials' in respect of all the Work Orders (where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 was not extended). The demands confirmed in the impugned order under the category of 'Commercial or industrial construction service is set aside and the matter remanded back to the adjudicating authority for the purpose of verification of usage of materials in respect of all the Work Orders (where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 was not extended) and examine the eligibility of the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 in respect of those Work Orders as well. The appellant is directed to produce all the documents evidencing that materials have been used in the said Work Orders. Extended period of Limitation - HELD THAT:- The appellant has not collected Service Tax from its customers. Further, the appellant was of the view that they were eligible for the benefit of exemption under Notification No. 01/2006-S.T. as they were using materials. Thus, suppression of facts with intention to evade the tax has not been established in this case. The demand of Service Tax from the appellant by invoking the extended period of limitation is not sustainable - The demand in the instant case has been raised for the period from 01.10.2007 to 30.09.2012 while the impugned Show Cause Notice was issued on 12.04.2013. Accordingly, the demand is to be restricted to the normal period of limitation and the verification by the adjudicating authority, is also to be restricted to the normal period of limitation alone. Demand of service tax confirmed in the impugned order under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service' - HELD THAT:- The appellant has not contested the demands of service tax on these categories. Accordingly, the demands of service tax along with interest confirmed under these categories upheld. Since there is no evidence brought on record to establish suppression of facts with intention to evade payment of tax in respect of these demands, no penalty imposable on the appellant with respect to these confirmed demands. Appeal disposed off. 2024 (10) TMI 150 Appropriation of Rs. 11,00,000/- deposited under protest - invocation of extended period of limitation - whether the amount of Rs. 11,00,000/- deposited by the appellant under protest during investigation could have been appropriated by the Commissioner in the impugned order for the period covered by the extended period of limitation, which demand was dropped by the Commissioner for the reason that the extended period of limitation could not have been invoked? - HELD THAT:- In Federation of Andhra Pradesh Chamber of Commerce and Industry [ 2017 (5) TMI 1199 - CESTAT HYDERABAD] , the Tribunal held that any payment made under protest cannot be considered as acceptance of the liability - the appropriation of an amount of Rs. 11,00,000/- towards a time barred claim is not justified. Whether the extended period of limitation could have been invoked in the facts of circumstances of the case? - HELD THAT:- It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be wilful since wilful precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression wilful before suppression of facts under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful and there should also be an intent to evade payment of service tax. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT ], the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The burden of proving that the appellant had suppressed facts with an intent to evade payment of service tax was clearly upon the department. It was necessary for the department to illustrate any positive act on the part of the appellant. The investigation started in October 2012 and continued for a period of almost two years. The entire records, including the balance sheets were available with the department and no new facts came to the notice of the department when the show cause notice was issued on 22.04.2014. The department has failed to substantiate that the appellant suppressed material facts with an intention to evade payment of service tax. There is no error in the order passed by the Commissioner holding that the extended period of limitation could not have been invoked in the facts and circumstances of the case. Appeal filed by the department against that part of the order passed by the Commissioner that holds that the extended period of limitation under the first proviso to section 73(1) of the Finance Act could not have been invoked is dismissed. 2024 (10) TMI 149 Disallowance of Cenvat Credit taken by the Appellant on Input Services used in the BTS (Base Transceiver Station) Towers/Shelters - HELD THAT:- This appeal was heard earlier also by this Tribunal, when vide order dated 28.6.2019 the Bench referred the issue to the Larger Bench while taking note of the decision of the Hon ble High Court of Judicature at Bombay in the matter of Bharti Airtel [ 2016 (3) TMI 165 - CESTAT NEW DELHI (LB)] where the issue of admissibility of Cenvat Credit in respect of input used for erecting and commissioning the telecom towers was decided against such admissibility, whereas the Mumbai Bench of Tribunal in appellant s own cases [ 2019 (9) TMI 837 - CESTAT MUMBAI] , [ 2016 (9) TMI 1136 - CESTAT MUMBAI] and [ 2016 (10) TMI 1197 - CESTAT MUMBAI] and few other co- ordinate Benches allowed the Cenvat credit in respect of input services used for commissioning and erection of towers, which according to the referral Bench, is contrary to the decision of Hon ble High Court in the matter of Bharti Airtel. Accordingly, the said Bench referred the matter to the Hon ble President of the Tribunal for constitution of larger Bench to consider the issue. The referral Bench has referred the issue to the Larger Bench because according to them the issue about admissibility of Cenvat Credit in respect of input services used for erection and commissioning of Telecom Towers by the Telecom Service providers have been decided by various Benches of the Tribunal without examining the issue in the light of the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004 as well as the decision of the Hon ble Bombay High Court in the matter of Bharti Airtel. As per the referral Bench the Hon ble High Court while deciding the issue about admissibility of Cenvat Credit against the assessee therein, did not make any distinction in respect of inputs and input services - It also observed that the services in respect of which the Cenvat credit has been claimed are not for providing the output services but have been used for commissioning and erection of telecom towers, which have been held by the Hon ble High Court as immovable property, not goods and thus the Cenvat chain is broken the moment it is admitted that these services have been used for erection and commissioning of the immovable property. The Larger Bench on the aforesaid issues/doubts raised by the referral Bench, while answering the reference, has observed that the decision in Bharti Airtel is limited to input as source of credit consequent on finding of ineligibility for claim as capital goods and, therefore, not relevant in dispute over entitlement of input service as credit. There is no break in CENVAT chain insofar as input service is concerned. The impugned order is set aside and the appeal filed by the appellant is allowed. 2024 (10) TMI 148 Non-payment of service tax on consideration towards Sale of Service - making payment of amount of pre-deposit by way of DRC-03 challan - recovery with interest and penalty - HELD THAT:- The Principal Bench of the Tribunal in TINNA RUBBER INFRASTRUCTURE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CGST, DELHI SOUTH [ 2024 (3) TMI 838 - CESTAT NEW DELHI] had held that the payment made through DRC-03 is not permissible under Section 35F. The Tribunal in the case of M/S ARMY WELFARE HOUSING ORGANISATION VERSUS COMMISSIONER OF CENTRAL GOODS, SERVICE TAX, DELHI SOUTH [ 2024 (3) TMI 854 - CESTAT NEW DELHI] has observed that there is no provision of using DRC-03 for the purpose of pre-deposit. Apparently and admittedly, DRC-03 is not the challan generated on CBIC GST/( ICE GATE), e-payment portal. Resultantly, it becomes clear that there was no payment of pre-deposit amount i.e. 7.5% of the amount equivalent to 7.5% of the demand confirmed vide the impugned OIO, at the time of filing the appeal before Commissioner (Appeals). Since it was statutory payment there was no mandate on Commissioner (Appeals) to specifically notify the non-payment of amount of pre-deposit prior rejecting the appeal on the said ground. Hence even if the letter dated 2.1.2023 was not received by the appellant. No benefits seems extendable in favour of the appellant. There are no infirmity in the order under challenge. Same is hereby upheld. The payment at the time of filing the appeal before this Tribunal of the amount equivalent to 10% of the demand confirmed by the impugned OIO (including the aforesaid 7.5 % thereof), it being the payment made after the order under challenge, it is insufficient to affect the legality and reasonably in the order under challenge - appeal dismissed. 2024 (10) TMI 147 Classification of services - export of services or not - services provided by Grant Thornton, India to develop the Grant Thornton brand name - payment received by the respondent towards reimbursement of Brand Development Expenses is business auxiliary service or not - intermediary services or not. HELD THAT:- The relevant clauses of the Cost Reimbursement Agreement do not indicate that Grant Thornton, India was to act as an intermediary . The activities undertaken by Grant Thornton, India are for promoting the brand name of Grant Thornton in India. Grant Thornton in India had to provides services on its own account and merely because Grant Thornton, India outsourced certain services would not mean that it became an intermediary . The transaction would, therefore, not be covered by rule 9 of the 2012 Rules. Under rule 3 of the 2012 Rules, which would be applicable in the present case, the place of provision of service shall be the location of the recipient of service. The recipient of service is Grant Thornton, London, which is outside India. There is no dispute that the payment for the services had been received by Grant Thornton, India in covertable foreign currency. Thus, the conditions set out in rule 6A of the Service Tax Rules 1994 stand satisfied. Thus, there can be no manner of doubt that the services provided by Grant Thornton, India to Grant Thornton, London would be export of services . This issue was examined by the Tribunal in M/S SUNRISE IMMIGRATION CONSULTANTS PRIVATE LIMITED VERSUS CCE ST, CHANDIGARH [ 2018 (5) TMI 1417 - CESTAT CHANDIGARH] . The Tribunal considered whether the assessee would be an intermediary with reference to the services provided to universities, colleges and banks and whether any service tax could be levied. The observations of the Tribunal are 'As the appellant did not arrange or facilitate main service i.e. education or loan rendered by colleges/banks. In that circumstances, the appellant cannot be called as intermediary.' The definition of intermediary services in section 2(13) of the Integrated Goods and Service Tax Act, 2017 is pari-materia with the definition of intermediary services in rule 2 (f) of the 2012 Rules. The meaning of intermediary services has been considered by the Punjab and Haryana High Court in GENPACT INDIA PVT. LTD. VERSUS UNION OF INDIA AND OTHERS [ 2022 (11) TMI 743 - PUNJAB AND HARYANA HIGH COURT] . The issue that arose for consideration before the High Court was whether the services rendered by the petitioner under the agreement could be treated as intermediary services under the provisions of the IGST Act and it was held that 'The circular after making a reference to the definition of intermediary both under Rule 2(f) of the Place of Provision of Service Rules, 2012 and under Section 2(13) of the IGST Act clearly states that there is broadly no change in the scope of intermediary services in the GST regime vis-a-vis the service tax regime except addition of supply of securities in the definition of intermediary in the GST law.' The Delhi High Court in M/S. ERNST AND YOUNG LIMITED VERSUS ADDITIONAL COMMISSIONER, CGST APPEALS -II, DELHI AND ANR. [ 2023 (3) TMI 1117 - DELHI HIGH COURT] also considered whether the services claimed were actually exported and convertible foreign exchange was received by the party in lieu of the said export of services. The observations of the High Court are 'the Services rendered by the petitioner are not as an intermediary and therefore, the place of supply of the Services rendered by the petitioner to overseas entities is required to be determined on basis of the location of the recipient of the Services. Since the recipient of the Services is outside India, the professional services rendered by the petitioner would fall within the scope of definition of export of services as defined under Section 2(6) of the IGST Act.' The aforesaid discussion leads to the inevitable conclusion that Grant Thornton, India is not an intermediary and that the services provided by it to Grant Thornton, London are export of services . The impugned order dated 29.03.2018 passed by the Commissioner dropping the proceedings initiated against Grant Thornton, India by the show cause notice dated 21.10.2015 does not, therefore, suffer from any infirmity - The appeal is, accordingly, dismissed. 2024 (10) TMI 146 Non-payment of service tax - car parking fee under the category renting of immovable property service - reimbursement of electricity charges under the category of management, maintenance and repair service - management, maintenance and repair service on signage charges - inadmissible CENVAT Credit - interest - penalty. Demand of Service Tax of Rs.8,99,864/- on car parking fee under the category of renting of immovable property service - HELD THAT:- The issue is no longer res integra as the Hon ble Delhi High Court has decided this issue in the case of MAHESH SUNNY ENTERPRISES PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX COMMISSIONERATE [ 2014 (2) TMI 1001 - DELHI HIGH COURT] where it was held that ' Now, parking services - regardless of wherever it is carried on - stand excluded in entirety. Therefore, it is not open now for the revenue to argue that it falls within the expression airport service under Section 65(105)(zzm). Parliament would have manifested its intention to bring to tax a part of the activity, carried out in airport premises, if it wished, in more express and clearer terms.' In terms of the decision of the Hon ble Apex Court in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [ 2006 (4) TMI 127 - SUPREME COURT] , when a Show Cause Notice has already been issued on the same issue, another Show Cause Notice cannot be issued by invoking the extended period of limitation. In view of the above, this demand is not sustainable on the ground of limitation also. Demand of Service Tax amounting to Rs.42,03,908/- on reimbursement of electricity charges under the category of management, maintenance and repair service - HELD THAT:- The assessee-appellant has collected electricity charges on actual consumption basis and paid the same to CESC Limited. Hence, there is no liability on the assessee-appellant to pay Service Tax on this amount of reimbursement collected from the shop owners, as they acted as a 'Pure agent'. This issue is no longer res integra as this Bench has already examined this issue in the case of M/S CHOICEST ENTERPRISES LIMITED VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA. [ 2024 (7) TMI 1533 - CESTAT KOLKATA] where it was held that ' the electricity charges are not liable to service tax' - the demand of Service Tax of Rs.42,03,908/- confirmed on reimbursement of electricity charges is not sustainable. Accordingly, we set aside the demand on this count. Demand of Service Tax amounting to Rs.36,790/- on signage charges under the category of management, maintenance and repair service - HELD THAT:- This demand has been raised for the period from 01.10.2006 to 31.10.2009 by issuance of the Show Cause Notice dated 06.01.2012. It is observed that the entire issue of collection of signage charges was well within the knowledge of the Department and thus, suppression of facts with the intention to evade payment of tax has not been established in this case. Accordingly, this demand is not sustainable on the ground of limitation. Reversal of CENVAT Credit of Rs.30,534/- - HELD THAT:- The assessee has paid Service Tax on the full invoice value. However, in some cases, they have paid lesser amount to the service provider. This does not mean that the assessee is not entitled to avail full Service Tax credit which has been paid to the exchequer. Accordingly, the demand for reversal of CENVAT Credit of Rs.30,534/- confirmed in the impugned order is not sustainable. Interest - penalty - HELD THAT:- As the demand itself is not sustainable, the question of demanding interest or imposing penalty does not arise. Accordingly, all the penalties imposed in the impugned order are set aside. The appeal filed by the appellant - assessee is allowed. Central Excise 2024 (10) TMI 145 CENVAT Credit - denial on the ground that the the Excise Duty collected from their buyers is required to be recovered under Section 11D of the Central Excise Act, 1944 - time limitation. HELD THAT:- The appellant, though is primarily in the business of manufacture of SS Hose Assembly, Flange Fittings, has also been carrying on the other business activities by way of procuring the MS Round, TMT Bars etc. After undertaking some work on them, was clearing the same to his buyers. On receipt of such materials under proper Excise Invoice from their vendors, they were taking the Cenvat Credit. At the time of clearance of these goods to their buyers, the entire Cenvat Credit taken was being reversed. As a matter of fact, from the Show Cause Notice, it is seen that the demand is towards Cenvat Credit of Rs. 1,46,75,425/- and even for under Section 11D, the same amount has been demanded. It shows that the entire Cenvat Credit taken was properly reversed by them when the goods were cleared to their buyers. In such a case, it would be more in the nature of clearance of goods under Rule 3(5) of CCR, 2004 rather than clearance of finished goods - the Department had not raised any objection for the Excise Duty payments made towards such transactions being carried on by the appellant. Both Cenvat Credit taking and Cenvat debiting have been reflected by them in their ER-1 Returns. It is also not the case of the Department that the goods in question were not received by them in their factory or not accounted for by them in their Books of Account. The Appellant has produced documentary evidence to the effect that all the payments towards purchase of these items have been made through banking channels. In such a case, there are no justification on the part of the Revenue to confirm the demand by denying the Cenvat Credit taken. Time limitation - HELD THAT:- There are considerable force in the appellant s argument that the Show Cause Notice has been issued belatedly on 30/09/2013 while the transactions have taken place during the period 2008-10. All the transactions towards Cenvat taking and Cenvat debiting are part of the ER-1 Returns, which are also part of the relied upon documents to issue the Show Cause Notice. Therefore, no case of suppression has been made out against the appellant - the impugned order set aside even on account of time bar. The appeals stand allowed both on account of merits as well as on account of time bar. 2024 (10) TMI 144 Admissibility of credit of service tax paid - input service - place of removal - Goods Transport Agency Service [GTA] availed by the appellant for outward transportation of goods on Free on Road [FOR] destination basis from the factory gate or depot of the appellant to the premises of the customers - Rule 2 (l) of the Cenvat Credit Rules, 2004 - HELD THAT:- The appellant was selling their final products on FOR destination price and has paid the excise duty, which includes the freight also. The evidence placed by the appellant regarding FOR destination sales included the Marketing Circulars, Sales Contract/Agreement, Excise Invoice, Commercial Invoice, Lorry Receipts, Transporter s Bills, Payment Details and Copies of the TR-6 Challans, etc. The invoices supported the submission that the place of removal is customer s premises and the same has been admitted by the Revenue in the show cause notice itself. The functioning of the appellant was to the effect that the customer was charged only for the quantities received by them and in that regard, the transporter appointed by the appellant used to get the acknowledgement copy of the lorry receipts for having delivered the goods to the customers, therefore, the customer pays only for the quantity, which is actually received by him. This shows that the ownership of the goods was transferred at the customer s premises and the appellant bore the risk of loss or damage to the goods during the transit to the destination till the goods finally reaches to the customer s door step. The High Court in AMBUJA CEMENTS LTD. VERSUS UNION OF INDIA [ 2009 (2) TMI 50 - PUNJAB HARYANA HIGH COURT ], therefore, decided in favour of the appellant that the transportation of the goods upto the customer s premises would also be covered within the definition of input service . No doubt, the said order of the Tribunal was passed when the Circular dated 23.08.2007 was in vogue and the definition of input service had been subsequently amended w.e.f. 1.3.2008. However, the final conclusion would remain the same in the present appeal in the light of the subsequent Circular No.1065/4/2018-CX dated 08.06.2018. The impugned order is un-sustainable and needs to be set aside - Appeal allowed. 2024 (10) TMI 143 CENVAT Credit - Goods Transport Agency services for outward transportation of goods - place of removal - period February 2016 to March 2017 - HELD THAT:- The credit of GTA services hinges on the term Place of Removal under Section 4 of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the CENVAT Credit Rules, 2017. The same was examined by the Board vide Circular No.1065/4/2018-CX, F. No.116/23/2018-CX-3, 8th June, 2018 in the light of the following judgments of the Hon ble Supreme Court in the case of CCE vs M/s Roofit Industries Ltd [ 2015 (4) TMI 857 - SUPREME COURT] , CCE vs Ispat Industries Ltd [ 2015 (10) TMI 613 - SUPREME COURT] , CCE, Mumbai-III vs Emco Ltd [ 2015 (8) TMI 200 - SUPREME COURT] and CCE ST vs. Ultra Tech Cement Ltd [ 2018 (2) TMI 117 - SUPREME COURT] , in order to bring clarity to the matter. At para 3 of the Circular, it was stated that the principle laid by the Hon ble Supreme Court was that the place or premises from where excisable goods are to be sold can only be manufacturer s premises or premises referable to the manufacturer. As per the analysis of the various judgments by Board s Circular dated 8.6.2018, in the case of consignments that have been sold on an FOR basis, where the ownership, risk in transit, remained with the seller till goods are accepted by buyer on delivery and till such time of delivery, seller alone remained the owner of goods retaining right of disposal, the benefit of CENVAT credit has to be extended to the seller on the basis of facts of the case and the place of removal has to be recognized as the buyers premises. The impugned order is set aside - appeal allowed. 2024 (10) TMI 142 Eligibility for exemption under N/N. 04/2006 C.E. - denial of exemption on the ground that the 'imported acrylic re processed granules (mix color)' was not covered under the `Waste' because as per Customs Tariff Act, 1975, all the waste, parings, and scraps are covered under Chapter Heading 3915 - HELD THAT:- The issue is no longer res-integra as exactly the same issue has been decided in the appellant s own case INTERCONTINENTAL POLYMER PVT LTD VERSUS C.C.E. S.T. -DAMAN [ 2023 (6) TMI 453 - CESTAT AHMEDABAD] where it was held that ' it is evident beyond the scope of any doubt that the imported plastics granules were nothing but waste and scrap of goods falling under Chapter 39. In the present matter we are of the considered view that imported goods have to be considered as waste scrap of goods falling under Chapter 39 and entitled to above exemption. Hence we do not find any merit in impugned order.' The impugned orders are not sustainable - Appeal allowed. 2024 (10) TMI 141 Self-credit of differential amount - rejection of refund without following the procedure laid down under the N/N. 19/2008 - It is the case of the appellants that they have availed 100% credit in view of the decision of the Hon ble High Court of Jammu Kashmir in the case of M/S RECKITT BENCKISER VERSUS UNION OF INDIA AND OTHERS [ 2010 (12) TMI 237 - JAMMU AND KASHMIR HIGH COURT] - HELD THAT:- In cases where the appellant has taken self-credit in a wrongful manner, the inadmissible credit needs to be recovered, if not reversed by the assessee within the specified period as intimated by the authorities, as if it is a recovery of duty of excise erroneously refunded. In the instant case, it is not on record if the authorities have given any notice to the appellants to reverse the credit and whether any Show Cause Notice to recover the excess credit availed in terms of Section 11A of Central Excise Act, 1944. It is found that it is not legally correct for the Department to reject the same as a refund to be granted. Hon ble Apex Court in the case of CHANDRA KISHORE JHA VERSUS MAHAVIR PRASAD ORS. [ 1999 (9) TMI 948 - SUPREME COURT ] held that 'It is a well settled salutary principle that if a Statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner.' If the law ordains the authority to do a particular thing in a particular manner, the authorities should do the thing only in the prescribed manner and not otherwise. In the instant case, Revenue having not followed the procedure prescribed for recovery of the alleged excess self-credit cannot reject the same. The appellants have already availed the self-credit and therefore, such an order rejecting the credit has no effect and cannot be implemented. Thus, the order becomes superfluous - the alleged wrongful credit has not been held to be so in a proper manner. Therefore, the rejection of cash refund of Rs.34,86,309/- for the month of July 2011 is not legally correct. Out of the claim of refund of Rs.34, 86,309/-, the appellants shall be entitled for refund of an amount, as calculated in terms of N/N. 19/2008 - Appeal allowed. CST, VAT & Sales Tax 2024 (10) TMI 140 Challenge to assessment order on the ground of time limitation - assessment orders passed by the Assessing Officer for the Assessment years 2007-2008 to 2009-2010 were passed within the period of limitation prescribed for completion of the Assessment under the provisions of Pondicherry Value Added Tax Act, 2007 or not - work of powder coating undertaken by the Assessee amounts to execution of works contract or not - powder coating work involves transfer of property or not? HELD THAT:- The definition of work-contract in Section 2(zp) is very wide. It includes any improvement modification, repair or commissioning or any movable or immovable property. Thus, without doubt the work undertaken by the Respondent Assessee for 'powder coating' the products like yokes, links and tubes etc amounts to works contract. Since the activity of powder coating is in the nature of works contract, it is to be construed that there is a transfer of property in the execution of works contract. Therefore, the Respondent-Assessee is liable to pay tax under Section 15(1) of the PVAT Act, 2007. Therefore, both the substantial questions of law answered in favour of the Petitioner-CTO and against the Respondent-Assessee. As per Section 24(1) of the Puducherry Value Added Tax Act, 2007, the Respondent Assessee was required to file a tax return within a period of 15 days after end of the period in such manner as may be prescribed. A return submitted by the dealer along with tax due is to be accepted as self-assessed. As per proviso to Section 24(2) of the Act, the Assessing Authority may select either at discretion or as directed by the Commissioner any dealer for detailed assessment - As per Section 24(4), the Assessing Authority has to serve a notice, on completion of the Assessment and the dealer is required to pay balance of tax in accordance with terms of that notice. As per sub-section (5) to Section 24, no Assessment under Section 24 shall be made after a lapse of three years from the end of the year to which, the returns filed under the Act relates. Admittedly, return pertains to the Assessment year 2007-08 to 2009-2010 as mentioned above. An earlier notice was issued on 05.03.2011 calling upon the Respondent-Assessee to show cause as to the basis on which exemption was claimed for issuance of C-Form for purchases made under Inter-State purchase and was followed by pre- Assessment notice dated 25.09.2014. As far as the present case is concerned, a limitation is prescribed under Section 24(5) of PVAT Act, 2007 for completing assessment. As per Section 24(5), no assessment shall be made after a period of three years from the end of the year to which the return under the Act relates - the test to be applied is whether the notice for completing the assessment was issued within limitation i.e., three years to which the returns relates to. If so, even if the Assessment Order is passed beyond the period of three years, it will be in time. In the present case, since notices were issued on 05.03.2011 i.e., within three years contemplated under Section 24(5) of the PVAT Act, 2007, the assessment orders passed on 12.12.2014, 22.12.2014 and 31.12.2014 are held to have been passed in time. The substantial questions of law framed are answered in favour of the Petitioner- Commercial Tax Department - tax cases allowed. 2024 (10) TMI 139 Dismissal of Revision Application for non-compliance of direction of pre-deposit - HELD THAT:- As the issue involved in this petition with regard to whether the VAT Tribunal was justified in directing the petitioner to pre-deposit the outstanding tax amount in the revisional proceedings filed under Section 75 of the VAT Act is already decided by this Court in the case of M/S LAXMI DYE CHEM VERSUS STATE OF GUJARAT [ 2023 (12) TMI 1353 - GUJARAT HIGH COURT] . This Court, after having considered the provisions of Sections 73, 74 and 75 of the Gujarat Value Added Tax Act, 2003, held ' On bare perusal of Section 75 of the GVAT Act, it does not provide for passing any order of pre-deposit as it is provided under Section 73(4) of the GVAT Act. Therefore, the impugned order of the Tribunal dated 21st March 2023 is beyond the scope of Section 75 of the GVAT Act insisting for pre-deposit to entertain the revision applications filed by the petitioner.' The impugned order dated 25th August 2023 passed by the VAT Tribunal is hereby quashed and set aside. Consequential order dated 29th September 2023 passed by the VAT Tribunal for non-compliance of order dated 25th August 2023 is also required to be quashed and set aside and is accordingly quashed and set aside. Petition allowed. Indian Laws 2024 (10) TMI 138 Prayer for quashing of the criminal proceedings - Section 482 of the Code of Criminal Procedure, 1973 - whether the continuation of the criminal proceedings against the present appellants would be justified or not? - HELD THAT:- In the matters arising out of commercial, financial, mercantile, civil, partnership or such like transactions or the offences arising out of matrimony relating to dowry, etc. or family disputes where the wrong is basically private or personal in nature and the parties have resolved their entire dispute, the High Court should exercise its powers under Section 482 CrPC for giving an end to the criminal proceedings. It is held that the possibility of conviction in such cases is remote and bleak and as such, the continuation of the criminal proceedings would put the accused to great oppression and prejudice. Appeal allowed. 2024 (10) TMI 137 Dishonour of Cheque - acquittal of accused - rebuttal of presumptions - case of petitioner is that the finding of acquittal ought to be reversed as the same is only based on conjectures, and not cogent evidence - HELD THAT:- It is trite law that a Court while considering the challenge to an order of acquittal, in exercise of jurisdiction under Section 378 of the CrPC, is empowered to reconsider the evidence on record and reach its own conclusions, however, it is to be kept in mind that there is a double presumption of innocence in favour of the accused. High Court ought to only interfere with the finding of acquittal if it finds that the appreciation of evidence is perverse. It is also well settled that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque/ respondent received the cheque in discharge of a legally enforceable debt or liability are raised against the accused. On a perusal of the record, it is seen that right from the time of the framing of notice, the statement under Section 313 of the CrPC, and during the course of the trial, Respondent No. 2 denied issuing the cheque and his signatures on the cheque. It is seen that in order to buttress his claim, an application was moved by Respondent No. 2 seeking expert opinion for verification of the signature of Respondent No. 2 and comparison with those appearing on the impugned cheques. It is seen further that the application was allowed, and the original cheques were sent to CFSL for comparison with the admitted signature of Respondent No. 2 on account opening form, vakalatnama, and bail bond. It is pertinent to note that the presumptions under Section 118 and 139 of the NI Act are not absolute, and may be controverted by the accused. In doing so, the accused ought to raise only a probable defence on a preponderance of probabilities to show that there existed no debt in the manner so pleaded by the complainant in his complaint/ demand notice or the evidence. Once the accused successfully raises a probable defence to the satisfaction of the Court, his burden is discharged, and the presumption disappears. The burden then shifts upon the complainant, who then has to prove the existence of such debt as a matter of fact. It is pertinent to note that in terms of the dictum of the Hon ble Apex Court in RAJESH JAIN VERSUS AJAY SINGH [ 2023 (10) TMI 418 - SUPREME COURT] , once Respondent No. 2 was able to raise a probable defence by either leading direct or circumstantial evidence to show that there existed no debt/liability in the manner as pleaded in the complaint/ demand notice/ affidavit-evidence, the presumption raised against him disappeared. It was then for the petitioner to prove as a matter of fact that there in fact existed a debt/liability. Much emphasis has been placed by the petitioner on the fact that the learned Trial Court erred in observing that a sum of ₹5,00,000/- had already been repaid vide debit entry dated 04.03.2010 when the same was debited and not credited to the petitioner s account. Upon a perusal of the impugned judgment, it is apparent that the learned Trial Court had merely made an observation that the petitioner had made an endeavor to prove the transfer of ₹5,00,000/- and the same was repaid vide debit entry dated 04.03.2010. It was further noted that apart from the said sum, no proof was led to establish that apart from ₹5,00,000/- there was any other advancement, albeit as per the petitioner s own stand the loan was advanced through bank transfer. The rationale behind the order of acquittal in the present case was not based on the observation whether the sum of ₹5,00,000/- was repaid or not but the fact that the petitioner had failed to prove that there existed any debt/liability on date, or show the mode and manner of the advancement of loan, or lead any evidence/documentary proof so as to establish how the sum of ₹48,00,000/- was advanced - the petitioner having failed to lead evidence to show the existence of the debt/liability, his contentions that the learned Trial Court erred in observing that ₹5,00,000 was credited, or that the presumptions under Section 118 and 139 of the NI Act were in his favour, do not bolster the case of the petitioner. This Court finds no such perversity in the impugned judgment so as to merit an interference in the finding of acquittal. Consequently, this Court finds no reason to entertain the present petition - The present leave petition is accordingly dismissed.
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TMI Tax Updates - e-Newsletter October 5, 2024

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Rejecting appeal without reasons violates natural justice, undermines objectivity.

Milk manufacturer's tax assessment revoked over flawed show cause notice, Covid-19 impact oversight.

Quashing tax order for violation of natural justice; fresh opportunity granted.

Steel company's GST registration restored after resolving tax credit utilization issue.

GST penalty proceedings initiated by State nullifies Centre's jurisdiction on same matter.

Advance Ruling Authority rejects application due to irrelevant questions not covered under GST Act provisions.

Ride-hailing app not liable for GST on driver services despite e-commerce tag.

Baby carriers classified as textile articles, not vehicle parts. Duty based on value: <=Rs. 1000 @ 5%, >Rs. 1000 @ 12%.

Catering and venue rental combo: GST 5% with ITC limits for 'unspecified premises' events.

Interest charges on loans by HDFC Bank are exempted services for computing 80% GST threshold limit.

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Assessing Officer rightly reopened assessment for potential income escaping tax after search revealed bogus billing.

Taxpayer escapes final assessment order due to officer's delay despite late objection filing.

Revisionary powers under Income Tax Act: Broader interpretation of 'record' crucial for fair adjudication.

Indian bank's foreign currency mobilization expenses allowable; card commission not taxable if debt incurred abroad.

Government grant exemption for Trust: ITAT upholds based on consistency principle.

Tax Dispute Remanded for Reconsideration in Light of Relaxed Delay Condonation Rules.

Assessee's Long-Term Capital Gains wrongly treated as 'undisclosed income'; no admission during search; penalty deleted.

Withholding Tax Credit Denial for Procedural Lapses by Third Parties Unjustified If Income Declared.

Income Tax penalties imposed without due process, failure to issue notice or allow explanation.

Fraudulent tax evasion through sham transactions, artificial losses; exorbitant rates to group entities, interest disallowance on exempt income.

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Customs duty misclassification: Edible oil mix not penalized for lack of intent to evade.

Customs duty upheld on pre-sensitized aluminum printing plates from China.

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Scrutinizing corporate debtor's alleged fraudulent transactions, tribunal clears the air.

Corporate debtor liquidated by creditors amid asset freeze, enforcement probe.

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Accused cleared of cheque dishonor charges due to lack of evidence proving debt.

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BSF Officer Granted Bail in Cattle Smuggling, Bribery Case.

Money laundering suspects' appeals against freezing assets dismissed; evidence access allowed.

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Powder coating business faces tax liability under "works contract" definition; Assessments upheld despite time delays.

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Disputed Tax Payment: Court Rejects Extended Limitation Period for Mere Non-Payment.

Telecom tower erection services eligible for CENVAT credit, overruling previous order.

Global brand promotion reimbursement: Not intermediary service, but exportable auxiliary business.

Mall wins case: Parking not taxable, signage demand time-barred, electricity charges not service.

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Manufacturer cleared goods after availing CENVAT credit, properly reversed; demand unjustified, time-barred.

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TMI Tax Updates - e-Newsletter
October 5, 2024