TMI Tax Updates - e-Newsletter
October 7, 2024

Case Laws in this Newsletter:

GST Income Tax Customs FEMA PMLA Service Tax Central Excise Indian Laws

Articles

1. REVOCATION OF POWER OF ATTORNEY DOES NOT ABSOLVE THE LIABILITIES OF THE ISSUER

   By: DR.MARIAPPAN GOVINDARAJAN

2. Should India seriously consider implementing an inheritance tax?

   By: Aratrik Banerjee

3. Bail may be conditionally granted in cases of fraudulent ITC availment through fake invoices

   By: Bimal jain

4. EU’s Deforestation-Free Regulation challenges, Global Impact, and Opportunities through Trade Agreements like IND-UAE CEPA. -

   By: DrJoshua Ebenezer

5. Karnataka HC granted ad-interim stay on adjudication proceedings on levying IGST on secondment of manpower

   By: Bimal jain

News

1. Advisory on Proper Entry of RR No./Parcel Way Bill (PWB) Numbers in EWB system Post EWB-PMS Integration

2. Advancing industrial growth and empowering local economy main focus of DPIIT in the first 100 days of government

3. Commerce and Industry Minister Shri Piyush Goyal co-chairs 6th India-US Commercial Dialogue in Washington D.C.

4. Secretary Raimondo and Minister Goyal Convene 6th U.S.-India Commercial Dialogue Meetings

Notifications

Companies Law

1. S.O. 4333(E). - dated 3-10-2024 - Co. Law

Amendment in Notification No. S.O. 1647 (E), dated the 5th May, 2016

Customs

2. 06/2024-Customs (CVD) - dated 4-10-2024 - CVD

Seeks to extend the levy of countervailing duty on "Continuous Cast Copper Wire Rod" originating in or exported from Indonesia, Malaysia, Vietnam and Thailand

Circulars / Instructions / Orders

GST

1. INSTRUCTION NO. 04/2024 - dated 4-10-2024

Systemic improvement with respect to mapping / de-mapping of the officers on the GSTN portal

FEMA

2. 18 - dated 4-10-2024

Due diligence in relation to non-resident guarantees availed by persons resident in India

Highlights / Catch Notes

GST

• Robust measures to prevent fraudulent refund sanctions by relieved officers through timely de-mapping from GSTN portal.

  Circulars : This instruction pertains to the systemic improvement regarding mapping and de-mapping of officers on the GSTN portal. It addresses an incident where a relieved officer fraudulently sanctioned a refund due to failure in de-mapping from the portal. To prevent such occurrences, it recommends immediate de-mapping upon relieving, monitoring by supervisory officers, compliance reporting to jurisdictional authorities, and clear accountability of concerned officers responsible for mapping/de-mapping. Principal Commissioners/Commissioners are directed to ensure strict compliance with the Directorate General of Vigilance's guidelines in this matter.
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• Supreme Court Clarifies GST Act: Works Contract Excluded from ITC; Defines "Plant or Machinery" for Business Use.

  Case-Laws - SC : The Supreme Court interpreted clauses (c) and (d) of sub-section (5) of Section 17 of the Central Goods and Services Tax Act, 2017. Regarding clause (c), the Court held that there is no scope to give any meaning other than its plain and natural meaning, excluding works contract services from input tax credit (ITC). Regarding clause (d), the Court held that the expression "plant or machinery" cannot be given the same meaning as "plant and machinery" defined in the explanation to Section 17. The expression "plant or machinery" in clause (d) should be given its ordinary meaning, and whether a building qualifies as a plant depends on the business of the registered person and the role of the building in that business. If the construction of a building is essential for supplying services like renting or leasing, it could be considered a plant under clause (d). The writ petitions were rejected, subject to this interpretation of clause (d).
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• GST Appeal Deadline Upheld: Courts Reject Extension Beyond Prescribed Period for Post-March Orders.

  Case-Laws - HC : Time limitation for appeal against order u/ss 73 or 74 of GST Act cannot be condoned beyond prescribed period. Notification dated 02.11.2023 allowing filing of appeal by 31.01.2024 without limitation applies only to orders passed on or before 31.03.2023. For impugned order dated 20.07.2023, notification is inapplicable. Delay in filing appeal cannot be condoned as per M/s Yadav Steels [2024 (2) TMI 1069 - ALLAHABAD HIGH COURT]. Petitions dismissed by High Court for lack of merit.
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• Court Invalidates IGST Demand on Reinsurance Services; Amendments Regularized Tax Period, Petition Granted.

  Case-Laws - HC : The High Court quashed the order dated 20 December 2023, issued u/s 168A of the Central Goods and Services Tax Act, 2017, demanding Integrated Goods and Services Tax (IGST) on reinsurance services provided by a multinational insurance company registered as a foreign reinsurance branch with IRDAI and the Ministry of Corporate Affairs, for the period 01 July 2017 to 25 July 2018. The court held that the amendments introduced by the GST Council and the Union Government through Notification No. 09/2023 and No. 56, specifically including Serial No. 40 in Entry 36A, were curative in nature and regularized the period from 01 July 2017 to 26 July 2018. Consequently, the impugned order, relating to the same period, could not be sustained in light of the respondents' stand, and the petition was allowed.
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• Court Sets Aside Orders for Lack of Proper Notice and Hearing Under State GST Act, Violating Sections 73, 75, and Rule 142.

  Case-Laws - HC : The High Court examined whether proper show cause notices were issued before passing impugned orders u/s 73(9) of the State GST Act. It held that the summary of show cause notice along with tax determination cannot substitute a valid show cause notice initiating proceedings u/s 73. The Court opined that the impugned orders were contrary to Section 73 and Rule 142(1)(a) as they were passed without issuing a proper show cause notice. Regarding the determination of tax and order attached to the summary, the Court held that as per Sections 73(3) and 73(9), only the proper officer can issue show cause notice, statement, and order. Section 2(91) defines the proper officer. Failure to authenticate by the proper officer renders the documents ineffective. The Court stated that unless Rules are amended, Rule 26(3) authentication must be followed when the proper officer issues notices/orders. On conformity with Section 75(4) and principles of natural justice, the Court held that when the statute mandates an opportunity of hearing, it must be provided. Merely mentioning the reply date in the summary without other hearing details like date, time, and venue is insufficient. If no reply is filed, passing an adverse order without a hearing opportunity would render Section 75(4) redundant. Consequently, the impugned orders were set aside, and the pet.
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• Court Quashes GST Registration Cancellation for Lack of Justification; Emphasizes Need for Reasoned Orders.

  Case-Laws - HC : The court dealt with the power to cancel GST registration retrospectively u/s 29 of the Central Goods and Services Tax Act, 2017. It held that while the provision enables retrospective cancellation, the mere existence of such power does not justify its invocation. The order u/s 29(2) must reflect reasons for cancelling registration retrospectively, considering the deleterious consequences. The power cannot be exercised robotically or routinely unless circumstances warrant. The impugned order lacked reasoning for retroactive cancellation, violating the statutory scheme. Relying on Ramesh Chander's case, the court emphasized that retrospective cancellation should consider denying input tax credit to customers, and such consequences must be intended and warranted. Failing to provide even rudimentary reasons, the impugned order was quashed, and the petition was allowed.
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• High Court quashes tax order due to improper dismissal of appeal on limitation and pre-deposit grounds.

  Case-Laws - HC : The High Court quashed the order of adjudication passed u/s 74 and demand notice u/s 107 of the KGST/CGST Act. It held that the appellate authority erred in dismissing the appeal on the grounds of limitation and non-payment of 10% pre-deposit. The appeal was filed within the prescribed time limit, and the affidavit for condonation of delay was not considered. The matter was remitted back to the appellate authority for reconsideration of the appeal on merits, including the issue of non-payment of 10% pre-deposit, in accordance with law.
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• Non-speaking assessment order passed without considering objections; violated principles of natural justice. Revenue to re-do assessment.

  Case-Laws - HC : Challenge to non-speaking order of assessment and consequential rectification order. Order passed without considering objections, violating principles of natural justice. Revenue agreed to re-do assessment. High Court set aside assessment order, treating it as show cause notice. Petitioner to appear before Revenue, submit objections and evidence. Revenue to pass speaking order after hearing petitioner. Rectification petition dismissed as assessment order set aside, rendering it infructuous. Non-application of mind by adjudicating authority warranted setting aside orders and re-adjudication in accordance with law after following due process.
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• Taxpayer's double taxation woes end as court rules against reverse charge GST liability.

  Case-Laws - HC : The court held that the petitioner cannot be made liable to pay GST under the reverse charge mechanism if it would lead to double taxation, provided the entire tax amount has been discharged. The court relied on its previous decision, wherein it was held that if the tax has reached the government's coffers, the assessee cannot be made to pay double tax merely due to non-adherence to the prescribed ratio for payment of tax between the assessee and the service provider. The court found its earlier judgment in M/s. Zyeta Interiors Pvt. Ltd. directly applicable to the present case and quashed the impugned order, allowing the petition.
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• Cryptic notice, arbitrary suspension of registration flouts natural justice.

  Case-Laws - HC : Cryptic show-cause notice and suspension of registration without assigning adequate reasons violates principles of natural justice. Authorities should not pass orders mechanically without providing basic reasons, depriving the aggrieved party of an effective opportunity to respond. The impugned show-cause notice dated 27.01.2024 and the order suspending registration are set aside due to lack of proper reasons. Respondents have liberty to proceed against the petitioner in accordance with law, but with proper reasoning and adherence to principles of natural justice.
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• Expired provisional attachment orders can't restrict bank accounts. High Court allows account operation.

  Case-Laws - HC : Provisional attachment order u/s 83 of the CGST Act ceases to be operative after one year. Petitioner's bank account cannot be restricted by respondent banks based on expired provisional attachment orders. High Court directs respondent banks to allow petitioner to operate bank accounts, disposing off the petition.
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• Transforming Second-Hand Jewelry into New Pieces Qualifies as Manufacturing, Affects GST Margin Rule Application.

  Case-Laws - AAR : The applicant purchases second-hand gold or diamond jewelry from unregistered individuals, melts and transforms them into new pieces, altering their nature and characteristics. This process constitutes manufacturing u/s 2(72) of the GST Act, where the purchased gold is used as a raw material or input to make a new commodity. When the applicant melts the jewelry into gold lumps, the nature of the goods changes, and the characteristics and classification are altered. In such cases, the applicant cannot avail the benefit of Rule 32(5) of the CGST Rules, 2017, which allows paying GST on the margin value (difference between selling and purchase price) for second-hand goods. The applicant cannot adopt the valuation method prescribed in Rule 32(5) when the old jewelry is melted to manufacture a new ornament. However, if the old gold ornaments are purchased and supplied after minor processing that does not change their nature, the applicant can pay tax on the value determined u/r 32(5). Rule 32(5) is available only when a registered person deals solely in buying and selling second-hand goods. If engaged in other activities like manufacturing or selling new articles, the applicant cannot avail the benefit of Rule 32(5) and must pay GST at the applicable rate on the actual value of the commodity, not the margin value.
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Income Tax

• Odisha Government appoints OCAC to identify beneficiaries of welfare schemes.

  Notifications : The Central Government, u/s 138(1)(a)(ii) of the Income Tax Act 1961, has specified the 'Principal Secretary to Government & Chairman, Odisha Computer Application Centre (OCAC), Department of Electronics & Information Technology (E&IT), Government of Odisha' for identifying genuine beneficiaries of social welfare schemes of the Government of Odisha. This notification aims to facilitate the identification process for genuine beneficiaries and streamline the implementation of social welfare programs in the state.
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• Direct Tax Dispute Resolution Scheme: Online Filing of Declaration Form.

  Notifications : This notification lays down the procedure for making a declaration and furnishing an undertaking in Form-1 u/r 4 of The Direct Tax Vivad Se Vishwas Rules, 2024. All declarants filing under sub-section (1) of section 91 of the scheme are required to file Form-1 online on the e-Filing portal. The form must be verified per section 140 of the Income Tax Act, 1961, and submitted electronically under digital signature or electronic verification code. The notification outlines the steps for preparation, submission, viewing, and submission to the designated authority of Form-1. It also references previous notifications regarding electronic verification codes. The notification is effective immediately.
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• Court Converts Old Tax Reassessment Notices to Show-Cause Notices; Stays Proceedings Until Revenue Updates Info.

  Case-Laws - SC : This judgment deals with the validity of reassessment notices issued u/s 148 of the Income Tax Act between July and September 2022, in light of the Tax Ordinance and the Supreme Court's decision in Ashish Agarwal. The key points are: The Court clarified that directions issued under Article 142 are not binding ratios but supplementary measures to achieve complete justice. It exercised this power in tax matters where Revenue actions were not per law. The Court deemed reassessment notices issued under the old regime between April 1 and June 30, 2021, as show-cause notices under the new regime in Ashish Agarwal, balancing assessee and Revenue rights and avoiding further appeals. The legal fiction created a deemed stay on proceedings till the Revenue supplied relevant information to assessees per the Court's directions. Exclusions apply for computing limitation u/s 149. After April 1, 2021, the Income Tax Act must be read with substituted provisions and the Tax Ordinance applies if actions fall between March 20, 2020, and March 31, 2021. Section 3(1) overrides Section 149 only for relaxing reassessment notice time limits. Reassessment notices under the new regime must be issued within the surviving time limit under the Act read with the Ordinance; notices beyond this.
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• Court Rules JAO Lacks Authority for Reassessment Notice, Upholds Faceless Assessment System's Integrity.

  Case-Laws - HC : Issue of faceless assessment of income escaping assessment, where the notice u/s 148 of the Income Tax Act was issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO), as required by Section 151A. The High Court held that for a valid reassessment notice u/s 148, the Revenue must comply with Section 151A, as interpreted in the cases of Hexaware Technologies Limited and Nainraj Enterprises Pvt. Ltd. The Court ruled that the JAO is not permitted to issue a notice u/s 148, as it would breach Section 151A. There is no concurrent jurisdiction between the JAO and FAO for issuing notices u/s 148 or passing assessment/reassessment orders. Accepting the Revenue's argument would lead to chaos and render faceless proceedings redundant. The decision was in favor of the assessee.
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• Compensation for Terminating Beverage Contract Ruled Non-Taxable; Court Limits Disallowance of Raw Material Purchases.

  Case-Laws - HC : The case pertains to the taxability of compensation received by the assessee for termination of a contract. The key points are: The assessee received Rs. 4,30,88,084 as compensation for terminating a bottling contract with Hindustan Coca-Cola Beverages Pvt Ltd due to trade disputes. The Revenue contended that the amount was taxable u/ss 28(iv)/28(va) or 45, arguing it did not represent termination compensation exempt under Oberoi Hotels case. However, the Tribunal, after examining the settlement agreement and financial statements, upheld the CIT(A)'s finding that the source of income had ceased, making it a non-taxable capital receipt under Oberoi Hotels. Regarding disallowance of 20% of raw material purchases, the ITAT restricted it to 10%, observing that while the assessee must justify claims, the AO cannot make ad-hoc disallowances without scientific basis if documents are unavailable. The High Court upheld the ITAT's view.
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• Film Distributor Deemed Indian Resident Under DTAA; All Global Income Taxable in India, No US Tax Credit Allowed.

  Case-Laws - AT : Income deemed to accrue or arise in India - residential status of the assessee under the India-USA DTAA. Assessee stayed in India for more than 183 days, considered a resident. Economic relationship, place of business, property administration, earning wages are important factors. Assessee has a private limited company in India involved in film distribution, attended board meetings, has operative bank accounts and mutual fund investments. In USA, assessee derives rental income, has bank accounts and investments, but no active involvement in earning wages or profits. Personal and economic relationships tilt more towards India. Assessee is a resident of India under Article 4(2)(a) of the Indo-US DTAA. All income derived in USA is chargeable to tax in India u/s 5 of the Income Tax Act. No tax credit available as no tax paid in USA. Dividend income, capital gains sourced in USA are taxable in India. Order of lower authorities confirmed, decided against assessee.
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• Appeal Dismissal Overturned: NFAC Failed to Provide Fair Hearing and Document Access; Case Remanded for Rehearing.

  Case-Laws - AT : Ex-parte dismissal of appeal by the Ld. NFAC was held unjustified as the appellant was deprived of reasonable opportunity and time to produce relevant documents to substantiate claims made in the returns of income and grounds of appeal. The opportunity of being heard should be real, reasonable, and effective, not an empty formality, as per the doctrine of natural justice. Relying on judicial precedents, it was held that where a decision is based on a document, a copy should be provided to the affected party with reasonable time to negate it. The impugned orders were set aside, and the cases were remitted back to the Ld. NFAC with a direction to deal with them de-novo, granting the appellant three effective hearing opportunities to comply with notices and contest the cases on merits.
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• Penalty u/s 271AAB for Undisclosed Income Overturned Due to Lack of Evidence; 30% Levy Deemed Unjustified.

  Case-Laws - AT : Penalty u/s 271AAB - treating an amount included in the Return of Income as undisclosed income susceptible to penalty - search conducted u/s 132, assessment carried out u/s 153A, additions made u/s 50C - assessee contended that without search, income from Long Term Capital Gains (LTCG) and cash transactions would not have been disclosed - Held: No reference to any statement recorded u/s 132(4) showing admission of undisclosed income, a prerequisite for invoking Section 271AAB(1A). Income from LTCG and cash transactions not alleged to be false by Revenue. LTCG otherwise taxable, transactions routed through banking channels, advance tax paid, hence cannot be treated as undisclosed income. Coordinate Bench decision in assessee's wife's case affirmed the view. Imposition of 30% penalty on alleged undisclosed income u/s 271AAB(1A)(a) not justified.
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• ITAT Overturns Penalty for Incorrect Deduction Claim, Citing Non-Automatic Penalty Rule and Supreme Court Guidance.

  Case-Laws - AT : Penalty u/s 271(1)(c) was imposed for denying deduction u/s 80DD for a disabled person with over 80% disability. The assessee, a retired individual, had submitted required medical documents but the deduction was denied. The ITAT held that merely making an incorrect claim which is not substantiated does not attract penalty u/s 271(1)(c), relying on the Supreme Court's decision in Reliance Petro-products Private Limited. The assessee had earned interest income but brought it to tax during assessment proceedings. Considering the facts, circumstances, and assessee's explanation, the ITAT set aside the penalty order u/s 271(1)(c) and allowed the appeal, holding that the lower authorities erroneously treated the penalty as automatic without considering Section 273.
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• Reassessment Notice Invalidated Due to Lack of Independent Inquiry and Misinterpretation of Exempt Capital Gains.

  Case-Laws - AT : The Appellate Tribunal examined the validity of the reassessment notice issued u/s 148 and the consequent order passed u/s 147 regarding the addition made by the Assessing Officer u/s 69A, treating the long-term capital gain on the sale of shares claimed as exempt u/s 10(38) as bogus. The Tribunal held that when the reopening is based on information received from the investigation wing, the reasons must show that the Assessing Officer independently applied their mind to the information and formed their own opinion. However, in this case, the Assessing Officer merely stated the information received and their conclusion about the alleged escapement of income but did not mention what they did with the available information. The reasons must also paraphrase any investigation report forming the basis and any inquiry conducted by the Assessing Officer, along with the conclusion. If the reasons refer to any document, such document or relevant portion must be enclosed. In this case, the available information with the Assessing Officer was neither stated nor enclosed, rendering the reasons recorded not in accordance with the law. Additionally, the Assessing Officer incorrectly mentioned that the assessee did not declare the long-term capital gain in the return filed in response to the notice u/s 148, whereas the assessee had categorically shown the exempt income comprising capital gain u/s 10(38) and dividend from shares. Consequently, the notice issue.
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• Transfer Pricing Revision Powers Clarified: Principal Commissioners Can Act on TPO Orders from April 2022, Invalid Orders Quashed.

  Case-Laws - AT : The Principal Commissioner or Commissioner having jurisdiction over transfer pricing matters has been empowered, effective April 1, 2022, to invoke revisionary action u/s 263 regarding orders passed by the Transfer Pricing Officer (TPO) under their administrative control. The amendment aimed to resolve confusion over revisionary powers concerning TPO orders, particularly after the 2014 notification defining the command chain from Principal Chief Commissioner (International Taxation) to Deputy/Assistant Commissioner (Transfer Pricing). The lawmaker included the "Transfer Pricing Officer" alongside the Assessing Officer for revisionary orders by the respective Principal Commissioner or Commissioner. When statutory provisions are unambiguous, no interpretation is permissible. Only the Principal Commissioner or Commissioner can exercise revisionary authority over TPO orders under their command from April 1, 2022. The order passed by the Principal CIT, Madurai-1 was without valid jurisdiction and deserves quashing. The Assessing Officer's order u/s 143(3) read with Section 144B did not warrant revisionary powers as it lacked deficiencies prejudicial to revenue interests. Consequently, the Principal CIT's order u/s 263 is void ab initio and quashed in favor of the assessee.
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• Forex gains on branch merger & excise refunds treated as non-taxable capital receipts.

  Case-Laws - AT : Assessee offered translation gain from revenue transactions for taxation. CIT(A) deleted disallowance of translation gain from merger of branch balance sheet, holding it non-taxable based on ICAI accounting standards and consistency principle. CBDT circular clarified such translation gains/losses are not real income, upheld by Delhi High Court. Excise duty refunds received by assessee were treated as capital receipts by CIT(A), not taxable revenue receipts, based on Gujarat High Court ruling that refunds aimed to promote industries satisfy 'purpose test' for capital nature. ITAT upheld CIT(A)'s decisions on both issues in favor of assessee.
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• Penalty for cash property sale deleted due to reasonable cause & narrow interpretation of "otherwise" Generis.

  Case-Laws - AT : Interpretation of the term "otherwise" in Section 269SS of the Income Tax Act and the applicability of the penalty u/s 271D for accepting cash consideration on the sale of immovable property. The Tribunal applied the doctrine of "Ejusdem Generis" and held that the word "otherwise" should be interpreted narrowly and cannot include "sale consideration." The Tribunal found reasonable cause u/s 273B for the assessee's failure to comply with Section 269SS, considering the lack of intention to generate unaccounted money, disclosure of the cash receipt in the return, and the assessee's lack of knowledge about the legal provisions. The penalty u/s 271D was deleted in favor of the assessee.
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• Tribunal Upholds Penalty for Incorrect Deduction Claims on Unit Size and Developer Status u/s 80IB(10.

  Case-Laws - AT : Disallowance of deduction u/s 80IB(10) and the levy of penalty u/s 271(1)(c). The Assessing Officer disallowed the deduction claim on two grounds: most residential units exceeded 1500 square feet, and the assessee was a contractor, not a developer. The Tribunal held that mentioning 1500 sq ft in the sanction plan is not determinative of the actual area constructed, and if the extra area does not breach building bylaws, it is irrelevant for civil authorities. The assessee failed to prove the units were under 1500 sq ft and that it was a developer executing sale deeds for loan purposes. The Tribunal distinguished the cited cases as involving debatable additions, whereas here, the claim was based on incorrect facts of the assessee being a developer and units exceeding 1500 sq ft. Hence, the penalty u/s 271(1)(c) was rightly confirmed.
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• Tax exemption denied for ad industry event expenses, not charitable.

  Case-Laws - AT : The Income Tax Appellate Tribunal upheld the Commissioner's revision order u/s 263, disallowing the expenses incurred for organizing the "Goa Fest" event as not being for charitable purposes u/s 11. The Tribunal concurred that conducting the "Goa Fest," where leaders from the advertising industry delivered presentations, constituted a business activity rather than a charitable purpose. Consequently, the assessee's appeal against the Commissioner's order was dismissed, affirming that the original assessment order was erroneous and prejudicial to the revenue's interests regarding the treatment of expenses for the "Goa Fest.
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Customs

• Extending Countervailing Duties on Copper Wire Rod from SE Asia Until 2025.

  Notifications : This notification seeks to extend the levy of countervailing duty on "Continuous Cast Copper Wire Rod" originating in or exported from Indonesia, Malaysia, Vietnam, and Thailand. The designated authority initiated a review u/s 9(6) of the Customs Tariff Act, 1975, and Rule 24 of the Customs Tariff Rules, 1995, regarding the continuation of countervailing duty on the subject goods. Exercising powers u/ss 9(1) and 9(6) of the Customs Tariff Act and Rules 20 and 24, the Central Government amended the previous notification to extend the countervailing duty until July 7, 2025, unless revoked, superseded, or amended earlier. The amendment inserts a new paragraph in the principal notification No. 1/2020-Customs (CVD).
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• Insolvency Code Shields Company from Unclaimed Tax Liabilities After Resolution Plan Approval.

  Case-Laws - HC : The case pertains to the extinguishment of claims under the Insolvency and Bankruptcy Code (IBC) against Ruchi Soya Industries Limited, after the acceptance of the modified resolution plan by the National Company Law Tribunal (NCLT). The key points are: 1) The revenue department had raised a demand against Ruchi Soya for imported crude palm oil, which was not claimed during the Corporate Insolvency Resolution Process (CIRP) under IBC. 2) As per Section 32A of IBC, the revenue's demand stood extinguished since it was not part of the approved resolution plan. 3) The Gujarat High Court, in a similar case, held that upon completion of the resolution process and the revenue not lodging any claim as an operational creditor, any liability extinguishes u/ss 31 and 32A of IBC. 4) The resolution plan aims to continue the company's business as a going concern under IBC's insolvency resolution process, distinct from liquidation. 5) Rule 22 of the 1982 Rules, regarding abatement of appeals, is inapplicable when a resolution plan is approved. 6) The High Court ruled in favor of the assessee (Ruchi Soya/Patanjali), holding that the revenue's demand stood extinguished due to non-inclusion.
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• Court Upholds CBN Guidelines on Poppy Seed Imports; Dismisses Allegations of Cartelization and Fraud.

  Case-Laws - HC : This case involves a challenge to the guidelines issued by the Central Bureau of Narcotics (CBN) regarding the registration of sales contracts for importing poppy seeds from Turkey. The petitioners alleged cartelization, monopolization, and fraudulent practices in the import of poppy seeds, and sought to quash the impugned guidelines. The High Court dismissed the petition, relying on its previous decision in Devki Global Capital, which held that the registration of sales contracts by the Turkish Grain Board (TMO) is an internal matter governed by Turkish law, over which Indian authorities have no jurisdiction. The Court emphasized that the CBN's role is limited to registering contracts duly registered by the TMO, as per the MoU between India and Turkey. The Court also cited the Supreme Court's ruling in Balco Employees' Union, which cautions against judicial interference in matters of economic policy unless there is manifest illegality or mala fide intent. Finding no such grounds, the Court upheld the guidelines and dismissed the petition.
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• Coastal bunker fuel valuation: Adopt NIDB data, if scarce use deductive method with adjustments.

  Case-Laws - AT : The CESTAT held that for valuation of bunker fuel consumed during coastal runs, the NIDB (National Import Database) data should be adopted as recognized by the facility notice issued by the Commissioner Bhubaneshwar. However, since the quantity of bunker consumed is small, it may be difficult to find comparable NIDB data. In such cases, the deductive method under the Customs Valuation Rules becomes relevant, allowing adjustments for quantity differences compared to contemporaneous import data in NIDB. The CESTAT remanded the matter to the original Adjudicating Authority for redetermination of assessable value using the deductive method, modifying the Commissioner (Appeal)'s order. The appeal was allowed by way of remand.
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• Refund Denied for CVD on Imported Goods Due to Time Bar and Unjust Enrichment; Exemption Only for Gum Arabic.

  Case-Laws - AT : The appellant sought refund of countervailing duty (CVD) paid while importing goods declared as 'Natural gum in raw form' through Bills of Entry filed during 2011-2014. The key issues were time limitation and unjust enrichment. The CBEC clarification dated 28.06.2007 exempted only 'Gum Arabic' from CVD levy, but the Bills declared the imported goods as 'Natural Gums' without evidence of being 'Natural Gum Arabic'. Thus, the appellant failed to establish eligibility for exemption, and the self-assessed CVD was rightly paid. The refund claim was barred by limitation as the appellant didn't modify self-assessment within the stipulated time. Additionally, the doctrine of unjust enrichment applied as the appellant likely passed on the duty burden to consumers, enriching itself unjustly at their expense. Consequently, the appellant was ineligible for CVD exemption, and the refund claim was rightfully rejected on grounds of limitation and unjust enrichment. The Appellate Tribunal upheld the Commissioner's order dismissing the appeal.
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DGFT

• Export benefits available sans RCMC for remission schemes; mandatory for FTP authorizations.

  Circulars : This trade notice clarifies that obtaining a Registration-Cum-Membership Certificate (RCMC) is not mandatory for exporters to claim benefits under post-export remission-based schemes like Duty Drawback, Rebate of State and Central Taxes and Levies (RoSCTL), and Remission of Duties and Taxes on Export Products (RoDTEP) under the Foreign Trade Policy (FTP) 2023. These schemes aim to remit duties or taxes on exported goods. However, an RCMC is required for exporters applying for authorizations to import/export or seeking other benefits/concessions under the FTP, except for restricted items. The notice clarifies the specific requirements for obtaining an RCMC to avail benefits under different schemes outlined in the FTP 2023.
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• Indian sugar export to EU duty-free under 5841 MT quota for 2024-25.

  Circulars : This public notice allocates a quantity of 5841 MT of sugar for export from India to the European Union under the Tariff Rate Quota (TRQ) for the year 2024-25 (October 2024 to September 2025). The export of sugar (HS Code 17010000) to the EU under TRQ is duty-free, subject to conditions notified. Certificates of Origin, if required, will be issued by the Additional Director General of Foreign Trade, Mumbai, on the recommendation of APEDA. APEDA will operate the quota as the implementing agency. Reporting requirements as per previous notifications must be followed.
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• Mandatory Halal certification for meat exports to listed countries.

  Notifications : This notification streamlines the Halal certification process for export of specified meat and meat products to listed countries. Key points: Halal certification under India Conformity Assessment Scheme (I-CAS) of Quality Council of India mandatory for exports to listed countries. Exporters must provide Halal certificate issued by NABCB-accredited bodies to buyers. Additional importing country requirements apply where notified. Non-Halal meat exports remain unchanged. Specifies HS codes for bovine, sheep, goat meat and offal subject to this condition. Effective 16.10.2024.
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• India Sets Minimum Import Price on Knitted Fabrics Until 2024 to Regulate Textile Imports.

  Notifications : This notification from the Directorate General of Foreign Trade, Ministry of Commerce & Industry, Government of India imposes a Minimum Import Price (MIP) on certain synthetic knitted fabrics and other knitted fabrics until 31st December 2024. For 5 specified ITC (HS) codes of synthetic knitted fabrics, imports are prohibited unless the CIF value is $3.5 or above per kilogram. Additionally, for 8 other ITC (HS) codes covering various knitted fabrics, a similar MIP condition of $3.5 per kilogram CIF value is imposed, with imports prohibited below this price. The notification extends the existing MIP on synthetic knitted fabrics from 15th September 2024 and introduces new MIP conditions for other knitted fabric categories. It aims to regulate imports of these textile products based on a minimum price threshold.
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SEZ

• New Guidelines for SEZ Warehousing: Strict KYC, Enhanced Surveillance, and Audits to Prevent Malpractices.

  Circulars : The guidelines outline operational framework for Free Trade and Warehousing Zones (FTWZ) and warehousing units in Special Economic Zones (SEZ). Key points include strict due diligence on applicants through KYC norms, Aadhaar/passport authentication, and financial documentation. Comprehensive CCTV surveillance, tamper-proof ERP systems with authorized access for Development Commissioners (DCs), and prohibition of manual customs clearances are mandated. Goods transfer between FTWZs is restricted. DCs must conduct periodic physical verifications, performance reviews of FTWZ units, and prioritize audits as per risk assessment. Information sharing on non-compliant units, monitoring high-risk commodities, defining minimum area for warehousing, and strict action against sub-letting are emphasized. Zonal teams are to be formed for continuous data analysis and risk management. The guidelines aim to strengthen compliance and curb malpractices within SEZ operations.
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FEMA

• Non-resident guarantees like letters of credit & performance guarantees for Indian residents not allowed under FEMA: Banks to ensure compliance.

  Circulars : RBI has observed instances of non-resident guarantees, including standby letters of credit and performance guarantees, issued to persons resident in India, which are not permitted under FEMA regulations. Authorized Dealer Category-I banks must ensure guarantee contracts advised to or on behalf of their resident constituents comply with FEMA regulations. Banks are directed to notify their constituents about this circular issued u/ss 10(4) and 11(1) of FEMA, 1999.
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• Secured Creditors' Claims Prevail Over Tax Dept Under SARFAESI Act; 2013 Mortgage Trumps 2017 Tax Claims.

  Case-Laws - HC : Priority of secured creditors under the SARFAESI Act over claims by the Income Tax Department. The respondent mortgaged the property to the petitioner in 2013-14, prior to the Income Tax Department's search in 2017. The court held that the petitioner's claim as a secured creditor dating back to 2013 would override subsequent claims, including those of the Income Tax Department in 2017, as per the Madras High Court ruling. The orders of attachment by the Tax Recovery Officer were subsequent to the mortgage created in favor of the secured creditors and hence have no legal standing. Debts due to secured creditors shall be paid in priority over all other debts, revenues, taxes, and rates payable to the government, as per the SARFAESI Act, which prevails over earlier enactments like FEMA. The Bombay High Court also held that the PMLA provisions are subservient to the rights of secured creditors under SARFAESI. Consequently, the mortgage in favor of the petitioner in 2013 overrides the Income Tax Department's proceedings initiated in 2017, and the impugned order of attachment deserves to be quashed.
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Corporate Law

• Principal Auditors Must Ensure Compliance and Sufficient Evidence in Group Financial Audits Under Companies Act 2013.

  Circulars : This document discusses the responsibilities and obligations of auditors, particularly principal auditors, in conducting audits of group financial statements under the Companies Act, 2013 and relevant auditing standards. Key points: 1. Auditors must determine necessary audit procedures to fulfill requirements of auditing standards and achieve audit objectives, even if additional procedures beyond standards are required. 2. Principal auditors remain responsible for forming and expressing opinion on group financial statements, requiring them to obtain sufficient appropriate audit evidence, including evaluating work of component auditors. 3. Use of "should" in auditing standards does not make provisions discretionary but implies presumptively mandatory responsibilities that auditors must comply with or document alternative procedures meeting objectives. 4. Principal auditors may need to review component auditors' work papers to evaluate if work is adequate, as permitted under law for discharging duties. Merely confirming component auditor's qualification is insufficient for assessing professional competence. 5. Responsibility for consolidated financial statements lies with management and board of holding company, and principal auditors must comply with relevant provisions. 6. Auditors must understand responsibilities under the Act, auditing standards, and carry out procedures accordingly in the public interest, as mandated for NFRA's oversight role.
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• Deepti Gaur Mukerjee appointed Chairperson of Investor Education & Protection Fund Authority under Companies Act.

  Notifications : The Central Government appoints Smt. Deepti Gaur Mukerjee as Chairperson of the Investor Education and Protection Fund Authority under the Companies Act, 2013. This amends the previous notification regarding the composition of the Authority. The amendment substitutes the existing entry for the Chairperson with the new appointment of Smt. Deepti Gaur Mukerjee, Secretary, Ministry of Corporate Affairs, as the Chairperson ex officio. The notification is issued in exercise of powers u/ss 125(5) and 125(6) of the Companies Act, 2013 read with relevant rules.
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Indian Laws

• Inadvertence claim rejected for deliberate choices & delay in rectifying. Revived arbitral award recovery over complaint cases.

  Case-Laws - HC : Inadvertence claim untenable, delay in rectifying alleged error reflects absence of inadvertence. Petitioner withdrew higher value complaint, pursued lower value complaint, then approached mediation without realizing inadvertence. Petitioner revived execution petition for arbitral award recovery instead of complaint cases, indicating deliberate choice. Application u/s 362 CrPC for recall filed belatedly after six months, dismissed by magistrate. Conduct inconsistent with inadvertence claim. Petition dismissed for lack of merit.
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• Magistrate Can't Drop Proceedings on Accused's Request; Valid Cheque Dishonor Complaint if Account Frozen.

  Case-Laws - HC : The court held that once a Magistrate takes cognizance and issues process against the accused, there is no provision in the Code of Criminal Procedure to allow the Magistrate to drop the proceedings at the behest of the accused. The revisional court's finding that the trial court wrongly dismissed the application for dropping proceedings was contrary to law. Regarding dishonor of a cheque due to 'account frozen', the court ruled that the complaint u/s 138 of the Act is maintainable even if the cheque is dishonored for this reason. The onus is on the accused to prove they were unaware of the account freeze, the freeze was beyond their control, and the account had sufficient balance when the cheque was issued. The revisional court's order was set aside, the trial court's order was restored, and the matter was remanded for a full-fledged trial.
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Law of Competition

• Revised CCI rules for engaging legal/other experts: Min 1 yr, max 3 yrs contract. Modified qualifications & experience criteria.

  Notifications : Notification amends Competition Commission of India (Procedure for Engagement of Experts and Professionals) Regulations, 2009. Substitutes "experts or professionals including research associates" wherever "expert or professional" occurs. Contractual engagement period changed to minimum one year and maximum three years. Modifies educational qualification and experience requirements for law experts/professionals. Preferred experience for Level I changed to "One to three years" from "Upto three years". Aims to update regulations governing engagement of legal and other experts/professionals by Competition Commission.
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PMLA

• Pension account operational despite provisional attachment under Money Laundering Act due to Covid-19 delays.

  Case-Laws - AT : Provisional attachment order under Money Laundering Act challenged for being beyond 180 days. Court held that period from 15th March 2020 till 28th February 2022 must be excluded due to Covid-19 pandemic, as per Supreme Court's order. Provisional attachment order issued on 23rd December 2020 and confirmation order passed on 9th November 2021 falls within permissible period after excluding Covid-19 period. Regarding attachment of bank account receiving pension, Court directed to allow operation of account for receiving pension while maintaining attached amount and not permitting withdrawal without permission. Appeal partially allowed, allowing operation of pension account while maintaining attached amount.
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• Legal battle over freezing of bank accounts & seized assets - Firm vs ED's raid.

  Case-Laws - AT : Challenge to order allowing the Enforcement Directorate (ED) to retain/seize/freeze documents, digital records, bank accounts seized during search conducted on 07.04.2017. ED directed to defreeze Credit Accounts (CC & BC Account) allowing appellant firm to clear outstanding loan liability, with direction not to dispose of properties securing CC Accounts. Karnataka Bank restrained from releasing more credit into CC Account. Saving and current account to remain frozen till final disposal of criminal trials. Appellant entitled to copies of relied upon documents/seized material and right to apply for release of un-relied documents if not required for further investigation. Appeal dismissed.
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SEBI

• SEBI relaxations for sending physical statements extended till Sep'25 for listed firms.

  Circulars : SEBI has extended the relaxations granted earlier for compliance with Regulation 36(1)(b) and Regulation 44(4) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 till September 30, 2025. This is in line with the Ministry of Corporate Affairs' circular extending the relaxation from sending physical copies of financial statements to shareholders for AGMs conducted till September 30, 2025. Listed entities availing these relaxations must ensure compliance with the conditions stipulated in the SEBI Master Circular dated July 11, 2023. The relaxations are subject to the provisions of the Companies Act, 2013 and rules made thereunder.
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Service Tax

• Refund Denied: Tribunal Upholds Rejection of Late Service Tax Refund Claims Due to Statutory Time Limits.

  Case-Laws - AT : The case pertains to the refund claims of service tax paid under the Reverse Charge Mechanism (RCM) due to a misconception or mistake of law. The tribunal held that there was a categorical provision requiring payment of service tax under RCM in a particular situation. The appellant interpreted their liability correctly and discharged the same under RCM basis. It was not a mistake of law but a mistake of fact, as they were informed about the payment of 100% tax liability later on, leading to double payment due to communication gap or reconciliation of accounts. The refund claim, regardless of the nature, has to be within the statutory provisions governing refund, including limitation periods. The authorities, being creatures of the statute, have to operate within its purview and cannot allow refunds outside the statutory limitations. Since the refund claims were filed beyond the expiry of the time limit, their rejection on this ground was upheld by the tribunal.
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• Service Tax Demand Unjustified: Unsupported GTA Classification, Invalid Extended Limitation, and Unmet Consultation Requirement.

  Case-Laws - AT : Recovery of service tax from the appellant, where the turnover reported in the balance sheet exceeded the amount reported in the belatedly filed Form ST-3 returns. The key points are: Section 66B imposed tax on services, except those listed in the negative list u/s 66D. Clause (p) of Section 66D excluded transportation services by road for goods, except when rendered by a Goods Transport Agency (GTA) or courier agency. The revenue treated the services as taxable transportation by a GTA, but failed to provide consignment notes issued by the appellant as required by the GTA definition. Without such evidence, the turnover cannot be attributed to GTA services. The ST-3 returns, filed after inquiry initiation without late fees, lack evidentiary value and cannot ascertain tax liability. Being defective, the returns and facts therein are non est for investigation and adjudication. The CENVAT credit demand, rooted in the invalid service tax demand, is also unsustainable. The extended period of limitation was incorrectly invoked as there was no suppression of facts. The entire demand, based on the extended period, is invalid and time-barred. The pre-show cause notice consultation requirement was not met, but as the show cause notice itself failed on various grounds, this aspect became infructuous. Ultimately.
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• Mutual fund investments not 'service', no reversal of CENVAT credit required.

  Case-Laws - AT : The appellant's activity of subscription and redemption of mutual fund units cannot be considered as trading of securities, thus not qualifying as an exempted service u/s 66D(e) of the Finance Act. Additionally, investment in mutual funds does not constitute a 'service' u/s 65B(44) of the Finance Act, as there is no service provider rendering a service to a recipient for consideration. Consequently, proportionate reversal of CENVAT credit availed on common input services was not required. The extended period of limitation invoked by the department was unjustified, as the responsibility to scrutinize returns and make correct assessments lies with the officer. The impugned order was set aside, and the appeal was allowed.
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Central Excise

• Revenue Demands Extinguished for Failure to File Claims During CIRP; Liabilities Not Included in Resolution Plan.

  Case-Laws - HC : This case deals with the extinguishment of demands due to the non-filing of claims by the revenue during the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). The key points are: 1) Ruchi Soya underwent CIRP, and Patanjali continued its business after the resolution plan was approved. 2) The revenue did not file any claim before the Interim Resolution Professional (IRP) during CIRP. 3) As the demand was not part of the resolution plan, it stood extinguished and cannot be continued per Section 31 and 32A of the IBC. 4) The Gujarat High Court held that if the revenue does not lodge a claim as an Operational Creditor before the Resolution Professional, any liability extinguishes upon the implementation of the Resolution Plan. 5) The resolution plan aims to continue the company's business as a going concern under the IBC's scheme. 6) Rule 22 of the 1982 Rules, which deals with abatement, is not applicable when a resolution plan is approved under the IBC. 7) The substantial question of law was answered in favor of the assessee against the revenue.
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• CESTAT Rules Compounded Levy Scheme Orders Invalid Post-2001 Due to Lack of Statutory Power; Appeal Allowed.

  Case-Laws - AT : The CESTAT held that in the absence of Section 3A of the Central Excise Act, 1944, and Rules 96ZO, ZP, and ZQ of the Central Excise Rules, 1944, along with any saving clause, the adjudicating authority lacked statutory power to decide matters related to the compounded levy scheme after March 1, 2001. Consequently, the orders-in-original passed by the adjudicating authority, holding the appellants liable to pay duty under the compounded levy scheme, were non-est and lacked legal authority. The entire proceedings, including the show cause notices and adjudication thereof, were vitiated. Without a valid provision or saving clause, the adjudication proceedings were illegal and incorrect, and no demand could be confirmed. Therefore, the impugned orders were unsustainable, and the appeal was allowed.
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Case Laws:

• GST

• 2024 (10) TMI 286
  Plant or Machinery - Input Tax Credit (ITC) - Constitutional validity of clauses (c) and (d) of sub-section (5) of Section 17 of the Central Goods and Services Tax Act, 2017 - Interpretation of the expression plant or machinery in Section 17(5)(d) of the CGST Act - HELD THAT:- There is no scope to give any meaning to clause (c) of Section 17(5) other than its plain and natural meaning. The expression plant and machinery has been specifically defined in the explanation of Section 17. Works contract service has been defined under the CGST Act. We cannot add anything to clause (c) or subtract anything from clause (c). ITC is a creation of legislature. Therefore, it can exclude specific categories of goods or services from ITC. Exclusion of the category of works contracts by clause (c) will not, per se, defeat the object of the CGST Act. Whether the explanation that lays down the meaning of the expression plant and machinery in Section 17 will apply to the expression plant or machinery used in Section 17 (5)(d)? - HELD THAT:- The explanation to Section 17 defines plant and machinery . The explanation seeks to define the expression plant and machinery used in Chapter V and Chapter VI. In Chapter VI, the expression plant and machinery appears in several places, but the expression plant or machinery is found only in Section 17(5)(d). If the legislature intended to give the expression plant or machinery the same meaning as plant and machinery as defined in the explanation, the legislature would not have specifically used the expression plant or machinery in Section 17(5)(d). The legislature has made this distinction consciously. Therefore, the expression plant and machinery and plant or machinery cannot be given the same meaning. It may also be noted here that the expression plant or machinery is used in dealing with a peculiar case of goods or services being received by a taxable person for the construction of an immovable property on his own account, even when such goods or services or both are used in the course of furtherance of business. Therefore, if the expression plant or machinery is given the same meaning as the expression plant and machinery as per the definition contained in the explanation to Section 17, violence done to the words used in the statute. While interpreting taxing statutes, it is not a function of the Court to supply the deficiencies. What meaning should be given to the expression plant or machinery ? - HELD THAT:- When the legislature uses the expression plant and machinery, only a plant will not be covered by the definition unless there is an element of machinery or vice versa. This expression cannot be read as plant or machinery . That is so clear from the explanation in Section 17, which says that plant and machinery means apparatus, equipment and machinery fixed to the earth by foundation or structural support that are used for making outward supply of goods or services or both. The expression includes such foundation and structural support fixed to the earth. However, the definition excludes land, buildings or any other civil structure. The question whether a mall, warehouse or any building other than a hotel or a cinema theatre can be classified as a plant within the meaning of the expression plant or machinery used in Section 17(5)(d) is a factual question which has to be determined keeping in mind the business of the registered person and the role that building plays in the said business. If the construction of a building was essential for carrying out the activity of supplying services, such as renting or giving on lease or other transactions in respect of the building or a part thereof, which are covered by clauses (2) and (5) of Schedule II of the CGST Act, the building could be held to be a plant. The writ petitions are rejected subject to the interpretation of clause (d) of sub-section (5) of Section 17 of the CGST Act.

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• 2024 (10) TMI 285
  Condonation of delay in filing appeal - Jurisdiction and Authority in GST Proceedings - Power of CGST Authority / DGGI over State GST authorities - Attachment of Bank accounts without Determination of Liability - HELD THAT:- Delay condoned. Issue notice to the respondent.

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• 2024 (10) TMI 284
  Time limitation - Dismissal of appeal of petitioner on the ground of limitation - difference between the GSTR-1 and GSTR-9C - HELD THAT:- It is admitted fact that the appeal has been dismissed on the ground of limitation. Learned counsel for the petitioner has relied upon the notification dated 02.11.2023. On close scrutiny of the said notification, it is clear that if taxable person could not file appeal against the order passed by the Proper Officer on or before 31.03.2023 under sections 73 or 74 of the GST Act and if the appeal is preferred on or before 31.01.2024, the same will be considered on merit without taking recourse to the limitation. In the case in hand, the impugned order has been passed on 20.07.2023, much after the date mentioned in the aforesaid notification, i.e., 31.03.2023. Therefore, the said notification is of no aid to the petitioner. In M/s Yadav Steels [ 2024 (2) TMI 1069 - ALLAHABAD HIGH COURT] , it has been specifically held that delay in filing the appeal cannot be condoned beyond the prescribed period of limitation in the Act. This Court does not find any merit in these writ petitions - Petition dismissed.

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• 2024 (10) TMI 283
  Appeal of the petitioner has been dismissed on the ground of limitation by taking the date of order - impugned order dated 03.12.2021 was neither communicated, nor served upon the petitioner - HELD THAT:- The State shall specifically averred as to how and under what manner, the deeming service as per clauses (c) (d) of sub-section (1) of section 169 can be said to be deemed service as per sub-section (2) of section 169 of the GST Act. List thereafter - Matter requires consideration.

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• 2024 (10) TMI 282
  Challenge to N/N. 09/2023 and N/N. 56 issued under Section 168A of the Central Goods and Services Tax Act, 2017 - demand for the period 01 July 2017 to 25 July 2018 in respect of non-payment of IGST on reinsurance services - HELD THAT:- Admittedly, the petitioner is stated to be a leading multinational insurance company which is also registered as a foreign reinsurance branch with the Insurance Regulatory and Development Authority of India [IRDAI]. It also holds a registration issued by the Ministry of Corporate Affairs, Government of India under the category of foreign companies. Entry 36A thus came to include Serial No. 40 specifically. The issue which therefore remained for consideration was whether the aforesaid amendments would be liable to be viewed as curative, and thus being applicable to the period prior to 27 July 2018, the date from which the said notification was stated to be applicable and whether the same would clarify the position which would obtain prior thereto - The GST Council as well as the Union Government, thus appear to have taken a conscious decision to regularize the period between 01 July 2017 and 26 July 2018. Undisputedly, the impugned order relates to that very period. While it is true that on 20 December 2023, when the impugned order came to be passed, these clarifications had not been rendered, undisputedly, the same would not sustain in light of the stand which has been taken by the respondents and is principally noticed. The impugned order dated 20 December 2023 is quashed - petition allowed.

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• 2024 (10) TMI 281
  Cancellation of GST registration - dismissal on the ground of time limitation - non-filing of the GSTR 3B returns - pure non-application of mind on the part of respondents - violation of principles of natural justice - HELD THAT:- In the impugned order dated 06.04.2023, it is observed that the petitioner is required to pay the following amount, however, the amount is mentioned as zero . Therefore, there was no occasion to deposit the amount because the respondents did not mention the amount to be paid. The said communication also shows non-application of mind. The orders dated 06.04.2023 passed by the Adjudicating Authority and order dated 20.06.2024 passed by the Appellate Authority are hereby set aside. Consequently, the petition is allowed.

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• 2024 (10) TMI 280
  Challenge to cancellation of registration - rejection of appeal for which no reason has been assigned - violation of principles of natural justice - HELD THAT:- It is settled law that reason is the heartbeat of every conclusion. An order without valid reasons cannot be sustained. To give reasons is the rule of natural justice. One of the most important aspect for necessitating to record reason is that it substitutes subjectivity with objectivity. It is well settled that not only the judicial order, but also the administrative order must be supported by reasons recording in it. Hon ble Supreme Court, in the cases of ASSISTANT COMMISSIONER, COMMERCIAL TAX DEPARTMENT, WORKS CONTRACT LEASING, KOTA VERSUS M/S SHUKLA BROTHERS [ 2010 (4) TMI 139 - SUPREME COURT] , TRAVANCORE RAYONS LTD. VERSUS UNION OF INDIA [ 1969 (10) TMI 23 - SUPREME COURT] have observed that the administrative authority and the tribunal are obliged to give reasons, absence whereof would render the order liable to judicial chastisement. Once the reason has not been assigned by the competent authority while passing the impugned orders, the impugned orders cannot be sustained. In absence of any reason in the impugned order, the matter requires reconsideration by the appellate court. The impugned orders cannot be sustained in the eyes of law and same are hereby quashed - the matter is remanded to the appellate authority, who shall proceed de novo and pass an appropriate, reasoned and speaking order, after giving due opportunity of hearing to the petitioner, within a period of three months from today - petition allowed by way of remand.

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• 2024 (10) TMI 279
  Principles of natural justice - service of SCN - Show Cause Notices were issued prior to passing the Impugned Order under Section 73 (9) of the State Act or not - challenge to determination of tax as well as the Order attached to the Summary of the Show Cause Notice in GST DCR-01 - impugned orders under Section 73 (9) of the State Act is in conformity with Section 75 (4) of the State Act or not. Whether Show Cause Notices were issued prior to passing the Impugned Order under Section 73 (9) of the State Act? - HELD THAT:- This Court is of the view that the Summary of the Show Cause Notice along with the attachment containing the determination of tax cannot be said to be a valid initiation of proceedings under Section 73 without issuance of a proper Show Cause Notice. The Summary of the Show Cause Notice is in addition to the issuance of a proper Show Cause Notice. Under such circumstances, this Court is of the unhesitant opinion that the impugned orders challenged in the instant batch of writ petitions are contrary to the provisions of Section 73 as well as Rule 142 (1) (a) of the Rules as the said impugned Orders were passed with issuance of a proper Show Cause Notice. Whether the determination of tax as well as the Order attached to the Summary of the Show Cause Notice in GST DCR-01 and Summary of the Order in GST DCR-07 can be said to be the Show Cause Notice and Order respectively? - HELD THAT:- A perusal of the provisions of Section 73 would show that the Show Cause Notice is required to be issued by the Proper Officer, the Statement under Section 73 (3) is to be issued by the Proper Officer as well as the Order under Section 73 (9) is required to be passed by the Proper Officer. Section 2 (91) of the Act defines who is the Proper Officer meaning thereby either the Commissioner or the Officer who had been specifically entrusted by the Commissioner. As it is the statutory mandate that it is only the Proper Officer who has the authority to issue Show Cause Notice and the Statement and pass the order, the authentication in the Show Cause Notice, Statement as well as the Order by the Proper Officer is a must and failure to do so, makes the Show Cause Notice, Statement and Order ineffective and redundant. It is also important to note that the Act only stipulates that notice would be issued and order would be passed by the Proper Officer. The manner in which the Proper Officer would authenticate the notice(s) or the order(s) in so far as other Chapters of the Rules of 2017 is silent except Chapter-III. Taking into account the utmost necessity of the authentication by the Proper Officer, this Court is of the opinion unless appropriate insertion are made in the Rules or notification are issued as per the directions of the Board to fill the void in the Rules of 2017, the authentication in the manner stipulated in Rule 26 (3) of the Rules of 2017 has to be applied as and when the Proper Officer is required to issue notice or Statement and pass Order in terms with the Act. Whether the impugned orders under Section 73 (9) of the State Act is in conformity with Section 75 (4) of the State Act and is in consonance with the principles of natural justice? - HELD THAT:- This Court is of the opinion that when the statute is clear to provide an opportunity of hearing, there is a requirement of providing such opportunity. In fact a perusal of the Form GST DRC-01 enclosed to the writ petitions shows details have been given as regards the date by which the reply has to be submitted; date of personal hearing; time of personal hearing and venue of personal hearing. It is seen that in the Summary of the Show Cause Notice only the date for submission of reply has been mentioned. In respect to other details as stated above have been mentioned to as NA . It may be that the Proper Officer assumed that based on the reply he/she may proceed with the adjudication depending as to whether the person to whom the notice is issued had opted for personal hearing or not. But in a case where no reply is filed, a question arises whether the Proper Officer can pass an adverse order without providing an opportunity for hearing. The answer has to be in the negative else it would render the second part of Section 75 (4) redundant. The impugned order is set aside - petition disposed off.

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• 2024 (10) TMI 278
  Cancellation of GST registration of petitioner with retrospective effect - power to cancel a registration under the Central Goods and Services Tax Act, 2017 - compliance with procedural requirements under Section 29 of the CGST Act. HELD THAT:- As is manifest from a reading of Section 29, clauses (a) to (e) of Section 29(2) constitute independent limbs on the basis of which a registration may warrant cancellation. While the provision does enable the respondents to cancel that registration with retrospective effect, the mere existence or conferral of that power would not justify a revocation of registration. The order under Section 29 (2) must itself reflect the reasons which may have weighed upon the respondents to cancel registration with retrospective effect. Given the deleterious consequences which would ensue and accompany a retroactive cancellation makes it all the more vital that the order be reasoned and demonstrative of due application of mind. It is also necessary to observe that the mere existence of such a power would not in itself be sufficient to sustain its invocation. It is emphasised that the power to cancel retrospectively can neither be robotic nor routinely applied unless circumstances so warrant. When tested on the aforesaid precepts it becomes ex facie evident that the impugned order of cancellation cannot be sustained. While dealing with the right of the respondents to cancel GST registration with retrospective effect and the manner in which such power should be exercised in accordance with the statutory scheme was an issue which was noticed in Ramesh Chander vs Assistant Commissioner of Goods and Services Tax, Dwarka Division, CGST Delhi Anr. [ 2024 (1) TMI 1014 - DELHI HIGH COURT] . The Court in Ramesh Chander taking note of the contours of Section 29 had held that It is important to note that, according to the respondent, one of the consequences for cancelling a tax payer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. Thus, in light of an abject failure on the part of the authority to assign even rudimentary reasons for a retroactive cancellation, the order impugned cannot be sustained - impugned order is hereby quashed - petition allowed.

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• 2024 (10) TMI 277
  Seeking quashing the order of adjudication passed under Section 74 of the KGST / CGST Act, demand notice and order passed under Section 107 of the KGST / CGST Act - time limitation - condonation of delay - return of seized documents - recovery of input tax credit claimed by the petitioner - HELD THAT:- A perusal of the impugned order would indicate that the appellate authority has dismissed the appeal on two grounds viz., firstly, the appeal is barred by limitation; secondly, the petitioner has not made the mandatory pre-deposit of 10%. The finding of respondent No. 2 that the appeal was barred by limitation was factually incorrect inasmuch as the appeal was filed on 29.12.2023 before expiry of 4 months (3+1) and consequently, the said finding regarding the appeal being barred by limitation by proceeding on a factually incorrect premise coupled with the fact that the affidavit for condonation of delay has not been considered by respondent No. 2 - appellate authority warranting interference by this court in the present petition. Insofar as the finding recorded by respondent No. 2 as regards non-payment of mandatory pre-deposit of 10% is concerned, the same would also have to be reconsidered by the respondent in accordance with law. The order dated 31.08.2023 passed under Section 74 of the KGST / CGST passed by the Assistant Commissioner of Commercial Taxes (Audit)-4, Shivamoga for the assessment year 2018-19 is set aside - matter is remitted back for re-consideration of the appeal on merits as well as non payment of deposit of 10% and in accordance with law - petition allowed.

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• 2024 (10) TMI 276
  Challenge to impugned order passed by the respondent - mismatch between GSTR 3B with that of GSTR-1 for the year 2017-18 - service of SCN - opportunity of personal hearing - Violation of principles of natural justice - HELD THAT:- In the instant case, it is seen that notice was issued by the respondent but however, the petitioner did not receive the same. On going through the impugned order, it is seen that a total tax liability of Rs. 2,96,544/- 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 between GSTR3B and GSTR-1. This Court had an occasion to deal with a similar issue in Sri Ganesa Engineering Enterprises [ 2024 (10) TMI 125 - MADRAS HIGH COURT ]. This Court wanted to afford an opportunity to the petitioner therein by putting the petitioner on terms. In order to maintain consistency, a similar order can be passed in this writ petition also. In the light of the above discussion, the impugned order passed by the respondent in Reference Number in GSTIN 33AAMFR9785P1Z1/2017-18 dated 20.12.2023, is hereby set aside. The matter is remanded back to the file of the respondent for fresh consideration on condition that the petitioner will pay 20% of the disputed tax amount to the respondent within a period of four weeks from today. If this condition is not complied with, the order passed by the respondent will stand automatically revived. On compliance with the said condition, the petitioner will file their reply/objection along with all the relevant documents within a period of two weeks thereafter. Petition allowed.

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• 2024 (10) TMI 275
  Rectification of mistake - mistake apparent on the face of record or not - Challenge to N/N. 54/2018 Central Tax dated 9th October, 2018 which finally substituted Rule 96 (10) of the CGST Rules with effect from 9th October, 2018 - It is the case of the applicant that there are various mistakes apparent on record and therefore, this application is filed under section 114 read with Order XLVII of the Code of Civil Procedure,1908 for review of the CAV judgment in [ 2020 (10) TMI 1099 - GUJARAT HIGH COURT ] - HELD THAT:- The mistakes which are apparent on record are rectified and CAV judgment dated 20th October, 2020 therefore, now shall stand corrected accordingly. Registry to issue fresh writ accordingly. Misc. Civil Application stands disposed of.

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• 2024 (10) TMI 274
  Challenge to assessment order - petitioner contested the order and paid 10% of the disputed tax while filing an appeal - HELD THAT:- The petitioner has approached this Court by way of the present writ petition, complaining inaction on the part of respondents 1 and 2 in lifting the said order of attachment and Garnishee and in considering the representation of the petitioner dated 07.07.2023, despite passage of more than one year. In view of the fact that the petitioner has preferred an appeal and has paid 10% of the disputed tax, as required under Section 107 of the CGST Act, no further tax can be recovered from the petitioner, in pursuance of the order of assessment under appeal. In such circumstances, continuation of the order of attachment and Garnishee is clearly impermissible and against the provisions of Section 107 of the CGST Act. The relief sought is only a direction to dispose of the representation of the petitioner, dated 07.07.2023, there would be no point in driving the petitioner to go before respondents 1 and 2 for determination of a predetermined fact - Petition disposed off.

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• 2024 (10) TMI 273
  Challenge to action on the part of the Central Board of Indirect Taxes and Customs in issuance of a Notification bearing No. 56/2023 dated 28.12.2023 - Interpretation of the term force majeure in relation to the extension of time limits for passing orders under the CGST Act, 2017 - HELD THAT:- This Court having heard the learned counsels appearing on behalf of the parties is of the opinion that it prima facie appears that the Notification bearing No.56/2023 is not in consonance with the provisions of Section 168 (A) of the Central GST Act, 2017. If the said notification cannot stand the scrutiny of law, all consequential actions so taken on the basis of such notification would also fail. This Court is of the opinion, that the petitioners herein are entitled to an interim protection pending the notice. Till the next date, no coercive action shall be taken on the basis of impugned assessment order dated 23.04.2024 - The respondents are directed to file their affidavits on or before 15.09.2024. List accordingly.

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• 2024 (10) TMI 272
  Challenge to impugned order of assessment and the consequential order passed in the rectification petition filed by the petitioner - non-application of mind - non-speaking order - impugned order of adjudication is challenged on the premise that the it has been passed without dealing with the petitioner s objections and without assigning any reasons for rejecting the detailed objection filed by petitioner - violation of principles of natural justice. Revenue would submit that the respondent would re-do the entire assessment. HELD THAT:- The impugned order of assessment dated 30.06.2023 is set aside and the Writ Petition stands disposed of. The impugned order of assessment shall be treated as a show cause notice. The petitioner shall appear before the respondent on 03.10.2024 at 11.00 AM and submit their objections along with relevant documentary evidence. If any such objections are filed, the respondent shall consider the same and pass a speaking order in accordance with law after affording an opportunity of reasonable hearing to the petitioner. The Writ Petition challenging the order passed in the rectification petition filed by the petitioner, it was submitted by both the learned counsel for the petitioner as well as the learned Additional Government Pleader for the respondent that in view of the fact that the impugned order of assessment is now being set aside, nothing survives for adjudication in the said Writ Petition - Petition dismissed.

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• 2024 (10) TMI 271
  Liability of the petitioner to pay GST under reverse charge mechanism - HELD THAT:- The issue in controversy involved in the present petition as regards liability of the petitioner to pay GST under reverse charge mechanism is squarely covered by the decision of the Honb le Division Bench of this Court in [ 2022 (4) TMI 774 - KARNATAKA HIGH COURT] , wherein it has held Whatever the ratio, the tax in its entirety has reached the hands of the ex-chequer. Merely for the reason that there was no strict adherence to the ratio as envisaged during the relevant point of time for payment of tax insofar as the assessee and the service provider, the assessee cannot be made liable to pay the double tax. What is significant to note is that the discharge of entire tax amount is not disputed. Thus, the reverse charge mechanism would not lead to double taxation. As can be seen from the finding recorded by this Court at paragraph No.9 of the order, so long the discharge of entire tax amount is not disputed and reverse charge mechanism would lead to double taxation, petitioner cannot be made liable to pay double tax as held in the aforesaid order. Thus, the judgment of this Court in M/s. Zyeta Interiors Pvt. Ltd., and Anr Vs. The Vice Chairman Settlement Commission and Anr [ 2021 (10) TMI 233 - KARNATAKA HIGH COURT] is directly and squarely applicable to the facts of the case on hand and present appeal deserves to be disposed of in terms of the aforesaid judgment. Impugned order at Annexure-A is hereby quashed - petition allowed.

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• 2024 (10) TMI 270
  Violation of principles of natural justice - Validity of SCN - cryptic notice - Whether the show cause notice for cancellation of registration and action of suspending the registration by order dated 27.01.2024 is justifiable and proper or not? - HELD THAT:- Since the impugned show-cause notice and suspension of registration is founded upon a cryptic notice dated 27.01.2024, both are set aside. On regular basis, this kind of notices are noticed whereby, without assigning adequate reasons, the business of taxpayer is suddenly suspended. In absence of basic reasons available in the show-cause notice, the party aggrieved by it cannot even prefer an effective representation - the authorities should sensitize themselves and should not pass order/notice in the mechanical manner it is passed in the present case. We hope and trust that, henceforth, the authorities will take care of this aspect. The impugned show-cause notice dated 27.01.2024 and the order suspending the registration are set aside. Liberty is reserved to the respondents to proceed against the petitioner in accordance with law - Petition allowed.

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• 2024 (10) TMI 269
  Challenge to impugned demand order along with its summary in e-form DRC-07 - violation of principles of natural justice - appropriate forum - appellate forum - HELD THAT:- It is for the Appellate Forum to decide, whether the appeal is within time, and if not, whether the delay needs to be condoned or not. The writ petition is disposed of with liberty to petitioner to approach Appellate Authority, as provided under Section 107 of the Uttarakhand GST Act.

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• 2024 (10) TMI 268
  Provisional Attachment of petitioner s bank account - petitioner states that he has not received any further/subsequent orders of provisional attachment under Section 83 of the CGST Act - HELD THAT:- Admittedly, in terms of Section 83 (2) of the CGST Act, an order passed under Section 83 (1) of the CGST Act, would cease to operate after expiry of a period of one year from the date the order. Thus, even if it is assumed that an appropriate order under Section 83 of the CGST Act was passed by the respondent no. 1, on the strength of which communications were issued to the respondent banks and the respondent no. 7 (RTO), the same would no longer be operative. Since the provisional attachment order(s) are no longer operative, the respondent banks are hereby directed not to prevent the petitioner from operating the concerned bank account/s, on the basis of communication(s)/order(s) impugned in the present petition. Petition disposed off.

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• 2024 (10) TMI 267
  Provisional Attachment of bank account - time limitation - HELD THAT:- Since it is the petitioner s case that its bank account was attached under Section 83 (1) of the CGST Act, 2017 in the year 2020-21 and the said order has not been removed or revived, the said order would be now inoperative by virtue of Section 83 (2) of the CGST Act, 2017. The petition is disposed of by directing that respondent no. 2 bank would not interdict the operation of the petitioner s bank accounts, solely on the basis of any order under Section 83 (1) of the CGST Act, 2017, passed in the year 2020-21.

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• 2024 (10) TMI 266
  Levy of GST - mining lease amounts paid by the petitioner to the Government - N/N. 13/2017-Central Tax (Rate) - HELD THAT:- Reliance placed in the Division Bench Judgment in a batch of cases where the lead case is A. Venkatachalam v. Assistant Commissioner (ST), Palladam [ 2024 (2) TMI 488 - MADRAS HIGH COURT ] where it was held that It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision. This petition is liable to be disposed of on the same terms. Consequently, the petitioner is permitted to submit his reply to the intimation within a maximum period of four weeks from the date of receipt of a copy of this order.

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• 2024 (10) TMI 265
  Classification of the applicant s business activities under Rule 32(5) of the CGST Rules, 2017 - person dealing in buying and selling of second hand goods where tax is to be paid on the difference between the selling and purchase price or not - transaction of purchases of old / second hand gold jewellery / ornaments or diamond jewellery / ornaments from individuals who are not dealers / registered under GST - supply of goods or supply of services - reverse charge mechanism - applicant is liable to pay GST on the goods received from the buyer or not. HELD THAT:- In terms of sub-section (1) of section 9 of the GST Act, tax on intra-State supplies of goods or services or both is levied on the value determined under section 15 of the Act ibid. Further, as per sub-section (1) of section 15 of the GST Act, the value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. However, in respect of second-hand goods, a person dealing is such goods is allowed to pay tax on the margin i.e. the difference between the value at which the goods are supplied and the price at which the goods are purchased subject to certain restrictions. In the instant case, the applicant has submitted that he purchases second-hand gold or diamond jewelleries from unregistered individuals and thereafter repairs or reshapes these items by melting the old jewelleries and transforming those into new pieces, such as changing a gold bangle into a bracelet or an earring into a locket. There can be no denying that the item namely bangle is different from a bracelet. Similarly, when an earring is melted to convert it into a locket, it loses it s nature and characteristics to emerge as a new commodity. The process is nothing but manufacturing as per clause (72) of section 2 of the GST act which states that, manufacture means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term manufacturer shall be construed accordingly. In the instant case, the purchased gold is used as a raw material or input to make a new commodity. In White Gold Bullion (P.) Ltd [ 2023 (5) TMI 747 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA ] it is observed by the Advance Ruling Authority that when the applicant melts the gold jewellery into gold lumps, the nature of goods changes in as much as the characteristics of the articles and the classification changes. Since the processing done by the applicant changes the nature of goods, they do not satisfy the second condition mentioned supra at para 10.2 and hence not eligible to avail the benefits of Rule 32 (5) of CGST Rules, 2017 . Where the applicant uses the purchased old / second hand jewelleries/ornaments as a raw material or input for manufacturing a new article is not entitled to pay GST on the margin value, i.e. difference between the sale price and purchase price as stipulated in Rule 32 (5) of CGST Rules, 2017. Hence, in this scenario, applicant cannot avail of the benefit of provisions stated under sub-rule (5) of rule 32 of CGST rules, 2017 - in cases where the applicant, after making purchases of old / second-hand jewelleries/ornaments, carries out the process of melting it to manufacture a new/different ornament, the applicant cannot adopt the valuation method as prescribed in rule 32 (5). However, where the old gold ornaments/jewellery are purchased and subsequently supplied after minor processing that does not change the nature of the ornaments so purchased, the applicant can pay tax on the value as determined under rule 32 (5). Thus, rule 32 (5) is available only when a registered person dealing with buying and selling of second hand goods only. In other words where the registered person deals with different business activities such as engage in supply of services, manufacturing or selling new articles apart from dealing with buying and selling of second hand goods cannot avail the benefit of rule 32 (5). In such a case GST is payable at applicable rate on actual value of the commodity and not on margin value.

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• Income Tax

• 2024 (10) TMI 264
  Validity of reassessment notices/ proceedings - scope of notices issued under Section 148 of the new regime between July and September 2022 - Application of TOLA to the Income Tax Act after 1 April 2021 - Whether TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021? - Whether the reassessment notices issued u/s 148 of the new regime between July and September 2022 are valid? - HELD THAT:- The exercise of the jurisdiction under Article 142 is meant to supplement the existing legal framework to do complete justice between the parties. In a given circumstance, this Court can supplement a legal framework to craft a just outcome when strict adherence to a source of law and exclusive rule based theories create inequitable results. The directions issued by this Court under Article 142 cannot be considered as a ratio because they are issued based on the peculiar facts and circumstances of the cause or matter before this Court. In State v. Kalyan Singh [ 2017 (4) TMI 1564 - SUPREME COURT] this Court observed that a judgment has two components: (a) declaration of law; and (b) directions. In Bir Singh v. Mukesh Kumar [ 2019 (2) TMI 547 - SUPREME COURT] it was held that what is binding on all courts under Article 141 is the declaration of law, and not the directions issued under Article 142. This Court has exercised its jurisdiction under Article 142 in tax matters where the actions of the Revenue are not in accordance with the law. In Whirlpool of India Ltd. v. CIT [ 2000 (2) TMI 15 - SUPREME COURT] this Court directed the Income Tax Officer to give effect to the order of the Income Tax Appellate Tribunal by disallowing a particular deduction. In CIT v. Greenworld Corporation [ 2009 (5) TMI 14 - SUPREME COURT] the issue before this Court was whether a Commissioner of Income Tax appropriately issued directions under Section 263 of the Income Tax Act to an assessing officer to reopen assessments. It was held that the facts of the case did not merit the CIT to issue directions to the assessing officer. Consequently, this Court termed the reassessment notice issued by the assessing officer to be illegal and exercised its jurisdiction under Article 142 to direct the reopening of the assessment by an appropriate assessing authority. The scope of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] extended to all the reassessment notices issued between 1 April 2021 and 30 June 2021 under the old regime - The purpose of this Court in deeming the reassessment notices issued under the old regime as show cause notices under the new regime was two-fold: (i) to strike a balance between the rights of the assesses and the Revenue which issued approximately ninety thousand reassessment notices after 1 April 2021 under the old regime; and (ii) to avoid any further appeals before this Court by the Revenue on the same issue by challenging similar judgments and orders of the High Courts (arising from approximately nine thousand writ petitions). Ashish Agarwal [supra] was primarily concerned with the validity of the reassessment notices issued between 1 April 2021 and 30 June 2021 under the old regime. The scope of the directions in Ashish Agarwal (supra) applied PAN INDIA, including all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021, In Ashish Agarwal (supra), this Court was aware of the fact that it could not have used its jurisdiction under Article 142 to affect the vested rights of the assesses by deeming Section 148 notices under the old regime as Section 148 notices under the new regime. Hence, it deemed the reassessment notices issued under the old regime as show cause notices u/s 148A(b) of the new regime. Further, the Court directed the Revenue to provide all the relevant material or information to the assesses and thereafter allowed the assesses to respond to the show cause notice by availing all the defences, including those available u/s 149. Thus, the Court balanced the equities between the Revenue and the assesses by giving effect to the legislative scheme of reassessment as contained under the new regime. It supplemented the existing legal framework of the procedure of reassessment under the Income Tax Act with a remedy grounded in equitable standards. Effect of the legal fiction - A legal fiction is a supposition of law that a thing or event exists even though, in reality, it does not exist. The word deemed is used to treat a thing or event as something, which otherwise it may not have been, with all the attendant consequences.154 The effect of a legal fiction is that a position which otherwise would not obtain is deemed to obtain under the circumstances. Under Section 148A(b), the assessing officer has to comply with two requirements: (i) issuance of a show cause notice; and (ii) supply of all the relevant information which forms the basis of the show cause notice. The supply of the relevant material and information allows the assessee to respond to the show cause notice. The deemed notices were effectively incomplete because the other requirement of supplying the relevant material or information to the assesses was not fulfilled. The second requirement could only have been fulfilled by the Revenue by an actual supply of the relevant material or information that formed the basis of the deemed notice. While creating the legal fiction in Ashish Agarwal (supra), this Court was cognizant of the fact that the assessing officers were effectively inhibited from performing their responsibility under Section 148A until the requirement of supply of relevant material and information to the assesses was fulfilled. This Court lifted the inhibition by directing the assessing officers to supply the assesses with the relevant material and information relied upon by the Revenue within thirty days from the date of the judgment. Thus, during the period between the issuance of the deemed notices and the date of judgment in Ashish Agarwal (supra), the assessing officers were deemed to have been prohibited from proceeding with the reassessment proceedings. To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 2021 were stayed till the date of supply of the relevant information and material by the assessing officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices. In Ashish Agarwal (supra), this Court provided two weeks to the assesses to reply to the show cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to Section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is: (i) the time during which the show cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices. Interplay of Ashish Agarwal with TOLA - Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under Section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under Section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under Section 148 of the new regime will end on 18 August 2022. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under Section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under Section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under Section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under Section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under Section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income Tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time barred. Thus, we conclude that: a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside; The judgments of the High Courts rendered in Union of India v. Rajeev Bansal [ 2023 (2) TMI 1081 - ALLAHABAD HIGH COURT] , Keenara Industries Pvt. Ltd. v. ITO, Surat [ 2023 (3) TMI 104 - GUJARAT HIGH COURT] , J M Financial and Investment Consultancy Services Pvt. Ltd. v. ACIT [ 2022 (4) TMI 1446 - BOMBAY HIGH COURT] , Siemens Financial Services Pvt. Ltd. v. DCIT [ 2023 (9) TMI 552 - BOMBAY HIGH COURT] , Geeta Agarwal v. ITO [ 2022 (10) TMI 1192 - RAJASTHAN HIGH COURT] , Ambika Iron and Steel Pvt Ltd v. PCIT [ 2022 (1) TMI 1291 - ORISSA HIGH COURT] , Twylight Infrastructure Pvt Ltd v. ITO [ 2024 (1) TMI 759 - DELHI HIGH COURT] , Ganesh Dass Khanna v. ITO [ 2023 (11) TMI 763 - DELHI HIGH COURT] and other judgments of the High Courts which relied on these judgments, are set aside to the extent of the observations made in this judgment.

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• 2024 (10) TMI 263
  Faceless assessment of income escaping assessment - notice issued under Section 148 of the Act is issued by the Jurisdictional Assessing Officer ( JAO ) and not by a Faceless Assessing Officer ( FAO ), as is required by the provisions of Section 151A - HELD THAT:- It is now well settled that for a notice to be validly issued for reassessment under Section 148 of the Act, the Respondent-Revenue would need to be compliant with Section 151A, which has been interpreted and analysed in detail by a Division Bench of this Court in the case of Hexaware Technologies Limited [ 2024 (5) TMI 302 - BOMBAY HIGH COURT ] and in Nainraj Enterprises Pvt. Ltd. [ 2024 (7) TMI 511 - BOMBAY HIGH COURT ] wherein held Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice under Section 148, as the same would amount to breach of the provisions of section 151A of the IT Act. There is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice under Section 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of Revenue is to be accepted, then even when notices are issued by the FAO, it would be open to an assessee to make submission before the JAO and vice versa, which is clearly not contemplated in the Act. Therefore, there is no question of concurrent jurisdiction of both FAO or the JAO with respect to the issuance of notice under Section 148 of the Act. Decided in favour of assessee.

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• 2024 (10) TMI 262
  Unexplained money u/s 69A - initial show cause notice was u/s 68 - violation of principles of natural justice - HELD THAT:- The two provisions are entirely independent provisions. While under Section 68, if sum is found credited in the books of an assessee maintained for the previous year in absence of any explanation about the nature and source thereof or if the explanation is found to be not satisfactory, the sum so credited may be charged by the income tax as the income of the assessee for the previous year, while in the case of Section 69A, if it is found that the assessee is the owner of any money, jewellery or other valuable articles and the same is not recorded in the books of accounts, if any, maintained by him for any source of income and in absence of any explanation about the nature and source of acquisition of the same or in absence of satisfactory explanation, the above would be deemed to be income of the assessee for such financial year. In this case although, the notice to show cause clearly identified that the amount proposed to be added back was by invoking the provisions of Section 68 of the said Act and the petitioner on such premise had responded to the same, the final assessment order was passed by treating the same to be an unexplained money under Section 69A of the said Act. The revenue authorities had invoked the provisions of Section 69A add back Rs.1,50,45,00,000/- to the petitioner s income as unexplained money, no notice in this regard had been served prior to taking a decision. Language used in Section 69A of the said Act clearly required the assessee to be afforded with an opportunity to explain. As such, even if the respondents were of the opinion that in this case Section 69A of the said Act ought to be invoked, in my view the respondents ought to have at least prior to passing of the assessment order granted an opportunity to the petitioner to explain as to why the aforesaid sum of Rs.1,50,45,00,000/-should not be added back as an unexplained money under Section 69A of the said Act. In absence of any notice, the petitioner was obviously taken by surprise and was denied the opportunity to appropriately explain The determination made by the respondents as is reflected in the assessment order stands vitiated by reasons of failure on the part of the revenue authorities to put the petitioner on notice in respect of addition u/s 69A of the said Act. Since, the above is violative of the principles of natural justice, the order impugned becomes unenforceable in law and is declared as such. The order impugned be treated as a show cause. This, however, shall not prevent the respondents from taking any additional point or raising any additional grounds if so advised. A notice would be required to be served as an addendum to the show cause notice, to the petitioner. Such addendum, if any, must be served within a period of 15 days from date.

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• 2024 (10) TMI 261
  Nature of receipt - compensation as awarded to the assessee for termination of the contract - taxable under Sections 28(iv)/28(va) or alternatively u/s 45 - ITAT deleting the addition on account of termination of bottling license as capital receipt as not taxable u/s 28(iv)/28( a) or alternatively u/s 45 of the IT Act - HELD THAT:- There were certain trade disputes arose between the assessee and the company namely Hindustan Coca-Cola Beverage Pvt Ltd and in order to settle those disputes the amount of compensation was received for Rs. 4,30,88,084/- only. Thus, it was alleged by the Revenue that the impugned amount does not represent the compensation as a result of termination of the contract and thus the principles laid down in the case of Oberoi Hotels Pvt Ltd [ 1999 (3) TMI 2 - SUPREME COURT ] are not applicable. Therefore, the same should be made subject to tax either under the provisions of section 45 or 28(va). Thus the issue arises before us so as to find out whether the amount represents the compensation for the termination of the contract. As important to note that the main settlement agreement has to be read as a whole and in substance. Tribunal after considering the settlement agreement arrived at by the respondent- assessee with the Coco Cola India has upheld the order passed by the CIT(Appeals) on finding of fact that the source of income of the assessee as a result of the main agreement had come to an end. Tribunal also verified the said facts from the financial statements filed by the assessee in the year ending on 31st March, 2009 and 2010 for the subsequent years. In view of the above concurrent findings of facts, we are of the opinion that the Tribunal has rightly followed the decision of the Hon ble Apex Court in case of Oberoi Hotel (P) Ltd [ 1999 (3) TMI 2 - SUPREME COURT ] Disallowance made 20% of total purchases of raw material - ITAT restricted addition to 10% - Undeniably, the onus lies upon the assessee justify its claim based on the documents. In the event the assessee fails to justify, the AO has to see the claim of the assessee based on the circumstantial evidence, history of the case, comparable cases so as to find out whether the claim of the assessee is genuine or excessive before making any disallowance. But we find that the AO has not done such exercise but made the ad-hoc disallowance in the absence of supporting documents. In our considered view, such ad-hoc disallowance is not permitted under the provisions of law unless it is based on scientific basis. Yet, the claim of the assessee cannot be allowed in to-to in the absence of documentary evidence. No substantial question of law.

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• 2024 (10) TMI 260
  Nature of receipt - severance payment or other termination-related compensation Addition as profits in lieu of salary u/s. 17(3) v/s non-taxable capital receipt - as per DR severance compensation was rightly treated as profits in lieu of salary under Section 17(3) as the amount was paid due to the termination of employment - whether a severance payment or other termination-related compensation is subject to tax as salary income or can be treated as a non-taxable capital receipt? - HELD THAT:- Section 56(2)(xi), introduced w.e.f. 1st April 2019, deals with compensation received or receivable in connection with the termination or modification of terms of employment contracts. However, this amendment applies to assessment years starting from AY 2019-20 onwards. Since the current assessment year is AY 2018-19, the amendment has no bearing on the current case. We are of the considered opinion that the severance compensation received by the assessee is a capital receipt, not chargeable to tax u/s 17(3). The order of the CIT(A) is set aside, and the addition made by the AO is deleted. Given that the addition u/s 17(3) of the Act is being set aside, the consequential levy of interest under Sections 234A/B/C/D of the Act and the initiation of penalty proceedings under Section 270A do not survive. Appeal of the assessee is allowed.

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• 2024 (10) TMI 259
  Addition made on account of 15% grants utilized as income of assessee as per GOG resolution which the assessee offered in the previous years - HELD THAT:- The assessee furnished documentary evidence, including the GOG resolution dated 27.05.1998 and audited financial statements, to demonstrate the consistent and appropriate application of the 15% charge only to grants utilized by TCGL. The records clearly indicate that the decentralized grants, were merely routed through TCGL and were directly managed and utilized by other government agencies, such as District Collectors. These passthrough funds did not impact TCGL s operational finances and, therefore, were not subject to the 15% charge. We find that the assessee s treatment of these funds is in line with the established accounting practices and the terms of the GOG Resolution. CIT(A) conducted a thorough examination of the facts, submissions, and relevant financial records. CIT(A) rightly observed that the AO s addition was based on assumptions and conjecture, without any substantive evidence to support the contention that TCGL was obligated to charge 15% of the decentralized grants as income. CIT(A) s findings are well-reasoned and supported by the consistent policy followed by the assessee in recognizing income. The principle that only real income can be taxed, and not notional or hypothetical income, is well-settled in law. The alleged income was never accrued to TCGL, nor did it represent real income as the funds were never utilized by TCGL but were simply transferred to other government agencies as per GOG s directions. The addition made by the AO goes against the basic tenet of income tax law, which mandates that taxation must be based on income that has actually accrued or arisen. Appeal filed by the Revenue is dismissed.

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• 2024 (10) TMI 258
  Penalty levied u/s 271(1)(c) - Addition of expenditure in the absence of production of bills and vouchers - HELD THAT:- Assessee is engaged in the business of purchase of agriculture lands from farmers / land owners for development or to sell and in the F.Y. 2005- 06, the assessee has debited land development expenses incurred during the period from 1995 to 2005 on acquisition of lands, as the assessee could not submit the details/vouchers till the completion of the assessment proceedings and accordingly the AO has made the addition. Whereas the CIT(A) on the land development expenses claim has granted partial relief to the extent of 25% of the claim and sustained @75% - In the penalty proceedings, AO has issued a show cause notice dated 20.01.2020 and A.O observed that since the assessee has not filed any explanations and the assessee has furnished the inaccurate particulars of income has levied penalty. Prima facie, it is clear that the assessee has complied with the notice and filed the submissions on 28-01- 2020 before the penalty order is passed. We considered the facts that the assessee is dealing with the farmers in acquisition of lands being a unorganized market and claiming land development expenses paid from the period 1995 to 2005, the assessing officer has made disallowance with the finding that the assessee has not submitted the details/bills and vouchers and further the assessing officer has not doubted the genuineness of claim of land development expenditure. We are of the view that penalty cannot be automatic and every addition in the assessment proceedings cannot be gate way for levy of penalty and relay on the decision of Manjunatha Cotton and Ginning factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT] Similarly the penalty cannot be levied in case of adhoc disallowance and estimation i.e. 75% of the total claim sustained by the CIT(A) in the absence of bills and vouchers. Whereas the assessee has made a claim under the bonafide belief that it is allowable under the law and we rely on the ratio of decision of CIT Vs. Reliance Petroleum Products Ltd [ 2010 (3) TMI 80 - SUPREME COURT] - We are of the opinion that the penalty cannot be sustained. Appeal filed by the assessee is allowed.

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• 2024 (10) TMI 257
  Income deemed to accrue or arise in India - residential status of the assessee under the India-USA DTAA - Assessee has stayed in India for more than 183 days in this AY - whether assessee should be treated as resident of India for tax purposes and his US income should also not be taxed in India u/s 5 of Indian Income Tax Act, 1961. HELD THAT:- Generally, investments in securities, mutual funds, banks move not necessarily with residence of the assessee but on the basis of rate of return in particular state. For determination of economic relationship, place of business, place of Administration of property and place of earning wages (remuneration) (profit) is of importance. Ambiguous factors, needs to be avoided. In this background and on the basis of the facts stated above, we proceed to decide the issue involved. As important that assessee is staying in India for the current year for more than 183 days and therefore according to the domestic law, he is considered to be the resident of India. He stays in India with his wife, son and daughter. His other daughter is staying in USA for the purpose of study. The stay of his extended family including parents in USA is not so much relevant to decide whether his personal relationship is close to USA or not. This is also so because, though his parents are USA National, but his brother and his sisters are also staying there. He has a home in India. He also has a home in USA which is earning rental income, purchased by mortgage loan. Regarding his economic interest, he has come back to India for carrying on business in a private limited company which is set up by him and his wife in 2009. The company is involved in distribution of films. Assessee has attended along with his wife five Board meetings of the above company. Therefore, it is important to note that assessee has an active involvement in a running of this company in India. In India he has operative bank accounts with Union Bank of India and ICICI bank. He has also investment in mutual funds. However, operating a bank account and having an investment in mutual funds may not have any vitality of economic relationship because these are passive investments and may flow to any country irrespective of the residence if the other laws permit, based on rate of return. From USA, assessee is deriving rental income where his house property is rented out, he has investments in bank accounts as well as alternative investments. He has also other investments where dividend income accrues along with the increase in market price of the investment. Thus, he does not have any active involvement in USA for earning wages, remuneration, profit. Therefore, on comprehensive appraisal of the personal relationship and economic relationship of the assessee, tilt more in favour of being close to India then US. Accordingly, we hold that the assessee is a resident of India in terms of Article 4(2)(a) of the Indo- US DTAA as a resident of USA. In view of this, the Ground Nos. 3 and 4 of the appeal are dismissed. Consequently, all his income derived in USA, is chargeable to tax in India by virtue of the provisions of section 5 of the income tax act. On the basis of the income tax return of assessee filed by him in USA, does not show that he is paid any tax there, therefore, in absence of any payment of tax in the country of source, no credit is available against tax payable by the assessee in India. As submitted by the learned authorized representative that the only issue is with respect to the decision of closure center of vital interest of the assessee and taxability of the income will follow that decision, we confirm the order of the learned lower authorities in taxing the dividend income, capital gains, sourced by the assessee in USA. Decided against assessee.

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• 2024 (10) TMI 256
  Ex-parte dismissal of appeal by the Ld. NFAC for non-prosecution - HELD THAT:- We are heedful to the restriction placed by clause (a) of sub-section (1) of section 251 of the Act which obligates the CIT(A) to adjudicate the issue either by confirming or annulling the addition or reducing or enhancing the addition made by the assessing officer without the right to remand the matter back. However, while exercising the jurisdiction u/s 251(1)(a) CIT(A) is mandated to state point of determination, its decision thereon and clear reasons therefore in terms of section 250(6) of the Act. It is a trite law as laid down by Hon ble Supreme Court in case Chandra Kishore Jha Vs Mahavir Prasad [ 1999 (9) TMI 948 - SUPREME COURT ] 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 . Therefore, in the absence of clear authorisation in the statue permitting the Ld. NFAC to culminate proceedings without touching merits is inconsonance with sub-section (6) of section 250 of the Act, hence the impugned order on very terms qualifies to be set-aside on this score too. For the aforestated two reasoning, without touching merits of the case, we set aside the impugned order and remand it back to the Ld. NFAC with a direction to deal therewith de-novo in accordance with law on merits after according not less than three effective opportunities of hearing to the assessee and pass a speaking order in terms of section 250(6) of the Act. The grounds accordingly stands partly allowed.

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• 2024 (10) TMI 255
  Deduction u/s 80P(2) - interest income earned by a credit co-operative society from fixed/term deposits held with various co-operative societies cooperative banks - during the conduct of its principal business of providing credit facilities to its members deposits therefrom are accepted and to service interest liability thereon it in turn generated interest by placing them either into investment with other financial institutions or by lending them to other members - HELD THAT:- In the present case, the reasoning given by the tax authorities in denying the claim for deduction u/s 80P(2)(d) of the Act is that interest was received from banks has no legs to stand as a cooperative bank is principally a cooperative society and holds a banking license to operate on a larger scale under the guidelines of RBI. This issue was came to consider in CIT Vs Totagars Cooperative Sale Society , [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] wherein their lordships referring to the decision of Hon ble Apex Court in the case of Totgars Co-operative Sales Society Ltd [ 2010 (2) TMI 3 - SUPREME COURT] held that the ratio of decision of the Hon ble Supreme Court in the aforesaid case (supra) not to be applied in respect of interest income on investment as same falls u/s 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. The interest income earned by the appellant society from its investment held with other cooperative banks since being a registered co-operative society under respective state laws, qualifies for deductions u/s 80P(2) - we vacate the balance disallowance retained by first appellate authority and direct the AO delete the disallowance in its entirety. The grounds accordingly stand adjudicated.

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• 2024 (10) TMI 254
  Ex-parte dismissal of appeal by the Ld. NFAC - HELD THAT:- In the case of Smt. Ritu Devi v. CIT [ 2003 (8) TMI 10 - MADRAS HIGH COURT] time of just few days was given to the assessee to furnish reply which was also held as denial of real opportunity. It shall be worthy to underlined that the opportunity of being heard should be real, reasonable and effective and same should not be empty formalities, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard. In I.E. Vittal v. Appropriate Authority [ 1996 (6) TMI 81 - ANDHRA PRADESH HIGH COURT] it is held that, where a decision is based upon a document in a proceeding, copy of the same should be provided to the affected party according reasonable period to negate, otherwise, it would violate the principles of natural justice as the opportunity of being heard should be an effective opportunity and not an empty formality, as the denial of reasonable opportunity renders the action void. We are of considered view that, the action of the Ld. NFAC is suffered from sufficiency of reasonable opportunity to the appellant to adduce necessary evidential material in support of his claim made and to represent effectively vis- -vis to comply with the requirements sought. Placing reliance on St. Paul s Anglo Indian Education Society [ 2003 (2) TMI 41 - PATNA HIGH COURT] we are mindful to hold that the impugned adjudications are unjustified as the appellant was deprived of reasonable opportunity and time to produce all relevant documents to substantiate his claims as made in the returns of income filed vis- - vis grounds of appeals raised. In the event we deem in all the fairness and in larger interest of justice necessary to accord one more real opportunity to the appellant to comply with notices and contest these cases on merits. In view of this, without offering any comments on merits of the cases, we set-aside these impugned orders and remit them back to the Ld. NFAC with a direction deal therewith de-novo and pass separate speaking orders u/s 250(6) of the Act preferable in three effective hearing opportunities.

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• 2024 (10) TMI 253
  Assessment made u/s 153C - period of limitation - propriety and legality of assessment for the A.Y. 2011-12 in question having regard to the embargo of limitation placed u/s 153C - HELD THAT:- It is the case of the assessee that the limitation period of 6 years has to be counted with reference to the date of requisition of books and other documents etc. seized from the custody of searched person. The date of search is not relevant for the purposes of limitation in Section 153C. What is relevant is the date of receipt of seized assets, documents by the AO of the non-searched person i.e. assessee in the instant case. When the limitation is counted from the date of requisition of books, documents by the AO falling in A.Y. 2018-19, the assessment, the A.Y. 2011-12 in question is clearly found to be outside the period of limitation assigned for invocation of section 153C of the Act. Similar view has been taken in Marconi Infratech [ 2024 (7) TMI 129 - ITAT DELHI] in identical set of facts. We thus find potency in the plea of the assessee for holding the assessment for A.Y. 2011-12 in question u/s 153 to be barred by limitation. The assessment order passed under Section 153C of the Act being barred by limitation and thus a non-est order and nullity in the eyes of law. The assessment order giving rise to present proceedings thus, is required to be quashed being barred by limitation. Validity of sanction accorded - The satisfaction note recorded is generic and encompasses several years from A.Y. 2011-12 up to A.Y. 2017-18 in a composite manner. No seized material has been identified qua each assessment year and thus satisfaction drawn by the AO without reference to seized material pertaining to A.Y. 2011-12, is illusory and unsustainable in law. A reference was made to the judgment rendered in the case of Dev Technofab Ltd [ 2024 (5) TMI 1468 - DELHI HIGH COURT] As evident from the satisfaction note that the alleged undisclosed income is not identifiable with any assessment year. In the absence of any particular of incriminating material available, such obscure and vague satisfaction note does not entitle the AO to assume jurisdiction u/s 153C of the Act. Neither the income assessed u/s 153C of the Act appears to relate to any incriminating material nor the so called incriminating material has been shown to be attributable to A.Y. 2011-12.

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• 2024 (10) TMI 252
  Disallowing TDS Credit - Appeal of the Assessee has been erroneously dismissed by the CIT(A) for the reason that the Assessee failed to prove that any TDS was deducted by the tenant and not deposited - HELD THAT:- It is not in dispute that in the case of co-owner namely Sh. Krishna Saran Dass on an identical fact for the identical period, the Ld. CIT(A) by following the Judgment of Yashpal Sahni [ 2007 (7) TMI 7 - HIGH COURT , BOMBAY ] allowed the Appeal of the Assessee thereon. It is found that the rental cheques issued by the tenant to the Assessee have been dishonored and the Assessee has filed the case for recovery before the High Court. The Ld. CIT(A) in the case of co-owner, in similar circumstances, allowed TDS credit by following Judgment of Hon ble Bombay High Court in the case of Yashpal Sahni [ 2007 (7) TMI 7 - HIGH COURT , BOMBAY ] The case of the present Assessee being identical, the Department of Revenue cannot have different view and deny the benefit. We set aside the order of the CIT(A) and direct the Department to allow the TDS credit to the Assessee and consequential benefits. Appeal filed by the Assessee is allowed.

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• 2024 (10) TMI 251
  Penalty u/s 271AAB - treating an amount included in the ROI as undisclosed income susceptible to penalty - search in the present case was carried out u/s 132 on assessee and assessment was accordingly carried out as per provision of section 153A making additions u/s 50C - as per DR search not taken place, the assessee would not have disclosed the income on account of LTCG and cash transaction declared and included in the return of income - HELD THAT:- 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. Needless to say, 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 under Section 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. Besides, the case of the assessee does not fall in the definition of undisclosed income provided in the Explanation appended to Section 271AAB - 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 and cash transactions has not been alleged to be false by the Revenue. Significantly, the LTCG in question is otherwise taxable in law in so far as the A.Y. 2021-22 is concerned. The transactions are routed through Banking Channel and advance tax has also been paid. Under these circumstances, income from LTCG cannot be treated as undisclosed income by any stretch of imagination. In the identical fact situation, the Co-ordinate Bench in the case of wife 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.

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• 2024 (10) TMI 250
  Adhoc disallowances on employee training expenses and printing and stationery expenses - Assessee submits before your kind Honour that the Assessee is a captive service entity, and the business model of the Assessee works on Cost plus profit model. Without admitting, even if there is unreasonable increase in expenses, then the same results in additional income being offered to tax and would be in the interest of revenue - HELD THAT:- We observe that DRP while deciding this issue against the assessee has not at all discussed these arguments in its order and has simply gone away by observing that the assessee had failed to submit necessary documentary evidence, which in our view, is not correct for the reason that there is corresponding increase in revenue from operations as well as profits of the impugned year and hence without appreciating this aspect the ad hoc disallowances are legally not permissible. Therefore, we restore this matter to the AO for deciding afresh considering all the main and alternative arguments of the assessee. Non Consideration of returned income by AO - AO despite the directions of Ld DRP has not considered the returned income and has considered the income determined while processing the return of income u/s 143(1). We observe that the Ld DRP has categorical held that the AO is directed to consider the determination of income as the return of income instead of determining the income as per intimation u/s 143(1). Therefore, the AO is directed to follow the directions of the DRP, we order accordingly. Credit of TDS as claimed by assessee - We direct the AO to examine this issue and decide the same as per law. TP adjustment - Rate of interest on outstanding of receivable - As per own decision in assessee s case, we hold that Libor +200 would be the rate to be applied for bench marking the transaction of interest receivable on outstanding.

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• 2024 (10) TMI 249
  Penalty u/s 271(1)(c) - deduction u/s 80DD denied - as submitted assessee is retired individual the son of the assessee being disabled person having disability of more than 80% was not allowed deduction under section 80DD even after submissions of required documents in the shape of medical certificate, having disability of more than 80% HELD THAT:- Assessee is already facing great hardship and raising a claim, which could not be substantiated does not attract penalty u/s 271(1)(c) of the Income Tax Act. On this preposition rely upon the decision of Reliance Petro-products Private Limited [ 2010 (3) TMI 80 - SUPREME COURT ] wherein it was categorically held by Hon ble Supreme Court that merely making an incorrect claim which is not substantiated does not attract penalty under section 271(1)(c) of the income tax Act Assessee earned interest income during the year under consideration but the same was not offered for taxation. However, noticed that during the assessment proceedings, the additional income was brought for taxation. Be that as it may, after considering the entire fact, circumstances of the present case, noticed that both the lower authorities have proceeded as the levy of penalty under section 271(1)(c) is automatic without considering section 273 therefore, now being satisfied by the explanation offered by the assessee and after considering the position of law as applicable, hold that respective orders imposing and confirming the penalty are set aside and the penalty order is quashed and the assesses appeal is allowed.

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• 2024 (10) TMI 248
  Denial of deduction u/s 80P - income earned from deposits with bank - assessee claimed deduction in respect of interest income earned from the activity which was done for non-agricultural purposes - HELD THAT:- As considering that the assessee-society has also been doing the activity of granting credit facilities to its members for agricultural purposes and activities connecting thereto, and further the assessee-society is involved in the activity of purchase, sale and marking of agricultural implements, therefore, the interest income earned by the assessee for providing credit facilities to its members for agricultural activities and activities relating thereto will be eligible for deduction u/s 80P(2)(a)(i) and further the income of the assessee earned from the activity of purchase, sale and agricultural implements etc. will also be eligible u/s 80P(2)(a)(iv) - assessee-society, therefore, is given an opportunity to provide necessary details before the AO in this respect. The matter is accordingly restored to the file of the Assessing Officer for the limited purpose that on furnishing of necessary details, the Assessing Officer will bifurcate the interest income earned by the assessee from the credit facilities granted to its members for agricultural purposes or purposes connecting with agricultural activities and further after netting off such interest income with the expenditure/interest incurred by the assessee-society for getting deposits in respect of such income, the AO would accordingly allow deduction in respect of the said amount out of total interest income u/s 80P(2)(a)(i) and further the AO will also bifurcate the income earned by the assessee-society from the purchase, sale and agricultural implements intended for agriculture for the purpose of supplying them to its members and will allow deduction on such income u/s 80P(2)(iv) of the Act Addition u/s 68 - Deposits during Demonetization Period - HELD THAT:- The assessee-society has deposited the said demonetized currency accepted from its members in cooperative/schedule bank and earned interest income on the same. The assessee-society has claimed that it is indulged in the banking business activity. Therefore, the income earned by the assessee-society in the form of interest on such deposits is liable to be assessed as business income, however, not eligible for section 80P deduction. Assessee-society since has earned the said interest income from an activity which was prohibited by law by collecting deposits in demonetized currency during demonetization period, therefore, the expenditure incurred by the assessee-society in the shape of interest paid to the members cannot be allowed as deduction u/s 37 of the Act. The issue is restored to the file of the AO with a direction that the assessee-society will furnish the necessary details relating to the source of the deposits to the AO - If the assessee society proves the source, no addition shall be made u/s 68 of the Act. The assessee-society will not be eligible for deduction in the form of interest paid on such deposits to the members. AO will also give proper opportunity to the assessee to furnish necessary detail. Addition on account of contingent liability - HELD THAT:- The amount has not been debited by the assessee on account of any bad debt, rather, the same has been claimed as interest overdue , which has not been explained by the assessee. As held above, even otherwise, the assessee is not eligible for deduction 80P of the Act. In view of this, this ground has no merit and the same is accordingly dismissed.

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• 2024 (10) TMI 247
  Reassessment proceedings - Reasons to believe - validity of notice issued u/s 148 and the consequent order passed u/s 147 - addition made by AO u/s 69A holding that long term capital gain on sale of shares claimed exempt u/s 10(38) as bogus - HELD THAT:- In case if the reopening is based on information received from the investigation wing then in that eventuality the reasons must show that the AO independently applied his mind to the information and formed his own opinion. The AO in the reasons in the present case has just stated the information received and his conclusion about the alleged escapement of income but he has not mentioned anywhere as to what the AO did with the information made available to him is not discernible from the reason. The reasons must also paraphrase any investigation report which may form the basis of the reasons and any enquiry conducted by the AO thereon as also the conclusion thereof, further where the reasons make a reference to any document then in that eventuality such document and/or relevant portion their of must be enclosed along with the reasons. In the present case what information is available with the AO is neither stated nor enclosed with the reasons so recorded by him and thus not discernible from the reasons so recorded. Therefore reasons recorded by the AO are found to be not in accordance with law. Another factual mistake wherein the AO has incorrectly mentioned while disposing the objection of the Assessee that assessee has not declared the long term capital gain in the return filed in response to notice u/s 148 whereas in this return assessee has categorically shown exempt Income comprising of capital gain exempt u/s 10(38) and dividend from shares. Thus notice issued under section 148 and the consequent order passed under section 147 is illegal and bad in law and the same stands quashed - Decided in favour of assessee.

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• 2024 (10) TMI 246
  Revision u/s 263 - TP Adjustment - who will have real revisionary powers u/s 263 qua orders passed by the TPO? - HELD THAT:- The principle chief commissioner or chief commissioner or commissioner having jurisdiction over transfer pricing matters has been specifically empowered, w.e.f 01.04.2022, to invoke revisionary action u/s 263 in respect of TPOs working under their administrative command and control. In this regard, we are fully in agreement with legislative intent embedded in the impugned amendment that there did existed a confusion as to who will have real revisionary powers u/s 263 qua orders passed by the TPO. A resolution to this controversy was necessary particularly in view of the notification dated 03.11.2014 which elaborately defined the chain of command right from Principal Chief Commissioner of Income Tax(International Taxation) at the top and the Deputy / Assistant Commissioner of income tax(Transfer Pricing) at the base of pyramid. Consequently, the law makers proceeded to include a Transfer Pricing Officer alongside an assessing officer for authorities in respect of whom revisionary orders can be invoked by the respective principle chief commissioner or chief commissioner or commissioner. It is trite law that when the provisions of the statute are unambiguously clear and do not afford divergent meanings, no interpretation of the same is permissible. As categorically mandated that w.e.f 01.04.2022 only a principle chief commissioner or chief commissioner or commissioner can exercise revisionary authority in respect of orders passed by TPO under their command and control. In this view of the matter, the order passed by Ld. PCIT, Madurai-1 can be taken as an order passed without having any valid lawful jurisdiction. Consequently, the same deserves to meet the fate of getting quashed. We are also not inclined to subscribe to the view of the Ld. DR that the order passed by Ld. PCIT, Madurai-1 was not against TPO s order but was against the assessment order passed by the Ld.AO. The show cause notice issued by Ld. PCIT, Madurai-1 referred herein above as well as his order u/s 263 clearly indicates that he is assailing the order of the TPO and the revision of order u/s 143(3) was merely an offshoot of this activity. The order u/s 143(3) r.w.s. 144B passed by the Ld. AO did not suffer from any deficiency so as to classify into the category of an order which is erroneous in so far as it is prejudicial to the interest of revenue . No mistake whatsoever has been indicated in the impugned order. Therefore, order u/s 143(3) r.w.s. 144B passed by the Ld. AO did not have any ingredients for any justified exercise of revisionary powers. Thus, we hold the view that the order passed by Ld. PCIT, Madurai-1 u/s 263 has been passed without any valid jurisdiction and is void ab initio and therefore we quash the impugned order. Decided in favour of assessee.

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• 2024 (10) TMI 245
  Addition on account of investment in House property u/s 56(2)(x) - AO observed that on the date of registration of property, the value determined by the Stamp Valuation Authority for the purpose of levy of stamp duty - AO added the difference sum as property purchased by the assessee for inadequate consideration by applying provisions of section 56(2)(x) - HELD THAT:- The assessment was completed by the AO on 21.09.2022 as it was getting time barred by 30.09.2022. AO even made an observation that since the report of DVO was not received before the completion of assessment, he has proceeded to make an addition of Rs. 80,08,700/- and the order would be subjected to rectification u/s 155(15) of the Act after the receipt of report. It is not in dispute that the DVO report was received by the AO on 17.11.2022 i.e. after completion of assessment proceedings, wherein, the subject mentioned property was valued at Rs. 62,04,000/-. DVO s report was even ignored by the CIT(A). We find that the value determined by the ld DVO was for Rs. 60,57,000/-, the difference between the assessee s consideration and the DVO value works out to less than 10% of actual consideration. Hence, as per the provisions of Section 56(2)(x) the value declared by the assessee falls within the tolerance range of 10% of the consideration and hence, there is absolutely no basis for the addition made u/s 56(2)(x) of the Act. Hence, the addition is hereby deleted. Appeal of the assessee is allowed.

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• 2024 (10) TMI 244
  Levy of penalty u/s. 271(1)(c) - Estimation of income - bogus purchases - on the estimated addition @12.5% made by the AO, on appeal the CIT(A) has directed the AO to calculate profit @ 8% - HELD THAT:- We find the A.O has made adhoc disallowance of bogus purchases on estimation of income but has accepted the sales in the books of accounts. We are of the opinion, that where the addition is sustained on the estimated basis no penalty u/s 271(1)(c) of the Act can be levied. Accordingly, we considering the facts, circumstances and the ratio of the judicial decisions, set aside the order of the CIT(A) and direct the assessing officer to delete the penalty and allow the grounds of appeal in favour of the assessee.

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• 2024 (10) TMI 243
  Demand u/s 201(1) 201(1A) - failure to deduct tax at source (TDS) on Leave Fare Concession (LFC) - HELD THAT:- AO held that the money received by an employee as LFC/LTC for travelling within the territory of India was only exempted u/s 10(5) of the Act and this exemption could not be claimed by an employee for travel outside India, which had been done in these cases and; therefore, the AO held that the SBI had defaulted in not deducting tax at source (TDS) from such amount claimed by its employees as LFC/LTC. AO, after holding the appellant/assessee in default due to failure to deduct tax at source on LFC, raised the consequential demand under section 201(1) 201(1A) of the Act. The SBI challenged the AO s order before the JCIT(A), which was dismissed. AR confessed that the issue in dispute here had already been decided in favour of the revenue by the Hon ble Supreme Court in the appellant/assessee s case [ 2022 (11) TMI 426 - SUPREME COURT] - Therefore, these appeals needed to be dismissed as such, being covered matter. DR therefore, was not required to argue the case. Appeals of the assessee stand dismissed.

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• 2024 (10) TMI 242
  Addition on account of translation gain - CIT(A) had deleted the said disallowance made by the ld. AO on the ground that translation gain had not arose out of any revenue transaction but is merely as a result of merger of the US Branch Balance Sheet converted from USD to INR with the balance sheet of the assessee as per AS 11 issued by ICAI - HELD THAT:- We find from the financials of the assessee, the translation gain arising out of revenue transactions had been duly offered to tax by the assessee in the return of income. CIT(A) held that the disallowance is to be deleted even on the principles of consistency as the revenue cannot be allowed to take a divergent stand for translation loss and translation gain. We find that this issue is no longer res integra in view of the CBDT Circular No. 10 of 2017 dated 23.3.2017 wherein it was held that the losses / gains arising by valuation of monetary assets and liabilities of the foreign operations as at the end of the year cannot be treated as real income of the assessee. This Circular has been heavily relied upon in the case of Chamber of Tax Consultants vs Union of India [ 2017 (11) TMI 465 - DELHI HIGH COURT] - We do not find any infirmity in the said action of the CIT(A) granting relief to the assessee. Accordingly, the Ground No.1 raised by the revenue is dismissed. Nature of receipt - treating the excise duty refund as capital receipt, which were earlier treated as revenue receipt - HELD THAT:- The intention behind the exemption scheme was to attract fresh investment so as to generate employment and for industrial development of the region. The subsequent notifications issued in the year 2008 substantially diluted the benefit granted by the original notification on the ground that there was substantial revenue loss to the Government. The Hon ble High Court held that the notifications issued in the year 2008 to be invalid to the extent they were sought to be applied to the new unit set up in the Kutch District of Gujarat in compliance of the original notification in the year 2001 on the ground that it was contrary to the principles of promissory estoppel. Further it was clearly held by the Hon ble Gujarat High Court that the purpose of the original notification issued in the year 2001 was to incentivize and promote setting up of industries in the Kutch Region of Gujarat thereby clearly satisfying the purpose test thereon. Hence it could be safely concluded that the excise duty refund received is clearly in the nature of capital receipt not chargeable to income tax. We find that the ld. CIT(A) had rightly decided the issue in favour of the assessee and we do not find any infirmity in the said order granting relief to the assessee. Accordingly, the Ground No. 2 raised by the revenue is dismissed.

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• 2024 (10) TMI 241
  Addition being the amount of agriculture income from sale of cotton - revenue submits that the assessee failed to substantiate the agriculture income by showing sufficient evidence of sale of agriculture product - Addition u/s 56(2)(vii)(b) for the differential value of stamp duty on the purchase of agricultural lands. HELD THAT:- CIT(A) on considering the submission of assessee granted partial relief on the addition of agriculture income on account of sale of vegetables Remaining addition was upheld by holding that the assessee failed to provide basic details of expenses to justify the sale of other agriculture product. On the addition under Section 56(2)(vii)(b) of the Act, the ld. CIT(A) held that the Assessing officer rightly brought the difference of purchase on account of difference in stamp duty qua the share of assessee. Before us, neither the assessee has filed any submission nor any evidence, therefore, in absence of any cogent evidence or submission, therefore, we are unable to differ with the findings of ld. CIT(A), which we affirm. In the result, grounds of appeal raised by the assessee are dismissed.

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• 2024 (10) TMI 240
  Addition of unaccounted cash transaction - Estimation of profit percentage on the cash transaction - HELD THAT:- Assessee being a small businessman carrying on trading business of Betel Nut (suprai) as commission agent, to meet the ends of justice, we deem it fit and appropriate to set aside the impugned order passed by the learned CIT(A) and direct the AO to calculate the profit @ 3% on cash transaction. Thus, grounds are partly allowed.

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• 2024 (10) TMI 239
  TP Adjustment - benchmarking of interest on receivables - as argued bench marking the transactions of interest chargeable on delayed recoveries LIBOR rate may kindly be applied - revenue and requested the LIBOR +200 points may kindly be applied - HELD THAT:- LIBOR is a rate applicable in the transactions entered into between banks and the loans advanced by these banks are secured by securities. However, in the case of assessee, the transaction is between the assessee and its AE and that too for delayed recoveries i.e. beyond the period agreed for credit. Further a reference can be made to the decisions of Coordinate Bench in the case of Albany Molecular Research [ 2020 (11) TMI 1018 - ITAT HYDERABAD] wherein it is held that where assessee has to receive outstanding from its AE then LIBOR +200 points is the correct rate for determining ALP. We direct the AO to apply LIBOR +200 points adjustment without any further adjustment to benchmark the transaction of interest on receivables. Credit of tax may be given to the assessee, if the assessee would be able to prove before the AO that it has taken over all the assets and liabilities of the amalgamated company - We observe that this issue requires fresh adjudication at the end of AO and in case the assessee would be able to prove that all conditions of merger and acquisitions are fulfilled, i.e. all the assets and liabilities of the transferor company stand merged with assessee then the AO shall allow the claim of assessee in accordance with law. The AO would grant sufficient opportunities to the assessee before taking any view.

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• 2024 (10) TMI 238
  Penalty u/s 271D - reasonable cause for accepting the cash on account of sale of immovable property - Interpretation of the term otherwise in Section 269SS - contention of AR that receipt of such sale consideration is not covered under the provisions of section 269SS of the Act as the scope of said section is limited to receipt of money in the nature of advance. HELD THAT:- The doctrine of Ejusdem Generis is a latin maxim meaning of the same kind and nature . According to the Black s Law Dictionary, the principle of Ejusdem Generis is where general words follow an enumeration of persons or things by particular and specific words. Not only these general words are construed but also held as applying only to persons or things of the same general kind as those specifically enumerated. We are of the view that the word otherwise used under section 269SS of the Act cannot include sale consideration as the word otherwise should be read in accordance with the principle of Ejusdem Generis. The word otherwise should draw its colour from other words used in the provisions contained in section 269SS of the Act i.e., money receivable as an advance . Invoking the doctrine of Ejusdem Generis, we are of the view that the term otherwise should be interpreted in a narrow sense and it must include the words similar to money receivable, as advance . In other words, the term otherwise cannot be given a wider interpretation. The Hon ble Supreme Court in the case of Kamlesh Kumar Sharma Vs. Yogesh Kumar Gupta [ 1998 (2) TMI 600 - SUPREME COURT ] held that wherever there is term otherwise the word is to be given a restricted meaning. Further on the facts of the present case, we find there is reasonable cause as mandated under section 273B of the Act, for the failure to comply with section 269SS of the Act. Section 269SS of the Act was amended by the Finance Act, 2015, wherein the term specified sum was introduced to include amount received for transfer of immovable property as a measure to curb generation of black money. In the present case, there was no intention, whatsoever, to generate unaccounted money/black money as the assessee had recorded the receipt of entire cash in the registered sale deed and duly disclosed the same in the return of income filed. Assessee had also claimed exemption under section 54 of the Act towards construction of residential house. As pertinent to note that the claim made by the assessee under section 54 of the Act has been allowed by the AO in the assessment completed. Copy of the bank statement and the Assessment Order dated 09.12.2019 is placed on record. Therefore, it is clear that there is no unaccounted money / black money in the transaction. Moreover, we find that in this case there was no agreement to sell executed between the parties as is evident from the sale deed. Therefore, the assessee had no legal right to enforce the sale. All the payments were made through DD and cheques and cash was paid to the assessee only on the date of sale deed being executed. Hence, denial by the assessee to receive the consideration in cash would have resulted in failure of sale of the said property. Moreover, the amendment effected by Finance Act, 2015, to section 269SS of the Act, which had laid a restriction for receiving cash for transfer of immovable property would not have come to the knowledge of the assessee who is a woman having elementary education and no knowledge of tax laws. She would have not been under a belief that there was contravention of any provision of the Act. On identical facts, the following judicial pronouncements had held that there is reasonable cause as mandated under section 273B. Thus, penalty under section 271D of the Act, is not warranted and we delete the same. Decided in favour of assessee.

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• 2024 (10) TMI 237
  Levy of penalty u/s 271(1)(c) - disallowance of claim of deduction u/s 80IB(10) - on issue of obtaining the completion certificate within the stipulated period the claim of deduction u/s 80IB(10) was disallowed by the A.O on other two factual grounds being most of the residential units having more than 1500 square feet and secondly the assessee has not developed the residential project but only construction the residential houses as a contractor - HELD THAT:- It is pertinent to note that merely mentioning build-up area of 1500 sq ft. in the sanction plan cannot be a determinative fact of actual area of the area constructed units as there may be deviations in the actual area of construction and area of construction as per plan. Even otherwise if extra area of construction of the units is not in breach of building by laws then it is irrelevant for the municipal or development authorities whether a particular unit is having less than or more than 1500 sq. ft. area because civil authorities are concerned only with respect to the overall constructed area within the prescribed limit of building by laws. Nothing has been brought on record to prove that the second contention of the Ld. AR is that the built up area of units are less than 1500 sq. ft. The assessee is a developer and not a works contractor is based on the hypothetical situation and facts and not on the actual facts of the assessee s case. The assesse has not brought any material on record to show that in all the cases sale deed of plots were executed prior to the construction of house to facilitate the buyers to avail loan from the bank/financial institutions. Even otherwise this issue has already attained finality in the quantum proceedings and nothing has been brought on record to show that the case of the assessee falls in the category of developer and sale deed executed by the assesse in favour of the buyers is only for the purpose of availing loan facility by the prospective buyers. Accordingly the decision relied upon by the Ld. AR of the assessee will not help the assessee of the case because those decision are only on the point of addition made by the A.O on a debatable issue and the claim of the assessee was found to be bonafide claim. In the case in hand the claim of the assessee was found to be based on incorrect facts of claiming himself as a developer and secondly the built up area of most of the residential houses was found to be exceeding the stipulated limit of 1500 square feet. Accordingly in the facts and circumstances of the case we do not find any error or irregularity in confirming the levy of penalty u/s 271(1)(c) - Decided against assessee.

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• 2024 (10) TMI 236
  Revision u/s 263 - expenses of Goa Fest not for charitable purposes - exemption u/s 11 - assessee had conducted Goa Fest in Goa annually where in the leader of advertising industries are invited to deliver their presentation on the industry - CIT has treated this activity as business activity and not in charitable nature - HELD THAT:- CIT appropriately invoked Section 263 of the Act concerning the impugned assessment order. We conclude that the impugned assessment order was erroneous and prejudicial to the interests of revenue, for the application of Goa Fest. Therefore, the assessee s appeal is dismissed.

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• 2024 (10) TMI 235
  Rejection of application for final approval u/s 80G(5)(iii) - delay in filling in Form 10AB - HELD THAT:- We observe that the assessee is a Charitable Organization and provisionally enjoying registration u/s 12A and has also been granted provisional registration u/s 80G(5)(iii) on 15.03.2022. Application for approval u/s 80G(5)(iii) was filed on 01.11.2022 duly filled in Form 10AB. AO treated the same as non- maintainable on the ground that CBDT vide its Circular bearing No. 6 of 2023 dated 24th May, 2023 has extended the date of filing new application in Form 10AB upto 30.09.2022. We, however, on perusal of the recent Circular dated 25.04.2024 issued by the CBDT find that the due date for filing Form 10A/10AB has now been extended upto 30.06.2024. Since the assessee s application was filed on 01.11.2022 , the same is before the extended due date by 30. 06.2024 issued by CBDT. We direct the CIT(Exemption) to admit the assessee s application in Form 10AB and grant approval under section 80G(5)(iii) in accordance with law. Appeal of the assessee stands allowed for statistical purposes.

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• Customs

• 2024 (10) TMI 234
  Seeking condonation of delay of 238 days in preferring this Special Leave Petition - HELD THAT:- There is no satisfactory explanation given by learned counsel appearing for the petitioner for condoning the delay of 238 days in preferring this Special Leave Petition. The Special Leave Petition is, accordingly, dismissed on the ground of delay.

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• 2024 (10) TMI 233
  Extinguishment of claims - demand(s) for which no claims were submitted and which were not part of the approved Resolution Plan - Exemption as per notification dated 1.3.2002 - denial on the ground that the imported Crude Palm Oil was not of edible grade - Section 32A of the IBC - HELD THAT:- During the pendency of the appeal before the CESTAT, the proceedings under IBC against Ruchi Soya had commenced and also culminated with the acceptance of the modified resolution plan, consequent to which Patanjali has continued the business of Ruchi Soya, which is also forthcoming from the certificate dated 24.6.2022. It is further undisputed that the revenue has not made any claim before the IRP during CIRP process under the IBC - the revenue not having made any claim before the IRP during the CIRP process and the demand not having been part of the resolution plan, has stood extinguished and cannot be continued. It is relevant to note that a Division Bench of the Gujarat High Court in the case of The Commissioner of Customs , [ 2022 (8) TMI 1459 - GUJARAT HIGH COURT ] while considering an appeal filed by the revenue in the case of Patanjali after noticing Section 32A of the IBC as well as the amended Section 31 of the IBC as also the judgment of the Hon ble Supreme Court in the case of Ghanshyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT ] has held Thus taking into consideration the fact of the completion of the resolution process of the respondent by the NCLT and undisputed fact that the appellant has not lodged any claim in the capacity of the Operational Creditor before the Resolution Professional, this appeal is required to be disposed of as having become infructuous and abated with regard to any liability of any nature whatsoever having extinguished in view of the implementation of the Resolution Plan and change in management and control of the assessee in view of the provisions of section 31 and section 32A of the IBC. It is clear from Section 5 (26) of the IBC as noticed above that the resolution plan is proposed by the applicant for continuing the business of the company as a going concern . It is forthcoming that under the Scheme of the IBC, Part II contemplates Insolvency Resolution and Liquidation for Corporate Persons. Chapter II in Part II contemplates Corporate Insolvency Resolution Process and Section 6 to Section 32A deals with the same. Chapter III in Part contemplates Liquidation Process and Section 33 to Section 54 deals with the same. Hence, it is clear that by a resolution process the company continues its business and only by a liquidation process, the business of the company would be wound up. In the present case, the resolution plan in respect of the assessee having been accepted by the Tribunal, the question of the assessee being wound up does not arise. Hence, it is clear that Rule 22 of the 1982 Rules would not be attracted in a case where the resolution plan has been approved by the IBC. Hence, the Tribunal ex facie erred in holding that by virtue of Rule 22 of the 1982 Rules, the appeal would abate. The substantial question of law is answered in favour of the assessee and against the revenue - Appeal allowed.

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• 2024 (10) TMI 232
  Cartelization and monopolization of poppy seed imports - fraudulent practices and quota theft - Non-registration of their contracts for import of poppy seeds from Turkey - seeking to quash the Impugned Public Notice dated 07th January 2022 and Guidelines dated 25th June, 2019 issued by Respondent No. 2 for Registration of Sales Contract for Import of Poppy Seeds from Turkey - seeking a direction to modify/amend/streamline procedure for import of poppy seeds against the existing policy and a direction to amend the existing policy, in as much as, the allocation of quantity imported is done in the name of importer - HELD THAT:- In Devki Global Capital [ 2020 (7) TMI 389 - DELHI HIGH COURT ], the Court addressed similar grievances regarding the registration of sales contracts for the import of poppy seeds from Turkey. In that case, the Petitioners argued that their sales contracts were not registered by the TMO in Turkey, thereby preventing them from securing the necessary approvals from the Central Bureau of Narcotics (CBN) in India for importation. The key issue before the Court was whether the Indian authorities, particularly the CBN, could intervene in the registration process managed by the Turkish Grain Board (TMO) and whether the guidelines issued were arbitrary or discriminatory. The Court unequivocally held that the registration of sales contracts by the TMO is an internal matter governed by Turkish law and procedure, over which Indian authorities have no control or jurisdiction. It found that the role of Respondent No. 2, the CBN, is strictly limited to registering contracts that have been duly registered by the TMO. The Court accordingly observed that the allocation and registration of contracts are bound by the terms of the MoU between India and Turkey, and any grievances regarding non-registration or alleged manipulation of contracts must be addressed in Turkey through appropriate legal channels. Furthermore, the Court emphasized that, in matters of policy and trade agreements, judicial intervention is warranted only in cases of manifest illegality, mala fide intent, or violation of fundamental rights, none of which were found in that case. This precedent, therefore, directly negates the Petitioners plea for judicial intervention in the present matter. The Court also does not find merit in Petitioners contention that Indian authorities can and should demand explanations from Turkish authorities, including the TMO registration process. Such a demand would overstep the boundaries of the MoU, which delineates the responsibilities of the Indian and Turkish governments. The Indian authorities cannot impose their regulations on a foreign sovereign s internal procedures. The MoU and the guidelines empower the CBN to register contracts based solely on the TMO s registrations. As noted in Devki Global, the Court cannot compel Indian authorities to investigate or interfere with the TMO s processes. The guidelines, as they stand, strike a balance between regulating imports and respecting the sovereignty of Turkey. In Balco Employees Union (Regd.) v. Union of India [ 2020 (7) TMI 389 - DELHI HIGH COURT ], the Supreme Court held that matters concerning economic policy fall squarely within the domain of the executive, and judicial interference should be exercised with extreme caution. It has also been emphasised that it is neither within the domain of the Courts nor the scope of the judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor should the Courts be inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical. Therefore, in the sphere of economic policy or reform, the courts cannot sit in judgment over the wisdom of the executive. The Petitioners allegations remain unsubstantiated and also fail to show how the Respondents actions violate any statutory or constitutional obligation - Petition dismissed.

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• 2024 (10) TMI 231
  Seeking to adopt price at which IOCL supplies this items to the ships on the coastal run the appeals are seeking adoption of the import price - price to be adopted for the bunker consumed during the coastal run - HELD THAT:- It is seen that the facility notice issued by the Commissioner Bhubaneshwar also recognized this fact that NIDB data should be adopted for the purpose of valuation of the goods bunker consumed in the domestic. It is seen that the quantity of bunker consumed is very small and it may be difficult to find NIDB data for comparable quantities. In that regard the appellant s demand of adoption of deductive method under rule of custom valuation rules become relevant. The revenue is free to adopt the re deductive method for assessment prescribed under custom valuation rules to make adjustment for the different in the quantities of bunker consumed vise a vise the contemporaneous import noticed in the NIDB data. With this observation the order of Commissioner (Appeal) is modified and matter remanded to the original Adjudicating Authority for redetermination of assessable value - Appeal is allowed by way of remand.

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• 2024 (10) TMI 230
  Seeking refund of amount of countervailing duty (CVD) while importing goods declaring those goods as Natural gum in raw form vide Bills of Entry filed during the year 2011 to 2014 - time limitation - unjust enrichment. Whether in terms of CBEC clarification dated 28.06.2007 the appellant is entitled for exemption from payment of CVD while importing Natural gum in raw form and is thus, eligible for refund of the amount already paid by appellant? - HELD THAT:- Vide this clarification the CBEC has exempted only Imported Gum Arabic from levy of CVD The Bills of Entry in question have declared the imported goods as Natural Gums . (Natural Gum siftings/ Natural Gum rejected/ Natural Gum No. 3 rejected) thus goods have not been declared as Gum Arabic to which the exemption from leviability of CVD is available vide clarification dt. 28.06.2002. No evidence has been produced to show that imported good was Natural Gum Arabic . These observations are sufficient for us to hold with appellant has failed to establish its eligibility of claiming the benefit of exemption from payment of CVD in terms of CBEC clarification dated 28.06.2007. Thus, the CVD self-assessed has rightly been paid. No situation arise for refund of same - issue stands decided against the appellant. Whether the refund claim is rightly rejected on the ground of limitations and that of unjust enrichment ? - HELD THAT:- In the present case apparently and admittedly the appellant has not modified the self-assessment vis-a-vis the impugned amount of CVD. Also, the claim is not covered under proviso to section 27 of the customs Act, 1962. Thus the appellant is not entitled to claim the refund without such modification and the claim is otherwise barred by limitation - The doctrine of unjust enrichment is that no person can be allowed to enrich equitably at the expense of another. Thus if the assessee has passed the burden of duty paid to the consumer the assessee is not allowed to enrich at the expense of said consumer. The duty was paid at the time of clearance of the imported goods to the domestic market. There is no evidence found on record to show that the quantum of self-assessed duty was not the part of the value at which the goods were sold. The present is the case of unjust enrichment Refund in such case cannot be allowed. The appellant is not eligible for the exemption from payment of CVD in terms of CBEC clarification dated 28.06.2007. The Refund claim is otherwise barred by time and by the principle of unjust enrichment and can t be sanctioned - there are no infirmity in the order under challenge - the order passed by Commissioner (Appeals)is hereby upheld - appeal dismissed.

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• FEMA

• 2024 (10) TMI 229
  Priority of secured creditors under SARFAESI Act - attachment by virtue of Section 26 (E) of the SARFAESI Act - respondent No. 3 had mortgaged the subject property in favour of the petitioner in the year 2013-14 much prior to the search conducted by the respondent Nos. 1 2 under Section 132 of the Income Tax Act - HELD THAT:- The claim of the petitioner as against the subject property mortgaged by respondent No. 3 in favour of the petitioner is as long back as in year 2013 would have an over riding effect in respect of all subsequent claims including the alleged claims of respondent Nos. 1 2 which was only in the year 2017 as held by the Madras High Court in the case of State Bank of India Vs. Tax Recovery Officer [ 2022 (12) TMI 557 - MADRAS HIGH COURT ] The orders of attachment passed by the Tax Recovery Officer/Income Tax Department were subsequent to the mortgage created in favour of the secured creditors and hence, the same will have no legs to stand. Debts due to any secured creditor shall be paid in priority over all other debts, dues and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or other local authority; it follows therefrom that the provisions of the SARFAESI Act would prevail over the provisions of other earlier enactments, under which, amounts are allegedly due to the Central Government; it is well settled that if there are two special Acts / enactments, it is the later enactment that shall prevail; in the instant case, it cannot be gainsaid that the FEMA (a special law / Act) is an earlier enactment, while the SARFAESI Act (a special law / Act) is a later / subsequent enactment which would prevail over FEMA in the light of the principles laid down by the Apex Court in several judgments including Solidaire India s case [ 2001 (2) TMI 968 - SUPREME COURT] Also, in SBICAP s case [ 2023 (3) TMI 1509 - BOMBAY HIGH COURT ] Division Bench of the Bombay High Court held that the provisions of the Prevention of Money Laundering Act, 2002 (for short the PMLA ) would be subservient to the rights of a secured creditor under the SARFAESI Act which would prevail and override the provisions of the PMLA. Thus by virtue of the provisions contained in Section 26E of the SARFAESI Act, coupled with the undisputed fact that mortgage of the subject property by the respondent No. 3 in favour of the petitioner in 2013 was earlier/prior in point of time to the search conducted by respondents No. 1 2 in the year 2017, I am of the considered opinion that the mortgage in favour of the petitioner over ride and prevail over the proceedings initiated by respondents No. 1 2 and consequently, the impugned order of attachment deserves to be quashed.

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• PMLA

• 2024 (10) TMI 228
  Seeking grant of default bail - Money Laundering - amassing Assets disproportionate to known sources of income u/s 13 (1) (e) of the Prevention of Corruption Act, 1988 - Under what circumstances can a Complaint filed in the Court can be considered as incomplete? HELD THAT:- In the case of Satender Kumar Antil [ 2021 (10) TMI 1296 - SUPREME COURT ], the Apex Court observed that it is the duty of the Agency to complete the investigation within the time prescribed and a failure would entitle the accused to be released on default bail. The right enshrined is an absolute and indefeasible one, inuring to the benefit of suspect, to which due effect must be given by the Courts. Thus, any detention beyond the period would certainly be illegal, being an affront to the liberty of the person concerned. Therefore, it is not only the duty of the investigating agency but also of the Court to ensure that in appropriate cases, the accused gets the benefit of Section 167 (2) of the Cr.P.C. Similar observations were made in Rakesh Kumar Paul [ 2017 (8) TMI 1526 - SUPREME COURT ] wherein it was observed that the default bail is an important right about which millions of countrymen may not be aware because of their ignorance and illiteracy. In the case of Sanjay Dutt [ 1994 (9) TMI 351 - SUPREME COURT ], the expression if not already availed of as they appear in Section 167 (2) have to be understood to mean that when an Application is filed by the accused and he is prepared to offer the bail then it has to be held that the accused has availed his indefeasible right even though the Court has not considered the said Application and has not indicated the terms and conditions of bail. Under what circumstances can a Complaint filed in the Court can be considered as incomplete? - HELD THAT:- In the present case, the contents of the Complaint disclosed all the ingredients for commission of an offence against the accused and the cognizance is also taken, it is evident that the investigations qua the accused for disclosing the commission of the offence, is complete. There may be supplementary investigations undertaken, but the learned Special Judge has rightly observed that incidental or supportive investigations may continue by way of F.S.L. Report, which was to collect such other further details but that in itself would not take away the completeness of the Complaint in so much as the contents of the Complaint discloses all the ingredients for commission of offence. Mere supplementary evidence, which is only intended to be filed in support of the main Charge Sheet, would not make the Complaint incomplete. In the case of Vijay Madanlal Chaudhary and Others [ 2022 (7) TMI 1316 - SUPREME COURT ] it was observed that Clause (ii) of the Explanation to Section 3 is only an enabling provision permitting to take on record material regarding further investigation against any accused person involved in respect of offence of money-laundering for which Complaint has already been filed, whether he has been named in the complaint or not. Such a provision, in fact, is a wholesome provision to ensure that no person involved in the commission of offence of money-laundering, must go unpunished. It is always open to the Authority authorised to seek permission of the Court during the trial of the Complaint in respect of which cognizance has already been taken by the Court, to bring on record further evidence which request can be dealt with by the Special Court in accordance with law keeping in mind the provisions of the 1973 Code as well. The learned Trial Court has, therefore, rightly concluded that the Complaint filed against the petitioners, were complete in the sense of containing all the necessary ingredients for the commission of the offence. Any further investigations, which are only supplementary in nature which do not make the Complaint incomplete, there being no default in filing the Complaint within the statutory period. The default bail under Section 167 (2) of Cr.P.C. is, therefore, rightly denied to the applicants and both the Petitions are hereby dismissed. However, this does not prevent their right to seek Regular Bail on merits. Petition disposed off.

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• 2024 (10) TMI 227
  Provisional attachment order - challenge to the order of the Adjudicating Authority has been made alleging it to be beyond 180 days from the date of the provisional attachment order - Money Laundering - possession of assets, dis- proportionate to the known sources of income while he was in service of Steel Authority of India Ltd. - HELD THAT:- The period intervening 15th March 2020 till 28th February 2022 must be excluded for determination of the period of 180 days. It is not in dispute that the provisional attachment order was issued on 23 rd December 2020 and the confirmation order was passed on 09.11.2021. The period was affected by Covid 19 and the Apex Court in Suo Moto Writ Petition (C) No. 3 of 2020 excluded [ 2022 (1) TMI 385 - SC ORDER] the period of Covid-19 for termination of proceedings in itsorder dated 10.01.2022. Since the period of Covid- 19 from 15.03.2020 till 28.02.2022 has been excluded by the Apex Court for termination of proceedings, the Telangana High Court took notice to it and held that if period of 180 days was falling during the period eliminated by the Apex Court for termination of proceeding, then the provisional attachment would not lapse. In the light of the detailed Judgement of the Telangana High Court, we are unable to accept the first argument. Attachment of the appellant s bank account receiving pension - It is submitted that on account of the attachment of bank account, the appellant has been deprived to get pensionary benefit which is not sustainable because one cannot be deprived from his pension - HELD THAT:- If the appellant is getting pension, then the account in which it is received, should be allowed to operate by the appellant while maintaining the amount lying therein and would not be withdrawn by the appellant, but it should be with the permission to get the pension with its withdrawal by the appellant. While not causing interference the impugned order, the respondents are directed to allow the appellant to operate the bank account in which he is getting pension while the amount lying till date would be maintained and the appellant would not withdraw the said amount as agreed by the counsel. Appeal allowed in part.

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• 2024 (10) TMI 226
  Money Laundering - Challenge to Provisional Attachment Order - offence under Section 120-B IPC read with Section 7, 8 and 10 of the Prevention of Corruption Act, 1988 - HELD THAT:- It is a case where an FIR was registered for the offence under Section 7,8 and 10 of the PC Act along with Section 120-B IPC. It is not in dispute that a sum of Rs.89,68,000/- was seized by the CBI and the amount now remains under seizure pursuant to the order of the CBI Court. In those circumstances, it could not be clarified by the respondent as to whether there were likely of transfer or alienation of the said amount to frustrate the proceedings for confiscation. The perusal of Section 5(1)(b) would reveal that the attachment of the property can be made when the `proceeds of crime is likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to the confiscation of such proceeds of crime. In the instant case, `proceeds of crime is said to be a sum of Rs.89,68,000/- and was seized by the CBI. An order for it was passed by the CBI Court and thereby the amount is lying with it. Therefore, it could not be clarified how the said amount was likely to be concealed, transferred or dealt with in any manner to frustrate the proceedings of confiscation. The counsel for the respondent has referred to the judgment in the case of Om Prakash Daulat Ram Nagoj [ 2011 (9) TMI 1143 - BOMBAY HIGH COURT ] which permits attachment of the property - In that case, the argument considering Section 5(1)(b) of the Act of 2002 was not raised. The attachment of the property is permitted when it is likely to be concealed, transferred or alienated to frustrate the proceedings of confiscation. Section 5(1)(b) thus puts an embargo on the attachment. Considering the rider of Section 5(1)(b), attachment of the amount in the present case would not be permissible otherwise it is nothing but to offend Section 5(1)(b) of the Act of 2002. It is found that the attachment of the amount is in ignorance of the mandate of Section 5(1)(b) of the Act of 2002 and are set aside - appeal disposed off.

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• 2024 (10) TMI 225
  Money laundering - permission to respondent ED to retain/seize/freeze the documents, digital records, bank accounts etc., seized from the premises of various persons including the present appellants, during the search conducted on 07.04.2017 - HELD THAT:- The impugned retention order passed by the Ld. Adjudicating Authority to continue the seizing/ freezing of the documents and material seized/freeze by respondent ED, till the completion of investigation. After the completion of investigation, prosecution complaint is already filed by respondent ED, wherein present appellant Bhawna Kirpal along with her other family members are arrayed as accused persons. Even otherwise, the aforesaid property is 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. Therefore, the appellants are not agreed upon, 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 have 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.

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• 2024 (10) TMI 224
  Money Laundering - Challenge to order allowing the respondent ED to retain/seize/freeze the documents, digital records, bank accounts etc., seized from the premises of various persons including the present appellant firm, during the search conducted on 07.04.2017 - HELD THAT:- The respondent ED is hereby directed to defreeze the Credit Accounts (CC BC Account) and appellant is at liberty to clear its outstanding loan liability, if any, with direction to appellant not to dispose of the properties on whose collateral the CC Accounts have been secured. Karnataka Bank is hereby restrained from releasing more credit into the said CC Account. However, the saving and current account will remain frozen till final disposal of criminal trials. However, seeing the fact that prosecution complaint is already filed, the present appellant (if arrayed as an accused) is 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 appeal is hereby dismissed.

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• Service Tax

• 2024 (10) TMI 223
  Recovery of irregularly availed Cenvat Credit - input services - deletion of certain words like setting up from the definition of input services or for not having nexus with output service - Infrastructure Development Service - initial setting up of a factory - maintenance and up-keep of roads and landscapes - invoice in the name of their SEZ unit - input services received exclusively for trading - time limitation - penalty. Service Tax availed Rs. 17,01,848/- on Infrastructure Development Service - HELD THAT:- It is obvious that while show cause notice proposes to deny this credit solely on the account that the work is in the nature of Works Contract Service, which is not covered within the definition of input service, whereas credit has been denied by Original Authority on the ground that this being in the nature of common service, and therefore not having an integral and essential part for providing the output service etc., renting of immovable property. In this case, as submitted by the appellant, the definition of works contract service is quite clear and the Revenue has not been able to produce any evidence that there is any transfer of property on which VAT was paid and therefore since the allegation itself is not factually correct, the demand cannot be sustained on this ground alone. Therefore, demand confirmed on this ground itself is not tenable and liable to be set aside. Cenvat Credit availed on initial setting up of a factory amounting to Rs. 5,06,401/- - HELD THAT:- The Adjudicating Authority has observed that the assessee have not adduced evidence that there was any nexus between input services and output services, whereas, Department had proposed to deny said credit on account of it s being used for initial setting up. Hence the grounds taken for confirming demand is different than the grounds taken in show cause notice and hence this confirmation is also not tenable on this ground itself. Denial of Rs. 13,050/- on account of its having no nexus - HELD THAT:- The allegation in the show cause notice is that these services fall under the category of initial setting up of the factory and since word setting up has been omitted, it is not eligible. Therefore, this also traverses beyond the scope of the show cause notice. In so far as amount of Rs. 7,109/- is concerned, the show cause notice has alleged that this also falls within the category of initial setting up of a factory, whereas, the confirmation is on account of services having no nexus with the services provided by the assessee. Hence, this also traverses beyond the scope of the show cause notice and hence not tenable. Cenvat Credit availed on maintenance and up-keep of roads and landscapes amounting to Rs. 8,40,44/- - HELD THAT:- Adjudicating Authority has rightly confirmed the demand as there is no clear evidence to suggest nexus between input services being used for providing output service in renting of vacant land. In fact, these services were being provided outside the premises of the manufacturing unit. It is also observed that while Department has alleged that appellant had rented out leased vacant land as such on sub-lease to another person, the appellants have claimed that it was also having building on that. However, appellants have not produced any evidence that the rental recovered by them was for land as well as building thereon and thus it would obvious that they had only leased out vacant land. Thus, this demand is sustainable. Time limitation - HELD THAT:- There was responsibility on the appellant to take only the eligible credit, whereas, they have taken credit on services, which apparently they should have known were otherwise not eligible on the plain reading of the statutory provisions itself. The appellant has not adduced any ground for having any bonafide belief for taking said credit. Therefore, while certain demands made by the Department is not sustainable on the grounds that there is a difference between grounds taken for confirming the demand and the grounds invoked in the Show Cause Notice, merely because of that it cannot be said that the appellants were not liable to be subjected to extended period, the Department was right in invoking extended period of limitation. Cenvat Credit availed on the invoice in the name of their SEZ unit amounting to Rs. 6,917/- - HELD THAT:- The demand is rightly confirmed as the same being not an eligible credit. Appellant is not contesting this demand. Cenvat Credit availed on input services received exclusively for trading amounting to Rs. 2,98,630/- - HELD THAT:- The confirmation of demand is sustainable and rightly upheld by the Commissioner (Appeals). Moreover, the appellant is also not contesting this demand. Imposition of penalty - HELD THAT:- Since the demand itself has not been sustained the penalty, is not imposable and therefore liable to be set aside. As regards the demands which have been rightly upheld by the Commissioner (Appeals), penalty as imposed by Original Authority would be applicable. Though, the appellants have argued that in the given facts the penalty should not be imposed on them, for the reasons discussed in foregoing paras regarding the applicability of extended period, the imposition of penalty is justified and therefore there is no need to interfere with the imposition of penalty wherever the demand has been otherwise found sustainable. Amount already paid and appropriated would be adjusted against total demand found sustainable. The Order of the Commissioner (Appeals) is partly modified - Appeal allowed in part.

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• 2024 (10) TMI 222
  Refund claims of service tax paid under the Reverse Charge Mechanism (RCM) - time limitation u/s 11B of the Central Excise Act, as applicable to Service Tax - service tax was allegedly paid twice due to a misconception or mistake of law - whether in the given factual matrix, the time limit applicable for claiming refund as per the statutory provisions under Service Tax would be applicable or otherwise, in the event where the Service Tax has been paid under misconception or mistake of law? HELD THAT:- There was a very categorical provision, which required paying Service Tax under RCM basis in a particular situation. The Appellant felt that they were falling within the ambit of the said provision and therefore, liable to pay under RCM basis. Therefore, this was not mistake of law. In fact, it was mistake of fact as they were informed about the payment of 100% tax liability later on and it was not an interpretation issue or mistake of law that they ended up paying under RCM basis. From the facts, it appears that they had, at that point of time, rightly interpreted their liability and discharged the same under RCM basis. Therefore, it is not a case of payment under mistake of law rather it is a case of a double payment of tax due to some communication gap or for that matter, due to reconciliation of accounts at a later date between service provider and the Appellant. Be the case as it may, the fact remains that the refund of any nature has to be within the four walls of statutory provisions governing the grant of refund, which may arise on account of various situations including mistake of law or mistake of fact. The question is under what circumstances the limitation would not be applicable while considering the claim filed by the claimant before the statutory authority, who is a creature of statute and has to examine the claim within the provisions of the statute itself. The statute has clearly provided for limitation within which a claim can be filed and the authority in power to consider and grant such refund has to consider the claim within the provisions of statute itself and has no power to allow any refunds outside the statutory provisions governing limitation. It is settled position that the authorities created by the statute are the creatures of the statute and have to operate within the purview of the said statute under which they have been created. Therefore, the Original Authorities have rightly held that these claims are hit by time limit and therefore, liable to be rejected. There would be applicability of time limit prescribed under the Service Tax and since, admittedly, both the claims have been filed beyond the expiry of time limit, the rejection of the refund claims on this ground does not suffer from any infirmity. Therefore, there is no ground to interfere with the Orders passed by the Commissioner (Appeals) in both the Appeals and the Appeals filed by the Appellant are liable to be rejected. Appeals dismissed.

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• 2024 (10) TMI 221
  Recovery of service tax - whether the tax was leviable and recoverable from the appellant in respect of the turnover reported in balance sheet and which exceeded the amount reported in Form ST-3 returns filed belatedly and after initiation of the inquiry? - extended period of limitation - validity of SCN. HELD THAT:- Section 66B of the Act imposed a tax on the value of all services, except for those specifically listed in the negative list under Section 66D. Activities detailed in Section 66D were thus outside the levy of service tax. Therefore, it was crucial to establish that any given activity falls outside the scope of Section 66D to subject it to taxation under Section 66B. On the contrary, Clause (p) of Section 66D, as designed by Parliament, excluded the entire gamut of transportation services provided by road for goods from the scope of taxation, except when such services are rendered by a Goods Transport Agency (GTA) or a courier agency. Whether the services were falling within the scope of exception carved out to clause (p) or not and for which it is necessary to examine as to whether the revenue established the applicability of exception to clause (p) with the help of contemporaneous evidences while issuing show cause notice? - HELD THAT:- There are no hesitation in appreciating the legal position as it emanated from the plain reading of clause (p) of section 66D with section 66B that the activity in the nature of transportation of goods by road would not attract levy if it could not be specifically and undisputedly proved to fall within the scope of exception carved out to clause (p). Since the rate of abatement taken by the revenue implied that the services were treated as taxable services of transportation of goods by road by GTA, it is the definition of GTA given in section 65B which is relevant at this stage and not the definition of courier agency. As per the definition of GTA provided in Section 65B(26), presence of a consignment note issued by the person who shall be deemed as GTA was mandatory. Therefore, it was necessary in the case before us to examine as to whether the revenue had made out their case in the show cause notice on the basis of consignment notes issued by the appellant or not. In absence of such consignment notes, the turnover of activities cannot be deemed as value of services provided by way of transportation of goods by GTA. Based on the facts and contentions presented in the show cause notice and looking to the complete absence of crucial and necessary evidence in form of consignment notes, the turnover taken from the balance sheet cannot be attributed towards the services by way of GTA. Consequently, the revenue has not made out a case in the show cause notice as well as in adjudication to bring the amount of turnover reported in balance sheet within the scope of exception carved out to clause (p). Consequently, it is found that the clause (p) of section 66D cannot be taken out from the taxation of the turnover in dispute and accordingly the tax cannot be levied under section 66B of the Act. It is found from the records as well as the show cause notice that the ST-3 returns were filed by the appellant after initiation of the inquiry on 05.04.2016 and that too without payment of late fees prescribed in rule 7C. ST-3 returns would have become the basis for analysis and investigation vis- -vis financial statements when they were filed within the prescribed time limit or before commencement of the investigation. When the returns were filed after commencement of investigation they do not carry evidentiary value and cannot be taken into consideration for ascertainment of the tax liability arising on account of the investigation - the demand of CENVAT credits which found its root in the demand of service tax on services provided by way of transportation of goods and thus that shall be treated equally as the demand of service confirmed in the impugned Order - the demand of CENVAT credits made in the impugned Order is non-estand liable to be set aside. Because the demand of tax on transportation services is not sustainable. It is also found that the ST-3 returns were filed by the appellant without payment of late fees prescribed in rule 7C - Having looked at the scheme postulated by section 70 read with rule 7C, it is necessary to hold that the returns were furnished contrary to the procedures laid down in the law inasmuch as the late fees were not paid and therefore the returns were required to be deemed as defective returns liable to loose the sight of law. Accordingly, the returns as well as facts stated therein became non estfor the purpose of investigation as well as adjudication and therefore nothing can be based upon the facts stated in the said defective returns. Since the demand of CENVAT credits was solely based on the returns, it is liable to be held baseless. Time Limitation - suppression of facts or not - HELD THAT:- It is unclear why the appellant would have suppressed information from the revenue, especially when there was no significant tax liability involved. Therefore, the extended period of limitation was not applicable to the appellant s case. Since the show cause notice was issued based on the extended period and the entire liability falls outside the normal limitation period, the entire demand proposed in the show cause notice and confirmed in the impugned Order is invalid - the demand for the longer period is hit by the limitation also. Validity of SCN - appellant had challenged the validity of the show cause notice on a ground that the opportunity of pre-show cause notice consultation was not afforded as per mandatory requirement of the board - HELD THAT:- There are no contrary fact in submission of the appellant. It is also found that with the given opportunity of pre-show cause notice consultation, facts would have been well appreciated and the case would have avoided unwarranted litigation. However, it is decided that the show cause notice itself failed to survive on various counts elaborately discussed and decided hereinbefore, the challenge made by the appellant for want of pre-show cause notice consultation is infructuous and thus this aspect not entered into. The demands of service tax, cenvat credits, interest and penalties are held unsustainable and the same are accordingly set aside - Appeal allowed.

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• 2024 (10) TMI 220
  Non-reversal of proportionate CENVAT credit availed on common input services - trading of goods - exempt service in terms of section 66D(e) of the Finance Act - Chartered accountant services, telephone services and legal services, used in relation to redemption of mutual funds - Extended period of limitation. HELD THAT:- The activity of subscription and redemption of the units of mutual funds cannot be said to be an activity of sale and purchase of the securities. It would, therefore, not be an activity relating to trading and securities. The activity undertaken by the appellant would, therefore, not be an exempted service in terms of section 66D(e) of the Finance Act and proportionate reversal of credit was not required to be made. Even otherwise, the activity of investment in mutual fund cannot be termed as service under the Finance Act. For an activity to fall under the ambit of exempted service under rule 2(e) of the Credit Rules, the activity has to first qualify as a service . Section 65B(44) of the Finance Act stipulates that service means any activity carried out by a person for another for consideration, and includes a declared service, but excludes a transfer of title in goods or immovable property by way of sale or gift - there has to be a service provider who provides a service to the recipient in lieu of consideration. The department has failed to substantiate that investment in mutual fund by the appellant involves a service rendered by a service provider to a service recipient. Thus, the activity undertaken by the appellant would not amount to service under section 65B(44) of the Finance Act. It would, therefore, not be necessary to examine the alternative submissions raised by learned counsel for the appellant that reversal of proportionate credit of common input services utilized for rendition of exempted service along with interest, in terms of rule 6(3)(ii) read with rule 6(3A) of Credit Rules would be sufficient compliance of rule 6 of the Credit Rules. Extended period of limitation - HELD THAT:- The impugned order holds that it is because of the audit that the correct facts came to the notice of the department and so the extended period of limitation can be invoked - It is not possible to accept this contention as such a contention was repelled by the Tribunal in M/S GD GOENKA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, DELHI SOUTH [ 2023 (8) TMI 995 - CESTAT NEW DELHI ] where it was held that in the scheme of the Finance Act, 1994, the officer has been given wide powers to call for information and has been entrusted the responsibility of making the correct assessment as per his best judgment. If the officer fails to scrutinise the returns and make the best judgment assessment and some tax escapes assessment which is discovered after the normal period of limitation is over, the responsibility for such loss of Revenue rests squarely on the shoulders of the officer. It is incorrect to say that had the audit not been conducted, the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72. The impugned order, therefore, cannot be sustained - appeal allowed.

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• Central Excise

• 2024 (10) TMI 219
  Extinguishment of demand due to the non-filing of claims by the revenue during the Corporate Insolvency Resolution Process (CIRP) - HELD THAT:- The proceedings initiated against Ruchi Soya under the IBC are also a matter of record. Hence, from the aforementioned, it is clear that during the pendency of the appeal before the CESTAT, the proceedings under IBC against Ruchi Soya had commenced and also culminated with the acceptance of the modified resolution plan, consequent to which Patanjali has continued the business of Ruchi Soya, which is also forthcoming from the certificate dated 24.6.2022. It is further undisputed that the revenue has not made any claim before the IRP during CIRP process under the IBC - the revenue not having made any claim before the IRP during the CIRP process and the demand not having been part of the resolution plan, has stood extinguished and cannot be continued. It is relevant to note that a Division Bench of the Gujarath High Court in the case of The Commissioner of Customs [ 2022 (8) TMI 1459 - GUJARAT HIGH COURT ], while considering an appeal filed by the revenue in the case of Patanjali after noticing Section 32A of the IBC as well as the amended Section 31 of the IBC as also the judgment of the Hon ble Supreme Court in the case of Ghanshyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT ] has held undisputed fact that the appellant has not lodged any claim in the capacity of the Operational Creditor before the Resolution Professional, this appeal is required to be disposed of as having become infructuous and abated with regard to any liability of any nature whatsoever having extinguished in view of the implementation of the Resolution Plan and change in management and control of the assessee in view of the provisions of section 31 and section 32A of the IBC. It is clear from Section 5 (26) of the IBC that the resolution plan is proposed by the applicant for continuing the business of the company as a going concern . It is forthcoming that under the Scheme of the IBC, Part II contemplates Insolvency Resolution and Liquidation for Corporate Persons. Chapter II in Part II contemplates Corporate Insolvency Resolution Process and Section 6 to Section 32A deals with the same. Chapter III in Part contemplates Liquidation Process and Section 33 to Section 54 deals with the same. Hence, it is clear that by a resolution process the company continues its business and only by a liquidation process, the business of the company would be wound up. In the present case, the resolution plan in respect of the assessee having been accepted by the Tribunal, the question of the assessee being wound up does not arise. Hence, it is clear that Rule 22 of the 1982 Rules would not be attracted in a case where the resolution plan has been approved by the IBC. Hence, the Tribunal ex facie erred in holding that by virtue of Rule 22 of the 1982 Rules, the appeal would abate. The substantial question of law is answered in favour of the assessee and against the revenue.

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• 2024 (10) TMI 218
  Liability of respondent, M/s Afflatus International to pay service tax - manpower recruitment or supply agency - reverse charge mechanism - time limitation - Section 11B of the Central Excise Act, 1944 - HELD THAT:- The CESTAT has rested its decision on the consistent position struck by various High Courts on a payment of tax made under a mistake of fact or law. The High Courts have held that since there would be a complete lack of authority inhering in the appellant to demand a payment of tax, there would exist no justification for the amounts deposited being retained. It was further held in those decisions that consequently the period of limitation as otherwise raised in terms of Section 11B of the Act would be inapplicable. There are no justification to take a contrary view. The appeal consequently fails and shall stand dismissed.

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• 2024 (10) TMI 217
  Violation of circular No. 1058/07/2017-18 dated 16.05.2017 - proof of export under N/N. 45/2001-CE (NT) not accepted by the lower authority - requirement of quadruplicate copy of invoice for export - HELD THAT:- In the instant case the appellants have produced original and duplicate copies of invoice before the officer in charge of factory. However, they have failed to produce quadruplicate copy of invoice. From the procedure prescribed for export it is seen that the original, duplicate and quadruplicate copies of invoice all travelled the same route. The Duplicate copy of invoice always remains in the custody of revenue and is never in custody of exporter. The original and quadruplicate remain in the custody of exporter for most of the time. In this background this felt that duplicate copy of endorsed invoice is the most full proof evidence of export of goods and production of quadruplicate copy of invoice is only a supporting proof. In case the appellant has failed to produce quadruplicate copy of invoice, the revenue could have verified the facts from the port of export directly. There was no necessity of rejecting the proof of export on this account. The production of original and duplicate copies of duly endorsed invoice is a sufficient proof of export. The board circular dated 16.08.2017 relied by the appellant points out that in view of the indo Bhutan agreement trade, commerce and transit, the payments can be received in Indian Rupees and there is no necessity of producing any certificate for receipt of payment in freely convertible currency as required under Notification No.45/1-CE (NT). In the background there is no necessity of producing any bank certificate regarding receipt of payment in freely convertible currency. Consequently, this ground also does not survive. It is seen that the hydro electric Project for which goods has been exported entirely funded by India through norms with the facilities for payment in Indian rupees. In this circumstances the amendment although made on 16 August, 2017 i.e. after the export shall be deemed to be clarificatory in the nature. Appeal allowed.

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• 2024 (10) TMI 216
  SSI Exemption - entire case is based on the determination of the rights to use brand name between the appellant and Prince Care Pharma Private Limited - penalty - HELD THAT:- It could appear that registration of the such deeds is not necessary when the facts are not in dispute. This issue has also been examined by Tribunal in the case of Que Pharma Pvt Ltd wherein relying on the decision of Hon ble High Court of Madhya Pradesh in case of JEPIKA PAINTS VERSUS UNION OF INDIA [ 2008 (1) TMI 359 - HIGH COURT MADHYA PRADESH] benefit of small scale exemption has been extended in case of an unregistered assignment deed. Merely because deed of assignment of brand name was not registered cannot be held that the appellant did not own the brand name. Consequently, benefit of small scale exemption cannot be denied. The penalty imposed on Shri Sureshbhai Jivrajbhai Sakariya is also set aside and appeal is allowed - Appeal allowed.

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• 2024 (10) TMI 215
  Seeking relief from the demand/recovery of duty and interest - provision made under the head Inventory Procedure and Control for non-moving items as well as obsolete goods without paying an amount equivalent to the CENVAT credit taken in respect of the capital goods - contravention of Rule 3(5B) of the CENVAT Credit Rules 2004 - HELD THAT:- As per Rule 3(5B) of the CENVAT Credit Rules 2004, as amended with effect from 01/03/2011, input or capital goods before being put to use, on which CENVAT credit has been taken is written off fully or partially or where any provision to write off fully or partially has been made in the books of account then the manufacturer or service provider, as the case may be, shall pay an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods. Since the impugned period pertains to the period prior to 31/03/2012 there was no power to recover an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods provided for by law. This being so the order for recovery of CENVAT Credit along with interest during the impugned period was not correct and merits to be set aside. A Division Bench of this tribunal in Ericsson India Pvt Ltd. [ 2019 (3) TMI 776 - CESTAT NEW DELHI ] held that for reversal of cenvat credit on partial writing down of value of inputs, the provision was introduced only first time by amendment of Rule 3(5B) of Cenvat Credit Rules, with effect from 01.03.2011. Further, there was no provision prior to 01 March 2013 for recovery of cenvat credit and interest thereon under Rule 3(5B) etc. which was made applicable with effect from 01.3.2013 only, by virtue of Notification No. 3 of 2013-CE(NT) dated 01.03.2013. The notification provides that if the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rule (5), (5A) and (5B), it shall be recovered, in the manner as provided in Rule 14, for recovery of CENVAT credit wrongly taken. The impugned order merits to be set aside and is so ordered. The appellant is eligible for consequential relief if any as per law - Appeal disposed off.

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• 2024 (10) TMI 214
  Compounded levy scheme - whether at the relevant time when the orders-in-original were passed in absence of any saving clause and omission of Section 3A of the Central Excise Act, 1944 read with Rule 96 ZO, ZP and ZQ of the Central Excise Rules, 1944 whether the orders-in-original passed by the adjudicating authority holding that the appellants are liable to pay duty as per the compound levy scheme? - HELD THAT:- In absence of the aforesaid provision and any saving clause the adjudicating authority had no statutory power to decide any matter related to compounded levy scheme in terms of Section 3A of Central Excise Act, 1944 and under the provision of Rules, 96ZO, ZP and ZQ of Central Excise Rules, 1944 for the reason that it is not only the issuance of show cause notices but entire proceedings such as adjudication of such show cause notices has to be governed by statutory provision and the said proceeding was envisaged under Rule, 96 ZO, ZP and ZQ. Once the said Rule was omitted w.e.f. 01.03.2001 thereafter, no provision exist by which the adjudication authority has any power to adjudicate the matter related to the compounded levy scheme in terms of Section 3A of the Central Excise Act, 1944. Therefore, the orders passed by the adjudicating authority are non-est and having no support of any authority of law. On this ground, the entire proceedings of show cause notices and adjudication there of gets vitiated. It is settled that in absence of any saving clause while omitting the provision of Section 3A of Central Excise Act, 1944and Rules, 96 ZO, ZP and ZQ of the Central Excise Rules, 1944 adjudication order passed after 01.03.2001, the adjudication proceeding is not legal and correct, consequently no demand can be confirmed. Since the Orders-in-original, itself are without authority of law, demand confirmed under the said orders-in-original cannot be sustained. Therefore, the impugned orders are not sustainable - Appeal allowed.

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• Indian Laws

• 2024 (10) TMI 213
  Interpretation of the Clause 10 of the NIT dated 16.08.2023 - Rejection of Technical bid of the Appellant, while accepting the Technical bid of the Respondent no. 8, Company - Respondent no. 8, Company failed to comply with the mandatory requirement of submitting the important documents. Whether the Respondent Bharat Coking Coal Limited (BCCL) was justified in rejecting the Technical bid of the Appellant, while accepting the Technical bid of the Respondent no. 8 - Company, and declaring it to be successful bidder, though the Respondent no. 8 had not complied with the mandatory requirement of submitting the important documents relating to the qualification criteria as contained in Clause 10 of the Notice Inviting Tender (NIT) dated 16.08.2023, and thereby had failed to qualify the Eligibility criteria laid down therein? HELD THAT:- From the bare perusal of the Clause 10, it clearly transpires that the Bidders were required to furnish the information and the scanned copies of the documents relating to qualification criteria particularly to substantiate their Financial capacity. For the purpose of substantiating Financial Capacity, the Bidders were obliged to submit the scanned copies (self-certified and notarised/certified) of the Audited Annual Reports for the last three financial years as chosen by the Bidder, comprising of the audited balance sheets and profit and loss accounts of the Bidder, along with other documents as stated therein. This was the mandatory requirement of the NIT, the same being related to the qualification criteria as also transpiring from Clause 2.2.5 of the RFB. Admittedly, the Respondent No.8 had not submitted the scanned copies of its audited Annual Reports for the last three financial years, at the time of submitting/uploading the bid documents, before the last date fixed i.e 01.12.2023 and the same were submitted on 17.04.2024 only when the clarification was sought from the Respondent No.8, after the Technical bids were opened on 04.12.2023. When the Technical bid of the Appellant was rejected by the Respondents on 06.05.2024 on the ground that it did not comply with the Clause 10 of the NIT namely Part I/ Cover I Other Important Documents (OID) Point No. 02 Appendix II (Power of attorney for signing of bid), there was no justification on the part of the Respondent authorities for accepting the Technical bid of the Respondent No.8, which clearly was not in compliance with the same mandatory Clause 10 of NIT. The Respondent BCCL has miserably failed to justify as to how the Technical bid of the Respondent no.8 was accepted when it had not submitted the requisite important documents related to the qualification criteria as mentioned in Clause 10 of the NIT. There cannot be any disagreement to the legal proposition propounded in catena of decisions of this Court relied upon by the learned counsels for the Respondents to the effect that the Court does not sit as a Court of Appeal in the matter of award of contracts and it merely reviews the manner in which the decision was made; and that the Government and its instrumentalities must have a freedom of entering into the contracts. However, it is equally well settled that the decision of the government/ its instrumentalities must be free from arbitrariness and must not be affected by any bias or actuated by malafides. Government bodies being public authorities are expected to uphold fairness, equality and public interest even while dealing with contractual matters. The impugned decision of the Respondent BCCL dated 06.05.2024 rejecting the Technical bid of the Appellant and further declaring the Respondent no.8 as successful bidder is set aside. Any action/ process undertaken or agreement entered into pursuant to the said decision also stand set aside. It shall be open for the Respondent BCCL to initiate fresh tender process for the Project and to process the same in question in accordance with law. Appeal allowed.

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• 2024 (10) TMI 212
  Criminal conspiracy - Recovery of amounts due - compoundable offences - settlement between the parties - whether the continuation of the criminal proceedings against the present appellants would be justified or not? - HELD THAT:- In the case of Nikhil Merchant [ 2008 (8) TMI 966 - SUPREME COURT] , this Court was considering a civil dispute with certain criminal facets. The matter also involved offences which were not compoundable in nature. This Court, therefore, considered the question as to whether the criminal proceedings could be quashed under Article 142 of the Constitution of India on the basis of compromise, even where non-compoundable offences are involved. This Court found that though the offence punishable under Section 420 of the IPC was compoundable under sub-section (2) of Section 320 CrPC with the leave of the Court, the offence of forgery was not included as one of the compoundable offences - This Court specifically noted that though it is alleged that certain documents had been created by the appellant therein to avail of credit facilities beyond the limit to which the Company was entitled, the power of quashing could be exercised. This Court found that in view of a compromise arrived at between the Company and the Bank, it was a fit case where a technicality should not be allowed to stand in the way of quashing of the criminal proceedings. This Court found that in view of the settlement arrived at between the parties, continuance of the same would be an exercise in futility. The facts in the present case are similar to the facts in the case of Sadhu Ram Singla and others [ 2017 (2) TMI 1530 - SUPREME COURT] wherein a dispute between the borrower and the Bank was settled. In the present case also, undisputedly, the FIR and the chargesheet are pertaining to the dispute concerning the loan transaction availed by the accused persons on one hand and the Bank on the other hand. Admittedly, the Bank and the accused persons have settled the matter. Apart from the earlier payment received by the Bank either through Equated Monthly Instalments (EMIs) or sale of the mortgaged properties, the borrowers have paid an amount of Rs.3,80,00,000/- under OTS. After receipt of the amount under OTS, the Bank had also decided to close the loan account. The dispute involved predominantly had overtures of a civil dispute. This was a fit case wherein the High Court ought to have exercised its jurisdiction under Section 482 CrPC and quash the criminal proceedings - The impugned judgment and order passed by the High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh is quashed and aside - Appeal allowed.

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• 2024 (10) TMI 211
  Seeking permission to reopen Complaint which was inadvertently withdrawn from the Court of learned Metropolitan Magistrate- 02 (South), Saket Court, New Delhi - Recovery of Award amount - dishonour of cheque - HELD THAT:- Though, the petitioner has claimed that it was due to inadvertence that first Complaint Case No. 469088/2016, for cheque amount of Rs. 51,13,692/- got withdrawn when the petitioner intended to withdraw the second Complaint Case No. 469085/2016 pertaining to the cheque for lesser denomination in the sum of Rs. 74,000/-. Though, the petitioner has tried to justify that this inadvertence happened on account of the two Complaint Cases being taken on the same day but the conduct of the petitioner, does not show that there was any inadvertence. Firstly, as observed above, some amounts of money have already been recorded as paid and only about Rs. 30-32 Lakhs was recorded to be outstanding. Therefore, the claim that there was an outstanding liability of Rs. 67,60,656/- by the petitioner, is not tenable. Secondly, the petitioner having withdrawn the first Complaint case, approached the Mediation Centre but surprisingly, still did not come to know about the alleged inadvertence. Learned counsel for the petitioner has sought to explain by asserting that though the parties were referred to the Mediation Centre but no consensus of settlement was arrived at the Mediation Centre, consequently, the mediation failed. The Application under Section 362 Cr.P.C. for recall of the Order dated 20.05.2022 was filed before the learned Metropolitan Magistrate after six months on 05.06.2023 and was dismissed on 28.11.2023. Such conduct of the petitioner again reflects that there was no inadvertence or else it would have acted promptly to rectify the alleged error - it is also pertinent to observe that having withdrawn the Complaint Case, the petitioner got the Execution Petition for recovery of the said amount revived, in regard to the Arbitration Award. It is quite apparent that the petitioner rather than perusing the remedy under the Complaint Cases for the recovery of the due, amount had chosen to pursue the matter further in the Execution of the Arbitral Award. There is no merit in the present Petition which is hereby dismissed.

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• 2024 (10) TMI 210
  Dishonour of Cheque - Account Frozen - no provision for dropping of proceedings was available in the Code of Criminal Procedure - stand of the respondent is that the situation was beyond his control as such, the respondent could not have been proceeded against for commission of offence under section 138 of the Act. Whether the learned revisional court is right in returning a finding that the learned Magistrate has wrongly dismissed the application for dropping of proceedings? - HELD THAT:- The finding returned by the learned Revisional Court that the learned trial court has wrongly dismissed the application for dropping of proceedings in the complaint filed by the petitioner, is contrary to the settled proposition of law that once the Magistrate takes the cognizance and issues the process against the accused, then the Magistrate cannot put the clock back and drop the proceedings at the behest of the accused because there is no such provision in the Code of Criminal Procedure, permitting the Magistrate to recall his order, whereby he has taken the cognizance and issued process against the accused - the observation of the learned Revisional Court is contrary to law and, as such, it is held that the Revisional Court was not right in returning the finding that the trial court had wrongly dismissed the application for dropping of the proceedings filed by the respondent herein. Whether the complaint for dishonour of cheque due to the reason account frozen is maintainable under section 138 of the Act? - HELD THAT:- The cheque was issued on 01.07.2014 and the same was dishonoured on 14.07.2014 and in absence of any finding as to when the account was frozen i.e. whether the account was frozen prior to the issuance of the cheque or after the issuance of the cheque and further as to whether the accounts of the respondent was having sufficient amount to honour the cheque at the time of issuance of cheque or not and rightly so because there was no material before the Revisional Court to return any such finding, the petitioner herein could not have been knocked out of the court at the threshold. The learned Revisional Court has put the cart before the horse and has returned a finding which could have been returned only after the full-fledged trial. Rather, the onus would be on the respondent to prove that he was not aware about the freezing of the account when the cheque was drawn, the account was frozen due to reasons beyond his control and the account was having sufficient balance when the cheque was dishonoured. In Vikram Singh vs. Shyoji Ram, [ 2022 (2) TMI 1475 - SC ORDER ], the High Court had quashed the proceedings of the complaint under section 138 of the Act, as the witnesses had stated that the accused had not opened the account with the Bank but in the memo it was mentioned that the cheque was dishonoured due to the reason Account Frozen . The Hon ble Supreme Court of India set aside the order passed by the High Court by observing that the Account Frozen would presuppose the existence of the account and it was premature to quash the compliant. The Hon ble Supreme Court of India remanded the matter back for full-fledged trial. This court is of the considered view that the complaint under section 138 of the Act is maintainable even if the cheque is dishonoured due to reason Account frozen - Order of Revisional Court dated 09.05.2018 is set aside and the order of the trial court dated 14.11.2017 is restored. The matter is remanded back to the trial court and the trial court shall proceed in accordance with law - Petition allowed by way of remand.

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