TMI Tax Updates - e-Newsletter
November 12, 2024

Case Laws in this Newsletter:

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

Highlights / Catch Notes

GST

• Tax evasion case: Bail for accused in fake invoice scam to claim illegal input tax credits.

  Bail granted to accused in case involving alleged issuance of fake invoices by nine firms for evasion of GST through fraudulent claims of input tax credit. Complaint alleges non-traceable addresses and proprietors of firms used to generate fake invoices. Maximum punishment of five years, accused already in custody for over seven months. Offences compoundable and triable by Magistrate, trial likely prolonged. Accused released on bail of Rs. 1,00,000 personal bond and two sureties of Rs. 50,000 each, subject to appearing before court on all dates.
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• Quasi-judicial body violated natural justice by issuing non-speaking order without reasoning.

  Violation of principles of natural justice by the authority in passing a non-speaking order without applying its mind to the material on record. It emphasizes that reasoning is the essence of any quasi-judicial order with adverse consequences. The impugned order merely stated that the reply and documents were unacceptable, without addressing the objections raised by the petitioner. Consequently, the High Court held that the order suffered from being non-speaking, violating natural justice principles, and set it aside, allowing the petition.
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• Tax credit blocked without hearing; Court quashes order citing lack of reasons.

  The Court held that the impugned order invoking Rule 86A of the CGST/SGST Rules by blocking the petitioner's Input Tax Credit (ITC) without providing a pre-decisional hearing violated principles of natural justice. The order lacked independent or cogent reasons, merely relying on reports of the Enforcement authority, which is impermissible as it amounts to borrowed satisfaction. The impugned order stating the petitioner was found non-existent or not conducting business without providing further reasons was also found deficient. Consequently, the High Court quashed the impugned order dated 09.07.2024 and directed the respondents to unblock the petitioner's ITC immediately to enable filing of returns, allowing the petition.
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• Tax refund claim for "Inverted Duty Structure" under GST regime allowed despite delay.

  The case pertains to the refund of tax paid by the petitioner under the 'Inverted Duty Structure' in the Goods and Services Tax (GST) regime. The petitioner filed an application for refund on 12.04.2023, beyond the limitation period, claiming a refund of Integrated Goods and Services Tax (IGST) paid. The High Court held that when the amounts in the credit ledger were set off against the demand, their character changed to that of tax recovered by the department. An appeal against the demand raised by the Assessing Officer was allowed on 20.02.2022, and the order was communicated on 15.08.2022. The second Explanation to Section 54 of the GST Act states that when tax becomes refundable due to an order of the Appellate Authority, the relevant date is the date of communication of such order, which in this case was 15.08.2022. The petitioner's online application could not be uploaded due to a technical glitch, and the Government contended that the 'Inverted Duty Structure' refund is possible only for two years. The High Court allowed the petition.
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• No statutory appeal possible due to non-constitution of Tribunal. 20% deposit ordered for stay on recovery.

  The petitioner is deprived of the statutory remedy of appeal against the impugned order due to the non-constitution of the Tribunal u/s 112(8) and (9) of the B.G.S.T. Act. Consequently, the petitioner cannot avail the benefit of stay on recovery of the balance tax amount upon deposit as contemplated u/s 112(8) and (9). The State authorities acknowledged the non-constitution of the Tribunal and issued a notification u/s 172, providing that the limitation period for filing an appeal before the Tribunal u/s 112 shall commence after the President's appointment. The petition is disposed of subject to depositing 20% of the remaining disputed tax amount, in addition to the earlier deposit u/s 107(6), entitling the petitioner to the statutory stay benefit u/s 112(9), as the non-constitution of the Tribunal cannot deprive the petitioner of this right.
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• Order on GST appeal remedy when Appellate Tribunal not constituted.

  Non-constitution of Appellate Tribunal under CGST/OGST Act deprived petitioner of statutory remedy of appeal against order passed by Authority. Considering Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 and clarification by Central Board of Indirect Taxes and Customs vide Circular No.132/2/2020, High Court deemed it proper in the interest of justice to dispose of the writ petition.
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Income Tax

• Tax reassessment row: Lack of fresh evidence invalidates reopening.

  Validity of reassessment proceedings u/s 147, the requirement of fresh tangible material for reopening assessment, and the disallowance of expenditure incurred on DAP, production, and translation expenses. The court held that the reasons provided by the Assessing Officer (AO) failed to demonstrate the assessee's failure to disclose fully and truly, rendering the reassessment exercise nugatory. The court observed that the purported reasons only demonstrated a change of opinion, which cannot form the basis for reopening the assessment. The court also noted that even if the AO's argument of allowing expenses due to a mistake or without verification is accepted, the appropriate remedy would lie u/s 263. Consequently, the essential ingredient for reopening the assessment beyond four years was not satisfied, making the reassessment proceedings bad in law. Additionally, the court highlighted that the details regarding the expenses were placed before the AO in the previous assessment years, and the claim for deductibility was allowed, attaining finality. Since identical expenditure was claimed year after year without disallowance, the basis for "reasons to believe" did not survive anymore. The decision was in favor of the assessee.
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• Manufacturing Co's transfer pricing method upheld; AMP expenses deemed comparable.

  Tribunal's conclusion that Resale Price Method (RPM) is the most appropriate method upheld. Transfer Pricing Officer (TPO) and Dispute Resolution Panel (DRP) had rejected RPM, citing assessee's significant Advertisement, Marketing and Promotion (AMP) expenses. However, Tribunal accepted assessee's contention that AMP expenses were not excessive and comparable to other entities. DRP's finding that assessee was not a 'routine distributor' sustainable. Revenue's challenge to Tribunal's decision dismissed, no substantial question of law arises.
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• Tax Dept Overruled: Notice for Reopening Assessment Beyond Stipulated Time Limit.

  Notice issued for reopening assessment u/s 147 was beyond the limitation period stipulated in Section 149(1). The High Court, following Ojjus Medicare Pvt. Limited, clarified the manner of reckoning the six or ten-year period for reopening assessment prior to six years or before expiry of ten years from the relevant assessment year u/s 153C. The court held that the ten-year period is to be reckoned from the end of the assessment year relevant to the year in which the notice u/s 148 is issued. Consequently, the impugned notice for Assessment Year 2015-16 was set aside, restraining the respondent from proceeding with the reassessment proceedings.
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• Unreliable survey statement can't justify addition to assessee's income by hiking closing stock value.

  Addition to assessee's income by enhancing closing stock value made by Assessing Officer (AO) u/s 143(3) was based solely on statement recorded during survey without any incriminating material. As per S Kader Khan Sons [2007 (7) TMI 182 - MADRAS HIGH COURT], statement recorded u/s 133A has no evidentiary value, and addition cannot be made based on such admission during survey. AO relied on gross profit rate declared during survey, but CIT(A) noted AO did not provide basis for adopting 17.43% rate instead of overall 13.08%. AO cannot make additions based on surmises and conjectures without rejecting books of account. CIT(A) examined consistent gross profit rates over previous years and deleted the addition. AO did not disallow purchases but enhanced closing stock, potentially affecting opening stock in subsequent year. Revenue's appeal against CIT(A) order was dismissed.
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• Jurisdictional defects ignored, bogus expenses disallowed, profit estimation not justified.

  Assessment proceedings conducted by non-jurisdictional officer - Assessee participated without challenging jurisdiction - Assessment order valid as per Supreme Court ruling in DCIT vs. Kalinga Institute case. Bogus expenses - Assessee provided incomplete addresses, similar PAN numbers for different vendors - Disallowance of Rs. 20 lakhs justified considering totality of facts, assessee's inability to substantiate expenses despite reasonable profit rate declared. Estimation of 25% profit by authorities not warranted.
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• Assessee Wins! Tax Officer's Route Expense Disallowance Rejected, Surrender Deemed Excessive.

  This is a case concerning the disallowance of certain expenses termed as "route expenses" by the Assessing Officer (AO) due to lack of proper supporting vouchers. The key points are: The assessee made a surrender of Rs. 13 crores for all the years covered under search action. The Revenue cannot shift the burden on the assessee to prove the genuineness of expenses when nothing contrary was found during the search operations. The AO did not doubt the genuineness or allowability of expenses but harped upon the production of drivers, ignoring the search findings. Statements recorded u/s 132(4) and 131(1) have no evidentiary value and cannot be termed incriminating material, as per recent court rulings. Merely because drivers were unavailable during assessment, no addition is permissible without corroborating material proving the expenses were bogus, not business-related, or invoices were fake. The CIT(A)'s sustaining 60% of the hypothetical surrender is not tenable in law. All additions sustained by the CIT(A) are deleted. The assessee's appeals are allowed.
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• Tax tribunal deletes additions for commission expenses and non-genuine purchases for assessee's sister concern.

  The CIT(A) partly allowed and restricted the addition on account of commission expenses at 0.25% as compared to 2% adopted by the Assessing Officer. The coordinate bench of the Tribunal, in a similar case involving the assessee's sister concern, deleted the addition on account of non-genuine profit/loss in illiquid options and consequently also deleted the notional addition of commission u/s 69C. Following the same, the addition on account of commission expenses u/s 69C is deleted. Regarding the addition on account of non-genuine purchases, the coordinate bench of the Tribunal, in a similar case involving the assessee's sister concern, deleted the addition on account of non-genuine purchases. In the absence of contradictory material on facts and law, the addition on account of non-genuine purchases is also deleted, respectfully following the Tribunal's decision in the cited case.
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• Taxman can't revise order just for differing opinion, only lack of inquiry permits revision.

  Section 263 revision - derivative transactions losses - inadequate inquiry by Assessing Officer (AO). Commissioner of Income Tax (CIT) set aside AO's order for re-examination instead of giving conclusive finding on sustainability under law. Distinction between lack of inquiry and inadequate inquiry - if any inquiry conducted, even inadequate, CIT cannot revise merely due to different opinion. Only lack of inquiry permits revision u/s 263. AO conducted inquiry, was satisfied with evidence provided, not required to give elaborate finding. CIT cannot remand for fresh adjudication merely due to uncertainty about assessee's claim correctness. When AO's order not erroneous for want of inquiry, CIT must give conclusive finding on order's sustainability under law. Assessee's appeal allowed.
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• Transfer of tenancy rights not taxed but purchase of additional area beyond tenancy is taxable if consideration differs from stamp duty value. (2)(x.

  Applicability of Section 56(2)(x) of the Income Tax Act to the transfer or surrender of tenancy rights. It states that Section 56(2)(x) is a deeming provision akin to Section 50C, with the former applicable to buyers and the latter to sellers of immovable property. The decisions rendered in the context of Section 50C are applicable to Section 56(2)(x). The transfer of "tenancy rights" has been held to be outside the scope of Section 50C, and following the same reasoning, the provisions of Section 56(2)(x) will not apply to the transfer of tenancy rights. However, in the present case, the assessee purchased additional area beyond the tenancy rights, and the provisions of Section 56(2)(x) will apply to the additional purchase. The difference between the actual consideration and stamp duty valuation for the additional area was less than 10%, and as per the amended tolerance limit, no addition u/s 56(2)(x) is required.
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• Land sale capital gain: Indexation from allotment date. Cost based on land parcel accounts. Land improvement cost remanded. Loan interest disallowance set aside.

  Indexation benefit allowed from date of allotment letter for capital gain on land sale. Cost of acquisition determined from books for separately maintained land parcel accounts. Cost of land improvement remanded to AO for fresh adjudication based on evidence. Disallowed expenses related to interest on loans for land purchase set aside for AO to examine allowability under law after considering all facts, including commencement of business. Partial relief granted to assessee.
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• Original asset co-owned by assessee and wife; sale proceeds invested in new property qualify for tax exemption u/s 54F.

  Legal interpretation of the term "original asset" for claiming exemption u/s 54F of the Income Tax Act. It discusses the ownership rights over the "original asset" by the assessee and his wife, and their entitlement to claim exemption based on the sale proceeds invested in a new property. The key points are: the "original asset" was jointly owned by the assessee and his wife, giving them equal ownership rights; the term "property" encompasses valuable rights and interests; both the assessee and his wife are beneficial owners and liable for taxation on the income from the property; the assessee invested the sale proceeds from the "original asset" in a new property co-owned with his son, fulfilling the criteria for exemption u/s 54F; the exemption is applicable based on judicial precedents, and the income should be computed considering the assessee's share of ownership and investment in the new property.
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Customs

• Imported goods exempted from countervailing duty due to domestic excise duty exemption.

  The appellant imported goods and claimed exemption from countervailing duty (CVD) under Notification No. 30/2004-CE, as the like articles manufactured in India were exempt from excise duty. The appellant paid CVD under protest and filed a protest letter. The Commissioner (Appeals) allowed the appellant's appeal, granting exemption from CVD. The Tribunal upheld the Commissioner's order, rejecting the revenue's objection based on unjust enrichment. The Tribunal relied on its earlier decision allowing the appellant's appeal on the same issue. Consequently, the impugned order denying refund was set aside, granting consequential relief to the appellant.
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• Revenue required to file separate appeals for each Bill of Entry due to monetary threshold limits.

  One appeal filed by the Revenue against 7 Bills of Entry is not maintainable. As per Rule 6(A) of the CESTAT Procedure Rules, 1982, when the Commissioner (Appeals) passes a common order-in-appeal disposing of appeals covering multiple Bills of Entry, the appellant is required to file separate appeals for each Bill of Entry, as each Bill of Entry is an assessment order in itself. This interpretation aligns with the Ahmedabad Bench's ruling in CMR Nikkie India Pvt Ltd case and the Jammu & Kashmir High Court's interpretation in CGST & CE, Jammu vs. M/s Narbada Industries case, which clarified that monetary thresholds apply to individual appeals, not the aggregate amount. Consequently, the Revenue is directed to file 7 separate appeals instead of one appeal if they wish to challenge the common order-in-appeal.
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• DRI officers' authority to issue customs notices upheld; misinterpretation rectified.

  DRI officers were appointed as officers of customs through notifications issued by the Department of Revenue, empowering them to issue show cause notices u/s 28 of the Customs Act, 1962. The Supreme Court's decision in Canon India erroneously held that DRI officers lacked jurisdiction, failing to consider Sections 2(34) and 5 of the Act which assign functions to proper officers. The reliance on Sayed Ali was misplaced as it dealt with different circumstances. Section 28(11) does not lead to chaos, as feared in Mangali Impex, due to the policy of excluding other officers once a notice is issued. Section 97 of the Finance Act, 2022, validating notices u/s 28, is constitutional. The Court provided directions for pending cases challenging jurisdiction, allowing appeals and remanding matters for adjudication on merits by proper officers u/s 28. The Canon India ruling on limitation remains undisturbed.
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• Customs Duty Dispute: Extended Limitation Period Scrutinized.

  Extension of the limitation period under the first proviso to Section 28(9) of the Customs Act, 1962, and whether the proceedings initiated in the Show Cause Notice dated 28.09.2022 can be continued in light of the extension granted by the Chief Commissioner of Customs on 07.05.2024. It clarifies that the question of granting extensions under the first proviso arises only after the limitation period for passing an order determining duty or interest has expired. The senior officer can then extend the period by six months or one year, as specified in clauses (a) and (b) of Section 28(9). The second proviso deals with the abatement of proceedings if no orders are passed after the extension period. The clarification issued by the Commissioner of Customs regarding the amendment to Section 28(9) is deemed a non-application of mind. The appellant's argument about standing orders being guidelines is addressed, and the lack of a reply to the Show Cause Notice is mentioned. The rejection of the appellant's request for cross-examination by an officer without jurisdiction is highlighted, and the decision to file an appeal before the High Court is discussed. The summary also notes the expiry of the limitation for filing an appeal against the CESTAT Order and the failure to file a writ petition under Article 226 of the Constitution.
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• SEZ goods removed to DTA face Anti-Dumping Duty challenges.

  This is a case involving the imposition of Anti-Dumping Duty (ADD) on goods removed from a Special Economic Zone (SEZ) to the Domestic Tariff Area (DTA). The key points are: 1) The demand for ADD for the period from 08.12.2014 to 31.08.2015 cannot be sustained as the ADD Notification had lapsed on 07.12.2014, and the subsequent notification extending it was held invalid. 2) For the prior period (14.11.2014 to 07.12.2014), no breakup of ADD liability or penalty was provided, necessitating further examination after deciding other objections. 3) The Development Commissioner had jurisdiction to issue show cause notices and adjudicate the matter before 05.08.2016, as the administrative head empowered under the SEZ Act. 4) The failure to provide the petitioner with the respondents' written submissions before concluding proceedings is immaterial, as the orders are not mere modifications of those submissions. 5) Determining whether the goods fall within the scope of the ADD Notification and whether the business model involved circumvention involves disputed questions of fact, requiring detailed examination of evidence, which is inappropriate in a writ petition when a statutory remedy is available. 6) The High Court granted leave to the petitioner to file a statutory appeal on.
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• Tribunal upholds adopting SION norms to calculate yarn input for duty drawback on exported products in absence of actual data.

  Drawback scheme allows rebate of duty paid on excisable goods used in manufacture of exported products. The assessee calculated yarn consumption for exports based on SION norms, an established input-output ratio recognized by law, as actual quantity could not be ascertained due to quality checks and wastage. The Tribunal upheld the adoption of SION norms, stating that in absence of actual data, a methodology like SION has to be applied to determine duty incidence for drawback. The Tribunal found no infirmity in the method as it is consistent, certified by field officers, and not disputed by Revenue apart from alleging reverse calculation, which is permissible based on SION. The reasoned order was upheld as Revenue failed to negate the findings.
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FEMA

• FPIs can reclassify holdings as FDI with conditions.

  The circular provides an operational framework for reclassification of Foreign Portfolio Investment (FPI) to Foreign Direct Investment (FDI) as per the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. It allows FPIs investing beyond the prescribed 10% limit of paid-up equity capital to reclassify such holdings as FDI, subject to conditions. The key points are: reclassification not permitted in FDI-prohibited sectors; necessary approvals from government and investee company's concurrence required; reporting requirements specified; custodian to transfer shares from FPI to FDI demat account post reporting; entire FPI investment treated as FDI post reclassification; reclassification/divestment timeline prescribed; post reclassification, investment governed by FDI rules.
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State GST

• Exporter's IGST refund regularized if import taxes paid later.

  The circular clarifies the regularization of refund of IGST availed in contravention of Rule 96(10) of CGST Rules, 2017, where exporters had imported inputs without paying integrated taxes and compensation cess. Initially, if inputs were imported without IGST and cess by availing exemption notifications, but later the exporter paid IGST, cess with interest and got the Bill of Entry reassessed, then the IGST paid on exports shall not be considered in contravention of Rule 96(10). The Explanation inserted in Rule 96(10) retrospectively deems the exemption notification benefits as not availed if IGST and cess were paid on imported inputs. Thus, refund of IGST paid on exports can be regularized in such cases.
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IBC

• Apex Court Directs Liquidation for Non-Payment of Dues by Resolution Applicant, Allows PBG Invocation.

  The Supreme Court held that the Effective Date for implementing the Resolution Plan was achieved on 20.05.2022 as all Conditions Precedent were fulfilled. The Performance Bank Guarantee (PBG) could not be adjusted against the first tranche payment as per the Resolution Plan. The Resolution Applicant/Successful Resolution Applicant (SRA) failed to implement the Resolution Plan by non-payment of the first tranche, airport dues, workmen and employees' dues. The NCLAT rightly held the SRA contravened the approved Resolution Plan, warranting liquidation u/s 33(3) of the IBC. Timely implementation is crucial under the IBC, so the SC exercised Article 142 powers to direct liquidation of the Corporate Debtor, overriding the need for the Adjudicating Authority's determination, to prevent delays. The PBG may be invoked by creditors per the Resolution Plan terms.
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• IBC: Suspended Director's preferential transaction payment reversed in liquidation.

  This appeal arose u/s 61 of the Insolvency and Bankruptcy Code, 2016, filed by the Suspended Director against the Adjudicating Authority's order. The Liquidator had obtained a Transaction Audit Report, which identified a payment of Rs. 3,67,900/- to the Suspended Director as a preferential transaction. The Adjudicating Authority rightly noted that this payment placed the Suspended Director in a beneficial position against the provisions of Section 53, which prioritizes secured creditors and workmen over unsecured creditors. The Suspended Director could have staked his claim for the outstanding unsecured loan u/s 53's waterfall mechanism. Since the Liquidator formed an opinion based on the Transaction Audit Report and filed an application before the Adjudicating Authority, the contention that the Liquidator did not form an opinion cannot be accepted. Consequently, the appeal was dismissed.
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Indian Laws

• Partners split; firm wound up. Court-appointed receiver managed assets. Ex-partner claimed share in profits from firm's assets taken over.

  Partnership firm dissolution, accounts settlement, and distribution of shares. Receiver appointed to manage assets until winding up. Defendants restrained from disposing firm property. Appellant company took over firm assets. u/s 37 of 1932 Act, outgoing partner entitled to accounts, share in profits derived from their share in firm assets. Extent of appellant's business derived from firm assets to be determined through evidence. Appeal against remand order to trial court dismissed.
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• Petition under Arbitration Act dismissed based on forum non conveniens doctrine.

  The doctrine of forum non conveniens was applied to determine the maintainability of a petition u/s 11 of the Arbitration and Conciliation Act, 1996. The Court held that Part I of the Act is applicable only where the arbitration takes place in India or the law governing the arbitration agreement is Indian law. For agreements executed after 06.09.2012, if the seat of arbitration is outside India, Part I is inapplicable. For pre-06.09.2012 agreements, Part I is inapplicable if parties have excluded its application by designating a foreign seat or governing law. The seat cannot be determined by the 'Closest Connection Test' but by express designation or significant indicia. Where multiple possible seats exist, forum non conveniens determines the appropriate seat considering parties' intentions and convenience. The petition was dismissed as the seat was not in India, nor was the agreement governed by Indian law.
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• High Court overstepped limited jurisdiction by delving into factual matrix instead of ascertaining prima facie arbitration agreement.

  The High Court exceeded its limited jurisdiction u/s 11 of the Arbitration and Conciliation Act, 1996 by undertaking a detailed examination of the factual matrix and assessing the auditor's report, instead of merely ascertaining the prima facie existence of an arbitration agreement. The Supreme Court clarified that the referral courts' limited jurisdiction u/s 11 must not be misused to force parties into costly arbitration, but this does not determine the merits, which the Arbitral Tribunal is rightfully equipped to decide. The Supreme Court allowed the appeal and set aside the High Court's order, reiterating the narrow scope of judicial scrutiny at the Section 11 stage after the 2015 amendment.
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SEBI

• Unified Payment Interface (UPI) facilitated trading, integrated demat/bank accounts, fund blocking at order placement.

  Circular mandates qualified stock brokers to provide facility of trading supported by blocked amount in secondary market using UPI block mechanism or 3-in-1 trading account integrating trading, demat and bank accounts. 3-in-1 account blocks funds/securities at order placement, transfers post market hours, client earns interest on available funds. Clients have option to continue existing mode or opt for new facilities. Provisions effective February 1, 2025. Stock exchanges and clearing corporations to amend bye-laws, disseminate circular. Issued under SEBI Act to protect investors, regulate securities market.
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• To reclassification rules: Equity investment over 10% requires compliance, custodian reporting to , and transfer to FDI account.

  This circular outlines the procedure for reclassification of Foreign Portfolio Investment (FPI) to Foreign Direct Investment (FDI). If an FPI's investment reaches 10% or more of a company's paid-up equity capital, and the FPI intends to reclassify its holdings as FDI, it must follow extant FEMA rules and RBI circulars. The custodian shall report this intent to SEBI, freeze the FPI's purchase transactions, and upon completion of RBI reporting, transfer the equity instruments from the FPI's demat account to its FDI demat account. The circular modifies the previous procedure outlined in the Master Circular and comes into immediate effect under SEBI's powers to regulate securities market.
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Service Tax

• Limitation Period For Tax Evasion Not Extended For Mere Non-Production Of Documents.

  Failure to produce supporting documents before audit team does not constitute suppression of facts to invoke extended period of limitation u/s 73(1) of Finance Act, 1994. No allegation of statutory contravention with intent to evade tax against assessee. Not producing documents necessary for substantiating claim does not fall under exception of "suppression of facts". No express allegations made in show cause notice regarding suppression of facts. High Court concurred with CESTAT that extended period not correctly invoked as intent to evade tax neither established nor evident. No infirmity in CESTAT's decision rejecting Revenue's contention of invoking extended period under proviso to Section 73(1).
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• Subcontractor not liable for service tax in SEZ despite lacking A-1, A-2 forms.

  Service tax demand was made on a subcontractor for services provided in a Special Economic Zone (SEZ), on the grounds that the subcontractor failed to provide declarations in forms A-1 and A-2, and Rule 10 of the SEZ Rules does not extend benefits to subcontractors. However, it was held that the subcontractor cannot be expected to obtain A-1 and A-2 forms, as these are obtained by the main contractor who directly deals with the SEZ unit. The main criteria for granting exemption is that the service should be provided in the SEZ, which was not disputed. Once this fact is established, the service is exempt under Notification No. 09/2009-ST and not taxable u/ss 51 and 26 of the SEZ Act. It is settled that when a subcontractor provides services on behalf of the main contractor in an SEZ, the same is exempt from service tax. Therefore, the subcontractor is not liable to pay service tax.
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• Manufacturer's interest on late payments for excisable goods not a taxable service.

  Classification of interest charged by a manufacturer on delayed payments from customers for the sale of excisable goods. The key points are: The interest was classified as a declared service u/s 66E(e) of the Finance Act, making it liable for service tax. However, relying on the Supreme Court's judgment in South Eastern Coalfields Ltd., it was held that penal interest on delayed payments cannot be subject to service tax u/s 66E(e). Consequently, the order classifying the interest as a taxable service was set aside, and the appeal was allowed with consequential relief, following the ratio decidendi of the Supreme Court case.
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• Services tax relief: GTA, reimbursements, double demands, pure supply, public roads, commissions, railway works, compensations set aside.

  Service tax demand on Goods Transport Agency (GTA) services rendered on reverse charge basis set aside as appellant did not collect service tax from service recipient. Demand on reimbursable expenditure for diesel procurement set aside being reimbursements not taxable. Double demand on advances received and later included in final bill value set aside. Demand on supply of materials where CST paid set aside being pure supply. Demand on road works set aside as construction of public roads exempted. Demand on commission retained on back-to-back contracts set aside as not covered under Business Auxiliary Service. Demand on railway works set aside as service tax already paid. Double demand on erection, commissioning and testing set aside. Demand on lump sum compensation paid and reimbursed set aside as not related to taxable service. Double demand on advances adjusted in bills set aside. Demand on hiring of additional dumpers set aside as service tax not collected. Demand treating services as Works Contract Service partly allowed 60% abatement. Demand for extended period set aside being time-barred. CENVAT credit demand for 2013-14 and 2014-15 set aside being time-barred. Balance credit demand remanded for verification. Extended period not invokable as Revenue aware of facts. Demand of service tax collected but not paid for 2015-16 to be verified and paid. Penalties.
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Articles

• Important task to be completed in October month's GST Return for F.Y.23-24 invoices
• Importance of a Trademark Search Before Registering Your Brand
• CLUBBING OF WIFE’S INCOME WITH THAT OF THE ASSESSEE
• Decoding the phrase 'eligible for full Input Tax Credit(ITC)' as prescribed under the provisos to Rule 28 of the CGST Rules, 2017

Notifications

• GST - States

• S.O. 483 - dated 11-11-2024 - Bihar SGST
  Seeks to bring in force provisions of various sections of Bihar Goods and Services Tax (Amendment) Act, 2024

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• G.O. Ms. No. 9 - dated 14-10-2024 - Puducherry SGST
  Seeks to bring in force provisions of various sections of Puducherry Goods and Services Tax (Amendment) Act, 2024

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• G.O. Ms. No. 8 - dated 14-10-2024 - Puducherry SGST
  Amendments in Notification G.O. Ms. No. 49, dated 28th September, 2018

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• 04/2024-Puducherry GST (Rate) - dated 14-10-2024 - Puducherry SGST
  Amendment in Notification No. 12/2017-Puducherry GST (Rate), dated 29th June, 2017

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• 03/2024-Puducherry GST (Rate) - dated 14-10-2024 - Puducherry SGST
  Amendment in Notification No. 2/2017-Puducherry GST (Rate), dated 29th June, 2017

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• 02/2024-Puducherry GST (Rate) - dated 14-10-2024 - Puducherry SGST
  Amendment in Notification No. 1/2017-Puducherry GST (Rate), dated 29th June, 2017

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Circulars / Instructions / Orders

• SEBI - SEBI/HO/AFD/AFD-POD-3/P/CIR/2024/152 - dated 11-11-2024
  Procedure for reclassification of FPI investment to FDI
• SEBI - SEBI/HO/MRD-PoD2/CIR/P/2024/153 - dated 11-11-2024
  Trading supported by Blocked Amount in Secondary Market
• FEMA - 19 - dated 11-11-2024
  Operational framework for reclassification of Foreign Portfolio Investment to Foreign Direct Investment (FDI)

News

• Indian Institute of Foreign Trade celebrates 57th Convocation, over 650 students conferred degrees

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• Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman launches National MSME Cluster Outreach Programme and inaugurates New SIDBI Branches in Bengaluru

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• Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman chairs meeting to review performance of 10 Regional Rural Banks of the Southern Region, including Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana and UT of Puducherry, in Bengaluru.

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Case Laws:

• GST

• 2024 (11) TMI 463
  Seeking grant of bail - input tax credit - offence punishable under section 132 (1) (a), (f) (h) and (l) of the Central Goods and Service Tax Act, 2017 - HELD THAT:- From the complaint it is revealed that the allegation against the accused petitioner is of issuing fake invoices in the names of nine fake firms which led to evasion of GST by claims of input tax credit on the basis of such fakes invoices. In the complaint the respondent-Department has asserted that there are nine fake firms and in para 13.1 of the complaint they have given the details of the firms and the reasons for declaring them to be fake. It has been stated in the complaint that the addresses as mentioned in the GST registration of such firms is non-traceable and the proprietor of the firms could not be traced. After completion of investigation, the complaint was submitted against the accused petitioner on the basis of evidence collected so far during investigation. There is nothing on record that who claimed how much input tax credit on the basis of alleged fake invoices said to have been issued by the accused petitioner. The maximum punishment for the offences alleged against the accused petitioner is five years and the present accused petitioner has already suffered the custody of more than seven months as he was arrested on 16.03.2024 in the matter. The alleged offences as per the provisions of law are compoundable and triable by Magistrate. The trial of the case is likely to take considerable time. This Court without expressing any opinion on the merits and demerits of the case deems just and proper to release the accused-petitioner on bail - bail application of accused-petitioner namely; Manoj Kumar Jain S/o Late Shri Anil Kumar Jain is allowed and it is directed that the accused-petitioner shall be released on bail provided he furnishes a personal bond in the sum of Rs. 1,00,000/- together with two sureties in the sum of Rs. 50,000/- each to the satisfaction of the trial Court with the stipulation that he shall appear before the trial Court or any other Court to which the matter is transferred, on all subsequent dates of hearing and as and when called upon to do so. Bail application allowed.

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• 2024 (11) TMI 462
  Violation of principles of natural justice - non-application of mind to the material on record - non-speaking order - HELD THAT:- It is trite law that when any quasi-judicial order, which results in adverse consequences, must be made in compliance with the principles of natural justice. Reasoning is the heart-beat of every conclusion, absence of reason would vitiate the proceedings - In the case on hand, the impugned order does not reflect any reasoning. What is stated therein is that the reply is not acceptable and documents are not filed. The Assessing Officer has not dealt with the objections of the petitioner at all. This Court is of the view that the impugned order suffers from the vice of being a non-speaking order and thus violates principles of natural justice - the impugned order is set aside - Petition allowed.

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• 2024 (11) TMI 461
  Challenge to order passed under Section 73 of the Karnataka Goods and Services Tax Act, 2017 - discrepancy in the returns - non-payment of GST - attachment of bank account of petitioner - unaware of issuance of the notice - violation of principles of natural justice - HELD THAT:- It is the responsibility of the petitioner to keep a valid E-mail ID for communication purposes. If she changes the E-mail ID, she is required to update the same in the GST portal. Admittedly, the petitioner had not done it at the time of issuance of the said notice. No fault can be found with the authorities concerned in passing the impugned order pursuant to the issuance of the recovery notice. However, taking into consideration that the petitioner did not have an opportunity of participating in the proceedings, this Court is of the opinion that interest of justice would be met, if an opportunity is given to the petitioner to participate in the proceedings by setting aside the impugned order at Annexure-D and summary of the order at Annexure-E and consequently, the recovery notice at Annexure-F to the writ petition subject to imposing cost on the petitioner and remanding the matter back to respondent no.1. Petition allowed by way of remand.

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• 2024 (11) TMI 460
  Constitutional validity of provision of Rule 86A of the Central Goods and Service Tax Act / State Goods and Service Tax Rules, 2017 (CGST / SGST) - violation of of Article 14 and 19(1)(g) of the Constitution of India - blocking of Input Tax Credit (ITC) - no pre-decisional hearing was provided/granted by the respondents before passing the impugned order - violation of principles of natural justice - HELD THAT:- In view of the dictum of the Hon ble Division Bench of this Court in K-9-Enterprises s case [ 2024 (10) TMI 491 - KARNATAKA HIGH COURT] , it is opined that in the instant case, since no pre-decisional hearing was provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A of the CGST Rules by blocking of the ITC of the petitioner does not contain independent or cogent reasons to believe except by placing reliance upon the reports of Enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by the Hon ble Division Bench of this Court, the impugned order deserves to be quashed. It is also pertinent to note that in the impugned order except stating that a registered person/s who has been found non-existent or not to be conducting any business from any place for which registration has been obtained in contravention of the above provisions , no other reasons are forthcoming in the impugned order. On this ground also, the impugned order dated 09.07.2024 deserves to the quashed. Impugned order dated 09.07.2024 at Annexure-A is hereby quashed - The concerned respondents are directed to unblock the ITC of the petitioner immediately upon the receipt of copy of this order, so as to enable the petitioner to file returns forthwith - petition allowed.

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• 2024 (11) TMI 459
  Condonation of delay in filing the revocation application - compliance with all the requirements of paying the taxes, interest, late fee, penalty etc. due - HELD THAT:- In that view of the matter, the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. The writ petition is disposed of.

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• 2024 (11) TMI 458
  Condonation of delay in filing the revocation application - compliance with all the requirements of paying the taxes, interest, late fee, penalty etc. due - HELD THAT:- In that view of the matter, the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. The writ petition is disposed of.

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• 2024 (11) TMI 457
  Condonation of delay in filing the revocation application - compliance with all the requirements of paying the taxes, interest, late fee, penalty etc. due - HELD THAT:- In that view of the matter, the delay in Petitioner s invoking the proviso to Rule 23 of the Odisha Goods and Services Tax Rules (OGST Rules) is condoned and it is directed that subject to the Petitioner depositing all the taxes, interest, late fee, penalty etc. due and complying with other formalities, the Petitioner s application for revocation will be considered in accordance with law. The writ petition is disposed of.

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• 2024 (11) TMI 456
  Refund of the tax paid by the petitioner on the Inverted Duty Structure - relevant dates - time limitation - petitioner filed an application for refund in the format RFD-01 on 12.04.2023 in terms of Rule 89(1) read with Section 54 of the GST Act much later to the limitation period and claimed a refund paid under IGST - HELD THAT:- When the amounts remaining in the credit ledger was set off as against the demand, the character of the said amounts which remained in the credit ledger changed and acquired the status of tax recovered by the department. An appeal was filed from the aforesaid demand raised by the Assessing Officer which was allowed on 20.02.2022. The appellate order is also said to have been received only on 15.08.2022. The petitioner has now filed an application for refund of the amounts credited to the credit ledger on the appeal being allowed. Hence, what remains in the credit ledger of the petitioner is the amount of tax recovered which is enabled for refund as per the appellate order. Clause (2) of the second Explanation to Section 54 provides that when tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, the date of communication of such judgment, decree, order or direction is the relevant date. Hence, the relevant date as per the Explanation is 15.08.2022 on which date the order was communicated. The petitioner s online application was not uploaded, presumably by reason of a technical glitch. The Government Advocate, however, points out that the uploading was not possible since the Inverted Duty Structure refund is possible only for two years. Petition allowed.

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• 2024 (11) TMI 455
  Violation of principles of natural justice - blocking of Input Tax Credit (ITC) - HELD THAT:- The documents on record indicate that the petitioner was put on notice, albeit by uploading the intimation and notices on the GST portal. However, it is equally evident from the record that the petitioner did not participate in proceedings and, therefore, could not place on record documents to contest the reversal of ITC. In these circumstances, it becomes necessary to balance the interest of the petitioner and revenue interest. On instructions, learned counsel for the petitioner submits that the petitioner would remit 10% of the disputed tax demand. The impugned order calls for interference solely for the reason of providing the petitioner an opportunity to contest the tax demand, albeit on terms - the impugned order is quashed subject to the petitioner remiting 10% of the disputed tax demand with in a maximum period of two weeks from the date of receipt of a copy of this order - petition disposed off.

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• 2024 (11) TMI 454
  Challenge to assessment orders in respect of distinct assessment periods - breach of principles of natural justice - HELD THAT:- The assessment orders were issued on 31.07.2023, but the petitioner has approached this Court in late February 2024 after the bank accounts of the petitioner were attached. The documents on record clearly indicate that the petitioner was negligent in not contesting the assessment proceedings until orders of attachment were issued. However, it is equally clear that the orders impugned herein were issued without hearing the petitioner. In these circumstances, solely with the view to provide an opportunity to the petitioner to contest the tax demands, interference with the impugned orders is warranted subject to putting the petitioner on terms. The impugned assessment orders are quashed and the matters are remanded for re-consideration subject to the condition that the petitioner remits 12.5% of the disputed tax demand in each assessment order within a period of two weeks from the date of receipt of a copy of this order - Petition allowed by way of remand.

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• 2024 (11) TMI 453
  Cancellation of the petitioner's GST registration - no business for eleven months and had filed nil returns - HELD THAT:- The appellate authority cannot be faulted for rejecting the appeal in view of the language of Section 107 of the Central Goods and Services Tax Act, 2017. At the same time, the petitioner should not be left without remedy. The reasons set out in the order of cancellation is non filing of returns for a continuous period of more than six months. In TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , this Court directed restoration of registration subject to certain conditions. The petitioner is directed to file returns for the period prior to the cancellation of registration, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order - Petition disposed off.

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• 2024 (11) TMI 452
  Imposition of GST under the reverse charge mechanism on the seigniorage paid by the petitioner to the Government - HELD THAT:- In a recent judgment of the Division Bench of this Court in a batch of writ petitions, TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [ 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.

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• 2024 (11) TMI 451
  Denial of transitional credit in TRAN -1 and TRAN 2 - HELD THAT:- It was the initial year of ruling out of the GST and the petitioner might not be aware of the documents which were required to have been produced in support of its claim for transitional credit. In view thereof, it is opined that the petitioner should be afforded one more opportunity to produce all the documents before the Assessing Officer in support of his claim regarding transitional credit. The petitioner is directed to appear before the 1st respondent on 05.03.2024 with all the relevant documents in support of his claim for transitional credit. If the petitioner fails to appear on 05.03.2024 and is unable to substantiate his claim by documentary evidence, the Assessing Officer would be free to pass the order - the impugned order is set aside - the writ petition is allowed.

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• 2024 (11) TMI 450
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 449
  Breach of principles of natural justice - impugned order was issued without providing a personal hearing to the petitioner - HELD THAT:- The reply dated 30.10.2023 of the petitioner is on record and the document contains an indication that the petitioner requested for a personal hearing. Even otherwise, the statute mandates that a personal hearing be provided either if requested for or if an order adverse to the taxpayer is proposed to be issued. Since such personal hearing was not provided and the reply was not taken into consideration, the order impugned herein calls for interference. The impugned order is quashed and the matter is remanded for re-consideration. The petitioner is permitted to resubmit the reply dated 30.10.2023 electronically on the portal of the respondents along with any additional documents. Such reply shall be re-submitted within a maximum period of ten days from the date of receipt of a copy of this order - Petition disposed off by way of remand.

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• 2024 (11) TMI 448
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 447
  Seeking cancellation of its GST registration - typical graphical error in the prayer paragraph - Closure of business - HELD THAT:- As per the petitioner, petitioner had closed his business on 05.04.2021 and applied for cancellation of the registration on the same date. The application is still pending. This petition is disposed of directing the respondents to process the application of petitioner seeking cancellation of its GST registration and dispose of the same, if not already done, within the period of two weeks from today with intimation to the petitioner.

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• 2024 (11) TMI 446
  Maintainability of petition - availing statutory remedy of appeal against the impugned order - HELD THAT:- Due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act. Under the circumstances, the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Petition disposed off subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non constitution of the Tribunal by the respondents themselves.

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• 2024 (11) TMI 445
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 444
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 443
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 442
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 441
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 440
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 439
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 438
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 437
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of his statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• 2024 (11) TMI 436
  Maintainability of petition - availability of statutory remedy of appeal under CGST/OGST Act due to non-constitution of Appellate Tribunal - HELD THAT:- It is not at all in dispute that the order impugned in this writ petition, which has been passed by the Authority under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) is appealable under Section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of non-constitution of the Appellate Tribunal as required under section 109 of the said Acts, the petitioner is deprived of its statutory remedy of Appeal and the corresponding benefit of subsections-8 9 of section 112 of the said Acts. Taking into account the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition. Petition disposed off.

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• Income Tax

• 2024 (11) TMI 435
  Validity of reassessment proceedings u/s 147 - reasons to believe - Requirement of fresh tangible material for reopening assessment - disallowance of expenditure incurred on DAP and production and translation expenses - HELD THAT:- The existence of failure on the part of the assessee to disclose fully and truly should not only be integral to the reasons but it must also be spelt out in the reasons as to what was to be disclosed but had not been disclosed. The absence of such averments in the reasons renders the whole exercise nugatory. Such lapse on the part of the AO cannot be regarded as a mere procedural irregularity but is a defect which goes to the root of the matter. The purported reasons that prompted the AO to reassess and disallow the expenditure incurred on DAP and production and translation expenses only demonstrate a change of opinion on the part of the AO, which cannot form the basis of reopening the assessment. In order to assume jurisdiction under Section 147, the stand of the AO was that DAP expenditure was allowed owing to a mistake , whereas, production and translation expenses were allowed without any verification. Even if, such an argument is to be accepted, the appropriate remedy in such a situation may lie under Section 263 of the Act. Consequently, one of the essential ingredients for reopening the assessment beyond the period of four years has not been satisfied in the present case. Reassessment proceedings are therefore bad in law. Reasons to believe - Quite apart from above, it is also important to note that the details regarding DAP and production and translation expenses were placed before the AO in AY 2012-13 and on consideration of material so placed on record, the claim of DAP expenses as well as production and translation expenses were allowed by the AO. Order of assessment for AY 2012-13 has attained finality as on date. We also take note of the undisputed position as brought to our notice during arguments that the claim of deductibility of the said expenses was not only allowed in AY 2012-13 but also in AY 2013-14. Thus, identical expenditure has been claimed by the petitioner year after year and there has been no disallowance. Since there has been no disallowance of the deductions in the subsequent AYs, we agree with the submission of learned counsel for the petitioner that the basis for the reasons to believe do not survive any more. Decided in favour of assessee.

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• 2024 (11) TMI 434
  TP Adjustment - MAM selection - CUP or the RPM - Tribunal s conclusion that RPM is the most appropriate method - TPO and the DRP had rejected RPM as a most appropriate method for computing the ALP on the ground that the assessee had incurred significant advertisement, marketing and promotion (AMP) expenses - HELD THAT:- The question whether RPM is the most appropriate method in cases of the distributor that purchases the products from its AE and resells the same to unrelated parties without any further processes is covered by the several decisions. As decided in L Oreal India (P) Limited. [ 2015 (2) TMI 407 - BOMBAY HIGH COURT] had considered the Revenue s challenge to an order passed by the learned Tribunal in a similar case holding that the RPM was the most appropriate method in a case where the assessee had imported the finished goods and resold the same in the same condition. In the present case, as noted above, the learned Tribunal had accepted the assessee s contention that its AMP expenses were not excessive and were similar to those incurred by other comparable entities.There is no cavil that the AMP activities are a part of the functional profile of the assessee. In the given facts, the DRP s decision that the assessee was not a routine distributor is clearly sustainable. No merits in the Revenue s challenge to the decision of the learned Tribunal. No substantial question of law.

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• 2024 (11) TMI 433
  Reopening of assessment u/s 147 - notice issued beyond the period of the limitation as stipulated under Section 149 (1) - HELD THAT:- As in Ojjus Medicare Pvt. Limited [ 2024 (4) TMI 268 - DELHI HIGH COURT] the Court explained the manner in which the period of six or ten years is required to be reckoned in respect of reopening of the assessment for a period prior to six years and/or before the expiry of ten years from the relevant assessment years as contemplated u/s 153C of the Act. The court held that the period of ten years is required to be reckoned from the end of the assessment year relevant to the year in which the notice under Section 148 of the Act is issued. In view of the above, the impugned notice is set aside. Consequently, the respondent is restrained from the proceeding with the re-assessment proceedings in respect of the AY 2015-16.

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• 2024 (11) TMI 432
  Addition of specific findings during the survey operation on the assessee s premises - AO made addition to the income of the assessee by enhancing the value of closing stock in the assessment framed u/s 143(3) - HELD THAT:- As during the course of survey, a statement was recorded by the survey team, however, no incriminating material was found during the course of survey. Therefore, in absence of having any incriminating material, the statement recorded has no evidentiary value as in the held in S Kader Khan Sons [ 2007 (7) TMI 182 - MADRAS HIGH COURT] wherein it has been held that the statement recorded u/s 133A has no evidentiary value and any admission made during the course of survey cannot be the basis for making the addition. AO has mainly harped on GP declared during the course survey proceedings. We even note that CIT(A) has specifically mentioned that the AO has not mentioned any basis for taking G.P. rate of 17.43% whereas overall GP was 13.08%. It is not open to AO to make the addition merely on the basis of surmises and conjectures unless the books of account are rejected which was also observed by the ld CIT(A) while allowing the appeal of the assessee. CIT(A) even examined the comparative gross profit rate from AY 2014-15 to 2016- 17 and find that the G.P. Rate during the year is more or less consistent. Therefore, the addition made by the AO was deleted by the CIT(A). CIT(A) noted that the AO has not disallowed the purchases or disbelieved the purchases but only enhanced the closing stock which could have the effect the enhancing the opening stock in the subsequent assessment year. Appeal of the revenue is dismissed.

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• 2024 (11) TMI 431
  Penalty u/s 271(1)(c) - Estimation of income - bogus purchases - HELD THAT:- CIT(A) has specifically mentioned that the Tribunal, in quantum appeal, has restricted the addition to 12.5% of bogus purchases. CIT(A) has treated the bogus purchase amount debited by the assessee in its P L Account as concealment of particular of income. CIT(A) has failed to appreciate the core spirit of the Tribunal s order that the restriction is based merely on the estimation basis only. Hence, we hold that the penalty levied u/s. 271(1)(C) of the Act is unsustainable under law. The aforesaid point is accordingly determined in favour of the assessee and against the revenue.

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• 2024 (11) TMI 430
  Addition u/s 68 - onus to prove - loan received by the assessee during the year under consideration - CIT(A) deleted addition - HELD THAT:- There is no dispute regarding the fact that both parties, who have lent a loan to the assessee, have furnished their PAN, ITR acknowledgement and also complied with notice issued u/s 133(6) of the Act. Thus, we are of the considered view that identity in the present case of the loan lender cannot be doubted. As regards the allegation of the Revenue that the assessee failed to produce both parties for evidence, it is pertinent to note that both parties made due compliance and responded to the notice issued u/s 133(6) and filed the documentary evidence to prove their identity and creditworthiness and genuineness of the transaction. AO has merely raised doubt as regards the loan confirmation submitted by Mr. Mahesh Purohit only on account of a mismatch in signature, which we found to be only in respect of one out of three loan confirmations pertaining to the said transaction and in view of the fact that the said transaction is duly supported by the bank statement, such a doubt appears to be merely a pretext to doubt the transaction by the assessee without any substantial material being brought on record. In any case, the Revenue has not denied the submission of the assessee that the loan was ultimately repaid on 24/02/2014, i.e. in the year under consideration itself. Thus, we are of the considered view that in the present case, the assessee has discharged the initial onus of proving the identity and creditworthiness of the loan lenders and the genuineness of the transaction. Accordingly, we find no infirmity in the findings of the learned CIT(A) in deleting the addition. Disallowance of transport and hiring charges and reduction of disallowance on account of wage and labour charges - CIT(A) deleted addition - HELD THAT:-It is evident from the record that the AO neither controvert any of these details furnished by the assessee nor examined the parties to whom payment was made despite the availability of PAN details and only on the basis that bills and vouchers have not been presented in respect of material and transport/hiring charges made the disallowance. It is further pertinent to note that the disallowance was only restricted to 10% of the expenditure and the entire expenditure of INR 1,13,90,636 as claimed by the assessee was not disallowed. At this stage, it is also relevant to note that in the year under consideration the assessee has shown a total sale of INR 12,16,47,493. Such being the facts, we find no infirmity in the impugned order in deleting the ad-hoc disallowance of 10% made on account of material, transport and hiring charges by the AO. For labour charges incurred by the assessee, we find that the assessee has merely provided the list of parties to whom such charges have been paid - We are of the considered view that even if these parties are daily wagers, the assessee being a contractor would have maintained a record having at least the details regarding the date of payment made to these parties and the work contract in respect of which these payments have been made. However, it is evident from the record that the said details were not provided by the assessee. It is evident from the record that the AO made a disallowance at 10% in respect of wage and labour expenses which has further been reduced by the learned CIT(A) to 2%. However, in view of the fact that the assessee is a registered civil contractor for MCGM and has undertaken various work contracts for authorities, it cannot be denied that the assessee would have incurred wages and labour charges for the purpose of its business. Therefore, in view of the peculiar facts and circumstances of the present case as noted above, we are of the considered view the disallowance @2% made by the learned CIT(A) on account of wage and labour charges is justified and thus the same is upheld.

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• 2024 (11) TMI 429
  Assessment proceedings concluded by non jurisdictional AO - ACIT, Panvel Circle being the jurisdictional Assessing Officer has not issued the notice u/s 143(2) of the Act and therefore, the assessment order is invalid - As argued assessee participated in the assessment proceedings without challenging the jurisdiction at any stage - HELD THAT:- It is an admitted fact that the assessee had filed its return of income before the ITO, Ward-2, Panvel who had issued notice u/s 143(2). Subsequently due to monetary limits of the income returned, the ITO Ward-2, Panvel transferred the file to the ACIT, Panvel Circle who issued notice u/s 142(1) of the Act. It is also an admitted fact that the assessee never challenged the jurisdiction of the ACIT, Panvel Circle for not issuing notice u/s 143(2) either before him or before the CIT(A) / NFAC and has participated in such assessment proceedings. We find an identical issue had come up in the case of DCIT vs. Kalinga Institute of Industrial Technology [ 2023 (6) TMI 1076 - SC ORDER] wherein quashed the assessment order on the ground that the jurisdiction to issue notice u/s 143(2) of the Act in case of assessee laid with JCIT (OSD) (Exemption), Bhubaneswar, whereas the notice u/s 143(2) of the Act was issued by the ACIT, Corporate Circle 1(2), Bhubaneswar, who has no jurisdiction but SC set aside the order of the Hon ble High Court and allowed the appeal filed by the Revenue on the ground that the records revealed that the assessee had participated pursuant to the notice issued u/s 142(1) of the Act and had not questioned the jurisdiction of the Assessing Officer and therefore, in such case, the order of the Hon ble High Court could not be sustained. Since the assessee in the instant case had participated in the assessment proceedings and had never challenged the jurisdiction of the ACIT, Panvel Circle who had issued the notice u/s 142(1) of the Act, therefore, we hold that the assessment order passed by the ACIT, Panvel Circle is valid. Bogus expenses - details provided by the assessee are not sufficient to verify the genuineness of the expenses claimed, the assessee has not provided the complete addresses of the parties to carry out third party verification - HELD THAT:- The assessee himself has given wrong information to the Assessing Officer as well as the CIT(A) / NFAC in respect of some of the parties. Despite the above, the Ld. CIT(A) / NFAC closed his eyes and allowed the appeal filed by the assessee which in our opinion, cannot be accepted. In our opinion, the estimation of profit @ 25% is uncalled for especially when the assessee has declared reasonable profit rate @ 9% of the total contract receipts and the decision relied on by case of Vijay Protein [ 2015 (4) TMI 1146 - SC ORDER] is distinguishable and not applicable to the facts of the present case. At the same time, it cannot be said that there is no leakage of revenue in the instant case especially when the assessee could not give the complete addresses of the parties to whom the payments have been made and that there are similar PAN numbers for different vendors which the assessee itself has admitted in the written submissions. Considering the totality of the facts of the case, we are of the opinion that lump sum of disallowance of Rs. 20 lakhs will meet the ends of justice.

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• 2024 (11) TMI 428
  Additions based statements of assessee recorded during a search - certain expenses were not supported by proper vouchers - AO disallowed these route expenses - assessee has made a surrender of Rs. 13 crores for all the years covered under search action - HELD THAT:- In our opinion the Revenue cannot shift the burden on an assessee to prove the genuineness of the expenses, when nothing contrary found in the search operations. Further the finding recorded by the AO during the course of assessment proceedings would show that the AO has not doubted the genuineness and allow ability of the expenses rather harped upon the production of drivers before him, ignoring the factum of search. So far as the reliance of the AO on the statement of assessee under section 132(4) and thereafter under section 131(1) we observe that recently in the case of Harjiv [ 2016 (3) TMI 329 - DELHI HIGH COURT] as no evidentiary value and hence cannot be termed as incriminating material. Similar view has been reiterated in the case of Best Infrastructure [ 2017 (8) TMI 250 - DELHI HIGH COURT] Therefore, merely because the drivers not available at the time of assessment no addition is permissible in this case, in absence of any corroborating material. It is not the case of the revenue that there was any material showing that these expenses were either bogus or not incurred for the purpose of business, or there was some material which would prove that the invoices of these vouchers were fake. Additions sustained by the CIT(A) that 60% of the hypothetical surrender is not tenable in law. Hence, we delete all these additions sustained by CIT(A). Appeals filed by the assessee are allowed.

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• 2024 (11) TMI 427
  Addition of the notional commission expenses - CIT(A) partly allowed and restricted the addition on account of commission expenses @0.25% as compared to 2% adopted by the AO - HELD THAT:- We find that the coordinate bench of the Tribunal in a batch of cases pertaining to the assessee s sister concern in Abans Commodities (I) Pvt. Ltd. [ 2024 (11) TMI 359 - ITAT MUMBAI] while deciding a similar issue deleted the addition on account of non-genuine profit/loss in illiquid options and consequently also deleted the notional addition of commission under section 69C. In the absence of any contradictory material on facts and law being brought on record since the issue arising in the present appeal is similar to the issue already considered by the coordinate bench of the Tribunal in a similar factual matrix in the case cited supra, therefore respectfully following the same, the addition on account of commission expenses under section 69C of the Act is deleted. Addition on account of non-genuine purchases - HELD THAT:- We find that the coordinate bench of the Tribunal in a batch of cases pertaining to the assessee s sister concern in Abans Commodities (I) Pvt. Ltd. [ 2024 (11) TMI 359 - ITAT MUMBAI] while deciding a similar issue deleted the addition on account of nongenuine purchases.

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• 2024 (11) TMI 426
  Reassessment proceedings by by a non-jurisdictional AO - ITO, Ward-3 (4), Ludhiana jurisdiction over Assessee NRI - HELD THAT:- As the assessee is a non-resident as per the facts stated above by the ld. Counsel and the documents submitted before us for Assessment Year 2011-12. It is also a fact that the assessee is a citizen of USA and is holding American Passport and notice u/s 148 was issued by the non-jurisdictional ITO, no hesitation in holding that the AO Ward-3(4), Ludhiana did not have valid jurisdiction to issue the notice u/s 148, since it was in the knowledge of the department earlier that the assessee was a non-resident and, even the return for AY 2011-12, had been filed, earlier to the notice issued u/s 148 for the year under consideration and the AO, International Tax had proceeded with the framing of the assessment without issuing fresh notice u/s 148 and, thus, the assessment as framed by the AO, International Tax, is bad in law. Thus no hesitation in holding that since the assessment has been framed by the AO of International Tax on the basis of notice u/s 148 issued by the non-jurisdictional AO, Ward-3(4), Ludhiana, the assessment as framed by the AO of International Tax is quashed. Decided in favour of assessee.

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• 2024 (11) TMI 425
  Addition relating to sale value of shares - addition of estimated commission expenses - HELD THAT:- We noticed that the evidences furnished by the assessee to prove the purchase and sale of shares, payment made/received, entry/exit of shares in the demat account of the assessee etc., were not doubted with. In the case of PCIT vs. Smt Krishna Devi [ 2021 (1) TMI 1008 - DELHI HIGH COURT] as noticed that the reasoning given by the AO to disbelieve the capital gains declared by the assessee, viz., astronomical increase in the price of shares, weak fundamentals of the relevant companies are based on mere conjectures. Accordingly, the Hon ble Delhi High Court affirmed the decision rendered by ITAT in deleting the addition of capital gains. We noticed earlier that the AO has assessed the sale consideration of shares as unexplained cash credit u/s. 68 of the Act. It is pertinent to note that the purchase of shares made in an earlier year has been accepted by the Revenue. The sale of shares has taken place in the online platform of the Stock Exchange and the sale consideration has been received through the stock broker in banking channels. Hence, in the facts of the case, the sale consideration cannot be considered to be unexplained cash credit in terms of sec. 68 - Accordingly, we hold that the sale consideration received on sale of shares cannot be assessed as unexplained cash credit u/s. 68 of the Act and the long term capital gains declared by the assessee cannot be doubted with. Accordingly, we set aside the order passed by the Ld.CIT(A) and direct the AO to delete the impugned addition made by him. Since we have held that the transactions of purchase and sale of shares are genuine in nature, the AO was not justified in estimating the commission expenses and adding the same. Appeal filed by the assessee is allowed.

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• 2024 (11) TMI 424
  Revision u/s 263 - loss from the derivative transactions - Lack of inquiry and inadequate inquiry - HELD THAT:- CIT order clearly shows that he has set aside the matters of the record of the AO for re-examination of the issue and to make denovo assessment which means that the commissioner was also not certain about correctness of the claim of the assessee. This course of action on the part of the commissioner is not permissible when the AO has conducted inquiry twice and has taken view based on the material on record and therefore, the only course available with the Pr. CIT u/s 263 was to give a conclusive finding that the view taken by the AO is not sustainable under the law. The Hon ble Delhi High Court in case of CIT vs. Sunbeam Auto Ltd. [ 2009 (9) TMI 633 - DELHI HIGH COURT] while dealing an issue of lack of inquiry and inadequate inquiry held that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has different opinion in the matter. It is only in cases of lack of inquiry , that such a course of action would be open. AO has conducted an inquiry and was satisfied with the supporting evidences produced by the assessee in response to notice u/s 142(1) then it is not necessary for he AO to give an elaborate finding on the issue. CIT while passing revision order cannot remand the matter back to the AO for fresh adjudication simply because he himself was not sure about correctness of the claim of the assessee. Assessee appeal allowed. Accordingly in the facts and circumstances of the case when the order passed by the AO is not erroneous for want of inquiry then it is incumbent upon the Pr. CIT to give conclusive finding that the impugned order passed by the AO is not sustainable in law. Appeal of the assessee is allowed.

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• 2024 (11) TMI 423
  Deduction u/s 80P(2)(d) for the Interest received by the Appellant from Co-operative Banks - HELD THAT:- We find that only reason given for disallowance u/s.80P(2)(d) is relying upon the judgment of Supreme Court in Totagars Cooperative Societies Ltd. [ 2010 (2) TMI 3 - SUPREME COURT] and decision of Totagars Cooperative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT] . Now this issue is covered by the decision of Tribunal in the case of Premium Tower Co-operative Housing Society Ltd. [ 2023 (5) TMI 1301 - ITAT MUMBAI] hold that assessee is eligible for deduction of interest income earned from cooperative bank. Thus, claim of deduction u/s.80P(2)(d) is allowed to the assessee.

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• 2024 (11) TMI 422
  Revision u/s 263 - non verification of accommodation entries receipts of assessee by the Assessing Officer - HELD THAT:- Reason for scrutiny selection is suspicious transactions relating to long-term capital gain on shares as per inputs from the investigation wing . Accordingly, during the course of original assessment proceedings, the assessing officer, on the basis of return of income and submissions and evidences filed by the assessee and discussions during the course of assessment proceedings, and after specifically inquiring into the aspect of bogus long-term capital gain on sale of shares of Safal Herbs Ltd, assessed the total income, without making any addition is and accepting the return of income as filed by the assessee. Therefore, evidently, the issue regarding accommodation entry regarding sale of shares of Safal herbs Ltd was to be enquired the course of original assessment proceedings and no additions were made by the assessing officer. We observe that the issue regarding alleged bogus accommodation entry had been examined both during the course of original assessment proceedings (refer original assessment order passed dated 23- 12-2016 u/s 143(3) of the Act) and again during the course of 147 proceedings (refer notice under section 147 of the Act dated 04-02-2022) wherein the issue for consideration was whether the assessee had made transactions as fictitious loan (entry operator beneficiaries) of Jignesh Shah -Therefore, it is seen that evidently the same issue has been again raised by the Principal CIT, when this issue had earlier been examined by the assessing officer of both during the course of original assessment proceedings and also in the course of 147 proceedings, and after thorough examination, no addition was made on this issue in the hands of the assessee. It is well settled law that recourse cannot be made to 263 proceedings, only with a view to enhance the scope of assessment / reassessment proceedings. Department has at various stages of proceedings (both during the course of regular assessment under section 143 (3) as well as under section 147 of the Act) have examined this issue and therefore, the contention of the principal CIT that there was lack of adequate enquiry, cannot be accepted. We observe that in the order passed by the principal CIT under section 263 of the Act, there is no specific finding to the effect as to where and in what manner, the order passed by the assessing officer under section 147 of the Act is erroneous insofar as prejudicial to the interests of the revenue. However, on going through the contents of the order passed under section 263 of the Act, it is observed that there is no finding in the 263 order as to why the order passed under section 147 of the Act is erroneous, insofar as prejudicial to the interest of revenue. ITAT in the case of Vinod Bhandari [ 2020 (3) TMI 1074 - ITAT INDORE] held that Commissioner before holding order of Assessing Officer as erroneous and prejudicial to interest of revenue should have to conduct necessary enquiries or verification in order to show that findings given by Assessing Officer are unsustainable in law. We observe that the principal CIT has given a specific finding that once the proceeding under section 147 of the Act have been initiated to verify information regarding accommodation entry, then the assessing officer was duty bound to verify the information and make addition on account of accommodation entry. However, in our considered view, Principal CIT has erred in facts and in law in giving attention to the assessing officer to make an addition in the hands of the assessee. Firstly, we observe that the 263 order has not pointed out to any specific infirmity/lack of enquiry by the assessing officer and has also not pointed out as to how the order passed under section 147 of the Act is erroneous and prejudicial to the interest of revenue and secondly, in the 260 order, the principal CIT has given a specific direction/finding that the assessing officer should have made additions on account of accommodation entry, taken by the assessee during the impugned year under consideration. Accordingly, in view of the facts highlighted before us, we hold that the order passed under section 263 by principal CIT is liable to be set aside - Decided in favour of assessee.

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• 2024 (11) TMI 421
  Addition u/s. 56(2)(x) - transfer/surrender of tenancy rights - HELD THAT:- Sec. 56(2)(x) is a deeming provision akin to Section 50C of the Act. While the provisions of Section 50C are applicable to the seller of immovable property, the provisions of Section 56(2)(x) are applicable to a buyer. The question as to whether the provisions of Section 50C of the Act would be applicable to transfer of lease hold right came to be examined in the case of Atul G Puranik [ 2011 (5) TMI 576 - ITAT, MUMBAI] It was held that the provisions of Section 50C of the Act will not be applicable to lease hold rights. The decisions rendered in the context of sec. 50C shall be applicable to the provisions of Section 56(2)(x) of the Act. There is no dispute with regard to the fact that the assessee has transferred only tenancy right to the builder and obtained a new flat in lieu of such transfer as consideration for such transfer. The AO has applied the provisions of Section 56(2)(x) to the transfer of tenancy right, since the stamp duty value of new property was much higher. The provisions of Section 56(2)(x), being a deeming provision, the same has to be interpreted strictly. In the above said decisions, the transfer of tenancy right has been held to be outside the scope of sec. 50C of the Act. Since the provisions of Section 50C and Section 56(2)(b) of the Act are applicable to Immovable property being land or building or both , following the above said decisions, we hold that the provisions of Section 56(2)(x) of the Act will not apply to the transfer of tenancy right. We notice that the assessee was entitled for 753 Sq. ft on surrender of tenancy right. However, the assessee obtained 824.24 sq. ft, by purchasing additional area of 71.24 sq.ft. For purchasing the above said additional area, the assessee paid a consideration of Rs. 20.00 lakhs. Since the additional purchase of 71.24 sq.ft., is not related to tenancy right held by the assessee, the provisions of sec. 56(2)(x) will apply to the same. We noticed that the value determined by the stamp authorities for 824.24 sq.ft was Rs. 2,47,93,300/-. Hence proportionate value for 71.24 sq.ft will work out to Rs. 21,42,913/-. The assessee has paid a consideration of Rs. 20,00,000/-. Hence there is a difference of Rs. 1,42,913/- and the said difference works out to 7.14% of the consideration paid by the assessee. As per sec. 56(2)(x)(b)(ii), the difference of upto 5% has to be ignored. The said tolerance limit was increased to 10% w.e.f. 01-04-2021. In the case of Maria Fernandez Cheryl [ 2021 (1) TMI 620 - ITAT MUMBAI] has held that the amended tolerance limit of 10% shall be applicable from the date of insertion of sec. 50C of the Act. The ratio of above said decision would be equally applicable in the present case also. Since the difference between the actual consideration and stamp duty valuation is less than 10% of the consideration, there is no requirement of making any addition u/s. 56(2)(x) of the Act. Appeal filed by the Revenue is dismissed.

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• 2024 (11) TMI 420
  Benefit of indexation in respect of capital gain on sale of land - HELD THAT:- We find that the CBDT Circular No. 471 dated 15.10.1986 and the ratio of the decision of CIT Vs, Ram Gopal [ 2015 (2) TMI 500 - DELHI HIGH COURT] squarely applies to the facts and circumstances of the case as stated that the allottee gets title to the property on the issuance of the allotment letter and the payment of installments is only a follow up action and taking the delivery of possession is only a formality Thus, we hold that the AO has erred in denying the benefit of indexation from FY 2007-08. In that view of the matter, the assessee is allowed benefit from the date of allotment letter i.e. 17.02.2008. To that extent, the decision of the CIT(A) is sustained. Cost of acquisition/improvement of the land sold determination of cost of land on proportionate basis and the other pertains to cost of improvement of land - AO has calculated the proportionate cost of acquisition for the parcel of land admeasuring 9900 sqmts. We find that the assessee has maintained a separate account for each parcel of land in its books of account since FY 2013- 14 as non-current asset. Since the accounts are separately maintained for each parcel of land, the cost of the parcel of land admeasuring 9900 sqmts can be determined and taken from the books of account itself unless it is bogus or unsubstantiated. We therefore, hold that the CIT(A) has rightly accepted the assessee bifurcation of land parcel for determining the cost of the parcel of 9900 sq mts as per the books. Other aspect for determining the cost of improvement - As we find that the assessee has claimed an amount in FY 2015-16. AO has held that the assessee has not been able to substantiate the expenses on improvement of land to the extent of Rs 65,78,905/-. Before us also the ld AR admitted that details were not filed before the AO earlier but the same can be filed if required. In the light of the above, we find it appropriate to set aside the issue of determining the cost of improvement to the file of the AO for a fresh investigation and determination. In view of the above discussion, the ground number 1 is partly allowed for statistical purposes. Disallowance of expenses - assessee failed to explain as to why such expenses are being claimed when there is no revenue in the given year - AO has not examined the issue of commencement of the business in a proper manner for allowance of expenses u/s 37(1) - assessee has also not been able to substantiate the factum of commencement of business in the previous year. Assessee has merely claimed that the interest has been paid towards the loans borrowed for the purchase of land which the AO has not examined thoroughly. There is, however, some substance in the alternate claim of assessee that where the interest paid is towards loans borrowed for purchase of land, the same may be allowed to be capitalized. We find that the complete facts on this issue have not been enquired/examined by the AO. We therefore deem it appropriate to set aside this issue to the file of the AO to enquire and examine the facts comprehensively and reach a conclusion in accordance with law.

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• 2024 (11) TMI 419
  LTCG - exemption u/s 54F - original asset ownership - HELD THAT:- In an ordinary sense, property is something that a person exclusively owns and something peculiar to a person. Property is ownership of something, thus, giving an exclusive and unrestricted right - The original asset was in ownership of assessee and his wife. Both are the eligible owners of the original asset . In the case of McAlister v. Pritchard Hon ble Supreme Court of Missouri, Division One, held that the term property is believed to be extended to every category of valuable rights and interests. Thus, anything that a person owns can be considered to be a person s property. Here, the assessee and his wife both are the beneficial owners of property and the income levied from this property will be taxed in the individual hands of both the parties. So there is no question of estoppels in the statute. By selling of original asset, both the assessee and his wife gained the capital gain and the income will be distributed in both the hands, but not in assessee s hand alone. AO has taken a view that the assessee s wife has no existence in case of ownership right. But it was taken from the different judicial pronouncement and as per the Transfer of Property Act, both the assessee and his wife has equal right on the ownership. So tax will be computed in specific hands. Whether exemption u/s 54F will be applicable or not if the assessee has invested in new property with his son? - If we look back quickly in section 54F, the criteria should be fulfilled with the time limits for purchasing new property, the assessee should invest through selling the original property and assessee should be the owner of new property. Amount assessee invested Rs. 46 lakhs from the bank account where the assessee received the sale consideration of original asset . The assessee is also the owner of flat No.508B. Considering this, we respectfully rely on the order of Jennifer Bhide [ 2011 (9) TMI 161 - KARNATAKA HIGH COURT] So addition of son is not affecting the claim of deduction under section 54F of the Act. Considering the additional ground of the assessee, the income should be taken 50% of Rs. 1,30,00,000/- which works out to Rs. 65 lakhs on assessee s hand. The assessee will be eligible for indexation of the property and the claim of deduction under section 54F of the Act, Rs. 46 lakhs and the stamp duty value, i.e. Rs. 2,12,600/-. The total amount works out to Rs. 48,12, 600/-. The income of the assessee only should be restricted on assessee s income considering the order of Hon ble Apex Court in case of CH Atchaiah [ 1995 (12) TMI 1 - SUPREME COURT] Accordingly, the additional ground of the assessee is allowed.

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• Customs

• 2024 (11) TMI 418
  Extension of the limitation period under the first proviso to Section 28(9) of the Customs Act, 1962 - whether the proceedings initiated in the Show Cause Notice dated 28.09.2022 can be continued in the light of the extension granted by the Chief Commissioner of Customs, Chennai Customs Zone, Custom House, Chennai on 07.05.2024 under the first proviso to Section 28(9) of the Customs Act, 1962.? HELD THAT:- A reading of Section 28(9) (a) and (b) of the Customs Act, 1962 makes it clear that at the expiry of six months or one year as the case may be, from the date of Show Cause Notice, the concerned proper officer who was to adjudicate the Show Cause Notice would have become functus officio. It is only thereafter, any senior officer in rank to the proper officer can extend the period by six months or one year as is stipulated in Section 28(9)(a) and (b) of the Customs Act, 1962 under proviso to it. The question of granting extensions under the first proviso to Section 28(9) of the Customs Act, 1962 will arise only after the limitation for passing Order determining duty or interest, as the case may be, within the time stipulated under Section 28(9) of the Customs Act, 1962 had expired. Therefore, only after the period of six months or one year, as the case may be, the senior officer could extend the period by another six months or one year specified in Clause (a) and Clause (b) under the first proviso to Section 28(9) of the Customs Act, 1962. The second proviso to Section 28(9) of the Customs Act, 1962, further contemplates abatement of the proceedings if after the extension period under the first proviso to Section 28(9) of the Customs Act, 1962, no Orders are passed. Clarification of the Commissioner of Customs, NS-IV, Mumbai Customs Zone-II, Nhava Sheva, Raigad-400 707 in Standing Order was issued in the wake of amendment to Section 28(9) of the Customs Act, 1962 vide Finance Act, 2018 (13 of 2018). The clarification issued therein itself is a non-application of mind as the second proviso to Section 28(9) of the Customs Act, 1962 deals with abatement of the proceedings after extension is granted. It is irrelevant. The argument of appellant that the standing orders have been issued by various Commissionerates for the procedures to be adopted for processing of adjudication files is merely a guideline for ensuring that there is no lapsing of proceeding under Section 28 of the Customs Act, 1962. In this case, the appellant has not been filed a reply to the Show Cause Notice dated 28.09.2022. Only, a request was made by the appellant for cross-examining the persons named in the Show Cause Notice dated 28.09.2022 as per the decisions of the Hon'ble Supreme Court in Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] and in M/s.Kanungo Co. [ 1972 (2) TMI 35 - SUPREME COURT] , long after the receipt of Show Cause Notice dated 28.09.2022 on 10.04.2023. As mentioned above, the request was rejected by the Deputy Commissioner of Customs (Adjudication), Chennai-III vide a communication even though the said Officer was not concerned with the adjudication of the Show Cause Notice dated 28.09.2022. Thus, the proceedings got derailed for further illegality by the said Officer. The decision taken to file an appeal before the High Court was transferred on 16.06.2023. The file was returned by the Commissioner of Customs, Chennai II Import Commissionerate, Chennai, on 29.04.2024 as the limitation for filing an appeal against CESTAT Order dated 26.05.2023 had expired.Therefore, a decision appears to have been rightly taken on 29.04.2024 for getting extension. It is also strange to note that no steps was taken by the Customs Department to file appeal with an application for condonation of delay. That apart, since the Order of the Deputy Commissioner of Customs (Adjudication), Chennai-III was without jurisdiction, the correct remedy that was available was to file a Writ Petition under Article 226 of the Constitution of India.

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• 2024 (11) TMI 417
  Demanding Anti-Dumping Duty (ADD) along with interest and penalty applicable - ADD levy from 08.12.2014 to 31.8.2015 in the OIO - whether the imposition of ADD for the period commencing on 08.12.2014 and ending on 31.8.2015 is in violation of common order dated 06.10.2017? HELD THAT:- The admitted position is that the validity period of the ADD Notification was a five year period from 8.12.2009 to 7.12.2014. The Second ADD Notification was admittedly issued on 05.01.2015, after the lapse of the ADD Notification, and purports to extends the validity of the ADD Notification till 7.12.2015. The Supreme Court examined the validity of the Second ADD Notification in Kumho Petrochemicals [ 2017 (6) TMI 526 - SUPREME COURT] two things which follow from the reading of the Section 9A(5) of the Act are that not only the continuation of duty is not automatic, such a duty during the period of review has to be imposed before the expiry of the period of five years, which is the life of the Notification imposing antidumping duty. Even otherwise, Notification dated January 23, 2014 amends the earlier Notification dated January 2, 2009, which is clear from its language, and has been reproduced above. However, when Notification dated January 2, 2009 itself had lapsed on the expiry of five years, i.e., on January 1, 2014, and was not in existence on January 23, 2014 question of amending a non- existing Notification does not arise at all. The demand of ADD for the period commencing on 08.12.2014 and ending on 31.08.2015 cannot be sustained. As regards the prior period (14.11.2014 to 07.12.2014), no break-up of either ADD liability or penalty has been provided. Therefore, interference with the impugned OIO in W.P. No.768 of 2018 is warranted. As regards the prior period (14.11.2014 to 7.12.2014), a conclusion can be drawn only after deciding on the other objections of the petitioner. Development Commissioner did not have jurisdiction to issue SCN I for the period July 2011 to August 2014 or SCN II for the period 14.11.2014 to 31.08.2015 - As regards jurisdiction, the SEZ Act clearly envisages the imposition of ADD on goods removed from a SEZ to a DTA. On and from 5.08.2016, the jurisdiction to issue show cause notices and adjudicate the matter has been vested in the jurisdictional customs officers. As the administrative head of the SEZ, who is empowered to take all steps to discharge his functions under the SEZ Act under section 12(1) of the SEZ Act, the Development Commissioner issued the show cause notices. Section 30 of the SEZ Act was in the statute when the show cause notices were issued. If the contention of the petitioner on jurisdiction were to be accepted, neither the Development Commissioner nor customs officers could have issued the show cause notices prior to 5.08.2016. This contention cannot be countenanced. Hence, all the jurisdictional objections are rejected and the findings in the impugned OIOs thereon are upheld. Interference with the impugned orders is called for because the written submissions of the respondents were not provided to the petitioner before the conclusion of proceedings and that the impugned orders are no more than a minor modification of such written submissions - As regards the first of these aspects, written submissions are intended to capture the oral arguments in writing so as to facilitate the adjudicator to consider the arguments while issuing the order of adjudication. Since written submissions, unlike pleadings, do not require a response from the counter party, the alleged failure to provide a copy of the written submissions to the petitioner in time for the petitioner to respond thereto is immaterial. On examining the impugned orders closely, find that the discussion and analysis is elaborate and such orders are not vitiated on the ground of some commonality of language between the written submissions of the respondents and the impugned orders. Applicability of ADD to the subject goods - whether the goods fall within the scope of the ADD Notification? - Determination whether the relevant goods were stand-alone components or SDH equipment in some form is a determination involving disputed questions of fact. Likewise, the determination as to whether ADD was imposed because the business model of the petitioner involved circumvention of the ADD Notification would also involve detailed examination of disputed questions of fact. Such determinations would further entail detailed consideration of evidence. In the impugned OIOs, there is detailed consideration and analysis followed by conclusions. Hence, it is inappropriate to consider and determine this issue in exercise of summary and discretionary jurisdiction under Article 226 especially when a statutory remedy is prescribed. Since interim protection was granted when these writ petitions were filed and these cases were pending for about 7 years, it is just and necessary to grant leave to the petitioner to file a statutory appeal on merits within a specified time line.

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• 2024 (11) TMI 416
  Validity of CESTAT order allowing conversion of shipping bills - petitioner had exported hydrogenerated caster oil / 12 hydroxy stearic acid, under various consignments during the period 1.4.1997 - 14.4.1998 - Retrospective application of the Public Notice - Admittedly, at the relevant point in time, the exports were not covered under the DEPB Scheme - petitioner had made a request before the authority seeking the benefit extended under Public Notice dated 21.08.1998 - HELD THAT:- Commissioner has proceeded on the basis that Section 149 provides for amendment only on the basis of documentary evidence contemporaneous with the fatum of export. Noting that there was no contemporaneous evidence, the request of the respondent was rejected. As against the same, an appeal was filed before the CESTAT which, in our view, rightly held that the rejection of the petitioner's request was incorrect. The CESTAT notes that the Public Notice had been issued in public interest and with retrospective application. Public Notice makes it clear that exports during the period 14.4.1997 - 14.4.1998 would be covered by the benefit under that Notice. The denial of the petitioner's request is thus contrary to the very object of the Public Notice, both in letter and spirit and the order of the CESTAT is thus upheld. The petitioner had earlier approached this Court seeking a mandamus for disposal of its representation seeking conversion of benefits and by order dated 16.03.2009, the representation had come to be disposed adverse to the petitioner. An appeal had been filed before the Tribunal on 22.06.2010, and the matter stood remanded to the file of the jurisdictional Commissioner. The remand is specifically only for the limited purpose of enabling the Commissioner to pass fresh orders after hearing the petitioner. However, the Tribunal had categorically noted that, exports for the period 1.4.97 to 14.4.98 were covered under Public Notice dated 21.08.1998 - No appeal has been filed by the Customs Department challenging order dated 22.06.2010 and having acceded to the directions issued, a different view cannot be canvassed now. Substantial questions against the Revenue and in favour of the assessee

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• 2024 (11) TMI 415
  Maintainability of appeal before High Court - Classification of goods imported - goods described as trigger spray for plastic bottles, lotion pump for plastic bottle and fine mist spray for plastic bottle - CTH 8424 OR CTH 9616 - Liberty to convert the petition into a statutory appeal - Revenue submits that the issue is, essentially, as to the rate of the tax, and therefore, the appeal against the impugned order passed by the learned CESTAT would lie with the Supreme Court under Section 130E of the Customs Act, 1962. HELD THAT:- In the present case, the petitioner s grievance is, essentially, regarding the rate of duty as is imposed on the goods in question as the rate of duty on the goods falling in CTH 9616 is higher than the rate of duties specified for products falling under CTH 8424. The present appeal is, accordingly, dismissed being not maintainable. The pending application also stands disposed of.

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• 2024 (11) TMI 414
  Violation of Export Obligation - Confiscation of imported goods valued u/s 111(o) of the Customs Act, 1962 - option to redeem the confiscated goods on payment of redemption fine u/s 125 of the Custom Act, 1962 and imposing penalty u/s 112(a) of the Customs Act, 1962 on the petitioner - petitioner, a company, was granted an EPCG license in 2013 and imported goods availing customs duty benefits for export obligation compliance HELD THAT:- .As against the impugned order, there is effective appeal remedy available to the petitioner under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992, before the Additional Director General of Foreign Trade, Chennai. The petitioner is at liberty to canvass all the grounds raised in this writ petition before the Appellate Authority. The period during which the writ petition was pending before this Court is excluded for the purpose of limitation so as to enable the petitioner to prefer appeal before the Appellate Authority.

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• 2024 (11) TMI 413
  Fixation of brand rates of DBK by the appropriate authority - Rejection of applications for fixation of brand rate of duty drawback for the drawback of duties suffered on inputs used in the exports made - reasons inter alia that they had not furnished proof of duty paid inputs declared in DBK III and IIIA statements, they had calculated the yarn consumption for a particular export based on SION which is nothing but a mere arithmetical reverse calculation and not the actual quantity of duty, paid inputs, etc. - whether the direction of the Original Authority in directing the fixation of brand rates of drawback is in order? HELD THAT:- Drawback which is rebate of duty paid on excisable goods used in the manufacturer of export fabrics, term used refers to the actual quantity of goods used in the manufacture. The justification for this method adopted by the respondent has also been reproduced at para 15.03 and thereafter, the Original Authority observes that there was sufficient force in the contentions of the assessee since the exporter cannot manufacture exact quantity of fabric required for export under a particular consignment and that the export items are always subject to rigorous quality test and inspection. We find that the incidence of duty suffered at the input stage, in the absence of Modvat/deemed credit benefits should be rebated by way of drawback; when the exact quantity of yarn consumed out of the purchased quantity could not be ascertained under circumstances, like the one in the case on hand, there has to be a methodology to be adopted, it could be SION norms or any other input output norms as available in textile parlance. SION being an established norms prescribed even by DGFT for the purpose of export import commerce which is recognized in law, there is no infirmity in applying the same norms in the case on hand. There is a finding in the impugned order that the drawback eligibility is calculated after accounting for the duty involved on the production wastage at 4% and finally the eligible amount of drawback is arrived at against the FOB value and therefore there was no infirmity in adopting the SION norms for the reasons that the main purpose underlying the drawback scheme is rebate of duty paid on excisable goods used in the exported products. We do not find any counter based on record to the above findings in the order and nor do we find any assertion by the revenue as to either the non-usage of materials in the manufacture of Denim and the non-export of its manufactured products. There is no denial of the fact that the eligible brand rate is calculated based on the quantity of fabrics exported and the consumption of yarn relevant to a specific quantity of fabrics exported is arrived by reverse calculation method based on the input output norms as envisaged in the SION and the calculation so made for fixing the brand rate of due drawback appears to have been certified by the field officers, and the claim was submitted after verification to the Drawback Directorate, New Delhi, as appearing in impure order. Moreover, we find that the method adopted by the receipt, respondent appears to be consistent, which fact has also not been disputed by the Revenue. Allegation of reverse calculation alleged by the Revenue - As we find that the input output ratio is prescribed by the SION, which is also recognized under law and hence the mode of calculation adopted by the respondent cannot be rejected. It is not the case as though said method was adopted deliberately, rather the respondent has explained the circumstances which prompted them to adopt the said method not only for the year under consideration but also for the earlier years, which has been accepted by the revenue. This apart, there is no allegation by the revenue that there was any statutory violation by the respondent, other than following the SION norms We find that there has been no effort at all made by the Revenue to negate the above findings of the Appellate Authority in any manner and hence, we are of the clear opinion that the impugned order deserves to be upheld since it is a well-reasoned order.

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• 2024 (11) TMI 412
  Refund of duty paid under protest - Exemption of CVD under Notification No. 30/2004-CE dated 09.07.2004 - Principle of unjust enrichment - appellant took a stand that goods imported by them does not attract CVD leviable under Section 3 of the Central Excise Tariff Act, because the excise duty on the like articles if manufactured in India is exempted by Notification No. 30/2004-CE 09.07.2004; thereafter, the appellant paid the CVD under protest and a letter of protest was also filed. HELD THAT:- Thus, order of the Commissioner (A) dated 20.02.2019 allowing the appeal of the appellant by holding that exemption of CVD under Notification No. 30/2004-CE dated 09.07.2004 is available to the appellant and he has allowed the appeal with consequential relief and the said decision has not been challenged by the Revenue and thus attained finality. Further, find the refund has been rejected primarily on the ground of unjust enrichment. In the appellant s own case, this Tribunal has allowed the appeal of the appellant vide Final Order [ 2019 (4) TMI 448 - CESTAT CHANDIGARH] and in the said order the Division Bench of this Tribunal has discussed all the issues which are involved in the present case and has allowed the appeal of the appellant with consequential relief. The said decision of the Tribunal has not been stayed till date and therefore the same is binding on the revenue. The impugned order is not sustainable, therefore, the same is set aside by allowing the appeal of the appellant with consequential relief, if any, as per law.

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• 2024 (11) TMI 411
  Maintainability of the one appeal filed by the Revenue against 7 Bills of Entry - HELD THAT:- Here, it is pertinent to consider the relevant Rule 6(A) of the CESTAT Procedure Rules, 1982. It is clear that in a case where there are numbers of Bills of Entry and for all Bills of Entry, if one common order-in-original is passed, then only one appeal is sufficient; however as per the Explanation of the Rule 6(A) ibid, it is clear that when more than one order-in-original are passed, then appellant or assessee is required to file numbers of appeals as many as numbers of order-in-original. But in the present case, the Commissioner (Appeals) passed a common order-in-appeal disposed of the appeals covering 7 Bills of Entry; therefore, as per Rule 6(A) ibid the Appellant-Revenue is required to file 7 appeals challenging each Bill of Entry which is an assessment order in itself. We find that the Ahmedabad Bench in the case of CMR Nikkie India Pvt Ltd [ 2021 (6) TMI 270 - CESTAT AHMEDABAD] has also interpreted Rule 6(A) and has held that the number of appeals which the department is required to file, will be equivalent to the number of Bills of Entry filed by the importer/assessee. We find that in the case of CGST CE, Jammu vs. M/s Narbada Industries [ 2022 (5) TMI 1361 - JAMMU KASHMIR HIGH COURT] while interpreting the National Litigation Policy and specifically the phrase monetary limits below which appeal shall not be filed , in its aforementioned pronouncement lucidly elucidated that the said phrase pertains to the monetary threshold of a singular appeal, rather than the aggregate amount of multiple appeals. This interpretation is founded on the fundamental principle that each appeal represents a distinct cause of action, necessitating separate consideration in determining the applicability of monetary thresholds. Thus, we are of the considered opinion that the present appeal filed by the Revenue is not maintainable. Revenue is directed to file 7 appeals instead of one appeal, if they are so advised.

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• 2024 (11) TMI 391
  Jurisdiction of DRI officers to issue show cause notices under Section 28 of the Customs Act, 1962 - Review Petitions in the Canon India [ 2021 (3) TMI 384 - SUPREME COURT] batch - whether the officers of DRI would be proper officers in light of Section 28(11) - petitions challenging the constitutional validity of Section 97 of the Finance Act, 2022? - Whether there is an error apparent on the face of the record for the purpose of entertaining the review petition? - HELD THAT:- The assignment of functions of proper officers as mentioned in Section 2(34) and entrustment of functions of customs officers as mentioned in Section 6 operate on different planes. The assignment of functions of the proper officer is to be done only to officers of customs (whether they be appointed under Section 4 or entrusted with certain functions under Section 6). There may be some overlap between the assignment of functions of proper officers under Section 2(34) read with Section 5 and the entrustment of functions of officers of customs under Section 6 in some instances but there can be no scenario in which we can hold that the functions under Section 6 and Section 2(34) are congruent. One of the bases for the decision in Canon India [ 2021 (3) TMI 384 - SUPREME COURT] was that no entrustment of functions under Section 6 was done in favour of the DRI officers. This, however, is a glaring misapplication of Section 6 of the Act and is in ignorance of the applicable law which is in fact Sections 2(34) read with Section 5 of the Act, 1962. Therefore, in light of the judgment of this Court in Yashwant Sinha [ 2019 (11) TMI 1775 - SUPREME COURT] we find that it is necessary to allow this review petition to do complete justice. Order - DRI officers came to be appointed as the officers of customs vide Notification No. 19/90-Cus (N.T.) dated 26.04.1990 issued by the Department of Revenue, Ministry of Finance, Government of India. This notification later came to be superseded by Notification No. 17/2002 dated 07.03.2002 issued by the Department of Revenue, Ministry of Finance, Government of India, to account for administrative changes. The petition seeking review of the decision in Canon India (supra) is allowed for the following reasons : a. Circular No. 4/99-Cus dated 15.02.1999 issued by the Central Board of Excise Customs, New Delhi which empowered the officers of DRI to issue show cause notices under Section 28 of the Act, 1962 as well as Notification No. 44/2011 dated 06.07.2011 which assigned the functions of the proper officer for the purposes of Sections 17 and 28 of the Act, 1962 respectively to the officers of DRI were not brought to the notice of this Court during the proceedings in Canon India (supra). In other words, the judgment in Canon India (supra) was rendered without looking into the circular and the notification referred to above thereby seriously affecting the correctness of the same. b. The decision in Canon India (supra) failed to consider the statutory scheme of Sections 2(34) and 5 of the Act, 1962 respectively. As a result, the decision erroneously recorded the finding that since DRI officers were not entrusted with the functions of a proper officer for the purposes of Section 28 in accordance with Section 6, they did not possess the jurisdiction to issue show cause notices for the recovery of duty under Section 28 of the Act, 1962. The reliance placed in Canon India (supra) on the decision in Sayed Ali [ 2011 (2) TMI 5 - SUPREME COURT] is misplaced for two reasons first, Sayed Ali (supra) dealt with the case of officers of customs (Preventive), who, on the date of the decision in Sayed Ali (supra) were not empowered to issue show cause notices under Section 28 of the Act, 1962 unlike the officers of DRI; and secondly, the decision in Sayed Ali (supra) took into consideration Section 17 of the Act, 1962 as it stood prior to its amendment by the Finance Act, 2011. However, the assessment orders, in respect of which the show cause notices under challenge in Canon India (supra) were issued, were passed under Section 17 of the Act, 1962 as amended by the Finance Act, 2011. This Court in Canon India (supra) based its judgment on two grounds: (1) the show cause notices issued by the DRI officers were invalid for want of jurisdiction; and (2) the show cause notices were issued after the expiry of the prescribed limitation period. In the present judgment, we have only considered and reviewed the decision in Canon India (supra) to the extent that it pertains to the first ground, that is, the jurisdiction of the DRI officers to issue show cause notices under Section 28. We clarify that the observations made by this Court in Canon India (supra) on the aspect of limitation have neither been considered nor reviewed by way of this decision. Thus, this decision will not disturb the findings of this Court in Canon India (supra) insofar as the issue of limitation is concerned. The Delhi High Court in Mangali Impex [ 2016 (5) TMI 225 - DELHI HIGH COURT] observed that Section 28(11) could not be said to have cured the defect pointed out in Sayed Ali (supra) as the possibility of chaos and confusion would continue to subsist despite the introduction of the said section with retrospective effect. In view of this, the High Court declined to give retrospective operation to Section 28(11) for the period prior to 08.04.2011 by harmoniously construing it with Explanation 2 to Section 28 of the Act, 1962. We are of the considered view that the decision in Mangali Impex (supra) failed to take into account the policy being followed by the Customs department since 1999 which provides for the exclusion of jurisdiction of all other proper officers once a show cause notice by a particular proper officer is issued. It could be said that this policy provides a sufficient safeguard against the apprehension of the issuance of multiple show cause notices to the same assessee under Section 28 of the Act, 1962. Further, the High Court could not have applied the doctrine of harmonious construction to harmonise Section 28(11) with Explanation 2 because Section 28(11) and Explanation 2 operate in two distinct fields and no inherent contradiction can be said to exist between the two. Therefore, we set aside the decision in Mangali Impex (supra) and approve the view taken by the High Court of Bombay in the case of Sunil Gupta (supra). Validity of the Finance Act, 2022, particularly Section 97 - Section 97 of the Finance Act, 2022 which, inter-alia, retrospectively validated all show cause notices issued under Section 28 of the Act, 1962 cannot be said to be unconstitutional. It cannot be said that Section 97 fails to cure the defect pointed out in Canon India (supra) nor is it manifestly arbitrary, disproportionate and overbroad, for the reasons recorded in the foregoing parts of this judgment. We clarify that the findings in respect of the vires of the Finance Act, 2022 is confined only to the questions raised in the petition seeking review of the judgment in Canon India (supra). The challenge to the Finance Act, 2022 on grounds other than those dealt with herein, if any, are kept open. Subject to the observations made in this judgment, the officers of Directorate of Revenue Intelligence, Commissionerates of Customs (Preventive), Directorate General of Central Excise Intelligence and Commissionerates of Central Excise and other similarly situated officers are proper officers for the purposes of Section 28 and are competent to issue show cause notice thereunder. Therefore, any challenge made to the maintainability of such show cause notices issued by this particular class of officers, on the ground of want of jurisdiction for not being the proper officer, which remain pending before various forums, shall now be dealt with in the following manner: Where the show cause notices issued under Section 28 of the Act, 1962 have been challenged before the High Courts directly by way of a writ petition, the respective High Court shall dispose of such writ petitions in accordance with the observations made in this judgment and restore such notices for adjudication by the proper officer under Section 28. Where the writ petitions have been disposed of by the respective High Court and appeals have been preferred against such orders which are pending before this Court, they shall be disposed of in accordance with this decision and the show cause notices impugned therein shall be restored for adjudication by the proper officer under Section 28. Where the orders-in-original passed by the adjudicating authority under Section 28 have been challenged before the High Courts on the ground of maintainability due to lack of jurisdiction of the proper officer to issue show cause notices, the respective High Court shall grant eight weeks time to the respective assessee to prefer appropriate appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT). Where the writ petitions have been disposed of by the High Court and appeals have been preferred against them which are pending before this Court, they shall be disposed of in accordance with this decision and this Court shall grant eight weeks time to the respective assessee to prefer appropriate appeals before the CESTAT. Where the orders of CESTAT have been challenged before this Court or the respective High Court on the ground of maintainability due to lack of jurisdiction of the proper officer to issue show cause notices, this Court or the respective High Court shall dispose of such appeals or writ petitions in accordance with the ruling in this judgment and restore such notices to the CESTAT for hearing the matter on merits. Where appeals against the orders-in-original involving issues pertaining to the jurisdiction of the proper officer to issue show cause notices under Section 28 are pending before the CESTAT, they shall now be decided in accordance with the observations made in this decision. We allow the Review Petition insofar as the issue of jurisdiction of the proper officer to issue show cause notice under Section 28 is concerned. As discussed, the findings of this Court in Canon India (supra) in respect of the show cause notices having been issued beyond the limitation period remain undisturbed. We set aside the decision of the High Court of Delhi rendered in the case of Mangali Impex [ 2016 (5) TMI 225 - DELHI HIGH COURT] and uphold the view taken in the case of Sunil Gupta [ 2014 (12) TMI 151 - BOMBAY HIGH COURT] We also uphold the constitutional validity of Section 97 of the Finance Act, 2022.

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• Insolvency & Bankruptcy

• 2024 (11) TMI 410
  Adjustment of Performance Bank Guarantee (PBG) towards the first tranche payment - Non-payment of Airport dues - Non-payment of Workmen and Employees dues - Achievement of Effective Date - Non-fulfilment of Conditions Precedent. Whether the Conditions Precedent were fulfilled by Respondent No.1/SRA and the Effective Date was fixed at 20.05.2022? - HELD THAT:- The order of the NCLT dated 22.06.2021 approving the Resolution Plan had fixed the Effective Date as the 90th day from the Approval date, which was subject to a maximum extension of another 180 days. It consciously removed the ambiguity that plagued Clauses 7.6.2 and 7.6.4 respectively for the precise reason with the idea that the Effective Date should not be endlessly postponed. Agreeing to such an erroneous proposition would mean that the Effective Date would never be achieved as long as the parties are litigating before the Courts and the SRA would be absolved of taking the implementation under the Resolution Plan further. The NCLAT had declined to stay the order of the NCLT dated 13.01.2023 which held that all the Conditions Precedent were fulfilled. Further, on a perusal of the impugned order, it is evident that the NCLT and NCLAT rendered concurrent findings of fact that the SRA had fulfilled all the Conditions Precedent. In other words, it was repeatedly declared by different fora that the Effective Date was frozen on 20.05.2022 and the obligation of the SRA to implement the Resolution Plan was absolute. To contend that its hands were tied since the Conditions Precedent were still being challenged before this Court is nothing but a reflection of its mala fide intention on the part of the SRA to not fulfil its obligations in accordance with the Resolution Plan under the garb of pendency of litigation. Such an undue delay cannot be permitted, especially in light of the intention of the IBC, 2016 to ensure a successful and time-bound revival of the Corporate Debtor. This places a higher obligation on the SRA to act in an expeditious manner. Whether the NCLAT could have directed the Performance Bank Guarantee (PBG) to be adjusted against the first tranche payment which was to be made within 180 days of the Effective Date? - HELD THAT:- The NCLAT proceeded on an incorrect understanding of Regulation 36B(4A) and its First Explanation. Regulation 36B(4A) does not state that if the Resolution Applicant, after approval, fails to implement the PBG, then it shall stand forfeited. Instead, what the Regulation actually states is that the performance security shall stand forfeited, if the resolution applicant of such a plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule . It is not the failure to implement the performance security i.e., the PBG, that is dealt with in this Regulation but the consequence of the failure to implement the Plan by the SRA. The duration of the performance security that has been specified in the RFRP is given under Clauses 3.13.2 and 3.13.8 of the RFRP which categorically states that the PBG shall be kept alive until the Resolution Plan has been completely implemented. This is the duration which is referred to in Explanation I to Regulation 36B(4A) - irrespective of whether Clause 6.4.4 expressly or impliedly provided for the PBG to be adjusted, such a provision would create a dissonance with Clause 3.13.9 of the RFRP which has also been made binding on the SRA through Clauses 7.3 and 9.4 respectively of the Resolution Plan. Therefore, such an adjustment should not be allowed in the facts of the present case. The existing insolvency framework does not provide any scope for effecting further modifications or withdrawals of the Resolution Plan approved by the CoC, at the behest of the successful resolution applicant, once the plan has been submitted to the adjudicating authority. The submitted Resolution Plan is binding and irrevocable as between the CoC and the successful resolution applicant in terms of the provisions of the IBC, 2016 and the 2016 Regulations as well - there is absolutely no scope for modification of the terms of a Resolution Plan which has received the imprimatur of the Adjudicating Authority, be it by the Adjudicating Authority itself, the CoC or the SRA. The conditions imposed on the SRA under the Lender s Affidavit and the Resolution Plan were one and the same, the only difference being that the Appellants had offered not to press issues relating to the compliance of the Conditions Precedent and grant of extensions/exclusions along with offering to withdraw the Company Appeal and the Appeals pending before this Court. The PBG of Rs. 150 Crore could not have been allowed to be adjusted with the first tranche payment of Rs. 350 Crore. Non-compliance of the SRA with the order of this Court has led to a dereliction of its obligations to implement the Resolution Plan. Whether the non-implementation of the Resolution Plan by the SRA necessarily leads to the consequence of liquidation as under Section 33(3) of the IBC, 2016? - HELD THAT:- The impugned order of the NCLAT nowhere caps the Airport Dues to a maximum of Rs. 25 Crore. Moreover, such a mention of Rs. 25 Crore is plainly absent in its observations regarding Airport Dues. All that is mentioned is that The payment of Airport Charges has to be made as per the Resolution Plan when the implementation of the plan commences as per the Resolution Plan . It is in this regard that Clause 6.4.1(j) provides that if the CIRP costs exceed the current estimates, then they will be paid as per actuals in compliance with the provisions of the IBC and as a consequence, the pay-outs towards the other creditors would be reduced proportionately to account for such additional CIRP costs. This would be subject to a minimum payment of liquidation value to the Operational Creditors and Dissenting Financial Creditors of the Corporate Debtor and subject to a maximum of Rs. 475 Crore. Therefore, the Resolution Plan, too, does not contemplate the CIRP costs to be strictly subject to a maximum of Rs. 25 Crore. To accept such a contention of the Appellants would be to misinterpret the observations made in the impugned order. The SRA not having infused the first tranche payment of Rs. 350 Crore as per Clause 6.3.1(g) and S. No. 11 of the Implementation Schedule under Clause 7.7 within a period of 180 days from the Effective Date and within the multiple extensions granted therefrom, has defaulted on its obligation towards the payment of CIRP costs (which include airport dues) under Clause 6.4.1 as well - by not infusing the first tranche payment of Rs. 350 Crore as per the Implementation Schedule of the Resolution Plan, the SRA has breached the terms of the Resolution Plan which required a minimum liquidation value of Rs. 113 Crore to be paid towards the Workmen and Employees Dues as well. Moreover, both the Provident Fund and Gratuity Dues amounting to Rs. 226 Crore should also have been paid by the SRA as per the order dated 21.10.2022 of the NCLAT in fulfillment of its obligations, which it failed to do. Whether there were sufficient grounds before the NCLAT to hold that Respondent No.1/SRA had contravened the terms of the approved Resolution Plan and that the Corporate Debtor must be directed to be liquidated under Section 33(3) of the IBC, 2016? - HELD THAT:- At this stage of the implementation of the Resolution Plan, it is no longer viable for the SRA to submit that the Resolution Plan shall automatically stand withdrawn according to Clause 7.6.4 of the Resolution Plan and upon, such withdrawal, the members of the SRA in the MC shall resign, the remaining members of the MC shall assume absolute control of the Corporate Debtor and all the amounts infused by the SRA would be refunded. This is especially so, since the Conditions Precedent were declared to be fulfilled and the Effective Date was achieved on 20.05.2022. The consequence of the failure to implement the Resolution Plan in terms of Clause 9.4 of the Resolution Plan and Clause 3.13.7(iii) of the RFRP is that the Appellants are entitled to invoke the PBG automatically without any reference to the SRA. Therefore, it is directed that the PBG may be invoked by the Appellants in accordance with the terms of the Resolution Plan. Whether the timely implementation of the Resolution Plan is also one of the objectives of the IBC, 2016? - HELD THAT:- Rule 15 of the NCLT and NCLAT Rules, 2016 grants power to the NCLT and NCLAT respectively, to extend the time limits for doing any act which have been fixed, either by the rules or by an order, as the justice of the case may require. However, such power must not be exercised mechanically without any application of mind. An extension on the strict timelines fixed under the resolution plan must be done by adequately weighing the period of extension sought with the consequences of such extension on the continued implementation of the Resolution Plan. After all, such a discretion cannot be exercised to the detriment of the resolution plan and its implementation itself - The feasibility and practicability of the resolution plan adjudged by the commercial wisdom of the CoC might no longer remain in cases where incessant extensions are granted by the NCLT and NCLAT under their discretionary powers. The discretion in extending the time limits fixed under the Resolution Plan must be exercised in a much more circumspect manner, especially in cases such as the present, which pertains to the aviation sector, wherein timely resolution and revival of the Corporate Debtor is all the more crucial since the sector operates in such a way that a continuous flow of cash is required to maintain the company in a position of status quo. Since the Resolution Plan is no longer capable of being implemented, we must ensure that at least liquidation remains as a viable last resort for the Corporate Debtor and its creditors. Being mindful of the underlying objective that Time and Speed are of the essence under the Code and to prevent the frustration of this objective, we have thought fit and necessary to exercise our plenary powers under Article 142 and direct the Corporate Debtor into liquidation in the manner as laid down in the IBC, 2016. Granting this relief to the Appellants would not run counter to the timelines and predictability that is central to IBC - it would not be necessary for the parties to again approach the Adjudicating Authority for a determination under Section 33(3) of the IBC, 2016 on the ground that the provisions of the approved Resolution Plan have been contravened. The impugned order passed by the NCLAT is perverse and unsustainable in law. It has led to further complications. As a result, the appeals succeed and are allowed. The impugned order passed by the NCLAT is set aside. Appeal allowed.

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• 2024 (11) TMI 409
  Waterfall Mechanism - Appeal filed by the Appellant, the Suspended Director, under Section 61 of the Insolvency and Bankruptcy Code, 2016 against the Order passed by the Hon ble National Company Law Tribunal (Adjudicating Authority), New Delhi - Appellant contends that the Liquidator had failed to form his independent opinion about the existence of the preferential transaction - HELD THAT:- The Liquidator had got a Transaction Audit Report made, which had various findings, and in one such finding it was noted that Rs. 3,67,900/- had been paid to the Suspended Director i.e. Alok Tripathi and was found to be a preferential transaction. The Adjudicating Authority has rightly noted that the Appellant/ Mr Alok Tripathi was put in a beneficial position when aforesaid payment was made against his unsecured loan as in terms of the provisions of Section 53 of the Code, the secured Creditors and workmen get precedence over unsecured Creditors against the payment of dues It is to be noted that even if any amount was payable to the Appellant/ Mr Alok Tripathi qua its outstanding unsecured loan could have staked his claim before the Liquidator and could have got his share in terms of the provisions of Section 53 of the Code. It is worth noting that the Adjudicating Authority noted that the Liquidator shall look into the claim of the amount of the Appellant/ Mr Alok Tripathi while distributing the assets/funds/properties of the Corporate Debtor as per the waterfall mechanism under Section 53 of the Code. When the Liquidator has got a Transaction Audit Report done and basis that has come to a conclusion that this is a preferential transaction, after which he filed an I.A. before the Adjudicating Authority, in such conditions, the submissions of the Appellant that the Liquidator has not formed an opinion, cannot be agreed upon - Appeal dismissed.

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• Service Tax

• 2024 (11) TMI 408
  Extended period of limitation invoked - Service tax liability in respect of the tax period from the year 2007-2010 - invoking the provision of Section 73 (1) of the Finance Act, 1994 - SCN issued was beyond the specified period or not? - as alleged that since the assessee had failed to produce the supporting document before the CERA audit team, it appeared that the assessee had availed CENVAT credit on input services without fulfilling the conditions as prescribed under Rule 9 of the CENVAT Rules. HELD THAT:- There is no allegation against the assessee of any statutory contravention with an intent to evade tax. The case of the Revenue is solely premised on the basis that there was suppression of facts on the part of the assessee. Clearly, not producing the documents, which may be necessary for substantiating a claim, does not fall in the exception of suppression of facts . In any view of the matter, no express allegations were made in the SCN to the said effect. This Court in an earlier decision of M/s EMAAR MGF Land Ltd. [ 2023 (2) TMI 613 - DELHI HIGH COURT] concurred with the learned CESTAT that the extended period of limitation was not correctly invoked as the intent to evade tax was neither established nor evident in the given facts. No infirmity with the decision of the learned CESTAT in rejecting the Revenue s contention that it was entitled to invoke the extended period of limitation in terms of the proviso to Section 73 (1) of the Act.

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• 2024 (11) TMI 407
  Entitlement to make the pre-deposit of Duty, payable under the old Central excise regime, as per the requirement of the section 35F of the Central Excise Act by debiting, the electronic cash ledger under the CGST regime - HELD THAT:- We observe that this issue has already been decided by M/s. Jyoti Construction [ 2021 (10) TMI 524 - ORISSA HIGH COURT] wherein it has been held that it is not possible to except the plea of the petitioner that output tax as defined under section 2(82) of the CGST Act could be equated to the deposit required to be made in terms of section 107(6) of the CGST Act. Pursuant to these directions, Central Board of Indirect Taxes and Customs vide Instruction No. 14/2022 dated 28.10.2020 as clarified that payments through DRC-03 under CGST regime is not a valid mode of payment for making pre-deposits under Section 35F of the Central Excise Act, 1944 and Section 83 of Finance Act, 1994 read with Section 35F of the CEA. There exists a dedicated CBIC-GST integrated portal, https://cbic-gst.gov.in which should only be utilized for making pre-deposits under Central Excise Act, 1944 and the Finance Act, 1994. We answer the above framed question in favour of the department and against the appellant. Resultantly, the condition of making payment of amount of pre-deposit in terms of Section 35F remains non-complied with. The matter remains defective. However, in the interest of justice, one more opportunity is given to the appellant to do away the said defect.

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• 2024 (11) TMI 406
  Calculating the proportionate credit attributable to exempted services under Rule 6(3A)(c) of CCR, 2004 - whether total credit availed in a financial year would include credit on taxable services also or only credit availed on common input services is to be considered? - As alleged that the factor P in the formula denotes the total cenvat credit taken on input services during the financial year was not limited to the common input services on which credit has been availed but also the credit exclusively attributable to taxable service also in the total cenvat credit taken by the appellant during the financial year HELD THAT:- We find that this Tribunal in a series of cases, interpreting the provisions of Rule 6(3) of CCR, consistently held that the factor P referred to in the said formula cannot be considered to mean the total cenvat credit taken in a financial year would also include credit taken on input services and exclusively utilised in providing taxable output services; thus, only the credit taken on common input services which are utilised in providing both taxable as well as exempted services to be considered for arriving at the proportionate credit attributable to exempted services when common input services are utilised for providing both taxable as well as exempted services. As decided in M/S. THYSSENKRUPP INDUSTRIES INDIA PVT. LTD. VERSUS COMMISSIONER OF CE ST, PUNE-I [ 2023 (2) TMI 1343 - CESTAT MUMBAI] main basis on which the demands were raised in both the Show Cause Notices have already been dropped by the adjudicating authority since the appellant had reversed proportionate amount of credit. Only the computation of the amount to be reversed is in dispute. The adjudicating authority has erred in (a) taking the total turnover of traded goods as the value of trading service instead of following Explanation 1(c) to Rule 6 to calculate the value of trading service; (b) For the periods covered in both appeals, the adjudicating authority has erred in reckoning the total credit taken instead of credit on common input services in calculating the amount of credit required to be reversed. The impugned orders, therefore, cannot be sustained. Undisputedly and admittedly appellant has reversed/ paid the amount of the CENVAT Credit attributable to trading activities as per the prescribed formula in Rule 6(3A) as interpreted in the above referred orders. The fact of reversal is also noted in the impugned orders. Appeal allowed.

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• 2024 (11) TMI 405
  Service tax demand on appellant being a subcontractor of main contractor provided services in the SEZ - service tax demand was made on the ground that appellant is not entitled for exemption Notification No. 09/2009- ST dated 03.03.2009 as amended by Notification No. 15/2019-ST dated 20.05.2019 on the ground that the appellant have failed to provide declaration in form A-1 and A-2. Further, Rule 10 of SEZ Rules, 2006 does not extent the benefit to the subcontractor for the SEZ unit HELD THAT:- The parent Act i.e. SEZ Act itself grant exemption but all these observation were brushed aside by the adjudicating authority. We find that the appellant being a sub-contractor cannot be expected to obtain a A1, A2, the same has been obtained by main contractor, since, direct dealing of the main contractor with SEZ unit. Therefore, expecting form the sub contractor all the procedure to be followed is incorrect. The main criteria for granting the exemption is that the service should be provided in the SEZ unit which is not under the dispute in the present case. Once this fact is established, then not only service is exempt under Notification No. 09/2009- ST dated 03.03.2009 but also not taxable in terms of the Section 51 read with Section 26 of the SEZ Act It is settled that when subcontractor provided the service on behalf of the main contractor in the SEZ, the same is exempted from payment of service tax. Thus, the appellant is not liable to pay service tax.

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• 2024 (11) TMI 404
  Classification as declared service u/s 66E(e) of the Finance Act as agreeing to the obligation to tolerate an Act and consequential liable to service tax or otherwise - interest charged by the appellant to their customer against the sale of the goods for delayed payment - appellant are a manufacturer of excisable goods and selling the same on principal to principal basis to their customers - HELD THAT:- From the judgments including the Apex Court, judgment in South Eastern Coalfields Ltd. [ 2023 (8) TMI 606 - SC ORDER] it is settled that penal interest charged for delayed payment cannot be liable to service tax under Section 66E(e) of Finance Act, 1994. Following the ratio of the above judgment in the present case also, the interest charged on the delayed payment of the sale proceed is not liable to service tax. Accordingly, we set aside the impugned order and allow the appeal with consequential relief.

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• 2024 (11) TMI 403
  Service tax demand on municipality on the income received from the renting of immovable property - assessee argued service tax demand on the plea that the Srivilliputhur Municipality is a creature of an Act of the Tamil Nadu Legislature and is the statutory body being governed by the Tamil Nadu District Municipalities Act, 1920 and it is an autonomous self-government in terms of the Article 243Q of the Constitution of India. HELD THAT:- We find that the issue involved has been squarely covered by the decisions rendered by this Tribunal in the case of The Commissioner, Krishnagiri and OtheRs [ 2024 (6) TMI 767 - CESTAT CHENNAI] as set aside only to the extent of demand of Service Tax on Renting of Immovable Property service by allowing the appeal by way of remand to the Adjudicating Authority who is directed to pass fresh order in strict observance to the principles of natural justice.

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• 2024 (11) TMI 402
  Quantum of demand based on gross receipt - benefit of tax value - invocation of extended period for issuing show cause notice - imposition of penalty, applicability of section 80 of the Finance Act, 1994 - HELD THAT:- There is no element of suppression or concealment on part of the appellant. Hence we hold that extended period of limitation is not invokable in the present case. The period in dispute is the year 2006 to 2012 and the Show Cause Notice has been issued on 23.04.2012. Hence it is only the period from 25.04.2011 to February 2012 which the normal period of limitation for serving SCN. The demand for rest of the prior period is therefore held barred by the period of limitation. It has already been observed that the appellant has already admitted his service tax liability and has deposited the amount demanded voluntarily. Hence we confirm the demand for the normal period and set aside the demand for the extended period. The order under challenge/ Order-in-Appeal is upheld vis- -vis normal period and rest is hereby set aside. Consequently, the appeal is partly allowed.

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• 2024 (11) TMI 401
  Service tax demand confirmed in respect of the Goods Transport Agency (GTA) service rendered by the appellant on reverse charge basis - Assessee billed service tax on the GTA service in respect of 12 RA bills / invoices raised by them on the service recipient - appellant submits that the demand of service tax on this category from them is not sustainable as they are not the persons liable to pay tax on this activity. They contend that in respect of GTA service, service tax under reverse charge mechanism is liable to be charged at the hands of the service recipient - HELD THAT:- The appellant has negated the allegation against them that they have collected service tax under the category of GTA service. Further, we observe that the charge in the show cause notice is that the appellant has billed the service tax amount in the 12 RA bills / invoices raised by them. However, there is no evidence adduced by the Revenue to substantiate the allegation that the appellant has actually 'collected' service tax. On the contrary, the appellant has submitted evidence to the effect that the service tax amount mentioned in the said bills / invoices are not collected, by producing the ledger accounts and also the Payment Advices, w.r.t. these 12 RA bills / invoices. We observe that the demand of service tax cannot be confirmed on the basis of a single invoice without verification of all the invoices that too when this single invoice relied upon, belies the allegation of the Revenue. In this regard, we derive support from the judgment in the case of M/s. R.S. Ispat Pvt. Ltd. and Shri Radhe Shyam Agarwal, Director M/s. R.S. Ispat Pvt. Ltd. [ 2024 (9) TMI 176 - CESTAT KOLKATA] . Since, the appellant is not the person liable to pay service tax under the category of GTA service and the evidence submitted by the appellant indicates that they have not collected service tax on this service and the appellant claims that the service recipient has already paid service tax on this category, we hold that the demand of service tax of Rs. 9.03 crores confirmed under the category of GTA service from the appellant, is not legally sustainable. Reimbursable expenditure - demand pertains to procurement of HSD by the appellant in the case of exigency in terms of Clause 5.10 of the contract dated 14.05.2012 wherein such expenses of procurement are liable to be reimbursed by the service recipient - HELD THAT:- We observe that as per Clause 5.10 of the contract dated 14.05.2012, such expenses of procurement are liable to be reimbursed by the service recipient. We observe that this demand is legally not tenable upto 14.05.2015 in terms of Section 67 of the Finance Act, 1994, in view of the Apex Court judgement in the case of Union of India Anr. Vs. M/s. Intercontinental consultants and Technocrats Pvt. Ltd [ 2018 (3) TMI 357 - SUPREME COURT] . Thus, we observe that there is no service tax liable to be paid on these expenditure for diesel reimbursed by the service recipient upto 14.05.2015 except to the above extent, which was already paid to the exchequer. In respect of the remaining transactions upto 14.05.2015, we observe that the appellant did not collect service tax from the service recipient since the same is not legally payable. The Revenue did not come up with any other evidence, except the above cited evidence, to substantiate that the appellant collected service tax on this count upto 14.05.2015. Accordingly, we hold that the demand of service tax of Rs. 4.78 crores confirmed in the impugned order on this count for the period upto 14.05.2015 is not legally sustainable. Demand on advances - appellant submits that this is a double demand, wherein initially, when the advances were received, demands were raised on such advances, subsequently, service tax is demanded for the second time when they raised the final bill on the gross value which value is inclusive of the said advance component - HELD THAT:- As per duly supported by documentary evidences, it is evident that the Revenue made out double demands on advances once on advances per se and for a second time on the total gross values of the final bills / invoices, which values include the advance amounts and the appellant has been paid the remaining amount after adjusting the said advances from the final bills / invoices. This fact of double demand is corroborative from the said 3 Annexures A3 to A5 themselves since there are separate columns therein for bill amounts as well as mobilization / work advances and tax liability is created against both the entries which liabilities are confirmed by the Ld. Adjudicating Authority. We, therefore, hold that the double demand confirmed in the impugned order is not legally sustainable. Demand of service tax on supply of materials - as submitted that no service tax is payable on material supplied wherein CST has already been paid - HELD THAT:- This transaction is a pure supply of materials. However, in the impugned order, the nature of service has been indicated as Site Formation Service. In this backdrop, the appellant produced the related work order, invoice and a Chartered Accountant Certificate dated 10.03.2024, produced at the time of personal hearing. This documentary evidences submitted by the appellant reveals that material has been supplied in this transaction on which CST has been paid. Thus, we hold that no service tax is payable on this transaction involving only pure sale of materials. Accordingly, we hold that the demand confirmed in the impugned order, on this count is not sustainable. Demand on Road Works - appellant has billed service tax in respect of this activity and hence it is alleged that the appellant collected service tax on this activity - HELD THAT:- This demand pertains to construction of roads. We observe that construction of roads is exempted under Notification No. 25/2012-ST. The said Notification clearly exempts the services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a road, bridge, tunnel, terminal for road transportation for use by general public. The notification speaks of only usage of the roads by general public and it does not refer to ownership of the roads. We have perused the depositions obtained by the investigating agency during the course of investigation from the personnel of the appellant as well as the service recipient and the payment advices of the service recipient. We find that Para 54 of the notice dated 18.11.2017 clearly admits to usage of the road by local villagers at different stretches. Shri Sameer Kumar Rout, Assistant General Manager (Taxation), UAIL in his statement dated 15.03.2017, in response to question no. 4, clearly admitted that the said road is used by the local villagers for years together even before setting up of the plant and before acquiring the ownership of the mines road by M/s UAIL. Thus, we find that the evidence available on record clearly indicates the usage of the said road by the inhabitants of 16 villages on either side of the road. The other objection of the Revenue is that the appellant billed service tax in respect of this activity and hence it is alleged that the appellant collected service tax on this activity. In this regard, we observe that even though the appellant billed service tax in two instances (invoice dated 28.10.2013 invoice no.1 dated 16.02.2015), fact remains, service tax is not paid to the appellant by the service recipient in these two cases as is evident from the corresponding payment adviceApart from the two instances cited none of the bills / invoices indicate billing of service tax. The payment advices in all the 12 cases indicate that service tax was not paid by the service recipient to the appellant. We thus observe that the Revenue has not brought in any evidence to substantiate the allegation that the appellant has actually collected the service tax. While this is the factual position, the Ld. Adjudicating Authority cited the above two bills / invoices for the purpose of confirmation of the demand without appreciating the difference between billing and collection and without establishing that the appellant collected service tax in those two cases. As the activity of construction of road is exempted from payment of service tax as per Notification No. 25/2012-ST, fortified by the cited case law and documentary evidence placed to the effect that no Service Tax was collected by the appellant, we hold that the demand of Rs.1.49 crores confirmed in the impugned order on this count is legally not sustainable. Confirmation of demand on Commission - appellant submits that they have sub- contracted some of the work orders to the sub- contractors on back-to-back basis, in which case the appellant paid service tax on the entire contract value; while disbursing this amount to the sub-contractors, they retained their profit margin and TDS and paid the remaining amount to the sub-contractors - HELD THAT:- In the present case, from the factual details discussed on the issue, the activity would not fall under (i) to (vi) above. Coming to the entry (vii), there is nothing to indicate that the appellant is acting as Commission agent for the sub-contractor to whom the back-to- back contract has been given. The appellant is the one who is directly raising the bills for the work and receives the payment from the client. They are not performing any of the activities under (i) to (iv) specified to be the activities to be undertaken by the Commission agent . Since the work has been given on back-to-back basis, they retain a part of the margin as their profit and after deducting the TDS, they are giving the balance amount to the sub-contractor. Thus, we do not see that the profit margin retained by the appellant would fall under any of the above (i) to (vii) categories, so as to attract Service Tax payment under Business Auxiliary Service. It is to be noted that the appellant has not rendered any service to the sub-contractor, but it is the other way round. The profit margin on such back-to-back transfer of the contract is in the nature of trading the contract to make a profit. This activity is not mentioned as a taxable service under Section 65(19) of the Finance Act, 1994, under the definition of the Business Auxiliary Service. Hence, the confirmed demand is not sustainable. Therefore, we hold that this demand confirmed in the impugned order under the category of Business Auxiliary Service is not sustainable. Demand on Railway work - demand has been confirmed in the impugned order on the ground that it is a private railway line for use by UAIL - appellant submits that works related to Railways are exempted under Notification No. 25/2012-ST - HELD THAT:- We observe that the Original Authority, without appreciating the fact that the Revenue itself admitted to the non-billing of service tax, confirmed this demand by citing invoice no.1 dated 03.09.2012 which is the subject matter of S. No. 1 of Annexure - A2 to the notice for the year 2012-13 in which case, the appellant submitted that service tax has been collected and paid during the normal course vide challan no. 106 dated 27.09.2012. All the connecting documents relating to this transaction i.e., invoice, payment advice challan. Thus, we hold that the demand confirmed in the impugned order is not sustainable. Erection, Commissioning and Testing Double Demand - HELD THAT:- We observe that the Ld. adjudicating authority has not given any findings on the submissions made by the appellant on this demand in the entire Order-in- Original. Thus, we hold that the demand raised in the instant notice is a double demand as the demand on this issue has already been covered in the Notice dated 17.10.2016. We accordingly hold that this demand is not legally sustainable. Demand on Eastern piling - appellant submits that the amount involved in this demand pertains to lumpsum compensation paid by them on behalf of UAIL and got reimbursed later. Thus, the submission of the appellant is that this reimbursement does not relate to any activity which is liable for service tax - HELD THAT:- There is no discussion with reference to this demand either in the notice or in the impugned order. The documentary evidence submitted by the appellant clearly reveal that M/s Eastern Piling Construction Pvt. Ltd., while executing a 33KV tower line and stringing work upto the mines top, encountered certain problems with the local villagers and negotiated with them for a lump sum compensation. For this purpose, the appellant paid the said amount to the said company and got the same reimbursed from UAIL. The documentary evidence submitted by the appellant in the form of two letters dated 27.08.2013 and 25.10.2013 and a Note dated 17.07.2013, indicate that the reimbursement received by the appellant was not related to any taxable service. Accordingly, we hold that service tax confirmed in the impugned order on this count is not sustainable. Hence, the demand confirmed in the impugned order on this count is set aside. Double demand on the advances received and the tax thereon - HELD THAT:- We observe that these advances on which service tax has already been paid, are adjusted in the present bills. However, the investigating agency has taken into consideration the gross amount for the purpose of computation of the tax liability of the appellant which resulted in the excess demand. Detailed calculations and submissions in this regard are provided. Thus, we hold that the demand of Rs. 78.96 lakhs confirmed in the impugned order on this count is not sustainable. Confirmation of demand on Hiring of Additional dumper - as argued since the tax is to be payable by the service recipient and the same was already paid by him and since the appellant was not paid the said service tax, the demand on this count is liable to be set aside - HELD THAT:- We have perused the revised invoice wherein the service tax billed earlier was excluded. The corresponding payment advice confirms the claim of the appellant that they have not collected the service tax on this bill. Thus, we observe that the related payment advice indicates that only service consideration was paid and no service tax component was paid. Since, the appellant was not paid the said service tax and the activity undertaken is not liable to service tax at the hands of the appellant, the demand is not legally sustainable on merit. We observe that the Original Authority for the purpose of confirming this demand. It is on record that this invoice was cancelled and a revised invoice was issued for which no service tax was paid by the service recipient to the appellant. This citation therefore will not be of any help to the Revenue. Accordingly, we hold that the demand confirmed in the impugned order on this count is not sustainable and hence we set aside the same. Demand on Works Contract Service - HELD THAT:- We observe that the service rendered by the appellant include materials also and hence the said services are appropriately classifiable under the category of Work Contract Service . Accordingly, we hold that the appellant is eligible for the abatement 60% available to Works Contract Service . Thus, we hold that the appellant has rightly computed service tax on 40% of the value and correctly paid service tax as per the provisions relating to Works Contract Service on these three transactions. Appellant was paid service tax on 40% of the value in all these 3 cases as seen from the related payment advice. Accordingly, we hold that the demand confirmed on this count is not sustainable and hence we set aside the same. Notice issued invoking extended period of limitation - demand related to Commission received by the appellant - HELD THAT:- We observe that the present notice was issued on the heels of the earlier notice dated 17.10.2016, covering the same period; the said notice has clearly gone on record that the appellant was providing exempt / non-taxable services like bauxite are transportation, reimbursable expenditure, road works etc., and yet did not question the said clearances. We also observe that three successive audits have been conducted during the relevant period, the audit teams did not question the said transactions; in fact, the audit memo dated 06.05.2016 for year 2014-15 has asked for reversal of proportionate CENVAT Credit on the ground that the appellant have provided taxable as well as exempt / non-taxable clearances. Thus, we observe that notice cannot be issued again by invoking extended period of limitation, as held in the case of Nizam Sugar Factory [ 2006 (4) TMI 127 - SUPREME COURT] . Accordingly, we hold that the confirmed demand in respect of extended period, is not sustainable and hence, we set aside the same on the ground of limitation. Confirmation of CENVAT credit demand on inputs and input services - demand has been confirmed in the impugned order on the ground that the appellant had taken excess credit in certain cases and in some other cases availed credit without any supporting documents / proper duty paid documents - HELD THAT:- he Audit Officers called for various documents from the appellant including CENVAT Credit Documents, statement of credit availment, item-wise and document-wise. The CENTRAL EXCISE AND SERVICE TAX AUDIT MANUAL 2015 CESTAM-2015 provides the documents to be verified by the auditors in the areas like CENVAT Credit and the auditors are bound to examine each and every aspect / record / document in relation to CENVAT Credit, Provision of services, payment of service tax, valuation, exemptions, taxable /non-taxable services etc. of the assessees. Having regard to the above position and the evidence cited by the appellant, accounts of the appellant company were audited upto the period 2014-15. We, therefore, hold that the demand under this head for the years 2013-14 and 2014-15 are liable to be set aside on time bar front and accordingly we set aside the same. Demand raised on the ground that there is misreporting of credit availment under input services instead of under inputs and vice versa - HELD THAT:- Since the appellant has already produced documents evidencing availment of credit of Rs. 25,71,907/- as against the availment of credit of Rs. 27,63,848/-, as accepted by the Department in the said Annexure and since the same are available with the department, the appellant is required to produce documentary evidence in respect of the balance credit of Rs. 1,91,941/- only. The appellant submitted that they have the documentary evidence for availment of this balance CENVAT Credit of Rs. 1,91,941/- also. Accordingly, we remand the matter back to the adjudicating authority for the purpose of verification of documents w.r.t availment of CENVAT credit. Invoking extended period of limitation cannot be invoked to demand service tax and CENVAT credit - HELD THAT:- We hold that the Revenue was well aware of the issues on which demand was raised in the present proceedings much before issuance of the present notice. When the facts are in the knowledge of Revenue through audit of the accounts of the appellant as well as through the proceedings of other notice dated 17.10.2016, issued under the extended period, suppression of facts with intention to evade the tax cannot be alleged and extended period of limitation cannot be invoked. Thus, we hold that the extended period of limitation cannot be invoked to demand service tax and CENVAT credit in this case. Accordingly, we hold that in the case of all the confirmed demands discussed above, the extended period provisions could not have been invoked. Hence, we hold that the following demands in respect of the extended period i.e., upto to the year 2014-15 are not legally sustainable on account of the time bar and set aside. Appellant has charged and collected service tax from the recipient but failed to pay such tax so realised to the Govt exchequer - Even though the appellant billed service tax in some of the bills initially, the appellant is not liable to pay service tax, as the service recipient has finally not paid the service tax amount to them, as evidenced by the RA bills / invoices raised for final payment / payment advices issued by the service recipient. However, we make it clear that in any of the cases where the appellant has billed service tax in the bills and collected it from the service recipient and not paid the same to the exchequer during the normal period i.e., 2015-16, the appellant is liable to pay the amount of service tax collected by them to the exchequer, even if the activity is held as not liable to service tax in this order, as per the provisions of Section 73A of the Finance Act, 1994. We have already held that the demands for the period prior to 2015-16 are not sustainable on merit as well as on limitation. Thus, the above said verification needs to be done only for the demands confirmed in the impugned order for the Financial year 2015-16, which is the demand pertains to the normal period of limitation. Revenue is directed to conduct the verification on this aspect and complete the verification within three months from the date of receipt of this order. The appellant should cooperate and produce the relevant documents for verification. Personal penalty on MD under Section 78A of the Finance Act, 1994 - Most of the demands pertain to settled issues like free supplies, reimbursable expenditure, road works, railway works and services liable to tax under RCM by the service recipient like Bauxite Ore Transportation. In addition, there are double demands on the advances, demand of service tax on supply of material, demand on lump sum compensation paid to villagers, commission, etc. These demands are set aside on limitation front too. In this backdrop, it may not be fair to impute mala fide intention on the part of Shri Ravichandra. Having regard to this position, we set aside the penalty of Rs. 1,00,000/- imposed on Shri M. V. Ravichandra, Managing Director of M/s K.V. Mohanarao Co. Pvt. Ltd. Original Authority also imposed a penalty of Rs.1 Lakh on Shri T. Srinivasa Rao, GPA Holder and Authorized signatory of M/s K. V. Mohanarao Co. Pvt. Ltd. - As we have set aside almost all the demands on merit. Most of the demands pertain to settled issues like free supplies, reimbursable expenditure, road works, railway works and services liable to tax under RCM by the service recipient like Bauxite Ore Transportation. In addition, there are double demands on the advances, demand of service tax on supply of free material, demand on lump sum compensation paid to villagers, commission, etc. These demands are set aside on limitation front too. In this backdrop, it may not be fair to impute mala fide intention on the part of Shri T. Srinivasa Rao. Having regard to this position, we set aside the penalty of Rs. 1,00,000/- imposed on Shri T. Srinivasa Rao, GPA Holder and Authorized signatory of M/s K. V. Mohana Rao Co. Pvt. Ltd.

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• Central Excise

• 2024 (11) TMI 400
  Legality of adjudication proceedings held by Respondent No. 2 - refund of excise duty u/s 11B of the Central Excise Act, 1944 - violation of principles of natural justice - HELD THAT:- It is opined that the claim of the petitioner for the refund in terms of Section 11-B of the Central Excise Act, 1944 ought to have been decided before taking any action as is envisaged in the impugned show cause notice against the petitioner. It seems that the application of the petitioner for refund remained undecided and the Respondent No. 2 instead proceeded to recover the amount, which as per the Respondent No. 2 was illegally utilized/withdrawn by the petitioner by issuing a show cause notice dated 13.07.2018. Undoubtedly, the petitioner has been heard in the matter and he was given an opportunity to reply the same. The adjudicating authority has also passed a reasoned order but that does not meet the requirement of Section 11B as no such adjudication is apparent from the reading of the impugned order of adjudication. The amount which is subject matter of the show cause notice and the order of adjudicating authority impugned in this petition shall be reversed and kept in FDR with the Respondent No. 2-Additional Commissioner, Central GST Central Excise and appropriated as per the final orders to be passed by Respondent No. 1-Principal Commissioner, Central GST Central Excise Commissionerate, Jammu. The matter is sent back to the Respondent No. 1-Principal Commissioner, Central GST Central Excise Commissionerate, Jammu to consider and dispose the application for refund filed by the petitioner in accordance with law, provided that the application is complete in all respects or is completed by the petitioner within a period of four weeks from today. Petition disposed off by way of remand.

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• 2024 (11) TMI 399
  Rejection of appellant s challenge to the arbitral award by way of a petition under Section 34 of Arbitration and Conciliation Act, 1996 - seeking reimbursement of the differential amount of excise duty paid on the goods supplied under the contract - interpretation of the Clause III.12.2 of the Purchase Orders - HELD THAT:- The record reveals that in the present case the appellant has neither raised any dispute qua any of the invoices raised by the respondent nor has it amended any of the terms of the Purchase Orders. The only plea of the appellant both before the learned Single Judge and before us is that Clause III.12 of the Purchase Orders would not include a demand towards higher duty paid by the respondent due to change in classification of the goods - there are no merit in this plea, as the expression, change in taxes/ duties can also pertain to the change in classification. In any event, this being a plausible view arrived at by the learned Arbitrator and upheld by the learned Single Judge calls for no interference in the present appeal under Section 37 of the Act, where the scope is as it is very minimal. Though the learned counsel for the appellant had tried to urge that the interpretation of the Clause III.12.2 of the Purchase Orders given by the learned Arbitrator is incorrect, the said possible interpretation rendered by the learned Arbitrator cannot be appealed, which has also been accepted by the learned Single Judge. Reference may be made to the decision of the Hon ble Apex Court in MMTC LTD. VERSUS M/S VEDANTA LTD. [ 2019 (2) TMI 1085 - SUPREME COURT] wherein it was held ' the Court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the Court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the Court under Section 34 and by the Court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.' There are no reason to interfere either with the impugned arbitral award or the impugned order passed by the learned Single Judge. The appeal being meritless is dismissed.

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• 2024 (11) TMI 398
  Challenge to actions on the part of the respondent CIL in issuance of respective debit notes - recovery of amounts on account of arrears of central excise duty and corresponding VAT/CST from 01.03.2011 to 28.02.2013 against the coal purchase from the CIL by the petitioners - failure to provide details - appropriating from other transactions carried out between the CIL and the petitioners - HELD THAT:- One aspect is very clear that the petitioners herein have not assailed as to whether the stowing excise duty as well as the royalty would form a part of the transaction value on which the central excise duty is liable to be paid. Under such circumstances, what transpires from the materials on record, as well as the submissions so made by the learned counsels appearing on behalf of the parties is that the CIL is trying to recover certain amounts from the petitioners by issuance of these debit notes along with the enclosures. It is relevant to take note of the submissions of the learned counsel for the petitioners wherein it was emphasized that basing upon the debit notes and the enclosures, the respondent CIL is trying to recover from other transactions carried out by the petitioners with the CIL. This Court is of the opinion that the issuance of the debit notes along with the enclosures can at best be construed to be demands made by the CIL upon the petitioners. If such demands are rejected and the petitioners refuse to pay, the same would result in a dispute between the respondent CIL and the petitioners. This Court is of the opinion that by issuance of a debit note, the CIL cannot recover such amounts from other transactions. However, in terms with Clause 11.12 of the Spot E-Auction Scheme 2007, it is the opinion of this Court that if the CIL wants to recover such amounts, the said amounts can be recovered by the process mandated in the said Scheme i.e. by way of Arbitration - Petition disposed off.

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• 2024 (11) TMI 397
  Recovery of inadmissible Cenvat credit along with interest and imposition of penalty - Fraudulent availment of Cenvat credit based on fake invoices - denial of cross-examination of witnesses - Applicability of Section 9D of the Central Excise Act - principles of natural justice - HELD THAT:- The identical issue has been decided by the Hon ble Punjab Haryana High Court in the case of Jindal Drugs Pvt. Ltd. [ 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT] as well as by this Tribunal in the case of M/s Lauls Ltd. and M/s Tibrewala Industries (P) Limited [ 2023 (7) TMI 1112 - CESTAT CHANDIGARH] wherein it was held that the cross-examination of witnesses whose statements were relied upon by the Revenue to make out a case against the assessee has to be allowed and by following the ratio of the said decisions, the impugned order is not sustainable and therefore, the same is set aside and the cases remanded back to the Adjudicating Authority for a fresh decision after affording opportunity of cross-examination of the material witnesses and by following the procedure as prescribed in Section 9D of the Central Excise Act. Both the appeals are allowed by way of remand - The appellants are directed to cooperate with the Adjudicating Authority for a speedy disposal of the case.

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• CST, VAT & Sales Tax

• 2024 (11) TMI 396
  Condonation of delay - revisions were beyond the period of limitation - non-submission of Form C and Form F - HELD THAT:- It is nobody's case that the respondent has not submitted Form C Form F in support of its sales. The same Form F was got verified from the Assessing Authority by the order of the first appellate authority, but still, the first appellate authority, instead of deciding the issue, has remanded the matter. Feeling aggrieved by the said order, cross-appeals were preferred, but the Tribunal, after detailed discussion and verification of the records, recorded a finding of fact in favour of the respondent, which has not been specifically challenged in the present revisions. Thus, no interference is called for in both the revisions. No question of law arises in the present revisions - both the revisions are dismissed.

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• 2024 (11) TMI 395
  Interpretation of statute - Section 18 (A) (5) of the CST Act - pre-deposit for admission of appeal and stay of recovery - HELD THAT:- It is found that the Appellate Authority was examining the case on an application under Section 18 (A) (5) of the CST Act, as is apparent from the first para of the order and proceeded to frame a question of law for the purpose of admission. But while passing the order, it has made a stay of recovery, subject to condition of depositing 10% of the tax due. The language may be a little misleading, but the very purpose is of depositing 10% of the tax due, as a pre-condition for admission in stay, which is in consonance with Section 18 (A) (5) of the CST Act. Thus, it is clear that the admission of appeal would be subject to pre-deposit of 10% of the tax, which has been directed by the VAT Appellate Tribunal. The order, therefore, does not warrant any interference. The writ petitions are dismissed.

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• Indian Laws

• 2024 (11) TMI 394
  Dissolution, settlement of accounts and distribution of shares of a partnership firm, namely, Crystal Transport Service - appointment of receiver to take charge of the management and assets of the firm till it is wound up - restraining the defendants from recovering, receiving or disposing of the property and effects of the firm - HELD THAT:- In the instant case, the finding, which appears on the record, is to the effect that the fourth defendant (appellant company) had taken over the assets of the firm. Therefore, in light of the provisions of Section 37 of the 1932 Act, if the fourth defendant is carrying on business with the assets of the firm, till a final settlement is made, the plaintiff, who would fall in the category of an outgoing partner, would have the right to seek for accounts and a share in the profits which might be derived from his share in the assets of the firm. As to what extent the business of the appellant company is derived from the assets of the firm is a matter of evidence which parties may have to adduce in the course of the proceedings relating to the preparation of the final decree pursuant to the order of remand. Considering that by the impugned order the matter has been remanded to the trial court, there are no good reason to interfere with the order impugned - appeal disposed off.

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• 2024 (11) TMI 393
  Doctrine of Forum Non Conveniens - Maintainability of the petition under Section 11 of the Arbitration and Conciliation Act, 1996 - Applicability of Part I of the Act, 1996 to the arbitration clause contained in the Distributorship Agreement - seat of the arbitration in terms of the Distributorship Agreement - Seeking a referral of the disputes that have arisen between the parties to arbitration and consequent appointment of an arbitrator by this Court in terms of clauses 26 and 27 of the Consumer Distributorship Agreement respectively dated 09.11.2010 - Section 11 sub-section (6)(a) read with Section 11 sub-section (12)(a) of the Arbitration and Conciliation Act, 1996. HELD THAT:- The following position of law emerges:- (i) Part I of the Act, 1996 and the provisions thereunder only applies where the arbitration takes place in India i.e., where either (I) the seat of arbitration is in India OR (II) the law governing the arbitration agreement are the laws of India. (ii) Arbitration agreements executed after 06.09.2012 where the seat of arbitration is outside India, Part I of the Act, 1996 and the provisions thereunder will not be applicable and would fall beyond the jurisdiction of Indian courts. (iii) Even those arbitration agreements that have been executed prior to 06.09.2012 Part I of the Act, 1996 will not be applicable, if its application has been excluded by the parties in the arbitration agreement either explicitly by designating the seat of arbitration outside India or implicitly by choosing the law governing the agreement to be any other law other than Indian law. (iv) The moment seat is determined, it would be akin to an exclusive jurisdiction clause whereby only the jurisdictional courts of that seat alone will have the jurisdiction to regulate the arbitral proceedings. The notional doctrine of concurrent jurisdiction has been expressly rejected and overruled by this Court in its subsequent decisions. (v) The Closest Connection Test for determining the seat of arbitration by identifying the law with which the agreement to arbitrate has its closest and most real connection is no longer a viable criterion for determination of the seat or situs of arbitration in view of the Shashoua Principle. The seat of arbitration cannot be determined by formulaic and unpredictable application of choice of law rules based on abstract connecting factors to the underlying contract. Even if the law governing the contract has been expressly stipulated, it does not mean that the law governing the arbitration agreement and by extension the seat of arbitration will be the same as the lex contractus. (vi) The more appropriate criterion for determining the seat of arbitration in view of the subsequent decisions of this Court is that where in an arbitration agreement there is an express designation of a place of arbitration anchoring the arbitral proceedings to such place, and there being no other significant contrary indicia to show otherwise, such place would be the seat of arbitration even if it is designated in the nomenclature of venue in the arbitration agreement. (vii) Where the curial law of a particular place or supranational body of rules has been stipulated in an arbitration agreement or clause, such stipulation is a positive indicium that the place so designated is actually the seat , as more often than not the law governing the arbitration agreement and by extension the seat of the arbitration tends to coincide with the curial law. (viii) Merely because the parties have stipulated a venue without any express choice of a seat, the courts cannot sideline the specific choices made by the parties in the arbitration agreement by imputing these stipulations as inadvertence at the behest of the parties as regards the seat of arbitration. Deference has to be shown to each and every choice and stipulations made by the parties, afterall the courts are only a conduit or means to arbitration, and the sum and substance of the arbitration is derived from the choices of the parties and their intentions contained in the arbitration agreement. It is the duty of the court to give weight and due consideration to each choice made by the parties and to construe the arbitration agreement in a manner that aligns the most with such stipulations and intentions. (ix) We do not for a moment say that, the Closest Connection Test has no application whatsoever, where there is no express or implied designation of a place of arbitration in the agreement either in the form of venue or curial law , there the closest connection test may be more suitable for determining the seat of arbitration. (x) Where two or more possible places that have been designated in the arbitration agreement either expressly or impliedly, equally appear to be the seat of arbitration, then in such cases the conflict may be resolved through recourse to the Doctrine of Forum Non Conveniens, and the seat be then determined based on which one of the possible places may be the most appropriate forum keeping in mind the nature of the agreement, the dispute at hand, the parties themselves and their intentions. The place most suited for the interests of all the parties and the ends of justice may be determined as the seat of arbitration. The present petition under Section 11 of the Act, 1996 is not maintainable as neither the seat of arbitration is India nor is the arbitration agreement governed by laws of India. The present petition filed by the petitioner fails and is hereby dismissed.

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• 2024 (11) TMI 392
  Seeking appointment of an arbitrator to adjudicate disputes and claims in terms of Clause 18.12 of the Master Services Agreement - whether the High Court committed any error in dismissing the appellant s application under Section 11 of the Act, 1996? - HELD THAT:- In a recent pronouncement, relying on the Constitution Bench judgment of this Court in In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899, [ 2023 (12) TMI 897 - SUPREME COURT (LB)] this Court in SBI General Insurance Co. Ltd. vs. Krish Spinning [ 2024 (9) TMI 606 - SUPREME COURT] , summarised the law on the scope and standard of judicial scrutiny that an application under Section 11(6) of the Act, 1996 can be subjected to - it was held that ' ex-facie frivolity and dishonesty in litigation is an aspect which the arbitral tribunal is equally, if not more, capable to decide upon the appreciation of the evidence adduced by the parties. We say so because the arbitral tribunal has the benefit of going through all the relevant evidence and pleadings in much more detail than the referral court. If the referral court is able to see the frivolity in the litigation on the basis of bare minimum pleadings, then it would be incorrect to doubt that the arbitral tribunal would not be able to arrive at the same inference, most likely in the first few hearings itself, with the benefit of extensive pleadings and evidentiary material.' The scope of inquiry under Section 11 of the Act, 1996 is limited to ascertaining the prima facie existence of an arbitration agreement. In the present case, the High Court exceeded this limited scope by undertaking a detailed examination of the factual matrix. The High Court erroneously proceeded to assess the auditor s report in detail and dismissed the arbitration application. In our view, such an approach does not give effect to the legislative intent behind the 2015 amendment to the Act, 1996 which limited the judicial scrutiny at the stage of Section 11 solely to the prima facie determination of the existence of an arbitration agreement. It is clarified that the limited jurisdiction of the referral Courts under Section 11 must not be misused by parties in order to force other parties to the arbitration agreement to participate in a time-consuming and costly arbitration process - it is clarified that the aforesaid is not to be construed as a determination of the merits of the matter, which the Arbitral Tribunal will rightfully be equipped to determine. The appeal filed by the appellant is allowed and the impugned order passed by the High Court of Bombay is hereby set aside.

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